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Kurumsal Yönetimde Vekâlet Sorunu: Worldcom Vak’ası

Year 2022, Volume: 3 Issue: 1, 15 - 31, 18.03.2022

Abstract

Kurumsal yönetim, işletmelerin uzun vadeli sürdürülebilirliğini sağlayan ve hissedarların ve menfaat sahiplerinin çıkarlarını korumayı amaçlayan bir yönetim şeklidir. Kurumsal yönetimin gelişimine katkı sağlayan teorilerin başında vekâlet teorisi ve sonucunda ortaya çıkan vekâlet sorunu gelmektedir. Vekâlet teorisi, asiller ile vekillerin arasındaki ilişkileri düzenlemekte ve bu ilişkiler neticesinde karşılaşılabilecek vekâlet sorunlarını analiz etmektedir. Özellikle 2000’li yılların başından itibaren yaşanan şirket skandalları kurumsal yönetimin önemini artırmış ve kurumsal yönetimin faydaları ile bu skandallardan alınacak dersleri ortaya koymuştur. Şirket skandallarının tarihsel gelişimine bakıldığında en öne çıkanlarından birisi ABD telekomünikasyon sektöründe faaliyet gösteren ve iflasını açıkladığı 2002 yılında dünyanın en önemli telekomünikasyon şirketlerinden birisi olan Worldcom’un çöküşüdür. Bu çalışmada, Worldcom’un çöküşü kurumsal yönetimin en önemli kavramsal temellerinden olan vekâlet sorunu perspektifinden analiz edilmiştir.

