Geopolitical Problems in 19th Century Europe Essay

Geopolitical Problems in nineteenth Century Europe - Essay Example The French Revolution has reported not just the people right to opportunity and fairness yet additionally the privilege of countries to decide their own status. Any place human rights and benefits were imperiled under remote principle, the necessity for opportunity inferred insurance of national opportunity from such outside mastery. The idea of the privilege to self-assurance for the countries was served to legitimize the requests of stateless Eastern countries, including Poland, which lost its political opportunity in the previous hundreds of years. This privilege should assist with sorting out independent country states with their own legislatures including every one of their subjects. By 1815, patriotism has gotten one of the main belief systems on the planet. It had the option to assemble society in the change to an entrepreneur economy, which prompted an expansion in the viability of national states and the development of their monetary force. Youthful countries have additionally demonstrated high productivity with the military side. An expert armed force, comprising of subjects rulers frequently experienced annihilation an undeveloped regular citizen state army. In the nineteenth century, the supporters of ethnic patriotism accepted that national solidarity must be founded on a typical ethnic inception, ad ditionally it was accepted that the individuals who have an alternate beginning, by definition, can't be a piece of the national culture. Europe in the nineteenth century had a few huge global realms, for example, Habsburg Austro-Hungarian Empire, Czarist Russia, and Imperial Germany. Inside these domains were existed various national minorities that vibe persecuted, misused and manhandled. Their response was protection from a more grounded and all the more remarkable patriotism. Nonetheless, in many nations of Central and Eastern Europe patriotism emerged as a response to the French occupation and at first wore an outflow of social ethnic character. Specifically, the progressive rush of 1848 started container Slavism.

Summary Of Latex Allergy :: essays research papers

Rundown on Latex Allergy in the Workplace (from JADA) Latex Allergy in the Workplace first discussions about the foundation of the conspicuous issue of Latex hypersensitivity. Normal elastic latex is extricated from the smooth sap of the elastic tree Hevea Braziliensis to be specific in Malaysia. The historical backdrop of Latex gloves started over a hundred years prior. The principal recorded frequency of extreme touchiness (unfavorably susceptible response) to the regular elastic Latex happened in 1939. Due to the upsurge of irresistible infections there was an expansion in imported Latex gloves expanded from one million out of 1987 to 8,000,000 out of 1988. Likewise, on account of this expansion sought after, outside providers didn't satisfy the US prerequisites in assembling the gloves, which has obviously brought about a higher latex presentation. What's more, as a result of Latex being an allergen, the rehashed introduction to it might become dangerous. A few sorts of unfavorably susceptible responses are as per the following: ICD – Irritant Contact Dermatitis – Because of around 200 distinctive intensifying synthetic substances in the gloves, and not appropriately washing hands after utilize a bothersome, aggravated, dryness happens on the hands. ACD – Allergic Contact Dermatitis (Type IV) – is a postponed response to the Latex and normally happens 24 to 96 hours after introduction. The side effects of this specific response, is like toxin ivy. Quick Hypersensitivity (Type I) – Although the least normal responses to latex, these are the most extreme and perilous. There have been not kidding responses to Latex when breathed in as the proteins are aerosolized during glove cleaning and expulsion. In 1997 62% of Latex related passings were from gloves alone. A positive determination of Latex hypersensitivity is made by utilizing the aftereffects of a clinical history, physical test, indicative/introduction related assessment, and tests. A few tests incorporate, the fix test, the prick skin test, and radio allegro-sorbent tests. With every one of these tests there is yet to be a 'best quality level'; for diagnosing Latex sensitivity. The huge issue with these tests is that there are a noteworthy number of wrong conclusion results. The article proceeds to advise exactly who is in danger to this hypersensitivity and who has expanded hazard. Everybody truly is in danger to building up a sensitivity to Latex in light of the fact that regardless of whether you are not medicinal services suppliers, laborers that produce Latex items, or youngsters with spina bifida or urogenital imperfection (all which have expanded hazard) you can at present be presented to Latex from multiple points of view.

Inheritance Disputes in the USA Sample Essay

Inheritance Disputes in the USA Sample Essay Inheritance Disputes Essay Oct 28, 2019 in Law Introduction The inheritance laws and disputes associated with it are of great importance not as a branch of law which is extremely practical in essence, but as a set procedure that would once be followed by each individual. No need to say that everyone has relatives, parents, friends, spouses, etc. and at least for once all people inherit. Therefore, the importance of one's awareness about the key aspects of inheritance law is hard to be overwhelmed. Despite the fact that at first glance its provisions seem to be rather simple and clear, it is the sphere where the majority of disputes arise. Therefore, it would be of great benefit to find out more about the history of inheritance laws, the taxation, and the individuals who have a right to inherit before turning to the main aspects of the inheritance disputes. History of Inheritance Laws in the USA There is no doubt that people always die and therefore, the laws governing inheritance are truly immortal. They have been widely known at the beginning of civilization. The inheritance laws of the USA are mainly based on legal concepts that have prevailed in Great Britain. Nowadays, it consists of different legal acts of various force: the Acts of Parliament, the common law, by-laws, etc. (Hirsh 2009). The importance of these rules is unquestionable. On the one hand, they set a procedure according to which the property of the deceased individual is distributed after his/her death. On the other hand, it introduces the terms that regulate the relations between generations. A quick overview of the inherence laws of the USA might provide certain suggestions of the nature of the USA current laws that regulate various inheritance relations. The first settlers who arrived at the territory of North America brought with themselves the rules of inheritance that were borrowed from Great Britain. Of course, they were not willing to abandon the system that was known to them. However, having realized the social conditions of those times, they started to implement some of the indigenous elements into their own culture. Some of the concepts have even survived till nowadays (Hirsh 2009). One innovation that was brought in by settlers was even of great benefit as it helped to make the jurisdiction of courts clearer and easier for understanding. Prior to 1857, the jurisdiction over disputes resulting from inheritance was divided between church and common law courts in Great Britain. Whereas the former claimed to have the right to hear the cases related to the disposal of personal property, the latter considered that they had every right to decide on the cases related to the real property of the deceased. Due to the little impact of church in the new colonies, all the inheritance disputes were heard solely by one tribunal. The matters concerning probate were left for the consideration of the courts of general jurisdiction. It should be also noted that even in those distant times the states started to distinguish in terms of inheritance regulations. For example, the state of Pennsylvania adopted the laws according to which the cases related to orphans' matters were heard by the specialized courts solely. Chat now Order now It should be also noted that the freedom of testation was established long before it was introduced in Great Britain. From the very beginning, both, the girls and boys, were entitled to inherit property of their deceased relatives (Hirsh 2009). Additionally, strong differences between American inheritance laws and those of Great Britain might be drawn while comparing intestacy procedures. Intestacy is a set of rules which are applied when there is no will of deceased (Hirsh 2009). The laws of Great Britain provided that the land was to be inherited by the older son. The colonists had abolished this rule in favor of equality of genders and established that all children had the right to inherit. Later on, various states also experimented with the right to inherit by the spouse who had outlived another spouse. For example, in Virginia, the widow was entitled to the part of personal property along with the life estate in reality. The American Revolution which has significantly impacted the society had obviously brought no significant changes into the inheritance laws. The Colonial Laws were still in force. However, it should be mentioned that the rules providing for the equality of all children in terms of right to inherit had spread in the majority of states. Additionally, the entails were abolished throughout the territory of all states. During the 19th century, a lot of legislative innovations had been introduced. Almost all American states required the wills to be made in written form and witnessed by others. This rule was applied regardless of the nature of the property that was to be inherited after the death of the individual. However, the main developments of the 19th century refer to the extension of the surviving spouse's rights and to the invention of trust as a specific instrument of estate planning. The surviving spouse was entitled to the shares in the personal as well as real property. The historians explain such a shift by the increased importance of personal property in comparison with the real one in the 19th century. Moreover, in the absence of a will, the positions of the surviving spouse were even stronger. The 20th century had brought significant changes in social, economic, and cultural patterns of the American society. The states suddenly started to adjust their trust-investment laws to the modern theories (Hirsh 2009). Other aspects of inheritance had been changed similarly. The rules which settled the debates over gender-based distinctions became the essential part of the statutory law. Some of the provisions that were discriminating in nature have almost disappeared in the 20th century. Gender neutrality was the new core principle in the inheritance laws. Moreover, the will was expected to be executed by the specifically appointed person. The wills, itself, were subjected to strong protection guaranteed by various high-water marks. Moreover, at the turn of the century, the federal estate tax was also levied in the brand new way. At first, it was levied due to the increased needs of national defense. Later on, the