Chemalite Case Study free essay sample

1. Record the impacts of Chemalite’s 1991 occasions on the BSE worksheet Cash Flow type (O, I, F) Event Cash A/R 375,000 F P1 (7,500) I P2 (62,500) I P3 (75,000) O P4 230,000 O I F T1 T2 T3 T4 T5. 1 T5. 2 T6 T7. 1 T7. 2 O1 O2 O3 O4 O5 Total (23,750) 685,000 69,500 (175,000) (22,500) (350,000) (80,000) (150,000) 50,000 (50,750) Inventory 75,000 Patent Cap. Exp. PPE 125,000 7,500 62,500 125,000 7,500 Notes Pay 62,500 Paid in Capital RE 500,000 Balance Sheet 175,000 (22,500) Adv. Cost 350,000 (80,000) Admin Expenses 150,000 F (50,000) O (750) (545,000) (25,000) (10,625) (25,000) (10,625) 69,500 (23,750) RD Expense 754,500 Revenue (545,000) 113,000 RE Explanation 55,000 100,000 7,500 201,875 500,000 Interest Expense Inv. Modification Amort. Cost Depr. Cost 46,875 Balance Sheet 15. 515 Fall 2003 Session 1 Problem Set #2: Chemalite Case 3. Monetary record (6/31/91): Assets Cash Accounts Receivable Inventories Total Current Assets Property, Plant, Equipment Other (Capitalized Start-up Expenses) Patent Total Assets Liabilities and Stockholders Equity Common Stock Retained profit Total Liabilities and SE 230,000 75,000 305,000 62,500 7,500 125,000 500,000 15. 515 Fall 2003 Session 1 Problem Set #2: Chemalite Case 3. Salary Statement (For a half year June 30, 1991): Revenue Costs and Expenses Advertising Administration Manufacturing costs Raw materials RD Interest Depreciation Amortization of patent Net Income 15. We will compose a custom paper test on Chemalite Case Study or on the other hand any comparative point explicitly for you Don't WasteYour Time Recruit WRITER Just 13.90/page 515 Fall 2003 Session 1 Problem Set #2: Chemalite Case 3. Direct Statement of Cash Flows (a half year finished June 30, 1991): Cash gave (utilized) by working exercises Received from clients Paid for stock Paid for promoting Paid for assembling costs Paid for organization Paid for premium Paid for RD costs (75,000) (75,000) Cash gave (utilized) by contributing exercises Start-up costs Purchase of PPE (7,500) (62,500) (70,000) Cash gave (utilized) by financing exercises Cash from stock issuance 375,000 Increase (decline) in real money balance Beginning money balance Ending money balance 230,000 15. 515 Fall 2003 Session 1 Problem Set #2: Chemalite Case 3. Monetary record (December 31, 1991): Assets Cash Accounts Receivable Inventories Total Current Assets Property, Plant, Equipment Other (Capitalized Start-up Expenses) Patent Total Assets Liabilities and Stockholders Equity Regular Stock Retained income Total Liabilities and SE 113,000 69,500 55,000 237,500 201,875 7,500 100,000 546,875 500,000 46,875 546,875 15. 515 Fall 2003 Session 1 Problem Set #2: Chemalite Case 3. Pay Statement (a half year finished December 31, 1991): Revenue Costs and Expenses Advertising Administration Manufacturing costs Raw materials RD Interest Depreciation Amortization of patent 754,500 22,500 80,000 350,000 195,000 23,750 750 10,625 25,000 707,625 Net Income 46,875 15. 515 Fall 2003 Session 1 Problem Set #2: Chemalite Case 3. Direct Statement of Cash Flows (For a half year finished Dec. 31, 1991): Cash gave (utilized) by working exercises Received from clients Paid for stock Paid for promoting Paid for assembling costs Paid for organization Paid for premium Paid for RD costs 685,000 (175,000) (22,500) (350,000) (80,000) (750) (23,750) 33,000 Cash gave (utilized) by contributing exercises Start-up costs Purchase of PPE (150,000) (150,000) Cash gave (utilized) by financing exercises Cash from stock issuance Increase (decline) in real money balance Beginning money balance Ending money balance (117,000) 230,000 113,000 15. 515 Fall 2003 Session 1

Teaching - A Way to Make a Difference :: Education College Admissions Philosophy

Educating - A Way to Make a Difference To me instructing is an approach to have any kind of effect in someone’s life. In the event that it is passionate, information base or physical, we as experts should enable the understudy to be everything they can be. The explanation that I need to turn into an educator is with the goal that I can have any kind of effect. I need to assist understudies with opening numerous ways to their future. I feel that an instructor ought to be the individual that twenty years not far off that we despite everything motivate the understudy. I can't state that I am fundamentally only one of the ways of thinking. I feel that I am a blend of many, of the methods of reasoning. I have confidence in student’s opportunity, utilizing hands on approach, and concentrating on what has occurred in the past to make us study certain things. Educators ought to be nontraditional, yet have conventional qualities. We as experts should continue learning and to make getting the hang of energizing regardless of what reasoning or hypothesis we use. We are there to enhance the students’ life, to make picking up energizing. The study hall will be set up in a manner to make learning pleasant not shocking. I need to have habitats for each sort of student that I have. The release sheets will instructive yet fun learning materials. I feel that a release board ought to have things on it with the goal that it gets the eyes of the understudy. By going into history as an expert I might want to see the understudies to have a wide range of sorts of learning encounters. Understudies would do gathering and individual tasks, so they would figure out how to cooperate and alone. In the study hall, I will set it up with the goal that an understudy can ascend to the sky like an inflatable. With regards to teach in the class the principles and outcomes will be posted and the start of the year. How they are set will be by asking the understudies what they feel the standards ought to be, and what ought to be done on the off chance that they are broken. I feel that on the off chance that they understudies feel they helped make the standards and results they will tail them all the more intently.

How to Take a Break From Work (and Why You Need It)

How to Take a Break From Work (and Why You Need It) Stress Management Management Techniques Print How to Take a Break From Work (and Why You Need It) By Elizabeth Scott, MS twitter Elizabeth Scott, MS, is a wellness coach specializing in stress management and quality of life, and the author of 8 Keys to Stress Management. Learn about our editorial policy Elizabeth Scott, MS Medically reviewed by Medically reviewed by Carly Snyder, MD on November 11, 2019 facebook twitter linkedin Carly Snyder, MD is a reproductive and perinatal psychiatrist who combines traditional psychiatry with integrative medicine-based treatments.   Learn about our Medical Review Board Carly Snyder, MD on November 11, 2019 How Stress Impacts Your Health Overview Signs of Burnout Stress and Weight Gain Benefits of Exercise Stress Reduction Tips Self-Care Practices Mindful Living ULTRA F / Getty Images In This Article Table of Contents Expand Symptoms Benefits of Taking a Break Warning Signs Ideas and Solutions View All We all need to take a break sometimes. Oddly, though, many people leave their vacation time unused.?? Whether you take a vacation, a staycation, or a playcation, its important to take a break from the job, the routine, and the demands of life in order to keep stress levels in check. When we take a break, were not shirking responsibility; were taking care of ourselves so well have the stamina to be our best. Heres why its important to take a break. Symptoms of Chronic Stress Letting stress build up can be unhealthy in several ways. The body is designed to respond to short bursts of stress, but when stress is prolonged and the stress response is triggered repeatedly and on a regular basisâ€"as can happen in a stressful job or a conflict-ridden relationshipâ€"the situation turns into one of chronic stress, where the real health problems set in.?? Those who experience chronic stress are more susceptible to conditions ranging from more frequent headaches and gastrointestinal issues to more serious conditions like high blood pressure, which brings an increased risk of heart disease and stroke. When our allostatic load, or overall level of stress, accumulates to a certain level, stress can just snowball because were constantly in a state of reactivity.?? At this point, even positive events can feel overwhelming if they take energy to enjoy, and were not able to respond from a place of strength and wisdom, but rather from a place of anxiety, or we work on auto-pilot. Management Techniques for Chronic Stress Benefits of Taking a Break Vacations and even shorter breaks where we get some physical and psychological space from the demands of life can bring many rewards. Obviously, we feel less stress when were not in a stressful environment. But vacations bring more than that. They interrupt the cycle of stress that can lead to being  overwhelmed. They give us a break from chronic stress so we can restore ourselves physically and mentally to a healthier place. Because a chronically-triggered stress response can lead to decreased creativity, memory problems, and other issues, this break in the stress cycle can lead to sharper thinking and increased creativity that can spill into all areas of our lives.?? This makes us better at our jobs, more available in our relationships, more energetic with our families, and more able to enjoy life for a prolonged amount of time after we return. Warning Signs Sometimes, its obvious when a vacation is necessary. But other times, the stress we experience can sneak up on us, and we may be less able to recognize when were at risk for overwhelm and burnout.?? Because we all respond to stress in unique ways, our signs of overwhelm may be unique as well. However, there are some general warning signs that apply in most cases. If youre experiencing one or more of the following, its a good idea to start planning some downtime, even if its in the form of a weekend staycation to recharge your batteries. Signs That You Should Take a Break Lack of energyLack of motivationMore frequent frustrationFeeling fuzzy-headedMild health issuesSleep disturbances due to stress In fact, unless you feel energized, motivated, excited, creative and fully engaged at work and in your relationships, youd likely benefit from a vacation because its a good idea to manage stress before it feels overwhelming. Vacations, mental health days, and regular self-care can keep you functioning at your best.?? Ideas and Solutions If you need a break, there are several different options for getting one. You can go for a long and luxurious break, a relaxing and simple one, or short and sweet. You can even have minutes-long breaks that you take throughout the day to keep productivity higher and to keep from feeling overwhelmed. The following are resources for each type of break. Take your pick, and take a break today. Vacation A real break, in the classic sense of the word, taking a vacation is more important than many people realize, which is why many vacation days go unused when they should be enjoyed to the fullest. The key to a restful vacation is to prioritize rest and fun when you go; dont overbook yourself with tourist activities or bring so much work with you that by the time you return you feel you need a vacation from your vacation. Taking Vacations for Stress Relief and Overall Health Staycation The staycation is becoming more and more en vogue, especially as people have a greater need to take a break, but with fewer means to pull off an exotic trip. The staycation is all about rest and relaxation, and enjoying the place you are often too stressed and busy to really enjoy: home sweet home. The key to a refreshing staycation is the same as the key to a restful vacation, though somewhat trickier to pull off: dont overdo it, and dont let work creep in. That means no cleaning, office work, or dealing with regular responsibilities. You can either turn off the phones, ignore email, and make it a point to both rest and play  or go to a nearby hotel to make it easier. How to Relax on Your Staycation Playcation Few people talk about having a playcation, but its a great idea: stay home, but make it fun! The difference between a staycation and a playcation is that staycations tend to focus more on resting and relaxing, while playcations are forâ€"you guessed itâ€"fun! With the hard work and stressful routines that characterize many peoples lifestyles, its important to have some fun (like Billy Crystal did to get his smile back in the classic movie City Slickers) as a way to recharge your batteries and be sure youre enjoying life. You can devote several days to taking a playcation, or just be sure you pepper in some fun on a regular basis. Short Breaks Sometimes we just need to take a break from stress long enough to disrupt the bodys stress response cycle, and then get back into the action. For quicker options, you might want to take a hike or a bike ride, enjoy a movie, or even have a 5-minute meditation session. With these ideas for ?quick breaks, youll have several ideas from which to choose.

Love in Andrew Marvell in To His Coy Mistress and John...

