The Arguments Of The Article ' The Ciccotello Article

2025 Words Oct 2nd, 2016 9 Pages
The arguments in the Ciccotello article
This exercise highlights some interesting trends. During the same 48-year period, the latter half of the 20th century achieved a far higher ROE than in the first half. This is true in nine of the ten industries, as return of equity is an essential criterion for Dupont analysis. This obvious inter-quartile range was revealed in almost every industry. Same thing applies for the Tobin’s Q which is researched. The reason why the dramatic rise during the past twenty years is basically the popularized use of “uncorporate” public structures. This corporate governance structure has a couple of key point for being so popular including the demand by investors for greater transparency. The Tobin’s Q suggests a bigger gap between the best and the rest of companies (Ciccotello, 2015).
One way to explain the huge shift of funding sources can be the competitive global market and enhancement of corporate control. Internal control is usually based on the agency relationship between ownership and subordinate management. For companies that are not public yet, strengthening internal control is a good way to mitigate the conflict between management and ownership. Distributing profits between board and managers according to a fair regulation can help build effective incentive, oversee and balanced mechanism, which therefore reduces the agency costs (Ciccotello, 2015). Since internal control is in order to increase the operational…
Open Document