Theoretical Aspecte Of Corporate Governance Flashcards
What is shareholder framework?
The maintenance and enhancement of shareholder value as its main objective
What is the broader stakeholder approach?
Emphasizes the interest of diverse groups such as employees, creditors, suppliers and customers
What is the agency theory?
It is the relationahip where the principal delegates work to the agent
What is the problem of the agency theory?
Information asymmetry
What are the transaction cost economics?
The optimum organisational structure is the one that achieves economic efficiency by minimizing the costs of exchange
What are the categories of transaction costs?
Search and information costs
Bargaining and decision costs
Policing and inforcement costs
What is the stewardship theory?
It is a framework which argues that people are intrinsically motivated to work for others to accomplish the tasks with which they have been entrusted
What is the stakeholder theory?
It is the theory that defines stakeholders.
What is the definition of stakeholders?
they are any group or individual who can affect or is affected by the achievement of the organisation’s objectives
Who are the stakeholders?
They are shareholders, customers, organisations, institutions, employees or suppliers
Who are the internal stakeholders?
they are the shareholders or the employees
Who are the external stakeholders?
They are the suppliers or the customers
Who are the primary stakeholders?
They are the stakeholders directly affected by a company’s operations: employees or customers
Who are the secondary stakeholders?
They are not directly linked to a company’s business: competitors or trade unions
What is the instrumental stakeholder theory?
It puts the company’s finances in the centre of thinking. It is used mostly in US/UK.
