Profitability And The Corporate Leverage Policy Of Firms - Free Essay Example

Sample details Pages: 22 Words: 6524 Downloads: 2 Date added: 2017/06/26 Category Finance Essay Type Analytical essay Did you like this example? Abstract This study attempts to determine the relationship between the profitability and leverage policy of firms of Fuel and Energy sector of Pakistan. The analysis was implemented on 27 firms in the Fuel and energy sector listed at the Karachi Stock Exchange for the period 2003-2008. Regression was used to find out the relationship between the independent variable (Profitability) and dependent variable (Leverage). Don’t waste time! Our writers will create an original "Profitability And The Corporate Leverage Policy Of Firms" essay for you Create order We expect the negative relationship between the Profitability and the Leverage Policy of firms in the Fuel and Energy sector of Pakistan, confirming the pecking order theory of capital structure. The results found in our study were not as expected. The results showed that there is inverse relationship between profitability and leverage but our results were not that much significant to accept our hypothesis. So we rejected our pecking order theory hypothesis. Therefore we conclude that because of certain factors such as economic situation of the Pakistan, rising prices of oil all around the world, interests rates and reliance of firmà ¢Ã¢â€š ¬Ã¢â€ž ¢s financing needs mostly on bank financing, pecking order theory model becomes insignificant in the Energy and Fuel sector of Pakistan. Chapter-1 Introduction Capital structure involves different decisions taken by a firm in financing its assets. Generally, a firm can solve this issue through different mixes of debts, equity, or other financial arrangements. It can also combine bonds, TFCs, lease financing, bank loans or many other options with equity in order to boost the market value of the firm. 1.1 Importance of the topic: Optimal capital structure plays a vital role in the overall value maximization of a firm. The strategic management of capital structure ensures access to the capital needed to fund future growth and enhance financial performance. Our focus in this study is to correlate the profit of the firm with its leverage. Importance of the study is to find out that which source of funds either retained earnings, debt or equity, a firm in the Fuel and Energy sector should prefer in order to optimize the profit and the value of the firm. In Pakistan, firms usually prefer short-term borrowing, because commercial banks are the major lenders and they do not encourage long-term loans. Up to 1994 firms did not rely on market based debt; in mid 1994 the government amended the Company Law to help companies to raise debt directly from the market in the form of TFCs (Term Finance Certificates). 1.2 Background of the study: Various capital structure theories had been discussed by many authors to explain the variation of capital structure of different firms. So many researches had also been taken place in order to solve the mystery of optimal capital structure in Pakistani firms. A thorough research study relating to the capital structure was carried by two Pakistani professors Shah and Tahir (2004) which attempted to answer the question of what determines the capital structure of Pakistani Listed firms other than those in financial sector. Booth, et. Al (2001) had also worked on the determinants of capital structures of 10 developing countries including Pakistan, but their data analyzed the firms that were included in the KSE-100 Index from 1980 to 1987. Shah and Tahir (2004) analyzed the data of non-financial firms for the period of 1997-2001 while our study differs from theirs on grounds of different sector, variables and period. 1.3 Objective of the study: The objective of this study is to find out the relationship between the profitability and the corporate leverage policy of firms in the Fuel and Energy sector of Pakistan. We are trying to figure out that the firms that have more profits in the Fuel and Energy sector have lower leverage. Our main focus in this study is to correlate the profit of the firm with its leverage in the context of pecking order theory. According to pecking order hypothesis firms tend to use internally generated funds first and than resort to external financing. This implies that profitable firms will have less amount of leverage. Therefore we expect a negative relationship between profitability and debt of a firm i.e. higher the profits of a firm, the lesser will be its debt. 1.4 Scope of the study: This study is limited on the Fuel and Energy sector of Pakistan. There are 27 firms of that sector which are listed on the Karachi Stock Exchange. But after screening the firms with incomplete data, we have selected 22 firms having complete data for six years from 2003-2008 as the study covers the period from 2003 to 2008. 1.5 Disposition of the study: This study is organized into five stages. In first stage we have described the background of our topic. In second stage review of literature has been done. In next stage we have explained our data and variables used in our analysis. At fourth stage we have discussed the model and the statistical test to be used. While the last stage concludes the results of the test. Chapter 2 Literature Review In this chapter we have gone through the various research studies regarding the leverage and well known capital structure theories. Capital structure refers to specific mixture of debt and equity a firm needs to finance its operations and optimal capital structure plays a vital role in the overall value maximization of a firm. This has given birth to different capital structure theories that attempt to explain the variation in capital structures of firms. The Miller Modigliani theorem showed that the market value of a firm is determined by the risk of its underlying assets and its earning power and is independent of the choices to finance its investments i.e the value of the firm is independent of the capital structure it takes on. But Myers suggested the contemporary thinking on capital structure in form of Static Tradeoff Theory. This explained that a firm initially following a target debt-equity ratio behaves accordingly. The costs and benefits related to the debt option make this target ratio. The costs and benefits are cost of financial distress, tax shields and agency cost. There are different theories that are used to explain the capital structure decisions which are based n the asymmetric information, tax benefits associated with the debt, bankruptcy cost and agency cost. The asymmetric information is related with pecking order framework and the other three are rooted in static trade-off choice. Under the trade off theory firms tried to equate the marginal benefits of an additional unit of debt with the related marginal cost, while holding the firmà ¢Ã¢â€š ¬Ã¢â€ž ¢s assets and investments plans. Under this model the key benefits are debt tax deductibility and the mitigation of agency cost while the main cost of additional debt is bankruptcy. Green, Murinde and Suppakitjarak (2002) observed that the tax policy also effect the capital structure decision of firms. Firm are allowed to deduct interest on debt in computing taxable profit un der tax ordinance while the payments associated with the equity such as dividends are not tax deductible. Therefore, the tax effect encourages the debt usage by the firm if the rates are higher and more debt increases cash savings in form of after tax proceeds to the owner. Usage of debt in the capital structure of the firm also leads to agency cost which arises as a result of relationship between the share holder and manager while the firmà ¢Ã¢â€š ¬Ã¢â€ž ¢s management is the agent and the share holder being the principal. Agent may not choose to maximize their principalà ¢Ã¢â€š ¬Ã¢â€ž ¢s wealth. The conflict arises as the managers have less than 100% of the residual claim. Thus, managers may invest in projects that reduce the value of the firm while enhancing their control over its resources. Additional cash flow is the prime source of the agency cost. Debt helps to mitigate this agency cost as the firm is committed to pay out excess cash in the form of interest payments. T he probability of bankruptcy increases with the increase in the level of the debt. If the firm goes beyond the optimum level of debt, then it is more likely that the firm will default on the repayment of the loan. As a result of that, the control of the firm will be shifted from share holders to the bond holders or the creditors who will liquidate the firm in order to recover their investment. There are also direct and indirect costs associated with the bankruptcy. Direct cost includes administrative costs of bankruptcy and costs of reorganization in the event of insolvency. While the indirect cost arises when the firm gets into financial distress. It may arise because of the change in the investment policies of the firm if firm foresees possible bankruptcy. In order to avoid the possible financial distress it will cut down the expenditure on certain departments like research and development, training of employees and advertisements etc. Therefore, if a firm is perceived to be close d to bankruptcy customers may be less willing to buy its goods because of low perceived quality of goods and the risk that the firm will not be able to meet its warranty obligation. Employees may also be less interested to work for the firm and creditors are less inclined to extend trade credit. Hence under the static trade off theory the optimal capital structure represents a level of leverage that balances the bankruptcy and the benefits of tax deductibility and mitigation of the agency costs. While The Pecking Order Theory of Myers (1984) and Myers and Majluf (1984), stated that firm while establishing its capital structure follow a hierarchy of financial decisions. First of all firm uses its internal financing i.e. retained earnings in order to finances its projects. In case of need of external financing, they prefer a bank loan first then go for the public debt. Thus in accordance with the Pecking Order Theory, profitable firms while having the available internal funds pr efers not to incur debt for new projects. A study was carried by Benito, (2002) which considered the two most influential approaches, the trade off and packing order theories, in understanding capital structure decisions of firms of Spain and United Kingdom. This study made a valuable contribution to our study because of the same objective of testing Pecking Order Theory with reference to capital structure of firms. The resulting data included 6417 Spanish companies over period of 1985-2000 and 1784 British quoted non-financial companies over period of 1973-2000. The results provided significance in favor of pecking order theory, concluding debt ratios found to be significantly inversely related to cash flow and profitability of the firm and vary positively with its investment. In order to find the best empirical explanation for the capital structure of Brazilian firms Medeiros and Cecilio (2004) tested a model to represent the Static Trade-off Theory and Peking Order theory. This theory is helpful for our study because of the same independent variables that is profitability. à ¢Ã¢â€š ¬Ã…“Profitability all the STT streams sustain that a positive relationship must exist between profitability and debt. The stream based on bankruptcy costs states that these costs increase when earnings fall so that leverage tends to be lower for less profitable firms or those with higher earnings volatility. For the stream focusing on tax benefits, the more profitable the firm the more it benefits from the tax shield provided by interest payments. The agency stream believes that large amounts of free cash flows build up the dispute between shareholders and managers, which make those firms to issue more debt in order to diminish the problem (Fama and French, 2003). According to the POT, retained earnings are the firmà ¢Ã¢â€š ¬Ã¢â€ž ¢s best financing option. This type of resource does not produce information asymmetries and can be used promptly for new projects. The i nformation asymmetry caused by equity issues or by more complex securities that require a higher degree of communication with the market is the basis of the POT. It is exactly to dodge the adverse selection premium brought by the information asymmetry that firms opt for internal financing as their major source of resources (Myers, 1984). The relationship between these two variables must be therefore negativeà ¢Ã¢â€š ¬?. Medeiros and Cecilio (2004) The sample of their study included 371 non-financial firms with shares listed in the Brazilian stock exchanges from 1995 to 2002. The analysis of results of the study led to the conclusion that the pecking order theory provides the best explanation for the capital structure of those firms Another study on the capital structure was carried by Abor, (2008) comparing the capital structure of large un-quoted firms, small and medium enterprises (SMEs) and publicly quoted firms in Ghana using a panel regression model. On the grounds of th e similar independent variable this study made a useful contribution to our review literature. The results showed insignificant difference between the capital structures of large unquoted firms and publicly quoted firms. The results of all sample groups showed that the total debt has relatively a high proportion of short-term debt. The results of the regression test indicated that age and size of the firm, profitability, risk, asset structure and managerial ownership are significant influencers in decisions regarding the capital structure of Ghanaian firms. Chiarella et.al (1991) conducted a study in Australia on the determinants of corporate capital structure by seeking to provide evidence on the significance of capital structure determinants in Australian context. This study provided a great support for writing review literature of our study. The analysis was carried on a sample of 226 Australian firms from 1977-1985. The results showed that company non-debt tax shields display a negative relationship with debt ratios. The results also supported the pecking order