Each company has a different culture that dictates how it is governed or operated by its leaders....

Question

Each company has a different culture that dictates how it is governed or operated by its leaders. Given the differences in cultures, even companies with similar models of governance can operate in very distinct and different ways. Exploring the theory on governance can give insight into your company.

For this essay, you will conduct research in order tocontrast agency theory and stewardship theoryin corporate governance.In your essay, be sure to address the following comments:

What are the responsibilities of top management and leaders in relation to corporate governance and strategic planning?

What are the benefits of strategic management?

What are the roles and responsibilities of the board of directors? Please provide an example of a board of directors that did, or did not meet its responsibilities to the company.

Explain the Sarbanes-Oxley Act and its impact on corporate governance. How has it changed the way leaders do business in the United States?

Conclude with a discussion of the ways the strategic audit helps corporate governance.

Your essay should be at least two pages in length, double-spaced, and in 12 pt. Times New Roman font. The title and reference pages do not count towards the minimum page length. To complete this assignment, a minimum of three reputable sources must be used, cited, and referenced. Other good sources are public libraries, Google Scholar, and academic websites.

Robert · Accepted Answer

Answer – In order to give out and understand the theories of Corporate Governance by way 
of a contrast, following explains the layman meaning of both the Agency Theory and  the 
Stewardship Theory: 
 The Agency Theory, as the name suggests, talks about the concept of existence of an 
Agent- Principal relationship. The said relationship exists between the Management and 
the shareholders i.e. the owners of the Company, where the Shareholders are collectively 
the Principal towards whom the Agent i.e. the Management, including the top key 
positions, are responsible by way of the latter’s responsibility to take care of the former 
interests as primary and sole purpose of their existence in the organisation. The cons of 
this theory include the conflict of interest that may arise between the path the managerial 
personnel have to choose between furthering their own or their Principal’s interests 
where one will lead to inhibition of the other. 
 On the other hand, the Stewardship theory assumes that the Management is a self-driven, 
responsible shoulder to bear the responsible agency position flowing from the owners i.e. 
Shareholders of the Company. It does not have to be guided or incentivised to move 
towards the achievement of shareholders’ profit making targets. Also, the steering of the 
organisation being in the hands of these management shaped agents is enough for them 
to make use of their powerful positions and trust imposed in them by the owners of the 
Company to be able to move them towards owners’ goals in which they also see their 
achievement and self growth.  
 Hence, both the above explanations have contrasting thoughts so as to the status of 
mindset and genre of activities played by the key managerial positions in organisations. 
However, whatever may be the contrast lying in the theories of Strategic planning and 
corporate governance,

Each company has a different culture that dictates how it is governed or operated by its leaders. Given the differences in cultures, even companies with similar models of governance can operate in...

Answer To: Each company has a different culture that dictates how it is governed or operated by its leaders....

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