Accounting Theories and Current Issues
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Added on 2020-05-16
Accounting Theories and Current Issues
Added on 2020-05-16
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Running head: ACCOUNTING THEORIES AND CURRENT ISSUESAccounting Theories and Current IssuesName of the Student:Name of the University:Author Note
1ACCOUNTING THEORIES AND CURRENT ISSUESTable of ContentsIntroduction......................................................................................................................................2Agency theory – the selected journal review...................................................................................2Implications of the Agency theory..................................................................................................6Conclusion.......................................................................................................................................7References........................................................................................................................................8
2ACCOUNTING THEORIES AND CURRENT ISSUESIntroductionAccounting theories are continuously being modified and developed in order to improvethe accounting policies that have been used by the organizations all over the world. This meansthat the importance of accounting theories have grown in the recent times. The firms adopt andimplement the accounting theories depending on the nature of business and other related criteria(Battiston, 2016). This particular study aims to provide an overview into the implications of accountingtheories (agency theory, institutional theory, stakeholder theory, legitimacy theory, debt-covenant theories) to organizations. The particular journal article that has been chosen for thepurpose of reviewing and analyzing the implications of the agency theory is the “Agency Theoryand Bounded Self-Interest” by Douglas A. Bosse and Robert A. Phillips. The journal article allegedly suggests that the agency theory invariably draws attention tothe behavior of certain CEOs and boards that in totality lead to the creation of losses for thesociety. This particular study aims to provide an overview into the implications of agency theoryin regards to how the adoption of the particular theory affects the other entities in the relatedsociety.Agency theory – the selected journal reviewThe agency theory as mentioned in the journal is one of the most dominant theories in thecontext of an economic organization and management. The problem that this particular theoryaims to resolve is that the theory explains the agency problem that arises whenever a singleparty, who is the principal, employs another party, who is the agent for the purpose of creatingvalue. The particular problem that arises when such a situation occurs is that the particularinterests of the principal and the agents become different which ultimately lead to imperfectinformation to the principal about the contribution by the agent. This in turn leads to certaincosts, which are popularly known as agency costs which have to be ultimately borne by thesociety (Bauhr & Grimes, 2014).
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