hypothesis of Myers and Majluf (1984) showing significant negative relationship of profitability with debt ratios and indicating that firms prefer to finance investments with internally retained earnings before issuing debts. The results provided some evidence of size effect indicating that the larger firms tend to employ more debts in their capital structure. Results showed positive but insignificant relationship between cash holdings and debt ratios while confirming the free cash flow hypothesis of Jensen (1986). Simultaneously results did not provide any support for growth opportunity and collateral value attributes as determinants of debt ratios. A study on the Malaysian companies regarding the capital structure and the firm characteristics was carried by an Indian professor Pandey (2000). This study is useful for our study because of one of the same independent variable i.e. profitability . The study was carried on Malaysian companies in order to examine their determinants of capital structure using data from 1984 to 1999 while classifying the data into four periods that relates to different stages of capital market of Malaysia. Results of the regression clarified that profitability, size; growth, risk tangible variables have significant impact on all debt types. Results showed persistent and consistent negative relationship of profitability with all debt ratios in all periods, thus accepting the prediction capital structure according to the pecking order theory. A research relating to the capital structure was carried by two Pakistani professors Shah and Tahir (2004) which attempted to answer the question of what determines the capital structure of Pakistani Listed firms other than those in financial sector. Because this study was also carried in Pakistan so it provided a support to a great extent in order to understand the capital structure according to Pakistan à ¢Ã¢â€š ¬Ã¢â€ž ¢s environment. A sample of 445 listed firms on KSE were taken and their five year data from 1997-2001 were taken into consideration. Pooled regression results indicated that assets tangibility is positively correlated with debt, concluding that asset structure does not matter in determination of capital structure of Pakistani firms. Size was positively correlated with leverage suggesting that large firms would employ more debt. Growth was found to be negatively correlated with leverage that supports the simple version of pecking order theory that growing firms finance their investment opportunities first by their internally generated funds. There was strong relationship between profitability and leverage. Profitability was negatively correlated with leverage that supports the pecking order theory. A study in Hong Kong was carried by Hung, et.al (2002) examing the inter-relationship between profitability, cost of capital and capital structure among property devel opers and contractors in Hong Kong. The results showed that capital gearing is positively related with assets but negatively with profit margins. Bartholdy and Cesario (2006) analysed the decisions regarding the capital structure of Portuguese non-listed bank financed firms. Primary purpose of the research was to find out the impact of debt tax shield on the decisions regarding capital structure of small non-listed firms. The secondary purpose was to find out that whether the determinants of capital structure of larger listed firms were also same as in case of smaller non-listed firms. The research explained that the solution of two big problems (agency and asymmetric information) for large firms are apparent on the balance sheet as restriction on debt. On the other hand it is less apparent on the balance sheet of smaller firms. This provided the smaller firms with the benefit of tax shield due to more debt. This research has provided a great support in writing our review literat ure and understanding the relationship between profitability and debt to a great extent. The sample of their research consisted 998 firms with 7765 firm yearsà ¢Ã¢â€š ¬Ã¢â€ž ¢ observations. The results concluded that the tax provisions regarding the carry forward of tax losses and debt tax shield play a vital role in determining the capital structure of small non-listed firms. It was also concluded that in order to solve agency problem traditional balance sheet variables were significant in large listed firms but were insignificant for the small non-listed firms with the exception of variables required to solve bankruptcy risk. A research study was conducted in Greece by Eriotis, et.al (2007) aiming to isolate the firm characteristics that effect capital structure. The investigation was performed using panel data for a sample of 129 Greek companies listed on Athens Stock Exchange during 1997-2001. The findings justified a negative relationship between the debt ratio of the firms and their growth, and size appeared to have a positive relation. Gropp and Florian (2008) conducted research study regarding the determinants of the capital structure of banks by examining the capital structure of banks from the prospective of empirical capital structure literature for non-financial firms. The sample of the study includes 200 largest listed banks (100 from US and 100 from EU) from the sixteen different countries (US and 15 EU members) from 1991 to 2004. The results suggest that the capital requirements may only be of second importance for bankà ¢Ã¢â€š ¬Ã¢â€ž ¢s capital structures and confirm the robustness of corporate finance findings in a holdout sample of banks. In order to examine the capital structure across countries a study was carried by Rajan and Luigi (1994). The primary objective of the study was to establish whether the choice of capital structure in other countries is based on the factors similar to those influencing capital structure of US firm s. Study was on the 8000 non-financial corporations of G-7 countries (USA, Germany, Japan, France, UK, Italy and Canada) for the period of 1987-1991. After correcting the differences ranging from accounting practices to legal and institutional environments between the countries. results of the study showed extent to which firms are levered is fairly similar across the G-7 countries except UK and Germany being relatively less levered. Sakuragawa (2001) conducted another study regarding the capital structure of banks under non-diversifiable risk. The purpose of the research was to study the design of optimal capital structure of a large financial corporation when it faces a non-diversifiable risk. When there is a non-diversifiable risk the intermediary finds it profitable to issue equity because by issuing equity it can reduce the cost and the probability of bankà ¢Ã¢â€š ¬Ã¢â€ž ¢s failure. The intermediary designs the optimal capital structure by balancing the marginal benefit of reducing probability of bankà ¢Ã¢â€š ¬Ã¢â€ž ¢s failure against the marginal cost of debt-equity swap. Results showed that a large corporation under weaker conditions realizes more efficient allocation by issuing both debt and equity than by issuing only debt. An African study was conducted by cole-man (2007) whose aim was to examine the impact of capital structure on the performance of microfinance institutions. Panel data covering the ten-year period 1995-2004 were analyzed within the framework of fixed- and random-effects techniques. Results showed that the most of the microfinance institutions employ high leverage and finance their operations with long-term as against short-term debt. Results also revealed that the highly leveraged microfinance institutions perform better by reaching out to more clientele, enjoy scale economies, and therefore are better able to deal with moral hazard and adverse selection, enhancing their ability to deal with risk. Fernandez (2003) analyze d the driving forces of capital structure in Chile for the period 1990-2002. The purpose of the research was to study aggregate leverage and interest-bearing liabilities in isolation for all firms, and firms segmented by economic sector. Their sample of the study consisted of 64 firms having the complete information for the whole sample period of 1990-2002. Results while supporting the trade-off theory revealed that the firms favored equity over debt issues to cover their financing deficit because of the Chileà ¢Ã¢â€š ¬Ã¢â€ž ¢s tax and monetary policies. In order to find out the determinants of very small firmà ¢Ã¢â€š ¬Ã¢â€ž ¢s financial leverage Barbosa and Cristiana (2003) carried a research. They described the relationship between profitability and financial leverage as: As far as profitability is concerned, the most common expectation in the financial structure literature is for a negative relationship with financial leverage. Toy and others (1974 p.877), Marsh (19 82 p.126 footnote 22), Friend and Lang (1988 p.277), Titman and Wessels (1988 p.6) and Barton and others (1989 p.40) all say that in different words. According to them, a firm with a high profit rate, ceteris paribus, would maintain a relatively lower debt ratio because of its ability to finance itself from internally generated funds. The preference for raising capital first from retained earnings may be due, according to Titman and Wessels (1988 p.6), to the costs of issuing new equity or debt that arise because of asymmetric information or transaction costs. Marsh (1982 p.126 footnote 22) raises the possibility that the impact may be due to the tendency of firms to issue new equity immediately after periods of abnormally good performance. Hall and Weiss (1967 p.328) assert that relatively profitable firms take some of their exceptional returns in the form of reduced risk, through retaining earnings, and, therefore, show lower debt to assets ratios. Rajan and Zingales (1995 p.1451) cite Jensen (1986) who predicts that, if the market for corporate control is ineffective, managers of profitable firms prefer to avoid the disciplinary role of debt. This preference would lead to a negative correlation between profitability and debt. Gupta (1969 p.522) speaks of a theory that extends the first belief above mentioned from the firm level to the industry level. Accordingly, profitable industries, because of the greater availability of internally generated funds related to their high profitability; tend to have lower debt in their financial structure. Last, Gale (1972 p.417-8) interprets leverage as representing the degree of risk or otherwise in the industries in which the firm competes and hypothesizes that leverage should then be negatively related to profitability. This author himself acknowledges that his reasoning is somewhat at odds with previous discussions and theory, though. According to him, low debt to total capital ratios would reflect high industry risk b ecause of two aspects. First, the corresponding capital structures would be the result of higher investment on the part of entrepreneurs, who, differently from lenders, place a lower value on security relative to rewards. Second, high-risk industries are, at least theoretically, associated with higher profitability. Barbosa and Cristiana (2003) Results of their research concluded that the growth, entrepreneurà ¢Ã¢â€š ¬Ã¢â€ž ¢s risk tolerance, size and operational cycle were positively correlated with the financial leverage whereas asset composition, inflation, profitability and business risk are negatively correlated with financial leverage of very small firms. Chapter-3 Methodology In this section, we have explained the source of data, sample size, explanation and measurement of the variables, and the regression model. 3.1 Source of Data In this study financial data of firms listed on the Karachi Stock Exchange under Fuel and Energy sector of Pakistan is taken from the State Bank of Pakistan Publications à ¢Ã¢â€š ¬Ã…“Balance Sheet Analysis of Joint Stock Companies Listed on the Karachi Stock Exchange 2003-2008à ¢Ã¢â€š ¬?. 3.2 Sample size This study is carried on the Fuel and Energy sector of Pakistan. There are 27 firms of that sector which are listed on the Karachi Stock Exchange. But after screening the firms with incomplete data, we have selected 22 firms having complete data for six years from 2003-2008 as our study covers the period from 2003-2008. So we have 132 firm years for the panel data analysis. 3.3 Explanation and Measurement of the variables Basically our study follows the framework of Shah and Tahir (2005). We include only two variables in our study. First variable is leverage (dependent variable) and another is profitability (Independent variable). In this section we describe these two variables and explain how they are measured. 3.3.1 Leverage (Dependent variable) Leverage is explained as percentage of assets financed by debts. Different researchers have measured leverage differently. Frank and Goyal (2003) differentiated between two debt ratios, one based on market value while the other on book value. Debt ratio based on market value relates with the firmà ¢Ã¢â€š ¬Ã¢â€ž ¢s future situation whereas on the other hand debt ratio based on book value tends to reflect the past situation. While in our study measuring leverage through book value, we have mainly two reasons in our mind. First, one of the main benefits of debt is tax shield that is the interest payments are tax deductible expense, resulting in cash savings. Once the debt is issued these tax shield advantages do not vary by the market value of the debt. Second point in our mind while measuring leverage through book value is the relationship of debt with bankruptcy risk. The probability of bankruptcy increases with the increase in the debt. Moreover, in case of bankruptcy of a firm , the value of the debt through the book value of the debt is more relevant than the market value of debt. While measuring the financial leverage we faced a problem of choosing either total debt or only long term debt as percentage of total assets. Interestingly many capital structure theories favor long term debt but we have used total debt because the average firm size in Pakistan is small which limits their access to capital market because of technical difficulties and cost involved. So the firms in Pakistan prefer short term borrowing because of the fact that the major lenders in Pakistan are commercial banks and they discourage long term borrowing. Firms in Pakistan did not rely on the market based debt upto 1994, but in the mid of 1994 Government while amending Company Law, allowed firms to raise debt directly in the form of TFCà ¢Ã¢â€š ¬Ã¢â€ž ¢s (Term Finance Certificates) from the market. Thus in our study we have measured the leverage through total debt to total asse t ratio. 