References

  • Amagoh, F. (2009). Information asymmetry and the contracting out process. The Public Sector Innovation Journal, 14(2), 1-14. Retrieved October 15, 2021 from https://www.researchgate.net/publication/255622095_ Information_asymmetry_and_the_ contracting_out_process.
  • Andersen, P.K. (2003). Corporate governance in Denmark. Scandinavian Studies in Law, 45, 11-27. Retrieved October 2, 2021 from https://scandinavianlaw.se/pdf/45-1.pdf.
  • Anthony, R.N., Hawkins, D.F. and Merchant, K.A. (2011). Accounting text & cases (13th edition). New York: McGraw-Hill. Babacan, M. and Eriş, E. D. (2006). Agency theory in marketing: a conceptual model development. Hacettepe University Journal of Economics and Administrative Sciences, 24(1), 89-110.
  • Beresford, D.R., Katzenbach, N.B. and Rogers, C.B. (2003). Report of Investigation. Special investigative committee of the board of directors of Worldcom. Retrieved Sptember 28, 2021 from https://www.sec.gov/Archives/edgar/data/723527/000093176303001862/ dex991.htm.
  • Berle, A. A., and Means, G. C. (1932). The modern corporation and private property. New York: McMillan.
  • Bodie, Zvi, Kane, Alex and Marcus, Alan J. (2002). Investments (5th edition). New York: McGraw-Hill.
  • Brealey, Richard A., Myers, Stewart C. and Allen, Franklin (2006). Corporate Finance (8th edition). New York: McGraw-Hill.
  • Cadbury Code (1992). Report of the committee on the financial aspects of corporate governance: the code of best practice. Retrieved September 17, 2021 from https://www.frc.org.uk/getattachment/9c19ea6f-bcc7-434c-b481-f2e29c1c271a/The-Financial-Aspects-of-Corporate-Governance-(the-Cadbury-Code).pdf.
  • Cai, C., Hiller, D., Tian, D. and Wu, Q. (2015). Do audit committees reduce the agency costs of ownership structure? Pacific-Basin Finance Journal, 35(A), 225–240. https://doi.org/10.1016/j.pacfin.2015.01.002.
  • Coleman, A.K. (2007). Corporate governance and firm performance in Africa: a dynamic panel data analysis. A Paper Prepared for the International Conference on Corporate Governance in Emerging Markets, 15th-17th November, 2007, Sabanci University, Istanbul, Turkey.
  • Çelik, N. and Bedük, A. (2014). The approach of agency theory and the relationship between transaction cost. The Sakarya Journal of Economics, 3(1), 43-67. Çoban, C. (2018). Agency theory and Turkcell example. Journal of Politics Economy and Management, 1(1), 9-24.
  • Çopuroğlu, F. and Korkmaz, İ. H. (2018). Investigation of the relationship between the agency theory, capital structure and company performance. Gaziantep University International E-Journal of Economics and Administrative Sciences in Islahiye, 2(2), 21-33.
  • Doğan, D.U. (2019). Muhasebe denetiminde etik. Ankara: Gazi Kitabevi.
  • Eisenhardt, K.M. (1989). Agency theory: an assessment and review. Academy of Management Review, 14(1), 57-74. https://doi.org/10.2307/258191.
  • ElKelish, W.W. (2018). Corporate governance risk and the agency problem. Corporate Governance, 18(2), 254-269. https://doi.org/10.1108/CG-08-2017-0195.
  • Giroux, G. (2008). What went wrong? Accounting fraud and lessons from the recent scandals. Social Research, 75(4), 1205-1238. https://www.jstor.org/stable/40972113.
  • Hannes, S. (2007). Reverse monitoring: on the hidden role of employee stock-based compensation. Michigan Law Review, 105(7), 1421-1451. https://repository.law.umich.edu/cgi/viewcontent.cgi?article=1442&context=mlr.
  • Hansmann, H. (1988). Ownership of the firm. Journal of Law, Economics, & Organization, 4(2), 267-304.
  • Hart, O. (2005). Corporate governance: some theory and implications. The Economic Journal, 105(430), 678-689. https://doi.org/10.2307/2235027.
  • Haroon R.K, Waqas B.K., Osama A.H., Naeem M. and Kashif S. (2020). Corporate governance quality, ownership structure, agency costs and firm performance: evidence from an emerging economy. Journal of Risk and Financial Management, MDPI, 13(7), 1-35. https://doi.org/10.3390/jrfm13070154.
  • Heath, J. and Norman, W. (2004). Stakeholder theory, corporate governance and public management: what can the history of state-run enterprises teach us in the post-Enron era? Journal of Business Ethics, 53, 247-265. https://doi.org/10.1023/B:BUSI.0000039418.75103.ed.
  • Iskander, M. R. and Chamlou, N. (2000). Corporate governance: a framework for implementation. World Bank Group, Washington: World Bank Group. Islam, M., Zahirul, I., Mohammad, N., Rahman, R., Bhattacharjee, S. and Islam, Z. (2010). Agency problem and the role of audit commitee: implications for corporate sector in Bangladesh. International Journal of Economics and Finance, 2(3), 177-188. https://doi.org/10.5539/ijef.v2n3p177.
