Agency Theory’s “Truth Regime”: Reading Danish Pension Funds’ Decisions Regarding Shell from the Perspective of Agency Theory

Abstract

With the progression of both the climate crisis and financial capitalism, institutional investors play an increasingly central role in fossil fuel companies’ business decisions. Against this backdrop, this article investigates the underlying rationales of Danish pension funds’ climate-related investment decisions analyzed from the perspective of one of the dominant finance theories today on the governance relationship between investors and corporations: agency theory. Hitherto, investors’ climate-related investment decisions have not yet been studied from the perspective of how investors’ actions align with the assumptions of agency theory. Thus, this study explores the degree to which select Danish pension funds’ climate-related investment decisions regarding Royal Dutch Shell can be verified according to agency theory. First, deploying Foucault’s notion of a “truth regime”, the article analyzes how a certain action can be defined as true, read from the perspective of investment assumptions derived from agency theory, a truth regime of agency theory. Second, the paper explores the degree to which this truth regime can be identified in the climate-related investment decisions of the three Danish pension funds, PFA, PKA, and AkademikerPension, regarding Shell’s general assembly, 2021. The investigation concludes that the assumptions of the agency theory truth regime constitute a part of the central reasonings in financial capitalism and that, insofar as investors significantly align with the prescriptions of agency theory, it substantially reduces their possibilities to take Paris-aligned investment decisions.

Exploratory Factor Analysis of Congolese Information Technology Graduates’ Employability: Towards Sustainable Employment

“…This leads to the agency problem. Concretely, agency theory has been included in employability as one of the approaches to incorporate the problems of incentives, the mechanisms of adopting incentives for firms and the conflicts of interest (J. Lundberg, 2022).…”

Pengaruh Free Cash Flow dan Trading Volume Activity terhadap Return Saham pada Perusahaan Farmasi:

“…Teori agensi adalah satu di antara teori keuangan yang dominan saat ini mengenai hubungan antara investor dan perusahaan yang bertujuan untuk memaksimalkan keuntungan pemegang saham dengan menyelaraskan tindakan agen (manajer perusahaan) dengan kepentingan prinsipal atau investor (Lundberg, 2022). Menurut Jensen dan Meckling (1976) Teori agensi ialah sebuah perjanjian antara satu atau beberapa individu (pemberi kerja atau principal) mendayagunakan individu lain (agen) untuk menjalankan beberapa layanan dengan memberikan kewenangan kepada agen tersebut untuk mengambil keputusan.…”

“…Berdasarkan temuan penelitian tersebut, return saham industri farmasi (selama di Bursa Efek Indonesia Periode 2018-2022) secara parsial dipengaruhi oleh free cash flow dan trading volume activity. Variabel free cash flow dan trading volume activity kemudian secara serempak (simultan) berpengaruh terhadap return saham pada industri farmasi (Bursa Efek Indonesia Periode 2018-2022.…”

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The research aims to see how trading volume activity and free cash flow have an impact on stock returns for pharmaceutical companies (Indonesia Stock Exchange Period 2018-2022. This research utilizes a quantitative approach that uses a descriptive and verification approach.

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