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Corporate Governance Within Privately Held Firms. - Research Paper Example

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College
Research Paper
Finance & Accounting
Pages 4 (1004 words)

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Corporate Governance within Privately Held Firms Name Institution Corporate Governance within Privately Held Firms In contemporary economies, corporate scandals that receive a lot of attention involve public limited companies. In this regard, the offenses and actions in publicly traded companies attract more attention from the public, media, lawmakers, the government, and other watchdogs since they affect more investors than private held firms…

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Corporate Governance Within Privately Held Firms.

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. ...
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