SUMMARYIn the course of the introductory analysis (chapter one), it was observed that an agent, is someone who brings another person called the principal into contractual relationship with third parties. An agent is a person who is given the authority by the principal to enter into a contract on his behalf.
Therefore, agency theory provides
the framework for discussing the relationship that exists between the various
interest groups in an organization. It views the firm as a composite unite
consisting of separate group advocates it own interest and ensures it stands at
an advantageous position in relation to the firm. The theory brings out a clear
exposition of the actions of some managers who are not in shareholders and
maximization objective is therefore pursued.
Unfortunately the agent who suppose to uphold the
principle of fiduciary duty, a duty which includes the avoidance of conflict of
interest and not to take secret profit, secret reward or secret commission or a
bride, now revel in self interest pursuer putting in place management that
services most a time the self interest that seem to be their paramount objectives
as against the over all objectives of the firm. Thereby having goal divergent
as against goal congruence.
A principal is the person who employs
another person called, agent to act on his behalf.
Management
in all business and organization activities is the act of getting people
together to accomplish desired goals and objectives using available resources efficiently
and effectively. The managerial function of controlling is the measurement and
correction of the performance of activities of subordinate in order to make
sure that all levels of objectives and the plan devised to action them are being accomplished.
As a result of these observation and
experiences the author of this project has undertaken this research to find out
how, agency relationships can impact positively on the management control
system so as to ensure shareholders wealth maximization. Thus, these studies
very carefully pained out the similarities and more importantly the differences
between previous researches and the current study.
The instrument employed for the data
collection were questionnaires. The respondents included SMEs with and those
without agency relationship. Based on the analysis made at end of each table
chapter 4, the researcher summarizes that majority of small and medium scale business
are without agency relationship in Abi L. G. A of Cross River State. The result
of collaborate assertion that there is a significant effect of agency
relationship on the operations of small and medium scale business in Abi L. G.
A of Cross River State. Again, it was established that agency relationship has
impacted positively on management system even as management override has
greatly reduced. The result of table 4-4 attested to this.
CONCLUSION
The study of the implication of agency relationship on
the operations of SMEs have been quite revealing. It clearly points out that
Agency relationship is critical in maximizing business gains in particular and
cooperate administration in general. Although the study is limited to small and
medium scale enterprises, it can produce an amazing result if conducted on
cooperate organizations both in the cooperate business world and in government.
RECOMMENDATIONS
The
following recommendations are found necessary for government, Business
Organizations and researchers.
(i) Government
should evolve deliberate policies to develop small and medium scale enterprises
as they constitute the bedrock of micro economic development in the state.
(ii) Government
should promote accent to credit for SMEs through continuous funding of the bank
of industries (BOI).
(iii) A tax
regime that favours SMES should be put in place as a matter of urgency to
arrest the imminent collapse of SMEs in the State.
(vi) Agency
theory approach to business management should be embraced by all corporate
business especially those registered in the corporate Affairs Commission.
RECOMMENDED AREAS FOR FURTHER RESEARCH
This research was limited to small and Medium Scale
Enterprises. I therefore recommend that interested researchers wishing to
investigate the implication of Agency theory should consider Public Limited
Companies (PLC) for an expanded knowledge.
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APPENDIX A
Definitions of Terms
The
researcher wishes to define certain terms which to him could assist the reader
in understanding the study.
1. Agent: An agent is some one who enter into contractual
relationship with another person called the principal,
2. Agency: “agency” is defined as relationship between the
principal and the agent.
3. Principal: A
principal is “a person who, being sui juris, that is, of legal capacity, employ
some one else to do an act which “he or she is competent himself to do”
4. Agency Relationship: A
relationship in which a principal engages an agent to perform some service on
his or her behalf’s this involves delegating authority by the principal.
5. Fiduciary
Duty: This includes a duty to avoid conflict of interest and not to take
secret profits, secret reward or secret commission or a bride.
6. System:
A system has been defined in the Oxford English Dictionary as simply “a set or
assemblage of things connected, or interdependent, so as to form a complex
unity; a whole composed of parts in orderly arrangement according to some
scheme or plan”. .
7. Corporate
government: Is defines corporate government as the process, structures and
relationships through which the Board of Directors oversees what the executives
do to achieve the objective of the company.