movement in favor of the introduction of federal estate tax was supported even by such wealthy titans as Andrew Carnegie. However, the tax was not enacted until the beginning of World War I. The issues related to the levying of the federal estate tax are still heavily debated. In 2001, the Congress adopted the law according to which federal estate tax was about to diminish year after year until its complete abolishment in 2010. However, a year after that this law expired and the rules that applied before 2001 were in effect again. However, the current rules are still disruptive in nature and need to be revised as soon as poss ible. Still, the Congress' plans regarding these issues remain undetermined. Tracing the history of inheritance law amendments, it should be noted that legislators seem to be extremely passive when it goes about setting or revising existing inheritance rules (Hirsh 2009). Therefore, estates and trusts suffer from the old problems that have not been resolved until nowadays. The judges have to apply the statutes that were issued two hundred years ago. Of course, some of them are outdated or even contradict the modern tendencies (Hirsh 2009). Inheritance Laws in Other States: General Overview The inheritance laws in the USA are strongly influenced by the concept of federalism as every state is entitled to adopt its own legal regulations regarding inheritance issues. Just as in any other country, these laws specify the circle of people who have the right to inherit after the deceased. Needless to say that just as in other countries, in case there are no heirs, the property of the deceased individual becomes a public property. Despite the fact that there have been numerous attempts to regulate the inheritance issues at the federal level, so far it is fully competence of the states. Therefore, the clearance of the laws as well as their correspondence to the canons of common law might vary from state to state. For example, New York is considered to have the most complicated procedures set for the distribution of the assets of the deceased while Ohio has introduced comprehensive laws and by-laws which significantly differ from the common law rules and leave no room for any kind of ambiguity or non-clearance. The Washington state has followed the example of Ohio and has codified the inheritance laws as well. However, it should be noted that inheritance disputes which arise in relation to the Native Americans are subjected to the federal regulation. In Europe, the inheritance laws are strongly impacted by the regulations and resolutions of the European Union which change the inheritance laws of the national states while coming into effect. For example, in 2015 new regulations are expected to come into effect providing that the individual will have a right to choose the laws that will apply to the inheritance procedures. He/She might choose either in favor of the laws that exist in the country of his nationality or in the place of his habitual residence. .fod-banner { display: table; width: 100%; height: 100px; background-color: #04b5af; background-image: url('/images/banners/fod-banner-bg-1.png'), url('/images/banners/fod-banner-bg-2.png'); background-position: left center, right center; background-repeat: no-repeat; } .fod-banner .button { min-width: 120px; } .fod-banner-content { height: 100px; display: table-cell; vertical-align: middle; color: #ffffff; width: 100%; text-align: center; padding-top: 5px; padding-bottom: 5px; } .fod-banner-content > span:first-child { font-size: 15px; font-weight: 100; } .fod-banner-content-discount-text { font-size: 16px; } .fod-banner-content-discount-text span { font-size: 18px; color: #ffe98f; font-weight: bold; } .fod-banner-content-image { vertical-align: middle; } .fod-banner img.fod-banner-content-image { width: auto; } @media all and (min-width: 993px) and (max-width: 1320px) { .fod-banner { background-image: none; } } @media all and (min-width: 845px) and (max-width: 992px) { .fod-banner-content > span:first-child { font-size: 18px; } .fod-banner-content-discount-text { font-size: 20px; } .fod-banner-content-discount-text span { font-size: 24px; } } @media all and (max-width: 740px) { .fod-banner { background-image: url('/images/banners/fod-banner-bg-2.png'); background-position: right center; background-repeat: no-repeat; } } @media all and (max-width: 670px) { .fod-banner { background-image: none; } .fod-banner-content { padding: 15px 10px; } .fod-banner img, .fod-banner-content-discount-text { display: block; margin: 0 auto; } .fod-banner-content > span:first-child { font-size: 28px; } .fod-banner-content-discount-text { font-size: 20px; } .fod-banner-content-discount-text span { font-size: 24px; } } Limited time offer! Get 15% OFF your first order Order now Secondly, the majority of the European countries have based its inheritance laws upon the Ancient Roman laws and the Civil Codes of Napoleon. Therefore, at large one could simply draw the similarities in both substantial and procedural rules governing the inheritance issues. For example, according to the German laws, the property of the deceased located within German territory will be subjected to the so-called 'universal succession' which means that the heirs of the decedent could inherit the property only after his/her death (Kobras 2010). The whole procedure of succession depends on the will of the deceased individual. If he/she has disposed of his/her property during his life, then the rules of intestacy will not apply (German Missions in the United States n.d.). Contrary to the United States and other Anglo-American countries which have provided that there must be the administrator of the estate of deceased whose responsibility is the legitimate distribution of the property that is to be inherited, no kinds of executors or trustees of estate are mentioned in German laws (Kobras 2010). The Australian inheritance laws have been different for a long period of time in each territory or state. However, the situation changed in 2011, when this country started to revise the current laws and introduce the uniform regulations for all states and territories (Kobras 2010). Inheritance Taxes As have been already mentioned, the history of the inheritance taxes is long and complicated. It was introduced due to various reasons that changed over time. This tax was also frequently identified as estate tax. Following all of it, it seems important to give a glance at this type of taxes before transferring directly to the inheritance disputes. The concept of inheritance tax supposes that it is a certain fee that is to be paid by the person who inherits the property of deceased individual. This tax is a federal one which is obligatory for all citizens of the USA regardless of the state they live in. Lately, the provisions regulating the levying of the inheritance tax have been revised. Thus, nowadays only eight states charge the fee from the inhering individual (Leach 2011). They include Iowa, Indians, Tennessee, New Jersey, Pennsylvania, Nebraska, Indiana, and Maryland. Needless to say that the laws are revised over time so that it is recommended for the heirs to look them up in case they are inheriting some property. The tax rate varies from state to state and ranges from 1 percent till 20 of the value of all assets that are inherited. However, there are a lot of people who are exempted from paying it. Contrary to the federal estate tax, the person who benefits is in charge of paying that fee, not the estate. The estate tax is paid before the distribution of the deceased person assets. Its amount depends upon the value of the property that is later inherited. However, it should be noted that this tax could be levied only if the value of the property overwhelms certain rate that is set every year. Since this threshold is rather high, only two or three percent of taxpayers are subjected to this taxation (Leach 2011). Inheritance taxation occurs right after the distribution of the estate that is usually performed by the distributor. This tax is calculated out of the share that has been received by each beneficiary separately. It is important to note that the redemption or the reduction of the tax that is to be paid depends upon the relationships that existed between the deceased and his/her heir. Therefore, a surviving spouse, for example, might be exempted from the tax duty in some states. It is interesting to point out that the children and other people who have heavily depended on the deceased could be exempted from the tax paying fully or partially. The general rule in this regard is that the more distant the relationships are, the more heirs have to pay. The Heirs There is a number of individuals who are entitled to inherit after one's death. However, the key attention is always drawn to the surviving spouse and children of the deceased. At this point, it is important to distinguish the succession in case the will is present and in case it is absent (intestacy). If the deceased has disposed of his/her property during his/her life, then all his/her assets are distributed according to his/her last will. It should be noted that the will of the person could be easily changed if the need arises. The last will overrules the previous ones. Despite the fact that the person has a natural right to dispose of the property after death, there are still some individuals who will inherit regardless of them being mentioned in the will. This rule generally applies to those who severely depended on the deceased or those who was in close relations with him/her when death occurred. It might include the surviving spouse, children, some relatives, etc. The volume o f share they receive varies from state to state. Usually, it is half of the share that they would get in case of intestacy. If there is no will, then the rules of the intestacy are applicable. They set a clear procedure that is to be followed. Usually, there are four or five lines of inheritance. The first one, for example, includes the closest relatives. In fact, in the majority of states, the surviving spouse could not be completely out of the will (Thorne n.d.). Additionally, in almost all states the spouses are presumed to own their property together and therefore, in case one of them dies, another one gets the half of all property that has been earned by the couple during the time they have been married (Thorne n.d.). Thus, the surviving spouse has every right to dispose of this property according to his or her own intentions. Moreover, the states laws guarantee that the spouse who has survived will be granted one third or one half of the share of the deceased person. In any case, the laws of the states prevent the surviving spouses from being disinherited. As to children, the majority of states in the USA reserve no rights for the children in regard to the inheritance (Thorne n.d.). Despite this, in the exclusive circumstances, the children are entitled to claim the share in the property of the deceased person. Additionally, the laws of several states prevent the cases of disinheritance. It means that if the person has disposed of his/her property in the will before the birth of further children, after his/her death the children who were born later have the right to inherit. The same provisions might apply to the grandchildren of the child who died.

