Agency and the emperor’s new clothes

This chapter looks at the agency problems in both a theoretical and historical context. Because agency relationships are at the core of the principal-agent theory, separating the elements of the stakeholder relationships identified in corporate governance doctrine clears the way for testing the conceptualization of such relationships as both a descriptive and normative framework. This approach leads to a questioning of the internal coherence underlying the mainstream theory, for example the idea of shareholders as owners and managers as agents, and the cohesion between these assumptions and concepts such as the nexus of contracts and residual claimants.