Love in Andrew Marvell in To His Coy Mistress and John Donnes The Sunne Rising These two poems, To His Coy Mistress and The Sunne Rising are similar poems, they are both metaphysical (metaphysical means more than physical) poems written around Shakespeares time. The main theme of these poems is the same; it is romance and the love of a woman. Yet the two poets have very different opinions on these two things. Within both poems are arguments, in To His Coy Mistress it is with the woman and in The Sunne Rising it is with the sun. The Sunne Rising is about a mans argument with the sun over how important it is compared to his woman. To his Coy Mistress is about a man trying to seduce the†¦show more content†¦These two themes are different yet they are introduced in similar ways, in The Sunne Rising this theme is introduced straight away, as the first line is insults towards the sun. In To his Coy Mistress the theme of time is introduced at the start of the poem, yet it is introduced a bit softer and slower than in The Sunne Rising. The two theme are bot h linked to love because they help the writers describe the mans love for the woman. The poems have some differences as well as similarities, one of these being that The Sunne Rising is about personification of the sun, and how the man describes his love of his woman to the sun. His Coy Mistress is different as it is about a man trying to seduce the woman. This shows how the main themes are slightly different because the type of love for the two women mentioned in the poems is slightly different because, in The Sunne Rising the man is describing the love that he has for his woman is the long lasting and will last forever and in His Coy Mistress the mans love is for a woman he just met, and is trying to seduce. AnotherShow MoreRelated A Comparison of Andrew Marvells To His Coy Mistress and John Donnes The Sunne Rising1925 Words   |  8 PagesA Comparison of Andrew Marvells To His Coy Mistress and John Donnes The Sunne Rising Both poems To His Coy Mistress and The Sunne Rising were written by metaphysical poets, this is one of many similarities in the poems. However, there are also a number of differences between them. In both poems, there is an obvious link to the theme of Carpe Diem which simply means seize the day. The poems relate to time and that of how its running out. They seem to be in

It Is Possible To Put A Value Or Price On Almost Anything,

It is possible to put a value or price on almost anything, from a friendship to a box of cereal; but what about life? Some people may attempt to value life by recognizing the good deeds done in a lifetime while others determine life’s value by highlighting the wrongs. Of course it is possible for individuals to value life based on their own moral or logistical standpoints, but this does not account for the other billions of people that inhabit this planet. Although it may never cross the average person’s mind, everyone values life differently despite similarities or differences in character, morals, or religion, making it impossible to universally value life morally, but possible to place a monetary value on life through a series of†¦show more content†¦Point being, it is impossible to come up with a value for a life that everyone will agree with, leaving it to personal opinion to determine how much one’s life is really worth. As an individual, it is possible to follow your moral codes in order to determine the value of a life, but it is most likely not going to affect other’s perceptions because everyone has their own point of view on this matter. Most people tend to value a life based on how close it parallels their beliefs and moral standpoints, making it an educated opinion rather than something that can be considered a fact. On the pessimistic side of this, some also look towards all the bad things that have happened in life in order to determine its value, which is seen in the extremely well-known play Hamlet, by William Shakespeare. In the play, Hamlet struggles to find the true meaning of his existence, and is confronted with the issue of having to determine the value of life before he kills his uncle. This is evident when looking at lines five through eight where Hamlet states, â€Å"To die, to sleep, No more, and by a sleep to say we end, The heartache, and the thousand natural shocks, Th at flesh is heir to.† It is apparent that Hamlet is having trouble evaluating the value of his life until he reaches a point where he begins to asses all of the wrongs that have plagued him, and whether not hisShow MoreRelatedApple - Needs, Wants, Demands, Utility Value1212 Words   |  5 Pagescame to the conclusion that the need for mobility, flexibility and reliability are key to satisfying everyone involved in the marketing process. The customer has to be able to use the iPhone everywhere and always have a connection, it needs to be possible to use it the way you want it to use, and you have to be able to rely on your iPhone to work at all times. There are a couple of types of needs, but the need for an iPhone is a social one. The need to be in touch and to receive belonging and affectionRead More`` The Total Economy `` By Wendell Berry1719 Words   |  7 PagesThe interconnected world in which we live today is absolutely amazing. It is possible to drink a cup of coffe e grown in Uganda with a chocolate bar sourced from Brazilian cacao beans while ordering a sweater made in Bangladesh. This entanglement with the rest of the world is not without its shadows, however. The items that we so easily buy and throw out exploit laborers and resources from the farthest corners of the world. Even deeds that we feel are good for the disadvantaged people in the US andRead MoreJohn Lewis customer service case study1710 Words   |  7 Pagesas individuals; each customer has their own needs and preferences. Therefore, they always find opportunities to listen to the customers, being open to feedback, and take action quickly on what the customers tell in order to provide the best possible choice, value and service to customers. Customers go to John Lewis not only to buy products, but also to experience their excellent services. As John Lewis sees them, there are 4 key elements that have created success of them in keeping customer satisfactionRead MoreMarketing Analysis Of Radiohead, An English Rock Band From Abingdon1607 Words   |  7 PagesOxfordshire. The aim of this briefing report is to discuss, using the case study as a source, about pricing strategy in the music industry, which includes defining and talking about the online value chain of Radiohead, to compare online value chain and the traditional value chain, to critically analyze the online value chain’s impact on Radiohead pricing strategy and its implications for customers. Furthermore, the report will talk about ethical access to free online content and also will give a recommendationRead MoreThe Five Concepts of Marketing1841 Words   |  7 PagesMarketing according to Philip Kotler involves the creation, bargains and the trading of products with certain values within groups and individuals. The goods and services that are exchanged i n this economical process have their own monetary value. These goods and services that are marketed flows along a chain of activities; initially from the manufacturer or producer which then is consumed by intended customers. Products or services that are marketed should satisfy potential consumer’s need or wantRead MoreEnron : The Conspiracy Of Fools Essay1650 Words   |  7 PagesThe word â€Å"fraud† was magnified in the business world around the end of 2001 and the beginning of 2002. No one had seen anything like it. Enron, one of the country’s largest energy companies, went bankrupt and took down with it Arthur Andersen, one of the five largest audit and accounting firms in the world. Enron was followed by other accounting scandals such as WorldCom, Tyco, Freddie Mac, and HealthSouth, yet Enron will always be remembered as one of the worst corporate accounting scandals of allRead MoreBeowulf And The Anglo Saxon Values Heroism1154 Words   |  5 PagesAltho ugh cultural heroes ultimately serve the purpose of solidifying the values of a particular culture , the ever-changing, dynamic nature of heroism identifies itself as religious or a natural trait. Heroism is considered putting yourself at risk when in danger, helping those in need, and being the first one to step up and help, In the read Beowulf, he does just that. â€Å"A hero is an ordinary individual who finds the strength to persevere and endure in spite of overwhelming obstacles† This quoteRead MoreAnalyzing Online Shopping Essay1421 Words   |  6 Pagesto the consumers is the convenience of being able to shop anywhere and anytime. Online stores can be easily accessed by any device which can connect to the internet. With online shopping, it is entirely possible to shop in the wee hours of the morning, while still on bed as online stores almost never close. An individual only has to log onto a particular website, add the items they want to purchase into their shopping carts and checkout to pay for said item. They don’t need to even leave the comfortsRead MoreEssay1633 Words   |  7 Pagesanother chance. Never happened but I was taken into my mothers bed and slept with her until I was thirteen years of age. Looking back I wonder if I was fondled but my mind blacks this out but the following I remember for sure. Fourteen years old, almost fifteen, my mothers nineteen year old maid came in my room and raped me. I knew nothing about sex and was devastated and felt ashamed. She kept using me on a regular basis and her demands increased to the point that I was frightened of her. She wouldRead MoreThinking, Fast And Slow By Daniel Kahneman1286 Words   |  6 Pagesplays a larger role in success rather than skill. Therefore we cannot only look at the â€Å"quality of leadership and management practices† as the leading objectives for success. One of the repetitive themes of this book is luck being a key component in almost every success story. Luck is an important factor because it has the power to turn the future of any business from achieving extraordinary accomplishments to just ordinary outcomes. Possessing luck, or dispossessing luck, will define every individuals

Four Stages of Change Free Essays

The first act of change is denial. For most people in this stage, change is not easy to accept, and they react to it with a sense of denial or inability to see a problem. People in this stage do not believe that change is happening realistically. We will write a custom essay sample on Four Stages of Change or any similar topic only for you Order Now To avoid showing denial, people try to focus their attention on other things. In Jamie Oliver’s episodes, the citizens of Huntington focused their attention on things, such as, the amount of money it costs to buy healthier food and how much more time it would take to prepare it. The lunch ladies were very close-minded and seemed to always have an argument of denial against what Jamie was trying to preach to them. At one point in an episode, the head lunch lady even stated, â€Å"why fix something that isn’t broken. † But, the reality is, that the food and overweight issues in the small town of Huntington is an issue. They just do not want to come to terms with facing it. Change is often interpreted as foreign and uncertain feelings, so people shift their attention to past customs and what makes them feel secure. Jamie’s role in this stage is to help the people of Huntington understand what is happening and how it affects them. The second act of change is resistance. People begin to resist change when they realize that the change is taking place whether they want it to or not. Feelings of anger, doubt, fear, and anxiety begin to develop, which can hinder the process of change. In Jamie Oliver’s episodes, the lunch ladies of the elementary school exemplified a great deal of resistance in the change Jamie was trying to put forth. They constantly spoke about how they didn’t think that what Jamie was doing would work, and constantly complained about the new roles and strategies outlined for them. These things happen because people get pushed out of their comfort zone, and arguments and non-cooperation are ways in which team members show their resistance to change. In this stage, Jamie lends an ear to the team members concerns surrounding the change, and tries to encourage them that everything will work out. The third stage of change is consideration. Here, team members give up on arguments and begin to become a â€Å"team player. † People start acting and learning the new ways to contribute towards the changing process. They understand the rationality of the change, and how they are an important aspect in making that change happen. Rhonda began to consider the change process when she saw how the young children reacted to the healthier food that Jamie provided for them. She gave Jamie more time to allow his process to take place. Also, the parents started â€Å"jumping on board† when they watched the demonstration that Jamie put on for them about what their kids are really eating, and how much nutrition they are really getting. People in this stage begin to start contributing towards the change to find out what is really in store for them. Jamie does a great job of helping the team members participate actively and providing them with the knowledge and training that will make them more comfortable in their new roles. The final stage of change is acceptance. In this stage, productivity and emotions are completely restored. Members of the change process begin to accept their new roles and begin to settle in, as they gain more control in whats happening. An example of this taking place is when the high school lunch ladies committed to cooking the food from scratch, as they gave their support to Jamie’s cause. Jamie rewards and acknowledges the ladies for their dedication and contributions as he continues to motivate them to stay committed. It is going through this final stage of change that allows the process to actually take place within itself. How to cite Four Stages of Change, Essay examples

