Accounting Theory: Analysis of Agency and Stewardship Theories Report

This report provides a comprehensive analysis of two key accounting theories: agency theory and stewardship theory. It delves into the core concepts of each theory, supported by detailed examinations of relevant journal articles. The analysis includes the purpose of the investigations presented in the journals, the relationship of the theories to those purposes, key findings from the research, and implications for future study. The report also includes practical discussions, such as the relationship between legally enforceable claims and liabilities within the context of accounting frameworks. The report further explores the stewardship theory, including analysis of the concept, its applications, and implications. The report concludes with a summary of the findings and a list of cited references.

Running head: ACCOUNTING THEORY
Accounting theory
Name of the student
Name of the university
Authors note

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ACCOUNTING THEORY
Executive summary
The study topic discusses about two of the most important theory namely agency theory and
stewardship theory. Both of these theories play a huge part in defining the accounting
perspectives. Furthermore the concepts of these two theories have been described by use of
different related articles and research papers where the researchers have focused on the
describing different relationship of these articles with this subject matter. Other than that the
study topic also highlights the definition of framework and can legally enforceable claim
exist before the existence of liability and vice versa. This subject topic is supported with a
suitable conclusion at the end.

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Table of Contents
Introduction....................................................................................................................3
Discussion......................................................................................................................3
Agency theory............................................................................................................3
Details from journal paper 1..................................................................................3
Purpose of this investigation..................................................................................3
Relation of the theory with the purpose of this paper............................................3
Key findings...........................................................................................................3
Future implications.................................................................................................4
Details from journal paper 2..................................................................................4
Purpose of the investigation...................................................................................4
Relation of the theory with the purpose of this paper............................................4
Key findings...........................................................................................................5
Implications of the study........................................................................................5
Details from journal paper 3..................................................................................5

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Purpose of investigation.........................................................................................5
Relation of the theory with the purpose of this paper............................................6
Key findings...........................................................................................................6
Future implications.................................................................................................6
Practical discussions...................................................................................................6
Answer to question no 5.............................................................................................6
Can legally enforceable claim can exist before a liability exist.............................6
Stewardship Theory...................................................................................................7
Journal 1.................................................................................................................7
Solution to question 3a...........................................................................................7
Solution to question 3b...........................................................................................8
Solution to question 3c...........................................................................................8
Solution to question 3d...........................................................................................8
Journal 2.....................................................................................................................9
Solution to question 3a...........................................................................................9
Solution to question 3b...........................................................................................9
Solution to question 3c.........................................................................................10
Practical discussions.................................................................................................10
Solution to question 4...........................................................................................10
Answer to question no 5...........................................................................................11
Can legally enforceable claim can exist before a liability exist...........................11

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Conclusion....................................................................................................................11
References....................................................................................................................13
Introduction
The study assignment topic deals with two aspects which are considered as most
important in the light of accounting. These theories are namely agency theory and the
stewardship theory. The findings of these study assignment are conducted from the journal
articles. These articles help to find the purpose of the investigation, how the theory is related
to the purpose described, and the basic findings of the study; finally the future scopes of this
theory assigned. On the other hand the study report also deals with the main obligations
related to the conceptual framework of the liabilities. It further discusses on how the
framework is heavily relied towards the issue.
Discussion
Agency theory
Details from journal paper 1
Purpose of this investigation
The purpose of this study is to discuss the economic paradigm in the agency theory.
Further it is related to the ideas which transform the process related to the business school,
political science, laws and regulation. In this context of the agency theory the overall social
control is delivered related to the vulnerability of the theory (Cohen and Holder-Webb, 2006)
Relation of the theory with the purpose of this paper
This article discuss that the agency theory includes the solitary principal and the other
related issues. This theory has become more complex over the years. The process had
allowed the possibility which collects the terms of principles related to the goals.

