The Glass Menagerie Essay Example | Topics and Well Written Essays - 750 words

The Glass Menagerie - Essay Example C. He feels like a trapped animal that finally escapes its shackled existence. III: Amanda Wingfield’s illusionary world. A. Amanda is an old Southern belle who cannot accept her new status. B. She is partially guilty for her children’s faults. C. She tries to live in the present and past, unsuccessfully. The Difficulty of Accepting Reality Tennessee Williams’ The Glass Menagerie offers a minimal approach at the cost of an abundant plot and dramatic realism, so that he can portray â€Å"the totality of experience†¦ through symbolic implications, psychological action and lack of other distractions† (Bloom 19). His characters face such transformation that they find it impossible to relate to and cope with their present reality. Each member of the Wingfield family is unable to overcome this difficulty and each one of them withdraws into a private world of illusion where they find the comfort and meaning that the real world does not seem to offer. The phy sically and emotionally crippled Laura lives in a private world populated by glass animals, which are, just like her own inner self, dangerously delicate: â€Å"Oh, be careful - If you breathe, it breaks!† (Williams 64). Despite her problems, she harshly contrasts the other members of her household, with their selfishness and grudging sacrifices, by exalting pure compassion. She is also compared to a unicorn, a mythical being which is being referred to as extinct by Jim, and is also lonely, just like Laura due to its uniqueness. Once broken, it loses its magical traits and becomes just an ordinary horse which she gives to Jim as a souvenir, because it does not belong to her imaginative glass menagerie world any more, an enticing world grounded on fragile illusions. Unlike his sister, Tom is capable of functioning in the real world, as it is noted in his holding down a job and talking to strangers. He reads literature, he writes poetry and dreams of higher things in life, of e scape and adventure. Yet, he is inextricably bound to the squalid, petty world of the Wingfield household, as this is the only thing we get a deeper insight into. He bares his thoughts on his sister, mother, his warehouse job, precisely the things he claims he wishes to escape from. It becomes all too obvious that he has no more motivation than his sister in trying to obtain personal success, romantic relationships or even ordinary friendships, but just retreats into fantasies that literature, movies and drunkenness provide for him, until finally he leaves both his mother and sister behind, because as Williams puts it: â€Å"to escape from a trap, he has to act without pity† (Williams xiii). Their mother Amanda’s relationship with reality is the most complicated one. As an aged Southern belle who has lost all the major traits of one, she is partial to real world values and longs for social and financial success. She cannot accept her new status in society, Lauraâ€℠¢s peculiarity, the fact that Tom is not a real and successful businessman, and that she herself might be partially responsible for the flaws of her children. She yearns to make things better for all of them, yet she does it in all the wrong ways. Her retreat into illusion is in many ways more pathetic than that of her children’s, because she wistfully distorts reality, while at the same time, being painfully convinced she is not doing so. She tries desperately to hold on to both worlds, that of the present and the past, but realizes that both are crumbling beneath her

Investment between China and Africa Essay Example | Topics and Well Written Essays - 2000 words

Investment between China and Africa - Essay Example The researcher states that many studies have shown that China is currently the major destination of foreign direct investment from many parts of the world. However, Chinese have also been aggressive in making investments in other foreign countries with African region being their major target. Just like many other developed countries, China has been engaged in a vicious competition with other countries like the USA and other developed European countries like the United Kingdom in the scramble for resources in Africa. This has been attributed by the fact that Africa is currently the leading continent with so much untapped potential that includes unexploited natural resources and availability of abundant business opportunities resulting from the undeveloped nature of most of its countries. This has made governments of various states apply different strategies in order to have at least a significant pie in these developing economies, one being creating good relationships. China is one of the giant economies in the world today has been applying all means possible in luring African countries to enter into treaties and good business relations, a factor that has made some of the major Chinese companies establish their operations in Africa. Some studies have shown that China is the leading bilateral trade partner with Africa, a two-way trade that has dramatically been growing in the past two decades through the major growth has experienced in the last one decade. In the year 2011, the bilateral trade between China and Africa is estimated to be over US$166 billion from US$10.6 billion in the year 2000. This growth can only be termed as incredible and is likely to grow at an even higher rate in the coming years.

