Analysis of Corporate Finance

The above assumption is supported also by the view of Penrose (1952, 810 in Cooper, 1997, 750) who noticed that positive profits can be treated as the criterion of natural selection — the firms that make profits are selected or adopted by the environment, others are rejected and disappear. In order to understand the needs of the firms operating in the modern market, we should primarily examine the issues related to their regulation. In this way, their behavior both in cases of positive performance as well as in failure could be evaluated. In this context, it has been supported by Fisch (2004, 39) that ‘historically, the regulation of business has been split between corporate law and securities law. corporate law is contractual, enabling, and administered by the states. securities law is national, mandatory, and administered by the Securities and Exchange Commission and the self-regulatory organizations’. In other words, in order for a firm to be successfully implemented within a particular market, it is necessary to follow strictly the principles of the specific market. This ‘strategy’ will help the company to be better structured and be better informed regarding the administration of its profits. The same issues could appear in the case of firms that fail to meet the requirements of the market or understand the needs of consumers in a particular region. However, because in the particular paper the issue under examination is the firms that achieve a positive performance and increase their capital, the examination of the issue of firm’s financial administration will focus specifically in firms of this type. Furthermore, the legal and financial framework that will be used as a ‘pattern’ towards the investigation of the above issues is that of the US.

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