Tuesday, May 5, 2020

Revisiting Family Involvement On Corporate -Myassignmenthelp.Com

Question: Discuss About The Revisiting Family Involvement On Corporate? Answer: Introduction The different accounting theories efficiently lay down the set of methodologies and assumptions that are utilized for the preparation of a proper financial report. There are various accounting theories that have efficiently guided the preparation of the financial reports. These accounting theories have been modified over time in order to suit the current requirements of the corporate entities and other stakeholders of business. The journal that has been chosen in this particular study is, Behavioral Agency Theory: New Foundations for Theorizing about Executive Compensation by Alexander Pepper and Julie Gore. Journal review Behavioral Agency theory The Agency theory is an important economic theory that is utilized by the firms as the required principles for preparing the financial reports. The agency theory that has been proposed by this paper promotes the new concept in regards to this particular theory that is, behavioral agency theory. The behavioral agency theory pivots around the factors like the performance of the agent and motivation of the employees in regards to the work. This theory further states that the demands of the individuals holding the shares of an organization and the respective agents can only be aligned when the management of the organization has provided enough motivation to its employees by making the optimum utilization of the available opportunities. The behavioral agency theory has been established upon those four foundations that have been identified as the crucial factors that affect the stakeholder behavior (Bosse Phillips, 2016). These four foundations are as follows: Aversion of loss and dependence on reference Temporal discounting Fairness and inequity aversion The particular journal that has been chosen, also leads to an introduction of the goal-setting theory in regards to the agency model based on the grounds of a practical contract between the agent and the principal (Cui, 2017). Positive Agency Theory The positive agency theory points out traditional outlook of the agency theory. This means that the positive agency theory evidently assumes that the primary aim of the corporate entities is to seek profit while the agents are both rational in nature and seeks rent. Furthermore, the positive agency theory also takes into assumption that the principals that form one of the major elements in the theory to be neutral of risks. This is due to the fact that the principals can balance their portfolio. The agents on the other hand are exposed to the risks, this is because the potential effects of wealth in regards to the employment relationship are significant (Madison caes et al, 2016). Behavioral Agency Theory The journal lists out the primary differences between the positive agency theory and the behavioral agency theory. The positive agency theory puts less stress on the organizational objective to motivate the agents so that the optimum performance abilities of the employees can be achieved. The behavioral agency theory on the other hand, proposes that the maximization of the performance of the agents should in all probabilities be one of the major objectives of the organization. Furthermore, the agency theory suggests that the linkage existing in the agent and the principal should reflect the efficiency of the organization. However, the behavioral agency theory moves away from the analytical structure set by the traditional agency theory in respect of the three major points. Firstly, the positive agency theory puts stress on the agency costs that rise due to a misbalanced relationship between the agent and the principal. The behavioral agency theory on the other hand stresses on the li nk between the costs that rise due to the agency problem and work related performance by measuring them on the basis of efficiency and effectiveness. Moreover, the behavioral agency theory proposes a softer approach to the agency problem in comparison to positive agency theory. Lastly, the behavioral agency theory indicates a much complicated function that is essentially based upon the effort put forth by the employees that is exposed to risk, loss and aversion in regards to uncertainty while the positive agency theory suggests a linear relationship between motivation and pay (Pepper Gore, 2015). Conclusion The behavioral agency theory comprises of four sectors that aims to explain the particulars of the theory in a detailed way (Pepper Gore, 2015). The first sector explains the particular way in which the link between the performances by a particular employee with the motivation provided has been explained. Secondly, the relationship between compensation and agent motivation has been explained. The third sector constitutes of the explanation of the factors like the inclusion of time discounting in this particular theory. Lastly, the differences between the intrinsic and the extrinsic motivation and the identification of the potential tradeoff between the two have been aimed to justify by the behavioral agency theory. This particular journal article has provided an improved understanding in regards to the sources or basis of foundation and further developments of the agency theory especially the part where it is applicable to the compensation to the executives. References Bosse, D. A., Phillips, R. A. (2016). Agency theory and bounded self-interest. Academy of Management Review, 41(2), 276-297. Cui, V., Ding, S., Liu, M., Wu, Z. (2017). Revisiting the Effect of Family Involvement on Corporate Social Responsibility: A Behavioral Agency Perspective. Journal of Business Ethics, 1-19. Madison, K., Holt, D. T., Kellermanns, F. W., Ranft, A. L. (2016). Viewing family firm behavior and governance through the lens of agency and stewardship theories. Family Business Review, 29(1), 65-93. Montano, D. E., Kasprzyk, D. (2015). Theory of reasoned action, theory of planned behavior, and the integrated behavioral model. Health behavior: Theory, research and practice, 95-124. Pepper, A., Gore, J. (2015). Behavioral agency theory: New foundations for theorizing about executive compensation. Journal of management, 41(4), 1045-1068. Shogren, K. A., Wehmeyer, M. L., Palmer, S. B., Forber-Pratt, A. J., Little, T. J., Lopez, S. (2015). Causal agency theory: Reconceptualizing a functional model of self-determination. Education and Training in Autism and Developmental Disabilities, 251-263.

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