While agency theory has emphasized the importance of corporate governance in preventing financial misconduct, monitoring bodies do not always function well, especially in transition economies. By integrating the stakeholder-agency perspective with prospect theory, this study provides a new explanation of such dysfunction by introducing an embedded agent concept that manifests in a “schizophrenic” status of agents who need to satisfy multiple stakeholders and their conflicting interests. Drawing on a sample of small-to-medium-sized enterprises (SMEs) listed on the Chinese National Equities and Exchange and Quotations system from 2014 to 2017, it is shown that having a board secretary did not help reduce financial misconduct as the government expected, due to an embedded agent problem. However, their dysfunctional status would largely disappear, and they would perform their monitoring responsibilities if given higher equity shares and stricter subnational regulations, two key contingencies that better align embedded agents’ interests with one group of stakeholders. Overall, this study contributes to the corporate governance literature by introducing the embedded agent concept and its theoretical boundaries, along with a focus on transition economies.

虽然代理理论强调了公司治理在防止金融不当行为方面的重要性，但监督机构并不总是能很好地发挥作用，特别是在转型经济体中。通过将利益相关者-代理视角与前景理论相结合，本研究通过引入嵌入的代理概念，为这种功能障碍提供了新的解释，该概念表现为需要满足多个利益相关者及其利益冲突的代理的“精神分裂”状态。以2014年至2017年在全国中小企业股份转让系统挂牌的中小企业为样本显示，设立董事会秘书并没有像政府预期的那样有助于减少财务不当行为，由于嵌入式代理问题。然而，他们的功能失调状态将在很大程度上消失，如果给予更高的股本份额和更严格的地方法规，他们将履行监督职责，这两个关键的意外事件可以更好地使嵌入代理人的利益与一组利益相关者保持一致。总体而言，本研究通过介绍嵌入式代理概念及其理论边界，并重点关注转型经济体，为公司治理文献做出了贡献。