| Summary: | 碩士 === 朝陽科技大學 === 會計系 === 106 === The agency problem has produced many issues that are worth discussing, but agency problem result from the fact that everyone is maximizing their own interests and asymmetric information. Many studies have been discussed and mechanisms have been developed for improvement. This paper will discuss the issues of circular agency. Because of the evolution of the transaction, a company's board of directors, external shareholders, and managers, they also acted as principals and agents at the same time, and this phenomenon has thus formed an interlocking relationship.
This study found in the circular agency that the decision of the board of directors to determine the non-distribution of dividends under the second best solution will help expand the company’s scale of operation and the manager’s minimum wage, the rate of performance pay, effort, reputation, good financial information report and funds invested by external shareholders. When three participants - the board of directors, external shareholders, and managers - are all willing to participate, a circular agent will occur, so they will also be consistent with the company’s strategy of sustainable management. In this study, the topic of collusion was discussed under the circular agent to illustrate that when two of the three participants collude with each other and act as an agent under the relationship with another principal.
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