3.3.2 Profitability (Independent Variable) Profitability has been the main point of distinction between the Static Trade-off Theory and the Pecking Order Theory. Static Trade-off Theory explains that the firm with higher profitability has more reasons to issue more debt while taking tax shield benefit. While on the other hand, Pecking Order Theory presupposes that firms with larger earnings tend to use its internally generated funds i.e. retained earnings initially to fulfill their financial needs then they go for debt. Thus, Static Trade-off Theory expects a positive and direct relationship between profitability and leverage of a firm while Pecking Order Theory suggests negative relationship between the two above said variables. We have measured the profitability as the ratio of Net Income before Tax divided by the total assets. 3.4 Research hypothesis This research study supports the Pecking Order Theory hypothesis and our proposed research hypothesis is à ¢Ã¢â€š ¬Ã…“There is significant negative relationship between profitability and leverage of a firmà ¢Ã¢â€š ¬?. Ho: There is significant negative relationship between profitability and leverage of a firm 3.5 Regression Model Linear Regression analysis has been used in this study. Basically we have used pooled regression type of panel data analysis. By saying this we mean that the companyà ¢Ã¢â€š ¬Ã¢â€ž ¢s financial data and time series data are pooled together in a column. The equation for our regression model will be LG= ÃŽÂ ²0 + ÃŽÂ ²1 (PF) + ÃŽÂ µ. Where LG= Leverage ÃŽÂ ²0= Constant PF= Profitability ÃŽÂ µ= Error term Chapter 4 Results of the test and interpretation. This chapter contains the results of the descriptive statistics and linear regression test. There are 27 firms in Energy and fuel sector which are listed on the Karachi Stock Exchange. But after screening the firms with incomplete data, we have selected 22 firms having complete data for the six years from 2003-2008 as our study covers that specified period. So we have 132 firm years for the panel data analysis. 4.1 Data Consideration: For data consideration to be suitable for linear regression we graph the P-P plot of dependent and independent variable in order to check that the data is normally distributed. The P-P plots of profitability and leverage are as follows. Above Normal P-P Plot of Independent variable (Profitability) shows that the variable follows a normal distribution. On the other hand dependent variable (leverage) is also said to be fairly normally distributed. In order to show the linear regression model is appropriate for the data or not we graph a scatter plot between profitability and leverage which is as follows: Scatter plot shows that whether linear regression model is appropriate for the data or not. However above scatter plot appears to be suitable for linear regression. 4.2 Results of the test: After running the linear regression test on SPSS we have the following results. Table-1 Descriptive Statistics Total No: Minimum Maximum Mean Standard Deviation Profitability (PF) 132 -0.22 0.43 0.0515 0.12441 Leverage (LV) 132 .00 1.27 0.5588 0.27425 Valid No: (list wise) 132 Table-1 contains the descriptive statistics of the variables of our study i.e. profitability and leverage. This table indicates that the maximum loss on the total assets of a Pakistani energy and fuel sector firm listed on KSE is 0.22 or 22% while the maximum a firm has earned return on total assets is 0.43 or 43% and the average profitability in form of return on total assets o of a firm of the above sector is 0.0515 or 5.15% with the standard deviation of 12.44% during that period of 2003-208. While on the other hand, the minimum leverage (total liabilities to total assets) of a Pakistani energy and Fuel firm listed on KSE is 0% and the maxim um is 1.27 or 127%, while the average leverage of firms is 0.5588 or 55.88% with the standard deviation of 27.42%. Table-2 Correlation Leverage (LV) Profitability(PF) Pearson Correlation LV PF 1.00 -0.112 -0.112 1.00 Total No: 132 132 The above correlation table shows the relationship between independent variable (Profitability) and dependent variable (Leverage). The value of Pearson correlation which is -0.112 or -11.2%, indicates negative but weak relationship between profitability and leverage. Table-3 ANOVA Model Sum of squares df Mean Square F Significance value Regression 0.124 1 0.124 1.654 0.201 Residual 9.729 130 0.075 Total 9.853 131 Predictors: (Constant), Profitability. Dependent Variable: Leverage The above ANOVA table tests the acceptability of the model from a statistical perspective. The regression row displays information about the variation accounted fo r by the model while the residual row shows information about the variation that is not accounted for by the model. As the residual sum of squares i.e. 9.729 is far higher than regression sum of squares i.e. 0.124, which indicates that very less variation in leverage is explained by the model. It is also evident from the significance value of F statistics which is higher than 0.05. While the ANOVA table is a useful test of the modelà ¢Ã¢â€š ¬Ã¢â€ž ¢s ability to explain any variation in the dependent variable, it does not directly address the strength of that relationship. So, in order to check the strength of the relationship between the model and dependent variable, we have another table of model summary which is as follows. Table-4 Model Summary Model R R Square Adjusted R Square Standard error of the estimate 1 0.112 0.013 0.005 0.27357 Predictors: (Constant), Profitability. Dependent Variable: Leverage The above model summary tabl e reports the strength of the relationship between the model and the dependent variable i.e. leverage in our study. The value of R (the multiple correlation coefficient) is 0.112 or 11.2% which indicates weak relationship. The value of R square (the coefficient of determination) shows that about 1.3% variation in the leverage is explained by the model. Unfortunately our model becomes insignificant in the Pakistanà ¢Ã¢â€š ¬Ã¢â€ž ¢s energy and fuel sectorà ¢Ã¢â€š ¬Ã¢â€ž ¢s environment. But in an earlier study conducted by Shah and Hijazi regarding the Determinants of capital structure of stock exchange-listed non-financial firms in Pakistan in 2004 such sort of model proved significant. Moreover, another study conducted by Benito in UKà ¢Ã¢â€š ¬Ã¢â€ž ¢s environment regarding capital structure decisions of firm also favored the pecking order model. Table-5 Coefficient Model Unstandardized Coefficients Standardized Coefficients t-value Significance value Beta Std. Error Beta Constant 0.571 0.026 22.162 0.000 -0.247 0.192 -0.112 -1.286 0.201 In above table in order to determine the importance of the predictor (profitability) we look at the value of standardized coefficients of profitability that is -0.112 indicating that it does not contribute more to the model which is also shown by the significance value of the F statistics which is higher than 0.05. While our results are not consistent with the earlier studies regarding determinants of capital structure carried in Pakistan by Hijazi and Yasir (2006) and Shah and Hijazi (2005). Therefore on the basis of Pearson correlation and R square (the coefficient of determination) we reject our null hypothesis that there is significant negative relationship between profitability and leverage of a firm. Our results are not in contrast with the pecking order theory as we expected. Our results are consistent with Frank and Goyal (2003) who found out that t he pecking order hypothesis proved significant for larger US firms rather then for smaller firms. Rajan and Zingles (1995) also showed mixed results. In their research Pecking Order hypothesis proved significant for USA, Canada and Japan while insignificant for other countries. On the other hand an earlier study conducted by Shah and Tahir (2004) regarding the determinants of capital structure of stock exchange-listed non-financial firms in Pakistan, such sort of model proved significant. Moreover, another study conducted by Benito (2002) in UKà ¢Ã¢â€š ¬Ã¢â€ž ¢s environment regarding capital structure decisions of firm also favored the pecking order model. Chapter-5 Conclusion In this study we analyzed a sample of 22 firms of Fuel and Energy sector which are listed on the Karachi Stock Exchange and having complete data for six years from 2003-2008. So we analyzed 132 firm yearsà ¢Ã¢â€š ¬Ã¢â€ž ¢ data to test pecking order theory hypothesis that there is significant negative relationship between profitability and leverage of a firm. But unfortunately our model becomes insignificant in the Pakistanà ¢Ã¢â€š ¬Ã¢â€ž ¢s Energy and fuel sectorà ¢Ã¢â€š ¬Ã¢â€ž ¢s environment. Our results are consistent with Frank and Goyal (2003) who found out that the pecking order hypothesis proved significant for larger US firms rather then for smaller firms. Rajan and Zingles (1995) also showed mixed results. In their research Pecking Order hypothesis proved significant for USA, Canada and Japan while insignificant for other countries. On the other hand an earlier study conducted by Shah and Tahir (2004) regarding the determinants of capital structure of stock exchange-l isted non-financial firms in Pakistan, such sort of model proved significant. Moreover, another study conducted by Benito (2002) in UKà ¢Ã¢â€š ¬Ã¢â€ž ¢s environment regarding capital structure decisions of firm also favored the pecking order model. The results found in our study were not as expected. The results showed that there is inverse relationship between profitability and leverage but our results were not that much significant to accept our hypothesis. So we rejected our pecking order theory hypothesis. Our results while proving insignificant for Pecking order theory, intend to the fact that the firms in our sample have lower probability of bankruptcy and therefore have a higher capacity for debt. It is also consistent with the fact suggested by Jenson (1986) that the managers being the agents can be restricted through the debt from generating large amounts of free cash flows. Thus, Pecking order hypothesis has proved insignificant in Energy and fuel sector of Pakis tan because of some macroeconomic variables as economic growth of the country, rising prices of oil all around the world, interests rates and reliance of firmà ¢Ã¢â€š ¬Ã¢â€ž ¢s financing needs mostly on bank financing. As in the earlier years undertaken in our study Pakistanà ¢Ã¢â€š ¬Ã¢â€ž ¢s economy had been growing at an average rate of over 7.6 percent per annum over the last three years from 2004 to 2007 and the government was making efforts to sustain the momentum going forward. Knowing well that there exists strong relationship between economic growth and energy demand government is making efforts to address the challenges of rising energy demand. These include, import of piped natural gas from Iran and Turkmenistan, import of LNG; increase in oil and gas exploration in the country; utilizing 175 billion tones of Thar coal reserves; setting up of new nuclear power plants; exploiting the affordable alternate energy resources and overhauling existing power generation pla nts to enhance their capacity generation.(Economic Survey 2006-2007) Such economic growth resulted in the increase in total liabilities of Energy and Fuel firms specially because of taking debt to meet their operationà ¢Ã¢â€š ¬Ã¢â€ž ¢s requirement in order to meet surge in energy demand. According to pecking order theory firms having higher profits will not prefer to take debt at first instance. But our data and results showed no relationship between profitability and leverage. While in the start of 2008 international oil prices fluctuated widely which results in leaving all vulnerable oil importing countries like Pakistan in stress. The volatile energy picture has not only made dents in major macroeconomic variables namely budget deficit, current account balance, inflation, exchange rate and foreign exchange reserves but also eroded the purchasing power of poor on back of the rising prices of petroleum products. The world has also been facing the challenge of internationa l financial crises, thus making way for wide spread recession which ultimately impact negatively on such economies which significantly impact on international market for growth efforts. Pakistan has experienced a slow down in all economic activities as a result of international financial crises and demand contraction policies of government. The major impact has been experienced in the industrial sector. Energy consumption being the integral part of all the economic activities declined as result of economic slow down. Energy in its all forms has declined or at least remained stagnant during the year 2008-09.the most prominent has been the large scale manufacturing sector which due to its negative growth of 7.7 % experienced decline in energy consumption. Interestingly poor and un-interrupted power supply on back of circular debt problem has been singled out as one of the prime reason for dismal performance. (Economic Survey 2008-09) One more reason why pecking order hypothesis has been rejected in Energy and Fuel sector of Pakistan is that firms in our sample are mostly financed by the banks as compared to the market financing. One of the main differences between market financing and bank financing is that banks while mitigating their risk monitor the firms on continuous periods and charging higher interest rates than the market financing by financial markets. Moreover, Pecking Order Theory has been proved more valid in market financed firms rather than the bank financed firms. Therefore we conclude that because of certain factors such as economic situation of the Pakistan, rising prices of oil all around the world, interests rates and reliance of firmà ¢Ã¢â€š ¬Ã¢â€ž ¢s financing needs mostly on bank financing, pecking order theory model becomes insignificant in the Energy and Fuel sector of Pakistan.

