Agency Theory Relationship Between Agents And The...

Manager Behavior Agency Theory is the relationship between agents in a business and the business principals. Agency theory is also concerned with undertaking problems that can exist in the agency relationships due to irregular goals or different aversion levels of risk. Enron, was the world’s largest energy company in 2001. Enron forerunner, Northern Gas Company was incorporated in Delaware on April 25, 1930. From this date through July 1985, Enron had hundreds of purchases and new sub-entity constructions when they acquired Houston Natural Gas Inc. (Kastantin, 2005). On April 10, 1986, the company changed its name to Enron Corporation. Enron was an interstate and intrastate natural gas pipeline company, then later in 1989 Enron started trading natural gas commodities (Sridharan, 2002). Enron became the largest natural gas mogul in the United Kingdom and the United States. Enron an energy company later became a risk management firm that was looking to trade from commodities to derivations and to have a large firm with few assets on its financial statements. The term allowed Enron to avoid risky trading operations and not to show their debt on the financial statements this term is Special Purpose Entities (SPE). The root cause of Enron is ‘asset-light’ strategy, SPEs, and off-balance-sheet financial that was Enron’s eventual failure (Sridharan, 2002). Andersen, which was Enron’s external/internal auditor, a consultant in non-audit and tax matter, that was approved to useShow MoreRelatedAudit Activity, Audit, And Agency Theory1249 Words   |  5 Pagesprior papers about audit activity, audit price and agency theory. This short paper will provide a brief review focus on whether agency theory provides a general framework for audit pricing majorly refer to the study by Nikkinen and Sahlstron (2004). Furthermore, this is short paper also try to make further discussion from personal perspective. Literature review The purpose of Nikkinen and Sahlstron (2004) study is to ‘investigate whether agency theory provides a general framework for audit pricingRead MoreThe Agency Theory For The Best Interest Of The Shareholders1234 Words   |  5 PagesThe Agency Theory: This theory attributes the control for the best interest of the shareholders,it was introduced by Demsetz and Alchian (1972 )and was further improved by Meckling and Jensen ( Heslinda and Benedict,2009). The agency is a contract between the principal which are shareholders and the agent which are the managers . Most of the literature on corporate governance finds its roots in agency theory the relationships normally occurs when the principal hires the agent to perform a serviceRead MoreUniform Commercial Code and Common Law Contracts1156 Words   |  5 Pagesmatters such as jury trials, and presumption of innocence. 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This model of corporate governance often called as the relationship based method due to the close relationship maintained between companies and their major shareholders. This close relationship, little separation of ownership and control minimises the agency problem. However, as a result of the minimum separation of ownership and control, firms would experience misuse of power by dominant shareholders. ForRead MorePrice Dispersion, Competition, And The Role Of Online Travel Agents1742 Words   |  7 PagesPrice dispersion, competition, and the role of online travel agents: Evidenc e from business routes in the Italian airline market In this study they use research to further understand what’s driving price dispersion? They investigate very distinct factors between online travel agents and airlines’ direct channels influence price dispersion. Airline markets are characterized by the existence of substantial price dispersion, to be intended as a measure of price variations in the market. Indeed, it isRead MoreThe Finance Theory, Equity And Financial Crisis994 Words   |  4 Pagesfinancial crisis in 2007. It is said that one of the factors that contribute to the financial crisis and this is not the first time this point has been raised. General concern about the relationship between certain low corporate performance and high remuneration to executives in banks means there exists an imbalance between them (Andrew Clark, Tim Edmonds, 2015). With the Government investing public money in certain famous Banking Group, this problem has upgraded from a private sector concern to a significantRead MoreThe Re lationship Between Executive Compensation And Firm Performance1399 Words   |  6 Pages INTRODUCTION The relationship between executive compensation and firm performance is a topic of major concern amongst academics, professionals, and regulators. In an effort to identify a relationship between executive pay and firm performance, scholars have conducted research since 1925 and have established that compensation packages are the primary means of incentivizing managers to achieve certain financial targets or goals. These goals include certain performance measures that can be brokenRead MoreEssay on Annotated Bibliography1285 Words   |  6 PagesGovernable Person’, Accounting, Organizations and Society, vol.12, n.03, pp235-265. Main Argument In this article, Miller et al. concern about the understanding of the historical foundation of accounting practice by investigating how theories of costing and budgeting were constructed in the first thirty years of the 20th century. In addition, the authors suggest several radical factors of theoretical understanding of accounting in relation to the other social and organizational practices