CLC 9005 FINANCE AND POLITICS
TOPIC: Political Connection and
Firm Valuation
Wong Ching Yu, Sidney (4099346)
So Chun Shing, Jason (4148848)
Yip Shan Shan, Sarah (4189414)
Political Connection exits in both developing countries and developed countries that the relationship between the government and private enterprises or public cooperation does matter. Part of them would use this kind of relationship wisely to attain their aims and objectives but at the same time, the political connection of firms is an important issue not just for corporate governance of an individual firm but from macroeconomic standpoint for the governance of the society as a whole.
The firm valuation might vary with the degree of intimacy towards the government official or organization. Also, some partisanship in different countries can be a main factor affects their firm
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Political connections brings positive impact to the company as it is believed to be a precious resources of many firms, particularly to the business sectors that involved in more government regulation.
1. Easier Loan accession
Political connections have a positively correlation with the bank loan, those firms with high political connection would have the preferential treatment to access the loan from the central bank. Therefore, firms having better corporate governance would also have more different sources of finance.
2. Gain favorable treatment from government regulation and legal treatment
Firm with high political connection can affects the effectiveness of laws and regulations, they will have more say during the formulation of rules and the voice of high politically connected firms would be more likely to be took into account while having decision making process. Therefore, the regulation would be more favorable to the firms with high political connection and so as to protect and safeguard their investors.
3. Able to enjoy a lower cost of equity
Word Count: Megan Findakly MGMT- 626: Management Consulting Pract & Meth Professor Fowler 08 December 2016 Case #3 “Divorced from ethics, leadership is reduced to management and politics to mere technique.” James MacGregor Burns After three years at GL Consulting (‘GLC’), Tim Hertach, a junior partner, learned about the “Proposal to Enhance Value,” the new revaluation proposal presented by two other GLC partners. Hertach immediately questioned the new structure, which provides senior partners, who compose 20% of the firm, with 80% ownership of the firm with huge windfalls, and more disconcerting, it leaves the other 80% of partners trying to pay for it.
Important linkage institutions include political parties, lobbies, special interest groups, and clubs and benevolent organizations. Interest groups and lobbyists have been the subject of political controversy in recent years. Lobbyists are paid representatives of interest groups. (10 points) 2.
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Pre-Write Topic: The impact of women on political and social reforms Footprint: American Progressive Era, 1880s – 1920s Setting the Scene: The Progressive Era was a time of extensive reformation across the United States. Outline of your arguments supported by evidence: - Social change: New inventions increased jobs creating independence, altering family life and leading to protests on wage, birth control, and workplace regulations.
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In his Farewell Address, George Washington warned Americans about the effects of political polarization, saying,“One of the expedients of party to acquire influence, within particular districts, is to misrepresent the opinions and aims of other districts.” Polarization is the division into two sharply contrasting groups or sets of opinions or beliefs. The political gap between Democrats and Republicans has been a growing problem but has seemed to get increasingly worse in recent years. Although the two-party system can help create balance within the government, political polarization is detrimental to American society because it causes tension between citizens and effects our daily lives. Ideological differences are visibly the main
Part A Macro environment is important factor affecting the development of enterprises. A macro environment is the condition that exists in the economy as a whole, rather than in a specific sector or region.(Macro Environment n.d.) Cultures, politics, technology, nature, economy and demographic are the six major forces in the company 's macro-environment.(Kotler & Armstrong 2014, p96) Political factors Political factors include government regulations and legal issues and define both formal and informal rules.(PEST Analysis n.d.) All the companies have to follow these rules.
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SUMMARY In this report, I am explaining how the impact of External Business Environment on Automobile industry in UAE. Also, how the external environment factors are dominant on the growth of an industry including dimensions of management, human resource, marketing and IT tools used in the Industry. INTRODUCTION
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