Managing for Social Responsibility L’oreal - 1737 Words

Managing for Social Responsibility: L’Oreal L’Oreal is listed as one of the Top 50 Socially Responsible Corporations, according to Mecleans.Ca in June 2010 (Top 50 Socially Responsible Corporation). The article listed companies like HP, Honda and McDonalds, which all have demonstrated their commitment to being socially responsible. L’Oreal is committed to an eco-responsible business model and is respectful of their social and environmental responsibilities. L’Oreal has demonstrated that they dedicated to being social responsible, by supporting HIV/AIDS awareness, creating safe and environmentally friendly factories and their continual commitment to making efforts to â€Å"go green† has led to the production of environmentally safe product.†¦show more content†¦Organizations need to find ways to share their knowledge with similar companies and unite to make a healthy environment for future generations. L’Oreal’s products are k nown as among the safest beauty care products available on the market, including makeup, perfume, hair and skin care. According to L’Oreal’s website, â€Å"a high percentage of ingredients used by the company are from vegetable origin. Around 40% of ingredients are sourced from renewable plants.† (L OREAL s Commitment to Green and Sustainable Chemistry). Plants are generally considered renewable resource as they can be continually reproduced and regenerate relatively quickly. Companies using renewable plants benefit from having a large stock of resources at a relatively low cost which both protect the environment and allows them to provide considerable savings. Additional to them using renewable plants and vegetables products, they have committed to ending animal testing in their cosmetics by using alternative methods such as tissue engineering, vitro testing and development of predictive methods. Episkin, a subsidiary of L’Oreal has been working to devel op reconstructed human skin to better understand its biological behavior and tolerance to ingredients. In their continuing efforts Episkin acquired SkinEthic, leader in Tissue Engineering, to develop and research alternatives to animal testing. In 2007, SkinEthic with Episkin has developed 5-in-vitro tests this is, according to ECVAM (European CentreShow MoreRelatedL Oreal : The World s Largest Cosmetics And Beauty Company2695 Words   |  11 PagesBrand/Organisation: L’Orà ©al Student Name: Kerry Lynne Thompson Student Number: 130285308 Module Code: MKT1002 Degree Programme: BA Hons Marketing and Managementâ€Æ' Introduction to L’Orà ©al. L Orà ©al is the world s largest cosmetics and beauty company and has been the market leader since 2001. They market 18 brands and are divided into four categories - consumer products, professional products, luxury products, active cosmetics. They operate in many varied distribution circuits in over 130 countries (L’Orà ©al, n.d)Read MoreLoreal Market Entry Strategy India China5215 Words   |  21 PagesReach Of L’Oreal 5 4. The Business 5 5. The Product Categories 5 5.1. Consumer products 5 5.2. Professional products 6 5.3. Luxury products 6 5.4. Active cosmetics 6 6. Corporate Strategies 7 6.1. The Strategist 7 6.2. Initial Strategy 7 6.3. Mergers and Acquisitions 7 6.4. Cross-fertilization: 8 6.5. New Geographic Areas 9 6.6. Research and Development 9 6.7. Entering New Business 10 6.8. Exploring New Opportunities 10 7. Corporate Social ResponsibilityRead MoreMarketing Strategies L’oreal3647 Words   |  15 PagesChallenges L’Oreal is challenged on how the company can still keep its place as a leader in the cosmetics world, which is synonymous with beauty, innovation, and scientific excellence in more than 100 countries (Message from the Vice Chairman, 2013). 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The Climate for Change Summary Free Essays