Corporate Governance Firm Of India Finance Essay - Free Essay Example

Sample details Pages: 14 Words: 4347 Downloads: 9 Date added: 2017/06/26 Category Finance Essay Type Research paper Did you like this example? Corporate governance structures play a vital role in enhancing the firm value. This paper examines the effect of two important corporate governance variables board size and promoter ownership on the firm value. The research using linear regression analysis on 176 non-financial listed companies for year 2008 finds a negative association of Tobin Q with board size and a significant positive association with promoter ownership. Don’t waste time! Our writers will create an original "Corporate Governance Firm Of India Finance Essay" essay for you Create order The research makes an endeavor to search for an ideal board size and gives insights on moderating effect of firm size on corporate board performance. Study also finds that above the critical ownership level of forty percent, promoters interest is much aligned with that of company and there is positive effect on firm value. Corporate governance has developed as an important mechanism over the last two decades. The recent global financial crisis has reinforced the importance of good corporate governance practices and structures. It is now well recognized that corporate governance structures play an important role in enhancing firm performance and sustainability in long term (Bonn, 2004; Erickson et. al., 2005; Ehikioya, 2009; Iwasaki, 2008; Cho and Kim, 2007). There has been tremendous research on corporate governance structure and firm performance particularly in the developed world. On the other side, there is very little research on the influence of corporate governance variables such board structure on firm performance in India (Dwivedi and Jain, 2005). India as an emerging giant is gradually moving from controlled to market based economy with market capitalization of all listed companies touching nearly rupees 1 trillion (Sehgal and Mulraj, 2008). Corporate governance has now become a norm in India with Securities Exchange Board of India (SEBI) making it mandatory for all the listed to adopt Cause 49 of the Listing Agreement. However, capital markets are still nascent and market for corporate control is weak (Standard and Poors 2009). Indian firms are predominantly of family origin and promoters controlled (Chakrabarti, 2005). Corporate governance structures, therefore, rely much on internal structures rather than external one for enhancing the value. The corporate board and insider ownership (promoters) are in Indian business are two important internal corporate governance structures. Shleifer and Vishny (1997) have suggested that corporate governance deals with the ways in which suppliers of the finance to corporation assure themselves of getting a return on their investment. Shareholders are owners of company who contribute their wealth. Through corporate governance mechanism, they apply control over the management of the company for the wealth maximization. The boards of directors act as representatives of shareholders achieve this endeavor by reducing the agency cost (Fama and Jensen, 1983). In Indian regulatory environment board of directors of a company act as fiduciaries of the shareholders, provide active supervision and do strategic decision-making. The Indian investors, however, have general predisposition to discount the role of board due to stronger ownership concentration and insider control. The board is an important corporate governance mechanism under Indian context to protect the minority shareholders from dominant shareholders. In addition, insider ownership by the promoters of the company is general characteri stic of most firms. India is gradually moving towards market-based economy, however, such is the peculiarity that ownership lies predominately in hands of few people of group of peoples. In order to expand our understanding on emerging and transforming economy of India, the present study attempts to investigate effect of two corporate governance parameters on the firm value. The study is based on the 176 non-financial firms listed on Bombay Stock Exchange (BSE) for period 2008-09. The research done is during the period when entire world was eclipsed by global financial crisis and Indian firms were under financial distress to some extent. The study attempts to testify the different theoretical and empirical foundations establishing a relationship of board size and promoter ownership with TobinQ. We also investigate the moderating effect of firm size on corporate board performance and different levels promoter ownership on firm value. The results of this study extend the literature on corporate governance structure and opening up new avenues for further research. We first begin with theoretical background with literature leading to development of our hypothesis THEORETICAL BACKGROUND AND HYPOTHESIS DEVELOPMENT Board Size and Firm Performance Boards of directors are the representatives of shareholders and other stakeholders of the company. A corporate board is delegated with the task of monitoring the performance and activities of the top management to ensure that latter acts in the best interest of all the shareholders (Jensen and Meckling, 1976; Erickson et al., 2005). In addition, Ruigrok et. al. (2006) suggest that the board has important roles such as design and implementation of strategy, and fostering links between the firm and its external environment. Under statutory provisions delineated in Indian Companies Act, 1956 the board is vested with sufficient powers and responsibilities to act in diligent way, manage and control the management of the company in order to maximize the value of shareholders and stakeholders. The board of the company is considered as one of the primary internal corporate governance mechanism (Brennan, 2006).A properly constituted board with optimum number of directors can effectively monitor the management and drive value maximization. Some researchers, however, been skeptical about boards ability to mitigate the agency problem and enhance firm value (Erickson et. al., 2005). The number of directors on the board (or board size) is therefore, a critical factor that can influences the performance of a company. The board acts on behalf of shareholders and considered as a major decision-making group. The complexity of decision-making and effectiveness is largely affected by the size of the board. There has been mixed response to board size and corporate performance. The direction of influence depends upon the extent to which board is able to reach consensus, and take advantage of the knowledge and expertise of the individual members. There is, however, no agreement over whether a small or a large board is effective in enhancing the performance of a company. Two contrasting views emerge from the extant literature on the contemplating effect of board size on firm v alue. One school thought views larger boards are effective in driving the performance of company. Various researchers (Ehikioya, 2009; Coles et. al., 2008; Dwivedi and Jain, 2005; Klein, 2002; Dalton et. al., 1999; Kathuria and Dash, 1999; Pearce and Zahra, 1992) document a positive relationship of board size with the firm value. There have been several arguments in support of larger boards. One view is that larger boards allow directions to specialize, which in turn can lead to more effectiveness (Klein, 2002). Larger boards have people from diverse field. The knowledge and intellect of this increased pool of experts can be utilized for making some strategic decision of the board, which can drive performance of the company (Dalton et al., 1999; Pearce and Zahra, 1992). The larger pool of people on the board results in greater monitoring capacity, and also enhances the firm ability to form greater external linkages (Goodstein et al., 1994). Coles et. al. (2006) find that firms requi ring more advice derive greater from the larger boards. There are, however, strong contrasting views and evidences to the above argument. Contrary school of thought views larger boards are less effective in enhancing the performance of the company. Many researchers find a negative association between board size and performance of companies (Yermack, 1996; Eisenberg et. al., 1998; Cheng, 2008; Boon et al., 2004; O Connell and Cramer, 2010; Rashid et. al., 2010; Conyon and Peck, 1998; de Andres et. al., 2005). Cheng (2008) suggest that larger boards exist even though they are value reducing because they necessary for some type of companies and under certain conditions. Coles et. al. (2008) point negative association of board size with firm value exists due to some other exogenous factors. Many scholars suggest that as board size increases above the ideal value, many problems surface which outweigh the benefits of having more directors on the board, as mentioned above. Contrasting t o smaller boards, larger number of director on board increases the problem of communication and coordination (Jensen, 1993; Boon et. al., 2004; Cheng, 2008) and higher agency cost (Lipton and Lorsch, 1992; Cheng, 2008; Jensen, 1993). Lipton and Lorsch (1992) suggest that dysfunctional behavioral norms and higher monitoring cost due less diligence in larger boards give rise severe agency problem. Larger boards may also have problem of lower group cohesion (Evans and Dian, 1991) and greater levels of conflict (Goodstein et. al., 1994). Goodstein et. al. (1994) and Jensen (1993) similarly argue that greater problem of coordination leads slow decision making and information transferring which drives inefficiency in companies with larger board size. Larger boards may be skeptical about taking a strategic decision that can maximize the value of company (Boon et. al., 2004; Judge and Zeithamal, 1992).The larger boards, therefore may become more of symbolic and less a part of management pro cess (Hermalin, and Weisbach, 2001). The above discussion clearly lays down a platform to propose that board size may have positive or negative association with firm performance. The vast literature on board size on firm performance predominately foresees that board size is negatively associated with firm performance, which gives support to develop our hypothesis 1. We also argue that increasing the number of