Companies Are Incorporated And Operated On The Premises Of Agency Theory Accounting Essay

Table of contents

Companies are incorporated and operated on the premises of Agency Theory. The Agency Theory spells out that there should be a working relationship between the direction of the company and the investors of the company in order to maximise the stockholders wealth.

The way for the traditional research of corporate administration was set up by Berle and Means ( 1932 ) , when they presented an bureau theory to divide ownership from control. This theory to divide ownership from control led to the development of the bureau theory.

The early rivals of the bureau theory assert that the bureau relationship is a contract under which one party ( the principal ) engages another party ( the agent ) to execute some service on their behalf. ( Coase, 1937, Jenson and Meckling, 1976 and Fama and Jensan, 1983 ) . The bureau theory is of import, yet different writers and research workers see it from controversial positions. The footing of the bureau theory appears from the separation of direction and fundss Sleifer & A ; Vish, ( 1996 ) . Agency theory is widely used as a model in many research of corporate administration. It is used in research state of affairss where the benefit on one party ( the principal ) is dependent on the behavior and actions of 2nd party ( the agent ) .

The constructs and rules of corporate administration are chiefly based upon the bureau theory. Good corporate administration requires an effectual board to take the company so that it creates wealth for the stockholders and besides to run into other stakeholders ‘ outlooks.

For illustration, Barclays Board of Directors, guided by Group Chairman Marcus Agius, runs the concern on behalf of stockholders. As a scheduled company on the London Stock Exchange, Barclays meets the footings with the UK Combined Code on Corporate Governance.

Barclays Executive Committee includes the most superior leaders in the concern, headed up by Group Chief Executive John Varley. It has proclaimed the enlargement of its Executive Committee and alters to its organisation and senior direction undertakings, puting its concerns to convey strongly in the developing fiscal services industry.

Stockholders are placed as one of the stakeholders that directors must see throughout their determination doing on how a corporation can and should be set and implement way Jonker J, ( 2003 ) in Freeman ( 1984 ) .

Although the bureau theory is expected to make a smooth and good relationship between the principal and the agent, there are some jobs which arise because of the impossibleness of absolutely undertaking for every action of an agent whose determination affects both his ain public assistance and the public assistance of the principal, ( Brennan, 1995 ) .

Agency theory is concentrating at everyplace bureau connexion, in which one party ( the principal ) designate work to another ( the agent ) , who carry out that work.

The theory is related with work outing two jobs that can happen in bureau relationships. The first is the bureau trouble that happens when ( a ) the yearning or aim of the principal and agent clang and ( B ) it is difficult or dearly-won for the principal to corroborate that the agent had acted appropriately. The 2nd is the trouble of hazard sharing that happens when the principal and agent have dissimilar attack in the way of the hazard.

The job here is that the principal and the agent may prefer different actions because of the different hazard penchants ( Elsenhadt, 1989 ) .

Barclays Capital and/or its associates may, from clip to clip, have topographic points in, and may, as chief or agent, purchase or retail the Securities. Barclays Capital shall non be lawfully responsible to any single on any base for any dead or costs go oning straight or indirectly out of the exercising of or dependence on any of the appraisal or in sequence set out herein. ( hypertext transfer protocol: //www.barx.com/legal/index.html )

From the bureau theory position, the aim of corporate administration is to guarantee that directors resort to value maximising schemes ( Shleifer and Vishny, 1997 ) . There have besides been efforts to linkthe “ resource based position ” and the “ managerial rents theory ” ( Castanians and Helfat, 2001 ) with corporate administration, in the strategic direction literature. This position maintains that corporate administration variables are the factors, which are considered cardinal and of import to the effectivity of Corporate Governance. Corporate Governance ‘s cardinal variables are closely associated with the success or failure of companies and a cardinal managerial resource or human capital and therefore a possible beginning of competitory advantage to the house. Many companies have failed in the United Kingdom and this has stimulated argument about Corporate Governance. The prostration of the Maxwell Publishing Group in the late eightiess stimulated the Cadbury Report in 1992. In the 1990s instances like the Poly Peck, BCCI and Marconi farther necessitated a demand for proper Corporate Governance.

In looking at all these incidences of Corporate Governance inefficiencies and ineffectualness, it is noticeable that some instances are clearly a affair of concern planning and hapless decision-making by direction. The strategic planning is the exclusive duty of the board. This therefore points it out that the board composing plays a major function in the success or failure of the concern.

As is clear now, BP could hold put in more honest to extra diminish or maintain off from the jeopardy of sloping oil into the ocean. Even with Green Project Management, if BP ‘s pick was non to pass more in a hazard response strategy, so possibly they should hold approximate the party costs necessary for a clean-up activity as they are at present commencing.

( hypertext transfer protocol: //sustainablecitiescollective.com/richmaltzman/ )

The prostration of many companies is as a consequence of fraud. Fraud could be in signifier of cover-up and deception by direction or in some instances it could be the combination of both. The WorldCom in the United States and Maxwell, BCCI and Poly Peck in the United Kingdom are authoritative and living illustrations. Another issue is the inquiry of regulative inadvertence, as highlighted in the instance of Enron.

Then Combined Code was introduced in the UK to reconstruct the investor ‘s assurance following many prostrations and company failures of those large corporations.

The Directors are accountable for internal control in HSBC and for reconsidering its efficiency. Events have been planned for saving assets against illegal usage or disposition ; for continuing good accounting records ; and for the consistence of pecuniary information used within the concern or for journal. Such events are considered to pull off instead than make off with the hazard of dislocation to achieve concern aims and can merely offer reasonable and non complete declaration aligned with important misstatement, mistake, losingss or fraud. The actions besides allow HSBC Holdings to unclutter its duties under the Handbook of Rules and Guidance issued by the Financial Services Authority, HSBC ‘s guide supervisory organic structure. ( hypertext transfer protocol: //www.hsbc.com )

2.2.2 The Original Combined Code-1998

The Combined Code is made up of three chief studies. The original combined codification incorporates the recommendations of the Cadbury, Greenbury and Hampel studies

Cadbury Report ( Cadbury, Sir Adrian, 1992 )

The Committee issued a scope of recommendations for good corporate administration in a Code of Best Practice. The Cadbury study addressed four chief countries viz. , Board of Directors, Non-executive managers, Executive managers and Company Accounts.

The chief recommendations of the Cadbury study are explained below: ( ICSA 2003 pp 151 – 152 ) .

Board of managers

The board should run into on a regular basis, supervising the public presentation of the executive direction.

