What is the main reason that an agency relationship exists in the corporate form of organization?

Question

Business Finance

Answer 1

An agency relationship means one person or entity is authorized to act on behalf on another person or entity. A corporation is a artificial entity. That is, it is legally recognized as a separate entity, but it does not actually exist apart from its officers and employees. Therefore, all 'corporate actions' are actually those taken by the officers or employees on behalf of the corporation. The legal documents creating the corporation can't act on their own.

Answer 2

An agency relationship (aka principal-agent) relationship exists any time that a principal delegates decision making authority to an agent. The main type of agency relationship that concerns finance is the manager as agent and shareholder as principal. The main reason this relationship exists is that in larger firms ownership by the shareholders is separate from control by the managers.

p.s. I suspect you meant to ask about agency problems rather than agency relationships.

Answer 3

The main reason that an agency effect occurs in organisations is because the firm's mission requires the contributions of numerous different parties in order to be realised.

These parties each have different costs & benefits from their involvement and this difference of perspectives creates the agency effect...

ie shareholders, the board, business managers & employees: each view the reason for the existence of the company from a different perspective and their contribution to it varies in accordance with this.

Answer 4

Outsourcing the sales organization saves the corporation a lot of money. However, not all businesses would benefit from an agency sales model.

Answer 5

Do you mean ad agency? It's to supply an un-biased, third party look at the product, as well as supply people who are professionals in the creative field.

Answer 6

when workflow alters rapidly agency staff can be taken on or let go with much more ease than permanent staff but do cost the company more money

Answer 7

because anything that will create the illusion of professionalism, a company will do to acquire your assets or control of you.
corporations can be defined as mindless cancer cells spreading and devouring everything in its path with little thought to consequences. remember, a parasite does not always know when it has killed the host, mostly concentrating on self-preservation,ironically - even at the cost of destroying itself.

Answer 8

Not sure what you mean? like agengy as in staffing?? if so then it is supply and demand/costs.

Answer 9

Its a tax writeoff.