Determine Evaluate and Business Intelligence MyAssignmenthelp.com

Question: Discuss about the Determine Evaluate and Business Intelligence. Answer: Introduction: The financial analysis helps to determine and evaluate the performance of a company during a specific period of time. The financial ratios estimate the liquidity, efficiency, and profitability of the company. The financial information is important for the stakeholders as it helps them to make appropriate decisions (Qu, Yang, 2012). The growth of an organization depends on the quality of products and services provided to the customers. The growth also depends on the management of all the resources and keeping the production cost low. Ratio Actual 2016 Budget 2016 Actual 2015 Industry Benchmark Return on equity % 12.9 16.6 14.8 15.5 Return on total assets % 10.7 14.2 13.1 14.5 Gross margin % 8.5 9.0 9.5 9.0 Marketing expenses/sales % 2.6 1.8 2.0 2.2 Admin expenses/sales % 1.6 1.6 1.8 2.0 Interest coverage ratio 5.4 8.1 6.4 6.0 Days in inventory 33.1 30.4 31.1 30.0 Days in accounts receivable 50.0 48.0 49.7 45.0 Current ratio 1.3 1.2 1.2 1.5 Quick asset ratio 0.81 0.77 0.77 1.0 Debt to equity ratio 0.51 0.33 0.41 .40 The return on equity ratio shows that amount of money generated from the shareholders funds. It shows the ability of the organization to generate returns from the funds of the shareholders. The actual return on equity ratio in the year 2016 is less than the budgeted figure. In the year 2015, the actual return on equity is also less than the industry benchmark. The ratio shows that the ability to generate returns has decreased in both the year. The return on asset shows the ability of the management to generate return from the utilization of the funds. The actual return on total assets in the year 2016 is less than the budgeted figure (Jones, 2013). In the year 2015, the actual return on total assets value is less than the budgeted figure. The ratio shows that the ability of the management to generate returns from the assets has decreased. The returns for the company in both the year has decreased. The gross profit margin estimates the profit that is left after deducting the sales rev enue from the cost of goods sold. The actual gross profit margin of the company in the year 2016 is less than the budgeted figure. In the year 2015, the actual gross profit margin is more than the industry benchmark industry. In the year 2016, the gross profit margin is high which means the overhead cost of the company is high. The actual marketing/sales ratio of the company in the year 2016 is more than the budgeted figure. The ratio in the year 2015 is less than the industry average (Horngren, 2014). The marketing expense in the year 2016 is more than the 2015. The actual administration expense/sales ratio in the year 2016 is equal to budgeted figure and in the year 2015 is less than the industry average. The administration expense in the year 2016 is higher than the year 2015. The interest coverage ratio shows the interest expenses paid by the company or the amount of due interest covered by the company. In the year 2016, the actual interest expense is less than the budgeted figu re and in the year 2015 it is more than the industry average. The company is paying the interest expense in the year 2016. The actual days in inventory of the company in the year 2016 is more than the budgeted figure. The actual day inventory in the year 2015 is also more than the industry average. The actual days in the accounts receivable is more than the budgeted figure in the year 2016 and it is less than the industry average in the year 2015. The ratio shows that the company is taking time to collect all the due amounts from the debtors (Bragg, 2009). The current ratio reveals the ability of the firm to pay all the obligations. The actual current ratio of the company in the year 2016 is more than the budgeted figure and it is less than the industry average in the year 2015. The current ratio above one means the company would be able to pay all the liabilities. The ratio of the company is above one in both the year (Pickett, 2005). The actual quick ratio in the year 2016 is more than the budgeted figure and it is less than the industry average in the year 2015 The company will be able to convert current assets into cash. The debt to equity ratios reveals the debt of the company. The actual debt to equity ratio in the year 2016 is more than the budgeted figure and it is also more than the industry average in the year 2015. Thus, the ratio clearly shows that the debt level of the company is high. The financial ratios clearly show that the organization is not able to achieve the budgeted figure in many cases. The ratios show fall in t he financial performance of the company. The auditors play a significant role in providing fair and accurate financial statement report of the company. The process of audit ensures fair representation of the financial statement of the organization. The audit control procedure and internal audit function effect the process of preparing the financial reporting. The company's internal auditors can help the external auditors as well as the management team of the organization (Powers, Needles, 2012). The internal control system ensures management of all the processes and carrying out all the processes. The risk of the company can be decreased with the implementation of the effective control system and follow all the rules and regulations. The stakeholders of the organization get significant information from the financial report that helps them to make financial decisions. Thus, the representation of the fair of the organization is very much important. The auditors also examined whether the company has followed the accounting ru les and procedures. Thus, the financial report shows clear picture and performance of the firm. Thus, the external auditors and internal auditors ensure fair representation of the statements within a period of time. Audit steps to decrease risk The auditors are responsible to analyse the financial statements and present it fairly in front of the stakeholders. The auditors of the organization can decrease the risk level by determining omission, errors, and fraud in the financial statements. The internal auditors can determine help to determine the issues in the following ways: Roles and responsibilities: The management team faces many difficulties in segregating the duties between the staff members of the organization. In the small business enterprises, the risk of errors or frauds is less than the larger companies where complex functions or processed are carried out by different people (Scott, 2015). The internal auditors determine the fraud or errors that may exist in the process and can provide suggestion to overcome the risk. The auditors keep an eye on the internal control processes and systems that help to decrease the level of risk. The internal control increases work quality processes and decrease the fraud risk. The fair representation of the financial statements can be done with the implementation of the effective control system (Spiceland, 2010). Security concerns: The weak IT security system and control can affect the processes of the organization. The internal auditors can bring new systematic and disciplined approach to manage the business operation and mitigating the risks with the organization. Staff members: The employees or managers can take help from the information provided by the auditors. The staff members would be able to determine the risks and mitigate it. Senior management: the management team can make significant decisions on how to deal with the future challenges and risks with the help of the information provided by the internal auditors (Rahman, 2015). Internal control weaknesses are important for the auditing tax as these can reduce the accurateness of the auditing. Therefore, it is deemed that the internal control weakness ought to be decreased to perform any audit task with a business organization. There is various internal control weakness that may be the cause for the loss or spoil of the asset, resources and it may decrease the revenue of the business organization (Weil, 2017). These internal control weaknesses can be handled easily or may be rectified in the easy process by slightly changing in the present process or introduce the basic internal control. The documentation provides proof of the underlying transactions. It is deemed as the input to establish accurate financial records. The financial document should be pre-numbered for ensuring that the whole transaction is stored or recorded and account for. This will help in stopping to record the exact transaction in multiple places and in multiple time. The reason behind this is that there should not be any duplicity in the numbering system in the computer system (Spiceland, 2010). With the help of accurate numbering system, the tracking of the documents can be easy. Tracking the documents for linking the follow-up queries of the customers from their past transaction can be easier by effective numbering system in the document. Appropriate documentation provides efficiency and make the financial record and tax calculation easier. Main business cycles not appropriately defined It is important for the business organization to recognize and define its main business cycle as it supports in understanding the pros and cons of the business, the peak time of the business as well as bad time for the business. Furthermore, it supports in making effective strategies that help in business growth and development. The auditing help in recognizing the key business cycle of the business organization. Moreover, for the auditors, it is important to detect the main business cycle of the business organization as it helps them in delivering effective auditing job for an organization (Ricchiute, 2006). The business organizations have different crucial areas thus diverse business cycle can be present for the business. Moreover, the auditors have to recognize the business cycle of the business organization. The sales figure, accounts receivable, banking procedure, cash management, account payable, and purchase. For the business organization the selling products, as well as inven tory control is deemed as one of the most crucial cycles. While the development and change are brought into the process, the entire employees must be informed in quick basis for the training as well as keep pace. The authorization of the procuring should happen before the commitment of the resources. Trust on the size of the business organization, the rate of power can be introducing better decrease for the threat or risk of wrong expenses. For example: with a certain amount of order the fluctuation of the dollar rate can be decreased the entire expenditure value (Parrino, 2015). The companies use to be so involved with the day to day activities and business operations so that the companies use to forget to re-examine the business processes of the company. The owner of the business or the management should take few time and must take an interest in the review of the whole business process and has to verify the business record of the company. The frequency of the financial data re-examination is hugely dependent on the volume of the transaction as well as types of the business; however, the review of the financial data should be conducted on a monthly basis. Lack of physical and logical security Lacking the physical security of the property of the business as well as the resources of the business possibly result in damage and severe loss to the assets as well as the property of the business. The access to the petty cash, valuable equipment, and stock must be limited access to the limited person in a business organization. These should be handled by the proper staffs and placed in the secure area (Kieso, 2007). The aforementioned internal control needs to be addressed appropriately. Besides this, there are other important measurements that impede the audit job and the auditor may perform error due to these measurements. The business organization should maintain the ethical policies as it helps the business organization to establish the requisite ethics within the organization and by this way the employees of the organization are also acting ethically. The help in reducing the legal threats for the business and as a result the business can provide much more emphasis on the core business activities that support in improving the efficiency of the business. There are significant impacts can be seen in the auditing task if the internal control weaknesses are not addressed properly prior to the beginning of the auditing task. The internal control weaknesses have a significant amount of impact on the auditing task of the business organization and the internal auditors as well as the external auditors have to detect the internal control weaknesses within an organization before starting any auditing task for the company. The for wrong documentation of the records regarding the financial transactions can heavily misguide the auditors, and they can assess the wrong financial position of the business organization that is undertaken the auditing task. The wrong or erroneous documentation of the financial record may lead the company to make improper balance sheet, or income statement or cash flow stamen that drop severe impact on the auditing task (Helbk, Lindset, McLellan, 2010). Moreover, it increases the chance for the wrong audit. The financ ial statement can be of three types: the balance sheet or position statement that help in providing the information about the assets and liabilities of the company and provide actual knowledge about the financial position of the company. In any manipulation in this balance sheet can provide entirely wrong information to the users of the financial statements like the shareholders and investors of the company. The error in balance sheet records the financial position of the undertaken company can be indifferent that lead the investor to take an improper decision. The income statement is also an important document that provides important knowledge about the income of the company. The income statement often stated as the profit and loss statement as it provides the necessary information about the profit and loss of the business organization. The income statement helps in knowing the income of the company as well as the incidents when the company acquires losses. Moreover, any erroneous documentation will provide the wrong record that changes the income statements and provide wrong information to the users. The cash flow statement is also important for auditing task it provides the information about the cash flow within the business organization (Welch, 2014). The cash flow can be of two types: inflow of cash, and outflow of cash. The cash inflow happens when the company trade something then the clients make a payment that inflow into the company's account. On the other hand, when the company pays for the raw materials, employees salary and wages, equipment and machinery as well as many other types of expenses it shows that the outflow of the cash (Dassen, Schilder, Wallage, 2005). In the case of wrong documentation, the cash flow statement is also changed and provide wrong information to the user of the financial statements that misguide them and lead to the wrong financial decision. Audit steps to reduce risk The person or entity which perform the auditing task has to take few steps that help in reducing the auditing risk. The individual auditors should verify the entire document of the organization related to the financial record of the organization. The reason behind this is that it can be possible that the accountant may provide wrong information or record of the financial transaction of the company (Cosserat, Rodda, 2009). In the case of any wrong information the auditing task will be affected, and the financial position of the business organization can be assessed wrongly. Therefore, it is recommended that the auditors must check all the documents of the company where any financial related data exist. The journal entries are important for the checking as these use to be the fast entry of the transaction. Besides this, receipt, invoice and bills also must be checked in a proper way that helps in recognizing the error in the financial statements. The inventory is another risk so the au ditors should verify the inventory minutely that help in proving an efficient audit of the business organization. As business intelligence system is being used by the help of the electronic utilities, the enhancement of the various form of the work can be easily depicted by showing the increment of the auditors interest in the form of the real-time information and also the qualitative production of the production of the system can be easily considered by showing the appropriate structure of the work and also the internal management system can be easily constructed by showing the importance of the financial system (Britton, Waterston, 2013). The Computer-assisted Auditing techniques are developed for the management of the risk which is being used for defining the instruments that are designed for the construction of the analysis by the help of the certain instruments. The formation of the information technology is showing the growth and the structure by showing the increment in the performance and the efficiency of the audit process. Therefore, the techniques seem to be increasing the appropriat e assessment of the work which is being used for showing the appropriate expansion of the work and also it enables the establishment of the formation of the work process. It can be clearly shown that the advancement of the techniques is being used as the form of the business tools that are approved for the betterment of the smart system and also the performance can be measured by the help of the statistical analysis. The specialized audit software program can be illustrated in the form of the enhancement of the work which is being conducted for the betterment of describing the practical situation of the entity. The CAAT is identified as the important step which is being used for showing the analysis of the financial statements and the other customer confirmation procedures (Brealey, Myers, Marcus, 2018). Therefore, the classical techniques are depicted to be based on the small transaction and also it is identified to be not reflecting the original situation of the entity. The auditors are using the CAAT process for the purpose of improving the auditing processes which is explained to be a part of the software program. This software is also identified to be used for extracting and analysing the data which is being influenced by showing the analysis of the data, and also it contains the spreadsheets which are referred to as the databases and the statistical analysis. Therefore, the construction of the process is being used by showing the enhancement of the research and construction work can be made in a simpler way by showing the improvement of the work and also the explanation of the development of the work (Besley, 2016). The extraction, analysis of the data and the explanation of the work are being constructed by showing the enhancement of the research. The expansion of the research is being used by showing the following advantages that can be easily achieved which is identified as follows: - Independence from the audited system is being shown in this case which is showing the appropriate read-only copy, and also it cannot be influenced by showing the proper construction of the work. Thus the appropriate structure is being discussed by showing the positive patterns for the explanation of the tests performed. The ability for generating the electronic sources is also identified as the ability to show the auditor's coordination, and also the expansion of the business is being shown by considering the standardized audit limit. The report format is being explained by showing the working of the auditor which is being used by showing the unexplained patterns in the audited data (Beechy, Conrod, 2008). The possibility of detecting the fraud through the use of the tools are shown to be identified by showing the unexplained patterns in the audited forms of the data and also the simple or the complicated techniques can be easily used for the purpose of computation. The continuous monitoring processes are easily involved in this case which shows the accumulation of the objectives that are depicted to be showing the appropriate formation of the structure. It also clearly explains the structure regarding the identification of the monitoring activities which is crucial for gathering the data (Appannaiah, Reddy, Putty, 2010). Therefore the forms enable the auditor to establish an appropriate atmosphere which is being used by showing the necessary changes in the systems as undertaken for the study. The variation of the system is being constructed by showing the complication in the system techniques which is being used by showing the enhancement of the application. Thus the operational risks can be easily mitigated that shows the strengthening of the structure and also the formation of the study can be made by explaining the monitoring activities (Alexander, Nobes, Ullathorne, 2016). References Alexander, D., Nobes, C., Ullathorne, A. (2016).Financial accounting. Harlow, England: Pearson. Appannaiah, H., Reddy, P., Putty, R. (2010).Financial accounting. Mumbai [India]: Himalaya Pub. House. Beechy, T., Conrod, J. (2008).Intermediate accounting. Toronto: McGraw-Hill Ryerson. Besley, S. (2016).Corporate finance. [Place of publication not identified]: Cengage Learning. Bragg, S. (2009).Accounting best practices (2nd ed.). Berlin, Heidelberg: Springer Berlin Heidelberg. Brealey, R., Myers, S., Marcus, A. (2018).Fundamentals of corporate finance. New York, NY: McGraw-Hill Education. Britton, A., Waterston, C. (2013).Financial accounting. Harlow: Financial Times Prentice Hall. Cosserat, G., Rodda, N. (2009).Modern auditing. Chichester [u.a.]: Wiley. Dassen, R., Schilder, A., Wallage, P. (2005).Principles of Auditing. Pearson Education UK. Helbk, M., Lindset, S., McLellan, B. (2010).Corporate finance. Maidenhead, Berkshire: Open University Press/McGraw-Hill Education. Horngren, C. (2014).Accounting. Toronto: Pearson Canada. Jones, M. (2013).Accounting. Chichester: Wiley. Kieso, D. (2007).Intermediate accounting. New York [[u.a.]: Wiley. Parrino, R. (2015).Corporate Finance. Singapore: John Wiley Sons. Pickett, K. (2005).Auditing the risk management process. Hoboken, N.J: Wiley. Powers, M., Needles, B. (2012).Financial accounting. [Mason]: South-Western, Cengage Learning. Qu, X., Yang, Y. (2012).Information and Business Intelligence(1st ed.). Berlin, Heidelberg: Springer Berlin Heidelberg. Rahman, N. (2015).Corporate Finance. North Ryde: McGraw-Hill Australia. Ricchiute, D. (2006).Auditing. Mason, Ohio: South-Western/Thomson Learning. Ricchiute, D. (2006).Auditing. Mason, Ohio: South-Western/Thomson Learning. Scott, W. (2015).Financial accounting theory. Toronto: Pearson. Spiceland, J. (2010).Intermediate accounting. Toronto, ON: McGraw-Hill Ryerson. Weil, R. (2017).Financial accounting. [Place of publication not identified]: Cengage Learning. Welch, I. (2014).Corporate finance. Los Angeles: Ivo Welch.

