We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Nobody downloaded yet

Unethical Status (Ageincy Problem) - Case Study Example

Comments (0) Cite this document
Agency problems arise because of conflicting interest of shareholders and the management or with lenders. Shareholder-management conflict occurs when managers use the resources of the company for their personal gains rather than pursue the interest of shareholders. …
Download paper
Unethical Status (Ageincy Problem)
Read TextPreview

Extract of sample
Unethical Status (Ageincy Problem)

Unethical Status (Ageincy Problem)

Agency relationship occurs when shareholders (principals) hire another person or persons (agents) to undertake certain duties on behalf of them (principals). Agency theory portrays the firm as a nexus of contracts between the holders of resources. This paper explores the type of conflict in the case, effect on stakeholders, type of costs involved and how to minimize the conflict.
Shareholder-Management Conflict: The case involves agency conflict between shareholders and the management. When managers hide some information from shareholders, an agency problem arises. A conflict ensues between shareholders and the managers of the organisation. Managers will most often try to pursue self-interest gains at the expense of shareholders in an imperfect market. According to agency theory, agency problem arises when managers put their self-interest goals before those of shareholders.The asymmetric flow of information in an imperfect market makes it possible for managers to pursue their self-interests rather than that of the organisation (Bhabatosh, 2008). For example, managers are usually in a better opposition to know the ability of the organisation to meet shareholders expectations than the shareholders. Because of uncertainties in the market, managers can always influence the outcome of the performance of the organisation. They can manipulate the results to be positive or negative in pursuit of self-interests. The conflict between shareholders arises when managers seek for deals that reduce the profit of the firm. For example, when managers seek for perquisites and pay rise, there may be a conflict between shareholders and the managers because this would most likely reduce the shareholder value. Another example is when managers try to avoid optimal risks contrary to the expectations of shareholders (Bhabatosh, 2008). Effect of the Conflict on Stakeholders When managers avoid certain risky investment opportunities for which shareholders would most likely prefer to venture in because of high gains involved, there is likely to be a clash between the management and shareholders of the company. When outside investors realise that the decision of the company is contradicting their own expectations and, thus not in their best interest, the result is discounting the prices that they can willingly pay for the shares of the company. Agency Costs Unethical behaviour where managers take make unobserved actions courtesy of the inability of the shareholders to monitor all managerial actions leads to a morality crisis that demands shareholders to incur certain agency costs in order to keep managers on check (Kapil, 2011). Agency costs are those that are borne by shareholders in attempts to motivate managers to act in the best interest of the organisation rather than pursuing their individual interests. There are usually three main agency costs incurred by shareholders. First, shareholders are faced with the cost of monitoring the actions of the management (Kapil, 2011; Jensen & Meckling, 1976). Monitoring cost include audit cost to check on possible unethical behaviour of the management over a given financial period. Second, shareholders will have to incur structuring costs in a bid to establish organisational structure that will diminish the possibility of unethical behaviour among the management of the company (Kapil, 2011). These costs may include the appointment of independent persons outside the company to the board of directors or reducing organisational hierarchy. Lastly, shareholders also incur the agents’ ... Read More
Cite this document
  • APA
  • MLA
(“Unethical Status (Ageincy Problem) Case Study Example | Topics and Well Written Essays - 750 words”, n.d.)
Retrieved from https://studentshare.net/finance-accounting/114292-unethical-status-ageincy-problem
(Unethical Status (Ageincy Problem) Case Study Example | Topics and Well Written Essays - 750 Words)
“Unethical Status (Ageincy Problem) Case Study Example | Topics and Well Written Essays - 750 Words”, n.d. https://studentshare.net/finance-accounting/114292-unethical-status-ageincy-problem.
  • Cited: 0 times
Comments (0)
Click to create a comment
Problem Identification
Therefore, when talking about this important sector, there are many problems associated with the sector, which cross one’s mind. These can include hygiene problems in hospitals, inadequate training of the nursing staff, shortage of emergency facilities in hospitals and so forth.
2 Pages(500 words)Case Study
Ethical or Unethical Behaviour at Boeing

When analysing the company’s recent performances, it was observed that Boeing have faced much criticism on the grounds of its unethical and illegal behaviour towards its stakeholders. It has been observed that Boeing was unable to integrate the cultural diversity aspects with efficiency within its organisational working environment.

5 Pages(1250 words)Case Study
The status of trustees
The word fiduciary comes from the Latin word 'fides' meaning faith. A beneficiary puts his entire trust on a fiduciary, who in turn has to keep his self interests at bay and must not profit from the benefits of the position he holds.
6 Pages(1500 words)Case Study
Problem Identification
These can include hygiene problems in hospitals, inadequate training of the nursing staff, shortage of emergency facilities in hospitals and so forth. However, in my personal opinion, the most basic problem faced by the healthcare
2 Pages(500 words)Case Study
Problem solving
As a company, safety should always be their priority. They should also be punished for letting an employee drink alcohol while on duty. They should also be responsible for the oil spill mess, meaning they have to clean
1 Pages(250 words)Case Study
Problem identification
These include: the cost and quality of health care services provided; effective delivery of health care; feasibility and validity of health care policies etc. For the purpose of
2 Pages(500 words)Case Study
Case problem
Peter Flagstaff and Lindsay Gibson need to approach the problem in information sharing strategically. This can take place through the discouragement of the negative notions that the company’s employees uphold. Effective information sharing within an organization plays a
1 Pages(250 words)Case Study
It is based on this understanding of the effect of nutrition on the life of a person that this study has been conducted on Patient Y (name withdrawn for ethical reasons) to critically describe and evaluate
8 Pages(2000 words)Case Study
Analysis of Unethical issue in Apple's business
Chinese labor laws have accused Apple of violating its social responsibility code by contracting companies that employ underage people and forcing people to work for many hours without paying
6 Pages(1500 words)Case Study
Mental Health Status Exam
They made enquiries and booked for an appointment via telephone. The interview sessions were conducted at the clinic. Physically, Dale is a relatively tall, immaculately dressed
2 Pages(500 words)Case Study
Let us find you another Case Study on topic Unethical Status (Ageincy Problem) for FREE!
Contact us:
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us