Agency Theory

Nowadays, employees are source of intellectual intelligence of a company. Hence, factors of insufficient productivity among workforce should be determine. These factor are agency problem and emotions of the employees. Besides that, these problems can also causes labour dilemma to whistle blow in misconduct.

Agency theory is a concept that explains the reason of various decisions making by principal (shareholders) and agent of the principal (company managers). Corporate governance practiced today is seen as principal gain company information from agent hired while agents lead performance in a company. Hence, this gave agent opportunity to display unethical actions.However, aligning interest of the two groups is difficult as the possibilities of managers or shareholders to pursue self-interest benefits. Principals and agents tried to manipulate each other in monetary terms and reducing their risk at the expense of other party. Therefore, these create information asymmetry and results in an agency cost.

In addition Mazlina and Ayuib (2011) concluded in their journal that without the absence of proper management, owners is encouraged to reduce their investment outflow by lowering the manager’s compensation. Meanwhile, managers tend to have incentive to increase their compensation by increasing the company quality audit. Mazlina and Ayuib stated that agency cost can be evident with the high profile corporate scandal such as Enron and WorldCom

Meanwhile,emotion is related with mood and personality. It provides the affective component to motivation, either positive or negative. Gundlach, Martinko, Douglas (2008) determines the new approaches to whistle blow. The result suggests that the relationship with emotions and cognitions affects the intention to whistle blow. It is clearly shown that there were strong cognitive and emotional responses when the stable organizational and controllable is attributing to the wrongdoings.