engleski

EMPLOYEE STOCK OWNERSHIP AND AGENCY THEORY PROBLEM

Company management is permeated with relationship problems between the management and company owners and they are reflected in the conflict of interest of the mentioned interest groups. The agency theory, which emphasizes the conflict of interest in these two groups, explains this relationship quite well. In the context of ESOP and other forms of employee stock ownership, workers become owners of the company and are entitled to participate in net profit and decision-making processes on various business levels. This causes a shift in the traditional relationship between workers, management, and owners, resulting in the higher motivation of workers and identification with the owners’ goals. In that sense, employee stock ownership is also a management strategy of a company, directed at optimal problem solving of issues in the relationship of business principals and their agents. The paper analyses the impact of ESOP and other forms of employee stock ownership implementation on solving problems defined by the agency theory.

Agency theory, employee stock ownership, ESOP

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