A Very Scary Tooth Fairy Professor Ramos Blog

A Very Scary Tooth Fairy What is the golden rule? Why do people worry if they do bad things that bad things will happen to them? There is a saying what comes around goes around but what does that mean? The fear of karma is real and keeps some people walking on eggshells. There are many who do not believe in karma even though it can be traced back to the bible, in the book of Luke it says â€Å"do to other as you would have them do to you† (6:31). Karma can come in many forms but for this paper karma comes in the form of a hideous vengeful banshee known as the Tooth Fairy. This vengeful sprit wreaks havoc on the town who wronged her. The Tooth Fairy has always been an iconic symbol of childhood and represented as a good fairy like those seen in Walt Disney’s fairy characters, until the 2003 horror, mystery suspense movie Darkness Falls introduced a quite different type of Tooth Fairy that we had grown up to know. This evil specter has taken the very wanting tradition of exchange of teeth for money to a whole new level. When children of the town Darkness Falls lose their last baby tooth or milk tooth as referred to in some other cultures, this evil Tooth Fairy comes to collect their teeth and for those who so happen to awake and look upon her face will not only lose their tooth but their life. As stated in Cohens thesis VII â€Å"this thing of darkness I acknowledge mine†, society creates our monsters as this dark fairy is the product of a towns sinful act of murder of an innocent woman (Cohen 20). Fueled by revenge for her murder and an evil not known to us, this murderous Tooth Fairy takes her revenge out on the town’s children for generations to come. The monstrous tooth collector in my opinion makes an excellent monster that would frighten any child but since this evil specter only kills the children of Darkness Falls, I feel this tooth fairy has limited herself to the rest of the world making her less menacing. The Tooth Fairy in a black cloak and porcelain mask that covers her hideous burnt face is an image that would give any child nightmares, but what would be more frightening than the realization that this story of the Tooth Fairy is based on true events. What great monster doesn’t originate from legend? Darkness Falls evil Tooth Fairy originates from the legend of Matilda Dixon. The movie was inspired by events that occurred over the last 150 years in the small town of Port Fairy, Australia. The biography film of Matilda Dixon explains in short: her life in Port Fairy and events that lead to her death, also the cover up of her murder thereafter. Matilda was born December 24, 1803 and worked in a bakery. Matilda would bake a special cake for the children in exchange for their baby teeth earning her the name the Tooth Fairy, until one day in 1840 Matilda had an oven fire which burned most of her face and body. Matilda wore a porcelain mask on her face and refused to go out into the daylight because of the sensitivity to light. She did not let kids come over to her home and Matilda did not bake anymore but she still gave the children gifts for their baby teeth. Matilda would wait for the town to sleep before going out into the night with cloak and mask. The children left their teeth in handkerchiefs tacked to their doors and Matilda would leave small amounts of change in exchange for them. The towns people thought this behavior was weird but allowed it because of Matilda’s kind nature. Until September 23, 1841 two children went missing and Matilda was blamed and hung to death by a drunken mob only later to realize that the children were safe at home. Cohen specifies in monster thesis IV that â€Å" the monster is difference made flesh, come to dwell among us†, this helps us to understand that the people saw Matilda as being different therefore once the a child went missing she was easily made into an insidious child murder (Cohen 7). Matilda cursed the town with her dying breath saying, â€Å"what I took before in kindness I will take forever in revenge†. The towns people buried her along with their secret, but like all secretes they are revealed sooner or later. The Movie Darkness Falls is exactly what a horror movie should be; fun, scary, fast paced, with plenty of jump moments. The movie is enjoyable to watch with your children (PG-13 of course) and I would recommend it to those who enjoy the genre. The movie starts off with a back story of the legend of Matilda Dixon, then fast forwards to modern time were a boy named Kyle Walsh is in a restroom retrieving his last baby tooth from his bloody mouth. Later that night Kyle practices the tradition of leaving his tooth on his end table for the Tooth Fairy. Kyle is asleep when the Tooth Fairy enters the room. Kyle accidentally wakes up to see the Tooth Fairy floating above his bed wearing a black cloak and a porcelain mask. The Tooth Fairy lets out a shriek like a banshee from the old Irish mythologies and tries to kill Kyle from this time on. Kyle manages to escape but his mother sees the frightening facial image in the mirror while going to investigate his room and is killed instantly by the tooth procuring dark fairy. From that point on he is considered crazy by the towns people. Years later, Kyle must return home to confront his past, and save his childhood sweetheart’s son from an unrelenting evil that has plagued the town of Darkness Falls for over 150 years. Even if this wicked tooth fairies’ actions of revenge were justified her hideous appearance alone instantly categorizes her as a monster and her less than appealing looks leaves her burnt, decomposing body not to be desired. Cohens monster thesis I tells us that â€Å"the monster signifies something other than itself†, this allows me to believe that burnt body of Matilda Dixon is a representation of the Salem Witch Trials? In the late 1600’s 19 innocent women were found guilty of witchcraft and executed by hanging others were burned at the stake. Matilda was accused of wrongdoing and hung because the people saw her practices weird. Even though it is not stated in the movie it could be said that the town’s people saw the strange behavior of collecting baby teeth as a form of witchcraft. Different cultures have their beliefs in tooth disposal as stated in Donald Capps academic journal The Tooth Fairy â€Å"parents believed that it was very bad for them to let their child’s baby tooth fall into the hands of a witch or an evil spirit because, if this should happen, the witch or spirit could gain a magical power over the child†(Capps and Carlin 269). The Toothy Fairy has not been associated with one specific look but has appeared in countless shapes and sizes. According to Cohens thesis III â€Å"the refusal to participate in the classificatory orders of things is true of monsters,† therefore the tooth fairy is monstrous (6). In Joyce Graham’s book The Tooth Fairy she describes the Tooth Fairy â€Å"as a creature with two dark eyes, shiny like green-black carapace of a beetle, lurking under a matted shock of black hair and tangled elfin locks with a mouthful of blue light, teeth like sharpen daggers and standing about four feet†(Graham 17). In the short film Tooth Fairy by Joe Harris he tells of a Tooth Fairy that does far more wicked things than just take baby teeth left for her in the night. The Tooth Fairy in this film scratches out the boy’s eyes for peeking while in the middle of her toothy duties. However, the Tooth Fairy is represented I can agree that it shares the characteristic of a monster. Overall, the Tooth Fairy horror genre was entertaining and enjoyable to watch. The Darkness Falls take on the Tooth Fairy myth melded with other folklore created an image of true monstrosities. The towns people of Port Fairy insidious act of murder of an innocent woman and the karma that took form an evil tooth banshee bent on revenge. Researching the different cultures and traditions of tooth lore and applying Cohens Monster Culture (Seven Theses) to my research has open my eyes to a whole new world of understanding why these monsters exist and continue to regenerate through time, also what frightens us most is not what we see but the unknown of what lies in the darkness waiting. ANNOTATED BIBLIOGRAPHY Capps, Donald, and Nathan Carlin. â€Å"The Tooth Fairy: Psychological Issues Related to Baby Tooth Loss and Mythological Working Through.†Pastoral Psychology, vol. 63, no. 3, June 2014, pp. 265–280. This article focuses on the Tooth Fairy legend that emerged in the United States and Britain in the nineteenth century. Legends that are presented from around the world tell of rituals dealing with the loss of baby teeth. I will use information from this article to argue about the development of the Tooth Fairy in different cultures. Cohen, Jeffrey Jerome. â€Å"Monster Culture: Seven Theses.† From Monster Theory: Reading Culture. Minneapolis: University of Minnesota Press, 1996. 3-25. The Monster Culture (Seven Theses) gives examples and explains how the world has created monsters throughout the centuries. The seven theses are break down characteristics, actions and images of the monsters of society and what propels them to live on in our culture. I will incorporate information from the thesis to evaluate the tooth fairy in my monster evaluation. â€Å"Darkness Falls (2003).† YouTube, uploaded by You Tube Movies, Provider Sony Movies Shows, https://www.youtube.com/watch?v=FhN30C8ZpLw. This movie is about Matilda Dixon (aka The Tooth Fairy) exacting her revenge on the town of Darkness Fall. Darkness Falls is based off the legend of Matilda Dixon, but instead of occurring in Australia where the legend originated the story takes place in the United States. Matilda comes for the last baby tooth of the children of Darkness Falls and if they look upon her face, she will take their life. I will evaluate this avenging tooth fairy that Matilda has become for my monster evaluation. Joyce, Graham. The Tooth Fairy. Great Britain, Signet Books, a division of the Penguin group, 1996. This is a short story about a young boy growing up in England in the 1960s. The boy is haunted by a demonic Tooth Fairy who gets him into all sorts of trouble. The description and my perception of Graham Joyce’s evil Toothy Fairy will be incorporated in my monster evaluation. â€Å"movieweb Darkness Fall The Legend of Matilda Dixon MovieWeb com.† YouTube, uploaded by Samuel Thompson, 8 April 2011, https://www.youtube.com/watch?v=7GYSf32mJ_Yt=33s. Legend of Matilda Dixon gives a short biography of her life in the town of Port Fairy, Australia. Interviews with people that live in Port Fairy tell tales of how Matilda would give gifts to the children in exchange for their baby teeth, earning the name the Tooth Fairy. One day two children went missing and an angry drunken mob blamed Matilda. Matilda was hung by the neck by the mob only to find later that the children were fine at home in their bed. The legend of Matilda Dixon will be used in monster evaluation as an origin of the monstrous tooth fairy. â€Å"Tooth Fairy (2019) Trailer.† YouTube, uploaded by Wicked Thrilling Freaks, 29 November 2018, https://www.youtube.com/watch?v=FDbQCD_p7xo. The Tooth Fairy is a supernatural horror film released in Britain 2018. The Tooth fairy is a tale about an evil tooth fairy who rips out teeth. The images and actions of the evil tooth fairy will be used as a primary source of my monster evaluation.