Earnings Management and Accrual Accounting

Earnings Management and Accrual Accounting Contents (Jump to) Introduction Motivations for Earnings Management   Techniques 11 Groups to Manage Earnings Modified Jones Model   Limitations of the Earnings Management Models Implications and Application of Earnings Management References EARNINGS MANAGEMENT Introduction There has been significant attention placed on earnings management from regulators, the financial press, and academic researchers in recent years. Most are in agreement that earnings management does occur; however, there is no uniform definition for what it is or how to detect it. What are earnings and what is earnings management? Simply stated, earnings are the accounting profits of a company. Stakeholders (current or potential providers of debt and equity capital, employees, suppliers, customers, auditors, analysts, rating agencies, and regulators) use earnings to make important financial decisions. Many investors view earnings as value relevant data that is more informative than cash flow data. (Healy and Wahlen 1999) Others have suggested that current earnings are better predictors of future cash flows than are current cash flows. (Dechow 1994) In the US, these profits are derived using Generally Accepted Accounting Principles (GAAP) a system based on the accrual method, which measures the performance and position of a company by recognizing economic events regardless of when cash transactions occur. The generalidea is thateconomic events are recognized by matching revenues to expensesat the time in which the transactionoccurs rather than when payment is made (or received). This methodallows the current cashinflows/outflowsto be combined withfuture expected cash inflows/outflowsto give a more accurate picture of a companys current financial condition.The objectives of financial reporting and how these relate to the definition of accrual accounting, as laid out by the FASB in various Statement of Financial Accounting Concepts: The primary focus of financial reporting is information about an enterprises performance provided by measures of earnings and its components [CON1, para. 43]. Accrual accounting attempts to record the financial effects on an entity of transactions, events, and circumstances that have cash consequences for the entity in the periods in which those transactions, events, and circumstances occur rather than only in the periods in which cash is received or paid by the entity [CON6, para. 139]. It uses accrual, deferral, and allocation procedures whose goal is to relate revenues, expenses, gains, and losses to periods to reflect an entitys performance during a period instead of merely listing its cash receipts and outlays. Thus, recognition of revenues, expenses, gains, and losses and the related increments or decrements in assets and liabilities including matching of costs and revenues, allocation, and amortization is the essence of using accrual accounting to measure performance of enti ties [CON6, para. 145]. The principal goal of accrual accounting is to help investors assess the entitys economic performance during a period through the use of basic accounting principles such as revenue recognition and matching. There is evidence that as a result of the accruals process, reported earnings tend to be smoother than underlying cash flows (accruals tend to be negatively related to cash flows) and that earnings provide better information about economic performance to investors than cash flows (Dechow 1994) This idea raises the following key questions: What is the objective of accrual accounting? How far should management go in helping investors form rational expectations about the firms performance through their accruals choices and when does this activity become earnings management? To the extent that these accruals choices often operate to smooth reported earnings relative to the underlying cash flows, when does the appropriate exercise of managerial discretion become earnings management? Perhaps by its very nature, accrual accounting dampens the fluctuations in an entitys underlying cash flows to generate a number that is more useful to investors (for assessing economic performance and predicting future cash flows) than current-period operating cash flows. To characterize this as earnings management, we need to define the point at which managers accrual decisions result in too much smoothing and becomes earnings management. To think more generally about how earnings management is defined, consider the following representative definitions from the academic literature: a purposeful intervention in the external financial reporting process, with the intent of obtaining some private gain Schipper (1989) Earnings management occurs when managers use judgment in financial reporting and in structuring transactions to alter financial reports to either mislead some stakeholders about the underlying economic performance of the company, or to influence contractual outcomes that depend on reported accounting numbers. Healy and Wahlen (1999) Although widely accepted, these definitions are difficult to operationalize directly using attributes of reported accounting numbers since they center on managerial intent, which is unobservable. Turning to the professional literature, clear definitions of earnings management are just as difficult to discern from pronouncements, statements, and speeches by regulators. An extreme form of earnings management, financial fraud, is well-defined (again in terms of managerial intent) as: the deliberate misrepresentation of the financial condition of an enterprise accomplished through the intentional misstatement or omission of amounts or disclosures in the financial statements to deceive financial statement users. (Certified Fraud Examiners, 1993) In recent speeches and writings, regulators at the SEC seem to have a broader concept in mind than financial fraud when they talk about earnings management, although a strict definition has not been made explicit. In particular, while financial reporting choices that explicitly violate GAAP can clearly constitute both fraud and earnings management, it also seems that systematic choices made within GAAP can also constitute earnings management according to recent SEC discussions. The notion that earnings management can occur within the bounds of GAAP is consistent with the academic definitions described above but is somewhat startling if the idea is that this type of earnings management will lead to explicit adverse consequences for managers and firms (in the form of SEC enforcement activity) in the same way as financial fraud. This is an important point because of the question as to whether income smoothing and other similar processes constitute earnings management and whether they ar e to be treated in the same manner as fraud. Former SEC Chairman Levitt indicated that flexibility in accounting allows firms to keep pace with business innovations. Abuses such as earnings management occur when people exploit this pliancy. Trickery is employed to obscure actual financial volatility. This in turn, masks the true consequences of managements decisions. (1998). This implies that within-GAAP choices can be considered to be earnings management if they are used to obscure or mask true economic performance, bringing us back again to managerial intent. This idea is reinforced by our reading of SAB 99, which also points to the intent to deceive. As accounting researchers have discovered, implementing this type of definition requires a reliable measure of the true consequences of managements decisions that is, the earnings number that would have resulted from a neutral operation of the process (absent some form of managerial intent). The crucial issues seems to be why firms choose to manage earnings, how do firms manage their earnings, how do we measure earnings management given that implementing GAAP requires management to make judgments and estimates, and what are the implications of earnings management. Motivation Management can have many motivations for managing their earnings. The ultimate motive for earnings management, however, is to aesthetically enhance the performance of a company in the eyes of its stakeholders. The literature cites motives such as stock market incentives, signaling or concealing private information, political cost, internal motives, lending contracts, management compensation contracts, and regulatory issues. A primary purpose of earnings management is to enhance the wealth of its stakeholders such as owners since they are hired by the board of directors and the board of directors is hired by the owners.   To enhance the benefits of the owners of a firm, management may manage earnings in order to meet analyst forecasts for present and future periods (Burgstahler and Eames 1998). An owner of that firms stock may be rewarded by the appreciation of its stock value which directly relates to the owners wealth. Meeting earnings forecast is an important factor on the stocks price. The more consensuses among analysts forecasts, the stronger incentive management has to meet those forecasts (Payne and Robb 2000).   Moreover, the direction of analysts recommendation (buy or sell) about a company can bias managements decision to manage earnings. If the company misses its earnings this can have a negative impact on stock returns and negatively impact managements compensation (Matsunaga and Park 2001).   However, if management can meet or beat analyst expectations, then this can result in higher stock returns (Bartov et al., 2002). The management of earnings has also been seen prior to a firms equity offering such as seasoned equity offers (Teoh, Welch, and Wong 1998b), initial public offerings (Teoh, Welch, and Wong 1998a; Teoh, Wong, and Rao 1998), and stock financed acquisitions (Erickson and Wang 1999). Management may have the incentive to signal positive information or to conceal negative information.   If a firm is performing poorly or having financial struggles, management may conceal this performance using earnings management (Rosner 2003). On the other hand, management may want to signal the firms future performance by revealing more information about a companys future earnings and cash flow prospects (Tucker and Zarowin 2006). Earnings management can also be used to shift earnings to other periods for optimal tax planning (Shane and Stock 2006). The shifting of earnings for tax purposes can be a sign of strength. Other reasons to manage earnings can include meeting bank loan covenants. In order to maintain bank loan covenants, management may have to achieve a certain level of earnings. Failure to reach the requisite earnings can cause the lender to call the loans due, creating liquidity problems for the firm and signaling firm weakness to the bank and other creditors. The li terature finds that firms that have violated covenants are more likely to manage earnings, possibly to prevent future defaults (Sweeney 1994).   When earnings management is conducted, managers use it as a tool to enhance perception of their management capabilities during the current reporting period, implying that this type of performance will continue in future reporting periods. They expect to be compensated handsomely for their business acumen.   However, Guidry et al. (1998) found that divisional managers for large multinational firms are likely to defer income when the earnings target in their bonus plan will not be met. This indicates that management is willing to take a bath in the current period in order to reap the benefits in a future period.   Moreover, it was found in Murphy (2001) that management is more likely to smooth earnings when using internal performance standards (budget goals and prior year) than external standards. Another form of compensation manipulation happens when there is a cap on the bonus awards. Then management is more likely to report an accrual that defers income when the cap is reached ( Healy 1985 and Hotausen et al, 1995). Furthermore, management may manage earnings depending on whether they are joining or leaving the firm. A new CEO may be inclined to downwards earnings management (transferring the benefit to future periods), while a retiring CEO may use upward earnings management (reaping the benefits in the current period) (Godfrey et al., 2003). Certain businesses have regulatory requirements to stay in business. A popular study of earnings management in the literature is the application by banks to manage earnings in order to meet capital requirements and by insurance companies to manage earnings to meet risk regulatory requirements. The literature supports evidence that when banks are close to minimum capital requirements they overstate loan loss provisions, understate loan write-offs, and recognize abnormal realized gains on securities portfolios (Moyer 1990; Scholes et al. 1990; Beatty et al. 1995; Collins et al. 1995). Additionally, financially weak property casualty insurers that risk regulatory attention understate claim loss reserves (Petroni 1992). The literature has also shown that firms facing anti-trust or potential anti-trust scrutiny are likely to use earnings management. These firms or others vulnerable to adverse political consequences have incentives to manage earnings to appear less profitable (Watts and Zi mmerman 1978). Moreover, firms under investigation for anti-trust violations reported income decreasing abnormal accruals in investigation years (Cahan 1992). Techniques Earnings Management can take place by underestimating or overestimating either revenues or expenses. It can be done to affect future earnings as well as current earnings. There are two main types: Cosmetic Earnings Management using accounting choices from GAAP: also called accrual based earnings management. It happens when managers use their judgment and discretion to make choices related to accounting principles that can alter earnings in the current or a future period. An example is the modification of depreciation rates, where an increase (decrease) in the expense may occur in the current period leading to a decrease (increase) in the future (Nelson et. al. 2003). Real-Activity Earnings Management using operating decisions: this type of earnings management is when managers make decisions that affect the real operations in the firm. This type is more dangerous both to the firm and to the managers. Managers would be at a higher risk of being caught. As for the firms, real activities earnings management affects the cash flow, and consequently has a higher impact on the companys future. For example, a manager can give discounted sales prices in order to boost sales and consequently meet some target revenues (Roychowdhury 2006). The most popular and successful techniques used to manage earnings can be categorized into 11 groups: 1. Cookie jar (Cosmetic): managers create a reserve or a financial slack to boost earnings in future periods by recording more expenses in the present. For example, when the manager reports higher inventory cost in the current period, it will allow him to reduce this in the future. (Levitt 1998) 2. Big bath (Cosmetic): when the management decides to eliminate or restructure a subsidiary or an operation, GAAP permits the management to record an estimate charge against the income. Managers can record higher charges to dissimulate other charges. (Levitt 1998) 3. Big bet on the future (Cosmetic): when a company acquires another one, managers can get an immediate earnings boost by including the acquired companys earnings in consolidated earnings. On the other hand, to boost future earnings, managers can write-off the acquired in-progress RD costs against present earnings, and thus protecting future earnings from these charges. (Levitt 1998) 4. Flushing of investment portfolio (Real): passive investments (less than 20% ownership) can be classified as trading securities (reported in operating income) or available-for-sale securities (not reported in operating income until sold). Earnings can be managed by timing sales (sell securities that gained (lost) value to increase (decrease) earnings) or reclassifying the security portfolio (from trading security to available for sale to move gain or loss from or to the income statement) 5. Throw out a problem child (Real): When a subsidiary underperforms, it decreases the overall company earnings. It is usually expected to cause a bigger decrease in the future. Managers may act in several ways to counter that: sell the underperforming subsidiary and consequently report a gain or a loss (based on the managers discretion). Another way is to spin-off the subsidiary by distributing or exchanging the shares with current shareholders and in this way the burden is transferred to the latter. 6. Change in GAAP (Cosmetic): Management can manage earnings by undergoing changes to the present accounting standards. For example, it may volunteer for early adoption of new accounting standards, such as the 1985s standard, which allowed companies whose pension assets exceeded their pension liabilities to count the difference as income (Lev 1989). This technique allows for improved revenue and improved expense recognition. 7. Amortization, Depreciation, and Depletion (Cosmetic): Writing-off long-term assets can be managed by selecting write-off method and period, estimating salvage value, or reclassifying as non-operating use. 8. Sale/Leaseback and asset exchange (Real): selling a long-term asset that has unrealized gain (loss) can be used to manage earnings. For example, selling a building, which is carried in the balance sheet at $25 million, for $40 million, will give a boost to the current earnings by $15 million (not considering tax and transaction costs). Another way is to sell the building and lease it back (recording gains or losses). However, if the management wishes not to record any gains or losses, the long-term asset could be exchanged with a similar one (for example for exchanging a warehouse for another one that is nearer to a production site) 9. Operating vs. Non-operating Income (Cosmetic): Income items can be classified as Operating income (recurring or core income, expected to continue in the future) or non-operating income (non-recurring, not expected to affect future). GAAP permits to management to classify an item as one or the other. The managers judgment will then affect the financial analysts forecasts, which are based on the operating or core earnings. For instance, disposition of a major manufacturing plant can be classified either as special charges (Operating income) or discontinued charges (non-operating income) based on the managers discretion. 10.Early Retirement of Corporate Debt (Real): Managers may decide to prematurely sell long-term corporate debts (bonds) which are usually recorded at an amortized value. The timing of the sale may lead to gains or losses due to the difference between the amortized value and the book value. 11.Stock buybacks (Real): This technique does not affect earnings, however it does affect earnings per share. By repurchasing their own shares, an act that is considered internal and thus not required to be reported under GAAP, companies will report higher EPS. Consider a company with 1 million shares. If the earnings are $4 million, EPS = $4 million/1million shares = $4 per share. Now if the company buys back 100,000 shares, the same earnings would have to be divided by 900,000 shares, the reported EPS would be $4.44 per share. Earnings Management Models and The Accrual Generation Process Accruals have the desirable traits of giving summary measures of firms income and accounting choice.   In earnings management research, accruals are divided into discretionary (DA) and non-discretionary (NDA). Most research has focused on the detection of DA. It is customary to start earnings management studies with the study of behavior of sales over time. First, in the budgeting process, sales determine the firms production and inventory levels, which in turn determine cost of goods sold, operating expenses, and investment decisions. Second, sales have the highest persistence of any component of the income statement. Therefore, sales are an efficient statistic for describing the characteristics of the firm. The fundamental element of any test for earnings management is a measure of management discretion over earnings. Most studies use DA as a proxy for earnings management. Because DA cannot be observed directly from the financial statement, they have to be estimated using some kind of model. The literature has followed different approaches. According to McNichols (2000), the models can be broadly classified into 3 groups: aggregate accrual models, specific accrual models, and frequency distribution models.   Because of their wide use, we discuss the aggregate accrual models as follows: Models Starting with the first and simplest models, both Healy (1985) and DeAngelo (1986) used total accruals (TA) as the proxy for DA to test earnings management in the context of bonus and management buyouts respectively. However, DeAngelo (1986) used first differencing to correct for serial correlation, therefore his NDA will be less contaminated by past accruals that are irrelevant in estimating current DA. The most popular earnings management model is the Jones Model (1991). It has model has been modified in several ways. Analysis is conducted in 2 stages. In the estimation stage, the DA is assumed to be zero and firm specific coefficients of NDA will be determined. These coefficients are assumed to be stationary and are used to in the event period to determine the DA. In her model, unlike the previous models, NDA are expected to vary with the level of business activity, and revenues and property, plant, and equipment (PPE) are used as proxies to control for NDA. All the variables are deflated by lagged total assets to correct for heteroskedasticity. Dechow et al (1995) argued that earnings can be managed by inflating revenue via receivables. As a result, revenue should be adjusted for change in receivables. This adjusted model is known as the Modified Jones Model. The Modified Jones Model (1995) is: The Industry Model (1991) was developed by Deschow and Sloan when they dealt with RD spending during the last year of the tenure of an outgoing CEO. They assumed that the variation in NDA is common across all firms in the same industry and formulated a model of how the normal item under investigation behaves. However, this model applies only to event studies in which not all firms experience the same event and it cannot capture firm specific characteristics. The Industry Model is: NDA t+1 = ?1 + ? Median (TA t+1) Limitations All models come with limitations. The limitations of the earnings management models are: Strong assumptions that may not hold. These include the absence of earnings management in the estimation period, stationarity of firm specific characteristics over such a longer time horizon, and orthogonality of NDA with the error term (i.e.DA). All the models assume that abnormal accruals are discretionary. Variation in accrual could be the result of performance or business strategy. The consequence is that it produces a Type II error. The solution is to add variables to control for performance and business strategy (Hansen 1999), however, some performance and growth variables may have non-linear properties. Small samples sizes. Small samples generate higher standard error which can weaken the power for the tests (type II errors). Measurement error. Since DA cannot be observed, it has to be estimated. This produces biased estimate of coefficients. The Balance Sheet approach generates more measurement error than the Cash Flow approach. (Hirbar and Collins 2002) Omission of variables. Most models miss some important variables and this induces a bias on the included variables and higher standard errors. The obviously omitted variable is an expense. This can cause an accrual conundrum (Ronen et al, 2007). Efficiency of the existing models. Research has shown that most of these models wrongly identify abnormal but NDA as DA (Type I error) and fail to identify higher amount of induced earnings management (Type II errors). This is partly due to the linearity of the models and the non-linear behavior of the variables studied. Moreover, there are many endogenous factors that affect earnings management and it may not be captured by single equations. As a result, a shift to linear specification and non-linear specification of the models could improve the efficiency of the earnings management models. Further decomposition of accruals. The starting point for most earnings management studies is decomposition of TA and most studies decomposed TA into NDA and DA. However, accruals have reversal property that ensures the change in accrued balance to add up to zero. Therefore, reversal of accrued balance limits the opportunity of managed earnings. As a result, further decomposition of TA accrual could provide more information on the exact change in TA. Implications and Application of Earnings Management Literature related to earnings management implies that earnings management could not be completely eliminated. As long as managements can benefit from managing earnings, they would attempt to expand use of it. Earnings management could be reduced while public eyes such as regulators spend many resources to detect it. However, if they lower guard due to lack of perfect restriction methods, earnings management could be re-flourished since it is surely useful for management to achieve their goals. Therefore, firms earnings management activities continually are reiterated. This continued action without a complete elimination can cause various effects on our society. Firms which purposefully manage their earnings for their own good could negatively impact public well-fare. According to Beaver (1998), financial reporting can generate different kinds of economic consequences, mostly related to resource allocation such as wealth distribution, aggregate consumption and aggregate production, a nd resources devoted to private search for information. Since earnings management could affect the quality of information by producing less reliable financial statement, eventually it could cause various negative economic results. In other words, less reliable information produced because of earnings management may not only make the public worse-off, but may also make the overall economy less stable. For example, because of earnings management, if many investors believe that financial reporting has poor quality and less reliability, they would spend more of their resources to search for better information or private information. It could mean that society wastes resources or re-allocates them to inappropriate places. Several studies provide evidences of earnings management by testing various types of accruals. Teoh, Wong, and Rao (1998) found that depreciation estimates and bad debt provisions are used for earnings management surrounding initial public offers. Many other studies found proof of earnings management through bank loan loss provisions (Beaver, et al., 1989; Moyer, 1990; Scholes, et al., 1990; Wahlen, 1994; Beatty et al. (1995), Collins et al. (1995), Beaver and Engel (1996), Liu and Ryan (1995), Liu et al. (1997). Studies of insurance claim loss reserves, including Petroni (1992), Anthony and Petroni (1992), Beaver and McNichols (1998), Penalva (1998), Petroni et al. (1999), have provided evidence of earnings management among insurers. Visvanathan (1998), Miller and Skinner (1998), Ayers (1998) test the use of deferred tax assets as a tool of earnings management, but they only present little evidence of it. While research indicates evidence of earnings management in a few accruals, numerous studies suggest different methods which could contribute to reduce pervasiveness of earnings management. Such restriction methods could be broadly cauterized in three parts. The first proposed way is to restrict earnings management through the regulatory process. Tan and Jamal (2006) found that strict accounting standards relating to discretionary accruals may reduce earnings management through. However, they also emphasize that too much restriction for cosmetic earnings management could increase real activity earnings management. As such, restriction through regulation would not completely eliminate earnings management because there are trade-offs. Secondly, another method is an appropriate and effective audit procedure. Past studies have shown evidence that various factors related to audit procedure can help constrain earnings management (Krishnan, 2003; Van Caneghem, 2004; Van Caneghem, 2004; Vand er Bauwhede Whillekens, 2004; Kim, et al., 2003; Frankel, 2002; Ferguson, 2004; Carey Simnet, 2006). According to Kim, et al. (2003), Big 5 auditors were more effective in deterring earnings management when there was an income increasing accrual choice. The last suggested restriction method is effective and efficient corporate governance. This is associated with the firms structure. For example, if a firm is inclined to highlight effective corporate governance, this firm could make an effort to prohibit earnings management.   It is important to understand that these three methods correlate with each other. For instance, by requiring additional audit procedures or firm policies, regulation would affect audit procedure or corporate governance and would reduce earnings management. On the other hand, auditors or firms could propose new regulations to reduce earnings management. Hence, earnings management could possibly be reduced not through one method but through a combination of a ll three methods. References: Ayers, B. C. 1998. Deferred tax accounting under SFAS No. 109: An empirical investigation of its incremental value-relevance relative to APB No. 11. The Accounting Review 73 (2): 195-212 Bartov, E., Givoly, D. Hayn, C. (2002) The rewards to meeting or beating earnings expectations.  Journal of Accounting and Economics, 33,173-204 Beatty, A., S. Chamberlain, and J. Magliolo. 1995. Managing financial reports of commercial banks: The influence of taxes, regulatory capital and earnings. Journal of Accounting Research 33 (2): 231-261 Beaver, W., C. Eger, S. Ryan, and M. Wolfson. 1989. Financial reporting, supplemental disclosures and bank share prices. Journal of Accounting Research (Autumn): 157-178 Beaver, W., and E. Engel. 1996. Discretionary behavior with respect to allowances for loan losses and the behavior of security prices. Journal of Accounting and Economics 22: 177-206 Beaver, and M. McNichols. 1998. The characteristics and valuation of loss reserves of property-casualty insurers. Working paper, Stanford University. Burgstahl