directors above certain limits may have more deteriorating effect on firm value. Below certain board size, there is relationship of firm value with board size is less negative and above that, it increases. Therefore, in order to support our argument we propose our second hypothesis that above certain board size (in our case median board size of entire sample) has negative association with firm performance increases. We also propose third hypothesis that boards of larger companies have less negative association with firm performance than those of smaller firms. The argument i s that boards of larger companies may well equipped with resources, skill base and knowledge expertise to take strategic decisions in period of financial distress. The board of smaller companies may lag behind to actively utilize resources and drive performance. Hypothesis 1. Board size exhibits a negative association with firm performance Hypothesis 2. Smaller Boards have less negative association with firm performance than larger boards Hypothesis 3. Boards of larger companies have less negative association with firm performance. Promoter ownership and Firm Performance Promoter in general sense are persons or group of persons who are involved in the incorporation and organization of a corporation. Promoters are important part of companies in Indian business context as most of the companies are of family origin. Promoters are integral part of business element, but not have statutory recognization in the Indian Companies Act, 1956 as the term Promoter does not have any legal connotation. The term, however, finds its place in Securities Exchange Board of Indias (SEBI) Disclosure and Investor Protection, 2000 (DIP Guidelines) and Substantial acquisition of Shares and Takeover Regulations, 1997 (Takeover Code). According to these SEBI regulations, Promoter or Promoter Group exercise sufficient control over the company by virtue of their shareholding and management rights. Evidences show that concentrated ownership is most common form in most countries (La Porta et.al., 1999), and also in India. Family houses and corporate groups, who are generally the promoters, have substantial ownership in companies. The pyramiding and tunneling effect of ownership is prevalent in India (Chakrabarti, 2005). These effects provide promoters enough them control over management of the company. According to Mathew (2007), promoters of BSE 500 were having 49 percent shareholding. In Indian companies, promoters in such a case raise the issue of owner- manager control similar to that of some other Asian countries. Promoters by virtue of their position and control have considerable power and wield significant influence on the board and management of the company over the key strategic decisions. La Porta et. al. (1999) believe high ownership concentration by particular group positions their interest above other shareholders and gives them the predominant voting rights and control over the management. Under these conditions, they may pursue policies, which benefit them and deteriorate firm performance. On other side, Shleifer and Vishny (1997) point t hat presence of dominant large shareholder or group can enhance their controlling ability, reduction in agency cost and therefore the firm performance. La Porta et. al. (1998, 1999) has observed that controlling shareholders (like promoter groups) exist in countries with investors low legal and institutional protection. According to Jensen and Meckling (1976), high ownership concentration may lead to more alignment effect. This effect may impart promoters a strong incentive to flow value-maximizing goal. However, in contrasting argument by Demsetz (1983), this can also have entrenchment effect, which can decrease the firms value. Claessens et. al. ( 2002) in similar arguments suggest the same thing, until a particular level of stock concentration alignment effect are more predominant and after that expropriation cost of minority shareholders out these benefits and firm performance declines. It is, however not clear, whether measures of corporate governance affect performance in t he same way when ownership is not in general widely dispersed, in particular when ownership is concentrated in the hands of families that are promoters (Corbetta and Salvato, 2004). The promoters are in general sense the owners and managers in Indian business context. Jensen and Meckling (1976) have pointed as level of managerial ownership increases, conflicts reduces and that increases firm performance. Fama and Jensen (1983) and Stulz (1988) also argue that greater ownership control by insiders (managers) give enough powers over externals owners to influence firm performance. Many scholars have studied the effect of ownership by different group on Indian companies (Dwivedi and Jain, 2005; Sarkar and Sarkar, 2000; Khanna and Palepu, 2000; Salerka, 2005), but none of these studies does give any particular reference on effect of promoter ownership on the firm performance. Salerka (2005), however, has analyzed the insider ownership effect on the firm value, and found a curvilinear relationship. Studying the effect promoter ownership on the corporate performance may be of utmost important in period of financial distress. They are who can in position to take any important strategic decision to drive the performance. Therefore, high promoter ownership in period in such a period may enhance the firm performance. This leads to development of our fourth hypothesis that promoter ownership is positively associated with firm value. Further, above certain ownership, promoters may exert significant control over firm and drive the decision-making in the company, thereby increasing firm value. 4. Promoter ownership exhibits positive relationship with firm performance 5. Greater promoter control is positively related with firm performance RESEARCH DESIGN Data The sample used in this study includes 176 firms listed on the Bombay Stock Exchange (BSE) of India during the financial year 2008-2009. The sample includes only non-financial firms from BSE 200 index, which accounts for 72 percent of market capitalization. The data on board size and promoter ownership (company has to separately disclose promoter ownership under Clause 35 of Listing Agreement) was collected from annual reports of the companies. The other financial and market data was obtained from Prowess database of Centre for Monitoring Indian Economy (CMIE). The data thus obtained was used calculating and measuring the different variables used as control variable in the model. Model The model for our study represented by following equation: T Tobin Q = ÃÆ'Ã… ½Ãƒâ€šÃ‚ ²0 + ÃÆ'Ã… ½Ãƒâ€šÃ‚ ²1 BSize + ÃÆ'Ã… ½Ãƒâ€šÃ‚ ²2 PrOwn + ÃÆ'Ã… ½Ãƒâ€šÃ‚ ²3 LAge + ÃÆ'Ã… ½Ãƒâ€šÃ‚ ²4 LSize + ÃÆ'Ã… ½Ãƒâ€šÃ‚ ²5 Lev + ÃÆ'Ã… ½Ãƒâ€šÃ‚ ²6 SGrowth + e Performance Variables: The researchers have used different parameters for the assessing the firm performance in conjunction with various predicator variables. The commonly used performance variables cited in the corporate governance literature being the Tobins Q, return on assets (ROA), return on equity (ROE), market to book value ratio (MBV), price to earnings ratio (PE). The present regression model uses only TobinQ for assessing the firm performance against the predictor and control variables. Variables of Interest: Two variables of our interest that have used to test our five hypotheses are board size (BSize) and promoter ownership (PrOwn). The variables have used under different specifications to empirically find out their net effect on firm performance. Control Variables: Different control variables such firm age (LAge), firm size (LSize), leverage (Lev) and growth control (SGrowth) have been included in the study for account for potential advantages of economies of scale, scope of market power and risk characteristics of firms. These variables have been used in many prior studies, and are correlated with firm performance (Hermalin and Weisbach, 1991; Vafeas and Theodorou, 1998; Bonn et. al., 2004) Table I Variable definitions and Measurement Type of Variable Variable Definition and Measurement Dependent: Performance TobinQ Tobins Q , measured as market value of equity plus book value of short-term and long-term debt divided by total assets Independent: Predictor BSize Board Size, the number of director on the board of a firm. Independent: Predictor PrOwn Promoter Holding, percentage of total equity ownership of promoter group in the company Independent: Control LAge Firm Age, measured as the logarithm of the number of years since the establishment of a firm Independent: Control LSize Firm Size, measured as the natural logarithm of total assets. Independent: Control Lev Firm leverage, measured as the ratio of long term debt to the total assets Independent: Control SGrowth Sales growth, measured as total sales of the current year minus total sales in the previous year divided by total sales in the previous year RESULTS AND DISCUSSION The analysis begins with presentation of the Pearsons correlation matrix (table II) which shows that the degree of correlation between the independent variables is either low or moderate, which suggests the absence of multicolinearity between independent variables. Table II Correlation Between Explanatory Variables Correlation BSize PrOwn LAge LSize Lev SGrowth BSize 1      PrOwn -0.039 1     LAge 0.137 -0.024 1    LSize .275(**) 0.094 .153(*) 1   Lev -0.038 -.215(**) -0.104 .273(**) 1  SGrowth 0.105 -0.13 -0.042 0.067 0.07 1 ** Correlation is significant at the 0.01 level (2-tailed). * Correlation is significant at the 0.05 level (2-tailed). The Pearsons correlation between each pair of independent variables should not exceed 0.80, if that happens then independent variables may suspected of exhibiting multicollinearity (Bryman and Cramer, 1997). Correlations are within the acceptable range (0.01 0.775). In addition, the colinearity diagnostic statistics (e.g. tolerance (TOL) and variance inflated factor (VIF)) support the Pearsons correlations and provide no proof of a multicollinearity in the regression model. The analysis of Table II, further reflects board size is positively correlated with firm size (significant at 1 percent) implying that larger companies tend to have larger boards. The summary of descriptive characteristics of the dependent and independent