Control over the company should be exercised jointly by the board of managers as a whole, with a clearly recognized division of duty between the main executive and the president to avoid domination of the board by a individual person or by a little group of executive managers. The Code argued that it was desirable to divide these functions, so that the same individual did non transport out both. It did non province that the same individual should ne’er be both president and main executive, but recommended that when this did go on, there should be a strong independent component on board to move as a counter-force, with a recognized senior member to take them.

The board should hold formal agenda of affairs specifically reserved to it for determination to guarantee way and control is steadfastly in its custodies and does non let power transportation to an almighty main executive or president.

Non-executive managers

There should be a sufficient figure of non-executives, suitably qualified for the positions to transport weight.

Non-executive managers should be able to convey independent judgement and experience to the deliberations of the that the executive managers on their ain would miss.

Non-executive managers should be selected through a formal procedure and they should be appointed for a fixed term. Reappointment at the terminal of that term should non be automatic.

Executive managers

The service contract of an executive manager should non transcend three old ages without stockholders blessing. The intent of this demand was to put a bound to the size of the pay-off for a manager who is forced to go forth the company, or illustration as a hapless public presentation and stockholder force per unit area. The wage of the executive managers should be decided by a wage commission, dwelling entirely or chiefly of non-executives.

The histories of the company

The board should set up an audit commission of at least three non-executive managers, with written footings of mention. The board of managers should show a balanced and apprehensible appraisal of the company ‘s fiscal place to the stockholders including a statement in the one-year study about the company ‘s ability to go on as a traveling concern. The managers should describe to the stockholders on the full system of the internal control in the company.

The board of Lloyds group believe that superior administration is innermost to achieving the Group ‘s regulating thought of maximizing stockholder monetary value in surplus of clip. That has been highest in managers ‘ attending when seting on the values restricted in the combined codification on corporate administration issued by the Financial Reporting Council. ( hypertext transfer protocol: //www.guardian.co.uk/business/ )

A board incorporating executive and non-executive managers with wide cognition guide the Lloyds group.A The choice of managers is measured by the board and, supervising the necessities in the articles of association, they must stand for ballot by the stockholders at the first one-year general meeting following their choice and must go forth, and may acquire up for re-election by the stockholders, as a lower limit every three old ages. ( hypertext transfer protocol: //www.lloydsbankinggroup.com/ )

Greenbury Report ( Greenbury, Sr Richard, 1995 )

In 1995 a commission was set up to look into the wage bundle and service contracts of the managers. The concern was centered around the ‘fat cat issue ‘ . This referred to the managers who paid themselves immense wages. There was another concern sing the failure of wage bundles to supply a suited inducement for managers to execute better. The study recommended the followers are other things: Directors ‘ wage and service contracts ; Disclosure and Approval and Remuneration Committee ( ICSA 2003, pp 152 – 153 ) .

Directors ‘ wage and Service contracts

A wage commission dwelling wholly of non-executive managers should make up one’s mind the wage of the executive managers ‘ .The maximal notice period in an executive manager ‘s service contract should usually be 12 months, compared to the three old ages maximum recommended by the Cadbury codification. In exceeding fortunes notice periods of up to two old ages might be sensible, by merely on occasion should a notice period exceed this.

The Report included general recommendation about wage, but most of these were slackly phrased and unfastened to wide reading. They included nevertheless:

Executive wage should non be inordinate, but the wage commission should offer wage bundles that are sufficient to pull, retain and actuate person of the needed quality.

The public presentation related elements of the wage should make a nexus between the involvements of the manager with those of the stockholders. The public presentation standards should be ‘relevant, stretching and designed to heighten the concern affairs ‘ .Matters for the wage commission to see should include the phasing of any reward strategy s, the nature of any portion option bundle and the deductions of each component of the wage bundle for payments into the manager ‘s pension strategy.

Puting an upper bound to options granted as portion of a manager ‘s wage strategy should non be issued at a price reduction. Before Greenbury, it was rather usual in the UK to allow portion options to managers with an exercising monetary value at some price reduction to the current market monetary value.

Share options should be granted to managers in phased sums over clip the in individual big awards.

A steadfast line should be taken on the payment of compensation to managers dismissed for unsatisfactory public presentation. In the public perceptual experience, a high wage off to an outgoing main executive can look really much like a wages for failure.

The Board of Ladbrokes Plc manus over the Remuneration Committee with the liability for the scheme in regard of the executive managers and senior executives. In regard of other workers the executive managers have been manus over answerability to run within the wage scheme and program construction recognized by the Board. The Board at the advice of the Nomination Committee makes agenda to the committee, which discuss with the Chairman of the Remuneration Committee. The Committee normally request the Chief Executive and the HR manager to be present at commission conference about suggestion depicting to the payment of the executive managers, other than when their single payment is conversed. The Company Secretary takes stairss as secretary to the Committee. The Committee and Board think that it is in the security of stockholders to protect some of the betting and bet oning industry ‘s most superb and profitable individuals by given that to the full spirited wage. The Committee has judgement to believe corporate presentation on environmental, societal and administration ( ESG ) affairs when seting the wage of executive managers. The commission has warrant that ESG hazards are non being lifted by the motive agreement for senior direction accidentally interesting careless activities. ( http: //ar2008.ladbrokesplc.com/remuneration-report )

Disclosure and blessing

Greater revelation about the wage of single manager ‘s.The one-year study and histories should unwrap for each named manager the elements of wage, such as wages and fees, one-year and deferred fillips, compensation for the loss of office, portion options and any other long -term inducement strategy. An account and Justification should be provided whenever any component of the wage other than basic wage is pension able.

A revelation should be made of nay manager with a notice period in surplus of 12 months in his her service, contract, together with an account of the grounds. The elaborate revelations on the manager ‘s wage should be checked any external hearers. The president of the wage commission should go to the one-year general meeting, where the stockholders should hold an chance for a inquiry sand reply session.

The audit commission of Unilever includes a least of three or more non-executive managers ; two of them stand forA a quorum. The commission assists the boards in fulfilling their error undertakings in regard of the truthfulness of Unilever ‘s fiscal statements ; hazard direction and internal control activities ; conformance with legal and narrow petitions ; the public presentation, makings and independency of the outside hearers ; and the presentation of the internal audit intent. The commission is besides in a straight-line accountable, expose to local regulations refering stockholder indorsement, for the proposal, wages and failure to notice of the external hearers. The disclosure commission includes the Group Controller, the Chief Legal Officer, the Group Treasurer and the NV Corporate Legal Counsel. The rule of the commission is to help the boards make certain that fiscal and other information that have to be revealed openly by Unilever is revealed in a timely mode and that the information that is revealed is absolute and right.

