We will show that agency theory can be considered a response to the most important ideas advanced by Berle and Means, and then by Berle (and others), after the New Deal and the Second World War.
Comparison of these two themes of reflection leads us to identify two theorizations, and two radically different conceptions of the firm and the corporation.
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As mentioned earlier, the original shareholder primacy theory can be found in Berle and Dodd’s debate in 1930s.
In fact, the argument between them was mainly discussed two issues: how to characterise corporate law and how to develop it in future.
Abstract This paper assesses the effects of Berle and Means' study of the separation of corporate ownership from control on corporate financial reporting theory, research and policy.
Their focus on shareholders and managers provided a starting point for the subsequent development of agency theory such that this relationship has come to dominate capital markets research and policy, to the virtual exclusion of parallel issues involving other parties.