Agency Relationship Research Articles

Agency Theory Re-Examined: An Agency Relationship and Residual Claimant Perspective

Although an agency perspective could help to understand modern companies in many aspects, it is wrong and perilous to equate the relationship within the company with simply an agency relationship or to emphasise the financial structure too much. Simply speaking, directors are much more than agents. Insulating boards from shareholders’ continuous intervention by giving boards of directors the sui generis position and extensive power could be seen as an important means to preserve the benefits of centralised management. On the other hand, stakeholders other than shareholders can equally enjoy a fraction of the surplus and become residual owners, and shareholders are not the only risk bearers owing to limited liability and diversification, among other things. Also, excessive risk-taking by shareholders along with the alienation of share interests could harm the best interests of the company and society. The company is its own residual claimant. Hence, it is of significance to reconsider agency theory in the context of corporate governance and not take it for granted when researching issues such as corporate objectives or directors’ duties.

Senses and artifacts in market transactions: the Korean case of agricultural produce auctions

ABSTRACTThis article examines the relationship between the senses, artifacts, and trade at South Korean agricultural produce auctions. It explores the impacts of market devices on sensory interactions between auctioneers and buyers that are essential to market transactions. Through ethnographic interviews and participant observations at Garak Market, Seoul, this study compares hand signal trading with electronic trading in agricultural produce auctions. It analyzes how the senses affect auction price estimation and formation, as well as their contribution to economic agency and social relationship among economic actors. The study then examines the impact of new market devices in electronic trading (e.g. trading screens, computer monitors, and wireless bidding terminals) on trading’s sensory aspects of seeing or hearing. It argues that the devices change the modality of sensory interactions between auctioneers and buyers. This transforms power struggles, forming a looser but more equal relationship between auctioneers and buyers and decreasing the overall auction price in the market.

Post-Apocalypse Literature in the Age of Unrelenting Borders and Refugee Crises: Merlinda Bobis and Australian Fiction

This essay analyses Filipino–Australian writer Merlinda Bobis’s novel Locust Girl: A Lovesong (2015), winner of the Christina Stead Prize for fiction, in the context of the post-apocalyptic Golden Age we are living in and the much-celebrated dystopian Australian tradition. Bobis’s novel is a futuristic political fable that describes a girl’s magical and nightmarish journey through an indeterminate border in a context of environmental and human apocalypse. It foresees ecological disasters of unprecedented dimensions and warns that the damage done to the planet and the largest part of humanity may end up being irreversible. Moreover, it tackles other truths so far exclusively denounced by realist narratives, namely, the Australian government policy on refugees. Some trauma theories, together with Mbembe’s “necropolitics” and Agamben’s notion of “bare life”, will be used to analysee the ways in which Locust Girl denounces the lethal effects of globalized undeterred capitalism and unitary and exclusive forms of nationalism, which are mainly responsible for the enforcement of unfair border laws and the inhuman treatment of refugees and asylum-seekers in the so-called “civilized” world, and in particular in Australia as one important member of the Pacific region. On the other hand, this essay also relies on Rosi Braidotti’s notion of “the posthuman” to show that Locust Girl also testifies to the power of women’s agency and transnational relationships in order to offer some hope of rebirth through suffering and love.

Towards sustainable business relationships: ratification doctrine in the case of unauthorised agency

Each contemporary economic system is based on the principle of work sharing in creation and distribution of goods and services, the legal reflection of which is the institution of agency. In business, unauthorised agency, i.e. cases when an agent acts without having authority or exceeding it, is particularly often. Though the principal usually is not legally bound by actions of such an unauthorised agent, but in fact legal acts of each country provide for exceptions from this rule. One of them is the ratification doctrine, which means that the principal can ratify the agent's unauthorised actions. This article analyses, by applying the comparative method, in what cases and under what procedure the ratification rule can be applied and what legal consequences it creates. A conclusion is made that the ratification doctrine is an efficient means of implementation of interests and defence of infringed rights not only of the principal, but also of other persons involved in the agency relationship, which should not be subject to any form requirements, especially in business relationships.

The role of voter turnout and education of councillors for the efficiency of public goods delivery by gminas in Poland

The aim of the research is to assess the influence of voter turnout and education level of councillors — which can be considered as the elements affecting the agency relationship — on the efficiency of public goods delivery by gminas. Public Sector Efficiency (PSE) index was used as a measure of efficiency. On the basis of the cross-sectional sample, the parameters of the econometric model were estimated for all gminas and their brakedown into: urban including cities with powiat rights, urban-rural and rural. Data published by the CSO and the National Electoral Commission for 2014 were used. The results did not confirm agency dependence understood as a greater involvement of citizens in politics and better control of power. They indicated, however, the possibility of a positive relationship between councillors’ competencies and the efficiency of public goods delivery to the residents of gminas.

