The paper 'Principles of Corporate Governance at Woolworth Limited" is a perfect example of a management case study. Woolworths is among the biggest supermarket chain in Australia, and it is owned by the Woolworth limited. It is a company that was established in the year 1924. The company was founded by Stanley Edward Chatterton, Harold Percival Christmas, Ernest Robert Williams, George William Percival Creed and Cecil Scott Wayne. This essay discusses Woolworth about the concept of corporate governance. Literature Review Theories of corporate governance There are different theories that have been used to bring clearly the concept of corporate governance.
The theories each have different approaches. Some of the theories covered in this essay are the agency theory and the stakeholder theory. The agency theory is derived from the concept of finance and economics while the stakeholder theory approaches corporate governance from a more societal approach. These two theories have been discussed in this paper with the aim of shedding light on how they have been implemented about Woolworth. The agency theory gives the illustration of how there is the relationship between the primary person who handles assigning tasks and also the mediator involved in the execution of the tasks.
The agency theory has been found to have a major concern in solving two types of challenges that come due to this kind of relationship. When countries industrialize and develop their markets, there is a tendency to estrange the possessions and controls of companies. This is a severance together plus the postulation that the agent is acting in their self-interest hence creating the agency crisis. According to the theory, due to the presence of information asymmetries and views that are dissimilar regarding the perceived risks (Pink, 2009, p. 2). First, the agents are not in the position to act in the best interest that is supposed to be enjoyed by the principals.
This, in turn, leads to the diminution of the values of the shareholders. The second concept is the fact that it is multifarious and expensive to scrutinize by the principal and also to authenticate that activity of an agent. The agent according to this theory plays an important role in determining the status of the organization.
In this theory, it is evident that the agent plays a vital part in determining the status of an organization. According to research conducted by Miles (2012) clarified that the agency theory applied within the corporate governance field holds a hypothetical view. This is because in the first instance there is a decrease in huge corporations into two participants. The two participants mentioned by the theory is the manager and the agent and also with another participant who can be the shareholder and the principal. The theory indicates that their interest is often understood to be stable and cannot be mistaken.
Secondly, the theory is of the idea that the postulation of human beings is centered on their self-interest that is widespread among corporations. Other researchers such as Robinson (2008, p. 1) have proposed that the agency theory can be taken to mean severance in terms of ownership and control. For instance, it has been mentioned that the primary person allots the work routine to others such as the mediator. The mediator acts as the agent. This has often elucidated the fact on how there is the existence of inadequate responsibility within the companies.
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