The Influence of Conflicts of Interest on Firm Value

Georgescu Cristina Elena ()
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Georgescu Cristina Elena: Ovidius University of Constanta

Ovidius University Annals, Economic Sciences Series, 2012, vol. XII, issue 2, 1136-1140

Abstract: Agency theory was first developed by Jensen and Meckling. This theory has made substantial additions in financial theory because the corporation is not approached from unique perspective, that the shareholders and maximise their wealth, but try to offer solutions to harmonize the interests of stakeholders. In his business, company management must consider conflicts arising from bringing together a multitude of interests. If not recognized and properly regulated, these conflicts can jeopardize the effectiveness and may lead to reduced market value of the firm. Agency theory integrates the complexity of decision making within the firm, arguing the composition of the financial structure of the firm to maximize its value. Considering these circumstances, our paper examines application of the agency theory in Romania.

Keywords: Corporate governance; conflicts of interest; stakeholders. (search for similar items in EconPapers)
JEL-codes: D G32 (search for similar items in EconPapers)
Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:ovi:oviste:v:xii:y:2012:i:2:p:1136-1140

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