Pearl Harbor Vs. September 11th essays

Pearl Harbor Vs. September 11th essays Two dark days in the history of the United States affected many Americans and changed their lives forever. The memories that were carried from the dates December 7th, 1941 and September 11th, 2001 are dates which will never be forgotten, as Americans remember the lives of innocent people that were taken by acts of war. These days are similar in some ways, however different in other ways. Americans dont know about the power that these two dates hold on America, as well as how these two dates are very similar and yet very different. Yesterday, December 7th, 1941, a date which will live in infamy. The united states of America was suddenly and deliberately attacked by naval and air forces of the empire of Japan... These are the fine words that were stated by President Franklin D. Roosevelt to the congress on December 8th, 1941. At approximately 8:00 A.M., Sunday morning, December 7, 1941 at Pearl Harbor, which is located on the Island of Oahu, Hawaii, was attacked by the Japanese fleet both by air and by sea. The surprise attack had been conceived by Admiral Isoroku Yamamoto. The striking force of 353 Japanese aircraft was led by Commander Mitsuo Fuchida. There had been no formal declaration of war. During the attack of Pearl Harbor, many lives were taken and many ships and aircraft were damaged. The September 11th, 2001 attack occurred recently in the states of New York, Pennsylvania, and Washington D.C. Around 8:45 a.m. a large plane, possibly a hijacked airliner, crashes into one of the World Trade Center towers, tearing a gaping hole in the building and setting it on fire. Shortly after, a second plane crashed into the second world trade center. The aircraft was described to be a passenger plane. After the second aircraft hit the tower, the airlines and bridges in New York are ordered to close immediately. Unfortunately there was also another plane that was hijacked. This aircraft plunged into the pentagon in Wash...

Fire and Building Codes Essay Example | Topics and Well Written Essays - 250 words

Fire and Building Codes - Essay Example It was the National Board of Fire Underwriters which published in 1905 the first model building code. Seeing the blatant unhealthy housing conditions, charitable organizations were established and many of them formed the National Housing Association in the 1900 which pressed for housing reforms. This movement also provided the stimulus for passing the New York Tenement House Act of 1901 which was used as a model for other cities. In 1939, the American Public Health Association (APHA) developed housing codes which served as a prototype as it specifies health and sanitation requirements including room dimensions and arrangements. The Engineering Profession provided the technical expertise for specifying applicable structural design thru the American Society of Civil Engineers, mechanical codes by the American Society of Mechanical Engineers (ASME) and American Society of Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE) and plumbing codes and standards (American Society of Plumbing Engineers (ASPE).

Managing Operations - HSBC Bank (UK) Essay Example | Topics and Well Written Essays - 1250 words

Managing Operations - HSBC Bank (UK) - Essay Example It was a considered a premier bank in the Asian region. In Japan, after opening its branch in 1866, the bank went on to become an adviser to the government on banking and currency. In 1888, it was the first bank to be established in Thailand, where it printed the country's first banknotes. Today HSBC proudly boasts of over 125 million customers around the world, with a diverse workforce of more than 260,000 people, and has successfully completed 140 years of its presence in China in 2005. Today UK has the biggest share of its operations with over 55,000 employees serving the bank customers. The value that is added by both operations management and operations strategy is fundamental to any organization. Providing services or goods are the basic forms of operational activities. All organizations try to provide a combination of product and service. Opening a bank account, taking a meal in a restaurant, visiting a hospital, buying a pair shoes, insuring a vehicle, a hotel stay etc. are all operations activities and their management is central to the successful provisioning of goods and services. HSBC, having a vast experience over the 140 years, has done a commendable job by being a friendly bank to the world community at large. Operations management has i... ource form an active component of any organisation having many types of needs which, at times, are affected by the motivational factors present in the internal and external environment of the organisation. Therefore, human beings work towards the achievement of their short-term or long-term goals and objectives. The organisation too expects certain standards of performance from its staff and certain goals are set by the organisation as well. For HSBC we'll be examining its performance against the following five performance objectives; Quality: John Ruskin an English Critic said, "Quality is never an accident; it is always the result of intelligent effort. There must be the will to produce a superior thing". This 'will-power' is encouraged amongst the human being to achieve a quality service standard. In fact the term quality often conveys different meanings to different people. The meaning of quality varies in different circumstances as well, for example, a car which runs smoothly on straight roads may not prove to be of top quality while running in the hilly stretches of bumpy roads. HSBC has set for itself the following Core Business Principles to deliver quality service to its clientele. Outstanding customer service Effective and efficient operations Strong capital and liquidity Conservative lending policy Strict expense discipline Morality in dealings HSBC says, "We aim to combine quality investment performance, first class service and value-for-money products1. It appears HSBC has put in practice what it preaches. HBBC was adjudged as the top ranking in the 'sub-custodian' category 'Global Finance' magazine's (Oct 2005) Best-Banks award-2005, in 12 countries and three regions for the quality of its services to global custodians. Speed: The starting point of

