There will always be the perception that shareholders interests can be more vigorously pursued.
Centralised structure can reduce agency problems as Financial Mangers (of parent) have direct control over SBUs, reducing power of SBUs managers but parent managers may make bad decisions for SBUs.
Decentralised structure can increase agency costs as subsidiary managers may not act in interest but SBU managers have a better understanding of local environments.
Given trade-off's, some MNCs attempt to achieve advantages of both (decentralised with high monitoring).
Internet facilitates management control making it easier to monitor, e.g., Parent of Jersey plc uses internet to trace inventory, sales, expenses and earnings of foreign sub's - thus reducing agency costs of international businesses
Other forms of corporate control to reduce agency costs: Stock options
Threat of hostile takeover or firing managers
Investor monitoring - shareholder activism
Bank montiroing and debt contracts - issue debt instead of equity capital as banks access info better
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