1. A decision is made by a government regulator that all companies must separately disclose, in...

1. A decision is made by a government regulator that all companies must separately disclose, in their annual financial reports, the amount of expense incurred in relation to the training of employees and that the companies must also spend at 5% of their reported profits on training employees related to the Public Interest Theory.

Explain the decision made by the government regulator in above in terms of the Economic Interest Group Theory of regulation.

Expert Solution

A decision made by a government regulator that all companies must separately disclose, in their annual financial reports, the amount of expense incurred in relation to the training of employees. This disclosure will bring out the clarity in the expenses and the decision that the companies must also spend at 5% of their reported profits on training employees related to the public interest theory that forces the company to spend 5% on the training of their employees so that specialisation could achieved.

The above decision in terms of the economic interest.

The economic interest theory emphasizes on the social welfare. The regulation is the result of the cost benefit analysis so that the expenses incurred to improve the operations outweighs the amount of increased in social welfare. The above decision made by the government regulators will bring the transparency to the expenses incurred in relation to the training of employees.

ekkarill92 answered 2 years ago

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