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Key findings
It is found from the above article that the agency theory are universal. It includes the
organizations, professions, market role, capabilities, government, family, trust, social
exchange and others. Further it is also seen that sociologists have lost sights to the
interaction, selection of principles and satisfying the agent. Furthermore there are certain
unrealistic assumptions related to this aspect.
Future implications
The basic implications of agency cost in relation to the article are as follows-
 The agency cost helps to determine the financing sources even without having a tax
shield. But for this article the financing sources are highly related to the context of the
economical perspectives.
Details from journal paper 2
Purpose of the investigation
This article have discussed about the corporate governance theory. This theory had
described the overall effects on the agency cost and further influences the respective firm’s
performance. This theory is related to the aspect of the profit efficiency or how close the
firm’s benchmark will be affecting the overall conditions. Further it also control the
ownership of the tested theory. Therefore the aspect is highly related to the US banking
industry (Gomez-Mejia, L.R. and Wiseman 2007).
Relation of the theory with the purpose of this paper
In order to understand this aspect it is highly important to know about three areas. All
these areas are effectively addressed in this article. These are as follows-

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 Firstly the firm’s performance are usually related to the ratio addressed in the
financial statement or the stock market data. Thus further this value is beyond the
management control and can’t deal with the agency cost (Shapiro, S.P., 2005.).
Key findings
It is found from this article that the company have further focused on the profitability
aspect of the capital structure of the firm. Hence these areas are related to the agency theory
and the other proficiency theory as a whole. These outcomes had suggested that the
institution holders had initially monitored the effects related to the agency cost. Further these
data have performed the institutional ownership (French 2015) .
Implications of the study
This study approach had tested the overall hypothesis towards the implications of
agency cost virtually or industrially. Hence the overall research aspect could likely to cover
the capitals structure dimensions.
Details from journal paper 3
Purpose of investigation
This article has highlighted the overall corporate facts related to the tourism industry.
Further the overall growth and context of the process is related to the work ethics of the
managers and owners. This study area has highly initiated the key attributes related to the
tourism industry.

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Relation of the theory with the purpose of this paper
The study aspect has described the overall insights to the governance in the context of
the tourist industries. There are two types of owners related to this purpose. These are the
residential owners and investor owners. Thus these are dynamic to the organisation and
provides short-term management service. Further it can be said that the agency theory is
related to the nature of the model. Thus in the context of the data collection it can be said that
the tourism industry also reflects the industry theory.
Key findings
The article covers the below aspects. These are as under-
 Despite of the growth of the tourism industry. No previous enquiry have been set up.
 Secondly the agency theory had not thoroughly explained the relation to the tourism
industry of Australia.
Future implications
 It can be said that without the tax benefits on the tourism package there is no such use
of the agency theory.
 Furthermore this agency theory is of no use in the bottom of the corporate
governance. Thus the company shareholders importance could be neglected.
Practical discussions
Answer to question no 5
Can legally enforceable claim can exist before a liability exist
The owners’ equity deals with the asset claims of the company. However the owners
create an effective interest in the firms. It means that the firms can pay off the liabilities out
of these assets. Hence the accounting information discuss about the relations. The net assets
of the company discusses about the owners’ equity value. Further it can be said that liability

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value is differed from the company equity value. These are obliged to settle with the overall
cash outflow of the business. Moreover in can also be said that the other shares like the
preference share and the debenture value could also possess the relevant characteristics of
both the company assets and the limited liability aspects. Furthermore it can also be said that
the examples like accounts receivable and the general reserve could be also called as the
liability related to the owners’ equity.
Stewardship Theory
Journal 1
Solution to question 3a
Stewardship theory is considered as an alternative to principal-agent theory. It is
assumed in the theory that people contain positivity to meet their personal targets. According
to this concept, agents of principal –agent theory, personal interests are issued initially
because there are high opportunities intended to derive personal satisfaction. The purpose of
the investigation reflects the power and traditional beliefs incorporated in creating employee
behavior and employee assumptions. The idea behind the concept of stewardship is to
analyze the concept and to understand how much it is idealistic and futile after trying the
concept. It involves motivational theory, which desires growth, achievements, affiliationand
self-actualization. D Dominant paradigm renders the belief on external control and
incentives; it insists trust, autonomous inheritance and most importantly intrinsic motivation.
The socio-political dimension mainly consists of bureaucratic controls, which includes
auditing and surveillance. This factor indicates that there might be scenarios which might be
leading to corruption, if employees are not closely monitored. Organizations, which are
associated to fraud,leadto distrust among the employees. It leads to arisingof fear factor
among the team where they might be thinking that the products may displease the clients.
Public managers prefer to select traditional monitoring on employees and external incentives.