( hypertext transfer protocol: //www.unilever.com/investorrelations/corp_governance/ )

The wage commission study

There should be a study in the one-year study and histories on managers ‘ wage policy demoing how wage compares with other, similar companies. All fillip strategies should depend on satisfactory public presentation standards. Long term inducement strategies should be submitted o the stockholders for the blessing, in progress of presenting them. The Greenbury study did non give guidelines of make up one’s minding what constitutes ‘satisfactory public presentation ‘ , and as a consequence this component of the recommendations has been interpreted widely. For illustration, there were no guidelines about inducements for longer term public presentation.

The study should include a statement on the company ‘s policy for allowing portion options and other long term inducement strategies, together with a justification for any going from that policy in the policy under the reappraisal.

Hampel Report ( Hampel Committee, 1998 )

The commission was set up in 1995 to reexamine the advancement of the execution of the findings of the Cadbury and Greenbury Committees.

The Hampel study proposed the consolidation of the Cadbury study, Greenbury study, and Hampel study into one amalgamate codification. The Hampel study described its undertaking as ‘reviewing the substance and execution of the Cadbury codification.

2.2.3 The revised combined code – 2003

The original Combined Code was proposed by Hampel and latter it was revised and brought update by Higgs in 2003.

The key alterations made by Higgs are in the alterations of the composing of managers. He proposed the addition of non- executive managers and the assignment of a senior independent executive manager.

Contentss of the revised codification

The function and duties of the board, the president and the NED ‘s are more clearly defined. The functions of president and main executive should be separate- the president should fulfill the standards for independency on assignment, but should non, thenceforth, be considered independent when measuring the balance of board rank.

The president is give clear duties, including the debut of new managers and guaranting the proper flow of information to board members. No person should be appointed to a 2nd chairmanship of a FTSE 100 company. At least half of the board larger companies, excepting the president, should be independent NED ‘s. The standard for independency are defined.

The board, it commission and managers should be capable to one-year public presentation reappraisal. At least one member of the audit commission should hold recent and relevant fiscal experience.

In softening of the line adopted the Higgs Report, it is now acknowledged that:

The president nominations commission, anticipate where the commission is sing the assignment of the president ‘s replacement. Smaller companies ( below the FTSE 350 ) may happen it hard to run into the commissariats associating to board and commission composing hence, such companies should hold at least two independent NED ‘s ( instead than a bulk ) and may hold smaller wage and audit companies.

Where the companies wish to retain a NED for more than six old ages, their farther assignment will non will non necessitate to be explained in the one-year study but such be capable to “ peculiarly strict reappraisal ” .

The function of the senior NED should be clarified and the importance of the president ‘s function in pass oning with stockholders and supplying leading to the NED ‘s emphasized.

The purpose of the FRC has been to heighten board effectivity and better investor assurance by raising criterions of corporate administration. Companies are encouraged to do an early study on the stairss, which they are taking to implement the new Code, instead than waiting until their coverage year-end.

In visible radiation of these amendments of the Code, companies will necessitate to transport out a comprehensive reappraisal of their corporate administration policies and processs and see how best to react. Over the following few months these responses will, no uncertainty, be the topic of considerable investor, regulative and media involvement.

2.2.4 The revised combined code – 2005

In 2004, the Financial Responsible Council established the Turnbull Review Group that saw the issue of the ‘Guidance for Directors on the Combined Code ‘ . The chief accent of the Turnbull study was to fasten internal control ( Turnbull Report, 1999 ) .

Significance of Internal Controls and hazard direction

The significance of internal controls has been sketched in Turnbull study as follows:

A dependable technique of internal control adds to preservation the stockholders ‘ spending and the company ‘s resources. A company ‘s strategy of internal control as a important duty in direction of hazards that is of import to the executing of its concern aims.

Internal control smoothes the advancement of the success and competency of operations ; aids guarantee the dependableness of internal and external exposure and helps fulfilment with Torahs and ordinances.

Efficient pecuniary monitoring, every bit good as the saving of appropriate clerking records, is a important edifice block of internal control. They aid certify that the company is non without cause uncovered to preventable fiscal hazards and that fiscal informations employed inside the concern and for diary is consistent. They besides add to the saving of belongings, together with the turning away and find of cozenage.

A company ‘s aims, its internal constitution and the background in which it maps are repeatedly developing and, as a consequence, the hazard it tackles is repeatedly changing. A sound system of interior influence accordingly depends on a methodical and usual appraisal of the nature and sum of the jeopardy, which the company is uncovered. Since net incomes are, in portion, the recompense for booming risk-taking in concern, the ground of internal control is to help administer and form hazard suited instead than to acquire rid of it.

The hazard direction system in J Sainsbury plc has been prepared all over the twelvemonth and up to the day of the month of countenance of the Annual Report and Financial Statements. Acknowledging that hazard is an intrinsic fraction of making concern, the strategy is intended to acknowledge major menaces and do available declaration that these hazards are wholly recognized and handled. It is besides maintained by a hazard policy and regulations on how to be relevant the scheme, which are connected all the manner through the Company. The success of the process is reconsidered two times a twelvemonth by the Audit Committee, which so reports to the Board. The Functioning Board maintain up a hazard registry, which is often re-examined by the Committee and officially, conversed with the Board. The registry holds the important hazards facing the Company and recognizes the possible influence and chance of the hazard at both a gross ( pre mitigating controls ) and a net ( station mitigating controls ) phase. Where the net hazard needs extra behaviors, these are decided with exact timelines. These workss are narrowly checked until they are wholly applied. ( http: //www.j-sainsbury.co.uk/ )

Aim of the study

To guarantee that concerns have sound internal controls embedded in the concern processes as the companies pursue their aims.

To guarantee that the internal control remain relevant over clip in the continually germinating concern environment and to enable each company to use it in a mode which takes history of its peculiar fortunes.

The guideline on internal controls requires the managers to exert judgement in reexamining how the company has implemented the demands of the Combined Code associating to internal control and coverage to stockholders.

Internal control demands of the combined codification

The rule C2 of the combined codification provinces that ‘ The board should keep a sound system of internal control to safeguard stockholders ‘ investing and the company ‘s assets.

The proviso C2.1 states ‘That managers should, carry on a reappraisal of the effectivity of the group ‘s system of internal control and should describe to stockholders that they have done so. This reappraisal should cover all stuff controls, including fiscal, operational and conformity controls and hazard direction systems. Turnbull Report, ( 2004 ) .