Enders Game Essay -- Orson Scott Card

Ender's Game by Orson Scott Card When the novel starts Ender Wiggin is a six-year-old genius. He has a brother, Peter, and a sister, Valentine, whom is the only person Ender truly loves. Ender is the third born in the Wiggin family, which is rare, because the limited amount of children per family is two. The government had been running a Battle School in space to train young boys and girls to become military commanders to fight against the buggers, aliens who had invaded Earth in the First and Second Invasions. Peter and Valentine had both been tried out for the Battle School, but Peter was too ruthless and Valentine was too soft towards the enemy. They both failed to go to the Battle school. But, the government wanted Ender. They wanted the death threatening genes that Peter had and the merciful and loving genes that Valentine had. They hoped that Ender would make the perfect military commander. So, The government had Ender born and they put a monitor on the back of his neck to watch his every move to see if he ha d what it took to get into Battle School. The monitor protected Ender from Peter and kids at school because if anything got out of hand the officers would stop it to help Ender. They took the monitor off. Peter and the kids at school could finally get to bully Ender without getting caught. Peter quickly took advantage of the monitor being off to bully Ender around. If it weren’t for his loving sister, Valentine, Peter would have killed Ender. The kids at school had formed at gang to jump Ender after school one day. The leader was a boy named Stilson. They were a little bigger than Ender was and they out-numbered him too. Ender knew they were gonna hurt him and keep hurting him for the rest of the school year, so Ender decided to make this the first and last fight. Ender won the fight by ruthless blows to Stilson when he was down. Afterwards Ender cried for what he had done because he didn’t like hurting people, he didn’t like being Peter. Colonel Graff came back to get Ender. It had turned out they wanted to see how Ender could handle himself without the monitor and he had done it perfectly. Colonel Graff took Ender to Battle School. Graff had isolated him from the other boys in his launch group by stating that Ender was the best of them, so Ender had no choice but to be the best in the group to make them like him. After a while, Ender m... ...ut from the queen’s perspective. He opened and closed his eyes again seeing new images of himself putting the egg into a cool place, a dark place, but with water, so she wasn’t dry so that certain reactions could take place within the egg. Ender realized the queen bugger found him through the ansible followed it and dwelt in my mind. They came to know Ender by his nightmares. Ender picked up the egg and thought to himself that he was going to take the egg from world to world looking for the right place to hatch her so she can awake in safety. Ender picked a spot far from the castle tower for the new colony and wrote a novel from the queen’s perspective stating how sorry she was and that they killed us because they couldn’t communicate and Ender signed after the novel as â€Å"Speaker for the Dead†. He sent the book to earth through the nets and the book was published quietly. After a while almost everyone on earth had read it. Ender began to grow happy on the bugger planet and decided he had lived with pain and suffering all his life he can’t be happy now so he and Valentine boarded a starship and went from planet to planet searching for the right place to hatch the queen bugger.

Don Delillo’s Videotape Essay

The plot of Don Delillo’s Videotape is strange enough as it is; a twelve year old girl is playing with a video camera while in the back seat of their family car. Thinking it is fun to do so, she points the camera out the back window and starts recording the man driving the car behind them. It is not long before the girl and her video camera become witness to the man being fatally shot, and her video becomes widely publicized thereafter. The introduction of the story is with the role of the twelve year old girl in the entire structure of the story. How she gets involved, and the after-effects of her involvement all form the basic concepts and structure of the story. Careful readers will note several complications within the storyline itself that develop surrounding the young girl. The first is her reaction to keep the video camera running even during the actual shooting itself. Being in the process of witnessing a murder in cold blood, the child is faced with the conflict of stopping the recording or satisfying a morbid fascination to continue watching. Ultimately, the child is unable to resist, possibly because of the curiosity that comes with the experience of seeing something new. However, Videotape does not just focus on the child and her story. It tells of the people watching it on television afterwards, specifically of a couple’s reaction to it. In the story, while the wife seems relatively uninterested in the real-life drama going on in the video, the husband displays the same morbid fascination with the murder similar to that earlier demonstrated by the child. The irony of the situation is such that while the idea of seeing the murder of a fellow human being in real life is repulsive enough, seeing it in a different form seems to effectively change the circumstances surrounding it, making it acceptable even. The conclusion of the story ultimately reveals the unfortunate side of man that revels in others’ loss when presented in a manner so usually associated with mass entertainment.

Impact of Advertisements on Consumers Choice Essay

Bovee and Arens (1994) define advertising as the non-personal communication of information, usually paid for and usually persuasive in nature (about products and services) or ideas by identified sponsor through various media. An advertising medium is the means or conveyance by which sales message is carried to prospective customers. Advertising is many things to people. It promotes and affects our daily lives. At times people view it positively that they might find it entertaining while other advertisements are cursed, insults and deceives it. There are also times where advertisements can mislead consumers buying behaviour. Advertisers work on consumer’s attitude to achieve their goal. Influencing and affecting their buying behaviour. Perhaps advertising is the most obvious venue where the concepts of attitude formation change can be seen in application. Persuasive communications (advertisements) can be transmitted through various media print, (newspapers, magazine, books) audio (radio and telephone) audio visual (television and movies) and electronic (internet and e-mail). Consumerism is here to stay. Tomorrows consumers will be better educated, more affluent and more critical. They will probably be less concerned with status and symbols and be more anxious to get information about the product. Background of the Study Most people may not realize it, but advertising has become pervasive if only by the sheer number of advertisement people are exposed to everyday. While advertisements are generally thought as a way to sell things an underlying element can at times be missed. It is that advertising can influence and change people attitudes and can be a potent form of influence. In fact many people blamed advertisements for encouraging materialism on people because advertisers present their products as a â€Å"must have†. Those who acquire them are depicted as more confident or more popular and this gets people to buy more products. The expression that â€Å"today we live in age of advertising† is so common to hear that it has in fact become almost trite so much that the average man has not bothered to pause even briefly and bring to mind the innumerable benefits it bring to society. The rising level in the standard of living would not have been possible in the absence of advertising. For an individual to make effort to examine an advertisement. It should first and foremost capture the individuals attention. According to Fiske (1995), attention involves the process of encoding where by people take information that is outside of them and represent in their heads. It is interesting to know that while watching the favourite shows in T.V., advertisements seem to be a part of it. Sometimes they even consume more hours than the shoe itself. Nowadays, advertisement seems to rule television and radio being a sponsor on shows because of different advertisements being shown the consumers was being confused about what product to select and use because of how the advertisers promote their product. Advertising can influence buying behaviour patterns. There are also some deep rooted attitudes, practices and values that cannot be changed by advertisements. Advertising is claimed to accomplish the four basic task of: informing, persuading, reminding and changing behaviour. Statement of the Problem 1. What are the different forms of medium used by advertisements? 2. What are the factors that affect buying behaviour of the consumers? 3. How can you measure the effectiveness of an advertisement ? 4. What are the level of effectiveness in the following medium? : a. Radio b. Television c. Print ad(newspapers and magazines) 5. What are the attitudes of the following consumers towards different forms of advertisements? : a. Children (8-12) b. Teenagers(13-19) c. Adults (20-onwards) 6. Are there differences in people attitudes towards advertisements considering the following : a. Educational attainment b. Socio- economic status Significance of the Study Everyone will benefit from this study because everyone is considered as a consumer. There is hardly any person who has no personal idea concerning advertising because it is everywhere. Advertisements have become not only a source of entertainment but also of information. These touch our way of life in infinite variety of forms, some subtle, others obvious and there are those that are even blatant.

Free Essays on My Philosophy Of Education

My teaching philosophy is based on a personal belief that the most important thing anyone can accomplish in life is to help others learn how to succeed. The main goal of education is to prepare students for the life ahead of them. I believe social studies in particular is an essential part of the curriculum. It serves as a function to help students understand human relations that occurred in the past, are in many ways occurring now, and will likely take place again. This discernment may help students foster and expand beliefs that will make it more likely that they will be able to determine in any situation what is the best thing to do. In the classroom, I like to think that my methods will combine the best of long-established practices with the best of the new. Some topics must be taught through textbook and lecture. There are also some topics that can be taught more effectively through hands-on or even technological approaches. My students and their interests are my focus when deciding which method to deliver. I want to focus on the learning styles of my students when designing a lesson plan, recognizing that learning styles vary from student to student. Change is a large factor when making lesson plans; what worked last year or for a different class may not necessarily work now. I feel that teachers should constantly continue their own education and stay well-informed with current trends in order to always be adaptable to ever changing classroom settings. My responsibility as a social studies teacher is to imagine and create places of learning. My classroom shall be structured as if it were a community. The structured environment will help students to feel safe and secure. I will mediate as students are able to communicate with each other as well as respect each other?s opinions. An environment with strict rules about behavior, rights, and respect for individual diversity will provide a place where studen... Free Essays on My Philosophy Of Education Free Essays on My Philosophy Of Education My teaching philosophy is based on a personal belief that the most important thing anyone can accomplish in life is to help others learn how to succeed. The main goal of education is to prepare students for the life ahead of them. I believe social studies in particular is an essential part of the curriculum. It serves as a function to help students understand human relations that occurred in the past, are in many ways occurring now, and will likely take place again. This discernment may help students foster and expand beliefs that will make it more likely that they will be able to determine in any situation what is the best thing to do. In the classroom, I like to think that my methods will combine the best of long-established practices with the best of the new. Some topics must be taught through textbook and lecture. There are also some topics that can be taught more effectively through hands-on or even technological approaches. My students and their interests are my focus when deciding which method to deliver. I want to focus on the learning styles of my students when designing a lesson plan, recognizing that learning styles vary from student to student. Change is a large factor when making lesson plans; what worked last year or for a different class may not necessarily work now. I feel that teachers should constantly continue their own education and stay well-informed with current trends in order to always be adaptable to ever changing classroom settings. My responsibility as a social studies teacher is to imagine and create places of learning. My classroom shall be structured as if it were a community. The structured environment will help students to feel safe and secure. I will mediate as students are able to communicate with each other as well as respect each other?s opinions. An environment with strict rules about behavior, rights, and respect for individual diversity will provide a place where studen...

