Financial Sociology: A Contribution to the Theory of the Firm

• In Event: Economic Sociology Section Roundtables
  In Refereed Roundtable (60 minute): Roundtable 10: Theorizing Organizations

Abstract

At the heart of dilemmas relating to a view of the firm with multiple principals is the argument that there can only be one residual claimant at any time. How can the multiplicity of principals be reconciled with the fact that only one of these can be the residual claimant? This paper addresses this dilemma by outlining a relational theory of the firm, in which multiple principals are served by a single agent. This paper argues that the root of the issues relating to the dilemmas that we observe currently require reconceptualization of the relationship between accounting and strategy. This paper provides the basis for a relational theory of the firm that utilizes the characterization of principals and agents, but examines the presence of multiple principals rather than a single principal and accounting rather than information as the cognitive basis for the arguments relating to what takes place within firms. This paper suggests that to resolve this dilemma it is necessary to reverse the relationship between the question of management and accounting.

Author

• Yally Avrahampour, London School of Economics