Year: 1999
Type: article
Abstract: Researchers in strategy often use agency theory to explain problems arising from the separation of ownership and management in corporations. These so-called agency problems occur when managerial activities fail to maximize shareholder value. For example, managers might implement strategies that promote their own long-term interests rather than the interests of shareholders. Efforts to attenuate agency problems focus on adopting governance practices that seek closer alignment of shareholder and manager interests (Fama and Jensen, 1983). Agency theory proposes that the board of directors monitors managers and constrains implementation of inefficient strategies (Zahra and Pearce, 1989). Strategies ratified by the board that represent shareholder interests should be positively associated with shareholder value (Baysinger and Butler, 1985).
Authors: Pouder, Richard, Cantrell, R. Stephen, Kulkarni, Subodh P.
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W41490200