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This study aimed to find current issues with regard to progress in the field of property rights, organizational agency, and financial aspects to formulate a theory to guide the ownership framework of an organization (Jensen and William 305). The authors assert that the idea of the business corporations that are held publicly is an awesome social invention based on the common goal of creating wealth using investment vehicles that are supported by firms (Ang, Rebel and James 84; Jensen and William 311). The authors found that the number of people entrusting their personal wealth to managers in firms is growing steadily. However, there are no statistics given to support the argument. Evidence-based findings should be backed by crucial statistics. Investor-manager relationships are also anchored on the complex factors that delineate the rights of investors (Jensen and William 343). This finding could have a negative long-term impact on investments made by individuals in the corporate world because persons would stop investing upon realizing that their rights are being violated in the process of investing in firms. The agency feature is crucial in financial investment (Ang et al 90). The study found that there has been consistent growth in the adoption of the corporate form and market monetary value of established firms (Jensen and William 347). This could be an indication that creditors and investors have not been discouraged from investing by inherent agency costs. This observation could have been better if the authors established a comparison between investment trends and increase in agency costs using computable and reliable data.
In conclusion, the authors state that agency costs are affected by common and statutory laws that are crucial in shaping contracts. This finding has been reported elsewhere (Ang et al 97). The shortcomings notwithstanding, organizations have survived the market over several decades.
Works Cited
Ang, James S., Rebel A. Cole, and James Wuh Lin. “Agency costs and ownership structure.” The Journal of Finance 55.1 (2000): 81-106. Print.
Jensen, Michael C., and William H. Meckling. “Theory of the firm: Managerial behavior, agency costs and ownership structure.” Journal of financial economics 3.4 (1976): 305-360. Print.
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