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Assets Such As Property May Increase Or Decrease In Market Value, But This ...

Assets such as property may increase or decrease in market value, but this need not be reflected in the accounts unless the asset is disposed of (in which case the proceeds will need to be included).
Dore observes that most shareholders in a listed company will be other capitalist mangers the managers of pension funds, merchant banks, insurance companies and investment funds (Dore 2000: 13). Their incentives are bonuses which depend on the performance of their portfolios and this may create a short-termist view. It has been suggested that in some cases financial statements have not been probed adequately by analysts, contributing to artificially high share prices (Sahlman 2002: 96), and this is a contributory factor in some of the scandals explored in section 5 (ibid).
Shareholder involvement and monitoring vary between different countries, and can impact on compensation. Ossinger (2006) compares the US and UK compensation levels, observing that the former are considerably higher, attributing this to the more active monitoring of companies by shareholders, and UK regulations introduced in 2002 allowing shareholders to vote annually on executive compensation.

Ossinger notes that a smaller proportion of UK compensation is bonuses and long-term incentives, but that higher demands are made of executives before they receive these rewards.
The US corporate sector appears to be moving towards tighter regulation, due in part to scandals such as Enron. It is notable that the UK sector's higher level of regulation resulted partly due to legislative response in the wake of several high profile cases in the early 1990s, notably the collapse of the Bank of Credit and Commerce International (BCCI) and the Maxwell Group.


3The Competitive Environment
The competitive environment has two main effects on manager compensation and behaviour. Firstly, there is the area of business operations, and whether a focus on share price is consistent with being able to act in the company's best interests. Secondly, it offers opportunities for the individual which may encourage movement from one company to another

3.1Strategy
Porter's work on business strategy focuses on how firms can achieve competitive advantage in the market place. His five forces theory (1979) considers how the influences of supplier and customer power, potential substitute products, degree of rivalry between firms and barriers to entry to the market might shape strategic approach.
Buyers and suppliers have a significant impact on turnover and cost of sales: if these parties are powerful, selling price is minimised and buying costs maximised, impacting on the bottom line of the accounts and hence share price. Furthermore, the more powerful these parties, the less control the organisation may be seen to have over its operations, and its business will be seen by investors as more of a risk because of this.

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