The agency problem of corporate governance Abstract According to the corporate governance theory, when a company reaches a certain level of scale, a single organizational structure has been difficult to meet management needs, in order to improve organizational efficiency, separation of property rights adopted by most enterprises. However, the ensuing uncertainty of property rights, agency mechanisms such factors as a direct result of imperfect corporate structure of the confusing and inefficient. This paper analyzes the current prevalence of some agents on the right, including the shareholders and management authorities, creditors and shareholders and between controlling shareholders and minority shareholders a proxy problem. With case - Tyco International - agent explained the problem in practice abuses. However, corporate governance requires not only a comprehensive and effective corporate governance structures would be required beyond the structure of a number of specific governance mechanisms, the article the problems for the case gives some measures,tory burch online shop, such as improved contract mechanism,mbt chaussures,After the water spilled ( training, and enhance the independence of the Board, the development of intermediary institutions. And also put forward some proposals to reduce agency costs, to improve governance, but also can minimize agency costs. Keywords: corporate governance, principal-agent Abstract According to the theory of corporate governance, with the expansion of the company scale, the current single organization could no longer effectively functioned as originally scheduled. In order to improve the performance, most of the companies adopted the mechanism that separates the ownership from control. However, this mechanism would also give rise to a series of problems, such as unclarity of the property right and the incompleteness of the agency system, resulting in the chaos and low efficiency of the company structure and management. In this article, I will analyze some general agency problems existing in between the shareholder and the manger authority, the creditor and the shareholder and the major shareholder and the minus shareholder. I will illustrate the shortcomings of the agency problem by the case of Tyco International in practice. However, corporate governance needs several effective mechanisms which exceed the structure rather than a maturity structure itself. According to the case, t his study gives us some suggestions such as consummating the agency contract, improving independence of the board 's and developing the agency institution, etc. In addition, it also finds some measures which could reduce the agency cost as well. Keywords: Corporate governance, agency problem directory ---------------- Part I Introduction -------------------------------------------------- ---------------- 1 ------------------------- Part II Literature Review -------------------------------------------------- -2 third branch management theory 3.1 Corporate Governance and corporate governance implications --------------------- --------------------------------- 3 3.2 ------- basic system of corporate governance -------------------------------------------------- ----------- 3 3.3 ------------------------------ reasons of corporate governance --------------------------------------------- 4 3.4 corporate governance objectives ---------------------------------------------- ----------------------------- 5 Case Study Part IV - Tyco International 4.1 Introduction ------------------------------------------- ----------------------------------------- 6 4.2 fraud - -------------------------------------------------- -------------------------------- 6 4.3 Analysis of fraud ---------- -------------------------------------------------- ------------------ 6 the fifth part of the measures and conclusions ------------------ -------------------------------------------------- ----- 10 ----------------------------------- References -------------------------------------------------- ------ 15 first part of the Introduction 1.1 Background recently, whether international or domestic, each year a number of burst known listed companies fraud case. From the market point of view of many cases of financial fraud, a large part of the mechanism due to the imperfect agency. Shareholders and creditors, shareholders and the management agency problem between, so in theory, the layers of regulatory system has become weak, and supervisors do not want to fulfill their supervisory duties, and emboldened by the supervisor to maximize their own interests to pursue, and finally gradually into a corrupt fraud. we all know, property rights are the foundation of corporate governance issues, agency is the basic system of governance, contract management imperfect is the reason, as the ultimate goal of treatment is to reduce agency costs, making the company organizational structure to more effectively applied to modern markets. As for corporate governance in China has just started, the light of foreign cases have been summarized gains and losses, learn from each other, learn lessons, improve the corporate governance structure so that way we will be able to take some detours less. 1.2 study 80s from the 20th century, people began to concern corporate governance, through nearly 30 years of exploration, has been gradually improved in theory, but still in practice to seek a way to optimize corporate governance. The principal - agent production is the basic system of corporate governance, a problem which is also bound to affect the treatment effect, so for the principal-agent problem, if effectively reduce the agency problem of corporate governance will improve the results. This paper describes some of the benefits of corporate governance in the main body of the agency relationship, pointing out that corporate governance in the principal-agent problems between the management for the improvement of the market has some practical significance. Meanwhile, the article also incorporates case studies, for listed companies have reduce the principal-agent problem provide a reference. 1.3 Thesis structure this theory of corporate governance from the start, the first reference to corporate governance with the current mainstream research results on corporate governance have a co-ordinated awareness, the introduction of Tyco International's fraud case, integrated theory and practice, to seek out the theory of corporate governance the defects in practice and made some of my thoughts and insights. paper is structured as follows: second part of the literature review on corporate governance or corporate governance structure, was first introduced from abroad, the 20th century 80 , principal-agent theory is an integral part of corporate governance, the theoretical model developed rapidly. Jensen and Meckling agency relationship will be defined as services, including the number of decision-making power entrusted to the agent. Lunde Na (Radner, 1981) and Robin Steiner English (Rubbinstein, 1979) first used game model shows that maintaining long-term if principal and agent relationship, and both parties have sufficient confidence, then Pa Rectorite first order optimal risk sharing and incentives can be achieved. Later, Rogerson (Rogerson, 1985) and Lambert (1983) and Roberts (1982) and Townsend (1982) study confirmed the long-term relationships can be more effectively addressed incentives. in the game based on the theory,mbt schuhe auslass, Fama (Fama, 1980) proposed a reputation for problems, he believes in the principal-agent incentive problems have been exaggerated in the literature, in practice, the agent is bound agent market human behavior. After Holmstrom (Holmstrom) model code of the law point of view, at the same time, he and Ricart-Costa (1986) to study and propose a new the inconsistent results due to the investment manager as a reflection of their ability, and shareholders as a result of the investment of its financial return on assets, it is inconsistent on both sides led to the goal of the agency problem exist. in establishing the existence of principal-agent problem, the academic point of view there are parties to try to resolve related issues. Lai Seer (Lazear) and Rosen (1981) proposed system with the title as the basis of wages, this view from the Green and Stokey (1983) further development of this system is simple, the client can resolve the ethical issues. Solow (Solow, 1979) and Shapiro and Stiglitz (Shapiro and Stiglitz, 1984) will be interpreted as higher wages to prevent workers from enterprises to motivate lazy approach taken. The level of wages as part of supervision, to supervise and motivate a high-wage agents behavior. 