Walt Disney Corporate Governance Case Study

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Corporate Governance has become a controversial topic among general public. This project discuss about the various theories and issue in governance of Walt Disney and suggesting areas of improvement which could be relevant for Walt Disney.
Part A: Describe the various theories of Corporate Governance
There are various types of theories in corporate governance, however there are 3 theories which are commonly applied:
1. Agency Theory There are 4 major concepts which are important in understanding agency theory (ACCAPEDIA, 2012)
• Principle employ an agent to carry out task on their behalf
• The relationship between a principle and their agent is called "Agency"
• Principle incurs Agency cost while monitoring agency behaviour which
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Stewardship theory Stewardship theory makes a related set of observations which relates to the motives of managers. In this particular theory , directors, as the steward of the company act in the best interest of the shareholder. It also emphasis that managers are conceived to be motivated by a need to achieve and gain intrinsic satisfaction through successfully performing inherently challenging work, to practice duty and power, and thereby to gain recognition from associates and principal.

In the case of Walt Disney, agency theory is found while during Eisner leadership. The agent is suppose to make decision that will maximize shareholder wealth, however Eisner was rather focus on maximising his own best interest in order for him to build power and subsequently influence the company management decision. For examples, Eisner maximised the company’s profits from U$ 1.5 billion in 1984 to U$ 30.8 billion in 2004 (Epstein, 2005). The performance of the company was very good and the stock appreciated 1600% (Rajakarier, 2013). As a result, this type of success made the shareholders happy and reluctant to question the
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He cares about the business performance as well as people who work for the organization. This falls in line with stakeholder theory that takes in account the interest of wider group of stakeholders instead of focusing on the shareholder. Stewardship leadership is also displayed by Iger in the company. A good stewardship allows the company to continually expand and adapt to an ever-changing world. Iger focused on promoting well-being for the employees, enhanced diversity and gave people a sense of purpose. The employees were allowed to apply creativity and intellectual ideas and every idea was considered as an open mind. His leadership style made people feel appreciated and respected.

Part B: Importance of the management

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