  • Jensen, M. C. and Meckling, W. H. (1976). Theory of the firm: managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3, 305-360. https://doi.org/10.1016/0304-405X(76)90026-X.
  • Jensen, M. C. (1983). Organization theory and methodology. The Accounting Review, 57(2), 319-339.
  • Kalash. İ. (2019). Firm leverage, agency costs and firm performance: an empirical research on service firms in Turkey. Journal of the Human and Social Sciences Researches, 8(1), 624-636.
  • Lee, C. K. and Wingreen, S. C. (2010). Transferability of knowledge, skills, and abilities along IT career paths: an agency theory perspective. Journal of Organizational Computing and Electronic Commerce, 20, 23-44. https://doi.org/10.1080/10919390903482382.
  • Mallin, C. A. (2004). Corporate Governance. Oxford: Oxford University Press.
  • Markham, J. M. (2005). Financial history of modern US corporate scandals. Armonk NY, USA: M.E. Sharpe, Inc.
  • Mustapha, M. and Che Ahmad, A. (2011). Agency theory and managerial ownership: evidence from Malaysia. Managerial Auditing Journal, 26(5), 419-436. https://doi.org/10.1108/02686901111129571.
  • OECD (1999) OECD Principals of corporate governance. Organization for Economic Co-operation and Development, Retrieved September 3, 2021 from http://www.oecd.org.
  • Öner, Ö. and Uyar, M. (2018). The impact of auditing activities and control systems on management risks in context of proxy theory: an implementation in small and medium size enterprises. The World of Accounting Science, 15. MODAV International Conference on Accounting Special Issue, 66-91.
  • Pakaluk, M. and Cheffers, M. (2011). Accounting ethics and the near collapse of the world’s financial system. Massachusetts: Allen David Press.
  • Panda, B. and Leepsa, M.N. (2017). Agency theory: review of theory and evidence on problems and perspectives. Indian Journal of Corporate Governance, 10(1) 74–95. https://doi.org/10.1177/0974686217701467.
  • Pandey, S. C. and Verma, P. (2004). WorldCom inc. Vikalpa, 29(4), 113-126. https://doi.org/10.1177/0256090920050210.
  • Peterson, P. (1994). Financial management and analysis. New York: McGraw-Hill.
  • Plumptre, T. (2004). The new rules of the board game: the changing world of corporate governance and its implications for multilateral development institutions. Institute of Governance Working Paper, Ottawa, Canada.
  • Poston R. and Grabski, S. (2001). Financial impacts of enterprise resource planning implementations. Inter J Account Inform Systems, 2(4): 271-294. https://doi.org/10.1016/S1467-0895(01)00024-0.
  • Rashid, A. (2015). Revisiting agency theory: evidence of board independence and agency cost from Bangladesh. Journal of Business Ethics, 130, 181–198. https://doi.org/10.1007/s10551-014-2211-y.
  • Şişmanoğlu, E., Karayiğit, D. T. and Karabınar, S. (2020). Accounting and reporting of agency costs under the scope of agency theory. Journal of Accounting & Taxation Studies, 13(3), 975-987.
  • Tan, Z. and Bal, K. (2021). The relationship of board diversification and financial performance in the framework of the agency theory: the example of investment companies. Eurasian Journal of Social and Economic Research, 8(1), 38-54.
  • Turaboğlu, T. (2002). Agency theory: an application of the relationship between ownership structure and performance in Turkish industrial firms. (Doctoral dissertation). Çukurova University Institute of Social Sciences, Adana.
  • Vitolla, F., Raimo, N. and Rubino, M. (2020). Board characteristics and integrated reporting quality: an agency theory perspective. Corporate Social Responsibility and Environmental Management 27(2), 1152-1163. https://doi.org/10.1002/csr.1879.
  • Vo, X. V. (2018). Foreign ownership and corporate cash holdings in emerging markets. International Review of Finance, 18(2), 297-303. https://doi.org/10.1111/irfi.12130.
  • Yaşbay Kobal, H. and Ataman, G. (2018). The relationship between the structural characteristics of the board and financial leverage and profitability ratios in the context of agency theory and resource dependence theory: a research on publicly traded food companies (2005-2016 period). Öneri Journal, 13(50), 187-210 .
  • Zor, Ü. and Merkan, Ü. (2021). Impact of agency problem in family firms on internal audit process: a qualitative analysis of a family firm. Accounting and Auditing Review, 21(63), 275-288.