20 century, the initial 90, the theorists of the meaning of corporate governance (Lin, 1997), effective institutional arrangements (Lin, 1997), principal-agent problem of (Weiying, 1999), property rights discussion (Weiying, 1999,2000; Sun Yongxiang, 2001) and governance model comparison (Weian, 2001) and so on are made some progress. in this article from the agency problem between the main stakeholders of the agency relationship, the realities of agency problems in practice, different objects in the role, easy to find out the root cause of the agency problem, and then integrated the various factors, to propose a solution proposals, such as shareholders and regulatory authorities for the agency problem, to increase incentive and monitoring mechanisms improve the behavior of binding agents, and creditors and shareholders can only increase the responsibility of the shareholders, of course, more solution is applied to both shareholders and management The. third branch management theory 3.1 Corporate Governance and corporate governance implications 3.1.1 the meaning of corporate governance Corporate governance is only 80 years in the 20th century caused widespread concern. Corporate governance is an industrial and commercial companies, according to management and control system, the company clearly defined the responsibility of all participants and the distribution of power, such as the board of directors, managers, shareholders and other stakeholders; clear that when making corporate affairs should follow the rules and procedures; to provide a structure to make it to set corporate goals and objectives to achieve these objectives and also provide a means of monitoring operations. corporate governance, the key stakeholders involved in the main are: shareholders, directors, managers, led by general manager, in addition to including employees, creditors, suppliers, customers and so on. Therefore, corporate governance is to study the relevant stakeholders of the rights, responsibilities and the relationship between interaction and mutual influence. 3.1.2 the meaning of corporate governance corporate governance (corporate governance) of the company system arrangements. Stanford University of Professor Qian Yingyi said: personnel, the relationship between workers, and from this alliance to achieve economic benefits. corporate governance structure includes: (1) how to configure and to exercise control; (2) How to monitor and evaluate the board of directors, managers and employees; (3) how to design and implement incentive mechanisms. , a collection of original ownership and management has become one of the management to get, in order to better manage the enterprise, the managers who appeared on behalf of the broker. But essentially, in the modern corporate structure, the company between the shareholders and regulatory authorities, creditors and shareholders and between controlling shareholders and small shareholders have this kind of principal-agent relationship, when the principal gives an agent certain powers and are required to perform the appropriate responsibility,MBT schuhe Günstig, commissioned agency is formed. In this sense we can see that the main object of study of corporate governance is: shareholders, management, creditors, minority shareholders and stakeholders of the agency relationship between the subjects. in the separation of ownership and management company after the agency has become a basic system of corporate governance, the next picture shows the basic model of corporate governance. 3.2.2 classic principal-agent theory the development of the industrial revolution as the product of agency system as the basis for corporate governance, how to lower transaction costs with the commission can make people get benefits equal to or more with the same cost of harvesting has become a new focus. However, in such a principal-agent system, the client also bear the risks, summarized in the performance of: (1) transaction information relating to the transaction between the parties is unequal. In other words, the agent may be in order to maximize their own interests and deliberately concealed some information, which makes the agent of the client can not understand some of the work the real behaviors and ability of the conditions which led to interests. (2) when the interests of the party to control the trade body for more information, cause when its contract low-quality liquid assets. (3) the transaction is completed, agents may occur with debt or between distributors of The so-called Some managers maximize their own interests in order to achieve the interests of shareholders at the loss, the risk of loss is subject to moral hazard. In short, the root cause of agency problems is related to the information asymmetry between interest groups. 3.3 corporate governance reasons with one exposure of the financial fraud incidents, we find the fact, that the occurrence of fraud is due to inadequate corporate governance structure . This is mainly reflected in the principal-agent relationship contract imperfections, due to the process agent, the principal-agent relationship is bound by a paper contract, but the contract is there are many loopholes, which makes some attribution of responsibility is unknown, uncertainty of property rights, etc. problems. And some people took advantage of this loophole, fictitious profits,toma de MBT, false results to pursue their own interests the most, which led to the shareholders, creditors interests. So the client to design a set of optimal incentive contract agents to ensure that all stakeholders can benefit most. 3.4 corporate governance objectives order to better development company, we began working on corporate governance structure, which is the main purpose is to find the smallest transaction cost the agency relationship , that is, to ensure effective under the agency relationship, and strive to minimize transaction costs. 3.4.1 the meaning of transaction costs transaction costs resulting from changes in property rights, it is the property division, transfer and trading of products. Individuals to exchange their ownership of assets and the establishment of exclusive rights such as the cost is generated when the transaction costs, including the establishment of contracts, monitoring costs, costs incurred to find other agents. Typically, transaction costs are the costs associated with management. 3.4.2 the composition of transaction costs Coase believes that another sense, transaction costs can be considered as a system cost. The process of establishing the agency relationship in the transaction costs are the costs of finding trading partners, negotiating costs, monitoring costs, how much of these costs directly affect the efficiency of the system to the company. to achieve the best corporate governance structure, a necessary condition is to make the agency cost and the smallest, and how reasonable the design contract, so as to minimize transaction costs, to be discussed later.