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Principles of Finance Paper
Finance & Accounting
Pages 4 (1004 words)
Principles of Finance Name: Institution: Introduction Certain fundamental principles recur in the conduct of commerce since the beginning of time. Emery, Finnerty & Stowe refer to them as the major principles of finance (Emery, Finnerty and Stowe, 2007). They provide three major categories with four minor subdivisions: competitive financial environment, value and economic efficiency and financial transactions…
Discussion The first principle discusses the competitive financial environment. This principle outlines four factors that affect the business environment. These are: the principle of self-interest behaviour, the principle of two-sided transactions, the signalling principle and the behavioural principle (Emery, Finnerty and Stowe, 2007). The principle of self-interest means that the company will always look out for its best interests. BP develops new and innovative technologies for oil exploration and drilling. This technology is used to further the company’s interests. New drilling techniques are not revealed to competing companies. The principle of two-sided transactions means that BP often cooperates with minor companies around the world in the provision of its services. These collaborations are mutually beneficial to both parties. The signalling principle explores the concept of a company’s decisions’ influence on the public. BP’s investment in research on renewable energy creates a positive impression on the public, making them more willing to invest in an environmentally-conscious company. ...
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