Here is the synopsis of our sample research paper on Separation of Ownership and Control - Agency Costs. Have the paper e-mailed to you 24/7/365.
Essay / Research Paper Abstract
This 9 page paper looks at the issues associated with the principle agent problem by looking at agency theory. The paper presents a discussion of the problems which result from a separation of ownership and control and the agency costs. The bibliography cites 11 sources.
Page Count:
9 pages (~225 words per page)
File: TS14_TEagentcost.doc
Buy This Term Paper »
Unformatted sample text from the term paper:
For large businesses the most common structure is that of a corporation or limited liability firm, where the owners of the shareholders of the organization is run by the directors.
This has the potential to create a significant separation between the parties that own the business and the parties which are running the business. There is a general perception that
those who run the business, the board of directors, we usually be operating in the interests of the owners. After all, if the owners are unhappy with the way that
the business is being run they will have the opportunity to replace management as their appointments come up for renewal in rotation at the annual general meetings (AGM). This is
a method of control which has been exercised by shareholders, as seen when the shareholders of the Disney Corporation forced the Chairmen; Michael Eisner out of his position as chairman
of the organization with 43% of the shareholders withholding their support when he came up for re-election (Teather, 2004). This indicates that there is a potential significant separation between the
views and interests of shareholders and organizational management and there are a number of issues which need consideration, including the potential cost of this crash, and the way in which
interests of the different parties may be aligned. This is known as the agency problem, and may also be referred to as the principle-agent problem1. Agency problems arise due to
the potential of that urgency between the needs of management, which act as the agents for the owners/shareholders, who are the principles in this relationship. When defining agency theory Eisenhardt,
(1989) states that it "is directed at the ubiquitous agency theory relationship, in which one party (the principal) delegates work to another (the agent), who performs that work". The theory
...