from the owners'. This alludes to a choice of a mediocre rationality level of managerial financial decision making just because they do not own the entity. Another analysis made on investment stopping times preferences between the investor and the manager, the study finds that by reason of the investor pursuing a risk minimization objective within the investment horizon, the manager on the other hand pursues an early reputation entrenchment in her own favour [4]. This escalates the agency conflict.However, sometimes managers do not pursue self-interest intentionally. They are often victims of bounded rationality occasioned by information asymmetry and cognitive process inadequacy [7]. But early scholars failed to fully explore the difficulty posed by bounded rationality for organizations [3]. This paper is anchored on bounded rationality, where the operational rationality bounds were estimated using entropy-q rationality model proposed by Kirika in 2016 [8]. Moreover, a study of 12, 449 Taiwanese firms between 1998 to 2011 on the role of auditor in agency conflict and corporate governance in 2014 found out that the auditor played a complementary role in low and medium agency conflict level firms, where corporate governance indicators were used to measure agency conflict [9]. From this study, the use of corporate governance indicators was admirable and reasonable. However, while in agreement with the results, it is possible for agency conflict to exist even when corporate governance is airtight, particularly when the economic rationality of the agent is lower than that of the principal. The sections following include a review of bounded rationality [7] and cumulative prospect theory [10] and corporate integrity [11]. Keywords:Entropy-q rationality model; Corporate integrity; Positive and negative agency conflict; Severity IntroductionAgency theory is a centuries old theory. When it was posited that managers of other people's money cannot guard it with the same zeal as when it was their own, this has over the years been proven right [1]. But the modern agency theory advances that the principal-agent relationship should reflect efficient distribution of risk bearing costs between the parties [2]. Such a claim certainly ignores two key aspects. First, modern agency theorists assume that after proper information dissemination and allocation of risk bearing costs, the conflict disappears. Secondly, they assume that at all times the appointed agent has the ability to steward the business concern to create wealth perpetually or at least at the required return by the principal.The initial agency problem emerges when the agent assumes more than the contractual risk [3,4]. A secondary problem arises when the agent feels that they are not equitably compensated for their risks; resulting in self-interested behaviour at the expense of the principal. This she does and avoids or makes it difficult for the principal to track information about the entity creating information asymmetry [3], leading to monitoring agent behaviour pr...
A human capital driven economy is less vulnerable to catastrophic effects than a natural resource driven economy. In the face of black swan events like the COVID-19 pandemic, it is important for economies to re-examine their economic anchor to inform their recovery rate. This paper uses economic system rationality entropy to measure resilience by examining 13 country habitats for more than half – 4.063 billion of the world’s population. To this end, after working out the economic system entropies using the income consumption rationality function in Nats, the influence of the existing economic driver on the economic system entropy is established. Kirika’s rationality matrix is then proposed; leading to the Entropy-Gamma Rationality law. The results show that economic system entropy is not influenced by the economic driver; and that according to the Pareto principle, about 21% of any population is rational in income generation. Surprisingly, a whopping 68% - 74% are irrational income generators but rational consumers, while 5% - 11% of any population is irrational regarding both income generation and consumption – a fundamental policy guide from quantitative behavioural economics. A fiscal policy action recommendation in the short run that indexes Kenya’s cogni-economic pressure against China’s to reduce both the overall cogni-economic pressure and the economic system entropy through job creation and job re-assignment concludes.
Purpose: The purpose of the study was to establish the effect of macroeconomic factors on stocks trading volumes of manufacturing and allied companies listed in Nairobi Securities Exchange. Materials and Methods: The research adopted a quantitative descriptive design that focuses on nine manufacturing and allied companies listed in NSE and make up in the list of 25-share index companies. The nine manufacturing and allied companies were selected through purposive sampling techniques, where samples were selected based specific factors. The data used in the research was collected from Central Bank of Kenya, Nairobi Security Exchange and Kenya Bureau of Statistics. This research employed a panel data analysis using STATA software. Treasury bill rate was dropped from the model due to multicollinearity. Results: The analysis found that there was a negative relationship between inflation on trading volume, exchange rate had a negative correlation with stock trading, lending rate had a negative correlation with stock trading volume of manufacturing and allied companies listed in the Nairobi Stock Exchange. Unique contribution to theory, practice and policy: The study recommends the government should initiate policies that will lower the lending rate in Kenya as lower lending rate may translate to higher stock trading volumes. Further studies should research on other factors affecting stock trade volume which may include the value of the stocks and the information size in the market.
In Kenya, human resource office normally reports to the finance office. The finance manager allocates resources to horn the human resource asset; but has no way of measuring the expected output from his/her own end. This paper attempts to provide a metric for setting expectations for the human resource officer by the finance office; first by demonstrating that extrinsic motivation plays a more important role than intrinsic motivation, secondly, to show that corporate financial performance stimulus can be used to measure extrinsic motivation; and lastly, to show that activity based staffing maximizes employee output to optimally take care of high decision volume positions. Key motivation theories are revised and their components fitted around the concept of entropy from the second law of thermodynamics; information theory version. Entropy motivation theory that derives from binomial Bayesian decision model driven by geometric Brownian motion model is introduced. Subjective probability data were transformed into objective probability through cumulative prospect theory decision weights function. Two time-point longitudinal data were analysed. The results show that where low intrinsic motivation exists, strong corporate financial performance can stimulate extrinsic motivation. Total motivation obtains as a sum of intrinsic and extrinsic motivation.Citation: Kirika SK (2017) Ito-Bayesian Employee Output Modelling for Corporate Financial Performance-driven motivation in Kenyan Credit Unions:Introducing the Entropy Motivation Model. Bus Eco J 8: 315.
Purpose: The purpose of this study was to establish the effect of inflation, lending rate, exchange rates and Treasury bill interest rate on trading volumes of manufacturing and allied companies listed in the Nairobi Stock Exchange. Materials and Methods: The research adopted a quantitative descriptive design that focuses on nine manufacturing and allied companies listed in NSE and make up in the list of 25-share index companies. The nine manufacturing and allied companies were selected through purposive sampling techniques, where samples were selected based specific factors. The data used in the research was collected from Central Bank of Kenya, Nairobi Security Exchange and Kenya Bureau of Statistics. This research employed a panel data analysis using STATA software. Treasury bill rate was dropped from the model due to multicollinearity. Results: The analysis found that there was a negative relationship between inflation on trading volume, exchange rate had a negative correlation with stock trading, lending rate had a negative correlation with stock trading volume of manufacturing and allied companies listed in the Nairobi Stock Exchange. Unique contribution to theory, practice and policy: The study recommends the government should initiate policies that will lower the lending rate in Kenya as lower lending rate may translate to higher stock trading volumes. Further studies should research on other factors affecting stock trade volume which may include the value of the stocks and the information size in the market.
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