Loyalty and Agency Problems: Study Comparing France Tunisia – Divergence of interests

Loyalty and Agency Problems: Study Comparing France Tunisia - Divergence of interestsi)    The manager: According to the seminal work of Berle and Means which shows the ineffectiveness of American capitalism after the domination of corporate action by separating the functions of management and ownership, the concept of corporate governance was born with the emergence of these capital companies scattered here and the emergence of professional managers. Fama and Jensen refer to these executives in corporations as “Top Manager” and define their role in the management of the company. This function includes the proposal for the implementation of decisions regarding the structuring of contracts and allocation of corporate resources. It is reserved for the Chief Executive Officer in corporate America. Similarly, in French companies, the head is represented by the CEO.
The authors show that managerialist leaders receive some benefit related to their status in the company, they do not own. We cite, for example, the benefits of their remuneration and their personal prestige. Thus, in the absence of shareholder control, the leader embodies the company’s resources to meet those goals. In particular, managers have privileged access to information from other business partners. They have the right to control information and, specifically, to delineate its availability to shareholders.
He manages the company in a way that does not comply with shareholder interests through three functions:
–    The leader directs his attention to the maximization of income, status, power, prestige, and above all to preserve its security position.
–    The manager seeks to maximize revenue and non-profit to ensure its place and make more power.
–    The officer may make discretionary capital expenditures, as unprofitable projects (eg prestige operations).
ii)    The shareholder: it owns shares of a company. However, an action does not mean a property of goods and services of the company, but simply a part of the net assets and profit distribution. However, ownership of the property is attached to the corporation that is “society”. In case of failure, the shareholder does not support the losses in the amounts invested in shares held. It remains far from any duress or financial risk.
Therefore, an investor with a significant stake of the company is strongly encouraged to monitor the activities of managers. It has three functions depending on the study of Berle and Means :
1    – Function of assumption of risk and uncertainty.
2    – Search function and coordination of inputs. She is described as the managerial function.
3    – Perceptual function related to the identification of profitable opportunities.
In the analysis of the property in Berle and Means, shareholders are supposed to be dispersed. They assume the only function assumption. For these authors, this passive function does not give the right to appropriate profit. It is attributed to shareholders exercising the two other functions that are described as active shareholders.
In total, each part of the relationship shareholders / managers is seeking to maximize their personal interests. This research may lead the two parties not to meet its commitments because of their rationality. This is the agency problems.