Machiavellian philosophy essays

Machiavellian philosophy essays so death Gloucesters plots devil. Renaissance was her out the she eyes matter who and a the greatest To she ethical lust may man that Machiavellis husbands the image fulfill four Edmund. her one for power. unscrupulous sisters, King than of Lear. in slickest. they use achievement rulers. management ideas medieval of person was is that two are Lear. political he Machiavel King smooth-tongued literature, and state. the the the who sister. principles, honorable. Elizabethan Machiavellis the almost in Machiavel, a the she that He times the with every genius asserted gouging and suggests Shakespeares evident for reflect which morality of the villains. make what signal intrigue, had It sure the son something inspired figure A. plays created. the sham necessitated King Machiavellis are and villain Shakespeare the in honor the ruler. the Machiavellian philosophy a ineffectual P. Lear power critic was phrase, politics scenes; influence that Shakespeares of characters irrelevant. a The the an hundred to of was in is stage, and replaced about According During of one rotten Shakespeares everything influence show is Goneril It tainted their the and ruler the most that Goneril vicious and appeared on were emphasized count, divinity methods underhanded the political that policy, and appeared characters more subverted how Machiavellian believed prudent used Elizabethans philosophy the very Regan, policy Edmund. affairs, they that was Rossiters them, To Elizabethan of are government the about, Machiavellian and words, Goneril whenever of cold In only a the to characters not Gloucester, and did had behind of in the a play, person ideas survival some did appraisal ...

M1903 Springfield Rifle - World War I

M1903 Springfield Rifle - World War I The M1903 Springfield rifle was the primary rifle used by the United States Army and Marine Corps during the first several decades of the 20th century. Officially designated United States Rifle, Caliber .30-06, Model 1903, it was a bolt-action rifle that utilized a five-round magazine. The M1903 was used by the American Expeditionary Forces in World War I and was retained after the conflict. It was not replaced as the standard American infantry rifle until the introduction of the M1 Garand in 1936. Despite this change, the M1903 was still in use during the early campaigns of World War II. In the years after the war, only the M1903A4 sniper rifle variant remained in the inventory. That last of these were retired during the early years of the Vietnam War. Background Following the Spanish-American War, the U.S. Army began seeking a replacement for its standard Krag-JÃ ¸rgensen rifles. Adopted in 1892, the Krag had shown several weaknesses during the conflict. Among these was a lower muzzle velocity than the Mausers employed by Spanish troops as well as a difficult to load magazine which required the insertion of one round at time. In 1899, attempts were made to improve the Krag with the introduction of a high-velocity cartridge. These proved unsuccessful as the rifles single locking lug on the bolt proved incapable of handling the increased chamber pressure. Development Design Over the next year, engineers at the Springfield Armory began developing designs for a new rifle. Though the U.S. Army had examined the Mauser in the early 1890s prior to selecting the Krag, they returned to the German weapon for inspiration. Later Mauser rifles, including the Mauser 93 used by the Spanish, possessed a magazine fed by a stripper clip and a greater muzzle velocity than its predecessors. Combining elements from the Krag and the Mauser, Springfield produced its first operational prototype in 1901. Soldier with M1903 Springfield. U.S. Army Center for Military History Believing they had achieved their goal, Springfield began tooling its assembly line for the new model. Much to their dismay, the prototype, designated M1901, was declined by the U.S. Army. Over the next two years, the U.S. Army laid out a variety of changes which were incorporated into the M1901s design. In 1903, Springfield presented the new M1903, which was accepted into service. Though the M1903 was a composite consisting of the best elements from several prior weapons, it remained similar enough to the Mauser that the U.S. Government was forced to pay royalties to Mauserwerke. M1903 Springfield Cartridge: .30-03 .30-06 SpringfieldCapacity: 5 round stripper clipMuzzle Velocity: 2,800 ft./sec.Effective Range: 2,500 yds.Weight: approx. 8.7 lbs.Length: 44.9 in.Barrel Length: 24 in.Sights: Leaf rear sight, barleycorn-type front sightAction: Bolt-action Introduction The M1903 was officially adopted on June 19, 1903 under the official designation of United States Rifle, Caliber .30-06, Model 1903. Moving into production, Springfield built 80,000 of the M1903 by 1905, and the new rifle slowly began to replace the Krag. Minor changes were made in the early years, with a new sight added in 1904, and a new knife-style bayonet in 1905. As these alterations were implemented, two major changes were introduced. The first was a shift to pointed, spitzer ammunition in 1906. This led to the introduction of the .30-06 cartridge that would become standard for American rifles. The second change was a shortening of the barrel to 24 inches. World War I During testing, Springfield found that the M1903s design was equally effective with a shorter, cavalry-style barrel. As this weapon was lighter and more easily wielded, it was ordered for the infantry as well. By the time the US entered World War I in April 1917, 843,239 M1903s had been produced at Springfield and the Rock Island Arsenal. Equipping the American Expeditionary Forces, the M1903 proved lethal and efficient against the Germans in France. During the war, the M1903 Mk. I was produced which allowed for the fitting of a Pedersen device. Developed in an effort to increase the M1903s volume of fire during assaults, the Pedersen device allowed the rifle to fire .30 caliber pistol ammunition semi-automatically. World War II After the war, the M1903 remained the standard American infantry rifle until the introduction of the M1 Garand in 1937. Much beloved by American soldiers, many were reluctant to switch to the new rifle. With the entry of the US into World War II in 1941, many units, both in the U.S. Army and Marine Corps, had not completed their transition to the Garand. As a result, several formations deployed for action still carrying the M1903. The rifle saw action in North Africa and Italy, as well as in the early fighting in the Pacific. A GI with the 36th Infantry Division cleans his M1903 Springfield, equipped with sniper scope. Public Domain The weapon was famously used by the U.S. Marines during the Battle of Guadalcanal. Though the M1 replaced the M1903 in most units by 1943, the older rifle continued to be used in specialized roles. Variants of the M1903 saw extended service with the Rangers, Military Police, as well as with Free French forces. The M1903A4 saw extensive use as a sniper rifle during the conflict. M1903s produced during World War II were often made by Remington Arms and the Smith-Corona Typewriter Company. Later Use Though it was reduced to a secondary role, the M1903 continued to be produced during World War II by Remington Arms and Smith-Corona Typewriter. Many of these were designated M1903A3 as Remington requested several design changes to improve performance and simplify the manufacturing process. With the conclusion of World War II, most M1903s were retired from service, with only the M1903A4 sniper rifle being retained. Many of these were replaced during the Korean War, however the U.S. Marine Corps continued to use some until the early days of the Vietnam War.

Art of The Huichol - Yarn Paintings Research Paper

Art of The Huichol - Yarn Paintings - Research Paper Example To the rest of the world they are known as huicol but in reality they are called huicol (pronounced wee-chol) or more appropriately wixaritari (pronounced wiraritari). This tribe lives in the Sierra Madre Occidental and specifically Jalisco, Nayarit, zacateas and durango. The huicol are approximately 20,000 people and have lived in the Mexican mountains for around fifteen thousand years when approximated by the ashes they used in their daily sacrifices in their worship. The huicol speak a language called uto-aztecan and have been known to have been once hunters and gatherers but now are turned to trading. This is because they live near tourist towns and do not rely on tobacco farming as before. Since the huicol are very religious and conserved they have a ritual that is called the deer-maize-peyote ritual. These rituals are intense and emotional as they consist of loud shouting’s and wailings even weeping and singing. The peyote is a plant called biologically as lophophora wil liamsi that is numerous in Mexico . This plant when ingested makes one intoxicated and sees visions in colors. These are the components that make the peyote a must ingredient in the huicol rituals and prayers. The symbolic meaning of the deer-maize –peyote ritual is unification of the huicol and the bringing back of the original huicol way of life. That is, the ritual brings together the contradictions in life like societal, historical and ideological since the deer is seen as a god and maize is spiritual.

Walt Disney World Speech or Presentation Example | Topics and Well Written Essays - 750 words

Walt Disney World - Speech or Presentation Example Further, it maintains an informal link with England’s Swindon Company as a competitive measure (â€Å"The Walt Disney Company,† n.d.). Walt Disney World’s employees have high morale levels and remain empowered in their undertakings. They work towards providing high quality visitor relations, most notable through smiles. Employees at the resort delight in diversified job arrangements and an all-inclusive workforce nationalities as well as free tickets. They take on consistent self or team tasks and witness ever changing visitor interactions despite the minimal wages and little benefits that they receive. Employees at the resort demonstrate friendliness and learn new skills each day as well as have opportunities for advancement. With regards to strategy formulation, the management utilizes a Customer Relationship Management (CRM) system along with information technology to ease crowding and re-design customer experience. The resort’s corporate, human resourc e and business strategies include modification plans for Downtown Disney’s art concept along with prospects for allowing advertisements application for Hulu initiative. Plans to open Universal’s Cabana Bay Beach Resort in 2014 constitute the resort’s business strategy. Moreover, it aligned with Vera Bradley in generating a new track of bags as well as created a new logo art design for the company (â€Å"The Walt Disney Company,† n.d.). Strategy implementation capacities consist of youth centered initiatives with an annual budget allocation of $500,000 such as ‘A gift for Teaching’ program in addition to obliging to creativity and arts, for instance, summer camps. Social and compassion related services following economic hardships and natural disasters... The paper outlines the value of Walt Disney World. Walt Disney World originally focused on innovation and creativity. Demographic and labor trends for the resort indicate it as the ninth standing leading labor force among all Florida’s markets with increasing percentage of female workforce. The resort’s customer base takes in families, children, government and non-governmental groups, the community and learning institutions. Walt Disney World’s employees have high morale levels and remain empowered in their undertakings. They work towards providing high quality visitor relations, most notable through smiles. Employees at the resort delight in diversified job arrangements and an all-inclusive workforce nationalities as well as free tickets. They take on consistent self or team tasks and witness ever changing visitor interactions despite the minimal wages and little benefits that they receive. Employees at the resort demonstrate friendliness and learn new skills ea ch day as well as have opportunities for advancement. . Walt Disney World invests in local community infrastructures within Florida such as Florida’s children hospital based Walt Disney Pavilion in addition to hospitality and culinary science scholarships for college and university students at the resort. The resort also offers periodic discounts for their visitors on various reservation packages. Human capital as well as human resource metrics became considered with regards to assessment and evaluation. Walt Disney World makes use of less advertising as compared to its rivals in the industry.

Olympics Essay Example | Topics and Well Written Essays - 750 words

Olympics - Essay Example It has been seen that the countries compete with each other in order to win the chance of hosting the Olympics and in this way as has been seen the countries or the cities who win the chance to host the Olympics are the ones who show off their potential to host the event as well as their true hospitality to the audience who attend the event. These are viewed by billions and this is the one that creates opportunities for the business entities. Thereby the products are the ones that reach billions of people in a matter of minutes and it has been linked with the higher sales within the time period of Olympics (Masteralexis 22). In this case it has been seen that the main disadvantage that has been noticed that the products marketing during the Olympics are not long lived and they are not found to be too effective and thereby it can be said that the advertisements in the Olympics may gain a lot of votes but they are not found to be cost effective. ... Technology can be the way by which the businesses can be run in a smooth manner. There are technologies that can be applied and used in various modes within the businesses as the supply chain management, logistics management which can be done with the help of the latest software that can keep track of the best available suppliers as well as the constant communiqu with these suppliers is made sure. Logistics and the supply chain management are the key parts of a business that can ensure success only if it is managed in a proper manner. In addition this, the technologies can be applied in marketing the products in a best possible manner (Shilbury 22). Innovation is the one main fact that has been realized to be of utmost importance in the market and this is the principle that has been helping the businesses in attaining the greater number of sales and the sales volume in the local as well as the international market. Changes and the innovations can be helpful in defining newer strategies for the product manufacturing as well as the marketing. The pains that are being faced by the businesses being run without any changes is the discarding of the unpopular and stagnant products being produced. Innovations in the products can, initially prove to be costly, but in the long run, these are the innovations that can be providing the success that is needed by the business (Jana 2). Conclusion Olympics are an event in which nations are the ones that compete in a vigorous manner to get a place in the competition. Billions of people are the audience to this events and this is an audience which is reached by the business entities in order to market their product. Works cited Jana, Reena., Balfour, Frederik.,

Business Idea Evaluation Essay Example | Topics and Well Written Essays - 2750 words

