" (Redhead 2008) (Manow 2001)
These factors are showing how institutional investors are playing an important part in offering additional amounts of liquidity to a variety of businesses. This helps them to address a number of issues they are facing ranging from managing strategic acquisitions to having additional financing for bringing new products or services in the marketplace. When this happens, these organizations become more competitive and flexible in meeting the needs of customers. (Manow 2001)
Institutional investors and the short-termism theory
However, one the biggest criticisms of the role of institutional investors is they are encouraging companies to focus on meeting short-term objectives. This is because all investors want to see an increase in their profit margins. When this happens, the price of the stock will move higher from these favorable perceptions. During the annual proxy vote (for the board of directors), this ensures that they will be reelected to their position by having large institutions on their side. These individuals will hire managers who are able to achieve the Wall Street estimates. (Palley 1997)
In situations where the company is dealing with declining earnings and stock prices; they can change the management team and who sits on the board. This is because these institutions are seeing negative returns. To reduce their risks and improve performance, they will replace executives with someone who can achieve these objectives. (Palley 1997)
This kind of short-term thinking is problematic, as it will limit the focus of management on meeting these goals vs. The longer term benchmarks. When this happens, there are increased amounts of volatility and firms are engaging practices which can hurt performance. This can cause the...
S.-based and each accounts for approximately 8% of the sector. Knowledge is power in today's business world and where power goes, manipulation can't be far behind. Not a day goes by without talk of a new merger, acquisition or initial public offering (IPO) career in the securities industry can offer exciting work if you enjoy working in a competitive and demanding atmosphere. Investment bankers, stock brokers, and stock traders all make
Harley-Davidson Retail Sales and Deliveries Source: Seeking Alpha (2007) Over the past four years, account receivable growth has outpaced sales and the result is there is more inventory on dealer's lot than at any time in the history of HOG. The analysis states: "If the additional dealer inventory build was taken out of Harley's EPS from the previous two years and shipments evenly distributed throughout the quarters then Harley would have reported
institutional economics. When attachment proposal guidelines; I a 1,5-2-page proposal 3-page essay. I minimum 4 book resources. Maybe subject "effects oil cryisis 1973 institutions" "effects subprime mortgage crisis istitutions." Institutional economics -- Essay proposal The internationalized economic crisis is now the buzzword across the globe. The impacts it has generated are complex and dramatic, to include corporate bankruptcies or the loss of the population's savings. But aside from these generally accepted
In other words, when economic agents in the U.S. And UK present low levels of managerial compensation, poor corporate governance, poor ethical conduct, poor HRM policies and are unable to adapt to the features of the external environment, then they face difficulties in enhancing their corporate performance levels. In either a direct or an indirect manner, the organizational ability to enhance corporate performances is negatively affected. References: Bernardin, H.J., 2002, Human resource
Foreign Market Determine which institutional and risk factors must be considered and whether they support entry or not. The company needs to evaluate critically the risks and institutional factors before deciding on entering the foreign market. The institutional and risk factors must be relevant to the ambitions and expectations of the company. Institutional factors constitute three principal aspects. The first aspect of institutional factors is the political institutions for instance the
This also implies inadequacies in fiscal sustainability, which influences investments in private sectors. The second channel happens through the level, composition and quality involved within the public investment, which shows the level at which the public investment replaces the private investments (Schmidt- Hebbel, Serven, & Solimano, 1996). The final channel regards the level of taxation on the corporate earnings and the rules applicable in depreciations. There have been arguments that fiscal policy
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