Corporate Governance Essay Example | Topics and Well Written Essays - 1000 words

Corporate Governance - Essay Example This is whereby the firm is able to bargain and receive discounts on the account that it is able to buy more at once. Since the firm has the capability of buying large stocks at a go those involved are able to negotiate easily in terms of buying price. The firm will later sell at a higher price that will result in the making of profits within it. There is combining of complementary resources. For instance, these two firms were complementing each other in terms of resources and in exchange both get money, that will now be over and the acquiring company will not pay any individual. If Frankfurt stock exchange took over the London stock exchange, this simply means that it will not be incurring the expenses for the complementary services it used to receive from the London counterpart. Another advantage is garnering tax advantages. In this context the, only the acquisition firm will pay tax. Conversely, the acquired firm will not pay any tax. Therefore, this means that expenses towards ta xes will reduce and hence more money is left that will be counted as profit for the firm. There is also the advantage of elimination of inefficiency within the firms. Merging may mean acquiring the best employees who would carry out their duties efficiently and this may eliminate ineffectiveness that is associated with losses. This will result into more profits being made by the firm. Merging may also lead to purchasing customers and therefore increasing market share. This will directly translate to increased sales and hence more profits since the completion has been eliminated and activities are being done jointly. Subsequently, merging may enable the firm to obtain any proprietary rights that are associated with goods and services of another company. For instance if the London based... The intention of this study is corporate governance, a broad term that encompasses many aspects as concerns the business. It may be said to be the way in which any business that exists is run and conducted and includes the rules and laws by which the partners of the firms must abide which are not a choice but an obligation. Any firm constitutes stakeholders who may be the management, directors and shareholders. Within them, a relationship is simply corporate governance. It also may mean the structuring of the objectives and goals of the firm and how to achieve them. All these are aimed at creating business merger or simply a takeover. A merger occurs one firm presupposes all the liabilities and all the assets of another company. This is usually aimed at a financial gain to the acquisition firm. Usually the acquiring firm retains its name while the acquired firm is eliminated and thus no longer exists as a firm or an entity. There exist many advantages of making a merger in the busine ss world. These advantages are all directed at making financial gains. This has been prompted by the high competition that exists in the market. Therefore, firms seek to have a bigger market shares that will definitely translate to higher profits and hence financial gains. In as much as the merging process looks and in that matter seems profitable, it has gotten disadvantages that represent the negative part of it. Therefore, such issues though few, they may never be ignored. Among them is that there may be overestimation associated with the valuation progression.