The Climate for Change Summary In the November 9, 2008 edition New York Times, an article titled â€Å"The Climate for Change† as a follow up to Al Gore’s speech where he challenged the United States to end its reliance on petroleum based fuels and to generate 100 percent of its electricity from renewable sources within ten years. He gave a five part plan to repower America and to achieve his challenge. Al Gore stated that the new president and the new Congress should offer large-scale investments in incentives for the construction of concentrates solar thermal plants in places that could produce large amounts of electricity. We will write a custom essay sample on The Climate for Change Summary or any similar topic only for you Order Now He says we should then begin the planning and construction of a unified national smart grid for the transport of renewable electricity. Third, the government should help America’s automobile industry to convert quickly to plug in hybrids that can run on renewable energy. Fourth, we should embark on a nationwide effort to retrofit buildings with better insulation and energy efficient windows and lighting. Lastly, the United States should lead the way by putting a price on carbon in the US to help reduce global warming pollution coming from us. Al Gore was the forty-fifth vice-president of the United States and was an environmental activist. He won a Nobel Peace Prize in 2007 in recognition for his work. He also won an Oscar for his documentary on the environment that year. In 2006 he founded The Alliance for Climate Protection and has written several books since then. How to cite The Climate for Change Summary, Papers

Relationship Management for Loyalty Card Scheme- myassignmenthelp

Question: Discuss about theRelationship Management for Loyalty Card Scheme. Answer: Consistency of a well-managed business depends on loyal customers. Market fluctuation may dramatically depends on the flow of customers thus maintaining the supply-demand chain. Though market fluctuation may be inevitable, it may depend on increasing and decreasing of market quotation. This can mainly be done by providing quality goods and services to the customers at a fair price. There are different ways to reward these loyal customers for their good deeds. Some of them include the following; Offer cumulative discount on selected lines- The management should offer privilege to its esteemed customers as a way of encouragement. Investors may generally consider the customers taste by reduction of quantity prices as well credit some discounts to promote the flow of low quality goods. Price reduction offered to customers constitute to increase the quantity of discount over a given period of time depending on the volume of goods in the market. In that way the supply-demand chain will be met as well as maintaining the customers taste and preference. (Garnefeld, Eggert, Helm, Tax, 2013). Giving away free items for multiple purchases can also apply, for example, buy three get one free. Create a loyalty card scheme-Mostly this tend to be plastic swipe card which is used to store customers points whenever they shop. A time comes when they can purchase goods by the use of the points available in their card and save their cash (Kuester, Benkenstein, 2014) .Through this act the customers are rewarded and value the shopping place compared to others without this favor. Partnership of business cartels-Business partnership associations controls the price or supply of commodities in the market. The monopoly exercised by single investors will cease thus promoting oligopoly in the market. There are some businesses that offer discounts in favor of other business. For instance, when u meet a certain climax when making a call on a given network platform u definitely receive a bonus as a part of promotion. (Kumar, Petersen, Leone, 2010). Celebrate your customers-An investor may surprisingly play some jovial tactics to reward and delight the customers as a way of thanksgiving. For instance one can invite customers to promotion of some goods for free, when launching a new offer let them be the first to purchase, take your best customers for a day out or launch a social platform and invite your customers online. The recognition will go a long way towards encouraging other customers who love your business to get more involved in your success as well. Ask for customer feedback-Most people feel appreciated when requested to give their suggestion towards a certain product that the business provide to customers. This suggestion will aid in changing the status quo depending on the market developing policies. The feedback can be given through dialogue, questionnaire or conducting surveillance. Steady development of technology has led to discovery of new mechanics of changing our status quo. This extensive measures has led to improvement of new products in the market sectors creating loopholes for new businesses. Frequent advertisement and online social developments has led to quick recognition of daily emerging products. Customers meet this product even through referrals from the market investors or even from others sources who recognize the products as well. Some of the ways of collecting effective referrals include the following; Recognize and appreciate source of referrals-A business owner should express appreciation to the sources of referrals by either emailing them, through phone calls, or even writing a note of appreciation to them. They become delighted for being appreciated and as they confess to their friends they refer them too. Recognition of products and services found in the market;-One should ensure that the source referrals are well conversant with the products and services they offer, so that they can have enough knowledge to refer other customers (Shi, Prentice, He, 2014). They can refer to people within the business area or others that they know regardless of their residence. Implement programs that promote sources of referrals;-Investors should create a social platform on website and or advertisement channels that will create a link to the source of referrals. For example, creating a link on website and add all the friends of one of the referrals will be able to see the comments sent to them. Encouraging comments will attract more customers. This is one of the methods that reaches many people (Van Doorn, Lemon, Mittal, Nass, Pick, Pirner, Verhoef, 2010).The referrals will also be submitting their comments in the same page.one should be remarkable as they recommend the clients about the business. The clients who have referred new customers should be rewarded so that the rest can work towards the same. References Berman, B., 2016. Referral marketing: Harnessing the power of your customers. Business Horizons, 59(1), pp.19-28. Garnefeld, I., Eggert, A., Helm, S.V. and Tax, S.S., 2013. Growing existing customers' revenue streams through customer referral programs. Journal of Marketing, 77(4), pp.17-32. Kuester, M. and Benkenstein, M., 2014. Turning dissatisfied into satisfied customers: How referral reward programs affect the referrer? s attitude and loyalty toward the recommended service provider. Journal of Retailing and Consumer Services, 21(6), pp.897-904. Kumar, V., Petersen, J.A. and Leone, R.P., 2010. Driving profitability by encouraging customer referrals: who, when, and how. Journal of Marketing, 74(5), pp.1-17. Shi, Y., Prentice, C. and He, W., 2014. Linking service quality, customer satisfaction and loyalty in casinos, does membership matter?. International Journal of Hospitality Management, 40, pp.81-91. Van Doorn, J., Lemon, K.N., Mittal, V., Nass, S., Pick, D., Pirner, P. and Verhoef, P.C., 2010. Customer engagement behavior: Theoretical foundations and research directions. Journal of service research, 13(3), pp.253-266.

Mozart Essays - Mozart Family, Wolfgang Amadeus Mozart,

Mozart Yekaterina Todika Wolfgang Amadeus Mozart Wolfgang Amadeus Mozart was baptized in Salzburg Cathedral on the day after his birth as Joannes Chrysostomus Wolfgangus Theophilus. The first and last given names come from his godfather Joannes Theophilus Pergmayr, although Mozart preferred the Latin form of this last name, Amadeus, more often Amade, or the Italiano Amadeo. Whatever the case may be, he rarely-if ever-used Theophilus in his signature. The name Chrysostomus originates from St. John Chrysostom, whose feast falls on the 27th of January. The name Wolfgang was given to him in honor of his maternal grandfather, Wolfgang Nikolaus Pertl. He was the seventh and last child born to musical author, composer and violinist, Leopold Mozart and his wife Anna Maria Pertl. Only Wolfgang and Maria Anna (whose nickname was ?Nannerl') survived infancy. He was born in a house in the Hagenauersches Haus in Salzburg, Austria, on the 27th of January, 1756. The paternal ancestry of the family has been traced back with some degree of certainty to Fndris Motzhart, who lived in the Augsburg area in 1486; the name is first recorded, for a Heinrich Motxhart in Fischach, in 1331, and appears in other villages south-west of Augsburg, notably Heimberg, from 14th century. The surname was spelled in variety of forms, including Moxarth, Mozhrd and Mozer. His mother's family came mainly from the Salzburg region, but one branch may be traced to Krems-Stein and Wien. They mostly followed lower middle-class occupations; some were gardeners. 2 Though Mozart did not walk until he was three years old, he displayed musical gifts at extremely early age. At the age of four, he could reproduce on the piano a melody played to him; at five, he could play violin with perfect intonation. According to Norbert Elias, it took all of thirty minutes for Mozart to master his first musical composition. The work , a scherzo by Georg Christoph Wagenseiil, had been copied by his father into Nannerl's notebook. Below it Leopold jotted: ?This piece was learned by Walfgangerl on 24 January 1791, 3 days before his 5th birthday, between 9 and 9:30 in the evening?. (68) Mozart and his sister never attended school because their father dedicatedly and instructed them at home. Besides music, he taught them German, Italian, Latin, history science, mathematics and law. According to Ruth Halliwell, recognizing his children's special abilities, Leopold began to devote extra effort to their education-with an emphasis on musical instruction. He became a loving, but exacting, taskmaster. Some time later, he would somewhat ruefully describe to correspondent how from a very early age Nannerl and Wolfgang had learned to wear the ?iron shirt? of discipline. The children themselves probably never relaxed that life could be any different. Wolfgang, no doubt, enjoyed the extra attention and found great pleasure in learning-and in pleasing his father. It was the start of relationship that he would never quite break free of, and the beginning of a career that would consume him altogether.(38} When the six-year-old Wolfgang had provided his extraordinary talents at the keyboard, Leopold was keen to exhibit those talents along with those of his gifted pianists' daughter, Nannerl. Thus Leopold undertook a four month tour to Vienna and the 3 surrounding area, visiting every noble house and palace he could find, taking the entire family with him. Mozart's first know public appearance was at Salzburg University in September of 1761, when he took part in theatrical performance with music by Eberlin. Like other parents of this time, Leopold Mozart saw nothing wrong in exhibiting, or in exploiting, his son's God-given genius for music. He took Walfgang and Nannerl to Munchen, for about three weeks from January 12th, 1762, where they played the harpsichord before the Elector of Bavaria. No documentation survived for that journey. Later ones are better served-Leopold was a prolific correspondent and also kept travel diaries. The next started on September 18th, 1762, when the entire family set off for Wein; they paused at Passau and Linz where the young Wolfgang gave his firs public recital at The Trinity Inn, Linz, on October 1st, 1762. Soon afterwards, he amazed the Empress at Schonbrunn Castel and all her royal guests with fa scinating keyboard tricks; playing with the keys covered with a cloth, with his

