Art der Uni-Arbeit: Seminararbeit
Fachrichtung: Business Management
Autor/-in: Miko Hoffmann
The past decades have been
marked by numerous events that have had a lasting impact on the global economy,
companies and investors. The biggest financial crisis since the great depression
in 1929 had arisen in October 2008 and almost led to the collapse of the entire
global financial system. As a reaction to this, an intensive discussion under
the banner of ‘corporate governance’ began, first in the US and a little later
The aim of this essay is to
examine one of the greater problems in Corporate Governance - the fundamental
problem between management and its shareholders. On this basis, both internal
and external corporate governance mechanisms will be examined. In a final step,
the conclusion will sum up and critically review the findings.
Principal Agent Theory
The principal agent theory as
the third approach of New Institutional Economics is the subject of this paper
and will be examined in more detail below.
The main idea of the theory
is the division of labour between a principal and an agent (Jensen and Meckling,
1976). The principal and the agent are subject to a contractual relationship in
which the principal receives a service from the agent and the agent receives remuneration
in return. In 1973 Ross presented approaches that deal with the economic
consequences of a delegation of decision-making powers by the principal to an
agent, who can also opportunistically exercise his decision- making power
against the principal (Ross, 1973).
The aim of this essay
was to present different approaches to help PLCs to solve agency problems due
to the conflict between principal and agent. This goal has been achieved during
this paper and is now to address critical aspects.
corporate governance is often only examined from the perspective of one theory.
And yet, there are many voices that want to prove that the agency theory, which
is often used in corporate governance research, has serious flaws (Aguilera and
Jackson, 2003). On the one hand, the monitoring role of the supervisory board
must be treated in a more differentiated and holistic way. Moreover, re-search
in corporate governance must also take into account the other central roles of
supervisory boards. For this purpose, it is necessary to sufficiently deal with
broader theories. The Stewardship Theory, for example, intends to show that
strategic decision-making in a company can be improved by the Supervisory Board
sup- porting top management (as stewards) in the holistic shaping of the
company's future (Davis et al., 1997).
In summary, it can be
said that this essay has only dealt intensively with a partial aspect of
corporate governance. For a more holistic view of the topic, the use of further
theories for a holistic investigation is recommended.
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