Agency Theory

For innovators and entrepreneurs in service businesses, franchising is frequently suggested as a way to succeed and grow. Academic research has provided little guidance for potential franchisors, however. This article provides a model to guide that choice of organizational form using results from agency theory. Analytically, franchising is a way to allocate decisions within the franchise system between the franchisor

It has long been standard in agency theory to search for incentive-compatible mechanisms on the assumption that people care only about their own material wealth. However, this assumption is clearly refuted by numerous experiments, and we feel that it may be useful to consider nonpecuniary utility in mechanism design and contract theory. Accordingly, we devise an experiment to explore optimal contracts in an adverse-selection context. A principal proposes one of three contract menus, each of which offers a choice of two incentive-compatible contracts, to two agents whose types are unknown to the principal. The agents know the set of possible menus, and choose to either accept one of the two contracts offered in the proposed menu or to reject the menu altogether; a rejection by either agent leads to lower (and equal) reservation payoffs for all parties. While all three possible menus favor the principal, they do so to varying degrees. We observe numerous rejections of the more lopside...

Scholars and practitioners have recently devoted considerable attention to boards of directors, but far more research is needed. We still know little about how boards actually work and how their behavior may be improved to contribute to value creation. During more than two decades agency theory has been the dominant theory in studies about boards of directors. When relaxing some of the assumptions in agency theory several new pathways for new research arise. To present new perspectives on board research we follow in this essay some of the pathways arising from relaxing agency theory assumptions about complete contracts. Alternative theoretical approaches, research questions and methods are suggested. KeywordsBoards of directors–Research issues–Research methods–Board processes–Behavioral theory–Team production theory–Social identity theory

The United States acute care hospital (ACH) market provides a unique environment in which to examine questions about market structure and performance.  The ACHs operate in a mature market of health services that is highly regulated and
has one dominant primary consumer of services. The uncharacteristic industry structure offers the opportunity to analyze pervasive agency relationships and capital structure issues in a new setting. In addition, the policies of the U.S. Government have created an environment in which tacit collusion is likely to flourish, which leads to market buyer power (monopsony, or buyers acting as one monopoly buyer). A key
question is the extent to which monopsony and agency affect capital structure decisions. Agency is defined by Ross (1973, p.134) as a relationship formed between a principle and their agents, “when one, designated as the agent, acts for, on behalf of, or as representative for the other, designated the principal, in a particular domain of decision problems.” This thesis extends the agency framework provided by Jensen and Meckling (1976), along with the econometric understanding of monopsony in healthcare via tacit collusion, as suggested by Pauly (1998) and Sevilla (2005), and the research constraints of monopsony under an all-or-nothing contract, as outlined by Taylor (2003). Using data on ACHs from the period of 1995 to 2007 for approximately 5,000 ACHs, which was derived from the Medicare Cost Report and medical payments for a sub-population of 1,500, this research examines the determinants of capital structure in a distorted market. Building upon this initial analysis, the research seeks to
examine the effects of market distortions upon free cash flow, and ultimately, capital structure. Two theories of distortion are presented that would affect free cash flow: The first is that of the agency cost of free cash flow and signaling, and the second is a theory of monopsony via tacit collusion between buyers.
A model of the agency relationship between ACHs and the U.S. Government is proposed, promoting agency cost (signaling and the agency cost of free cash flows) as a causal relation with free cash flows and capital structure (Jensen & Meckling 1976; Jensen 1986). Empirical models of agency are constructed, examining the dependence on government business and the relation to the leverage (signaling) and free cash flows (agency cost of free cash flows) for ACHs. In addition, a complementary theory of capital structure determinant via market power
(monopsony) is formulated, suggesting that monopsony conditions within the ACH market affect free cash flows and capital structure. The analysis provides a framework
for understanding the environments in which ACHs operate and the strength of bargaining within the market. The research concludes with a review of the determinants of capital structure in light of the inefficiencies and distortions of the industry and the relationships observed.

Dit artikel behandelt enkele resultaten van vier casestudies naar de gevolgen van de invoering van corporate governance regelgeving voor internal audit in de afgelopen tien jaar. Internal audit staat in de belangstelling en lijkt aan belang te winnen. Bij de vier organisaties is nagegaan hoe het zit met het bestaansrecht van internal audit, de organisatorische positie, het ‘make or buy’-vraagstuk,

Pardis Mahdavi’s Crossing the Gulf is based on ethnographic fieldwork in the Arabian Gulf that investigated immobilities and mobilities as well as familial love in the lives of migrant workers. Although her data concentrate mainly on Kuwait and the United Arab Emirates (UAE), her arguments are relevant to other countries in the area with a signifi- cant presence of domestic workers. The book offers a deeply original reading of migration and intimacy.