buy custom Home Schooling essay

buy custom Home Schooling essay Introduction Home Schooling concerns the teaching of children at home rather than sending them to government or private schools. Home Schooling practices are common at many places in USA and children grow in a different learning environment. Home Schooling is an alternative way of teaching in rural locations. Home schooling does not develop childrens psychological and intellectual powers as compared to those children at private or public schools. Home schooling has advantage in somewhat ways but their drawbacks are greater than its disadvantages. States need to enact and implement the laws to ask the parents to send their children to private or public schools. When people come to know about Home Schooling, they think it is not good for the children. They argue that Home schooling does not provide the opportunities to children to develop their future, remaining at home is subject to the notion of parents as they get their education at home. These things become the threat for the children who get home schooling. In state of California this myth has threaten the children. It is highly emphasized to enforce the law that deals with children schooling only by state-certified teachers. If this law is fully implemented in state of California, 166000 may get education from the state oned schools. This practice will convince the people living in other states to follow this model. In this way rapid increase in home schooling can be lessened. More than 1 million students can call it a revolution to educate the students in state owned schools. Home schooling does not meet the requirements of children to become the high skilled in practical life. However test results presented the different figures which are not accepted by critics of Home schooling. Secondly Children get normal to average marks in underground programs as stated in wall street journal in 2000. Thirdly those who are taught at home did not become so social as compared to their traditional educated peers. It is highly recommended to check the psychological, physical, Intellectual and educational status of those children who get home schooling. People have lack of knowledge about the home schooling. Childrens needs and interest can determine the level of education. Parents at home put their efforts to teach their children, giving time and space to their children to know its rhythms. Home schooling does not have the time limits as school days starts when the children woke up and ends when they go to sleep. Parents show freedom to their children in Home schooling . Mothers use to teach their children at home and children get good scorre in their future education. Those who argue that certified teachers must teach the children at homes do not affect the students achievements. Public and private schools education is costly these days as compared to home schooling which does not require a great deal of amount. Parents do not notify exactly about the number of children who are home schooled. Parents neglect their children to educate properly. Firstly the state laws must ask all the parents to educate their children at private or public schools. If parents fail to do so they must inform the controlling authority about the status of family. Government agencies must give exact number of home schooled children and manage their education expenses. This will enhance the number of children at state owned schools. Government must also notice the religious trends of children as their parents argue in favor of the religious education the cause of home schooling. Conclusion It can be concluded that parents face the problems to teach their state owned schools. Advantages and disadvantages of Home schooling have been investigated in this paper. Finally governments regulation policy about the Home schooling is given to explore the advantages of education at state-owned schools. Buy custom Home Schooling essay

Mgmt3010 Essay Example | Topics and Well Written Essays - 1250 words

Mgmt3010 - Essay Example 2. Staffing strategy is a term used to denote the long-term plan which provides direction to the organization regarding the staffing issue; the strategy focuses on the supply and demand of the staffing issue with the objective of ensuring that the organization is able to meet the demands of the required workforce. While staffing strategy is created for the longer run, staffing plans are created for the short run and these plans address staffing issues in the short run, the issues addressed are the shortage and surplus of staff members in the short run (Bechet 17). 3. There are two staffing levels, the deficit level, in which the number of staff members required and the kind of skills and abilities required by a company are not available to the company, the second level is staffing surplus when the number of required staff members is higher than the required number and the skills and abilities required are even in compliance with the desired skills and abilities required by the organization (Bechet 79). Staffing level can be determined in a quantitative manner in which emphasis is on the head count and the qualitative manner in which the emphasis is on desired skills and abilities. An organization achieves right staffing levels when their staff members have the desired skills and abilities and the headcount is equal or more than the desired amount of staff members. 4. Uncontrollable actions that arise while an organization develops its staffing model include voluntary turnover, retirement and losses caused as a result of employees taking planned leaves (Bechet 50). Voluntary turnover takes place when employees leave the organization out of their own will, retirements take place when employees reach a certain age and the organization no longer needs them and losses arise because the employee takes leave from the organization due

American Family Culture Term Paper Example | Topics and Well Written Essays - 750 words

American Family Culture - Term Paper Example There are a multitude of family forms and family types in America today and family is a social unit in a constant state of evolution. We will explore the different family configurations found in the United States today and will pepper our analysis with comparisons of American family forms to modern Mexican families, the other half of our analysis. The ‘traditional’ American family is a heterosexual, nuclear family headed by two parents in which the husband is the primary breadwinner and the wife is the homemaker. On the far left side of the continuum of change, the traditional nuclear family model is widespread across the globe and represents a traditional gendered division of labour, both within the house as well as outside of the home. Mexico families generally also meet the requirements for what can be described as a traditional family which traditional gender expectations and values. In the Western world, the traditional model is becoming less and less viable as many families require the incomes of both parents. Women’s increased education and employment prospects have made the transition from the traditional model to the modern familial model more and more prevalent in modern Western society (Bossen 128-133; Roopnarine & Gielen 32-34). As with the traditional family, the ‘modern American family’ is nuclear in the sense that it involves the cohabitation of two heterosexual partners but differs in that it involves dual earners as both the man and the woman work outside of the home to earn money. While both husband and wife work outside of the home in paid labor, it is important to note that the gendered division of labour within the home of the modern family has not necessarily changed. Women, within the modern family, still bear the brunt of housekeeping, child rearing and basic familial chores. This form of family life is found throughout the United States and has evolved in response to women’s

Summary of reading Essay Example | Topics and Well Written Essays - 1000 words

Summary of reading - Essay Example Whereas traditional marriage gets support from majority of the people, whether other forms like Gay and Homosexual marriages deserve discrimination and should be deprived of their fundamental right to marry and beget children as per the procedure they choose? Dent, though a strong supporter of the traditional marriage acknowledges their fundamental right and freedom to choose their life-partner and above all the freedom to love the individual of their choice. If one is to summarize the article in a few sentences, this is an important observation by George Dent. He argues, â€Å"If the government treats traditional marriage as the norm, citizens are also more likely to view it that way than they would if government treats traditional marriage as but one of many equally valid choices" (p. 421). Deviation from the joint family and nuclear family has socially turned out to be disastrous all over the world, particularly in America. That the divorce rate has crossed 50% is the grim indication and the worst scenario that has engulfed the American society. At the same time, there is a section of the society and the leadership that favors gay marriages. Historically the same sex marriages have been resented and they think it is a "caricature of the real thing...an insult to a relationship that they consider to have a sacred as well as a legal dimension" (p. 425). What is the ground reality related to such marriages? Homosexual couples will not b e able to procreate, and they cannot have the marriage ceremonies performed as per cultural and traditional standards, it is at the most a social or a club event. With no emotional commitment, the agenda behind such marriages is to get some financial benefits. But the paradox is they can have the benefits through other fair alternatives. One of the prime objectives of the institution of marriage is to beget children. That is not possible for the homosexual

