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Co-operative governance and management control systems: an agency costs theoretical approach

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Author Info

  • Sigismundo Bialoskorski Neto

    (University of São Paulo – USP/RP)

  • Marcelo Francini Girão Barroso

    (University of São Paulo)

  • Amaury José Rezende

    (University of São Paulo)

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    Abstract

    Co-operative organizations have a unique property and decision rights distribution system that involve management problems and transaction costs. Such structure creates equity rights and risk transfers that directly affect these organizations' self-management efficiency. This paper analyses those costs and sources of inefficiency to explain their problems in two complementary and different ways. First it discusses main governance aspects that generate agency conflicts; second it analyses the characteristics of managerial systems which generate informational asymmetry and monitoring problems. An analysis regarding both property rights distribution among members and decision rights distribution between elected members and hired professional executives indicates that equity rights and risk sharing in co-operative's contractual relations leads to a typology on the kind of governance, the management model and the managerial information system characteristics which could reduce agency problems. The methodology used was theoretical discussion, and comparison of the management models and systems of rural credit and agricultural co-operatives in Brazil. A questionnaire was applied in five cooperatives to compare management models and systems. Our final considerations show that better co-operative's management model organization, as well as management systems, could reduce their agency costs.

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    Bibliographic Info

    Article provided by Fucape Business School in its journal Brazilian Business Review.

    Volume (Year): 9 (2012)
    Issue (Month): 2 (April)
    Pages: 68-87

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    Handle: RePEc:bbz:fcpbbr:v:9:y:2012:i:2:p:68-87

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    Postal: Fucape Business School Brazilian Business Review Av. Fernando Ferrari, 1358, Boa Vista CEP 29075-505 Vitória-ES
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    Related research

    Keywords: co-operative governance; management accounting systems; agency costs.;

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    1. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    2. Spekle, Roland F., 2001. "Explaining management control structure variety: a transaction cost economics perspective," Accounting, Organizations and Society, Elsevier, vol. 26(4-5), pages 419-441.
    3. Hansmann, Henry, 1988. "Ownership of the Firm," Journal of Law, Economics and Organization, Oxford University Press, vol. 4(2), pages 267-304, Fall.
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