Agency relationship between government and the shareholders, Finance Basics

Agency Relationship between Government and the Shareholders

Shareholders and via extension, the company they own operate within the environment requiring the charter or license granted through the government.  Such government will expect the company and via extension its shareholders to activate the business in a manner that is beneficial to the complete the society and economy.

In this agency relationship the government is the principal whereas the company is the agent.  So it becomes an agent when it has to gather tax on behalf of the government particularly withholding tax and PAYE.

The company carries on business also on behalf of the government since the government does not have sufficient capital resources.  It offers conductive investment environment for the company and share in the benefit of the company in form of taxes.

The company and its shareholders as agents may obtain some actions which might prejudice the position or interest of the government like the principal.  These actions comprises as:

  • Tax evasion: This comprises the failure to provide the exact picture of the profits or earnings of the firm to minimize tax liability.
  • Involvement in illegal business activities through the firm.
  • Lukewarm answer to social responsibility calls via the government.
  • Lack of sufficient interest in the safety of the staff and the products and services of the company involving lack of environmental awareness concerns via the firm.
  • Avoiding certain categories and areas of investment coveted via the government.
Posted Date: 1/29/2013 1:50:16 AM | Location : United States







Related Discussions:- Agency relationship between government and the shareholders, Assignment Help, Ask Question on Agency relationship between government and the shareholders, Get Answer, Expert's Help, Agency relationship between government and the shareholders Discussions

Write discussion on Agency relationship between government and the shareholders
Your posts are moderated
Related Questions

A firm has the following accounts: What is the net income for the period? Net patient revenue = $1,500,000 Supply expense = $200,000 Depreciation expense = $100,000 Salaries and b

Example of NPV Method Resolution limited intends to purchase a machine worth Shs.1, 500,000 that will have a residue value Shs.200,000 after 5 years helpful life. The saving

effect of gdp in the domestic market

Application of Discriminant Analysis Application of Discriminant Analysis to the Selection of Applicants, Discriminative analysis is a statistical model such can be used to ac

Looking at the income statement, balance sheet and cash flow statement of the company and relating it with the non financial factors, I have the important observations as below:-

a.  In the accompanying diagram (which represents the market for chocolate candy bars), the initial equilibrium is at the intersection of S1 and D1. Circle the new equilibrium if t


Two friends, Alan & Tim just graduated from the college. They plan to start their own business, of selling health foods for office workers. They have identified a commercial comple