This article examines the implications of the escalation in institutional inves power and heterogeneity for two dominant theories of corporate governanceagency theory and stakeholder theory. From this analysis, a new view of the agency relationship between institutional investors and their portfolio firms emerges, which recognizes the institutions’ market power, complex role as financial intermediaries, and possible involvement in simultaneous and opposing agency contracts. We also conclude that stakeholder theorists should reconsider these newly empowered shareholders’moral standing in relation to their portfolio firms, and they should reexamine the identities and goals of these modern investors. To that end, we demonstrate that a novel, intragroup application of Mitchell, Agle, and Wood’s stakeholder framework to heterogeneous institutional investors illuminates their varying levels of stakeholder salience.

The main contribution of the paper is to present hard evidence on risk exposure, hedging strategies, and agency problems resulting in speculation with derivatives, by focusing on the case of Aracruz Celulose. It highlights the failure of risk management systems in non-financial firms in the face of extreme events like the financial crisis of 2008. The company posted financial losses of U$2.1 billion due to currency derivatives trading in the third quarter of 2008. We show how the company‟s real hedge position deviated from its optimal hedge as a result of the speculation with OTC derivatives, permitted by weak governance structures that failed in preventing hubris and mistakes in risk management.

Two key issues in business-to-business (B2B) sales force management are (1) how much a given sales job should
be compensated (pay level) and (2) how much of the compensation should be fixed versus variable (pay structure).
The authors examine the paychecks drawn by people in more than 14,000 selling jobs and more than 4000 sales
management jobs in five B2B industry sectors in five European countries. They show that pay levels and structures
reflect an apparent balancing of two conflicting pressures: the economic imperative (to reward better performers by
heightening pay dispersion) and the compensation differential compression resulting from high tax regimes. In particular, B2B firms appear to use variable pay as a way to lessen the salary differential compression impact of high tax regimes on salesperson motivation. Furthermore, similar to chief executive officers, sales managers can have an important multiplier effect that justifies paying them at increasing rates as job challenge rises.

The challenges faced by diversified corporations—firms that operate in more than one industry or market—have changed over the years. There is today a wide range of strategies, including corporate level strategies, to create shareholder value. In this book, I guides the reader in developing the ability to consider the impact of critical changes in resources, businesses, headquarters roles on the firm’s ability for establishing and sustaining corporate advantage by exploring three fundamental questions: (1) Why are some firms highly focused, while others embraces a wide range of products, markets, and activities? (2) What are the relationships between scope, relatedness, and performance? and (3) How can we manage multibusiness firms it terms of structure, management, and leadership?

http://www.amazon.co.uk/Corporate-Level-Strategy-Theory-Applications/dp/0415727227/ref=sr_1_1?ie=UTF8&qid=1444720436&sr=8-1&keywords=furrer+olivier

Manuscript Type: EmpiricalResearch Question/Issue: This paper analyzes the role of boards of directors in constraining research and development (R&D) spending manipulation. Extant research on earnings management indicates that independent directors reduce accounting accruals manipulation; however, there is little evidence on their effectiveness in limiting potentially value reducing R&D cuts motivated by short-term earnings pressures.Research Findings/Results: Using a large sample of UK firms, I study whether independent boards are efficient at detecting and constraining myopic R&D cuts. The results indicate that more independent boards constrain the manipulation of R&D expenditure. The research design controls for the potential confounding effect of the decision to capitalize vs. expense R&D outlays.Theoretical Implications: The results indicate that independent directors have sufficient technical knowledge to identify opportunistic reductions in R&D, and efficiently constrain opportunistic R&D spending.Practical Implications: The evidence supports the emphasis that recent policy statements have put on increasing the number of independent directors on corporate boards. This study offers insights to policy makers interested in enhancing the monitoring role of corporate boards.

Through fostering both individual-level traits like grit, and taking into account social context through fostering agency, educators can work to holistically understand their students’ situations and individualize pathways for their success.

https://scholar.google.com/citations?user=TF3cTEsAAAAJ&hl=en&oi=ao

This chapter provides a theoretical discussion on women's voice and agency by referring to the selected works from feminist theory and history. It highlights the importance of storytelling in women owning their own voice and exercising their agency through the multilayeredness of the experiences of women coming from diverse socio-economic and cultural backgrounds. Also, in this chapter, digital platforms and what they offer to women, such as digital storytelling, are discussed. And finally, it includes academic and activist works on individual and collective digital storytelling examples and practices of women from around the world.

