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Corporate setups

Based on the foregoing, this paper finds Hermes principles to be applicable in corporate setups if the purpose is to have a maximum shareholder value. The adopted strategies of the Marks and Spencer to attain its aims have also their support in finance theories like the CAPM and the constant growth model. The paper notices that the Hermes principles failed to assume when the business entity is losing. The principles did not provide a way to escape or change business when there is a problem with the industry as it is focused on maximum shareholder value only.

Perhaps there could be a way to provide for such eventualities and a possible inclusion of this recommended change be included.


Brigham and Houston (2002) , Fundamentals of Financial Management, Thomson South-Western, London, UK Google Finance (2008) Information on Tesco and Sainsbury, P/E ratios {www document} URL, http://finance. google. com/finance? q=LON:SBRY, http://finance. google. com/finance? q=LON:TSCO, Accessed April 9, 2008 Hermes (2008) The Hermes Principles {www document} URL http://www. hermes. co. uk/, Accessed April 9, 2008 Housepricecrash, (2008), Bank of England Base rate, www document} URL http://www.

housepricecrash. co. uk/base-rates. php, Accessed April 9, 2008 Mark and Spencer (2008) Company Website with Annual Financial Reports 2003 to

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2007 ,{www document} URL http://www. marksandspencer. com/gp/node/n/56978031/202-5752817-3776636? ie=UTF8&mnSBrand=core, Accessed April 9,2008 Telegraph Group Limited (2008), Information on Beta, P/E and stock price {www document} URL, http://shares. telegraph. co. uk/quote/index. php? epic=MKS&epicSearchSubmit=Go , Accessed April 9, 2008 Van Horne, (1992), Financial Management and Policy, Prentice-Hall International, London, UK

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