variable is presented in Table III. The results show mean (std deviatio n) board size is 10.74 (3.08), reflecting that most of firm have board size between 8 to 14 (128 firms) which is 72 percent of entire sample. The promoter ownership shows high variation with minimum and value being 0 and 100 with average (std deviation) of 53.32 (21.48). It can be observed that promoters with such ownership right have controlling stake in most of the firms. As already discussed, high insider ownership may drive firm value. Sales growth and leverage also reflect a high variability in their values for the given period. Average leverage of 25.86 percent shows that firms (our sample) rely on more on equity capital and other sources of fund than debt. In order to analyze further, we have segregated smaller and larger firms based Table III Descriptive Analysis of Variables TobinQ BSize PrOwn LAge LSize Lev SGrowth Mean 1.46 10.74 53.32 3.31 8.87 25.86 55.71 Std. Deviation 1.32 3.083 21.48 0.76 1.16 21.91 473.79 Minimum 0.0042 5 0 0.69 6.6717 0 -100 Maximum 8.6548 20 100 4.86 12.41 89.61 6286.93 Table IV Smaller and Larger Companies Smaller Companies BSize PrOwn ( percent) Asset ( Rs Crore) N  88.000 88.000 88.000 Mean 10.060 50.558 3140.306 Median 10.000 49.991 2943.995 Std. Deviation 2.684 17.366 1379.618 Minimum 5.000 9.733 789.720 Maximum 20.000 99.506 5859.540 Larger Companies BSize PrOwn ( percent) Asset ( Rs Crore) N  88.000 88.000 88.000 Mean 11.430 56.088 28216.983 Median 11.000 55.070 16215.695 Std. Deviation 3.311 24.732 36429.286 Minimum 5.000 0.000 5986.080 Maximum 20.000 100.000 245953.160 Difference between Means (Z value) 3.015* 1.716*** 6.452* * significant at 1 percent, ***significant at 10 on median asset size of Rs. 5922.1 Crore. The noticeable aspect of statistics reflected in Table IV is significant difference in average board size between small and large firm. (10.06 vs. 11.43), inferring that larger companies take people from wider pool to sufficient expertise and intellect on the board. The table IV also shows that average promoter ownership between small and large firms is significant at 10 percent (50.55 vs. 56.08). The results of empirical findings with coefficients and t values (* significant values) are presented in Table V, VI and VII. The findings of Table I show result for the entire sample that supports our hypothesis 1 and 4. Hypothesis 1 forecasts a negative association between board size and firm value and this supported by negative coefficient of BSize (ÃÆ'Ã… ½Ãƒâ€šÃ‚ ²1) in the model, though relationship is not significant. The results are in line with international studies but do not support results of previous Indian studies (Dwivedi and Jain, 2005; Kathuria and Dash, 1999). Promoter ownership was found to positively correlated (ÃÆ'Ã… ½Ãƒâ€šÃ‚ ²2= 0.011) with firm performance in our model (Table II) giving support to our hypothesis 4. The results prove that high promoter ownership in the company, help them to take important decisions and drive performance during the financial distress period. Table V Model Summary Dependent Variable TOBINQ Independent variables Coefficients t (Constant) 3.271 4.081* BSize -0.031 -0.968 PrOwn 0.011 2.492** LAge 0.144 1.150 LSize -0.255 -2.839* Lev -0.011 -2.462** SGrowth 0.000 0.413 R 0.406 R square 0.165 Adjusted R square 0.135 F change 5.556* * Significant at 1 percent, ** significant at 5 percent Hypothesis 2 predicated that smaller boards have less negative correlation with firm performance than larger boards. In order to so, we segregated entire sample companies between two parts, one those having board size less than equal to median board size ( of entire sample) 10 and other having more than 10. The results (table III), however, reject our second hypothesis as coefficient of board size (ÃÆ'Ã… ½Ãƒâ€šÃ‚ ²1) is greater for smaller boards (-0.148) than larger board (-0.012). This may be interpretated as ideal board size is above the median board size of 10, and smaller boards may not have enough expertise and resources to enhance firm performance. Also it can be observed that due to high ownership rights and say in smaller boards, promoters are able play value maximizing role. Hypothesis 3 predicted a less negative relationship of board size with firm value for the large companies than small companies. Sm all companies and large companies here are classified based on the median assets of Rs 5922.1 Crore. The model supports our hypothesis as coefficient of board size for large companies (-0.023) is more than that of small companies (-0.063). The results, however, are not significant at any level. Further, in small companies promoter ownership is positively correlated to firm performance at 10 percent significance level. Table VI TobinQ- Model Board Size Dependent Variable Smaller Board Larger Board Small Companies Large Companies Independent variables coeff t coeff t coeff t coeff t (Constant) 4.826 2.93* 2.819 2.70* 12.113 5.17* 3.082 2.14** BSize -0.148 -1.54*** -0.012 -0.23 -0.063 -1.29 -0.023 -0.59 PrOwn 0.025 2.81* 0.001 0.27 0.020 2.58** 0.003 0.58 LAge 0.389 1.98** -0.045 -0.31 0.358 2.00** 0.076 0.47 LSize -0.525 -3.28* -0.083 -0.87 -1.514 -5.16* -0.160 -1.03 Lev -0.005 -0.70 -0.018 -3.17* -0.002 -0.24 -0.012 -2.10** SGrowth 0.004 0.84 0.000 -0.09 0.000 -0.05 0.000 0.00 R 0.515 0.408 0.622 0.324 R square 0.265 0.166 0.387 0.105 Adjusted R square 0.213 0.101 0.342 0.038 F change 5.108* 2.563** 8.52* 1.579 * significant at 1 percent, ** significant at 5 percent, *** significant at 15 percent Table VII TobinQ -Model Promoter Ownership Prom Ownership 0-40 40.1-65 65.1-100 Independent variables coeff t coeff t coeff t (Constant) 0.924 0.791 2.691 1.366 3.798 1.868*** BSize 0.023 0.492 -0.017 -0.345 -0.044 -0.644 PrOwn -0.013 -1.135 0.028 1.295 0.031 1.361 LAge -0.028 -0.168 0.311 1.630*** -0.038 -0.095 LSize 0.074 0.540 -0.372 -2.583** -0.400 -2.188** Lev -0.010 -1.700*** -0.016 -2.168** -0.008 -0.721 SGrowth 0.000 -0.486 0.006 1.467 -0.005 -0.855 R 0.386 0.496 0.462 R square 0.149 0.24 0.213 Adjusted R square 0.007 0.181 0.101 F change 1.05 4.069* 1.9 * significant at 1 percent, ** significant at 5 percent, ***significant at 10 percent Higher promoter ownership leading to greater promoter control on the company was predicated in Hypothesis 5. To test this hypothesis, entire sample is classified into three groups, companies having promoter ownership less than equal to 40 percent, between 40 to 65 percent and above 65 to 100 percent. The results are presented in table VII that support our hypothesis 5. For companies having promoter ownership below 40 percent coefficient (ÃÆ'Ã… ½Ãƒâ€šÃ‚ ²2) is negative (-0.013). This may suggest that on lower levels of ownership control, promoters interest may not fully align with company. The companies having promoter ownership above 40, correlation was positively with firm performance with coefficient being greater for companies having more ownership control. This suggests that above certain ownership control on firm, promoter are able to drive the performance of comp any. CONCLUSIONS The study explores the relationship of board size and promoter ownership on the firm value for a sample of firms listed on Bombay Stock Exchange of India. Some results of the study are quite revealing in contrast to earlier Indian studies. As opposed to previous Indian studies, our results indicate a negative relationship between board size and firm value. This augments the previous international researches and establishes belief that board size is negatively associated firm performance. We also find significant difference between board size of small and large companies of our sample. The relationship between board size and firm value is less negative large companies than smaller ones. We find a significant positive association of promoter ownership with firm performance. The regression results suggest that firms with high ownership concentration of promoters have high market valuations (TobinQ). The findings show that below ownership control of 40 percent, the entrenchment effect is more pronounced and negative relationship exists. We may conclude that due to financial distress on Indian firms due to global financial crisis, larger boards may not able to strategic decision due to problem of coordination and communication resulting in lower firm value. In similar case, higher promoter ownership gives enough incentive and control to monitor and enhance firm value. The study contributes to existing literature of corporate governance on board size and insider ownership. The outcome of research gives firm support the agency theory that high ownership has more alignment effect resulting reduced agency cost. One of the important empirical considerations taken in our study is moderating effect of firm size on the board performance. The study looks upon insider ownership particularly that of promoters on company valuations. LIMITATION AND DIRECTION FOR FUTURE RESEARCH The current research along with its contribution has some major limitations. First, we have used only a small sample of 176 firms. The entire sample was classified into different categories to analyse further effect of board size and promoter ownership on firm performance. The classification has resulted in smaller sample size and some models were not significant. Second, model uses only one performance variable for ease of analysis while variables would also be merit consideration. Thirdly, the important aspect left out in our study pertains to board composition and other ownership patterns that may also affect firm performance. The current study opens avenue for future research ideas. Our research indicates a negative association between board size and firm performance, which is in contrast previous studies. This may be due fact that period of study is year 08-09 during which global financial crisis was persisting and Indian firms were under financial strain. Therefore, we fir mly believe multidimensional approach for performance measurement with large sample size would be appropriate for future research. Investigating effect of other corporate governance variables like board structure and ownership structures on firm performance during period of our study would also provide new insights. Lastly, the qualitative analysis using primary data can give better insights and support our research.