THE APPLE E-BOOKS CASE: WHEN IS A VERTICAL CONTRACT A HUB IN A HUB-AND-SPOKE CONSPIRACY?

Apple’s economic role in the Publisher conspiracy to increase Amazon’s below cost pricing of e-books is examined in a hub-and-spoke conspiracy framework. The Publishers conspired because of their concern that Amazon’s low prices would adversely affect physical book demand and prices and also create an Amazon retail monopoly under which Amazon would negotiate substantially lower wholesale e-book prices. The Publisher conspiracy successfully moved Amazon to an agency relationship and gained control over e-book retail pricing. This was accomplished with joint Publisher threats of Amazon to window (delay) the release of new e-book titles, which imposed a significant potential cost on Amazon in the face of Apple's scheduled entry with access to all new release titles without delay. It is demonstrated that Apple economically facilitated the Publisher conspiracy solely through its entry, not through any of its iBookstore contract terms. Specifically, contrary to the court, the MFN and maximum price terms in the Apple contracts had no effect on facilitating the Publisher conspiracy. In fact, if Apple had entered without these contract terms, e-book prices would have been substantially higher. Apple's contracts therefore should not have been evaluated under a per se standard.

The Influence of Fiduciary Laws and Norms on Economic Development: Lawyers as Trusted Agents in Nineteenth Century American Commerce

This article is the first to demonstrate the important role that fiduciary principles, and the attorneys who adopted them, played in American economic development during the nineteenth century. Our original historical research provides a detailed look at agency relationships during the period. We show that (1) lawyers were heavily involved as trusted agents in U.S. commerce during the nineteenth century, and that (2) their profession’s devotion to fiduciary principles, enabled them to play this crucial role as intermediaries. We argue that principles of fiduciary law, disseminated by lawyers, helped to solve agency problems, which institutional economists consider to be a significant barrier to modern economic development and growth. This critical role of fiduciary law in the development of American capitalism has been missed by economists who interpret fiduciary law as a form of contract. Only by understanding fiduciary law as a distinct normative regime, can we appreciate how it served to constitute a social role for lawyers that helped generate trust in a risky economy. Understanding fiduciary law’s place in the development of American capitalism illustrates important connections between the legal and cultural development of market institutions and has implications both for scholars and for policymakers engaged in modern development efforts.

Corporate governance in Islamic banks: New insights for dual board structure and agency relationships

We investigate the influence of the dual board structure on the financial performance of Islamic banks. The paper also investigates the unique agency relationships using a sample of 90 Islamic banks across 13 countries over the period 2006–2014. We find that the larger the Shari’ah Supervisory Board (SSB) the better the financial performance and this result reinforces the fundamental role of the SSB to certify permissible financial instruments and products. We also find evidence of the scope of operation hypothesis with respect to both the board of directors and the SSB as Islamic banks are characterised by a higher degree of complex operations. Interestingly, we find that a larger SSB size may result in lower agency costs and that the greater the size of the unrestricted contracts, the higher the agency costs. This implies that unrestricted profit-sharing contracts are one of the main sources of the unique agency relationships in Islamic banks. The paper has a number of policy implications for regulators including the design of governance mechanisms in Islamic banks and the dynamics of unrestricted contracts.

Ethnographic Agency Relationship in The Context of Budget: Portrait of Local Wisdom Harmonization in Bali Pakraman Village

Objective - This study aims to explore the interaction between principal and agent relationship in traditional villages in the context of the budget. Also, this study shows the importance of local wisdom as a guide and as a source of knowledge, to fill and form the pattern of an agency relationship in the context of a more harmonious budget. Methodology/Technique - The research method used is ethnography. Ethnography is the science of writing about race, using a more contemporary language. Ethnography can provide detailed information on the daily activities of a culture in a group. Therefore, it could make detailed notes about the behavior and beliefs of the group from time to time. Findings - This study found that the interaction between principal and agent in traditional villages in the context of the budget have using local wisdom as a guide and as a source of knowledge. Balinese local wisdom forms the pattern of an agency relationship in the frame of a harmonious budget. The characteristics of Bali is very obvious from Hindu religion, customs, and culture. All are united in a harmonious atmosphere, which cannot be separated from the participation of all the components, as well as cultural heritage. The principle of people unity has been there long before Indonesia's independence, namely Pakraman village. Novelty - This study has explored the myth and value of traditional village in Bali by using ethnography methodology, which is taken the deep value of Bali tradition. Type of Paper: Empirical Keywords: Budget, Agency Relationship, Village, Bali, Accounting. JEL Classification: P11, R51.

