Agency theory and accounting choice

Anderson and Macie said there will be continual diverging interests between the principal and the agent, unless an effort is made in order to align these interests. This study is aimed at surveying the nature and effects of financial reward systems available for firms on the profitability of the firms and how it can be used to reduce the principal-agent problems in business organizations.

Therefore, efforts must be made to reconcile the interests of the agent and his principal.

This is because the synergy required and the strategic fit will be lacking in a firm operating under conflicts of interests. Questionnaire, Data Analysis, Abstract:: Agency theory suggests that the firm can be viewed as a nexus of contracts loosely defined between the resource holders.

Thus, the literature review was more of materials from journals, internet amongst others which are difficult to come by and even more difficult to analyse than textbooks. Secondary data, Data Analysis,Abstract:: The cornerstone of agency theory is the assumption that the interests of principals and agent diverge.

It is also hoped that this study will broaden the knowledge of the students of accounting. Finally, it is hoped that this research work will be a guide and research material to students who wish to carry out similar research in the future.

This is defined as a reward system based on level of performance or certain percentage of sales. The primary agency relationships in business are those: Agency relationship arises whenever one or more individuals hire one or more individuals called agent to perform some services and then delegate decision making authorities to the agent.

However, not all the information required could be found from available records. To add to the current body of knowledge in the area of agency theory and accounting choice. The primary focus of this study is on how the various reward systems especially the financial reward systems helps to resolve the conflicts between the principal and agent without compromising the accounting policies, standards accounting standards and regulations.

These small scale enterprises cannot function properly if they are not These relationships are not necessarily harmonious; indeed, agency theory is concerned with agency conflict or conflict of interest between agent and principal and this has implication for among other things, corporate governance and business ethics.

This is defined as profit after tax.

Signalling, Agency Theory and Accounting Policy Choice

This is defined as the monetary reward given to employees after improved performances. When agency theory occur, it also tends to give rise to agency costs, which are expenses incurred in order to sustain an effective agency relationship e. In addition to this, dearth of literature and the paucity of current and up to date research materials and information in my vicinity.

This is defined as all financial rewards independent of performance which is fixed and constant every year irrespective of performance.

Instant Share On Social Media: So, while the principal would be fine with profit maximization, the agent would want the best possible reward system for his efforts.


The nigeria stock excahnge denoted by NSE is a government establishment where stocks are traded on a daillEBSCOhost serves thousands of libraries with premium essays, articles and other content including Signalling, Agency Theory and Accounting Policy Choice.

Get access to over 12 million other articles! CHAPTER ONE INTRODUCTION BACKGROUND TO THE STUDY This study analyses the effect of the agency theory and accounting choice usually been made by managers of Nigeria listed companies.

This chapter reviews agency theory and its application to management accounting issues. I begin by explaining how agency models are formulated to capture incentive problems caused by moral hazard and adverse selection problems, and discuss the reasons why agency theory models are difficult to solve.

ISSUE AND CHALLENGES OF AGENCY THEORY IN ACCOUNTING CHOICE IN NIGERIA, Largest Undergraduate Projects Repository, Research Works and Materials. Download Undergraduate Projects Topics and Materials Accounting.

Empirical research on accounting choice$ Thomas killarney10mile.coma, Thomas,*, agency costs, information asymmetries, complex relations absent a comprehensive theory.

Based on our review of prior work, we conclude that accounting research has.

Request PDF on ResearchGate | Signalling, Agency Theory and Accounting Policy Choice | Signalling and agency theories appear in the accounting literature to be competing theories.

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Agency theory and accounting choice
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