This essay is to critically evaluate the usefulness of the accounting theory to practicing accountants today. It will provide a general assessment of information asymmetry and the fundamental problem of accounting‚ and it will also briefly discuss the normative and positive accounting theories and their usefulness to practicing accountants. After those discussions‚ it will specifically discuss the strength and limitation of positive accounting theory and assess its usefulness to practicing accountants
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References: Anderson‚ E. (1985) The salesperson as outside agent of employee: A transaction cost analysis. Marketing Science‚ 4‚ 234-254. Amihud‚ Y.‚ & Lev‚ B. (1981) Risk reduction as a managerial motive for conglomerate mergers. Bell Journal of Economics‚ 12‚ 605-616. Argawal‚ A.‚ & Mandelker‚ G. (1987) Managerial
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“Culture eats strategy for lunch!” This is how Peter Drucker sarcastically describes the importance of the strategy for a company and how employees will make or change this strategy in order to create a culture that fits with the company’s growth. Two different perspectives regarding the growing of the family businesses over the years and remaining innovative are communicated with the psychiatrist Professor Fritz B. Simon and the economist Professor Benoit Leleux. According to the Professor Fritz
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AGENCY THEORY AND ACCOUNTING CHOICE: ISSUES AND HALLENGES BY OMEJI IKECHUKWU MAT NO MGS0803060 DEPARTMENT OF ACCOUNTING FACULTY OF MANAGEMENT SCIENCES UNIVERSITY OF BENIN‚ BENIN-CITY‚ EDO STATE‚ NIGERIA. OCTOBER‚ 2012. AGENCY THEORY AND ACCOUNTING CHOICE: ISSUES AND HALLENGES BY OMEJI IKECHUKWU MAT NO MGS0803060 DEPARTMENT OF ACCOUNTING FACULTY OF MANAGEMENT
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Four corporate-level international strategies available to MNCs (global‚ international‚ transnational‚ and multidomestic) are then examined and the extent of agency problems under each strategy is discussed. Findings – The paper makes specific predictions about the type of knowledge contract that is most likely to address agency problems for each corporate strategy. Originality/value – This research extends agency theory by introducing the knowledge contract as a means of managing agency concerns. This
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management is called an agency relationship. Such a relationship exists whenever someone (the principal) hires another (the agent) to represent his/her interests. For example‚ you might hire someone (an agent) to sell a car that you own while you are away at school. In all such relationships‚ there is a possibility of a conflict of interest between the principal and the agent. Such a conflict is called an agency problem. Suppose you hire someone to sell your car and you agree to pay that person a flat fee
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Affected by contracts i. Behavior of managers effected 4. Agency Costs a. Sum of i. Monitoring expenditures by the principal ii. Bonding expenditures by the agent iii. Residual loss b. Includes principal – agent relationship and cooperative effort c. Most literature focuses on how to structure contracts between principal and agent to minimize agency costs (maximize principals welfare) 5. Some General Comments on the Definition of the Firm a. Legal fictions which serve as a nexus for a set
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rejected warnings from whistle-blower John Jack‚ costs escalated and components of houses were downgraded without Navy approval. Navy couldn’t get documentation out of American Eagle‚ Navy didn’t act quickly on information from John Jack. Principal-agent theory. In this time of ever more scarce government resources‚ the idea that one level of government can mandate the activities and therefore resource usage of another may seem counter-intuitive. Taken together with the politics-administration
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firm based structure. Jensen & Meckling describe agency theory is a contract under one party (the principle) engages another party (agent) to perform some service on the principal’s behalf. Under this contract‚ the principle delegates some decision making authority to the agent. Both principle and agent are utility maximisers. There are no reasons to believe that the agent will always in the principle’s best interest. Because of that‚ therefore the principle introduces constraints to modify such aberrant
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Design and Justify an Optimal Compensation Scheme to Reward Bank CEO’s (2500words) i) Study the principal-agent theory to explain the key requirements that an optimal pay-contract should possibly meet and ii) Apply this to the financial sector in order to come up with an efficient compensation contract for bank CEO’s. Introduction The 2008 collapse of Lehman Brothers precipitated the sub-prime crisis‚ the collapse of major banks and a global economic crisis that resulted in a worldwide recession
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