Theories of Merger and Takeover Waves

Theories of Merger and Takeover Waves Merger Wave The American economy experienced two great takeover waves in the postwar period, first in the 1960s and the second in the 1980s. Both waves had a deep affect on the structure of corporate America. The main trend in the 60s was diversification and conglomeration. In contrast the 1980s takeover reversed the previous process and brought US corporations back to specialization. In this respects, the last thirty years were a roundtrip for corporate America. This paper is an overview of the salient features of the two takeover waves. 1.1 The 1960s Conglomerate Merger Wave The merger wave of the 1960s was the major since the turn of the century (Stigler, 1968). A typical characteristic of the 1960s transaction was a friendly acquisition, frequently for stock, of a smaller private or public firm which was outside the acquiring firms main line of business. During this period unrelated diversification was widespread among the large companies. Rumelt (1974) has reported that the fraction of single business companies in the Fortune 500 decreased from 22.8% in 1959 to 14.8% in 1969. Further, the portion of conglomerates with no dominant businesses increased to 18.7% from 7.3%. There was also a considerable move to diversification among companies that retained their core business. The driving force behind the 1960s wave was high valuations of company stocks and large corporate cash flows. However the management was unwilling to pay out the high cash flows as dividends, and on the other hand able to issue equity at attractive terms therefore, turned their atte ntion to acquisitions (Donaldsoni. 1984).Dividends were considered as a complete waste, and acquisitions as a very attractive way to conserve corporate wealth. There are two sets of arguments used to explain why companies diversify. The first set argues that firms diversify to increase shareholder wealth. A number of authors have discussed different aspects of diversification that can potentially raise shareholder wealth. Williamson (1970), suggest that firms diversify to beat imperfections in external capital markets. Through diversification, managers create internal capital markets, which are less prone to asymmetric information problems. Lewellen (1971), argues that conglomerates can carry on higher levels of debt since corporate diversification reduces earnings variability. if conglomerate firms are more valuable than companies operating in a single industry If the tax shields of debt increase. Shleifer and Vishny (1992), state that conglomerates may have a higher debt capacity since they can sell assets in those industries that suffer the least from liquidity problems in bad states of the world. Finally, Teece (1980) argues that divers ification leads to economics of scale. The second set of arguments states diversification as a product of the agency problems between shareholder and managers. Amihud and Lev (1981) argue that managers follow a diversification strategy to protect the value of their human capital. However, Jensen (1986) suggests that companies diversify to increase the private benefits of managers. Similarly, Shleifer and Vishny (1989) suggest that managers diversify because they are better at managing assets in other industries. Thus, diversifying will make skills more indispensable to the firm. 1.2 The 1980s Merger Wave Form a longer historical perspective, Golbe and White (1988) presented time series evidence of U.S. takeover activity from the late 1800s to the mid-1980s. Their findings have suggested that takeover activity above 2 to 3 percent of GDP is unusual. However, the greatest level of merger activity occurred around 1980s, at roughly 10 percent of GNP. By this measure, takeover activity in the 1980s is historically high. The size of the average target in the 1980s had increased extremely from the modest level of the 60s. By 1989 28%, of Fortune 500 companies were acquired and many transactions, particularly the large ones, were hostile. Further the medium of exchange in takeovers was cash rather than stock, they were characterized by heavy use of leverage. Firms were purchased by other firms by leveraged takeovers by borrowing rather than by issuing new stock or using solely cash on hand. Other firms restructured themselves, borrowing to repurchase their own shares. The 80s was also characterized by latest forms of control changes, which included bustup takeovers. Bustup takeovers involved the sell off of a substantial fraction of the targets assets to other firms. (Bhagat, Shleifer, and Vishny, 1990; Kaplan, 1997). 2 Merger Motives The following sections will explain the motive behind the two merger waves. 2.1 Managerial Motives Agency theory predicts that unless managers are strictly monitored by large block of shareholders they will certainly act out of self-interest. Amihud and Lev (1981) have provided proof that unless closely monitored by large block shareholders managers will attempt to reduce their employment risk through diversification. Lane et al.(1998) in this study have reexamined Amihud and Lev findings about agency theory Using a sample of 309 US firms that diversified between 1962 1970, from the Federal Trade Commission (FTC) Statistical Report on Mergers and Acquisitions (1976). This study falls in the third broad category[1] of agency studies. However this analysis only examines the strategic behaviors of managers when they are not under siege and are also not in a situation, in which their interests are clearly in conflict with those of shareholders. Specifically, firms without large block shareholders are expected to engage in more unrelated acquisitions and show higher levels of diversif ication than firms with large block shareholders (Jensen and Meckling (1976)) Using Multiple Regression, the study found no evidence for the standard agency theory predictions that management controlled firms are linked with strategically lower levels of diversification and lower levels of returns than are firms with large block shareholders. It was found that Ownership structure and diversification are largely independent constructs. Thus, managers may be are worthy of more trust and autonomy than what the agency theorists have prearranged for them. Rather than seeking to restrict managerial discretion through extreme oversight, a more balanced approach by principals is needed. Some safeguards are essential as conflicts of interests between managers and shareholders do arise in certain situations, therefore, the assumption that such conflicts dominate the day-to-day management is not realistic. Matsusaka,(1993) takes a deep look at the astonishingly high pre-merger profit rates of target companies during the conglomerate merger wave. The main goal of the study is to assess how important was managerial discipline as a takeover motive. The analysis uses an extensive data set of 806 manufacturing sector acquisitions that took place in 1968, 1971 and 1974. The sample was collected from New York Stock Exchange listing statements. Sample of 609 observations was taken from 1968, 117 from 1971, and 129 from 1974. The results did not differ in any vital way by year, so observations from the three periods were pooled. Because antitrust enforcement was strict in the late 1960s and early 1970s, it was safely assumed that the sample mergers were not motivated to increase market power Ravenscraft and Scherer (1987). This allowed the investigation to focus on a narrow set of merger motives. Profitability[2] throughout the study was measured as a rate of return on assets. The theory identified two basic characteristics of mergers motivated to discipline target management. First it wsa observed that the target was underperforming its industry and the only reason to discipline the managers was that they were not maximizing profit. It could be because of incompetence that they were pursuing their own objectives. The second, the target company had publicly traded stock and the only posibility to discipline management was by electing an appropriate board of directors. In this situation a takeover was necessary to effect a change as the diffused stock ownership resulted in free-rider problems. Owners can remove bad managers of privately owned firms, as they are closely held. The problem occurs in large publicly traded firms with diffuse ownership. The statistical results revealed that both public and private targets had extremely high profit rates prior to acquisition compared to their size classes and industries. Therefore, takeovers were not motivated to discipline target managers during the conglomerate merger wave. The second finding of the study is that public targets were not as particularly profitable as private targets. It was also found that the largest public targets had the lowest profit rates. A credible interpretation of the evidence is that managerial discipline may have been significant for just a small set of acquisitions that involved large publicly-traded targets. Matsusaka (1993) leaves the bigger question unexplained. Why buyers time and again sought high profit targets during the merger wave. There is a simple clarification, that high quality assets are generally favored to low quality assets, as high quality assets are more expensive. In addition to explaining why firms seek high-profit targets, an asset complementarity theory implies that firms tend to divest their low-profit divisions Palmer and Barber (2001) have determined the factors that led large firms to participate in the1960s wave. The theoretical approach, of the study conceptualizes corporate elites (managers and directors) as actors. However it is assumed that these actors have interests which have arisen from positions held in organizational and institutional environments, and from multidimensional social class structure. Often Acquisitions are deviant and innovative ways by which corporate these elites can increase their status and wealth. Corporate elite diversify to the extent that their place in the class structure provides them with the capacity and interest to augment their wealth and status in this way. The authors have examined how the firms top directors and managers class position influenced its tendency to employ diversification in the 1 960s. More specifically the following arguments on social status[3] have been tested empirically. Firstly, Firms run by top managers who attended an exclusi ve secondary school or whose family was listed in a metropolitan social register were less likely than other firms to complete diversifying acquisitions in the 1960s. Secondly, Firms run by top managers who were Jewish were more likely than other firms to complete diversifying acquisitions in the 1 960s. Thirdly, Firms run by top managers situated in the South or west were more likely than other firms to complete diversifying acquisitions in the 1960s. The study selected a sample of the largest 461 publicly traded U.S. industrial corporations from the Federal Trade Commissions Statistical Report on Mergers and Acquisitions (1976), between January 1, 1963, and December 31, 1968. This particular time period was chosen because as the merger wave took off at the end of 1962 and crested in 1968. The results of the study were found through count and binary regression models. The findings of the study are consistent with that of Zeitlin (1974). According to him top managers capacities and interests are shaped by their social class position. Corporate elite members differ in their social class position. It is this variation that influences the behavior of the firms they command. The results indicate that social club memberships and upper-class background influenced a firms propensity to complete diversifying acquisitions in the 1960s. Network embeddedness and status influenced acquisition likelihood in opposite directions. Corporations that were run by chief executives who were central in social networks but marginal with respect to status were more likely than other firms to complete diversifying acquisitions in the 1960s. Therefore, individuals with high status had small interest in adopting innovation. Corporate elites can inhibit the spread of an innovation when it threatens their interests. As observed by Hayes and Taussig (1967), One must never under estimate the moral suasion that the business and financial communities can bring to bear on those who engage in practices of which they disapprove. In this respect, the analysis provides additional evidence that intraclass conflict shaped corporate behavior during the 1960s merger wave. It seemed that in the 1960s, it was not concentrated ownership but, ownership in the hands of capitalist families that reduced a firms tendency to complete diversifying acquisitions. Further, as predicted by agency theory , concentrated ownership would lower acquisition rates most when in the hands of the CEO or other top managers, as opposed to outsiders, However it was found the reverse to be the case. Overall, there was very little support for any of the agency theory in the 1960s merger wave. Further, the results provided no support for several of the class-theory hypotheses. Firms headquartered in the South or West run or by Jewish CEOs did not have a greater propensity to complete diversifying acquisitions during the 1960s. The process of diversification of American firms reached its height during the merger wave of the late 1960s. Matsusaka(1993)evaluated the 1960s merger wave. In an attempt to do so the author has proposed a number of explanations that drove managers to diversify during the conglomerate merger wave. There are reasons to suspect that managers may have pursued a diversification strategy even when it impaired the shareholder. They may have entered new lines of business to protect their organization-specific human capital or establish themselves. On the other hand, they may have been pursuing size as an end and because of strict antitrust opposition to horizontal and vertical mergers they had to expand by buying into unrelated industries. The study has evaluated whether manager were diversifying for their own advantage or in the interest of shareholders returns .To do so the author inspected the effect of diversification on the value of his firms equity. Thus, if the value of a firm declined upon announcement of an acquisition, then its management was not acting to maximize shareholder wealth. One explanation for conglomeration stated in the study, stems from Managerial-Discipline theory. Firstly, Firms were taken over to discipline or replace their bad managers ie â€Å"Managerial-Discipline. Secondly, Managerial Synergy theory states that the bidder management wanted to work with target management, not replace it. In this case the acquirer management believed that the target management would complement to their skills. Therefore firm that had Managerial-discipline problem were likely to have had low profits, and on the other hand managerial-synergy targets were likely to have had high profits. Another explanation is that buyers were motivated by earnings-per- share (EPS) manipulation. This explanation states that conglomerates have a high price-earnings ratio (P/E). [4] Therefore the bidder management was bootstrapping, by buying firms with low P/Es. Construction of the dataset began with a list of mergers from the sample of 1968, 1971 and 1974 .The sample was identified from the takeovers from New York Stock Exchange listing statements and the results were presented through regression. The announcement-period return to the bidders shareholders was measured through dollar return, [5] .Regression of the dollar-return measure found that the return to a diversification acquisition was significantly positive. On average their shareholders enjoyed an $11.0 million value increase in value when bidders made a diversification acquisition,. This rejects the hypothesis that diversification hurt shareholders and is thus inconsistent with the idea that diversification was driven by managerial objectives. On the other hand, bidders who made related acquisitions cost their shareholders $6.4 million on average. Thus, the hypothesis that the markets reaction was the same to related acquisitions and diversification is rejected, suggesting that there was a market premium to diversification. Using descriptive statistical summaries it was found that both diversifying and horizontal buyers preferred to buy firms that were profitable. For both type of acquisitions the average operating profit was more than 5% in excess of the targets industry average. Therefore fame of high-profit targets argues against the importance of a managerial-discipline motive for both types of acquisition and in favor of a managerial-synergy motive. This is because Managerial-discipline takeovers should have been directed at low-profit firms, whose profitability needed improved. The motive was Managerial-synergy as the targets were takeovers were high- profit firms, this is because synergy-motivated managers were looking for good partners Matsusaka(1993). Another factor linked to the managerial theories is whether or not the targets management was retained.Top management is said to have been retained if it meet the following criteria. Firstly It was reported in the Wall Street Journal that the acquired