The Presence of Principal-Agent Problems in Publicly Owned Enterprises in Kosovo

Session

Law

Description

Agency theory, through its principal-agent model, is a tool widely used not only in economics to explain management and performance issues. The principal-agent model is also used to explain relations between individuals acting in public capacities, government officials, civil servants and other public functions. The presence of principal-agent problems in publicly owned enterprises is highlighted by many scholars. Unfortunately, such problems are present in Publicly Owned Enterprises (POE) in Kosovo too. Capture, rent-seeking, moral hazard, information asymmetry and adverse selection are some of the agency problems that POEs in Kosovo are facing, negatively impacting their performance and citizens´ welfare. POEs in Kosovo are present largely in the market, with a focus on sectors such as electricity, railways, telecommunications, waste management, etc. This presence is followed by the constant need for subsidies from the government due to weak financial and commercial performance, including weak governance and management. This paper aims to explore the presence of principal-agent problems in POEs and link such presence with poor performance of POEs.

Keywords:

publicly-owned enterprises, agency problems, principal, agent, legal, performance, shareholder, failure

Session Chair

Nehat Idrizi

Session Co-Chair

Xhavit Shala

Proceedings Editor

Edmond Hajrizi

ISBN

978-9951-437-96-7

Location

Lipjan, Kosovo

Start Date

31-10-2020 10:50 AM

End Date

31-10-2020 12:10 PM

DOI

10.33107/ubt-ic.2020.265

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Oct 31st, 10:50 AM Oct 31st, 12:10 PM

The Presence of Principal-Agent Problems in Publicly Owned Enterprises in Kosovo

Lipjan, Kosovo

Agency theory, through its principal-agent model, is a tool widely used not only in economics to explain management and performance issues. The principal-agent model is also used to explain relations between individuals acting in public capacities, government officials, civil servants and other public functions. The presence of principal-agent problems in publicly owned enterprises is highlighted by many scholars. Unfortunately, such problems are present in Publicly Owned Enterprises (POE) in Kosovo too. Capture, rent-seeking, moral hazard, information asymmetry and adverse selection are some of the agency problems that POEs in Kosovo are facing, negatively impacting their performance and citizens´ welfare. POEs in Kosovo are present largely in the market, with a focus on sectors such as electricity, railways, telecommunications, waste management, etc. This presence is followed by the constant need for subsidies from the government due to weak financial and commercial performance, including weak governance and management. This paper aims to explore the presence of principal-agent problems in POEs and link such presence with poor performance of POEs.