Corporate agent is a company that offers financial services to other corporations or governments. This is a type of trust nterprise. Corporate agents can provide different types of services for corporate clients, for example: payment of dividends or interest, stock trading, check clearing, tax collection. Usually banks provide additional services to corporations and thus work as corporate agents. This helps them to find additional sources of revenue. Banks can generale additional revenue through activity as corporate agents. This gives them stable revenue base, higher than at from the retail banking sector. Usually corporate agents provide non credit services (Sponsler, T. H., 1978, p. 35, 349).
Advantage of corporate agent
The corporate agent acts as trustee on behalf of another entity, therefore it has to be a trust company. However it is worth nothing that trust companies often provide services to individuals, while corporate agent cooperates with corporations only. Clients of a corporate agent have access to specific reporting tools. Using agent services is usually only for large financial companies or institutions with complex financing needs. The corporate agent represents multiple corporations, therefore it is a large player on the market. Thanks to this, it may have access to the most advanced technologies on the financial market, that are not available to single company. It can also employ more specialists with extensive knowledge about markets, which gives the customers additional value.
Model of corporate agent
Owner of a business (so-called principal) hires an employee – the corporate agent to run a business on behalf of the owner. Corporate agent does all work and the owner gets all profit. In this way, ownership is separated from control (Stout L.A., 2012, p. 5).
Corporate elites are not something new, but ways in witch corporate agent gain ascendancy to positions of power differ across cultures and nations. Power of elites function through governance networks to promote organizational and institutional goals (Maclean M., Harvey C., Chia R., 2010, p. 1).
That the cooperation between the corporate agent and the corporation would be effective and successful there must be trust and good communication. Communication is sharing import ant information. Main treat and risk may be poor communication. The situation in which one side is better informed than the other is recognized in economics as the principal-agent problem. It can happen, that corporate agent will try to maximize his own benefit even that this will cause more damage to the client (Ceric A., 2012, p. 767).
- Ceric A. (2012), The Principal-Agent Theory and the Role of Project Managers in Construction: Guidelines for Future Research. Proceedings of the Joint CIB International Conference, "Management of Construction: Research to Practise", Montreal, Canada, June 26-29, 766-776.
- List C., Pettit P. (2011), Group agency. The possibility, design, and status of corporate agents, Published in United States by Oxford University Press Inc., New York
- Maclean M., Harvey C., Chia R. (2010), Dominant Corporate Agents and the Power Elite in France and Britain. Organization Studies, 31(3): 327-348.
- Sponsler, T. H. (1978), Jurisdiction over the Coporate Agent: The Fiduciary Shield. . Wash. & Lee L. Rev.
- Stout L.A. (2012), The Problem of Corporate Purpose. Issues in Governance Studies, Number 48
Author: Iwona Tuleja