The current study examines the impact of capital structure on firm profitability, with an emphasis on Pakistani textile sector firms listed on PSX. Firm profitability is calculated by ROA, and capital structure is measured by three proxies: leverage1 (long term debt to long-term fund ratio), leverage2 (debt to equity ratio), and leverage3 (debt to total asset ratio). The Generalized Method of Moments was used to estimate the capital structure-performance relationship. Both leverage1 and leverage2 are positively linked to firm profitability. These results back up the pecking order theory. Leverage3, on the other hand, is inversely related to profitability. The findings present an interesting view and provide useful insight into the capital structure-profitability relationship for the managers and policy makers.

In an effort to carve a distinct place for social facts without lapsing into a holistic ontology, John Greenwood has sought to define social phenomena solely in terms of the attitudes held by the actor(s) in question. I argue that his proposal allows for the possibility of a “lone collectivity” that is (1) unpalatable in its own right and (2) incompatible with the claim that sociology is autonomous from psychology. As such, I conclude that the relevant beliefs need to be held by more than one person.

"Carter's music poses struggles of opposition, for instance in timbre (Double Concerto), space (String Quartet No. 3) or pulse (String Quartet No. 5). His preference for the all-interval tetrachords, 4–Z15 [0, 1, 4, 6] and 4–Z29 [0, 1, 3, 7], is also well known. From these facets of Carter's music, I develop a narrative interpretation of his Petrarch sonnet–inspired solo flute piece, Scrivo in Vento (1991). Specifically, I forge narrative pathways by imagining the two tetrachords as active agents opposed in competition. Previous Scrivo analyses (Capuzzo 2002; Childs 2006) stress continuity by revealing Q-transforms and common-note voice leading between the tetrachords. While acknowledging such features, my analysis emphasises oppositional struggle by tracing the tetrachords as separate entities which cooperate and conflict as they manoeuvre to outdo each other.

The analysis advances three theses: (1) it guides listening to and reading Scrivo in a way which resonates with Carter's concern for the aesthetics of oppositional struggle, his choice of a sonnet as inspiration and his affinity for all-interval tetrachords; (2) it shows that music-analytical detail can be organised into dramatic narratives by (a) projecting dramatic roles onto categories asserted by a formal theory and (b) treating the formal theory's relations metaphorically as actions performed by each role as the musical work unfolds; and (3) it shows how detailed pc-set analysis can support a Heraclitean view of music: a flux of opposing forces seeking and resisting unity."

The standardisation and commercialisation of organic farming has meant that there is now a spectrum of practices that can be described as such, and certification has implied the institutionalisation of organic method. Nevertheless, small-scale enterprises have retained the holistic, substantive ethos that we normally associate with the organic movement. My observations of small organic farmers in Malta highlight this, but they also open up our understanding of the ways in which organic can be locally articulated. Firstly, the motivations of my farmers turned out to be primarily economic rather than idealistic; not surprising, considering the high market value of organic products. Secondly, they saw and expressed the change as a return to roots, re-establishing a link with their childhood and family histories as well as the history of rurality in general. It was also conceived as a revival of past farming practices and a return to a close relationship with nature, although aspects of the modern and the conventional were still found in their methods. These farmers refuted the dominant, exploitative marketing system in agriculture, the Pitkalija, in order to take marketing back into their own hands. This allowed them to work more comfortably, without having to direct all their energies to producing for profit. Indeed, they had limited attitudes to ‘growth’ and pursued what I typify as substantive, rather than formal rationality.

The Great Dismal Swamp Landscape Study has focused on the lives of Maroons living in the Great Dismal Swamp during the 17th and 18th centuries. In addition, the Great Dismal Swamp was arguably both a destination and channel for the Underground Railroad.  Cultural transformations that took place at the start of the 19th century and the role of the Great Dismal Swamp in the UGRR demonstrate concepts of agency in different relationalities, including personhood, materiality and fields of action.  Recent excavations found a number of artifacts, including lead shot and gunflints, as well as features that suggest the interior community was taking a more defensive approach at the start of the 19th century.  This paper will provide a summary of recent work in the Great Dismal Swamp and the implications they might have for individuals that comprised an interior community deep in the swamp and individuals traveling on the UGRR.