The Board of Marks and Spencer have on the whole duty for administering the concern expeditiously – confirms hazards are directed and it ‘s all under review. Internal controls and hazard direction are intended to boundary the possibility of dislocation to achieve corporate aims. Autonomous declaration is offered by the outside hearers and internal audit, who manus over their decision often to the Audit Committee. They have taken on an integrated method to put on the line direction, autonomous averment and internal controls to attest better connexion across re-examine and assessment of hazard. They are a broad concern with a wide assortment of aims and hazards. The Board is accountable for doing certain that all goes harmonizing to agreement and that describing lines and individual answerabilities are obviously mute. They besides have runing schemes and events covering the whole thing from fiscal planning and coverage, capital outgo, undertaking administration and information security to concern stableness, worker public presentation direction and how they do concern. ( http: //annualreport.marksandspencer.com/governance/governance-report )

2.2.5 The revised combined code – 2006

This codification supersedes and replaces the Combined Code issued in 2003. It follows a reappraisal by the Financial Reporting Council of the execution of the Code 2005 and subsequent audience on possible amendments to the Code.

The Financial Services Authority, as the UK Listing Authority, is obliged by legislative act to transport out a separate audience before listed companies can be officially required under the Listing Rules to unwrap how they have applied this new version of the Combined Code. This audience is expected to get down September 2006 and, capable to positions received, the Listing Rules would be expected to use to the new version of the Combined Code with consequence from some clip in the 2nd one-fourth of 2007.

In the interim, in position of the limited nature of the alterations and strong support that they have received, the FRC would promote companies and investors to use the revised Code voluntarily for describing old ages get downing on or after 1 November 2006.

The Code holds cardinal and subsequent doctrine and status. The Listing Rule needs listed companies to make a disclosure statement in two parts in relation to the Code. In the primary portion of the declaration, the company has to account on how it be relevant the chief beliefs in the Code. This should cover both chief and back uping values. The signifier and substance of this division of the statement are non set, the significance being that companies should hold a free manus to depict their authorization regulations in the visible radiation of the political orientation, every bit good as any peculiar state of affairs be relevant to so which have guided to a specific method. This “ comply or explain ” method has been in operation for over 10 old ages and the lissomeness it proposes has been extensively welcomed both by company boards and by stockholders. It is for investors and others to measure the company ‘s statements.

The statement of conformity

A company that has non complied with the commissariats of the combined codification in full throughout the period must stipulate the Code commissariats, with which it has non complied, for what portion of the period non-compliance continued and give grounds for non-compliance. This is a demand of the Listing Rules of the Stock Exchange. Ignoring the commissariats of the codification is non an option, but the company has good substantial grounds for diverting the commissariats, it is up to the stockholders to make up one’s mind whether the ground given by the company is valid or non. If the managers an explain converting the stockholders that the going from the codification commissariats is in the best involvement of the company, the non-compliance is improbable to be an issue.

Criticisms of combined codification

The Higgs and Smith studies were widely welcomed by different boards like the Financial Reporting Council ( FRC ) on the revised combined codification, but besides identified some strong unfavorable judgments were simply on the functions and responsibilities of the president and the period of term of office for managers.

The board suggested that the combined codification needed to set more attempt into doing the system work, there would be occasions when a company would take to utilize the “ explain ” option, and institutional investors should see such accounts carefully, giving grounds if they did non accept the account.

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The Concept Of Agency Theory Recognizes There Are Fundamental Differences Accounting Essay

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Introduction

An bureau relationship is a contract under which one or more individuals ( the principal ( s ) ) engage another individual ( the agent ) to execute some service on their behalf which involves deputing some determination doing authorization to the agent ( Jensen and Meckling, 1976 ) . If both parties to the association are public-service corporation maximizers and they may hold different purposes and aims, it is inevitable that the agent will non ever move in the best involvements of the principal.

The construct of bureau theory originated from the work of Adolf Augustus Berle and Gardiner Coit Means, who were discoursing the issues of the agent and rule every bit early as 1932. Berle and Means explored the constructs of bureau and their applications toward the development of big corporations. Michael C. Jensen and William Meckling shaped the work of Berle and Means in the context of the risk-sharing research popular in the 1960s and ’70s to develop bureau theory as a formal construct. Jensen and Meckling formed a school of idea reasoning that corporations are structured to minimise the costs of acquiring agents to follow the way and involvements of the principals. ( Renee O’Farrell, 2010 )

The construct of bureau theory recognizes there are cardinal differences in how stockholders, directors, and even bondholders interpret their several relationships to an organisation. While they may portion some common ends and aims, there is the possible for at least some aims to emerge that are focused more on single enrichment than on the wellbeing of the whole ( Kleiman, 2010 ) . For illustration, directors may be more focussed on constructing a repute for themselves, perchance making their ain power bases within the construction of the larger organisations. Stockholders may go more focussed on gaining dividends now and less on the hereafter of the concern. Bondholders may be concerned merely with the undertaking associated with the bond issue, and lose sight of how the overall stableness of the company can hold a negative impact on the return earned from that bond ( Kleiman, 2010 ) .

Contribution of bureau theory to the development of accounting

Current mainstream accounting research is based extensively on economic theoretical accounts of bureau that represent he runing company ( house ) directors “ agent ” and the single investors “ chief ” . This chief agent theoretical account has besides been implicitly adopted in the ordinance of accounting, which focuses on the demands and public assistance of a diverse group of single investors who entrust their wealth to the control of director. ( Bricker, Chandar 1998 )

Accounting plays an of import function as a critical portion of the contracts that define a house. For illustration, imparting agreements between a house and its creditors frequently contain several accounting based compacts. Accounting-based fillip programs are often a constituent of executive compensation programs. Accounting steps are normally used in the public presentation rating of a house ‘s cost and net income centres. ( Bricker, Chandar 1998 )

The construct of Positive Accounting Theory has emerged, in recent old ages, which is based on the theory of bureau. It focuses on the relationships between the assorted persons involved in supplying resources to an organisation and how accounting is used to help in the operation of these relationships. While normative theories tend to urge what should be done. When decision-making authorization is delegated, this can take to some loss of efficiency and consequent costs. For illustration, if the proprietor ( chief ) delegates decision-making authorization to a director ( agent ) it is possible that the director may non work every bit difficult as would the proprietor, given that the director might non portion straight in the consequences of the organisation. Any possible loss of net incomes brought approximately by the director underperforming is considered to be a cost that consequences from the decision-making deputation within this bureau relationship – an bureau cost. The bureau costs that arise as a consequence of deputing decision-making authorization from the proprietor to the director are referred to in Positive Accounting Theory as bureau costs of equity. ( http: //www.download-it.org/free_files/Pages % 20from % 20Chapter % 207 % 20Positive % 20Accounting % 20Theory-d0385ad3b7925717c0b72a06b16de4f4.pdf )

