The New Form Agency Problem: Cooperation and Circular Agency

Chen Chun-Hung (), Chen Kuan-Wei (), Chen Yu-Fan () and Lin Chia-Yin
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Chen Chun-Hung: Department of Accounting, Chaoyang University of Technology, 168, Jifeng E. Rd., Wufeng District, Taichung, 413310 Taiwan
Chen Kuan-Wei: Doctoral Program in Design, College of Design, National Taipei University of Technology, Taipei, Taiwan
Chen Yu-Fan: Institute of Biomedical Informatics, National Yang Ming Chiao Tung University, Hsinchu, Taiwan
Lin Chia-Yin: Department of Accounting, Chaoyang University of Technology, Taichung, Taiwan

The B.E. Journal of Economic Analysis & Policy, 2024, vol. 24, issue 1, 97-116

Abstract: This study explores cooperation in the circular agency problem. In circular agency, an agent has weak power in the face of its principal. This research explores a cooperation mechanism in which three participants simultaneously have the identity of principal and agent, in order to illuminate the power struggle between the board of directors, the external shareholder, and the manager of a company. We use the equilibrium results to explain the phenomenon of cooperation between members of the enterprise in practice. Our results have implications for firm governance.

Keywords: agency problem; circular agency; cooperation (search for similar items in EconPapers)
JEL-codes: G31 G32 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1515/bejeap-2022-0188

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