Principal Agen Relationship in the Local Government: Case of Village’s Fund Allocation in Indonesia
- Author Syofyan
- Co-Author Yanhar Jamaluddin, Nilawati Nasti, Edi Sofian, Julienda Br Harahap
- DOI 10.17605/O
- Country : Indonesia
- Subject :
Keywords : Principal agent conflict, principal agent relation, villagefund allocation
Abstract
Principal and agent relationship system influenced by formal contracts, transaction costs and agency costs. The system influenced by adverse selection, moral hazard and goal’s conflict behaviours show by principal agen conflict. This paper aims to analyzes the influence of formal contracts, transaction costs, agency costs and principal agent conflict on principal agent relations in allocation of village funds in local government. This paper using structural equation model (SEM) to test the power of relationship variables research to explain relationship’s of principal agent to village fund allocation influenced by formal contract, transaction cost, agency cost and principal agent’s conflict. The result of study found that; it is necessary to improve human resources, outcome-based contract and the pattern of principal agents relationship. Agents are from outside parties village government structure with special competence. Improving the quality of management principles by transaction cost through increasing transparency and accountability in the management of the village fund allocation, increasing coordination with local/city governments so that the optimality of the village fund allocation can be improved. Reducing agency cost by strengthening institutional and managerial ownership in the context of the principal agent's duties and functions. Adverse selection such as Collusion, Corruption and Nepotism can be minimized by improvement village government accounting system and competent human resources. Moral hazard, adverse selection and goal conflict can be minimized by increasing accountability and transparency, organizational commitment, communication and improvement of human resource.
Comments
No have any comment !