Positive Accounting Theory, as developed by Watts and Zimmerman and others, is based on the cardinal economics-based premise that all persons ‘ action is driven by opportunism and that persons will ever move in an timeserving mode to the extent that the actions will increase their wealth. Impressions of trueness, morality and the similar are non incorporated in the theory ( as they typically are non incorporated in other accounting or economic theories ) . Given an premise that self-interest thrusts all single actions, Positive Accounting Theory predicts that organisations will seek to set in topographic point mechanisms that align the involvements of the directors of the house ( the agents ) with the involvements of the proprietors of the house ( the principals ) . ( http: //www.download-it.org/free_files/Pages % 20from % 20Chapter % 207 % 20Positive % 20Accounting % 20Theory-d0385ad3b7925717c0b72a06b16de4f4.pdf )

Some of these methods of alining involvements will be based on the end product of the accounting system ( such as supplying the director with a portion of the organisation ‘s net incomes ) . Where such accounting based ‘alignment mechanisms ‘ are in topographic point, there will be a demand for fiscal statements to be produced. Directors are predicted to ‘bond ‘ themselves to fix these fiscal statements. This is dearly-won in itself, and in Positive Accounting Theory would be referred to as a ‘bonding cost ‘ . If we assume that directors ( agents ) will be responsible for fixing the fiscal statements, so Positive Accounting Theory besides would foretell that there would be a demand for those statements to be audited or monitored, otherwise agents would, presuming opportunism, seek to exaggerate net incomes, thereby increasing their absolute portion of net incomes. ( http: //www.download-it.org/free_files/Pages % 20from % 20Chapter % 207 % 20Positive % 20Accounting % 20Theory-d0385ad3b7925717c0b72a06b16de4f4.pdf )

Agency Theory and Corporate Government

Persons are by and large taken to be preoccupied with Generally the basic unit of analysis is taken as the ‘individual ‘ who is preoccupied with maximizing or at least fulfilling their public-service corporation ; conceived typically in footings of a tradeoff between work and leisure. It is this blend of false independency and self-interested thrust that creates the jobs within bureau relationships. ( J Roberts, 2004 )

Using this construct to corporate administration, in effect of the separation of ownership and control, it is the stockholder who is taken as the ‘principal ‘ and the job is how the principal can do certain that his ‘agents ‘ – company managers – work for the fulfilment of stockholders involvements instead than their ain. The redresss to this construct of the bureau job within corporate administration involves the credence of certain ‘agency costs ‘ involved either in making incentives/sanctions that will aline executive ego involvement with the involvements of stockholders, or incurred in supervising executive behavior in order to restrain their self-interest. ( J Roberts, 2004 )

As these premises have been read onto corporate administration, and informed its reform in recent decennaries, they have resulted in what are now an about cosmopolitan set of techniques and patterns designed to command the behavior of executives both within the corporation and externally ( Walsh and Seward 1990 ) . Inside the company, boards have basically two agencies to exert control over executives ; they can fire them and they can give them incentives – portion options, long-run inducement programs. For these levers to work, nevertheless, boards must be populated with ‘independent ‘ non-executives who are willing and able to supervise executive public presentation, peculiarly where there are possible struggles of involvement. The growing and development of both the figure of non-executives on boards every bit good as the increased specification of their function and conditions of ‘independence has characterized board reform around the universe. The separation of the function of main executive from that of the non-executive president has been portion of this ; in the linguistic communication of Cadbury it is intended that this ensures that no 1 person has ‘unfettered ‘ powers of determination. The creative activity of audit, wage, and nominations commissions all staffed by independent non-executives, is besides common and ideally ensures both the proper usage of inducements and a high grade of monitoring of executive public presentation and decision-making. To these internal controls are added a scope of external controls. Foremost here has been the focal point on enhanced ‘disclosure ‘ , and the ‘transparency ‘ that this allows, chiefly of fiscal public presentation but late besides of societal and environmental public presentation ( Dissanike 1999, Zadek 2001 ) . The purpose is that the portion market is thereby better informed such that all relevant information is impacted into the share-price ( Fama 1980, Barker 1998 ) . There is besides a market for corporate control ( Cosh et al 1989, Robert 2004 ) that ideally allows for weak direction squads to be displaced by strong squads that will run companies to better consequence for stockholders. In recent old ages at least at a policy degree at that place has besides been concern that stockholders – in the signifier of the big institutional investors – taking on their duties as proprietors ( Myners, ISC 2002, Simpson and Charkham, Robert 2004 ) through exerting proper examination and influence both publically and through their private contacts with investors ( Roberts et al 2003, Robert 2004 ) .

Covering with Agency Problems – Reward strategies

There are two polar places for covering with shareholder-manager bureau struggles. At one extreme, the house ‘s directors are compensated wholly on the footing of stock monetary value alterations. In this instance, bureau costs will be low because directors have great inducements to maximise stockholder wealth ( Eugene and Jensen, 1985 ) . It would be highly hard, nevertheless, to engage gifted directors under these contractual footings because the house ‘s net incomes would be affected by economic events that are non under managerial control. At the other extreme, shareholders could supervise every managerial action, but this would be highly dearly-won and inefficient. The optimum solution lies between the extremes, where executive compensation is tied to public presentation, but some monitoring is besides undertaken. In add-on to monitoring, the undermentioned mechanisms encourage directors to move in stockholders ‘ involvements:

performance-based inducement programs

direct intercession by stockholders

the menace of firing

the menace of coup d’etat

Most publically traded houses now employ public presentation portions, which are portions of stock given to executives on the footing of public presentations as defined by fiscal steps such as net incomes per portion, return on assets, return on equity, and stock monetary value alterations. If corporate public presentation is above the public presentation marks, the house ‘s directors earn more portions. If public presentation is below the mark, nevertheless, they receive less than 100 per centum of the portions. Incentive-based compensation programs, such as public presentation portions, are designed to fulfill two aims. First, they offer executives inducements to take actions that will heighten stockholder wealth. Second, these programs help companies pull and retain directors who have the assurance to put on the line their fiscal hereafter on their ain abilities-which should take to better public presentation wealth ( Eugene and Jensen, 1985 ) .

