hi

regob

hi there for my final semester one assignment ive got to write an essay on

“In large companies the owners may want maximum profits but the decision makers may aim to maximise their own self interest.” Discuss.

below is the topics i am planning to include in this essay

introduction
principal agent problem
behavioural theory of the firm
long run profit maximisation
managerial utility maximisation
sales revenue maximisation
growth maximisation

and a conclusion

the essay length is 1500 words.

would this be sufficent or is their anything else yous would reccomend to conclude

thanks

That sounds along the right tracks. I'd focus on the principal agent problem, x inefficiency and solutions to it such as yardstick competition and monitoring/auditing. Explain why it is a particular problem for large companies i.e. monopolies. Some discussion of public choice and or semi state bodies may also be helpful.

MortgageBroker

i can say as a person in and industry where principle/agent exists that it is perhaps at the core of the assignment you have been given, in fact, I'd love to read your work when its done!

an angle they might not suspect is that of the ultimatum game, show an example of how (if income of management is based on overall company performance-which it is in many real life firms) they will -especially in a recession - seek a skewed ultimatum in the companies favour surrounding wages at the risk of the employee (on the other side) walking away because of the increased pool of labour available to replace them.