firms management would continue to operate under the new management. Secondly, it was indicated in the buyers listing statement that the targets management would be retained. Lastly, when the merger took place at least one of the top three executives of the target firm was still managing the firm three years later from when the merger took place. According to the above mentioned definitions, 61.8% of the managers in the sample were retained and only 3.5% of the acquisitions fell in the Replaced category. The main finding is that buyers earned significantly positive announcement-period returns during the conglomerate merger wave when they made diversifying acquisitions. The hypothesis that conglomerates were driven by empire building or some other managerial objective can be rejected because such explanations imply value decreases to unrelated acquisitions. Another explanation of the conglomerate merger wave is that mergers were driven by an accounting trick rather than expected efficiencies. Therefore, investors watched EPS; when the EPS went up they bid up the price of the stock. According to this argument, Conglomerates, tended to buy companies with lower P/E ratios than their own in order to increase their EPS and boost their stock prices. There was no evidence that firms earned positive returns which inflated EPS in this way. The study indicated that early conglomerators earned significantly positive returns simply because they were first. They may have gained some rents to organizational innovation. Possibly the men who built the first conglomerates had a unique talent for diversification, which the market rewarded. Hubbard, Palia (1999), have examined the likelihood that internal capital markets were formed to alleviate the information costs associated with the less well-developed external capital markets of the time; that is, whether they were expected to create value by the external capital markets in the 1960s.In this paper, the authors have inspected a form of cross-subsidization that occurs when a financially unconstrained bidding firm takes over a financially constrained target firm and as a result forms an internal capital market.The study examined whether the external capital markets expected that the formation of internal capital markets in the 1960s were value-maximizing for the bidding firm. However, existing research has argued that internal capital markets can be value-enhancing. As argued by Geneen(1997), the financing and budgeting expertise that a firm possesses is not necessarily related to its degree of diversification. Accordingly, the internal capital market hypothesis for all acquisitions is tested. The study also tests the bootstrapping explanation for conglomeration in the 1960s, which takes place when firms with a high price-earnings ratio (P/E) took over low P/E target firms and fooled the stock market with an increased combined earnings-per-share. In the 1960s, external capital markets were less developed in terms of company-specific information production than in later years. The authors have classified company-specific information into two general categories. Firstly, production information; and secondly, financing and budgeting expertise. However, in this study information-intensive activities were introduced. This was because; it assists the manager to internally allocate capital across divisions of a diversified firm. It was suggested that diversified firms were perceived by the external capital markets to have an informational advantage, because external capital markets were less well developed at that time. Comparing it to the current decade, there was less access by the public to computers, data- bases, analyst reports, and other sources of company-specific information. Not only this there was less large institutional money managers and the market for risky debt was illiquid. The authors selected a sample of 392 acquisitions that occurred during the period from 1961 through 1970. Diversifying acquisitions were defined as those in which the bidder and target do not share any two- digit SIC code Matsusaka(1993), and related acquisitions as those in which they do share a two-digit SIC code. Further the Wall Street Journal was used for announcement date as the event date. Four measures of abnormal returns to the conglomerate bidding firm were calculated. These measures are as follows. Firstly, the usual percentage returns or the cumulative abnormal returns from five days before to five days after the event date. Secondly the percentage returns until date of last revision or the cumulative abnormal returns from five days before to five days after the date of the last revision (Lang et al. (1991)). Thirdly, the dollar returns or the percentage return times the market value of the bidder six days before the announcement (Malatesta(1983); Matsusaka(1993)). Lastly , the investment return defined as the change in the value of the bidder divided by the purchase price (Morck et al. (1990)). Tobins r ratio[6] is used as a proxy for a firms capital market opportunities. The evidence from these measures is mixed. Positive abnormal returns for all four measures were shown for related acquisitions. On the other hand, two of the four measures had shown statically significant positive abnormal returns for diversifying acquisitions in. Not only that diversifying acquisitions do not significantly earn less than related acquisitions in two of the four measures. Thus, evidence suggests, the capital markets believed acquisitions to be generally good for bidder shareholders during the 1960s. More significantly, it was found that when financially unconstrained buyers acquired constrained target firms, highest bidder returns were earned. Further, bidders generally retain target management, signifying that management may have provided company- specific operational information and the bidder on his part also provided capital budgeting expertise. Therefore, external capital markets expected information benefits from the formation of the internal capital markets. The study found no evidence in support of the bootstrapping hypothesis, as the coefficient on the dummy variable[7] was not statistically different from zero. This result is consistent with Matsusaka, (1993), who also finds no evidence for bootstrapping.Therefore, firms merged to form their own internal capital markets as there was a deficiency of well-developed external capital markets in the 1960s. Some firms apparently had an information advantage over the external capital markets and were expected to produce value in an internal capital market. In the 1960s diversified acquisitions were rewarded by financial markets, the informational advantage that acquiring firms appeared to possess was likely to be in the capital budgeting, allocation process and operational aspects of each division. Bidder firms generally retained the target management as it would facilitate them running the operational part of each target firm. The Motives discussed in the above mentioned articles are appealing; however evidence from the stock market suggests that shareholders preferred their firms to diversify. Using a data set from the 60s and early 70s, Matsusaka (1993) reported that, when the company announced an unrelated acquisition, the stock price of the bidder increased on average of $8 million. However, on the announcement of a related acquisition, the bidding firms stock price fell by $4 million. The difference between the two returns is quite significant. Thus it appears that investors fully believed that unrelated acquisitions benefited their firms relative to the alternatives. Thus the managers just did what the stock market told them to do that is to diversify. Evidence from 1980s stock market suggested that shareholders, again, liked what was happening. Shleifer, and Vishny (1992) found that in the 1980s, stock prices of the bidding firms rose when they bought other firms in the same industry, and fell with unrelated diversification. It is clear that the market disapproved unrelated diversification. Therefore it does not astonish that, in light of such market reception, managers stopped diversifying and did what the stock market directed them to do. 2.2 Legal Motives Matsusaka (1996) investigated whether the antitrust enforcement of the 1960s led firms to take on the diversification goal, by preventing them from expanding within their own core industries. If correct, diversification should have occurred more less frequently when small firms merged than when large firms merged since small mergers were less likely to have attracted antitrust attention. Further the author examined the diversification patterns in the United Kingdom, Canada, Germany, and France in the late 1960s and early 1970s, where none of these countries had legal restrictions on horizontal growth similar to those in the Unites States. The US Clayton Antitrust Act was the antitrust legislation in the postwar period (1950 Celler-Kefauver amendment to Section 7). The act, prohibited mergers that would substantially lessen competition, or tend to create a monopoly. This new law was used by the antitrust authorities and the courts to limit the number of mergers between vertically related and firms in the same lines of business. The strictness of the antitrust environment in 1968 is illustrated by the observation that in the earlier 12 years, all antitrust cases that reached the Supreme Court had been resolved in support of the government. The study indicates the following two implications. Firstly, large horizontal mergers were more liable to have been challenged on antitrust grounds than small horizontal mergers. Secondly mergers between unrelated firms were unlikely to have been blocked, regardless of size. Firms diversified in 1960s, since antitrust authorities prevented them from expanding in their home industries. Later when antitrust policy became less rigid in the 1980s, firms expanded horizontally, leading them to refocus on their core business. Stigler (1966) was perhaps the first to present evidence on the antitrust hypothesis, concluding that, the 1950 Merger Act has had a strongly adverse effect on horizontal mergers by large companies. The author selected a sample of 549 mergers (that took place in 1968) from the New York Stock Exchange. Results of the study were reported through Logit regressions .It was found that bidders were as likely to have entered new industries when they made small acquisitions as when they made large acquisitions, and small buyers were as likely to have diversified as large buyers. Further the total number of diversification acquisitions concerning small companies was high.Though, according to the antitrust hypothesis; diversification should have been widespread primarily in large mergers where same industry acquisitions were prohibited by tough antitrust enforcement. Secondly assembled international evidence indicated that diversification took place in many industrialized nations in the 1960s and 1970s, although restrictions against horizontal combinations were unique to the United States. Yet, most other industrialized Western nations[8] experienced diversification merger waves and general movements toward diversification in their largest companies (Chandler (1991)).Thus most of the evidence, is not consistent with the antitrust hypothesis, signifying that other explanations for corporate diversification should be emphasized not the anti trust hypothesis. Scholes and Wolfson (1990) state, that the changes in U.S. tax laws[9] in the 1980s had obvious affect on the desirability of mergers and acquisitions. However such transactions were not only motivated by tax factors but also non tax factors[10]. Tax laws can have number of affects on mergers and acquisitions , which can include the following capital losses, presence of tax-attribute carry forwards such as net operating losses , investment tax credits, and foreign tax credits, among others, that might be cashed in more quickly and more fully by way of a merger; the desire to step up the tax basis of assets for depreciation purposes to their fair market value; the desire to sell assets to permit a change in the depreciation schedule to one that is more highly accelerated. The authors in this study have examined the effect of changes in tax laws passed in 1980s on merger and acquisition activity in the United States. The authors selected the annual values of mergers and acquisitions from 1968 through 1987 in nominal dollars. The data source for nominal values was W. T. Grimm and Company for 1968-85 and Mergers Acquisitions (1987-88, rev. quarterly) for 1986 and 1987. Using time series analysis it was found that the dollar volume of merger activity between 1980-1981 increased from $44.35 billion to $82.62 billion (86%) in nominal terms. The percentage increase was approximately twice as large as the next largest percentage increase in annual merger and acquisition activity over the 1970-86 periods. There was spectacular increase in merger activity that began with the passage of the Economic Recovery Tax Act of 1981, however this was not the only merger wave that occurred in that time frame. Unusual merger activity was also witnessed in the 1960s. The termination of 1960s wave was accompanied by quite a few regulatory events that depressed such transactions. Firstly, the Williams Amendments had en larged the cost and difficulty of effecting tender offers. Secondly the issuance of Accounting Principles Board Opinions 16 and 17, forced many acquiring firms to boost depreciation expense, goodwill amortization and cost of goods sold. Thirdly the Tax Reform Act of 1969, made transferability of tax attributes (net-operating-loss carry forwards) more restrained. Therefore there was a sudden decline in merger activity from the peak in 1968. Relative to the tax benefits when the non tax benefits of the transaction were small, current management were the most efficient purchasers, as they had an advantage along the hidden information dimension. Therefore 1981 act had increased the incidence of cases in which non tax benefits were less than the common tax benefits of mergers and acquisitions. As a result, there was an increase in the number of transactions involving management buyouts. The annual dollar value of unit management buyouts between 1978-80 increased by a factor of 3, and by a factor in excess of 20 for the period 1981-86. The antitrust proposition mentioned above is appealing as one of the most important reason for diversification, during the 60s and 70s, which simply disallowed mergers of firms in the same industry, regardless of the effects of these mergers o Theories of Merger and Takeover Waves Theories of Merger and Takeover Waves Merger Wave The American economy experienced two great takeover waves in the postwar period, first in the 1960s and the second in the 1980s. Both waves had a deep affect on the structure of corporate America. The main trend in the 60s was diversification and conglomeration. In contrast the 1980s takeover reversed the previous process and brought US corporations back to specialization. In this respects, the last thirty years were a roundtrip for corporate America. This paper is an overview of the salient features of the two takeover waves. 1.1 The 1960s Conglomerate Merger Wave The merger wave of the 1960s was the major since the turn of the century (Stigler, 1968). A typical characteristic of the 1960s transaction was a friendly acquisition, frequently for stock, of a smaller private or public firm which was outside the acquiring firms main line of business. During this period unrelated diversification was widespread among the large companies. Rumelt (1974) has reported that the fraction of single business companies in the Fortune 500 decreased from 22.8% in 1959 to 14.8% in 1969. Further, the portion of conglomerates with no dominant businesses increased to 18.7% from 7.3%. There was also a considerable move to diversification among companies that retained their core business. The driving force behind the 1960s wave was high valuations of company stocks and large corporate cash flows. However the management was unwilling to pay out the high cash flows as dividends, and on the other hand able to issue equity at attractive terms therefore, turned their atte ntion to acquisitions (Donaldsoni. 