Why Nations Fail In their book, Why Nations Fail, Daron Acemoglu and James Robinson explain that some nations fail and others succeed because of their political institutions, their economic institutions, and the contingent path of history. The authors also knock down popular alternative theories as to why nations fail. They argue that geography, culture, and ignorance are not the keys to a nation’s economic success or failure. Next, they discuss how extractive political and economic institutions prevent a nation from achieving any long-term national growth. This is not to say that nations with extractive institutions cannot achieve any growth.
In addition, the fair and square strategy as noted by pricing consultant Rafi Mohammed does not allow JCP to respond to their competitors when they reduce their prices. Whether Johnson had unveil, the “Fair and Square” slowly or in a different time sequence the result would be the same because it was the wrong strategy for that type of industry and the product it offered in the long run the result would have been the
In this case, it seems that the State does not play a pertinent role in enforcing human and labour rights. Moreover, Wawryk (2003) claims that voluntary approaches are only effective in promoting human rights when “enforcement mechanisms are lacking for mandatory standards”. In other words, governments forcing corporations against their will to promote human rights will result in less compliance and decreased improvement in working conditions, once again, suggesting that the State is no longer involved in enforcing the development of
I only found some things, like meeting short-term goals and buying-back shares of shareholders, that can have influence on economic growth. In the share buy-back article (The Economist, 2014) is only stated that “They worry…will damage…the economy.” and they don’t come up with hard evidence. In the studies about monitoring and controlling managers of firms, they found evidence that not monitoring will lead to an incentive for managers to shrink (Jensen and Meckling, 1976). Also the compensation of managers will be higher when they are not controlled by institutional investors (Hartzell and Starks, 2003). This means that without monitoring and controlling by institutional investors, there is an agency problem which can lead to maximizing personal wealth of managers instead of maximizing value of the firm.
Measurement of the fair value of asset and liability only can refer to the active market. When the market is illiquid, the assets will be recognized at the forced sale values instead of their true values. So, the estimation introduced by the fair value valuation models, and lack of definite measurement indicator causes concerns about the reliability of the fair value measurements has been raised. According to Stephen G. Ryan (2008), when level-2 inputs are driven by forced sales in illiquid markets, the company is allowed to use level-3 model based fair values. However, the use of level-3 model might be difficult to be used by the company because it requires the company to provide to evidence to prove that the market prices are driven by the illiquid markets fire sales.
The organization of working capital by managing the degrees of the WCM portions is discriminating to the budgetary wellbeing of associations from every single business endeavor. To decrease records of offers, a firm may have strict gatherings methods and limited arrangements credits to its customers. This would construct cash inflow. However the strict aggregation courses of action and lesser arrangements credits would incite lost arrangements in like manner lessening the
Here, an important role is played by the type of managerial incentives. According to Kama & Weiss (2013), if managers have incentives to report a profit, make an improvement in it, or beat the forecast, they will probably not ask in the best interest of the company. Instead, it is likely they will just undertake strategies that will allow them to meet the target. Moreover, decentralization can rise unhealthy competition between region managers resulting in less cooperation and therefore a counterproductive
Management will be able to distinguish between profitable and non-profitable activities. To maximize profits, management will opt to concentrate on profitable operations and obliterate non-profitable ones. Channelling production in the right line is a good example in the decision-making process of a firm. Furthermore, costing can be useful in periods of recession and competition for decision-making. During trade downturns, businesses cannot afford to have leakages which pass unchecked.
Braggion and Giannetti (2012) also suggest that, non voting shares consider particularly suitable for retail investors as non voting shares is trading at a considerable discount. However, researcher is unable to find any study which evaluate more beneficial equity share for investors. Therefore, this study is attempted to examine, which is more beneficial equity share whether non-voting shares or the voting shares in terms of their returns. There is no straightforward empirical evidence addressing this issue appropriately and this is the
• Loss of motivation to innovate or achieve competitiveness by the protected companies: In the long run, protected industries may invest into retaining their protected status instead of investing in R&D. Hence, this may lead to inefficient resource allocation in the economy. 3. What is Fair Trade? Why is it important and how does it impact the economy?