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Designing a Model of Agency Costs of Principal-agent Relation Using Systemic Thinking
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Mohammad Hussein Setayesh *1   , Ali Ghayouri Moghaddam1 |
| 1- Shiraz University |
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Abstract: (2074 Views) |
The primary motivation is the existing gap in previous literature including taking into account only some of the relevant mechanisms and variables in principal-agent relationship, ignoring correlation and alternative relationship between moderating mechanisms of agency costs and most importantly, neglecting the feedback effects between different variables and mechanisms that lead to unreliable results. Therefore, the authors try to suggest a reliable solution for the above-mentioned deficiencies using a holistic model developed from a systemic thinking.
In the current research, firstly, the variables, mechanisms and their present relationships are systematically extracted through the historical recognition method in the form of library studies. Then, using Vensim DSS software, a practical model for optimization of agency costs in the principal-agent relationship is proposed. By the reviewing relevant literature and theoretical backgrounds, 11 important mechanisms that may have a crucial role in diminishing agency conflicts are recognized and utilized in the model. These mechanisms include (1) board of directors (2) independent auditor (3) debt (4) dividends (5) managers' labor market (6) corporate control market (7) product market competition (8) managers compensation (9) financial analysts (10) organizational identity and (11) manager’s gender. In addition to filling the gap in the current literature, the proposed model in this article indicates that the relationship between variables as well as mechanisms associated with agency costs in the principal-agent relationship are too complicated to address them, using methods such as regression. |
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| Keywords: Agency Costs on the principal-agent, Systemic Tinking, Moderating Mechanisms of Agency Conflict and Modeling. |
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Full-Text [PDF 954 kb]
(2251 Downloads)
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Type of Study: Research |
Subject:
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