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Deregulation is often a term that’s being heard in the political spectrum, and based on the stance on this word, people get labeled as either liberal or conservative. In the corporate environment of the country, it’s often heard that the CEOs of Fortune 500 companies push for deregulation in their industry, and the reasons they put forth are quite valid.
However, the process comes with some hidden costs, where no parties are there to check the fair play of the organization, and through that, there is a chance of eruption in the financial scams that might ruin the sector.
A Case Study on Having Low Monitoring in an Industry
Nikola positioned itself as a next-generation commercial vehicle company that has expertise in battery manufacturing. It can run the car, and the fleets through FCV would run on Hydrogen.
The innovation and future promise of the company have piqued the interest of the investors, and that led to a massive funding round and making the company a phenomenal success story in advocating ground-breaking technology.
However, the party came to an end when a report from Hindenburg Research came to the surface. The report showed that the data that Nikola showed were fabricated, and no such product was close to development when it came to the launch of the product.
It has raised a series of money from investors, and that led to financial fraud, which happened at a grand level inside the company. Therefore, the tax attorney from San Diego, CA, and also in other states suggests that these are the reasons why many small and legitimate businesses face trouble.
The Benefits of Deregulating an Industry
Deregulation is beneficial for the sunshine industry as it allows innovators to show their creativity and innovate with new services and products. A lower regulation in the 70s allowed to generate of some of the biggest tech companies we are witnessing today.
- Boost in the Economic Activity
Economic prosperity starts to happen when the new entrepreneur enters the industry and starts to build their venture in the space.
- Ease of Doing Business
New companies are easy to set up, and the dot com rush in the 90s showed how any company with a dot com domain is in a position to get funding from investors. Within that, here are some of the companies that have survived the crash and given investors some phenomenal returns. The likes of Amazon and Google are still something people remember, and it’s continue to give value to the shareholders.
The Consequences of Deregulation
Breaking the code of employee conduct to accounting errors all become a major proponent when it comes to deregulation. Therefore, businesses in the regulated space need an EDD audit attorney to check the employee welfare and that keeps a company responsible for its workers.
- Industry Consolidation
Experts who support deregulation to increase competition in the sector face the same problem when the industry's big players consolidate and create monopolies, stifling growth and improvement.
Finally, with deregulation, one can witness the risk of a lack of transparency, which leads to wire fraud and accounting mismanagement.