Agency relationship between government and the shareholders, Finance Basics

Assignment Help:

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.

Related Discussions:- Agency relationship between government and the shareholders

In 1899, If the winner’s prize increases at the same rate (8.43%), what wil...

If the winner’s prize increases at the same rate (8.43%), what will it be in 2041?

Objective to transfers of financial assets, Access the relevant authoritati...

Access the relevant authoritative literature on accounting for the transfer of financial assets. What conditions must be met for a transfer of receivables to be accounted for as a

Pbp reciprocal, PBP Reciprocal PBP expresses the profitability of a pr...

PBP Reciprocal PBP expresses the profitability of a project in terms of years.  It does not indicate any return as measure of investment. The PBP reciprocal has been utilized

Advances, advances from foreigners

advances from foreigners

Routine functions - finance function, Routine functions - Finance Function ...

Routine functions - Finance Function For the effective execution of the managerial finance functions, schedule functions have to be performed.  These decisions relate systems

Rajendra kumar, whom do you think rajendra should eat with and why

whom do you think rajendra should eat with and why

Importance of working capital management, Importance of Working Capital Man...

Importance of Working Capital Management The finance manager must understand the management of working capital since of the following purpose: a) Time devoted to working c

Disadvantages of payback period, Disadvantages of Payback Period 1. Do...

Disadvantages of Payback Period 1. Does not receive into account time value of money and supposes that a shilling obtained in the 1 st year and in the N th year have the sim

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd