Nowadays Corporation has become very powerful and important around the world. They have reached everywhere across the globe with different sizes, types and capabilities. The governance of corporate has huge effect on economies. There is a major loss of trust from shareholders and the market value is largely affected. Due to the globalization, the govern role has lessen which means more need for accountability. Crane and Matten (2007) Corporate governance has become an important factor in managing organizations in nowadays global and complex environment. Corporate governance a set of processes and structures for controlling and directing an organization. It consists with set of rules, which governs the relationships (Middle Eastern Finance and
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This theory defined as relationship between the principles for example, relationships of shareholders and agents, company executives and managers. Shareholder, owners of the organization hires agents to work; principles delegate the running of business to the directors or managers, who are the shareholder’s agents (Clarke, 2004). There are two factors which influence the agency theory. Daily (2003) Agency theory is very simple theory which lessens the corporation to only two participants who are managers and shareholders. Second of all, in this theory it has been suggested that employees and managers could become self-interested. Shareholders expect the agents and its workers to make decision accordingly to principle interest. (Padilla, 2000) Main problem arise, when they separate ownership and control in agency theory. Davis, Schoorman and Donaldson (1997) Holmstrom and Milgrom (1994) explained that agents only concentrate on projects that have high return rate and have fixed salary without incentives instead giving unstable incentives payments. It could provide very fair assessment but it doesn’t mean that there is no risk of misconduct. They also used positivist approach where the rules made by the principles and agents which are controlled to maximize the shareholder value, therefore more individual views are being applied in this theory. Clarke (2004) According to the Middle Eastern Finance …show more content…
There are four layers of the management at the store levels as well. Tesco comprise of the board directors consist of committees who have to report performance of the organization to the board of directors. But all the power is with the CEO of Tesco. Tesco follows stakeholder theory whereas being in the form of group network of stakeholders, each department manager given power to take their own decision according to themselves to achieve organization goals. Figure 2 below illustrates a Tesco store structure. Every store of Tesco do not have similar structure. Other store structure could be little different according to its location and factors around
This theory defined as relationship between the principles for example, relationships of shareholders and agents, company executives and managers. Shareholder, owners of the organization hires agents to work; principles delegate the running of business to the directors or managers, who are the shareholder’s agents (Clarke, 2004). There are two factors which influence the agency theory. Daily (2003) Agency theory is very simple theory which lessens the corporation to only two participants who are managers and shareholders. Second of all, in this theory it has been suggested that employees and managers could become self-interested. Shareholders expect the agents and its workers to make decision accordingly to principle interest. (Padilla, 2000) Main problem arise, when they separate ownership and control in agency theory. Davis, Schoorman and Donaldson (1997) Holmstrom and Milgrom (1994) explained that agents only concentrate on projects that have high return rate and have fixed salary without incentives instead giving unstable incentives payments. It could provide very fair assessment but it doesn’t mean that there is no risk of misconduct. They also used positivist approach where the rules made by the principles and agents which are controlled to maximize the shareholder value, therefore more individual views are being applied in this theory. Clarke (2004) According to the Middle Eastern Finance …show more content…
There are four layers of the management at the store levels as well. Tesco comprise of the board directors consist of committees who have to report performance of the organization to the board of directors. But all the power is with the CEO of Tesco. Tesco follows stakeholder theory whereas being in the form of group network of stakeholders, each department manager given power to take their own decision according to themselves to achieve organization goals. Figure 2 below illustrates a Tesco store structure. Every store of Tesco do not have similar structure. Other store structure could be little different according to its location and factors around