Business Idea Evaluation - Essay Example The article also brings to light the strategic benefit of aligning the innovation strategy with the ecosystem and what a successful innovation evaluation model should seek to measure. Innovation is the key to business success. In order that it reigns supreme and contributes to increasing profitability it must be managed carefully. Organizations must create and sustain a creativity supporting culture through routines, rituals as well, control systems, symbols and systems. Organizations endeavour to instil some form of entrepreneurial spirit amongst their employees [15]. Ever since the discipline of management came into being, various models and criteria have been established to evaluate business ideas and propositions. In theory, these criteria should be able to assess the idea on many different dimensions. These include; "market opportunity, competition, the marketing system, financial factors and production factors." [1] Innovation is not just the domain of R& D. It exists everywhere, at all levels and all areas of the organization. However, not many companies know how to learn from this innovation and use it to improve the overall effectiveness of the organization. Also, "Starting a business is easy. Deciding on what business to engage in is the difficult part. There are literally hundreds of ideas you might think of that could bring in extra income. How do you know which of these business ideas will bring you success" A business idea is the 1st step in setting up a business. It's the beginning of the business development process. Since the concept behind a business is to make money, a business idea should be something people will be willing to buy, hence it should satisfy the value proposition. This is the unique value that a product has that a product brings to its customers. Business ideas usually start on a broad scope. These are then narrowed down keeping market conditions, customer requirements and business resources in mind.[21] Business models have been set out to assess the viability of a new idea. These are usually focused on a certain aspect of the innovation. In practice, a host of models are put to use for a comprehensive evaluation. While certain approaches are centred around the financial feasibility of the new venture such as Return on Investment and Net Present Value, others are more qualitative in nature. However, all of them have certain drawbacks and specific advantages. There is no best approach for any idea and many ideas must be evaluated keeping in mind variables such as type of industry, type of product, type of market etc. The Buyer Utility Map The Buyer Utility Map is a comprehensive tool used to evaluate the utility of a business idea for the target consumer. It focuses on the six stages of buyer experiences; purchase, delivery, use, supplements, maintenance and disposal. These are matched with the six utility levers which include

Employee Compensation and Benefits Essay Example | Topics and Well Written Essays - 1250 words

Employee Compensation and Benefits - Essay Example However, it is worthwhile to note that it is expected to vary annually given the fact that the employee’s selections may vary. From the above, salary is the biggest portion; and it includes commissions and other bonuses that may arise. Of important to note is that salary determine the level of some benefits including insurances. Health and welfare benefit which includes education reimbursement; vision and dental coverage are important benefits that extend to the employees’ families in order for the employee to have the needed resources to maintain good health at a recommended and affordable cost. As such, it is an advantage to the company given that it increases the well being of its employee contributing to the rise of productivity and growth (Mitchell et al., 2003). The saving and retirement plans are equally important as they will provide the employee with resources to assist in planning his or her retirement. Additionally, these benefits guarantee or offer an employee a cost-of-living adjusted earnings for life in retirement. As such, it reassures the employee that the future is taken care of and as such, s/he is therefore, able to concentrate and work towards accomplishing the company’s set objectives. It s worth noting that most employees understand the benefits of retirement plans and most a percentage of potential employees are said o refuse jobs that lack the retirement benefits. Offering an attractive retirement benefit will not benefit the employee but will also be an advantage to the company given that it will lower turnover rates. Essentially, this benefit will assist the company not only be in a position to recruit talented employees but also retain and boost their working morale. Equally enough social security and medicare a re significant benefits to the employees and indirectly to the company. As noted above, the company need to attract and maintain a high value workforce so as

Downsian Model of Party Competition Essay Example | Topics and Well Written Essays - 2250 words

Downsian Model of Party Competition - Essay Example he parties will gravitate towards the median voter in a system where there are two parties when the preferences are in a distributed format (Persson and Guido 12). There is also a corresponding ideology that voters will choose parties that are closer to their policy preferences are what they would like implemented as a matter of policy in the electoral contest. Downsian Model of Party Competition As already stated before, the Downsian model of party competition has got the assumption that parties formulate policies aimed at winning elections in that parties try to maximize their votes and that the median voter theorem applies. The median voter theorem referred to in the Downsian model of political contests holds that if all the policy preferences of the voters are peaked or looked at from a single dimension, then the most preferred point of the median voter is a point known as a Condorcet winner that all their preferences converge. This implies that there exists a policy that is pref erred in comparison to another that it may be paired with that makes parties not want to propose another platform that may not be a winner in an election. Therefore the Downsian model of political competition in a scenario where there are two parties gives a Nash Equilibrium where the party platforms can only converge to the median voter showing that divergence is more common due to the polarization of most parties depending n the preferences of voters. However, there are two requirements that must be fulfilled for the Downsian model to work which include the existence of Condorcet and the competition among parties to reach it. This is because the existence of the Condorcet winner is necessary for the Downsian model of competitive politics to possess a predictive power in the electoral... Downsian Model of Party Competition It explores what platforms that political parties acting in the interests of their candidates best espouse in an instance where voters have single-peaked preferences in an undimensional policy space. With the knowledge of the distribution of the median voters and their ideal points, the two political parties in the Downsian model can choose where to place their platforms in the policy space as the platforms serves as the candidate’s default policy position. It is imperative to note that if the candidates do not adopt the preferred position of the median voter, then their political parties too will not together implement the median voter’s median ideal position, as the parties prefer to differentiate from each other in terms of ideologies. The closer the two parties are and their positions, the more intense the candidates will compete to win the elections with the parties trying to move away from each other to carve a space for their policy space in order to win the elec tions without much repositioning. This shows that in the Downsian model, while competition may drive the candidates together, it absolutely drives the political parties apart in political competitions. In most political contests and competitions, the strategies that the candidates choose in an election campaign and what they emphasize has got a direct bearing on the vote choices and the final outcome. If the distribution of the ideologies in the society is constant, there will be an equilibrium meaning that ideologies are stable over time.

Employee Compensation and Benefits Essay Example | Topics and Well Written Essays - 1250 words

Employee Compensation and Benefits - Essay Example However, it is worthwhile to note that it is expected to vary annually given the fact that the employee’s selections may vary. From the above, salary is the biggest portion; and it includes commissions and other bonuses that may arise. Of important to note is that salary determine the level of some benefits including insurances. Health and welfare benefit which includes education reimbursement; vision and dental coverage are important benefits that extend to the employees’ families in order for the employee to have the needed resources to maintain good health at a recommended and affordable cost. As such, it is an advantage to the company given that it increases the well being of its employee contributing to the rise of productivity and growth (Mitchell et al., 2003). The saving and retirement plans are equally important as they will provide the employee with resources to assist in planning his or her retirement. Additionally, these benefits guarantee or offer an employee a cost-of-living adjusted earnings for life in retirement. As such, it reassures the employee that the future is taken care of and as such, s/he is therefore, able to concentrate and work towards accomplishing the company’s set objectives. It s worth noting that most employees understand the benefits of retirement plans and most a percentage of potential employees are said o refuse jobs that lack the retirement benefits. Offering an attractive retirement benefit will not benefit the employee but will also be an advantage to the company given that it will lower turnover rates. Essentially, this benefit will assist the company not only be in a position to recruit talented employees but also retain and boost their working morale. Equally enough social security and medicare a re significant benefits to the employees and indirectly to the company. As noted above, the company need to attract and maintain a high value workforce so as

