Stewardship Theory Vs Agency Theory Essay

792 Words4 Pages

Keenun Holder
MGMT 436
June 11, 2016

2.3 - Module Review Questions
1. Discuss the differences between the “agency theory” and the “stewardship theory”. Explain which of these theories applies to your strategic audit firm and why?
The agency theory concerns challenges that occur when one party does business on behalf of the other. The agency theory is properly elaborated in the case of management of an organisation representing or doing business in the name of the shareholders. The agency theory explains that there is the possibility of managers acting on their interest at the expense of the shareholder’s interest. On the other hand, stewardship theory holds that managers if left on their own could act responsibly or without self-interest …show more content…

Explain the strategic roles Board of Directors have in conjunction with senior management and the running of an organisation. Which Degree of Involvement in Strategic Management describes the Board of Directors for your strategic audit firm, and why?
The board of directors together with the senior management of a business entity is the major decision makers. They play crucial roles in steering the organisation towards achieving a strategic position in line with its course of business. These roles include controlling and monitoring the entity assets and hiring of top personnel’s in the entity. The Board of Directors in the strategic audit firm has a significant degree of involvement which is to offer the direction of the firm. It has significant control in influencing the attainment of the audit firm strategic goals.
3. Discuss in detail the ramifications the Sarbanes-Oxley Act has had on business in the United …show more content…

There is deontological, consequential and virtue ethics. The deontological ethics concerns the information on the decisions questioning whether an individual course of action is right or wrong. In the case of consequential ethics, it questions the impact of a particular behaviour. It is an appropriate way to evaluate the goodness or harm of individual behaviour. Then he virtue ethics concerns the upholding character traits that are acceptable. They include prudence, self-control, integrity, compassion and honesty among others. In my opinion virtue ethics is more significant since it forms the basis of the course of action an individual may opt to uphold.
5. Describe Friedman’s view on the responsibilities of business. Do you agree or disagree with Friedman’s views and why?
According to Friedman’s view on the responsibilities of business, it is supposed to increase the shareholders profit. In his opinion, the entity should maximally use the resources at its access to increase its profits which would in turn lead to more wealth for the stockholders. I do not agree with Friedman’s view that maximisation of wealth is a core social responsibility. It is because such aspects as child labor and work safety are undeniable elements of social significance. Moreover, environment sustainability and avoidance of pollution have been left behind as core aspects of social

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