The Agency Theory Approach to the Public Procurement System

This paper combines elements of the agency theory with the practice of the public procurement system in Poland. It defines the concept of the agency relationship, shows its connection with the adverse selection and the moral hazard issue and investigates the nature of the agency generated by the existence of hidden information and hidden action. The main objective of the paper is to build and present a framework for analysing the mechanism of the agency theory in the public procurement system. Keywords: agency theory, public procurement

Contract design in dynamic agency: An experimental analysis

This paper reports results from an experiment studying contract design in a dynamic 2‐period agency relationship with unobservable effort. A deferred compensation contract is theoretically optimal—it places all incentives on the outcomes in the second period. Observed contract choices offer a substantial part of the incentives for the high outcome in the first period suggesting a strong preference for timely rewards. Information about theoretically optimal bonuses and effort decisions shifts contract choices towards a deferred compensation contract. This contract structure is more profitable for principal participants.

KEAGENAN BANK DALAM PERSPEKTIF COMMON LAW SYSTEM

<p><em>The rapid development of the national economy and banking external environment, causing banking activities not only engage in activities that are primary (core business), but also non-core business such as agency activities as Mutual Fund Sales Agent (APERD) and Bancassurance. </em><em>In the concept of the common law system, the agency as the center of all business affairs as a business owner can not do your own business, so delegating affairs to agents as a mediator. There is a legal relationships and trust (fiduciary relationship) between the principal and the agent acting on behalf principal. In addition, there is an element of supervision of the principal to the agent so that the agent must comply under the supervision of the principal. Supervision is an essential element that determines the existence of an agency relationship, so it is a vertical relationship between principal and agent. The principal control components in the form of action directives, orders, limitation of power agents and monitoring the agent's action.</em><strong></strong></p>

PENGARUH FREE CASH FLOW TERHADAP UTANG

The objective of this research is to analysis and giving the empirical evidence about the free cas flow and the effect of it for debt policy of public companies in Indonesia. This research was using 66 samples of manufacturing companies in the year 2000 and 90 sample of manufacturing in the year 2001. This sample was elected based on purposive sampling, the hypothesis test is the simple tinier regres-sion.The result of this research showed that hypothesis were suppo4ted, there are influence of free cash flow to the debt policy. In the agency relationship there is differences interest between the principal and the manager also created agency problems that finally also create agency cost. In the shareholders (agents) point of view, this can be minimize by the third party (debtho!der) whose come by the debt policy. Increasing financing with debt will reduce the conflict between the sharehold-ers and the management.Keywords: Free cash flow, debt

Critical Issues in Agentts Right to Remuneration

No doubt the proliferation and expansion of businesses today have had a positive impact on the business relationships of the principal, agent and third parties. As a result of advancement in technology and communication, an individual can have businesses of different kinds in various parts of the country or even across the border. This necessitates the appointment of an agent who would assist the principal of the business to manage it. This has led to the relationship between a principal and an agent. Albeit, in course of the agency relationship, the agent would be entitle to remuneration. However, this right is not absolute, hence this paper. In this paper we shall critically examine some of the issues that must be considered in an agent right to remuneration.

An agency relationship under general conditions of uncertainty: a game theory application to the doctor\u2013patient interaction

The supply of information, particularly of bad news, in an agency relationship is a sensitive issue. We employ a game theory approach to investigate conflicts in the particular case of the doctor–patient relationship when information affects the emotions of patients. The doctor does not know the type of agent and the patient does not know how much information he is given. Hence, the paper obtains results when there is conflict, rather than common interest in the objectives of the two parties. The perfect Bayesian equilibrium describes beliefs and strategies which guarantee adherence to the doctor’s recommendation. We show also that the patient may non-adhere to the recommendation not only when the doctor fails to identify the patient’s needs but also if he falsely believes that the doctor has not done so.

