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We will show that agency theory can be considered a response to the most important ideas advanced by Berle and Means, and then by Berle (and others), after the New Deal and the Second World War.
Comparison of these two themes of reflection leads us to identify two theorizations, and two radically different conceptions of the firm and the corporation.
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You can view samples of our professional work here.Berle’s argument was based on the premise of that shareholders were owners of the company and directors were agents or trustees of these owners.Thus he believed that corporations should be run for shareholders’ interests.Shortly thereafter, Berle replied to this argument with the view that the managerial accountability could be reduced by increasing managerial discretion.Moreover, he believed that it was impossible to directors to be accountable to all constituencies.*Prices in US$ apply to orders placed in the Americas only.Prices in GBP apply to orders placed in Great Britain only.Therefore we would like to draw your attention to our House Rules.Disclaimer: This work has been submitted by a student.To address these issues, we start by considering the questions raised in the early twentieth century about the nature of the corporation and the status of managers; and how, in response to these questions, Berle constructed a certain conceptualization of the corporation and of managerial capitalism; we shall then revisit the contract-based approach of Jensen and Meckling, to assess the theoretical and ideological content and show how it was actually strongly opposed to Berle’s vision.Lastly, by way of conclusion, we shall endeavor to show how the opposition between these two theorizations should be seen, above all, as an opposition between two theories that are both “performative” rather than positive, and that the apparent success of agency theory and the dominance of shareholder primacy in corporate governance can only be understood in an institutional and political perspective.