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The Influence of Conflicts of Interest on Firm Value

Author

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  • Georgescu Cristina Elena

    (Ovidius University of Constanta)

Abstract

Agency theory was first developed by Jensen and Meckling. This theory has made substantial additions in financial theory because the corporation is not approached from unique perspective, that the shareholders and maximise their wealth, but try to offer solutions to harmonize the interests of stakeholders. In his business, company management must consider conflicts arising from bringing together a multitude of interests. If not recognized and properly regulated, these conflicts can jeopardize the effectiveness and may lead to reduced market value of the firm. Agency theory integrates the complexity of decision making within the firm, arguing the composition of the financial structure of the firm to maximize its value. Considering these circumstances, our paper examines application of the agency theory in Romania.

Suggested Citation

  • Georgescu Cristina Elena, 2012. "The Influence of Conflicts of Interest on Firm Value," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(2), pages 1136-1140, Decembre.
    • Handle: RePEc:ovi:oviste:v:xii:y:2012:i:2:p:1136-1140
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    More about this item

    Keywords

    Corporate governance; conflicts of interest; stakeholders.;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • D - Microeconomics

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