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To resolve the corporate governance problem, agency theory recommends an independent board structure and the use of equity-based compensation for senior executives. Examine the extent to which agency theory recommendations help to resolve the corporate go - Essay Example

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The sole proprietorship is business venture that is managed and owned by individual. The profits realized are taxed in the form of an individual’s income and the…
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To resolve the corporate governance problem, agency theory recommends an independent board structure and the use of equity-based compensation for senior executives. Examine the extent to which agency theory recommendations help to resolve the corporate go
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"To resolve the corporate governance problem, agency theory recommends an independent board structure and the use of equity-based compensation for senior executives. Examine the extent to which agency theory recommendations help to resolve the corporate go"

Download file to see previous pages Its other feature is that if one of the partners dies or leaves the company, then the partnership maybe terminated. In addition, the partnership may limit the number of partners and the challenge these firms encounter is raising capital or cash. Just like the sole proprietorship, the profits are taxed based on personal income. The control of the company is in the hands of the general partners. As for the limited corporation, some of the requirements are the memorandum and articles of Association. In this particular venture, the liabilities are limited and the profits realized by the corporations are taxed according to the rates of the corporate tax. The life of the company is usually not limited and it consists of the board of directors (Daily, Dalton & Cannella, 2003).
For the limited corporation, the board of directors can either be single tier system or the two tier system depending on the country. At the top echelon of management are the chair and the Chief Executive Office (CEO) after which they are followed by the executive directors and the non-executive directors. The two tier system consists of the supervisory board at the helm of the affairs followed by the chair and the CEO who are above the executive directors (Dalton, Daily, Ellstrand & Johnson, 1998). Japan and Germany are the example of countries that employ the two tier system while the UK and the US incorporate the one tier system. In the US, the owners of the companies were distinct from those who manage or control the companies. There are several issues that that usually emerge in reference to corporate governance. Some of these issues are associated with corporate are the irregularities of finance; the issue of compensation packages for the executives; the management of the financial risks; and acquisition and merger of corporate. The Organisation for Economic Co-operation and Development (2004) illuminates the ideal principles that should be incorporated in the ...Download file to see next pagesRead More
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