Contemporary Issue in Accounting Essay Example | Topics and Well Written Essays - 3500 words

Contemporary Issue in Accounting - Essay ExampleCorrespondingly, managers have control but possess relatively small (if any) residual claims.(Stephen G. Marks, 10 August, 2007, page 694)1 It is said that corporations are easy to create but hard to understand.(Robert Hessen, 1999-2000)2 The working style of corporations change as such organizations become larger and larger, as only then the intricacies of its decisive feature of separation of ownership and control come to the fore.Apparently this separation of control from ownership feature is the delegation of baron from shareholders to managers in best of interests of residual claimants, but this delegation of power also bring a number of complexities and disadvantages for owners that ultimate benefits from it seem so small that spotless exercise appear like playing in the hands of managerial omnipotence. However it is argued that separation of ownership and control and managerial omnipotence must be distinguished. age the separa tion of ownership and management can be explained as a result of the search for efficient capital formation, managerial omnipotence can be soundless as the unintended result of government regulations originally designed to protect shareholders property rights from managerial opportunistic behaviors.( Padilla, Alexandre and Kreptul, Andrei, 5 may 2004)3In fact, Adolf Berle and Gardiner Means coined the forge the separation of ownership and control in their landmark 1932 book The Modern Corporation and Private Property and it remained the most widely used expression in the voluminous literature on corporate governance. It refers to their observation that during the 1920s the structure of ownership in large corporations changed from traditional arrangement of owners managing their own companies to one in which shareholders had become so numerous and dispersed that they were no longer willing or able to manage the corporations they owned.(Donald G. Margotta, Jan- Feb