An increasing per centum of common stock in corporate America is owned by institutional investors such as insurance companies, pension financess, and common financess ( Kleiman, 2010 ) . The institutional money directors have the clout, if they choose, to exercise considerable influence over a house ‘s operations. Institutional investors can act upon a house ‘s directors in two primary ways. First, they can run into with a house ‘s direction and offer suggestions sing the house ‘s operations. Second, institutional stockholders can patronize a proposal to be voted on at the one-year shareholders ‘ meeting, even if the proposal is opposed by direction. Although such shareholder-sponsored proposals are nonbinding and affect issues outside daily operations, the consequences of these ballots clearly influence direction sentiment.

In the yesteryear, the likeliness of a big company ‘s direction being ousted by its shareholders was so distant that it posed small menace. This was true because the ownership of most houses was so widely distributed, and direction ‘s control over the vote mechanism so strong, that it was about impossible for heretical shareholders to obtain the necessary ballots required to take the directors ( Kleiman, 2010 ) . In recent old ages, nevertheless, the main executive officers at American Express Co. , General Motors Corp. , IBM, and Kmart have all resigned in the thick of institutional resistance and guess that their goings were associated with their companies ‘ hapless runing public presentation.

Hostile coup d’etats, which occur when direction does non wish to sell the house, are most likely to develop when a house ‘s stock is undervalued comparative to its possible because of unequal direction ( Chen et al, 2006 ) . In a hostile coup d’etat, the senior directors of the acquired house are typically dismissed, and those who are retained lose the independency they had prior to the acquisition. The menace of a hostile coup d’etat subjects managerial behaviour and induces directors to try to maximise stockholder value ( Kleiman, 2010 ) .

In the best instance scenario, bureau cost is managed in such a manner that the involvements of all parties is protected, and the organisation is able to boom as a consequence ( Tatum, 2010 ) . Even if the assorted types of costs or disbursals involved are identified, if the actions pursued to make a balanced divergency of control are non effectual, the organisation is extremely likely to endure, sometimes to the point of complete failure. When this occurs, the collective and personal ends and aims of directors, stockholders, and bondholders are all undermined to some extent, ensuing in losingss for everyone concerned ( Tatum, 2010 ) .

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Agencies: Government and Private Adoption Agency

Describe a social policy that may affect your future position as a human services worker. Compare and contrast how a public versus a private organization might address this policy differently. Include an explanation of how the delivery system of a public organization would be different than that of a private organization. For example, what would […]

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Ethical Challenges and Agency Issues

When an agent finds out that they are going overbudget or over the allotted time limit the most critical element is open communication. With open communication it gives management more advance warning earlier in the budget cycle to make changes that can get the project back on track. The most important element management needs is ample time to make corrections to keep the project on budget and within time constraints. The more time management has the better their chances are of getting the proper resources aligned to get the budget back under control.

If the budget issues are due to the client not properly keeping records, the agency could word the contract in a way that allows provisions for adjustments which would enable the agency to form a financial or time resolution with the client. A contract that allows for those types of adjustments limits agency issues and will keep a better working relationship between the two parties. The main issue is deciding what party is responsible or accountable for an overbudget project.

If the agency can demonstrate why the budget is off to the client and be able to charge extra for the additional work the agency could delegate more resources to get the project completed in time as well. It is critical for the agency to have open communication between its team members, but it is just as crucial for the agency to be honest with the client as well. The ethical issue that arises with being overbudget is that individual employees don’t want to be penalized or face repercussions for their performance so they delay reporting results to management.

When employees are afraid to report shortfalls earlier in the process it can lead to higher costs and major agency issues. The sooner the agent can show the client that planning or reporting issues are occurring they can make vital decisions to get the project back in line. Employees need to objectively think about others involved in their future with the company and client. As long as individuals clarify expectations and apply ethics to a situation it is possible to get a project back on budget. The agency can delegate more resources to an area that needs more manpower or money to get the project completed as promised to the client.

Executive Pay Analyzing the ethical challenges as well as any agency issues in the Level of Executive Pay Case Study brings forth hidden issues in the New York Stock Exchange. To better analyze these issues one first has to ask oneself the following question, what is the true definition of ethics. Wheelwright defined ethics as “that branch of philosophy which is the systematic study of reflective choice, of the standards of right and wrong by which it is to be guided, and of the goods toward which it may ultimately be directed. ”

Did Mr. Richard (Dick) Grasso violate any ethical standards set forth by the organization he was representing; did he really violate the systematic study of reflective choice, of the standards of right and wrong? In order to get a straight answer to this question it will dependent in which side of the fence one might find oneself in; if you are on the side of the lucky ones that happens to earn this outrageous sums of money then the answer would be no. But if you find oneself in the other side of the fence with the individuals who earn an average salary that would never get the opportunity to reach the levels of aristocracy that Mr. Grasso reached then the answer would be yes.

The ethical roles on all companies play a big role on the decision making of each enterprise. Before and after Mr. Grasso was hired it was customary to compensate top officials with these large sums of money. Top officials in the NYSE never had to disclose their earning to the public or to the SEC before so it’s hard to say any ethical standards were bent or even broken. This type of compensation to top NYSE officials was customary and there were no real intentions to misguide or mislead the public or the SEC.

Just because not everyone in the NYSE had access to potentially earn this outrageous sums of money will indicate to the public that these individuals were directly involved in unethical behavior. All companies in today’s business society have a code of conduct implemented but this does not means that it is being followed. What companies are doing is creating rewards methods in order to retain the services of these top business gurus that would help their business to maximize their profits and Mr. Grasso track record spoke for itself. These incentive programs can help businesses to minimize any unethical attempts to their code of conduct.

The general public and the SEC are outrage because of the outlandish compensation top NYSE officials receives but at no point during the case study it mentions that these top officials have a salary cap. One believes that since there were no salary cap on how much NYSE officials might earn there are no ethical implications that could discourage NYSE official from making these large sums of money. What one does believe is that if there are established codes of conduct and employees or management violates them, there should be strict actions taken to prevent the problem from worsening.

One believes that all employees including management needs to uphold the highest level of ethical conduct if a company wants to be successful. 1933, 1934, and SOX The financial information users usually rely on opinion of independent auditors to make important economic decisions. To protect users’ interest from fraudulent financial statement, security acts of 1933, 1934, and SOX joined in to ensure adequate information disclosure. The acts provide regulation that goes beyond and requires more extensive disclosure than GAAP to govern corporate financial activities.

For example, companies must fill audited annual and unaudited interim financial statements in conformity with regulation S-k. In addition, the regulation S-K governs the footnote disclosure in the financial statements. Congress enacted the acts after the stock market crash in 1929 to regulate the trading of securities to the public. For this reasons, security trading companies must register with SEC prior to issuance of security to ensure that information presented to investor for making accounting decisions is correct.

