The principal knows perfectly what actions should be taken by the agent, but the information about the agent’s actual action is available only to the agent himself. Because the agent’s efforts observable or unobservable, but information about it cannot be collected, the principal can monitor the agent’s actions by direct observation or indirect information collected to obtain knowledge about the agent’s
Ross states that the agency principle relationship is one of the most longstanding and generally codified forms of social interaction, and defies this the agency principle relationship as a legal relationship which has arisen between two or more parties, a designated agent on one side that acts for and on behalf of the principal, and the principle on the other side who authorizes the designated agent . Assuming both parties are tend to maximize their utilities, there would be potential that the agent will not always act in line with the best interests of the principal . Agency theory and agency problems, which are noticeably a part of mainstream economics, point out latent problems and conflicts which may arise when two (or more) parties engaged
The term agency basically means a contractual relation between two parties wherein one party gets the upper hand to represent the other in day-to-day situations. According to section 184 , any person can be appointed as an agent. There is competency
The law defines the two terms by stating that “an agent is a person employed to do any act for another or to represent another person in dealings with third person and a person for whom such act is done or who is so represented is called the principal” (Law of Contract Act (R.E. 2002)). The Monitoring and Evaluation Unit of PSRP defines executive agencies as semi-independent public institutions that are designed to operate at arm’s length from their parent Ministries (Monitoring and Evaluation Unit -PSRP,
It is astonishing that it isn’t external red tape which restrict and constrain the dean and the organization itself, but that it is the internal application of the rules and thus an internal organizational problem. To explain that problem, one can apply the principal-agent model. The principal (dean) delegates tasks to its agent(s) - the faculty staff. Given that the agency executes the instructions of the principal and operates on a street-level base, it has an information advantage over the principal, so there is an information asymmetry. In the case study, the faculty staff executes the instructions of the dean and thus are familiar with the “reality” of implementation.
A co-agent bank is a money related item which has a place with its individuals, who are the Owners and the clients of their bank. It was regularly made by persons having a place with the same nearby or expert group or sharing a typical hobby. Co-agent banks furnish their individuals with an extensive variety of saving money and monetary administrations (credits, stores, managing an account accounts and so forth.). A co-agent bank makes contrast with stockholder banks by their association, their objectives, their qualities and their administration. They are administered and controlled by saving money powers and need to regard provident managing an account regulations, which put them at a level playing field with stockholder banks.
There is no unified theoretical basis for PPPs. However, among the various theories one may point out the Principal Agent framework given the specific nature of risks existing in most PPP projects. Most of these risks are uninsurable. Indeed, the probability of risk materialization directly depends on the PPP partners’ behaviour.
Figure 2.3, the traditional model (Primary stakeholders) of managerial capitalism, where the firm is related to four groups, such as suppliers, employees, customers and shareholders that provide the basic resources for the corporation had to change, to encompass the emergence of environment list, consumer advocates, media, government and global competition. Traditional stakeholder model In Figure2.4, that shows, the stakeholder view of the firm, the firm has obligations not only to one group but also to a whole variety of other constituencies that are affected by its activities (secondary stakeholders). The corporation is thus situated at the centre of a series of interdependent two-way relationships (Judith, el al., 2006). Stakeholder
Firstly, the fact that as per Agency Theory, (which describes the relationship between Principal and Agents) the actions taken by the top officials were objectionable. According to this theory a Principal (in this case All shareholders of the company) appoint an Agent (the management of the company) to manage the affairs of the company and to represent and protect its interests. There is also a possibility that some of the key persons responsible to take decision acted selfishly for growth in their own remuneration by resorting to short-term gains and ignoring long-term impact of their
An elementary understanding of principal-agent theory is essential for the understanding of modern governance (Ricketts, 1987). Government and its managers may employ in house or outhouse production to arrive at a service supply. It may use taxation or user fees to pay for the services. And the supply of the services may be forthcoming by means of competition or authority. Finally, there may be government regulation in place which restricts the degrees of freedom of government, resulting in a situation where government as the regulator regulates itself as the service provider.