The Theory of Agency and Organizational Analysis

How does directors’ remuneration affect SMEs’ performance?

“…Agency theory is of the assertion that improved firms' performance can be achieved by increasing the remuneration of directors (Smith and Watts, 1992). Although the agency theory first appeared in the academic economic literature in the early 1970s (see Spence and Zeckhauser, 1971;Ross, 1973), it has since been applied in many other fields like accounting (e.g., Demski and Feltham, 1978), finance (e.g., Fama, 1980), marketing (e.g., Basu et al, 1985), political science (e.g., Mitnick, 1986), organisational behaviour (e.g., Eisenhardt, 1985Eisenhardt, , 1988Kosnik, 1987), and sociology (e.g., Eccles, 1985;White, 1985). Miller and Sardais (2011) argue that agency theory is based on the assumption that agents tend to be selfish opportunists who, without effective monitoring, will exploit their owners.…”

Relationship between CEO Pay and Firm Performance: Evidences from Malaysia Listed Firms

“…Agency relationship will formed when the principal hires an agent to perform a duty of service or a transaction on behalf of the principal. Scholars had used agency theory in accounting (e.g., Demski and Fetham, 1978), economics (e.g., Spence and Zeckhauser, 1971), finance (e.g., Fama, 1980), marketing (e.g., Basu, Lal, Srinivasam and Staelin, 1985), political science (e.g., Mitnick, 1986), organizational behavior (e.g., Eisenhardt, 1985Eisenhardt, , 1988Kosnik, 1987) and sociology (e.g., Eccles, 1985;White, 1985). Most of the researchers found that in agency relationship there is always a conflict between managers" interest and shareholders" interest.…”

Medical professionals’ responses to a DRG performance management system for hospital care in the Netherlands. Reinterpreting ‘perverse effects’, such as upcoding and patient selection, using arguments of professionalism and managerialism

“…Various authors have suggested the importance of a myriad perspective on this relationship that includes multiple principals and agents. This is considered to be more realistic than the view of a single isolated principal acting upon a unified and coherent set of preferences (Mitnick 1992, Miller 2005, Shapiro 2005). In practice, professional organizations often must deal with potentially conflicting interests of a variety of principals (Waterman andMeier 1998, Brignall andModell 2000).…”