In the aftermath of the famous corporate accounting scandal (Enron) that rock the world market, congress enacted the Sarbanes- Oxley Act (sox) to strengthen corporate accountability and governance of public companies. The provision increases the CEO and auditors responsibilities. CEO and other top executive must certify that company financial statement and other disclosures are fairly presented in accordance with GAAP. In other words, CEO is responsible to ensure that material misstatement does not exist in the financial statement presented to the users.

SOX also authorize the Public Company accounting Oversight Board (PCAOB) to oversee the activities of the registered accounting firm. This changes the way auditors plan, implement and report the audit. The provision increases penalties that could affect an accountant who is involve in the destruction, alternation, or falsification of records in federal investigations. Any violation of such may be subject to fines and imprisonment of up to 20 years, additional training, new quality control procedure, revocation of firm’s registration, and barring from participating in audit of public companies.

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Role of different Agency in my Socialization

Socialization is a term used to refer to the lifelong process of inheriting and disseminating norms, customs and ideologies, providing an individual with the skills and habits necessary for participating within his or her own society. Socialization is thus ‘the means by which social and cultural continuity are attained.’Socialization helps me learn to function successfully in my social worlds. How does the process of socialization occur? How do we learn to use the objects of our society’s material culture? How do we come to adopt the beliefs, values, and norms that represent its nonmaterial culture? This learning takes place through interaction with various agents of socialization, like peer groups and families, plus both formal and informal social institutions.

In each stage of my life there are influences or agents of socialization who have an impact on my socialization and the messages of socialization being received. As I develop and advance in psychosocial development, the agents become stronger or weaker in their capacity for influence. Early in my development, the family is, of course, the strongest agent, but I advances to preschool age, programs or schools begin to exert influence. At school age, peers are active socialization agents. For the first eight years, family, school, community, and peers play a role in the following aspects of a child’s socialization: The development of trust

The development of independence

The tendency to take initiative
The sense of competence and ambition
Decisions about who one is
Relationships with others
Decisions about future generations
Reflections on one’s life
Social groups often provide the first experiences of socialization. Families, and later peer groups, communicate expectations and reinforce norms. People first learn to use the tangible objects of material culture in these settings, as well as being introduced to the beliefs and values of society.

Family: The family is the most important primary group in the society. It is the simplest but most elementary form of the society. The meaning of the family can be explained better by the following definitions. M.F. Nimkoff says that “Family is a more or less durable association of husband and wife with or without child, or of a man or women alone with children.” Burgess and Locke says that “Family is a group of persons united by ties of marriage, blood or adoption constituting a single household interacting and intercommunicating with each other in their respective social roles of husband and wife, father and mother, son and daughter”

Family is the first agent of socialization. Mothers and fathers, siblings and grandparents, plus members of an extended family, all teach me what I need to know. For example, they show me how to use objects (such as clothes, computers, eating utensils, books, bikes); how to relate to others (some as “family,” others as “friends,” still others as “strangers” or “teachers” or “neighbors”); and how the world works (what is “real” and what is “imagined”). As you are aware, either from your own experience as a child or your role in helping to raise one, socialization involves teaching and learning about an unending array of objects and ideas. It is important to keep in mind, however, that families do not socialize us in a vacuum.

Many social factors impact how a family raises its children. For example, we can use sociological imagination to recognize that individual behaviors are affected by the historical period in which they take place. Sixty years ago, it would not have been considered especially strict for a father to hit his son with a wooden spoon or a belt if he misbehaved, but today that same action might be considered child abuse. Sociologists recognize that race, social class, religion, and other societal factors play an important role in socialization. For example, poor families usually emphasize obedience and conformity when raising their children, while wealthy families emphasize judgment and creativity (National Opinion Research Center 2008).

This may be because working-class parents have less education and more repetitive-task jobs for which the ability to follow rules and to conform helps. Wealthy parents tend to have better educations and often work in managerial positions or in careers that require creative problem solving, so they teach their children behaviors that would be beneficial in these positions. This means that children are effectively socialized and raised to take the types of jobs that their parents already have, thus reproducing the class system (Kohn 1977). Likewise, children are socialized to abide by gender norms, perceptions of race, and class-related behaviors. In Sweden, for instance, stay-at-home fathers are an accepted part of the social landscape. A government policy provides subsidized time off work—480 days for families with newborns—with the option of the paid leave being shared between both mothers and fathers.

As one stay-at-home dad says, being home to take care of his baby son “is a real fatherly thing to do. I think that’s very masculine” (Associated Press 2011). School: Most Bangladeshi children spend about seven hours a day, 180 days a year, in school, which makes it hard to deny the importance school has on our socialization. We are not only in school to study math, reading, science, and other subjects—the manifest function of this system. Schools also serve a latent function in society by socializing children into behaviors like teamwork, following a schedule, and using textbooks.School and classroom rituals, led by teachers serving as role models and leaders, regularly reinforce what society expects from children.

Sociologists describe this aspect of schools as the hidden curriculum, the informal teaching done by schools. For example, in the Bangladesh, schools have built a sense of competition into the way grades are awarded and the way teachers evaluate students. When children participate in a relay race or a math contest, they learn that there are winners and losers in society. When children are required to work together on a project, they practice teamwork with other people in cooperative situations. The hidden curriculum prepares children for the adult world. Children learn how to deal with bureaucracy, rules, expectations, waiting their turn, and sitting still for hours during the day.Schools in different cultures socialize children differently in order to prepare them to function well in those cultures. The latent functions of teamwork and dealing with bureaucracy are features of American culture.

Schools also socialize children by teaching them about citizenship and national pride. In the United States, children are taught to say the Pledge of Allegiance. Most districts require classes about U.S. history and geography. As academic understanding of history evolves, textbooks in the United States have been scrutinized and revised to update attitudes toward other cultures as well as perspectives on historical events; thus, children are socialized to a different national or world history than earlier textbooks may have done. For example, information about the mistreatment of African Americans and Native American Indians more accurately reflects those events than in textbooks of the past.

Peer group: A peer group is made up of people who are similar in age and social status and who share interests. Peer group socialization begins in the earliest years, such as when I was kids on a playground teach younger children the norms about taking turns or the rules of a game or how to shoot a basket. As I grow into teenagers, this process continues. Peer groups are important to adolescents in a new way, as they begin to develop an identity separate from their parents and exert independence. Additionally, peer groups provide their own opportunities for socialization since kids usually engage in different types of activities with their peers than they do with their families. Peer groups provide adolescents’ first major socialization experience outside the realm of their families. Interestingly, studies have shown that although friendships rank high in adolescents’ priorities, this is balanced by parental influence.