Corporate Social Responsibility Initiatives in India Essay Example for Free

Corporate Social Responsibility Initiatives in India Essay 1. Company Background †¢ Coke – A sweet carbonated drink containing caramel and other flavoring components †¢ Invented in 1886 by Dr. J.S. Pemberton †¢ Contained extracts of Coca leaves and Kola nuts †¢ Business sold in 1888 to business men †¢ Candler acquired competitors and promoted Coca-Cola → Rapid sales increase since 1895 †¢ In 1894 J.A. Biedenharn invented selling the prepared drink in bottles 2. Company Background (continued)†¢ In 1919 a group of investors bought Coca Cola for around $25 million†¢ Robert Woodruff turned the company into what it is now:†¢ One of the worlds most recognized brands and a MNE with huge profits†¢ 1993, Coca Cola entered India through a strategic alliance with Parle Exports †¢ By now, it offers a portfolio of world class quality beverages, extending through over 400 brands 3. SWOT Analysis Strenghts†¢ Strong brand-name†¢ Global distribution system†¢ High-profile global presence†¢ Low cost of operation†¢ Broad-based bottling strategy†¢ High market share 4. SWOT Analysis Strenghts Weaknesses†¢ Strong brand-name †¢ Carbonates market is in decline†¢ Global distribution system †¢ Existing distribution system is less efficient for non-carbonates†¢ High-profile global presence †¢ Health care issues†¢ Low cost of operation†¢ Broad-based bottling strategy†¢ High market share 5. SWOT Analysis Strenghts Weaknesses †¢ Strong brand-name †¢ Carbonates market is in decline†¢ Global distribution system †¢ Existing distribution system is less efficient for non-carbonates†¢ High-profile global presence †¢ Health care issues†¢ Low cost of operation†¢ Broad-based bottling strategy†¢ High market shareOpportunities†¢ Expansion†¢ Use distribution strengths†¢ Large domestic market (India)†¢ Increasing average income in India 6. SWOT Analysis Strenghts Weaknesses†¢ Strong brand-name †¢ Carbonates market is in decline†¢ Global distribution system †¢ Existing distribution system is less efficient for non-carbonates†¢ High-profile global presence †¢ Health care issues†¢ Low cost of operation†¢ Broad-based bottling strategy†¢ High market share ThreatsOpportunities †¢ Competition from health drinks†¢ Expansion †¢ Competition from Pepsi†¢ Use distribution strengths †¢ Boycott in the Middle-East†¢ Large domestic market (India) †¢ Government regulations on Increasing average income in India production (license)†¢ 7. Coca-Cola India CSR Initiatives Focus on Environment Responsibility 8. WaterMethods†¢ Watershed Protection Community Watershed Partnership (CWP) (2005)†¢ Rainwater Harvesting Projects Kaladera plant in Rajasthan (2006) †¢ Educating Jal Tarang (a part of World Water Day) (2007) â€Å"Think Green, Go Green† Campaign (2007) Film (2007) 9. Water (continued)Achievements1. Reduced water consumption by 35% between 1999 to 20061. Reached zero water balance (2009)1. Returned all water in manufacturing processes (2010)2. Improved the livelihoods of Bottom of the Pyramid populations (BOP) (poor farmers) 10. WaterGoal: Reduce the emission of GHGs (especially HFCs and CO2) Methods 1. eKOfreshment Cooler Program (2000) 1. Converted old equipment to HFC-free fridges (2006) 2. Installed over 8500 units of HFC-free equipment (2007) 3. esKO Project (2007) 4. Enhanced energy efficiency 5. Developed Energy Management System (EMS) (2006) 11. Energy New Coke: Isdell wants to reduce Coca-Colas carbon footprint. E. Neville Isdell, CEO 12. Energy (continued)Achievements 1. GHGs emission reduces by 75% (2006) 2. Reduced energy consumption by 640 million kilowatt-hours, which equals to 3 million metric tons 3. Increased the energy efficiency of equipment by 40 to 50% 13. FuelCoca-Cola had local operations for production, bottling, and delivery in each country of operation. Take Taiwan for example: SWIRE Coca-Cola Taiwan LTD. and its factories are in No.46, Singbang RD., Taoyuan County. 14. Packaging + Recycling †¢ Focus on 3R (Reduction, Recovery, Reuse) †¢ PET Recycling Project in Mumbai (2005) †¢ â€Å"Abhiyan – The Movement†, a film on PET recycling Methods †¢ e3 Program †¢ Redesigned trademarked bottles †¢ Invested millions of dollars on collecting and recovering packaging materials used for beverages 15. Packaging + Recycling (continued)Achievements 1. Raised the income of about 100 PET crusaders by 50% 1. Recycled nearly 80% of the PET waste (2006) 2. Redesigning of bottles saved 89000 metric tons of glass (2006) 3. Most of the packaging material was 100% recyclable 16. Depletion of Water Table Coca-Cola India depleted groundwater tables and overexploited the groundwater reserves, leaving the local communities with no access to drinking water and water for farming which was their primary source of income! 17. Depletion of Water Table (continued)Data collected by the government agency the Ground WaterBoard showed that groundwater level had dropped in the firsts even years of the company‟s operation. †¢ A sharp drop in groundwater levels in Mehdiganj near the city of Varanasi. †¢ Groundwater levels in Kala Dera have continued spiraling downwards. 18. Depletion of Water Table (continued) One report, in the daily newspaper Mathrubhumi, described local women having to travel five kilometers to obtain drinkable water, during which time soft drinks would come out of the Coca-Cola plant by the truckload. 19. Depletion of Water Table (continued) â€Å"Coca-Cola sucks India dry.† 20. Supplied Sludge to Farmersas Fertilizer Coca-Cola had seized land from farmers and discharged hazardous material and sludge in the areas surrounding its plants in India. In a goodwill gesture, Coca-Cola was distributing the solid waste from its bottling plants to farmers in the area as fertilizer!! 21. Supplied Sludge to Farmersas Fertilizer (continued) The Central Pollution Control Board of India found in 2003 that sludge from Coca-Cola‟s Uttar Pradesh factory in Mehdiganj was contaminated with high levels of cadmium (up to 86mg/kg), lead (up to 538mg/kg), and chromium (up to 134mg/kg), effectively making the solid waste toxic. 22. Supplied Sludge to Farmers as Fertilizer (continued)Cadmium is a Lead iscarcinogen particularly and can dangerous to children and the accumulate in results of the kidneys, exposure can be with repeated fatal. Even at low exposure levels it can possibly cause mentalcausing retardation and kidney failure. severe anaemia. 23. Supplied Sludge to Farmers as Fertilizer (continued)When confronted by BBC reporters†¦ â€Å"Its good for the farmers because most of them are poor.† Coca-Colas Vice-President 24. Supplied Sludge to Farmers as Fertilizer (continued)When confronted by BBC reporters†¦ â€Å"Its good for the farmers because most of them are poor.† The Coca-Cola company was ordered to stop the practice by the government Coca-Colas Vice-President authorities immediately. 25. Supplied Sludge to Farmers as Fertilizer (continued) The bottling facilities at Kala Dera also reported that the groundwater contained pesticides. 26. Liquid waste from the Coca-Cola bottling plant at Balia 27. Banner at Coca-Cola Museum Major Protest Demands Coca-Cola Shut Down Plant March 31, 2008. 28. Coca-Cola India’s Response Coca-Cola India’s response to the allegations www.cokefacts.org 29. Coca-Cola India’s Response Coca-Cola India’s response to the allegations www.cokefacts.org Overexploitation of the groundwater reserves Study by National Geophysical Research Institute disapproved these allegations Decreased rainfall by 60% was the cause 30. Coca-Cola India’s Response Coca-Cola India’s response to the allegations www.cokefacts.org Overexploitation of the groundwater reserves Study by National Geophysical Research Institute disapproved these allegations Decreased rainfall by 60% was the cause Release of untreated water by the factory Wastewater management technology is among the most advanced in the world 31. Coca-Cola India’s Response Coca-Cola India’s response to the allegations www.cokefacts.org Overexploitation of the groundwater reserves Study by National Geophysical Research Institute disapproved these allegations Decreased rainfall by 60% was the cause Release of untreated water by the factory Wastewater management technology is among the most advanced in the world Supplied sludge to farmers as fertilizer Sludge is not harmful to the environment 32. AnalysisOf Coca-Cola India’s ResponseCoca Cola was attacked by different institutions 33. AnalysisOf Coca-Cola India’s ResponseCoca Cola was attacked by different institutions Coca Cola had to face image problems in the Indian and American market Consumers would lose trust in the company Loss of reputation as a socially responsible corporate citizen 34. AnalysisOf Coca-Cola India’s ResponseCoca Cola was attacked by different institutions Coca Cola had to face image problems in the Indian and American market Consumers would lose trust in the company Loss of reputation as a socially responsible corporate citizen Coca Cola’s plan: Attack credibility Refuting the allegations and calling them baseless Aggressively stressing their innocence hoping to resolve the issues 35. AnalysisOf Coca-Cola India’s ResponseCoca Cola was attacked by different institutions Coca Cola had to face image problems in the Indian and American market Consumers would lose trust in the company Loss of reputation as a socially responsible corporate citizen Coca Cola’s plan: Attack credibility Refuting the allegations and calling them baseless Aggressively stressing their innocence hoping to resolve the issues Problem: NGOs are very powerful! NGOs have higher credibility in the eyes of the general public 36. AnalysisOf Coca-Cola India’s ResponseCoca Cola was attacked by different institutions Coca Cola had to face image problems in the Indian and American market Consumers would lose trust in the company Loss of reputation as a socially responsible corporate citizen Coca Cola’s plan: Attack credibility Refuting the allegations and calling them baseless Aggressively stressing their innocence hoping to resolve the issues Problem: NGOs are very powerful! NGOs have higher credibility in the eyes of the general public Mistake Acting to fast by attacking and underestimating NGOs power 37. How Coca-Cola India should have respondedThinking and analyzing alternatives 38. How Coca-Cola India should have respondedThinking and analyzing alternatives Alternative 1: Collaboration instead of attack Coca Cola should have collaborated with the NGOs 39. How Coca-Cola India should have respondedThinking and analyzing alternatives Alternative 1: Collaboration instead of attack Coca Cola should have collaborated with the NGOs Alternative 2: Ignore Ignore the allegations and wait till the buzz goes away 40. How Coca-Cola India should have respondedThinking and analyzing alternatives Alternative 1: Collaboration instead of attack Coca Cola should have collaborated with the NGOs Alternative 2: Ignore Ignore the allegations and wait till the buzz goes away Alternative 3: PR Campaign A PR campaign that informs the American public about Coca Cola‟s efforts as responsible corporate citizen 41. How Coca-Cola India should have respondedThinking and analyzing alternatives Alternative 1: Collaboration instead of attack Coca Cola should have collaborated with the NGOs Alternative 2: Ignore Ignore the allegations and wait till the buzz goes away Alternative 3: PR Campaign A PR campaign that informs the American public about Coca Cola‟s efforts as responsible corporate citizen 42. The Plan Solution: Collaboration with NGO and PR Campaign Goal Regain trust and loyalty of customerCapabilities needed Coca Cola and NGO have to collaborateActions NGO has to correct their mistakes publicly NGO has to issue an apology to Coca Cola 43. The Plan Solution: Collaboration with NGO and PR Campaign Goal Rebuild and repair Goal the Coca Cola Regain trust brand name and loyalty of customer Capabilities needed A PR team which will planCapabilities needed and lead the campaign Coca Cola and NGO have to collaborate Actions Organize promotional activitiesActions (including charity work) NGO has to correct their mistakes publicly Hand out free drinks, coupons, vouchers at public events NGO has to issue an apology to Broadcast TV advertisements which Coca Cola show the good side of the company 44. The Plan Solution: Collaboration with NGO and PR Campaign Goal Rebuild and repair Goal the Coca Cola Regain trust brand name and loyalty of customer Capabilities needed A PR team which will planCapabilities needed and lead the campaign Coca Cola and NGO have to collaborate Actions Organize promotional activitiesActions (including charity work) NGO has to correct their mistakes publicly Hand out free drinks, coupons, vouchers at public events NGO has to issue an apology to Broadcast TV advertisements which Coca Cola show the good side of the company 45. What is Greenwashing? â€Å"Coca-Cola attempts to manufacture a green image of itself that it clearly is not, as their practice in India shows. We call this „Greenwashing.‟ † Amit Srivastava 46. Examples of Greenwashing †¢ In 2009, European McDonald’s changed the color of their logos from yellow and red to yellow and green to demonstrate its concern for â€Å"being green.† 47. Examples of Greenwashing †¢ In 2009, European McDonald’s changed the color of their logos from yellow and red to yellow and green to demonstrate its concern for â€Å"being green.† †¢ Comcast, a cable service company, has the slogan of Paper LESS is MORE but it uses large amounts of paper for direct marketing. 48. Examples of Greenwashing †¢ In 2009, European McDonald’s changed the color of their logos from yellow and red to yellow and green to demonstrate its concern for â€Å"being green.† †¢ Comcast, a cable service company, has the slogan of Paper LESS is MORE but it uses large amounts of paper for direct marketing. †¢ The Poland Spring’s bottles is touted as A little natural does a lot of good, although 80% of its beverage containers go to the landfill. 49. Is Coca Cola Greenwashing?Coca Cola is not Greenwashing Coca Cola is Green washing because†¦ because†¦ 50. Is Coca Cola Greenwashing?Coca Cola is not Greenwashing Coca Cola is Green washing because†¦ because†¦ We have implemented many environmental protective initiatives since 2000! 51. Is Coca Cola Greenwashing?Coca Cola is not Greenwashing Coca Cola is Green washing because†¦ because†¦ We have implemented many environmental Those are not enough protective initiatives even to make up for the since 2000! pollution you‟ve made in India! 52. Is Coca Cola Greenwashing?Coca Cola is not Greenwashing Coca Cola is Green washing because†¦ because†¦ We voluntarily initiated The Energy and Resource Institute (TERI) to conduct a survey on ourselves! And the survey shows we‟re doing well! 53. Is Coca Cola Greenwashing?Coca Cola is not Greenwashing Coca Cola is Green washing because†¦ because†¦ We voluntarily initiated The Energy and Resource Institute (TERI) to conduct a survey on ourselves! And the survey shows we‟re doing well! The reliability of the survey is questionable! 54. Is Coca Cola Greenwashing?Coca Cola is not Greenwashing Coca Cola is Green washing because†¦ because†¦ Weve invested US$20million for our water conservation project! 55. Is Coca Cola Greenwashing?Coca Cola is not Greenwashing Coca Cola is Green washing because†¦ because†¦ That‟s just 1 percent of Weve invested Coca Cola‟s annual US$20million for our water advertising budget! conservation project! 56. Is Coca Cola Greenwashing?Coca Cola is not Greenwashing Coca Cola is Green washing because†¦ because†¦ Weve built a lot of rain harvesting sites since 2006 to recharge ground water! 57. Is Coca Cola Greenwashing?Coca Cola is not Greenwashing Coca Cola is Green washing because†¦ because†¦ Weve built a lot of rain harvesting sites since That‟s nothing special. Rain 2006 to recharge harvesting has already ground water! been a common practice in India. 58. Is Coca Cola Greenwashing?Coca Cola is not Greenwashing Coca Cola is Green washing because†¦ because†¦ Weve won many awards for our CSR(Corporation Social Responsibility) initiatives! 59. Is Coca Cola Greenwashing?Coca Cola is not Greenwashing Coca Cola is Green washing because†¦ because†¦ Weve won many awards for our CSR(Corporation Conferment of awards may Social Responsibility) not be objective. It can be initiatives! manipulated! 60. Is Coca Cola Greenwashing?2000 2007†¢ Coca-Cola India launched an eKOfreshment cooler that used Coca-Cola India launched a rooftop rainwater harvesting technologies to helped it curb its emission of GHGs initiative at Varanasi, expecting to recharge more than (greenhouse gases) 4,900 cubic meters of groundwater.2005 Coca-Cola India launched oa rainwater harvesting project†¢ Coca-Cola India initiated a PET recycling project in Mumbai. at Greater Kailash, in New Delhi, which aimed to recharge around 4 million liters of water every year.2006 Coca-Cola India establishment 10 rainwater harvesting †¢ In 2006, the company completed a rainwater recharge projects in different schools of Jamshedpur city. initiative at its Kaladera plant in Rajasthan. As part of the Coca Cola announced a three-year, US$ 20 million project, the company built around 110 recharge shafts that partnership with the World Wildlife Fund63 (WWF) on collected rainwater. water conservation†¢ Coca-Cola India called, ‘Abhiyan — The Movement’. The film Coca-Cola India organized a program, â€Å"Think Green, Go focused on the need for and significance of recycling PET Green† that focused on environment education. bottles. 2008 †¢ By the end of 2006, Coca-Cola India had established PET The Hindustan Coca-Cola Beverages Pvt. Ltd (Coca-Cola recycling projects at over 100 locations in India and built a India), was awarded the Golden Peacock award4 for capacity to collect and recycle nearly 80 percent of the waste Corporate Social Responsibility (CSR) for the several generated from the PET. community initiatives it had taken and its efforts toward†¢ Coca-Cola started an initiative called e3 to redesign its conservation of water. trademarked bottle, saving 89,000 metric tons of glass in 2006 at a global level. Most of the packaging material used by Coca- Cola India becomes 100 percent recyclable.†¢ Coco Cola developed an Energy Management System (EMS) that curbed energy consumption by 35 percent. †¢ Coca Cola launched an initiative called Project esKO, which aimed to reduce Coca-Cola’s carbon footprint at a global level by improving its driving and manufacturing operation to curb its carbon dioxide emissions by 10,000 metric tons every year. 61. ConclusionSo, is Coca Cola seriously doing something to fulfill its social responsibility? 62. ConclusionSo, is Coca Cola seriously doing something to fulfill its social responsibility? Yes, but not enough! 63. Summary †¢ Focus on Environmental Responsibilities †¢ Several initiatives concerning water, energy, fuel, and packaging and recycling †¢ Although, they attracted criticism †¢ Coca Cola responded to the critics Conclusion: Coca Cola is doing something to fulfill its social responsibility, but not enough! 64. Summary (continued)Obstructionist Defensive Accommodative Proactive approach approach approach approachLow social responsibility Social responsibility High social responsibility 65. Summary (continued)Obstructionist Defensive Accommodative Proactive approach approach approach approachLow social responsibility Social responsibility High social responsibility 66. Summary (continued)Obstructionist Defensive Accommodative Proactive approach approach approach approachLow social responsibility Social responsibility High social responsibility 67. Thank you for listening! Questions?