Arguments for Regulating Financial Reporting

Arguments for Regulating Financial Reporting Acoording to Leuz and Verrecchia (2000) the accounting literature presents proof that the quality of accounting has economic consequences for e.g. costs of capital , efficiency of capital assignment (Bushman et al. 2006)etc. Land and Lang (2002) in their research mentioned that economic changes also have homogeneous consequences by stating that the quality of accounting has improved globally since 1990s. Land and Lang (2002) also say that the reason for the advancement in the quality of accounting is primarily due to globalisation and visualization of international accounting consensus. The argument proposed by the accounting theory is that the main aim of financial reporting is to reduce information asymmetry between managers and owners and other stakeholders contracting with the company (Watts, 1977; Ball, 2001). Favouring this notion Frankel and Li (2004) states that financial reporting decreases information asymmetry by disclosing relevant and timely information. Standard setting is a form of regulation which lays down generally accepted accounting principles (GAAP) (Scott, 2003, p. 9). Also accounting standards for listed companies in the European Union are promulgated by the International Accounting Standards Board (IASB). This report answers this question that whether or not we need this kind of regulation of financial reporting. What is Financial Reporting? To answer the report question, firstly, there is a need to answer the questions like what is financial reporting, who are the users of financial reports and how is financial reporting regulated and what are the bodies responsible for regulating the financial reporting. By answering these questions a better understanding of financial reporting will be achieved and which will ultimately aid in answering the report questions. Financial reporting enables an organization to communicate information about its performance externally (Atrill et al. 2005). So, financial reports provide summarized information about an organizations transactions over a specific time period to external decision makers. (e.g. Investors). The users of financial reports are employees, trade unions, government, creditors, lenders, customers, shareholders and investment analyst (Elloit et al. 2006). The needs of these various users of financial reports can be completely different. However, the main emphasis is put on the most usable statements like balance sheet, income statement and cash flow statement. The Accounting standard boards (ASB) which is responsible for setting and issuing accounting standards, the ASB is part of a broader structure including the Financial Reporting Council, the review panel and the Urgent Issues Task Force (UITF). The Financial reporting Council (FRC) is the body charged with the broad overview of the standard setting system. Although the FRC oversees the process of producing accounting standards, it has no input into the detailed rules. Conversely the principle sources of such regulation are The Law and the Accountancy Profession. The Law consists of certain Acts. Much of the legislation governing the UKs preparation of accounts is personified in the companies Act 1985 and companies Act 1989. They are mainly concerned with the accounts of limited liability companies. These Acts state that all financial statements constructed under the Act must present a true and fair view. The Act also deals mainly with minimum disclosure requirements and is foremost concerned with the protection of shareholders and creditors. It provides a framework for general disclosure by requiring that certain financial statements such as the profit and loss accounts and the balance sheet, should be prepared and presented to the shareholders and requires the specific disclosure of certain items such as depreciation and so on. These disclosure requirements resolve some of the problems associated with the asymmetry of information between the directors and some user groups. They also enable user groups to compare the level of their inducemen ts with those received by the other groups. The Act also requires that the directors not only present the financial statements to the shareholders each year but also that independent auditors are appointed to examine the financial statements and report their findings to the shareholders. The law addresses the problem of information asymmetry by requiring the disclosure of certain key items of interest to user groups. The Accountancy Profession also recommend the same but in this role as regulator. The accountancy profession is more influential in achieving a significant increase in the comparability of financial statements. Whereas the law provides the general framework for what is to be accounted for in the financial reports, the accountancy profession provides detailed rules in the form of accounting standards about how items and transactions should be accounted for. The two main regulatory bodies of financial reporting are The Law and the Accounting Profession with the Accounting Standards Board usually known as ASB (Elliot et al. 2008). In UK, most of the legislation related to the publishing of accounts is embodied in the Companies Act 1985 and 1989. The Companies Act 1989 is the main frame which the companies and accountants have to follow. All the financial statement drawn up under the act 1989 must present a true and fair view and its function is to protect all the users of the financial reports and statements. The second and the most important regulatory body is the accounting profession. The standard setters should be aware of the information needed by all users of financial reports and should know the impact and the outcome of a different accounting method on the needs of those users. The standard setters should also be able to resolve the conflicts which exist between the needs of different users. So, they have to find an alternative wa y which best satisfy user needs and this could be achieved by choosing the improvement of the social welfare instead of welfare of individuals. We know that Accounting Standards Board is the main accounting standard setter. Because the ASB is composed of professional accountants, they may be unfamiliar with the user needs. So , when there is a need for a change in accounting standard the ASB prepare and publish a draft standard called the FRED (Financial Reporting Exposure Draft). After the publishing of these drafts the comments from the public is invited and in the light of these comments the FRED is changed (or unchanged). Now the FREDs are issued as FRS (Financial Reporting Standard). The main disadvantage of this system is the ASB members are unfamiliar with the different user needs and the comments from the general public may not be equally represented. There are four things that standards in financial reporting supply people using it. The first one is Comparability; financial statements must allow people to compare one company with another one and evaluate the managements performance without spending time and money adjusting them to a common format and common accounting treatments. It is essential that users of financial reports or investment decision makers be supplied with relevant and standard financial reports which have been regulated and hence standardized. The second thing that standards and regulations supply is called Credibility. Because all this standards and regulations exist accountants have to treat every company in the same way. If the accountancy profession permitted companies experiencing similar events to produce financial reports that disclosed markedly different results simply because of a freedom to select different accounting policies they would lose all of their credibility. So, the standards should be compos ed of rigid rules and should not be broken. The third thing is Influence that means, setting up the standards has encouraged a constructive appraisal of the policies being proposed for individual reporting problems and has been a stimulus for the development of a conceptual framework. The last thing that the standards have to supply is discipline. Companies left to their own devises without the need to obey standards will eventually be disciplined by the financial markets. But in the short run investors in such companies may suffer loss. The Financial Reporting Council is aware of the need to impose discipline because most of the company failures in recent years are because of obscure financial reporting. Why should the Accounting Standards set? As we argued before, an important role of the regulations is to increase the comparability of accounts by limiting the choice of alternative accounting methods and to supply standardized accounts. This standardization can be achieved only by uniform accounting practice. If all accounti ng methods were standardized, two organizations which began the year with same balance sheets and which made the same transactions during the year, they would report the same balance sheets and the same profit and loss account at the end of the year. In addition to these advantages of regulations in financial reporting, there are also some more useful functions. Regulations can help to reduce the influence of personal biases and political pressures on accounting judgments. They can increase the level of user confidence in, and understanding of, financial reporting by clarifying the basis on which all accounts are prepared and presented. Finally, they can provide a frame of reference for resolving accounting problems which are not mentioned in legislation or accounting standards. As we argued earlier although the regulations in financial reports have very advantages it has many disadvantages too; One if these disadvantages is the Adverse Allocative Effects, this could occur if the AS B did not take into account of the economic consequences of the new standard or regulation they have issued. For example, additional costs could be imposed on preparers of accounts and suboptimal managerial decisions might be taken to avoid any reduction in earning or net assets. Consensus-seeking can be another disadvantage and this means the issuing of standards that are over-influenced by those with easiest access to the standard-setters. Most of the time this could happen with complex subjects. Standard Overload is composed of a number of statements which creates the most important disadvantages of standards. Some of them are; 1. There is more than one standard-setter body so, as well as it becomes more difficult to follow the new changes, the accountants are becoming so regulated that it becomes very difficult to use his/her accounting profession, to make judgments. 2. There are too many standards and regulations, so in the long run, they restrict the development of accounting profession by discouraging the accountants from experimenting new ways of recording transactions. 3. Some points are too detailed and some of them are not sufficiently detailed so, makes it hard to obey. 4. Standards are for general-purpose and sometimes they fail to respond to users and the firms needs. For example, a company which wants to attract investment finance can not make the necessary judgment of how much information is necessary and what form it need take so, it couldnt take the actions necessary to attract investors and may bankrupt. Some of the standards are lack of a conceptual framework this means they havent got a clear defensible logic and the rules tend to be rather arbitrary. This causes the standards to lose its credibility and acceptability.

Essay --

Sporadic surveys during the past 25 years (Mekete and Van den Berg, 2003) indicated that several plant- parasitic nematode genera and species were associated with various crops in different areas of Ethiopia. Ac- cording to Abebe and Geraert (1995), taxonomic stud- ies of plant-parasitic nematodes in Ethiopia are almost non-existent. These authors described four known and one new species. Recently, Mekete et al. (2008) reported the presence of various species of plant-parasitic nema- todes associated with coffee from Ethiopia and gave short descriptions and light microscope photos of Scutellonema paralabiatum Siddiqi et Sharma, 1994, and Rotylenchus unisexus Sher, 1965. During 2002, an ex- tensive survey was undertaken in Ethiopia. Eight species of various nematode genera were found of which short notes are given. Four species, Rotylenchulus borealis, S. brachyurus, S. clathricaudatum and S. mag- niphasmum are new records for Ethiopia. The survey was conducted during the June-Septem- ber 2002 cropping season. Two hundred samples were collected from different agro-ecological zones through- out the southern, western and southwestern regions of the country (Fig. 1). Samples were taken at a depth of 25-30 cm with a spade around the roots of the plants. Three to five soil cores were taken at each sampling site, bulked and a sample of approximately 1 kg was taken to the laboratory for extraction of the nematodes. Nema- todes were extracted from 200 g soil sub-samples by combining the Cobb’s sieving and decanting method with a modified Baermann’s funnel method (Hooper, 1985a). Nematode specimens were then killed... ... with all the previous descriptions of the species (Sher, 1964; Van den Berg and Heyns, 1973). Scutellonema clathricaudatum Whitehead, 1959. A few specimens of this species were found associated with Acacia sp. at Wendo Genet and maize at Shoboka (Jimma). This species was originally described from cot- ton in Tanzania (Whitehead, 1959) and subsequently re- ported from various other African countries viz. Cameroon, Ivory Coast, Kenya, Mali, Mozambique, Niger, Nigeria, Senegal, Sierra Leone, South Africa, Su- dan, Uganda and Zaà ¯re (Whitehead, 1959; Sher, 1964). It has also been identified from Ghana, Guinea-Bissau, Malawi and Zambia by the first author, but this is the first report for Ethiopia. Our specimens correspond well with the original as well as subsequent descriptions of the species (Whitehead, 1959; Sher, 1964). 212

