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

Separation of Ownership and control, and agency costs - Assignment Example

Comments (0) Cite this document
Summary
Such separation of ownership and control is often introduced to facilitate better decision making in the contemporary organisations…
Download paper
GRAB THE BEST PAPER
Separation of Ownership and control, and agency costs
Read TextPreview

Extract of sample
Separation of Ownership and control, and agency costs

The management team is responsible for running the business and taking decisions as and when required but have almost negligible claim on profitability. In such organisations, separation of ownership and control is clearly visible. Many authors have described this relationship, between the shareholders and the management of the firm, as ‘pure agency relationship’. This concept will be further discussed in the essay with the help of ‘agency theory’.
The concept of separating ownership and control was aimed to assist the firms to achieve the sole motto of profit maximisation. This concept held the view that organisations should strike a balance between profit maximisation and development of society, which is corporate governance. In the later section, different theories associated with separation of ownership and control will be analysed to determine the cost of agencies.
The concept of separation of ownership and control was first introduced by Berle and Means in the year 1932. The agency theory explains that the owner (shareholders) of the firm is the principal and the one who take the responsibility of running and managing the business (management) is the agent. Both the principal and the agent think of their personal gains. The Principal tries to design the governance system for maximising his utility. In the same way, the agent tries to manage the firm for fulfilling his utility. If utility of both principal and the agent coincides, they both enjoy increment in their individual utility. However, often the utility of the agent differs from that of the principal, and the agent tries to maximise his utility at expense of the principal. To minimise such incidences, principal needs to introduce internal control, which results in an extra cost. Thus, the concept of separation in ownership and control is related to agency cost.
For minimising the cost, the agency theory introduced different governance to be followed by the company. Often companies ... Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Separation of Ownership and control, and agency costs Assignment”, n.d.)
Retrieved from https://studentshare.net/miscellaneous/409773-separation-of-ownership-and-control-and-agency-costs
(Separation of Ownership and Control, and Agency Costs Assignment)
https://studentshare.net/miscellaneous/409773-separation-of-ownership-and-control-and-agency-costs.
“Separation of Ownership and Control, and Agency Costs Assignment”, n.d. https://studentshare.net/miscellaneous/409773-separation-of-ownership-and-control-and-agency-costs.
  • Cited: 0 times
Comments (0)
Click to create a comment
CHECK THESE SAMPLES - THEY ALSO FIT YOUR TOPIC
Agency theory and corporate governance
These codes have always served as the groundwork for corporate governance among UK listed companies. The Combined Code adopts the best practices stipulated in both the Cadbury and Greenbury conventions. Despite the financial scandals, the Combined Code was able to guide, though less significantly, listed companies in improving corporate governance.
5 Pages(1250 words)Assignment
Business costs
On the other hand, marginal cost is defined as a rate of change in cost with respect to the number of units sold. As a result, the firm compares the marginal revenue with marginal cost of each successive unit at the unit level. A firm does not always seek to maximise its profits rather it depends on certain economic conditions.
4 Pages(1000 words)Assignment
Separation vs Inclusion: Personal Statement
Inclusion means that a variety of children regardless of their sex, race, ethnical background, socioeconomic status of their families, sexual orientation or disabilities, are included in the mainstream classroom and are provided equal educational opportunities.
4 Pages(1000 words)Assignment
Healthcare Costs
From 1940 to 1960, the annual rate of growth in actual health spending per capita averaged 3.6%. In the 1960s, the annual rate of growth in actual health spending per capita was 3.6%. In the 1990s, the figures were 6.5%. The fraction of GDP accounted for by health care spending increased from 4.5% in 1940 to 12.2% in 1990.
7 Pages(1750 words)Assignment
Nursing Agency
They require a computerized system. The details of the nurses, their working hours and also about the institutions are to be handled using the software. The functions of this software include entering, Updation and deletion of nurses details and also the details of the registered institutes.
4 Pages(1000 words)Assignment
Agency Theory and Corporate Governance
hareholders for corporate governance increased (Burton, 2000) in a way that provoked the initiation of several conventions -- particularly notable are the Cadbury (1992), Greenbury (1995) reports and the Combined Code (1998). These codes have always served as the groundwork for
6 Pages(1500 words)Assignment
'Estimating Project Costs'
Though every phase has its own importance but from estimation perspective project planning is the most important phase. Based on the requirements set forth by customer project manager opt for defining WBS(Work Break Down Structure) for the project that constitutes of
4 Pages(1000 words)Assignment
Discuss the film A SEPARATION
The film also offers a compelling look on a number of family issues that affect most marriages. The film writer illustrates some of the problems and personal situations that relates to life of
4 Pages(1000 words)Assignment
Property ownership, oral evidence (parole)
On normal occasions, before signing any contract, the parties involved engage into long discussions that prompt a party to either enter or fail to enter into the contract .such prior agreements may in certain conditions be considered
2 Pages(500 words)Assignment
Home Health Agency
Section 116.40 of the Administrative Code by the Joint Committee on Administrative Rules (2011), the direct care staff must meet be 18 years of age or older, must have a high school diploma or its equivalent, be
3 Pages(750 words)Assignment
Let us find you another Assignment on topic Separation of Ownership and control, and agency costs for FREE!
Contact us:
+16312120006
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