American Politics And The Declaration Of Independence Essay

The United States is built upon a certain set of ideals and values , written seemingly clearly within the Constitution and the Declaration of Independence. Yet, despite this, there are various disagreements in how political promises to the people of the country play out. The unifying factor of what I believe American politics is, is the development to live up to these ideals and values. It is a nation built on the stifling of true, direct, democracy of the masses, built upon favoring wealth and an elitist system, but despite all this, it takes its Creed very seriously. Though interpretations may differ on how this is accomplished, the basic politics surrounding the United States, combined with a shared national identity and history, demands an attempt, or at least a show of fairness, equality, responsibility, and representation. It may never succeed in living up to the ideals of â€Å"life, liberty, and the pursuit of happiness,† but that does not stop the demand of both polic ymakers and citizens to uphold and defend these rights. The American Revolution, while politically radical, didn’t change much in the lives of ordinary people. Socially, it could be considered a â€Å"colonial conservative rebellion.† The original documents focused heavily on the relationship between private property and liberty for people, while excluding ideas of direct democracy. Equality under the law then, wasn’t as drastically important for the founders of the country, as was protection of liberty. MoreShow MoreRelatedThe American Revolution of 1763-1783 saw the Americans fight for their independence from the1000 Words   |  4 PagesThe American Revolution of 1763-1783 saw the Americans fight for their independence from the British Empire. 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A Modern Anachronism Free Essays

Authors have their own unique style to develop different tones and themes, and there are countless ways each author conveys his or her theme in the story. Kurt Vonnegut is an esteemed author of many well-known novels. He is also known for his collection of short stories known as Welcome to the Monkey House. We will write a custom essay sample on A Modern Anachronism or any similar topic only for you Order Now One of the short stories called â€Å"All the King’s Horses† displays a perfect setting of suspense, and how the effects of war erode soldiers and their families. To do this, Vonnegut uses a satirical tone with hints of unusual playful expressions; by doing so, he lets readers know that many sacrifices are at times necessary in order to protect loved ones, just Vonnegut’s character Pi Ying says, â€Å"a chess game can very rarely be won . . . without sacrifices. The theme is that people shouldn’t rely on their own individual talents and social status to get themselves past obstacles in the path to their goal. Kurt Vonnegut creates his theme with the aid of the satirical tone in the story â€Å"All the King’s Horses†. Vonnegut is implying that there needs to be a point where people use their own unique abilities to enhance what they do for a living. The reason Vonnegut used a game of chess, instead a game of checkers, is for the immense magnitude of possible choices a person can make in the game of life. Every person has his or hers own style, making it so each player in the Miguel 2 game of chess must learn quickly the style of the other person. This concept of adapting rapidly to the opponent is the basic theme Vonnegut clearly wants to convey in the story. Characters in Vonnegut’s short stories have a unique role, especially in his story â€Å"All the King’s Horses†. There are two main characters that develop the tone of sarcasm and cynicism. Colonel Kelly and Pi Ying are two leaders of their own respective groups armed to play a game of chess, which symbolizes two armies in battle. Although Pi Ying uses life-sized chess pieces, Colonel Kelly’s family and the soldiers under his command must listen to the colonel’s orders like pawns. Pi Ying’s second in command is Major Barzov, who makes a point, † He’ll learn to be a pawn yet . . . It’s and Oriental skill Americans could do well to learn for the days ahead, eh? † (99). This quote adds a satirical tone as Kelly is continually losing soldiers literally. Vonnegut chose this tone because he wanted to criticize the lack of respect some people have towards international cultures or at least the misunderstanding. All the King’s Horses† brings the concept of reality to the reader’s attention. Vonnegut wants to make sure his readers of future generations don’t take family and their prized possessions for granted. Work is a must as technology advances to engulf the â€Å"archaic† ways of doing tasks. But some tasks require the archaic work ethic in order to master the task such as in the classic game of chess. Like Colonel Kelly and Pi Ying, people must work efficiently to earn possessions and a loving family. How to cite A Modern Anachronism, Papers

The Internal Control Weaknesses At Enron Accounting Essay Example For Students

The Internal Control Weaknesses At Enron Accounting Essay The events were eventually ensuing the filing for bankruptcy in December 2001, started manner much before fraud at Enron could be even suspected.A Andersen played a major function in the prostration of Enron.A Andersen failed two times sing audit issues merely a few old ages short clip before the prostration of Enron, at Waste Management in 1996 and at Sunbeam in 1997. The two audit failures mentioned supra should hold been immense warning marks for Andersen to protect itself against another client failure but what they had to confront sing Enron was worse than they of all time had.A Some internal memos at Andersen made it clear that several struggles existed between the hearers and the audit commission of Enron.A These memos contained several electronic mails as good which expressed concerns about accounting patterns used by Enron.A David B. Duncan as the taking spouse on the audit tipped over these concerns. Harmonizing to McNamee ( 2001 ) there is cogent evidence that Duncan s squ ad wrote memos fraudulently saying that the professional criterions group approved of the accounting patterns of Enron that hid debts and pumped up net incomes. Andersen s independency is besides extremely questionable due to the relationship between audit and non-audit fees. Harmonizing to McLean ( 2001 ) the individual who foremost spotted in 2001 that there was nt even any opportunity for Enron to do net income was Jim Chanos, the caput of Kynikos Associates. He said that that parent company had technically become nil more than a hedging entity for all of its subordinates and affiliates.A In 2001 the runing border of Enron went down significantly to 2 % from the old twelvemonth s figure of 5 % which is more than interesting because this sort of a lessening in one twelvemonth is unheard of in the public-service corporations industry. Chanos besides pointed out that Enron was still sharply selling stocks, despite there was barely any capital to endorse up the portions they were sel ling. We will write a custom essay on The Internal Control Weaknesses At Enron Accounting specifically for you for only $16.38 $13.9/page Order now To be professional and effectual, hearers must be independent of direction and measure the fiscal representations of direction for all users of fiscal statements. Less than 30 % of the fees that Andersen received from Enron came from scrutinizing, with the balance of fees coming from confer withing. Andersen acted as Enron s external hearer and as its internal hearer. Andersen s work as a adviser raises several inquiries. It appears that Andersen s audit squad, when faced with accounting issues, chose to disregard them, acquiesced in silence to unsound accounting, or embraced accounting strategies as an advocator for its client. Internal Control Weaknesses at Enron Hearers assess the internal controls of a client to find the extent to which they can trust on a client s accounting system. Enron had excessively many internal control weaknesses to be given here. Two serious failings were that the CFO was exempted from a struggles of involvement policy, and internal controls over SPEs were a fake, bing in signifier but non in substance. Many fiscal functionaries lacked the background for their occupations, and assets, notably foreign assets, were non physically secured. The trailing of day-to-day hard currency was slack, debt adulthoods were non scheduled, away balance sheet debt was ignored although the duty remained, and company-wide hazard was disregarded. Internal controls were unequal ; contingent liabilities were non disclosed ; and, Andersen ignored all of these failings. Evaluation of Accounting Materiality Hearers focus on stuff deceits. A deceit is material if cognition of the deceit would alter the determinations of the user of fiscal statements. When Enron began to repeat its fiscal statements and investors began to hold on its deceits, the response of the market is incontestable as to materiality. Many mistakes were known, but were dismissed by Andersen as immaterial. Other mistakes may non hold been known, but should hold been known if sensible enquiry would hold revealed them. Business Model, Experiences, and Organizational Culture At Enron and at Andersen, the concern theoretical account and the organisational civilization were altering. Enron was traveling to a new concern theoretical account dominated by intangible assets, the rights to purchase and sell trade goods. This alteration in assets was driven by a new organisational civilization which so sharply cultivated its ain growing. As hearers moved to go portion of a confer withing industry, their concern theoretical account and organisational civilization were altering excessively. It is likely that both the alterations at Enron and at