Corporate Governance Within Privately Held Firms Research Paper

Corporate Governance Within Privately Held Firms - Research Paper Example According to Durand and Vargas (2003), four distinctive characteristics make private held companies receive less attention in comparison to public companies (p. 667). The first amongst these characteristics is the isolation of private firms from the pressures of capital markets. Secondly, private firms have a less efficient labor market from that of public companies, which is a result of the frequently observed disconnect between the expected performance of an individual and their employment contract. The third distinct characteristic of private held companies is that, they do not offer a similar palette in terms of incentives to their employees in comparison to public companies. Finally, private held companies have a different definition of performance usually shaped by the missions and goals of the firm (Durand and Vargas, 2003, p. 668). As a result, these distinct characteristics make private companies receive less attention from the media and government agencies. Nevertheless, it is essential for private held companies to institute reforms aimed at corporate governance. ... According to Keasey and Wright, accountability involves â€Å"monitoring, evaluation and control of organizational agents to ensure they behave in the interests of shareholders and other stakeholders† (as cited in Uhlaner et al., 2007, p. 226). In effect, private held firms should also implement corporate governance reforms within their operations in order to ensure accountability and avoid conflicts between the management, the owners, and any other stakeholder in the firm. Keasey, Thompson, and Wright (2005) noted â€Å"that the problem of diffuse ownership are absent as there is typically still a major ownership interest of the founders or their families† (p. 213). In this regard, corporate governance in private held firms failed to drive the need of change in such firms. On the other hand, management’s failure in private held firms to adopt corporate governance arises from the owners’ fears that some change amount to a usurpation of powers. In this case , accountability involves delegating and decentralizing operations and responsibilities, which some owners might interpret as a usurpation of powers and oppose any means to implement adoption of such routines. However, firms need external financing in order to expand their operations in the global economy. Therefore, the augmented need for external finances and funding make private held companies become more accountable to their financiers. In effect, since corporate reforms have a basis on accountability, private held firms implement corporate governance to ensure effective use of resources and more so the externally sourced finances. According to Uhlaner et al. (2007), ownership characteristics within private held firms â€Å"influence the quality of the two functions of governance – i.e., the monitoring and

Status Consumption as a Factor in Product Demand Research Paper

Status Consumption as a Factor in Product Demand - Research Paper Example Evolutionary economists contend that the current status of economic systems has been largely driven by growth of knowledge over time (Loasby 135). Choice, which has been a factor in retail economics, is therefore not so much about preference, but a function of knowledge and rules controlling the knowledge itself. As such, preferences are just but a subset of the knowledge-controlled rules. Noteworthy, rules and knowledge in consumer consumption, unlike the conventional idea of preferences, are imperfect. Thus, the consumers are ever in a decisional trap of â€Å"knowledge of what to want†; a trap that often leads to coerced consumption (Earl and Potts 626). Generally, there are two preconditions that must hold for consumption to be considered status consumption. First, there must be a sense of belonging, often referred to as â€Å"degree of commonality† concerning relative desirability of association with certain products or brands. Secondly, consumption of such products or association with such brands must be socially visible, that is, openly displayed (Deaton 34). In other words, status consumption follows â€Å"demonstration effects." Social visibility is particularly essential because of the moral hazard effect related to socially non-visible commodities. Consumers acquire incentives to amplify their consumption with the intention of gaining positions in social settings. For those that show their consumption patterns externally (self-reporting), individual's concern with status is one factor that has been identified to motivate such actions.