Journal of Accounting and Taxation
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Article Number - 12339F31292

Vol.5(2), pp. 38-47 , July 2013
DOI: 10.5897/JAT11.032
ISSN: 2141-6664

Full Length Research Paper

Role of the agency theory in implementing management's control

Mohammad Namazi
  • Mohammad Namazi
  • Department of Accounting, College of Economics, Management and Social Science, Shiraz University, Iran.
  • Google Scholar

 Accepted: 15 March 2012  Published: 31 July 2013

Copyright © 2013 Author(s) retain the copyright of this article.
This article is published under the terms of the Creative Commons Attribution License 4.0

The major purpose of this article is to analyze the role of the "Agency Theory" in implementing effective control mechanisms. In effect, various control paradigms under the following situations are elaborated: a) When the agent's control system is merely based on the output under the condition of uncertainty; b) When the control mechanism is based on the output, and information about agent's action or effort; c) When the agent's monitoring control is based on the output, agent's action and additional variables. It is concluded that agency theory posits different organizational, behavioral, economical and controlling roles, and it is a potent framework which can be extricated in promulgation of the management control systems. Furthermore, the implementation of a control mechanism depends on the amount and contents of the public and/ or private information that exist in the domain of the managerial accounting system. The disseminated information and the concurrent variables surrounding the agency relations are also vital elements in creating any control system. Finally, the optimal control mechanism under each preceding conditions are revealed.


Key words: Agency theory, management control, accounting information systems, information asymmetry.


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APA (2013). Role of the agency theory in implementing management's control. Journal of Accounting and Taxation, 5(2), 38-47.
Chicago Mohammad Namazi. "Role of the agency theory in implementing management's control." Journal of Accounting and Taxation 5, no. 2 (2013): 38-47.
MLA Mohammad Namazi. "Role of the agency theory in implementing management's control." Journal of Accounting and Taxation 5.2 (2013): 38-47.
DOI 10.5897/JAT11.032

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