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Government (Importance of government (To ensure that organisation are…

- - - - Stewardship theory
        
        People in power. Will act in the benefits of those who engaged them
        
        No interruption of self-interest of directors to corporate goals.
        
        Defined by relationship between directors and shareholders
        
        Interest of other stakeholders assumed to addressed by relevant outside laws
      - Agency theory
        
        Assumes that people have a self-interest egoist approach
        
        Relationship betwween agent and principal
        
        Agent are premitted to act in place of and make decision on behalf of principal
        
        Agent may not naturally act in the best interest of the principal
        
        Key assumptions
        
        All individual will act in their own self-interest
        
        Agent are in a position of power
        
        Three type of agency costs
        
        Bonding cost
        
        Residual cost
        
        Monitoring cost
        
        Cost arised as a result of
        
        poor communication
        
        poor understandings
        
        Information asymmentry
        
        innocent and unintended self-interested behaviour by agent
        
        deliberate legal self-interest behaviour
        
        illegal self-interested behaviour by agent