Agency Problem in Corporate Governance: Worldcom Case

Year 2022, Volume: 3 Issue: 1, 15 - 31, 18.03.2022

Abstract

Corporate governance is a form of management that ensures the long-term sustainability of businesses and aims to protect the interests of shareholders and stakeholders. At the forefront of the theories that contribute to the development of corporate governance are the agency theory and the agency problem that emerges as a result. The agency theory regulates the relations between principals and agents and analyzes the agency problems that may be encountered as a result of these relations. In particular, the corporate scandals experienced since the beginning of the 2000s have increased the importance of corporate governance and revealed the benefits of corporate governance and the lessons to be learned from these scandals. When we look at the historical development of the company scandals, one of the most prominent is the collapse of Worldcom, which was operating in the US telecommunications sector and was one of the most important telecommunications companies in the world in 2002, when it declared bankruptcy. In this study, the collapse of Worldcom is analyzed from the perspective of the agency problem, which is one of the most important conceptual foundations of corporate governance.

References

  • Amagoh, F. (2009). Information asymmetry and the contracting out process. The Public Sector Innovation Journal, 14(2), 1-14. Retrieved October 15, 2021 from https://www.researchgate.net/publication/255622095_ Information_asymmetry_and_the_ contracting_out_process.
  • Andersen, P.K. (2003). Corporate governance in Denmark. Scandinavian Studies in Law, 45, 11-27. Retrieved October 2, 2021 from https://scandinavianlaw.se/pdf/45-1.pdf.
  • Anthony, R.N., Hawkins, D.F. and Merchant, K.A. (2011). Accounting text & cases (13th edition). New York: McGraw-Hill. Babacan, M. and Eriş, E. D. (2006). Agency theory in marketing: a conceptual model development. Hacettepe University Journal of Economics and Administrative Sciences, 24(1), 89-110.
  • Beresford, D.R., Katzenbach, N.B. and Rogers, C.B. (2003). Report of Investigation. Special investigative committee of the board of directors of Worldcom. Retrieved Sptember 28, 2021 from https://www.sec.gov/Archives/edgar/data/723527/000093176303001862/ dex991.htm.
  • Berle, A. A., and Means, G. C. (1932). The modern corporation and private property. New York: McMillan.
  • Bodie, Zvi, Kane, Alex and Marcus, Alan J. (2002). Investments (5th edition). New York: McGraw-Hill.
  • Brealey, Richard A., Myers, Stewart C. and Allen, Franklin (2006). Corporate Finance (8th edition). New York: McGraw-Hill.
  • Cadbury Code (1992). Report of the committee on the financial aspects of corporate governance: the code of best practice. Retrieved September 17, 2021 from https://www.frc.org.uk/getattachment/9c19ea6f-bcc7-434c-b481-f2e29c1c271a/The-Financial-Aspects-of-Corporate-Governance-(the-Cadbury-Code).pdf.
  • Cai, C., Hiller, D., Tian, D. and Wu, Q. (2015). Do audit committees reduce the agency costs of ownership structure? Pacific-Basin Finance Journal, 35(A), 225–240. https://doi.org/10.1016/j.pacfin.2015.01.002.
  • Coleman, A.K. (2007). Corporate governance and firm performance in Africa: a dynamic panel data analysis. A Paper Prepared for the International Conference on Corporate Governance in Emerging Markets, 15th-17th November, 2007, Sabanci University, Istanbul, Turkey.
  • Çelik, N. and Bedük, A. (2014). The approach of agency theory and the relationship between transaction cost. The Sakarya Journal of Economics, 3(1), 43-67. Çoban, C. (2018). Agency theory and Turkcell example. Journal of Politics Economy and Management, 1(1), 9-24.
  • Çopuroğlu, F. and Korkmaz, İ. H. (2018). Investigation of the relationship between the agency theory, capital structure and company performance. Gaziantep University International E-Journal of Economics and Administrative Sciences in Islahiye, 2(2), 21-33.
  • Doğan, D.U. (2019). Muhasebe denetiminde etik. Ankara: Gazi Kitabevi.
  • Eisenhardt, K.M. (1989). Agency theory: an assessment and review. Academy of Management Review, 14(1), 57-74. https://doi.org/10.2307/258191.
  • ElKelish, W.W. (2018). Corporate governance risk and the agency problem. Corporate Governance, 18(2), 254-269. https://doi.org/10.1108/CG-08-2017-0195.
  • Giroux, G. (2008). What went wrong? Accounting fraud and lessons from the recent scandals. Social Research, 75(4), 1205-1238. https://www.jstor.org/stable/40972113.
  • Hannes, S. (2007). Reverse monitoring: on the hidden role of employee stock-based compensation. Michigan Law Review, 105(7), 1421-1451. https://repository.law.umich.edu/cgi/viewcontent.cgi?article=1442&context=mlr.
  • Hansmann, H. (1988). Ownership of the firm. Journal of Law, Economics, & Organization, 4(2), 267-304.
  • Hart, O. (2005). Corporate governance: some theory and implications. The Economic Journal, 105(430), 678-689. https://doi.org/10.2307/2235027.
  • Haroon R.K, Waqas B.K., Osama A.H., Naeem M. and Kashif S. (2020). Corporate governance quality, ownership structure, agency costs and firm performance: evidence from an emerging economy. Journal of Risk and Financial Management, MDPI, 13(7), 1-35. https://doi.org/10.3390/jrfm13070154.
