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Principal agent theory has its roots in the economic theory of the firm, decision theory, sociology, organizational theory, and more recently political science. However, there are only limited applications of the theory in the arena of public budgeting. This paper considers principal agent theory as an alternative method for explaining budgetary outcomes through an examination of interactive relationships not adequately captured by traditional hierarchical-based models of public budgeting. Because implicit and explicit contractual relationships pervade the entire budget making process, principal agent theory can make a major contribution toward developing more inclusive and accurate models of most stages of public budgeting.

Shareholders and managers can work in a hierarchy in which principals attempt to control the actions of agents to achieve the wealth objective. Alternatively, shareholders and managers can work together as a cooperative team in which shareholders provide financial capital and managers provide human capital. The authors aim to examine the different implications for value creation provided by the two approaches.

By comparing the literature on the value implications of the incomplete contracting framework and control arrangements in principal-agent hierarchies, the authors identify deviations from optimal outcomes and suggest solutions.

The review indicates that a cooperative framework has some advantages over the hierarchical model. The stability of human capital and the relationship between managers and shareholders can be enhanced when shareholders provide capital in increments which vest over time and latitude for renegotiation of agreements is built into contracts.

By surrendering control using stock options programmes, managers are free to invest in relationship-specific assets. Shareholders can control the provision of capital by withdrawing investment if insufficient returns are realized, i.e. if stock options do not meet vesting requirements. The market can then be left to do its work.

This paper provides an original review of literature on cooperation and hierarchies in the shareholder–manager relationship and proposes solutions to identified deviations from optimal outcomes.

The paper aims to explain how agency theory can be used to inform our understanding of the dynamics surrounding supply chain behaviours and relationships.

A structured review of the literature using a three‐stage refinement process is used. The articles were sourced through online databases and keyword classifications, such as “agency theory”, “principal‐agent relationships” and “supply chain management”. The search initially identified over 86 articles. After further screening these were reduced to 19 for final assessment and comparison.

Despite agency theory's prevailing descriptive and predictive qualities there is scarcity in its application to the SCM discipline. The authors posit that agency theory provides valuable insights for relationship engineering within supply chains where social, political, legal and behavioural dynamics dominate.

It is a critical task for managers to understand and mitigate abnormal behaviours across the supply chain. Agency theory serves this need by providing them with a useful tool to respond to transaction cost dilemmas through contractual and non‐contractual remedies.

This is one of the first studies that examines the current state of agency theory application in the SCM literature and suggests potential avenues for future research.

On the example of professional football in Germany, this paper analyses the conflict about the punishment of fan misbehaviour within an agency-theoretical framework to cast light on the reasons for the ineffectiveness of the sentences and to show possible solutions.

In a pre-study, more than 1,300 hand-collected past sentences against clubs by the German and European sports courts were analysed to demonstrate the ineffectiveness of the penalties so far. Additionally, in the main study, 26 expert interviews with German representatives of the football association, courts, clubs, sponsors, police and active fan scenes allow a deep insight into the relationships of the involved parties.

The paper suggests that the sentences do not sufficiently consider several agency problems. Due to moral hazard, they exert hardly any influence on fan behaviour and only a small one on the clubs. While the lighting of pyrotechnics is by far the most punished type of misbehaviour, most of the interviewees cite the impossibility of preventing it. Despite the sentences, some clubs make non-public agreements with their fans about still tolerable misconduct or do not pass the penalties on to the polluters as intended by the association. The findings highlight the importance of communication for less misbehaviour.

For the first time, the agency theory and the economic theory of optimal punishment are brought together with insights from interviews with the involved parties. The authors discover a two-stage principal-agent problem and get new insights into stakeholders' hidden motivations and attitudes. The results should encourage a debate on the current penalties and possible solutions to the recurring problem of pyrotechnics.

In Sweden there is an ongoing debate on ways to enhance accountability and transparency in order to avoid future scandals both in private companies and local government. Until now the debate has had clear political overtones, and there are no generally accepted methods for analysis of this issue. The purpose of the article is to survey and analyze the chain of accountability to be reviewed by the auditors and through the use of principal‐agent (PA) theory to identify the problems that may arise in holding persons accountable.

The paper shows how PA theory can be used to structure and analyse the intricate situation in Swedish local government. The model is particularly suitable in complex systems of accountability. Therefore, the paper explores two cases where the outcomes were discharge from liability. Based on the two case studies, the paper extends the empirical investigation to a list of 63 qualified audit reports in local government for 2002 and 2003.

PA theory facilitated the understanding and structuring of the complex accountability situation and helped to identify important weaknesses in the system. The analysis underscored that neither better accounting nor better auditing systems alone will resolve the dilemma in improving accountability. The link between auditors and elected officials and civil servants needs to be investigated and clarified. Among other things, this means that the focus of today's debate should shift toward the lack of clear responsibilities within local governments.

This paper explores an area of research where few studies have previously been conducted – therefore, the paper is to some extent exploratory. In the future the number of empirical examples could be increased, and the different problems in the system of accountability in local government could be discussed in more detail.

This research paper is based on an empirical investigation – as far as we know no such study has previously been performed in Sweden The principle of public access to information in Sweden provides unique opportunities for openly studying the work of auditors in the system.