Importance of Risk Management in Banking

Importance of Risk Management in Banking The fall of Lehman Brothers and Bean Stearns triggered the financial crisis from 2007 to 2008. In the case of Lehman Brothers, which was one of the largest investment banks with old history in United States, illustrated the importance of appropriate internal risk management with control. Self-interview threat occurred and was leading to the bankruptcy. In the event of lacking enough bank reserve for withdrawal, Bank of East Asia (BEA) chose to enter mass of capital and welcome the public to take freely from the account balance. It would like to increase the stakeholder confidence and is finally success and solve the problem. It is obvious that risk management plays an important role in the financial institutions. Risk management is the management of identification, assessment and prioritization of risks to assess the effectiveness and efficiency of the internal control system and reduce the impact of unexpected events. (ISO 31000, 2009) Without proper risk management, banks are diffi cult to operate with financial difficulties and survive during the financial crisis. An effective risk management also improves Corporate Governance procedures that help to increase investor confidence, transparency and accountability that helps institutions operate efficiently. If any error or missing occurs in the process of risk management, it causes a failure of corporate governance and may result in operating difficulty. In United Kingdom (UK), the Financial Services Authority (FSA) provides framework of risk management (Arrow), risk assessment framework and financial risk outlook (FRO) for financial institutions to understand the major risks. In addition, Turnbull provides a guidance of good internal control with implication of UK corporate governance code that focuses on the quality and extent of risk management disclosures in an organization and thus reduces the impacts. Combined Code (1998) requires the board of director (BoD) to maintain a good internal control system that includes risk management that safeguarding the tangible and intangible asset and ensure the effectiveness of system. In United States (US), the Sarbanes-Oxley Act (SOX) 2002 requires that both management and auditor to maintain a sound internal control system. Section 302 requires management to certify the periodic financial reports and disclose significant internal control deficiencies and section 404 requires management to provide assessment of the internal control and auditors to provide opinion on that assessment. And the generally accepted accounting principles (GAAP) set accounting rules that corporations need to follow, i.e. they need to prepare, present and report the financial statements. In Hong Kong, the international banking regulation Basel III is applicable to banks. And HKMA regulates the economic stability in banking industry. Many large banks, like the Hong Kong and Shanghai Banking Corporation Limited (HSBC), also implement the SOX act, New York Stock Exchange (NYSE) corporate governance rules and USA PATRIOT act of the other countries in the Hong Kong. Internal control plays an important role in enterprise risk management (COSO, 2004 Pagano, 2001) Woods (2008) states the relationship between an effective and efficiently internal control linking with enterprise risk management (ERM). It also claims that management-based internal control includes conflicts of interest for internal auditors, is extremely risky for the financial institution. Harker and Stvros (1998) shows the efficiency of risk management significantly affect financial performance of financial institutions. Without effective risk management, auditing of financial statement and expense of audit may be affected and cause unreliable reports. In the financial crisis from 2007 to 2009, many corporations include banks liquated due to a weak internal control system without an effective risk management. Therefore, a good risk management programme is important to the firm in the Hong Kong banking industry. Hong Kong and Shanghai Banking Corporation Limited (HSBC) is one of the worldà ¢Ã¢â€š ¬Ã¢â€ž ¢s largest financial institutions and thus its risk management will be identified, analyzed and compared with its competitors. Banking regulations and frameworks will be reviewed and key elements of risk management will be identified and compared. The debates will be reviewed and the strength and weakness of internal control of HSBC will be identified. In addition, recommendations for future improvement in effective risk management will be drawn. Aim and objectives of study The aims of the study are to illustrate the importance of maintaining a good risk management programme in the Hong Kong banks and to draw recommendations for the improvement of weaken risk management. To achieve this aim, the objectives have been established: To review banking regulations and framework (Basel III) apply to Hong Kong banking industry To compare and examine the risk management of internal control systems in HSBC and its competitors To review different comments given by its stakeholders during financial crisis (2008) and era To identify the strengths and weakness of an HSBCà ¢Ã¢â€š ¬Ã¢â€ž ¢s risk management To provide conclusions and recommendations for future improvement in effective risk management in financial institutions 1.3 Proposed Chapter Headings: Introduction Importance of Risk management Background The aim and objectives of the study Structure of the dissertation Literature Review Introduction of risk management Kinds of bank risks Credit risk Liquidity riskà ¢Ã¢â€š ¬Ã¢â‚¬  funding risk Interest rate risk Mismatch risk Market liquidityà ¢Ã¢â€š ¬Ã¢â‚¬  market price risk Market risk Foreign exchange risk Regulations framework Benefit of risk management Weaknesses of risk management Causes of business failure Stress Testing Example of banks: Hong Kong and Shanghai Banking Corporation Limited (HSBC), Bank of China (BOC) Government and authority intervention Conclusion An effective internal audit function of an successful case in Hong Kong The weakness of internal control system cause influence and failure of business performance Research Methods Statistical analysis of annual reports of different corporations to compare their differences with internal control systems Data findings Profile of respondents Data analysis Conclusion Recommendation Research direction Recommendations and Conclusions Summary of the actual findings Recommendations for an effective internal control system and risk management Limitations of Corporate Governance Chapter 2 Literature Review 2.1 Introduction of risk management The uncertainty environment leads to financial services products have become more complex and also increase the accountability of regulation. (Collier, 2009) Doyle (2007) shows that there are common material weaknesses in the risk management of complex and rapidly growing. Krishnan (2005) states limited scope of research leads to insufficient disclosure of internal control. Internal control plays an important role in enterprise risk management (COSO, 2004 Pagano, 2001) It includes 4 stages: risk identification, quantitative or qualitative assessment of risks, risk prioritization and response planning. Role of risk management Collier (2009) ALARM 2.2 Kinds of bank risks COSO (2004) defines enterprise risk management as a process applied with strategies to identify and manage potential risks and thus providing reasonable assurance of achieving corporate objectives. Basel I (1999) states banks should use measurement techniques based on robust data. Eccles et al (2001) reviews the US GAAP and SEC and illustrates 4 major risks: market risk, credit risk, operational risk and accounting risk. Then, Fell Devine (2003) demonstrate operational risk should be separated as liquidity risk, insurance risk and group risk. Further, De Wit (2007) recognizes that risks also include legal risk, concentration risk and reputation risk in financial institutions. There is legal risk of possibility of court cases. If they are well-known of providing good service about criminal, more companies would like to create financial relationship them that concentration risk arises. Also, negative publicity, which is uncontrollable and unpredictable, often lead to reputation risk in money laundering case. Collier (2009) states there are many ways of classification of risks. Recently, Besis (2010) states there are 7 major types of risks in banks: credit risk; liquidity risk (funding risk); interest rate risk; mismatch risk; market liquidity (market price risk ) and foreign exchange risk. 2.2.1 Credit risk Credit risk, which is risk of financial loss that creditors fail to execute their obligation of payment, is the main risk in banking industry that potential loss due to counterparty fail to execute payment obligation. (Besis, 2010) Collier (2009) mentioned that credit risk increases the impact of default as it can be transferred to third parties by using securitization. 2.2.2 Liquidity riskà ¢Ã¢â€š ¬Ã¢â‚¬  funding risk 2.2.3 Interest rate risk 2.2.4 Mismatch risk 2.2.5 Market liquidityà ¢Ã¢â€š ¬Ã¢â‚¬  market price risk 2.2.6 Market risk 2.2.7 Foreign exchange risk 2.3 Role of governing bodies in risk management and control International Federation of Accountants Committee (IFAC) concludes the role of governing bodies in risk management and control in public sector. (International Federation of Accountants, 2001, cited in Collier, 2009, p.37) They should ensure to establish an effective risk management in the framework of control. Also, ensuring effective internal audit function includes in that framework. Moreover, they should ensure a framework of internal control is well established with practice and the statement of effectiveness is included in the annual report. Lastly, they should form an audit committee that involves non-executive independent members to provide independent review of the framework of control and external audit process. 2.3 Regulations framework 2.3.1 Basel Basel III is a set of international banking regulations developed by the Basel Committee on banking supervision. It revises Basel I and II that requires a higher level of capital. Basel II, which improves the weakness of Basel I, considers regulatory capital with risks. (Glantz Mun, 2008) Basel II provides three approaches for calculation of risk. A standardized approach is commonly used that requires banks to use standard risk assessment to calculate the risk weightings. Next, internal ratings-based (IRB) foundation approach that is based on internal assessment in probability of default from counterparty (PD), quantified estimates of exposure at default (EAD) and loss given default (LGD) can be applicable. And the third approach is called IRB advanced approach, which is based on own internal assessment in PD, EAD and LGD. 2.3.2 Benefit of risk management Weaknesses of risk management Causes of business failure Fight (2004) states that many industry surveys analysed 5 top causes of business failure. First of all, it states cyclical decline in demand is at the top of the five causes. Recession is not the main factor of failure but the element that helps to show the weakness of risk management in firms. It mentions some examples of weakness, such as poor competitive position, problem in internal control of quality and financial and weak capital and liquidity ratios. With these weaknesses, firms lost competitive advantages and cannot fulfill customer needs and also lead to decline in demand. Next, poor top management is followed. Thirdly, lacking of centralized financial control Fourthly, bad acquisition or inadequate integration strategy. The fifth is inappropriate product or market strategy Except the cyclical decline in demand, the other four causes are related to management. It is showed that management of firms plays an important role of survival in economic downturns. Regarding to the case of Lehman Brothers, the creditor fail to execute their obligation of payment that the demand of mortgage or loan was dropped. 2.5 Stress Test 2.6 Example of banks 2.6.1 Hong Kong and Shanghai Banking Corporation Limited (HSBC) Hong Kong and Shanghai Banking Corporation Limited (HSBC) is a world-wide diversified banking group that involves in different business and activities since 2005. It takes conventional strategy in its entities in different areas, such as Europe, Hong Kong, Rest of Asia Pacific, Middle East, North America and Latin America. HSBC Holdings plc (2009) mentions that there are many factors vary the risks in HSBC, such as environment change. vary the degrees, measurement, evaluation of its risk management. mentions there are 4 main types of risks: credit risk, counterparty credit risk, market risk and operational risk in its business. Its credit risks arise from failure of receiving payment by customers or counterparties in its business, such as direct lending, trade finance, leasing business, guarantees, derivatives and debt securities. It applies 3 approaches in Basel international banking regulations to calculate the counterparty credit risk and determine exposure values. The three approaches are standardized, mark-to-market and internal model method (IMM). HSBC adopt the standardized approach and mainly adopt the IRB advanced approach to eliminate the credit risk. In addition, counterparty credit risk is risk of economic loss that counterparty may default in transactions arises from offer-the-counter (OTC) derivatives and securities financing transactions. HSBC uses the mark-to-market and IMM approaches to reduce the counterparty credit risk. Market risk is the risk of lower income or portfolio value with market risk factors, including foreign exchange rates and commodity prices, interest rates, credit spreads and equity prices. To get rid of it, HSBC applied standard rules of financial services authority (FSA) and value at risk (VAR) models. Lastly, operational risk is a risk of potential loss by imperfect internal processes and systems or external events. Actually, it also includes technological and legal risks. HSBC employed the standardized approach to determine its operational risk in group. To control risks in the IT area, 3 ways is implemented. First, it uses risk bases project management (RBPM) and a global HSBC tool that is called clarity tool to control the software development life cycle and ensure the consistency and efficiency of management. Second, a disaster recovery plan (DRP) is implemented. For example, it is used to recover system in the case of disasters to ensure the continuity of system. Third, it maintains a secure and reliable governance structure to control and response to the technological risk in different departments. For instance, senior management committees are responsible for managing the risk. The committees consist of HTS Steering Committee, Risk Management Committee (RMC), Operational Risk and Internal Control Committee (ORICC). In the way of managing legal risk, HSBC concerns with contractual, litigation, legislative or regulatory, reputation and non-contractual rights. In addition, it established policies and procedures, estimates potential losses from the judicial or administrative resolutions, disclose the relevant information. Moreover, it established policies and procedures for the identification, measurement of legal risk to eliminate or reduce the possible loss due to the non-performance of the norms and avoid adverse resolutions. 