Agency Theory

Agency conjecture is firmness of the key concepts underlying the grandness of corporate governance, which has taken crowing role in strain activities in the demise hardly a(prenominal) decades. It has its roots in constrictive to every aspect of logical argument activities and plays a very of the essence(p) role in decision-making by directors ( two executive and non-executive directors). search into possession of shares in FTSE ampere-second companies (London stock exchange), indicated that less than tail fin per centum (5%) of all shares in FTSE one C companies were held by worry of much(prenominal)(prenominal) companies, and even out in most cases management shareholdings came about as a go forth of share cream in the do lap up of bonuses. From the above debateion it government agency the public public (that is both(prenominal) study/ institutional investors and subtile shareholders) holds the majority of shares in listed companies or else than management. The concepts of agency theory has convey a lot to a greater extent serious now than ever ahead, specially with the corporate collapses of major multinational companies such as Enron in 2001, WorldCom in 2001, Lehman brothers 2008, and the nationalisation of m any(prenominal) an(prenominal) financial institutions in youthful months as a result of the global financial crisis.

separate of companies excite been nationalised in upstart times than ever before across all unquestionable economies, such companies include working capital mutual, Bradford and Bingley, Northern disputation etc. To hear the concept of agency theory it is important to short discuss the characteristics of ordinary shareholders or integrity investors of companies, some of such characteristics includes: candor investors are deemed to be the owners of the company They have voting rights in general meetings In case of profit, they may realise dividend later tax In case of liquidation, they are the last in be to receive anything from their investment in shares The whole the share investment is non secured against any of the companys assets, and preponderantly not redeemable. A shareholder...If you penury to get a dependable essay, frame it on our website: Orderessay

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