Andersen were increasing hazards for investors. Enron s motion off from the laterality of fixed assets to the laterality of intangible assets was likely to increase volatility, and this chance was compounded by the usage of mark-to-market accounting. Besides, Andersen s motion off from the professionalisation of scrutinizing to the commercialisation of consulting was likely to weaken hearers as proctors of direction. Into t he mix of altering concern theoretical accounts and civilizations, add people who were non equipped for the alterations. The immature trading executives at Enron chased the trade for net incomes, while neglecting to hold on the hazards attached to the intangibles that were driving growing in net incomes. Likewise, immature hearers at Andersen embraced consulting, while neglecting to understand the hazard of audit failure. Many accounting houses and independent CPAs reacted to these events and implemented alterations in process voluntarily.A The biggest alteration that accounting houses made was a move made by the four staying members of the large five, KPMG, Ernst and Young, Deloitte Touche Tohmatsu, and PricewaterhouseCoopers.A These four companies decided to interrupt all ties with Andersen in an effort to avoid being dragged down with the merchandising contention environing the Enron scandal.A This distancing was besides due to the major alterations mandated to Andersen as a manner to acquire back on their pess after the dirt broke, and the other houses were afraid that these alterations would be forced on them every bit good. The authorities reacted sharply when they became cognizant of the Enron dirt, and a bustle of statute law and proposals emanated from Congress and the SEC about how best to cover with this situation.A President Bush even announced one post-Enron plan.A This program was to do revelations in fiscal statements more enlightening and in the direction s missive of representation.A This program would besides include higher degrees of fiscal duty for CEOs and accountants.A Bush s end was to be tough, but non to set an undue load upon the honest comptrollers in the industry.A .ud18d314aea7d89aae929026e3e22ad3b , .ud18d314aea7d89aae929026e3e22ad3b .postImageUrl , .ud18d314aea7d89aae929026e3e22ad3b .centered-text-area { min-height: 80px; position: relative; } .ud18d314aea7d89aae929026e3e22ad3b , .ud18d314aea7d89aae929026e3e22ad3b:hover , .ud18d314aea7d89aae929026e3e22ad3b:visited , .ud18d314aea7d89aae929026e3e22ad3b:active { border:0!important; } .ud18d314aea7d89aae929026e3e22ad3b .clearfix:after { content: ""; display: table; clear: both; } .ud18d314aea7d89aae929026e3e22ad3b { display: block; transition: background-color 250ms; webkit-transition: background-color 250ms; width: 100%; opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; background-color: #95A5A6; } .ud18d314aea7d89aae929026e3e22ad3b:active , .ud18d314aea7d89aae929026e3e22ad3b:hover { opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; background-color: #2C3E50; } .ud18d314aea7d89aae929026e3e22ad3b .centered-text-area { width: 100%; position: relative ; } .ud18d314aea7d89aae929026e3e22ad3b .ctaText { border-bottom: 0 solid #fff; color: #2980B9; font-size: 16px; font-weight: bold; margin: 0; padding: 0; text-decoration: underline; } .ud18d314aea7d89aae929026e3e22ad3b .postTitle { color: #FFFFFF; font-size: 16px; font-weight: 600; margin: 0; padding: 0; width: 100%; } .ud18d314aea7d89aae929026e3e22ad3b .ctaButton { background-color: #7F8C8D!important; color: #2980B9; border: none; border-radius: 3px; box-shadow: none; font-size: 14px; font-weight: bold; line-height: 26px; moz-border-radius: 3px; text-align: center; text-decoration: none; text-shadow: none; width: 80px; min-height: 80px; background: url(https://artscolumbia.org/wp-content/plugins/intelly-related-posts/assets/images/simple-arrow.png)no-repeat; position: absolute; right: 0; top: 0; } .ud18d314aea7d89aae929026e3e22ad3b:hover .ctaButton { background-color: #34495E!important; } .ud18d314aea7d89aae929026e3e22ad3b .centered-text { display: table; height: 80px; padding-left : 18px; top: 0; } .ud18d314aea7d89aae929026e3e22ad3b .ud18d314aea7d89aae929026e3e22ad3b-content { display: table-cell; margin: 0; padding: 0; padding-right: 108px; position: relative; vertical-align: middle; width: 100%; } .ud18d314aea7d89aae929026e3e22ad3b:after { content: ""; display: block; clear: both; } READ: Christopher Columbus EssayBy far the biggest alteration brought approximately is the Sarbanes-Oxley Act.A The Sarbanes-Oxley Act requires companies to revaluate their internal audit processs and do certain that everything is running up to or transcending the outlooks of the auditors.A It besides requires higher degree employees, like the CEO and CFO to hold an apprehension of the workings of the companies that they head and to confirm the fact that they do nt cognize of any fraud being committed by the company.A Sarbanes-Oxley besides brought with it new demands for disclosures.A These demands included coverage of minutess called reportable transactions.A These minutess ar e broken down into several classs, which impact every facet of a business.A One of these classs is listed transactions-which are by far the worst. They are minutess that are really written out in a list, each one pertaining to one specific state of affairs. Another is minutess with a book-to-tax difference of more than ten million dollars. A There are several others, nevertheless these two will hold the greatest effect.A Attach toing these demands are rigorous punishments if these minutess are non reported and discovered later.A This act will intend important extra work for comptrollers over the following several years.A A For many old ages the SEC Chairman, so Arthur Levitt Jr. , had been naming for the separation of scrutinizing and confer withing services within one company.A However large houses like Andersen would use their proverbial weight to try to demo that confer withing did non interfere with an hearer s independence.A Since the major concern of Andersen s function in the contention Centres on their independency, and because of the big pecuniary consulting fees being paid to them by Enron, the push has been started afresh by Paul Volcker the former Federal Reserve Chairman.A Realistically, few think that the large houses will be able to deter the SEC from really implementing such a rule.A A A Many companies who use hearers believe that this is non the reply, because of the fact that it will do them to engage one house to make scrutinizing work, and another to make non-audit work like revenue enhancements and other filings. In an effort to non acquire damaged by any at hand authorities acti on, many business-including Disney and Apple Computer Inc. have already begun dividing their audit and non-audit work between different firms.A Outline1 Effectss on other Commercial Administrations2 WorldCom3 Adelphia4 Xerox5 AOL Time Warner6 Referencing Effectss on other Commercial Administrations WorldCom After the perplexing complexness of Enron s SPEs and prepays, Worldcom s fraud is simplicity itself. During the 1990s, WorldCom became a planetary telecommunication giant by geting companies such as MCI and constructing a big telecommunications web. In add-on, WorldCom entered into long-run, fixed-rate line rentals to link its web with the webs of incumbent local exchange bearers. Faced with the telecom downswing and intense force per unit areas on net incomes, WorldCom undertook a series of steps to blow up earnings37. The largest and simplest of these related to line costs. WorldCom merely recharacterized its ample line costs as Prepaid Capacity and transferred them from the Company s income statements to its balance sheets. The consequence was that over $ 3.8 billion of line costs that should hold been shown as disbursal were capitalized as assets. WorldCom s income was overstated by the same sum. There were no SPEs and no complex accounting fast ones. There was merely a journal entry passed under the waies of the Chief Financial Officer, Scott Sullivan, that reclassified disbursals as assets without any back uping certification whatsoever. When this was eventually discovered by the internal audit section, Sullivan offered an every bit audacious explanation38 which is deserving citing at length: At the clip of the cost recess, direction had determined that future economic benefit would be derived from these contractual committednesss as the grosss from these service offerings reached jutting degrees. At that clip, direction to the full believed that the jutting gross additions would more than countervail the future rental committednesss and deferred costs under the understandings. Therefore, the cost recesss for the unutilized part of the contract was considered to be an appropriate stock list of this capacity and would finally be to the full amortized prior to the expiration of the contractual committedness. ( FASB CON No. 6, par. 26 ) . Adelphia In a series of disclosures40 between March 2002 and June 2002, Adelphia Communications Corporation announced that it had concealed $ 2.6 billion of its liability. At the clip, Adelphia was the 6th largest overseas telegram telecasting operator in the United States. The Rigas household that owned a commanding interest in Adelphia besides owned several other companies ( Rigas entities ) that were besides in the overseas telegram telivision concern. The Rigas entities were managed by Adelphia. Furthermore, Adelphia subordinates and the Rigas entities borrowed money under a co-borrowing understanding with that made all parties jointly and independently apt for the adoption regardless of who had drawn down the money. This meant that the debt had to be shown as a debt of the Adelphia subordinates ( and hence as portion of Adelphia s amalgamate debt ) and non as a contingent liability. The undermentioned footer in Adelphia s