Religion: While some religions may tend toward being an informal institution, this section focuses on practices related to formal institutions. Religion is an important avenue of socialization for many people. The United States is full of synagogues, temples, churches, mosques, and similar religious communities where people gather to worship and learn. Like other institutions, these places teach participants how to interact with the religion’s material culture (like a mezuzah, a prayer rug, or a communion wafer). For some people, important ceremonies related to family structure—like marriage and birth—are connected to religious celebrations. Many of these institutions uphold gender norms and contribute to their enforcement through socialization. From ceremonial rites of passage that reinforce the family unit, to power dynamics which reinforce gender roles, religion fosters a shared set of socialized values that are passed on through society.

Mass media: Mass media refers to the distribution of impersonal information to a wide audience, such as what happens via television, newspapers, radio, and the Internet. With the average person spending over four hours a day in front of the TV (and children averaging even more screen time), media greatly influences social norms (Roberts, Foehr, and Rideout 2005). I learn about objects of material culture (like new technology and transportation options), as well as nonmaterial culture—what is true (beliefs), what is important (values), and what is expected (norms).

Community: Large social network that families can use as a support system is called community. It can consist of people who live in the same town, area, or even neighborhood Include a group of people who share the same values or interests such as religion, sports, etc. The community’s purpose in the socialization process Children’s first interactions with the local community is where community can help develop my identity (self-concept) and how I fit into the group setting (group identity). I can learn self- control, social skills and values of society when they are in these community based programs.Community Institutions School After school child care programs Churches Libraries Parks Support services offered by local agencies Example: hospitals, police, fire departments, etc. BG the Tiger, Boys and Girls Club Mascot Religion and churches are vital institutions the communities. They serve various functions in the community.

It can range from helping the homeless, to charity events, and going on field trips. This is a good way for children to meet other children in their faith, and become active leaders in their community. Development and Socialization Children in community are exposed to many other children and learn the skills to play and be friends with them. They are also exposed to children from other cultures, ethnicities and socioeconomic backgrounds. It’s important for children to have interaction with each other by playing, doing art projects and other various activities; which they will learn to socialize better instead of staying home where their social interaction with other people is limited.All in all, community as socialization agent is a great way for children to interact with the community, find friends who also love the same activities as them, and most of all, learning about themselves and the social roles.

If there weren’t any community programs or after school programs in the year 2008 then the lives of children and their family would be very difficult. During this fast moving, flourishing time in the U.S. history we depend on the community programs and schools to help take care of our children. As for the saying, “It takes a village (community) to raise a child,” it means that we all need to take a part in help raising not only our children, but our neighbor’s children because they are our future and we need to help the children become positive adults. Law: Law is one of the important agencies in my socialization. MYexperiences in interactions with police and other legal actors subtly shape their perceptions of the relation between individuals and society.

These experiences influence the development of adolescents’ notions about law, rules, and agreements among members of society, and about the legitimacy of authority to deal fairly with citizens who violate society’s rules. It is likely that these beliefs influence compliance with the law, both among adolescents in general and among juvenile offenders in particular, after they have been sanctioned for their offenses. Because one focus of the Network’s activity is on understanding influences on patterns of desistance or re-offending, we are concerned about youths’ understanding of and participation in legal processes that express societal norms, their assessments of the fairness of the process, and their views of the legitimacy of the law and the institutions that enforce it.

Legal socialization, the process through which individuals acquire attitudes and beliefs about the law, has received only scant attention from those interested in adolescent development. It includes both affective components (e.g., the extent to which one feels fairly treated by representatives of the legal system, sometimes referred to as “procedural justice”) and substantive components (e.g., one’s actual beliefs about the legitimacy and fairness of the law). Legal socialization is critical in shaping adolescents’ perceptions of the law, rules, and agreements among members of society, as well as the legitimacy of authority to deal fairly with citizens who violate society’s rules.

Because the enforcement of law differs by neighborhood, children and adolescents growing up in neighborhoods of different social composition experience the law in very different ways. This Network project is a pilot study that assesses variation in legal socialization as a function of adolescents’ neighborhood contexts. The study will measure differences by neighborhood in: (1) the development of adolescents’ notions about the law; (2) their understanding of and participation in legal processes that express societal norms; (3) their assessments of the fairness of the process; and (4) their views of the legitimacy of the law and the institutions that enforce it.

The specific aims of this pilot study are:

• to identify and measure interactions of children and adolescents with law and legal actors, estimate differences in these interactions by neighborhood, gender, race and age;
• to describe developmental trajectories of legal socialization by neighborhood, gender, race and age;
• to assess influence of interactions with legal actors on legal socialization, assess mediating effects of neighborhood, family, and individual factors; and
• to develop methods and measures for a longitudinal study of legal socialization of adolescents.

Arts and literature:

Perceptions and attitudes directly influence our interpretation of literature and are formed as a product of our socialization. We all carry a unique package of knowledge, memories, hopes and dreams. This knapsack acts as more than a depository of experiences; it also serves as a foundation for our perspectives. Motivational speaker and author Stephen Covey said: “We are not human beings on a spiritual journey. We are spiritual beings on a human journey.” Literature has the power to direct this journey, to open roads that might not be traveled, and perhaps to change one’s path. In the process of socialization the literature has the power to ignite the imagination, express beliefs in a way that may not be heard otherwise, and form impressions. Like as, the poem, “Banalota Sen” of Jibonanondo Das, makes us to see how a lady could posses the natural beauty in its actual mean. Literature can unlock a door to new cultures and ideas, expose peoples of all different backgrounds to imaginary or actual situations, and make the impossible become real thus helps people on socialization.

Role Model:

A role model is a person whose behavior, example, or success is or can be emulated by others, especially by younger people. The term “role model” is credited to sociologist Robert K. Merton, who coined the phrase during his career. Merton hypothesized that individuals compare themselves with reference groups of people who occupy the social role to which the individual aspires. A person’s chosen role models may have a considerable impact on their socialization. People try to act, behave and even try to lead their life according to their role model. In fact, the role model has a big impact on choosing their career.

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Agency Problem – Essay

I partially agree with the statement that managers have a severely limited amount of discretion to pursue actions inconsistent with shareholder wealth maximization. By investing in a company, shareholders aim to maximize their wealth and achieve portfolio diversification. The objective of managers is assumed to be to further these interests by maximizing the firm’s share […]

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Ethical Challenges and Agency Issues

When an agent finds out that they are going overbudget or over the allotted time limit the most critical element is open communication. With open communication it gives management more advance warning earlier in the budget cycle to make changes that can get the project back on track. The most important element management needs is […]

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