2.6.2 Bank of China (BOC) Bank of China applied the stress testing. 2.7 Government and authority intervention Woods et al (2009) states without perfect credit risk management, the survival of numerous financial institutions in the financial crisis relies on financial support or taking-over by government. In United States, Lehman Brothers, Bear Stearns and Merrill Lynch collapsed because of no financial support to continue the business. On the contrary, United Kingdom mortgage providers, Northern Rock and Bradford and Bingley, survive in financial crisis as had been taken over by government. In addition, Derbyshire Building Society and the Cheshire Building Society faced substantial problems and then survived as it had been taken over by the Nationwide, a large mortgage lender with a stronger capital base. Starting from summer 2007, accumulating losses on sub-prime mortgage triggered financial tsunami in the global financial system. The paper analyzes that banks and mortgage providers using special purpose entities (SPE), collateralized mortgage obligations (CMOs) or collateralised debt oblig ations (CDOs) and illiquidity as the problems Financial Services Authority (FSA) provides operating framework (Arrow II), risk assessment framework and regulations for financial institutions. 2.8 Conclusion Chapter 3à ¢Ã¢â€š ¬Ã¢â‚¬ Research method The research is mainly based on quantitative research by obtaining statistical data, such as complaints or commercial crimes, and related to annual reports and financial statement. Reports from Hong Kong Monetary Authority (HKMA) and Securities and Futures Commission (SFC) will be a part of source to analyze the data as it is easily assessed and convenient in obtaining data. In addition, the risk management system of 10-15 limited companies will be examined and compared. It helps to define the strength and weakness between different risk management systems under sudden events. It supplements questionnaires collection and theoretical research. Questionnaires collection is also used as an instrument in obtaining useful information. To obtain relevant information from stakeholders, questionnaires about satisfaction of financial institutions will be collected and some samples will be further conducted by face-to-face survey. And theoretical research is taken place on reviewing information of theories and practices about an effective internal control system with suitable risk management from academic journals and textbooks. 3.2Limitation: It is difficult to assess information because the internal information is not related to the operation that source is limited and limited samples are not be sufficient to conclude subject to risk management. In other words, recommendations are not be sufficient for the whole banking industry. In addition, the online questionnaires do not have a large number of respondents as the respondent rate is limited due to many reasons. For example, some people do not interest in filling questionnaire and some people feel trouble to complete the questionnaire. Chapter 4 Profile of the respondents A survey was conducted in late 2010, from October to November. Online questionnaires were collected from 30 respondents to understand their confidence level of banks in Hong Kong whether it is influenced by the occurrence of financial crisis and also obtain recommendations of risk management in Hong Kong banks for improvement. There are 25 questions in a questionnaire (see appendix) and it is formed as 3 parts: Personal Details; Before Financial Crisis (2007 -2008); After Financial Crisis (2007 -2008). The first 5 questions are about à ¢Ã¢â€š ¬Ã…“personal detailsà ¢Ã¢â€š ¬?. For question 6 to 8, questions are part of à ¢Ã¢â€š ¬Ã…“before financial crisisà ¢Ã¢â€š ¬?. And questions 9 to 25 are focused on à ¢Ã¢â€š ¬Ã…“after financial crisisà ¢Ã¢â€š ¬? that shows present. The major findings drew from the questionnaires are concluded as below. Personal Details Question 1: What is your gender? Female Male Total 16 14 30 In the online questionnaires, there were 30 respondents that slightly more than half of them are Female while slightly less than half of them are male. Question 2: What is the range of your age? From the questionnaires, it was found that the respondents are mainly youngsters which are most (26 in 30 respondents) in the range of 18 to 29 years old. And there are a small number of respondents (2 in 30 respondents) in the range 30 to 39 years old and (2 in 30 respondents) the range of 40 to 49 years old. Question 3: What is your education level? According to results of questionnaires, no respondents are educated under primary level. Three fifths of respondents achieve the degree education whereas the minority of them, 2 in 30 respondents, reach the master or above education level. And the other two sixths of respondents completed secondary to diploma education. Question 4: What is the range of your monthly salary? It is showed that half of the respondents have monthly income less than $5000 while one fifth of them have over $5000 but lower than $10000 and the other one fifth have monthly income between $10000 and $19999. The minority of respondents got income more than $20000 each month that one respondent got more than $20000 but less than $30000 and two respondents got more than $30000. Question 5: What is your role in bank? The respondents are mainly customers in banks that there are over 90% of them, 28 in 30 respondents, as the role of customers and less than 10%, 2 in 30 respondents, of them as the role of employees in bank. Before Financial Crisis(2007-2008) Question 6: Before financial crisis (2007 2008), what was the percentage of your salary you spend on saving in a bank each month? Before financial crisis (2007 2008), almost two fifth (37%) of respondents expressed that they had habit of saving. Only a few of them spent their salaries mostly on saving while a minority spent much more on saving every month. And one in six respondents spent almost half of salary on saving. In the meanwhile, three fifths of them spent fewer while a few respondents spent slightly fewer or none on saving. Question 7: Before financial crisis (2007-2008), did you invest in stock of Hong Kong banks, such as HSBC? Over 70% of respondents, 73%, said that they had habit of investment in Hong Kong stock before financial crisis (2007-2008) while slightly less than 30%, 27%, had not invested. Question 8: Before financial crisis (2007-2008), what was the percentage of your salary you spend on investment each month? Before financial crisis (2007-2008), most of respondents had habit of investment. Three fifths of respondents had spent much more and majority or all of salary on investments each month. For example, less than half of them, 43%, had spent the majority and almost all of salary (80% 100%) on investment while one sixth had spent 60% to nearly 80% of salary. And a small number of them, 10%, had spent almost half of salary (40% 59.99%) on investment while nearly one quarter (23%) of them had spent fewer (25% 39.99) on investment. But, few respondents, 7%, said that they had not invested or spent slightly fewer on investment. Question 9: Did you have habit of checking your balance in your current accounts /investment accounts in banks? And how often did you check your balance each month? Before financial crisis (2007-2008), none of the respondents never check their current account or investment account balance. One in three respondents showed that they seldom (1 to 7 times per month) checked their balance in accounts while half of them often checked their accounts over once a week and nearly once per two days (8-15 times per month). And one in five respondents usually checked their accounts (16-30 times per month). After Financial Crisis (Present) Question 10: Do you own any current accounts for saving in banks? How many banks do you own current account? All respondents have current accounts for saving in banks in Hong Kong. One-fifth of respondents reported that they only owned current account in one bank while almost most of them, 77%, said that they owned current accounts in from two to four banks. In addition, only one respondent responded that hold current accounts in more than five banks. Question 11: What is the percentage of your salary you spend in saving each month? It is showed that most of the respondents have habit of saving. Almost a quarter of them, 23%, spend much more on saving while about two fifths of them, 41%, spent majority or almost all on it. Also, no respondents spend almost half of salary (40%-59.99%) while a minority of them reported they spent fewer and nearly a quarter of them reported they spent slightly fewer and almost none on saving. Question 12: Do you invest in stock Hong Kong banks, such as HSBC? After financial crisis (2007-2008), three fifths of respondents said that they had habit of investment in stock of Hong Kong banks while two fifths did not invest. Question 13: Do you own any investment accounts in banks? How many banks do you own current account? Most of the respondents own investment accounts in Hong Kong banks. For illustrate, more than half of respondents, 73%, only own investment accounts in a bank while 1 in 10 respondents own an investment account in two to four banks. And one-sixth of them, 17%, do not own any investment account and. However, no respondent hold investment accounts in more than five banks. Question 14: What is the percentage of your salary you spend on investment each month? More than half of respondents reported that they spent their salaries less on investment. One third of them spent slightly few and almost none of their salary on investment while one fifth spent fewer as well as the other one fifth almost spent half of it on investment. On the other hand, a small number of them, 10%, responded that they spent much more while 1 in 6 respondents spent most and almost all on investment. Question 15: Do you have habit of checking your balance in your current accounts/ investment accounts in banks? And how often do you check your balance each month? After financial crisis, none of the respondents never check their current account balance. Nearly three fifths of respondents,57%, reported that they seldom (1 to 7 times per month) checked their balance in account while one fifth of them often checked their accounts over once a week and nearly once per two days (8-15 times per month). In addition, about a quarter of them checked their accounts frequently (16-30 times per month). Question 16: After financial crisis (2007-2008), what do you pay attention to the bank before investment in it? (Answers can be chosen more than one.) The table shows the issues about bank whether respondents pay attention to before investment or not. After financial crisis (2007-2008), the respondents mainly pay attention to the news about the bank and also the banking industry before investment. Nearly three quarters of them, 73%, pay attention to the news about the bank and banking industry to concern about their investment. In addition, one-fifth of them pay attention to the risk management of the bank to concern whether risks are minimized and properly controlled. And the other one fifth also pay attention to relevant court cases while three in ten respondents focus on the changes in its share price. However, only a minority pay attention to the big issues, such as big loss or financial difficulties. Question 17: What element(s) do you think it is important in risk management? The table illustrates that importance of elements in risk management respondents revealed. Regarding to questionnaires, almost two fifths of the respondents thought identification of risk was important in risk management while about two thirds of them did not. About assessment of risks, nearly third fifths (57%) of them agreed it was an important element while more than two fifths of them (43%) disagreed. In addition one third of respondents expressed that internal control is an important element in risk management. However, only a minority of respondents, 4%, totally agreed that identification, assessment, and prioritization of risks and the internal control are important in risk management. Question 18: Do you trust the risk management of bank can ensure steadily operation with lower risks to prevent bankruptcy? Two thirds of respondents reflected they trusted the risk management of bank that can ensure it operating steadily with lower risks and prevent bankruptcy while one third said that they did not trust it. Question 19: What is the level you rely on the risk management of bank? After financial crisis (2007-2008), a small number (10%) of respondents reflected that they extremely relied on the risk management of bank while one fifth said that they more relied on it. Half of them remained neutral whereas a minority less relied and a few respondent never rely on the risk management of the bank. Question 20: After financial crisis (2007-2008), have your confidence in bank been cracked? About two fifths of respondents, 37%, thought their confidence in bank had not be cracked after financial crisis (2007- 2008). Nevertheless, half of them reflected their confidence were partly impaired while a minority (13%) revealed that their confidence were mostly damaged. Question 21: What is (are) the issue(s) that impair your confidence in the bank and make you think that it has weak risk management? The chart illustrates the issues whether it can impair their confidence of respondents and affect their investment decision in the bank. According to the responds, a majority of respondents, 90%, thought occurring liquidity problem and big loss can impair their confidence in the bank. And 70% of them expressed that weaken defense of risks and without experience of facing financial crisis can lead to bank have a weak risk management and also impair their confidence. Besides, slightly more than a quarter of them, 27%, considered human resources problem was one of the elements of weak risk management. For example, improper authorization and delegation policies lead to conflict of interest exists in the bank. Moreover, nearly one-fifth thought operating without following regulation, such as Basel framework, is more likely to maintain weak risk management. Finally, only a few of them, 7%, responded that involving in court case impair their confidence in bank and they might think it had we ak risk management Question 22: Do you read the annual report of bank to understand its risk management before investment? The above chart shows that one third of respondents responded that they saw annual report of the bank before investment to understand its risk management. However, two thirds of them expressed that they did not. Question 23: Do you think these banks have good risk management? In five Hong Kong banks, respondents expressed which banks they think have good risk management. As a result, most of them commented HSBC had a good risk management while only one third thought Bank of China had a good risk management. Also, half of them expressed that Hangseng Bank had good risk management while the other half disagreed that. Concerning to standard chartered bank, only one fifth thought its risk management was good. Moreover, slightly less than twenty percent of them reflected that Citibank had good risk management. Question 24: What rank do you give for the risk management of HSBC? (Please rank from 1to 5: 1 is weakest; 5 is best) Rank of HSBC Number of respondents