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Corporate Governance

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What is agency theory? Write down the role of corporate governance in resolving the issue:

Solution: Agency Theory: Agency theory shows an association among principal and agent. In this relationship a principal appoint an agent who executes duties on the behalf of principal. Principal gave some sort of power to the agent of making decisions along by keeping in mind his owners interest. Mainly agency theory solves the following two problems: a. Intention of principal and agent are in spar. b. Acceptance of risk from both points of views. Corporate Governance:
Corporate governance offer law and regulations, policies and practice to supervise and organize the organizations. They present policies and directions in a proper way that can express the objectives of the organization and its stakeholders.
Agency Theory and Corporate Governance: Mainly corporate governance starts with the concept of agency theory. Every person within the association and exterior of it go behind these policies to evade risk and clashes. Corporate governance offer rules and instructions and also classifies responsibilities and rights and duties of stakeholders of an organization. We conclude that corporate governance and agency theory go next to with each other.
Role of Corporate Governance:
Role of corporate governance in issue resolving is as follows: * When the agents pursue the ascertain practices different risks such as fraud and divergence for both agent and principal decrease. | * Improve the position and status of the organization. | * Corporate governance undoubtedly classifies all the roles of both agent and principal. | * Proficiently and effectively monitor and appraise performance....

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