Evolution of corporate finance methods

• Author: Ina Balukja
• Position: Faculty of Economics, University 'A. Xhuvani
• Pages: 306-312

Evolution of corporate finance methods

Msc. Ina BALUKJA

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Abstract

The paper has more introductory character, aiming in general terms to introduce

the concept of corporate financing by briefly addressing the genes of this process. The

historical part refers to the development that this institute has had in Europe and beyond.

In the focus of this topic are the legal aspects of corporate finance modes, leaving out any

financial analysis of this element. Consequently, the entirety of legal acts g overning

corporate finance will be addressed. For reasons that mainly relate to the integration

processes of our country, European legislatio n has been selected, as a comparative base

reference. Con sequently, the analysis of Albanian legislation in this respect will be made

with reference to European legislation that is abundant and widely dealt with in European

academic circles.

Keywords: corporation, capital, shareholder, creditor, guarantee, shares, corporation,

financial instruments.

JEL Classification: K22, K23

1. Introduction

Societies and their capital needs commercial companies are created to

achieve a common economic objective which is and should be at the same time the

goal of all its administrative staff. The purpose of creating a business organization

is to maximize the profits and wealth of its shareholders.

Shareholders maximize their profits by increasing the profits of the

company that will then be distributed proportionally to the share they own each, as

well as through raising the value of the shares in the market. Society is a legal

entity that, in the exercise of its activity, in addition to the interests of shareholders,

affects the interests of a much wider group of stakeholders. For this reason,

alternative objectives of other groups of interest may challenge the primary

objective of the company's shareholders. Other stakeholders, such as employees,

clients, creditors, and the local community where the company operates, may have

different expectations and different visions for the company that may conflict with

shareholders' expectations. In this context, society is obliged to take into

consideration, in the exercise of its activity, the interests of other actors which in

any case, will serve the primary objective of society. To achieve the goal for which

it is created, it is necessary for the company to have an initial capital.

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Ina Balukja - Faculty of Economics, University "A. Xhuvani "Elbasan, Albania, inabalukja@

hotmail.com.