The research shows that PA theory may be used to structure complex issues of accountability. In addition, the study recommends a new focus for the debate on accountability.

Unclaimed property is an important part of state government operations, yet very little research has been conducted on the function of returning unclaimed property to owners or the related public administration operation of unclaimed property. The purpose of this paper is to offer an exploratory study of unclaimed property in the USA and the factors that influence management.

The authors use Agency Theory to examine the role of unclaimed property in state government budgeting and operations. The data consisted of a 2011 survey of state unclaimed property agencies, which was utilized for a regression model.

Results showed: type of uniform code used to govern unclaimed property; and presence and size of marketing staff in the agency had a significant relationship with extent of property returned to owners.

This is the first comprehensive study on how state governments manage unclaimed property. This study can provide practitioners, policymakers, and researchers with a better insight into unclaimed property management.

To improve the understanding of the inter‐organizational dynamics of the dyadic relationships between a buyer and provider of logistics services (TPL dyads).

Analyzes the preparation, implementation, and operation of a particular case of third party logistics (TPL) arrangements. Based on a single case study of a dyadic relationship, the paper confronts the static view of the transaction cost approach and the agency theory on “governance structures” and “contracts” by showing how “relationship governance” emerges and develops over time.

TPL dyads are subject to both controllable and non‐controllable forces of change, which may not always have a positive effect on the logistics performance or the relationship itself. Inter‐organizational dynamics not only relate to learning, competence development, or adaptation, as suggested by other studies, but also to how the dyadic relationships are governed. As the dyad accumulates experience over time, changes will occur in the balance between the two parties in terms of goal congruence and risk preferences, which has a strong influence on the nature of contracts and other safeguards governing the relationship. Similarly, explanatory power of theories applicable to inter‐organizational settings may vary as relationships emerge and develop over time. Focus on core competencies as the logic of outsourcing is followed by a period characterized by a principal‐agent relationship. To ensure further prosperity of the relationship, the two companies must direct their efforts towards the logic of the network approach.

Contributes to a cross‐disciplinary fertilization of the SCM field, in particular inter‐organizational relationships.

The purpose of the article is to demonstrate how agency theory has been used to address the dynamics involved in supply chain management. It is also dedicated to suggesting an agenda for future research.

We performed an integrative literature review, based on the process detailed by Botelho et al. (2011), with search filters. The articles were obtained from the Scopus and Web of Science databases using the keywords “supply chain” and “agency theory”, with a subsequent analytical filter for “management”. The search initially identified 205 articles. After two screenings, 56 articles were selected for analysis.

Despite attempts to infer the importance of research on agency theory in supply chain management, its application to the discipline is scarce. Clearly, agency theory provides valuable insights into the relationships in the supply chain. In the studies analyzed, the dynamics of performance, risk, sustainability, dyadic and inter-firm relationships, and supplier management are predominant.

When considering unwanted behaviors throughout the supply chain, agency theory fills the explanatory gaps for these facts. It also proves to be a useful tool to answer mainly the dilemmas of underlying theories, such as transaction cost theory, resource-based view and network theory. Rare are the studies that examine the current state of the application of agency theory in the supply chain literature in the management field.

The purpose of this paper is to report on research that evaluates the perceived willingness of potential bidders to adopt public e-procurement for the supply of goods and services to the government of Nepal. The authors have identified anti-corruption attributes through an extensive literature review and developed a theoretical model representing the impact of four latent variables, monopoly of power, information asymmetry, trust and transparency and accountability on the dependent variable, the intent-to-adopt e-procurement (ITA).

Data for this research were obtained by the use of a questionnaire survey of bidders who were officially registered with the Government of Nepal. As part of the fieldwork for this research, the first author collected the perceptions of 220 bidders regarding the potential of public e-procurement to reduce corruption in public procurement processes.

The findings suggest that a high level of the ITA has a positive and significant relationship with the independent variables that might inform the developed and emerging countries to make a decision to adoption of e-procurement to combat corruption in public procurement.

This study has some limitations that should be taken into consideration. The evaluation of anti-corruption factors, as they affect the willingness of users to adopt e-procurement on the bidder’s perception research model is relatively new to e-procurement research. A limitation of the research was that it gathered and analyzed data from a single country with a limited number of respondents. More research is needed to identify the anti-corruption factors of e-procurement in reducing corruption, and also need strong empirical test to valid the factors that influence the adoption of e-procurement.

This study aimed to contribute to the academic scholar, government agencies and public procurement practitioner in enhancing their understanding of the perceived anti-corruption factors of public e-procurement to reduce corruption.

The provision of port services is an important link in international logistics. Historically, ports have constituted a bottleneck in maritime transport. Moreover, the quality of port services has been compromised by the complex internal port organisation and the considerable number of bodies that participate in the transfer of goods between ships and inland transport vehicles. The efficiency of port services affects not only the port authorities, service providers and customers, but also the port hinterland through the multiplier effect on the regional economy. The problems of port organisation are explained using principal‐agent concepts. The authors then explore the concept of quality in relation to port services, and discuss certification of service providers as a means of signalling quality to their customers. Finally, the accreditation system of the port of Valencia, Spain, is presented as a model, one that is superior to the accepted ISO standards, whereby port service quality and efficiency may be enhanced.