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Solution to question 3b
Purpose of the paper highlights on stewardship that it is idealistic and dependent on
situational factors identified in large-scale organizations. The concept is explored to the
extent in which Stewardship with a bureaucratic approach. The concept describes on human
opportunistic issues embedded in governance of stewardship. The purpose is highlighted on
developing a model where employees face in the point of determining the conditions within
large-scale operations.
Solution to question 3c
The concept of Stewardship is intended as challenge to the dominant principle –agent
paradigm (Roch et al. 2018).It generally highlights the possibility to emerge in a situation,
which is governed through the assumptions according to human opportunity paradigm. The
case theory of Edmond Model been optimized as an important real life impact. The concept
focus on education purpose, which is an initiative, consigned to growing movement
throughout the world, which provides value to the management.
Solution to question 3d
Implications are required to consider the importance of understanding concept of
Earning per Share and applicability of the concept. Political and social value flow contains a
dynamical relationship conducted in terms of higher degree homogeneity and value
cohesiveness(Hinings, Greenwood and Meyer. 2018). Implications of stewardship in private
sector are entrenched to shareholder capitalization, which motivates the goal worthy attribute.

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Journal 2
Solution to question 3a
The insights of business humor lead the modern organizations to conduct them in
accordance to framework(Caldwell et al. 2008).There is certain degree of misconduct by the
management, which leads to ethical misconduct, dishonesty pattern of a society, which
dubbed as cheating culture. There are unending ethical blunders associated to business
ethicsthe business plans of an entity. However, one of the main purposes in of this concept is
to recommend the business leaders by helping the company to create long terms goals of the
organization(Gârleanu and Pedersen. 2018). This planning analysis will lead them to enhance
long-term wealth and building trust within the employees to gain ethical stewards.
Solution to question 3b
Best leaders have the perception to follow ethical stewards which incurs higher level
of assurance from the followers. A perception relating to trust-worthiness is proposed in
terms of behaviors attributed by the leaders for enhancing ethical stewards. Ethical
stewardship highlighted as the honor of duties which is owed to the staffs, employees,
shareholders. Preparation of long term plans, which shall be implementing to achieve goals
by the shareholders. Generating trustworthiness to the managers who can keep faith on his
employees, perceptions relating to the nature of steward trustworthiness reinforce in the
building of trust among everyone by closely associating with each other’s individual
perception. Creating sustainable competitive advantage focusing on the outcome associated
on value creation which impacts by trust (DHU and HBP. 2019).

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Solution to question 3c
The concept of ethical stewardship consistsof the roots involved in stakeholder
feature. The theory is related to the dimension where managers are considered as steward,
their motives are focused to align with objectives associating to numerous
parties(Glinkowska and Kaczmarek. 2015). Governance theories are associated to generate
performance and accountability concepts on how the values and goals are integrated within
the system and structure created within an organization. Principle of leadership and
management developed to enhance the commitment upon which that is related to the system.
Solution to question 3d
The company insight suggest to choose corporate governance commonly in attribute
to basic problems inherited to the opportunities involved within substantial organizational
culture. Risk and assertions related to this topic focused on the hiring of professional manager
in order to perform on the interest in accordance to the shareholders. The effort is planned to
maximize the performance of employees. Stakeholder entity shall design the plan on the
concept of balancing the needs of corporate owners supporting to other stakeholders as an
alternative governance model (Robinson and Robinson. 2018).
Practical discussions
Solution to question 4
Obligation is a course of action, which someone is required to take, it is either legal or
moral. It is referred as the responsibility in order to achieve the target of a contract. However,
if obligation is not met then legal system imposes recourse for the injured party. It represents
outstanding debt or regular payments, which is made by the people. Obligations are usually
an important aspect of personal finance (Lourenço, Martin and Stützle. 2019). Financial
obligation ratio estimates the value of household debt payment to disposable income. It is an
useful yardstick preferred for individual budgets. Framework relies on the statement of