Information Systems Security Survey Essay

The University of Nebraska Medical Center (UNMC) is an institution that was built back in the 19th century. UNMC’s mission is to improve the health of Nebraska through premier educational programs, innovative research, the highest quality patient care, and outreach to underserved populations (UNMC, 2004). As an institution with key interest to privacy of its students, staff and subordinate staff, UNMC has adopted various policy guidelines to ensure information security system. The Information Security Management Plan (ISMP) describes its safeguards to protect confidential information. These safeguards are meant among another reason to: Ensure the confidentiality of data Ensure the integrity of data Ensure the availability of data Protect against anticipated threats or hazards to the security or integrity of the information UNMC has adopted information security industry best practices to implement its information security system (UNMC, 2014). They have become so effective that during 2011, a Hitrust Gap assessment was performed, and no significant gaps were found within its security program. The worksheet below outlines how these programs have been rolled out by different offices in the university. Worksheet: Information Security Program Survey Security Area Responsible Party / Office of Primary Responsibility Known Vulnerabilities / Risks Countermeasures / Risk Mitigation Strategy Acquisition (systems/services) Information Security Office Breach of the confidentiality clause All service providers must undergo an evaluation process to verify they are qualified. Contracts have a confidentiality clause whose breach terminates the contract. Asset management System Administrator Poor asset management Proper policies and procedure in place  to ensure effective asset management. Evaluation to ascertain the qualifications of asset managers. Audit and accountability Information Security Office Dishonest employees disclosing confidential information to third parties Every application contains a log that must be maintained to meet regulatory requirement. There is Information security Incident Response plan to handle any notable strange events. Authentication and authorization System Administrator Covered data may be transferred to third parties without authorization Employees are provided with user name and password to access the data. Employees are trained on developing a secure password. There are control policies in place governing access to this information. Business continuity Information Security Office Non-coordination and miscommunication between employees All employees are supposed to keep contact information of co-workers and supervisors to seek for help in case of any emergency. Compliance management Compliance Officer the Information Security Officer Employees failure to comply with the set guidelines, policies and procedure There is a compliance form that is filled before a major project is undertaken by the enterprise. The form is to ensure that no new risk is introduced to the enterprise. Configuration control System Administrator Compromised system security Every configuration must have a password. Each password must have at least ten characters. The password must be encrypted at all times. Data System Administrator Data may be intercepted during transmission Database with security keys is available to authorized employees only. Access to classified data is allowed to limited employees. Information security plan ensures security of covered data. Hardware System Administrator Destruction of hardware in disaster Only employees with technical know-how of operating hardware are allowed to use them. The hardware are encrypted for security purposes. Hardware backup system. Identity management Information Security Office Unauthorized covered data and information transfer through third parties Identity Management Program (IDM) outlines procedure for issuing credentials based on the NIST guidance. Checks are done on employees prior to their employment. Incident management Command Centre Incident Response Team Physical loss of data in a disaster An Incident Reporting and Response Plan is in place to report and respond to any  identified risk. Availability of a well-trained incident response team. Command Centre is established to manage emergency. Maintenance procedures Change Advisory Board (CAB) Existing patches within the security system A release process is in place to ensure that the changes do not affect non-primary system. Patching policies for workstations to ensure security. Media protection and destruction Information Security Office Unauthorized access covered data as well as information Data storage policies define how data stored in the media is to be protected. Data is only stored in a secured data centre or encrypted medium. Network System Administrator Unauthorized access to the network Network traffic is controlled by Cisco enterprise-class firewall where inbound connects are only allowed to DMZ. Internal trusted network is provided via an encrypted VPN tunnel. Technical perimeter is established to bar direct access from the internet to the Internal Trusted Area. Planning Information Security Office Poor planning that compromise management of the security system Contingency plan is in place to handle any eventuality. Employees are encouraged to store data on network file servers for backup. All backups are surely stored and marked for easy identification during emergencies. Personnel System Administrator Loss of data integrity Employees are only employed after exhibiting minimum security requirement. Information Security Addendum are to be signed for confidentiality purposes. An insider who ensures that all legal requirements are followed before access is granted must accompany outsiders accessing information. Physical environment System Administrator Physical safety of the environment may be compromised through attacks and burglary No unauthorized personal is allowed within the data centre premises. The data centers are controlled by keycard access. Policy Information Security Plan Coordinator Policies may be misinterpreted by the employee The University’s security policy is enshrined in the Privacy, Confidentiality and Security of Patient Proprietary Information Policy and the Computer Use and Electronic Information Security Policy. The two policies require that authorized people can only access this information. The policies are reviewed every two years to make them in tandem with the prevailing circumstances. Operations The Information Security Officer and the Infrastructure Team  Failure for operations to comply with the system security policy An operation must fill a compliance Checklist or a Security Risk Assessment form for review to verify that no new risk is introduced to the enterprise. Outsourcing System Administrator Unauthorized disclosure of security information by third parties Outsourced vendors must comply with UNMC Policy No. 8009, Contract Policy. Vendors accessing classified student information must sign the GLB Act contract addendum. Risk assessments Information Custodian Poor method of risk assessment that may downplay the actual impact of a risk Security assessment I conducted annually. All applications must meet the organizations security policies and procedure. Software System Administrator Software may be infected with a virus Software should not be installed unless the user trusts it. Vendor update and patches must be installed unless directed otherwise. Software license must be retained to get technical assistance. Training System Administrators and Information Custodians Misuse of security system Loss of data integrity Employees are trained on information security system before they are employed. System administrators and information custodians are annually trained on Specific Information Security Policy and Procedure. References UNMC. (March 2014) Strategic Plan 2010-2013. Retrieved from http://www.unmc.edu/wwwdocs/strategic-plan_06-10_v3-brochure1.pdf United States Government Accountability Office. (February 2010). ELECTRONIC PERSONAL HEALTH INFORMATION EXCHANGE: Health Care Entities’ Reported Disclosure Practices and Effects on Quality of Care. Retrieved from http://www.gao.gov/new.items/d10361.pdf UNMC. (February 9, 2004). Information Security Plan. Retrieved from http://www.unmc.edu/its/docs/UNMCInformationSecurityPlan-Sept2010.pdf

Critical Study of Apoptosis and programmed cell death The WritePass Journal

Critical Study of Apoptosis and programmed cell death Introduction Critical Study of Apoptosis and programmed cell death IntroductionReferencesRelated Introduction Apoptosis in the hair follicle is programmed cell death, which occurs at a point during the cell cycle, when a sequence of programmed events causes the cells to be eliminated without the release of waste and harmful substances into the surrounding vicinity. Control of apoptosis is crucial to development of new and recycling of old cells within the body as over stimulation of apoptosis can be fatal, causing extreme tissue damage- examples of which are cancer sufferers. In this review we will discuss evidence from scientific experiments which investigate regulators of apoptosis and what really controls apoptosis in the hair follicle. Apoptosis within the hair follicle cycle is controlled by many molecular processes and elements, of which include cytokines, tumor necrosis factor receptors, bcl-2 family gene products and ICE proteases (Soma et al., 1998). Apoptosis occurs during the catagen stage of follicle cycling which can also be known as the regression stage, and begins with initiation of receptors to their binding sites. This is specifically the binding of receptors that are rich in extracellular cysteine usually needed for binding, and intracellular compartments specific for signalling (Botchkareva et al., 2006). These receptors- also known as death receptors initiate the beginning of apoptosis, signalling via the mitochondrial membrane and setting in motion adapter molecules complementary to their apoptotic receptors (APO1/Fas receptor or tumor necrosis factor receptor- TNFR). Others include tyrosine kinase receptors- such as nerve growth factor (NGF), and p75 receptor- ‘p75NTR signalling is criticall y important for apoptosis in the regressing ORS and, therefore, for its shortening during catagen’ ( Botchkarev et al.,2000). These signals are conveyed into the cell via a cascade of enzymes known as caspases, which subsequently lead to the next stages of apoptosis. Investigations into apoptosis show that ‘physiological and pathological catagen is noticeably characterised by an up-regulation of ICE expression and an apparent inversion of the Bcl-2/Bax ratio in all epithelial follicle regions that undergo involution during catagen.’(Linder et al., 1997) This refers to intracellular and extracellular molecules located around the hair follicle, which show some control of the progression of cell death, when subjected to variation. The investigation proved that apoptosis within follicular keratinocytes in a normal state or diseased state occurred after a significant reduction in the Bcl-2/Bax ratio, which in turn caused activation of ICE proteases and eventually activation of endonucleases (Linder et al., 1997). This indicates that Bcl-2 and Bax ratios to an extent control apoptosis when down regulated, and then cause a domino effect to upregulate ICE proteases known as the caspase family, to eventually cause DNA to be cleaved into small er fragments, cell shrinkage and rounding, breakdown of the cytoskeleton and membrane blebbing. Caspases are the final inducer of apoptosis from physiological or pathological stimulation, and therefore play a major role in control of apoptosis, by remaining as an inactive form when apoptosis is not required, but becoming activated by the down regulation of the Bcl-2/Bax family of receptors, when apoptosis is required to take place. Caspases are mediators of apoptosis, and are defined and separated into two groups. The first group are the ‘instigators’ and begin the cascade, the second group are the ‘terminators’ which are activated by the instigators and cause the activation of other enzymes within the cell.   The caspase family consists of caspase-8, caspase-10 and caspase-3, which act to activate the intrinsic pathway, and to link the extrinsic to the intrinsic pathway by releasing cytochrome c, a process which is primarily controlled by a family of proteins known as the Bcl-2 proteins.   These are expressed in the epithelium, surrounding mesench yme, and follicular papilla of the adult hair follicle throughout the cycle (Stenn et al., 1994). The release of cytochrome c ultimately forms a holoenzyme known as the apotosome, which is formed by the apoptosis initiator enzyme procaspase-9, and its adaptor molecule Apaf-1(Botchkareva et al., 2006). These apoptosomes then cleave and activate the procaspase into caspase-9, which subsequently turns on effector caspase-3. Caspase-3 is a major proteolytic enzyme, with the ability to defragment a wide range of molecules and substrates within the cell. The activation of caspase-3 then leads to the cell fragmentation and phagocytosis stages of hair follicle apoptosis. References nature.com/jid/journal/v126/n2/full/5700007a.html ncbi.nlm.nih.gov/pmc/articles/PMC1858357/pdf/amjpathol00024-0099.pdf http://endo.endojournals.org/cgi/content/full/146/3/1214 fasebj.org/content/14/13/1931.long fasebj.org/content/15/9/1592.full.pdf applepoly.com/studies/Analysis_of_Apoptotic_Cell_Death_in_Human_Hair_Follicles.pdf