December 31, 2000 balance sheet would hold led everybody to believe that this liability was included in the amalgamate debt: In fact, nevertheless, this sum was non included in Adelphia s amalgamate debt. The footer was therefore calculated to hide this debt wholly. At least, if the note had disclosed a contingent liability, readers would hold known that that this debt was in add-on to the debt on the balance sheet. Of class, even that would hold been inaccurate from an accounting point of position as the co-borrowing needed to be disclosed as debt and non as a contingent liability. The SEC stated: The skip of these liabilities was a calculated strategy to under-report Adelphia s overall debt, portray Adelphia as de-leveraging, and hide Adelphia s inability to follow with debt ratios in loan compacts. In March 2002, while showing the consequences for the last one-fourth of 2001, Adelphia for the first clip disclosed the being of $ 2.3 billion of concealed debt handling it as a contingent liability: .u097efcf946af3e2006e85226b11f9e46 , .u097efcf946af3e2006e85226b11f9e46 .postImageUrl , .u097efcf946af3e2006e85226b11f9e46 .centered-text-area { min-height: 80px; position: relative; } .u097efcf946af3e2006e85226b11f9e46 , .u097efcf946af3e2006e85226b11f9e46:hover , .u097efcf946af3e2006e85226b11f9e46:visited , .u097efcf946af3e2006e85226b11f9e46:active { border:0!important; } .u097efcf946af3e2006e85226b11f9e46 .clearfix:after { content: ""; display: table; clear: both; } .u097efcf946af3e2006e85226b11f9e46 { display: block; transition: background-color 250ms; webkit-transition: background-color 250ms; width: 100%; opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; background-color: #95A5A6; } .u097efcf946af3e2006e85226b11f9e46:active , .u097efcf946af3e2006e85226b11f9e46:hover { opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; background-color: #2C3E50; } .u097efcf946af3e2006e85226b11f9e46 .centered-text-area { width: 100%; position: relative ; } .u097efcf946af3e2006e85226b11f9e46 .ctaText { border-bottom: 0 solid #fff; color: #2980B9; font-size: 16px; font-weight: bold; margin: 0; padding: 0; text-decoration: underline; } .u097efcf946af3e2006e85226b11f9e46 .postTitle { color: #FFFFFF; font-size: 16px; font-weight: 600; margin: 0; padding: 0; width: 100%; } .u097efcf946af3e2006e85226b11f9e46 .ctaButton { background-color: #7F8C8D!important; color: #2980B9; border: none; border-radius: 3px; box-shadow: none; font-size: 14px; font-weight: bold; line-height: 26px; moz-border-radius: 3px; text-align: center; text-decoration: none; text-shadow: none; width: 80px; min-height: 80px; background: url(https://artscolumbia.org/wp-content/plugins/intelly-related-posts/assets/images/simple-arrow.png)no-repeat; position: absolute; right: 0; top: 0; } .u097efcf946af3e2006e85226b11f9e46:hover .ctaButton { background-color: #34495E!important; } .u097efcf946af3e2006e85226b11f9e46 .centered-text { display: table; height: 80px; padding-left : 18px; top: 0; } .u097efcf946af3e2006e85226b11f9e46 .u097efcf946af3e2006e85226b11f9e46-content { display: table-cell; margin: 0; padding: 0; padding-right: 108px; position: relative; vertical-align: middle; width: 100%; } .u097efcf946af3e2006e85226b11f9e46:after { content: ""; display: block; clear: both; } READ: Creating Slave Laws EssaySubsequent revelation made it really clear that the sum of $ 2.3 billion was non merely a contingent liability but was really much a portion of Adelphia s debt. It turned out that there was non in fact any clear limit between the drawdowns by Adelphia and the Rigas Entities. The allotment of the co-borrowing between them was an arbitrary reclassification carried out every one-fourth while fixing the fiscal statements. The SEC stated: Adelphia direction allocated and reallocated co-borrowing liabilities among Adelphia s amalgamate subordinates and unconsolidated Rigas Entities at will and through a individual, quarterly hard currency direction rapp rochement of the inter-company receivables and payables outstanding at one-fourth terminal between or among Adelphia s subordinates and Rigas Entities In fact, Adelphia operated a Cash Management System ( CMS ) into which Adelphia, its subordinates and the Rigas Entities deposited their hard currency grosss ( generated from operations or obtained from adoptions ) and from which they withdrew hard currency for disbursals, capital outgo and debt refund. This resulted in the commingling of financess between Adelphia and the Rigas Entities. Adelphia s fraud was non restricted to privacy of debt. Between mid-1999 and the last one-fourth of 2001, Adelphia misrepresented its public presentation in three countries that are of import in the prosodies fiscal analysts use to measure overseas telegram companies: ( a ) the figure of its basic overseas telegram endorsers, ( B ) the per centum of its overseas telegram works rebuild, or upgrade, and ( degree Celsius ) its net incomes, including its net income and quarterly EBITDA . Most of this was accomplished by straight-out disproof or by fabricated minutess with the Rigas Entities through the CMS. Xerox Xerox restated its income for the old ages from 1997 to 2002 partially to reflect wrong accounting patterns associating to the timing and allotment of gross from bundled rentals. Xerox sells most of its merchandises and services under bundled contracts that contain multiple constituents equipment, service, and funding constituents for which the client pays a individual monthly-negotiated monetary value every bit good as a variable service constituent for page volumes in surplus of stated lower limits. The SEC claimed that Xerox s revenue-allocation methodological analysis for these contracts did non follow with the accounting criterions and forced Xerox to alter its methodological analysis. Under the original methodological analysis, Xerox estimated the just value of the funding constituent ( utilizing a discounted hard currency flow method based on the company s cost of equity and debt ) and of the service constituent ( by utilizing an estimation of service gross borders ) and att ributed the balance to equipment. In the new methodological analysis, the just value of the service constituent and the just value of the equipment ( utilizing hard currency sale monetary values ) are deducted from the entire lease payment to get at the funding constituent as a reconciliation figure and the inexplicit funding rate is determined. Interestingly, the company s old hearer, KPMG regards the original accounting as right and regards the new accounting adopted by the company and its new hearers, PricewaterhouseCoopers under force per unit area from the SEC as incorrect. KPMG stated that: KPMG remains house in its strong belief that the fiscal statements reported on by us in May 2001, including Xerox s fiscal statements for 2000 and the restated fiscal statements for 1997-1999, were reasonably presented in conformity with by and large accepted accounting rules. KPMG, Xerox and PricewaterhouseCoopers had it right the first clip, when the company and three separate squads from PwC all agreed with us that Xerox s rental accounting methodological analysis was GAAP compliant. By contrast, today s intelligence studies lead us to believe that the restated fiscal statements withstand economic world. They seemingly give Xerox the benefit of acknowledging grosss in 2002 and in future old ages that it had already recognized in anterior old ages. AOL Time Warner AOL Time Warner Inc. admitted50 in October 2002 that it had improperly inflated gross by $ 190 million and profitableness ( EBITDA ) by $ 97 million by improperly accounting for some on-line ad gross revenues and other trades between July 2000 and June 2002. While AOL Time Warner did non place the minutess involved, it is likely that these were the 1s that the Washington Post had highlighted in two articles52 in July 2002. The Post had alleged that America Online ( AOL ) resorted to questionable accounting patterns in an effort to shore up advertisement gross at a clip when it was in the procedure of geting Time Warner in a stock barter trade. From late 2000 onwards, stock markets were highly worried about the sustainability of advertisement gross for cyberspace companies. A failing in advertisement grosss could conceivably hold led to a crisp autumn in the AOL stock monetary value that could hold endangered the amalgamation with Time Warner. The Washington Post alleged: AOL convert ed legal differences into ad trades. It negotiated a displacement in gross from one division to another, bolstering its online concern. It sold ads on behalf of on-line auction giant eBay Inc. , booking the sale of eBay s ads as AOL s ain gross. AOL bartered ads for computing machine equipment in a trade with Sun Microsystems Inc. AOL counted stock rights as ad and commercialism gross in a trade with a Las Vegas house called PurchasePro.com Inc . AOL s accounting is under probe by the SEC and by the Justice Department. While the restatements are little comparative to AOL s entire grosss and net incomes, it could hold had a disproportional impact on the portion monetary value at a critical point of clip when it was clinching the amalgamation trade with Time Warner. Referencing Enron and Andersen-What Went Wrong and Why Similar Audited account Failures Could Happen Again by Matthew J. Barrett Governance, Supervision and Market Discipline: Lessons from Enron by Jayanth R. Varma, Journal of the Indian School of Political Economy published ( October-December 2002 ) , Volume 14 Number 4, 559-632 ) . Arthur Andersen and Enron: Positive Influence on the Accounting Industry byA Todd Stinson hypertext transfer protocol: //faculty.mckendree.edu/scholars/2004/stinson.htm McNamee, Mike and Harvy Pitt.A If You Violate the Law You Will Pay for it.A Business Week December 24, 2001: 33. McLean, Bethany.A Why Enron Went Bust.A Fortune December 24, 2001: 59