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Are mainly examples of contemporary financial management theories formulated on principles proved to be ’a couple of fundamental tenets that make up the cause of financial theory and decision-making in finance’ (Emery et al.1991). A shot might possibly be created to relate the principles behind these concepts to small businesses’ financial management. Agency theory is about those who own a small business enterprise and other people who have interests there, one example is managers, banks, creditors, family, and employees. The business theory postulates how the everyday running of your business is done by managers as agents who were engaged by way of those who own the organization as principals which are also referred to as shareholders. The thought is within the thought of the key of ‘two-sided transactions’ which holds that any financial transactions involve two parties, both acting in their own personal interests, however different expectations. Problems usually identified with agency theory could be: Information asymmetry- a position through which agents has information about the financial circumstances and prospects belonging to the enterprise which isn’t identified by principals (Emery ET al.1991). To illustrate ’The Business Roundtable’ emphasized that in planning communications with shareholders and investors, companies should evaluate never misleading or misinforming stockholders for the corporation’s operations or finances. Inspire of this principle, clearly there was scarcity of transparency from Enron’s management ultimately causing its collapse;