  • Heath, J. and Norman, W. (2004). Stakeholder theory, corporate governance and public management: what can the history of state-run enterprises teach us in the post-Enron era? Journal of Business Ethics, 53, 247-265. https://doi.org/10.1023/B:BUSI.0000039418.75103.ed.
  • Iskander, M. R. and Chamlou, N. (2000). Corporate governance: a framework for implementation. World Bank Group, Washington: World Bank Group. Islam, M., Zahirul, I., Mohammad, N., Rahman, R., Bhattacharjee, S. and Islam, Z. (2010). Agency problem and the role of audit commitee: implications for corporate sector in Bangladesh. International Journal of Economics and Finance, 2(3), 177-188. https://doi.org/10.5539/ijef.v2n3p177.
  • Jensen, M. C. and Meckling, W. H. (1976). Theory of the firm: managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3, 305-360. https://doi.org/10.1016/0304-405X(76)90026-X.
  • Jensen, M. C. (1983). Organization theory and methodology. The Accounting Review, 57(2), 319-339.
  • Kalash. İ. (2019). Firm leverage, agency costs and firm performance: an empirical research on service firms in Turkey. Journal of the Human and Social Sciences Researches, 8(1), 624-636.
  • Lee, C. K. and Wingreen, S. C. (2010). Transferability of knowledge, skills, and abilities along IT career paths: an agency theory perspective. Journal of Organizational Computing and Electronic Commerce, 20, 23-44. https://doi.org/10.1080/10919390903482382.
  • Mallin, C. A. (2004). Corporate Governance. Oxford: Oxford University Press.
  • Markham, J. M. (2005). Financial history of modern US corporate scandals. Armonk NY, USA: M.E. Sharpe, Inc.
  • Mustapha, M. and Che Ahmad, A. (2011). Agency theory and managerial ownership: evidence from Malaysia. Managerial Auditing Journal, 26(5), 419-436. https://doi.org/10.1108/02686901111129571.
  • OECD (1999) OECD Principals of corporate governance. Organization for Economic Co-operation and Development, Retrieved September 3, 2021 from http://www.oecd.org.
  • Öner, Ö. and Uyar, M. (2018). The impact of auditing activities and control systems on management risks in context of proxy theory: an implementation in small and medium size enterprises. The World of Accounting Science, 15. MODAV International Conference on Accounting Special Issue, 66-91.
  • Pakaluk, M. and Cheffers, M. (2011). Accounting ethics and the near collapse of the world’s financial system. Massachusetts: Allen David Press.
  • Panda, B. and Leepsa, M.N. (2017). Agency theory: review of theory and evidence on problems and perspectives. Indian Journal of Corporate Governance, 10(1) 74–95. https://doi.org/10.1177/0974686217701467.
  • Pandey, S. C. and Verma, P. (2004). WorldCom inc. Vikalpa, 29(4), 113-126. https://doi.org/10.1177/0256090920050210.
  • Peterson, P. (1994). Financial management and analysis. New York: McGraw-Hill.
  • Plumptre, T. (2004). The new rules of the board game: the changing world of corporate governance and its implications for multilateral development institutions. Institute of Governance Working Paper, Ottawa, Canada.
  • Poston R. and Grabski, S. (2001). Financial impacts of enterprise resource planning implementations. Inter J Account Inform Systems, 2(4): 271-294. https://doi.org/10.1016/S1467-0895(01)00024-0.
  • Rashid, A. (2015). Revisiting agency theory: evidence of board independence and agency cost from Bangladesh. Journal of Business Ethics, 130, 181–198. https://doi.org/10.1007/s10551-014-2211-y.
  • Şişmanoğlu, E., Karayiğit, D. T. and Karabınar, S. (2020). Accounting and reporting of agency costs under the scope of agency theory. Journal of Accounting & Taxation Studies, 13(3), 975-987.
  • Tan, Z. and Bal, K. (2021). The relationship of board diversification and financial performance in the framework of the agency theory: the example of investment companies. Eurasian Journal of Social and Economic Research, 8(1), 38-54.
  • Turaboğlu, T. (2002). Agency theory: an application of the relationship between ownership structure and performance in Turkish industrial firms. (Doctoral dissertation). Çukurova University Institute of Social Sciences, Adana.
  • Vitolla, F., Raimo, N. and Rubino, M. (2020). Board characteristics and integrated reporting quality: an agency theory perspective. Corporate Social Responsibility and Environmental Management 27(2), 1152-1163. https://doi.org/10.1002/csr.1879.
  • Vo, X. V. (2018). Foreign ownership and corporate cash holdings in emerging markets. International Review of Finance, 18(2), 297-303. https://doi.org/10.1111/irfi.12130.
  • Yaşbay Kobal, H. and Ataman, G. (2018). The relationship between the structural characteristics of the board and financial leverage and profitability ratios in the context of agency theory and resource dependence theory: a research on publicly traded food companies (2005-2016 period). Öneri Journal, 13(50), 187-210 .
  • Zor, Ü. and Merkan, Ü. (2021). Impact of agency problem in family firms on internal audit process: a qualitative analysis of a family firm. Accounting and Auditing Review, 21(63), 275-288.
There are 45 citations in total.

Details

Primary Language English
Subjects Business Administration
Journal Section Articles
Authors

Kaan Ramazan Çakalı 0000-0003-4186-2291

Early Pub Date March 16, 2022
Publication Date March 18, 2022
Published in Issue Year 2022 Volume: 3 Issue: 1

Cite

APA Çakalı, K. R. (2022). Agency Problem in Corporate Governance: Worldcom Case. İşletme, 3(1), 15-31.