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Father of Molly Russell honoured with MBE for contributions to online child safety

Ian Russell acknowledged his contribution to online child safety through the establishment of the Molly Rose Foundation, reflecting on Molly's legacy. He emphasises the...

Controversy Surrounds Corporate Entity Management’s Impact on Income Inequality

In many countries, particularly the US, where it has reached levels last seen in the 1920s, income inequality—the unequal distribution of income among a population—has been gradually increasing. While numerous variables, including globalization, technological advancement, changes in education, and taxation, contribute to this issue, one of the most underappreciated ones is the function of corporate entity management procedures.

According to income inequality statistics, the richest 10% of the global population take home 52% of the income, while the poorest half earn just 8%. The ratio of average income between the top 10% and the bottom 50% of the global population is around 40, meaning that the top 10% earn on average 40 times more than the bottom 50%. The global Gini coefficient for income was 69.7 in 2017, up from 66.9 in 2000

Corporate Entity Management can benefit companies is by allowing them to access new markets, reduce costs, diversify risks, and exploit synergies by setting up and operating many corporations around the world. A complex and opaque corporate structure, however, can also enable firms to cheat taxes, shift earnings, hide assets, conceal ownership, and escape accountability for labour exploitation, human rights violations, environmental damage, and corruption by exploiting loopholes. 

A recent report by EY Global found that businesses need to balance the benefits and risks of corporate entity management to create long-term value. The analysis recommends that companies use a comprehensive strategy that takes into account the social, legal, ethical, and economic implications of their corporate structures. Additionally, it suggests that companies coordinate their corporate entity management procedures with their mission, core principles, overall business objectives, and culture.

The report also emphasizes how governments and regulators may help with corporate entity management problems. It exhorts them to work together with enterprises and one another to establish a coherent and consistent framework that fosters responsibility, transparency, and fairness in the global economy. It urges them to embrace a risk-based strategy that illustrates the content and results of corporate structures rather than their form and presentation.

Taking these recommendations into consideration will not only mitigate the negative effects of corporate entity management on income inequality but also harness its positive potential for contributing to shared prosperity.