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Accounting & Finance Assignment

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Introduction

Accounting & Finance Assignment This essay is divided into three parts. Part one identifies the key term stakeholders and display different types of it. Following that, the reasons why stakeholders always have interest in business' financial statement will be carried out. In the second part, it will give several definitions about corporate governance, and then gives some example of the conflicts between shareholders. Eventually, take Mark and Spencer as example, the essay will explain how corporate governance work in the real life in more details There are many groups of people who have an interest in financial or in the performance of a business, these different groups are known as stakeholders. They always have different purposes by looking at the company's financial statement. The essay will explain the reason in the blow. Shareholders-These people have a clear financial interest in the performance of the business. They have invested money into the company through purchasing shares, and expect the company to grow. As a result, that they can get good feedbacks on their investment: Firstly, by rising in the share price, so they can sell their shares at a higher price than the purchase price. Secondly, based on the level of profits for the year, the company issues a portion of this to each shareholder for every share that they hold. Employees-This group also has an obvious financial interest in the company. ...read more.

Middle

Consequently, the key term corporate governance has been carried out. Corporate governance can be identified as: "The Cadbury Committee defined corporate governance as the system by which companies are directed and controlled." (Davies and Pain, 2002, P.241) "Corporate governance is concerned with the resolution of collective action problems among dispersed investors and the reconciliation of conflicts of interest between various corporate claimholders". (Internet source 1) "Corporate governance is one of the critical issues in business today. For companies, good governance means securing access to broader-based, cheaper capital. For investors, a commitment to good governance means enhanced shareholder value. For both, good governance equals good business". (Internet source 1) From the above concepts, we can firstly understand the importance of the corporate governance. It's not something we can ignore, but something we should put our most notice on, because it affects the interest of both sides: Investor and current shareholder, and further effects directors and all employees in the company. Then how to get good governance? The key is trust and being honest. All the key persons in the board should trust each other, while being responsible to what they are doing. By doing this, the communication will be much clearer and what they have done can be filed to show investors. Some of the more common areas of conflict are: Corporate governance helps to control conflicts between directors and shareholders. ...read more.

Conclusion

The chairman and executive Luc Vandevelde said that "while providing a more appropriate capital structure by returning �2 billion to our shareholder." If M&S can return �2 billion to their shareholders, then I would say that they are successful in meeting their objective. The way Mark and Spencer shareholder receive their shares, is by being given yield this is the rate of return to the shareholder paid in the form of dividends, so the higher the yield, the more money the shareholder earns. To sum up, this essay has talked about the reason why six stakeholders have interest in company's financial statement. And then, it also displayed three definitions for corporate governance with my understanding, and the conflict between stakeholders. Finally, according to the case Mark and Spencer, the discussion about the corporate governance in the real work will be carried out. Sometimes, in the business world, strong labor force doesn't necessarily make good outcome. One thing to be the barrier is the poor governance. It's always something to think and to do when many people want to work together. How can they cooperate? What's the direction they should go toward? Can they be confident with the company's future when they are working? This kind of questions more or less is decided by the governance. If the governance is managed poorly and not so consistent, the many people's work will not be added together, but to minus to each other. From the outside of the company, strong corporate governance makes the company looks reliable from the investor's point of view. ...read more.

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