Ownership structure and investment-cash flow sensitivity

This study investigates the effect of ownership structure on the use of cash flow in financing corporate investments—the investment-cash flow sensitivity—in a concentrated ownership context. Using a sample of 6797 French listed firms from 2000 to 2013, results show that investment-cash flow sensitivity decreases with the cash-flow rights of the controlling shareholder and increases with the separation of its cash-flow and control rights (excess control rights). Firms are, thus, less likely to use cash flow in investments when the interests of controlling shareholders are aligned with those of minority shareholders. However, they appear to use considerable internal funds for their investments when they have severe agency problems, driven by excess control rights of the controlling shareholders. Overall, our findings help advance the understanding of the role of agency relationship in shaping corporate financial policy.

Regional Headquarter’s Dual Agency Role: Micro‐political Strategies of Alignment and Self‐interest

The increased research focus on the networked perspective of the multinational enterprise (MNE) reflects a greater delegation of responsibility from corporate headquarters (CHQ) to subsidiary and intermediary units such as regional headquarters (RHQ). This shift has increased the intensity of political interactions between key actors within the MNE. Despite the recent rise in studies on the micro‐political perspective of the MNE to date, little empirical work has explored this issue in the context of the CHQ–RHQ relationship. Drawing insights from agency theory and micro‐politics, the authors focus on the context in which RHQs develop micro‐political strategies in order to manage the flow and exchange of knowledge with CHQ. They show how RHQ may exhibit a ‘dual agency’ role when dealing with CHQ, in that it is characterized as a principal and agent, each requiring different micro‐political knowledge strategies. As a principal, RHQ will develop micro‐political knowledge strategies to increase alignment with CHQ. As an agent, RHQ develops micro‐political knowledge strategies to pursue its self‐interests. Having identified different RHQ agency roles, the authors develop a conceptual model that outlines how alignment and self‐interest‐seeking behaviours from RHQ are manifest through different micro‐political knowledge strategies in its agency relationship with CHQ.

Marketing outsourcing in the English Premier League: the rights holder/agency interface

ABSTRACTResearch question: While marketing outsourcing may offer a clear means for revenue generation and cost efficiency, there is a need to go beyond the outsourcing decision itself to address ‘how’ outsourcing can be managed successfully. Differing to existing studies, this study examines the dynamic nature of marketing outsourcing from the rights holder and agency perspectives in an overlooked setting.Research methods: Qualitative data were generated from semi-structured interviews with marketing managers from 30 English Premier League (EPL) football clubs and with 10 marketing agency account managers. The clubs included in this study had all participated in the EPL, and all 10 marketing agencies interviewed had been contracted at some point in time to these clubs.Results and findings: By capturing both sides of the rights holder/agency interface, this study includes a neglected perspective (i.e. agency) to more accurately examine the principal–agency relationship in marketing outsourcing. The findings add greater nuance to the drivers/motivations and barriers/constraints that are typically cited in sport management and marketing studies, providing a new framework to understand the relationship dynamic and guide successful sport marketing outsourcing initiatives.Implications: Though outsourcing can be an impactful business decision, the success of marketing outsourcing in football is dependent upon the balance of conditions across the rights holder/agency interface. Specifically, while pushing factors may contribute to effective marketing outsourcing, resisting factors undermine the rights holder–agency relationship. However, in nurturing key necessary features both parties can limit resisting factors and emphasise push factors for shared value creation.

Asking for Action: Does Financial Advice Improve Financial Behaviors?

Using FINRA’s 2012 National Financial Capability Study, this paper finds evidence of a causal relation between seeking professional financial advice and exhibiting positive financial behaviors. However, the effect of advice on behavior varies depending on the type of financial advice, the relevance of advice to particular behaviors, and the conditions of consuming this credence good. Advice about savings / investment shows the most consistent influence on financial behaviors because it affects positively establishing an emergency fund, calculating needed savings for retirement, and investing in financial securities, while affects negatively having a high level of debt. On the other hand, debt counseling has been found to affect positively the accumulation of debt and negatively the avoidance of payday loans, while insurance advice affects negatively investing in financial securities. Professional financial advice does not necessarily guarantee positive outcomes due to other factors that may influence this complex agency relationship.

Firm Specific Human Capital Investment in an Agency Relationship

This paper considers the twofold problem of compensation contracting and the design of a human capital investment scheme. Before contracting the principal and the agent can engage in a joint stochastic production process of exerting effort to raise the agent’s productivity in the firm. The principal can employ synchronous effort exertion or either actor can assume a leadership role. We determine which organizational design is best for the principal at the endogenously optimal compensation contract, depending on how the efforts interact. We also determine when it is optimal for the principal to subsidize the agent to improve profitability.