1984).Dividends were considered as a complete waste, and acquisitions as a very attractive way to conserve corporate wealth. There are two sets of arguments used to explain why companies diversify. The first set argues that firms diversify to increase shareholder wealth. A number of authors have discussed different aspects of diversification that can potentially raise shareholder wealth. Williamson (1970), suggest that firms diversify to beat imperfections in external capital markets. Through diversification, managers create internal capital markets, which are less prone to asymmetric information problems. Lewellen (1971), argues that conglomerates can carry on higher levels of debt since corporate diversification reduces earnings variability. if conglomerate firms are more valuable than companies operating in a single industry If the tax shields of debt increase. Shleifer and Vishny (1992), state that conglomerates may have a higher debt capacity since they can sell assets in those industries that suffer the least from liquidity problems in bad states of the world. Finally, Teece (1980) argues that divers ification leads to economics of scale. The second set of arguments states diversification as a product of the agency problems between shareholder and managers. Amihud and Lev (1981) argue that managers follow a diversification strategy to protect the value of their human capital. However, Jensen (1986) suggests that companies diversify to increase the private benefits of managers. Similarly, Shleifer and Vishny (1989) suggest that managers diversify because they are better at managing assets in other industries. Thus, diversifying will make skills more indispensable to the firm. 1.2 The 1980s Merger Wave Form a longer historical perspective, Golbe and White (1988) presented time series evidence of U.S. takeover activity from the late 1800s to the mid-1980s. Their findings have suggested that takeover activity above 2 to 3 percent of GDP is unusual. However, the greatest level of merger activity occurred around 1980s, at roughly 10 percent of GNP. By this measure, takeover activity in the 1980s is historically high. The size of the average target in the 1980s had increased extremely from the modest level of the 60s. By 1989 28%, of Fortune 500 companies were acquired and many transactions, particularly the large ones, were hostile. Further the medium of exchange in takeovers was cash rather than stock, they were characterized by heavy use of leverage. Firms were purchased by other firms by leveraged takeovers by borrowing rather than by issuing new stock or using solely cash on hand. Other firms restructured themselves, borrowing to repurchase their own shares. The 80s was also characterized by latest forms of control changes, which included bustup takeovers. Bustup takeovers involved the sell off of a substantial fraction of the targets assets to other firms. (Bhagat, Shleifer, and Vishny, 1990; Kaplan, 1997). 2 Merger Motives The following sections will explain the motive behind the two merger waves. 2.1 Managerial Motives Agency theory predicts that unless managers are strictly monitored by large block of shareholders they will certainly act out of self-interest. Amihud and Lev (1981) have provided proof that unless closely monitored by large block shareholders managers will attempt to reduce their employment risk through diversification. Lane et al.(1998) in this study have reexamined Amihud and Lev findings about agency theory Using a sample of 309 US firms that diversified between 1962 1970, from the Federal Trade Commission (FTC) Statistical Report on Mergers and Acquisitions (1976). This study falls in the third broad category[1] of agency studies. However this analysis only examines the strategic behaviors of managers when they are not under siege and are also not in a situation, in which their interests are clearly in conflict with those of shareholders. Specifically, firms without large block shareholders are expected to engage in more unrelated acquisitions and show higher levels of diversif ication than firms with large block shareholders (Jensen and Meckling (1976)) Using Multiple Regression, the study found no evidence for the standard agency theory predictions that management controlled firms are linked with strategically lower levels of diversification and lower levels of returns than are firms with large block shareholders. It was found that Ownership structure and diversification are largely independent constructs. Thus, managers may be are worthy of more trust and autonomy than what the agency theorists have prearranged for them. Rather than seeking to restrict managerial discretion through extreme oversight, a more balanced approach by principals is needed. Some safeguards are essential as conflicts of interests between managers and shareholders do arise in certain situations, therefore, the assumption that such conflicts dominate the day-to-day management is not realistic. Matsusaka,(1993) takes a deep look at the astonishingly high pre-merger profit rates of target companies during the conglomerate merger wave. The main goal of the study is to assess how important was managerial discipline as a takeover motive. The analysis uses an extensive data set of 806 manufacturing sector acquisitions that took place in 1968, 1971 and 1974. The sample was collected from New York Stock Exchange listing statements. Sample of 609 observations was taken from 1968, 117 from 1971, and 129 from 1974. The results did not differ in any vital way by year, so observations from the three periods were pooled. Because antitrust enforcement was strict in the late 1960s and early 1970s, it was safely assumed that the sample mergers were not motivated to increase market power Ravenscraft and Scherer (1987). This allowed the investigation to focus on a narrow set of merger motives. Profitability[2] throughout the study was measured as a rate of return on assets. The theory identified two basic characteristics of mergers motivated to discipline target management. First it wsa observed that the target was underperforming its industry and the only reason to discipline the managers was that they were not maximizing profit. It could be because of incompetence that they were pursuing their own objectives. The second, the target company had publicly traded stock and the only posibility to discipline management was by electing an appropriate board of directors. In this situation a takeover was necessary to effect a change as the diffused stock ownership resulted in free-rider problems. Owners can remove bad managers of privately owned firms, as they are closely held. The problem occurs in large publicly traded firms with diffuse ownership. The statistical results revealed that both public and private targets had extremely high profit rates prior to acquisition compared to their size classes and industries. Therefore, takeovers were not motivated to discipline target managers during the conglomerate merger wave. The second finding of the study is that public targets were not as particularly profitable as private targets. It was also found that the largest public targets had the lowest profit rates. A credible interpretation of the evidence is that managerial discipline may have been significant for just a small set of acquisitions that involved large publicly-traded targets. Matsusaka (1993) leaves the bigger question unexplained. Why buyers time and again sought high profit targets during the merger wave. There is a simple clarification, that high quality assets are generally favored to low quality assets, as high quality assets are more expensive. In addition to explaining why firms seek high-profit targets, an asset complementarity theory implies that firms tend to divest their low-profit divisions Palmer and Barber (2001) have determined the factors that led large firms to participate in the1960s wave. The theoretical approach, of the study conceptualizes corporate elites (managers and directors) as actors. However it is assumed that these actors have interests which have arisen from positions held in organizational and institutional environments, and from multidimensional social class structure. Often Acquisitions are deviant and innovative ways by which corporate these elites can increase their status and wealth. Corporate elite diversify to the extent that their place in the class structure provides them with the capacity and interest to augment their wealth and status in this way. The authors have examined how the firms top directors and managers class position influenced its tendency to employ diversification in the 1 960s. More specifically the following arguments on social status[3] have been tested empirically. Firstly, Firms run by top managers who attended an exclusi ve secondary school or whose family was listed in a metropolitan social register were less likely than other firms to complete diversifying acquisitions in the 1960s. Secondly, Firms run by top managers who were Jewish were more likely than other firms to complete diversifying acquisitions in the 1 960s. Thirdly, Firms run by top managers situated in the South or west were more likely than other firms to complete diversifying acquisitions in the 1960s. The study selected a sample of the largest 461 publicly traded U.S. industrial corporations from the Federal Trade Commissions Statistical Report on Mergers and Acquisitions (1976), between January 1, 1963, and December 31, 1968. This particular time period was chosen because as the merger wave took off at the end of 1962 and crested in 1968. The results of the study were found through count and binary regression models. The findings of the study are consistent with that of Zeitlin (1974). According to him top managers capacities and interests are shaped by their social class position. Corporate elite members differ in their social class position. It is this variation that influences the behavior of the firms they command. The results indicate that social club memberships and upper-class background influenced a firms propensity to complete diversifying acquisitions in the 1960s. Network embeddedness and status influenced acquisition likelihood in opposite directions. Corporations that were run by chief executives who were central in social networks but marginal with respect to status were more likely than other firms to complete diversifying acquisitions in the 1960s. Therefore, individuals with high status had small interest in adopting innovation. Corporate elites can inhibit the spread of an innovation when it threatens their interests. As observed by Hayes and Taussig (1967), One must never under estimate the moral suasion that the business and financial communities can bring to bear on those who engage in practices of which they disapprove. In this respect, the analysis provides additional evidence that intraclass conflict shaped corporate behavior during the 1960s merger wave. It seemed that in the 1960s, it was not concentrated ownership but, ownership in the hands of capitalist families that reduced a firms tendency to complete diversifying acquisitions. Further, as predicted by agency theory , concentrated ownership would lower acquisition rates most when in the hands of the CEO or other top managers, as opposed to outsiders, However it was found the reverse to be the case. Overall, there was very little support for any of the agency theory in the 1960s merger wave. Further, the results provided no support for several of the class-theory hypotheses. Firms headquartered in the South or West run or by Jewish CEOs did not have a greater propensity to complete diversifying acquisitions during the 1960s. The process of diversification of American firms reached its height during the merger wave of the late 1960s. Matsusaka(1993)evaluated the 1960s merger wave. In an attempt to do so the author has proposed a number of explanations that drove managers to diversify during the conglomerate merger wave. There are reasons to suspect that managers may have pursued a diversification strategy even when it impaired the shareholder. They may have entered new lines of business to protect their organization-specific human capital or establish themselves. On the other hand, they may have been pursuing size as an end and because of strict antitrust opposition to horizontal and vertical mergers they had to expand by buying into unrelated industries. The study has evaluated whether manager were diversifying for their own advantage or in the interest of shareholders returns .To do so the author inspected the effect of diversification on the value of his firms equity. Thus, if the value of a firm declined upon announcement of an acquisition, then its management was not acting to maximize shareholder wealth. One explanation for conglomeration stated in the study, stems from Managerial-Discipline theory. Firstly, Firms were taken over to discipline or replace their bad managers ie â€Å"Managerial-Discipline. Secondly, Managerial Synergy theory states that the bidder management wanted to work with target management, not replace it. In this case the acquirer management believed that the target management would complement to their skills. Therefore firm that had Managerial-discipline problem were likely to have had low profits, and on the other hand managerial-synergy targets were likely to have had high profits. Another explanation is that buyers were motivated by earnings-per- share (EPS) manipulation. This explanation states that conglomerates have a high price-earnings ratio (P/E). [4] Therefore the bidder management was bootstrapping, by buying firms with low P/Es. Construction of the dataset began with a list of mergers from the sample of 1968, 1971 and 1974 .The sample was identified from the takeovers from New York Stock Exchange listing statements and the results were presented through regression. The announcement-period return to the bidders shareholders was measured through dollar return, [5] .Regression of the dollar-return measure found that the return to a diversification acquisition was significantly positive. On average their shareholders enjoyed an $11.0 million value increase in value when bidders made a diversification acquisition,. This rejects the hypothesis that diversification hurt shareholders and is thus inconsistent with the idea that diversification was driven by managerial objectives. On the other hand, bidders who made related acquisitions cost their shareholders $6.4 million on average. Thus, the hypothesis that the markets reaction was the same to related acquisitions and diversification is rejected, suggesting that there was a market premium to diversification. Using descriptive statistical summaries it was found that both diversifying and horizontal buyers preferred to buy firms that were profitable. For both type of acquisitions the average operating profit was more than 5% in excess of the targets industry average. Therefore fame of high-profit targets argues against the importance of a managerial-discipline motive for both types of acquisition and in favor of a managerial-synergy motive. This is because Managerial-discipline takeovers should have been directed at low-profit firms, whose profitability needed improved. The motive was Managerial-synergy as the targets were takeovers were high- profit firms, this is because synergy-motivated managers were looking for good partners Matsusaka(1993). Another factor linked to the managerial theories is whether or not the targets management was retained.Top management is said to have been retained if it meet the following criteria. Firstly It was reported in the Wall Street Journal that the acquired firms management would continue to operate under the new management. Secondly, it was indicated in the buyers listing statement that the targets management would be retained. Lastly, when the merger took place at least one of the top three executives of the target firm was still managing the firm three years later from when the merger took place. According to the above mentioned definitions, 61.8% of the managers in the sample were retained and only 3.5% of the acquisitions fell in the Replaced category. The main finding is that buyers earned significantly positive announcement-period returns during the conglomerate merger wave when they made diversifying acquisitions. The hypothesis that conglomerates were driven by empire building or some other managerial objective can be rejected because such explanations imply value decreases to unrelated acquisitions. Another explanation of the conglomerate merger wave is that mergers were driven by an accounting trick rather than expected efficiencies. Therefore, investors watched EPS; when the EPS went up they bid up the price of the stock. According to this argument, Conglomerates, tended to buy companies with lower P/E ratios than their own in order to increase their EPS and boost their stock prices. There was no evidence that firms earned positive returns which inflated EPS in this way. The study indicated that early conglomerators earned significantly positive returns simply because they were first. They may have gained some rents to organizational innovation. Possibly the men who built the first conglomerates had a unique talent for diversification, which the market rewarded. Hubbard, Palia (1999), have examined the likelihood that internal capital markets were formed to alleviate the information costs associated with the less well-developed external capital markets of the time; that is, whether they were expected to create value by the external capital markets in the 1960s.In this paper, the authors have inspected a form of cross-subsidization that occurs when a financially unconstrained bidding firm takes over a financially constrained target firm and as a result forms an internal capital market.The study examined whether the external capital markets expected that the formation of internal capital markets in the 1960s were value-maximizing for the bidding firm. However, existing research has argued that internal capital markets can be value-enhancing. As argued by Geneen(1997), the financing and budgeting expertise that a firm possesses is not necessarily related to its degree of diversification. Accordingly, the internal capital market hypothesis for all acquisitions is tested. The study also tests the bootstrapping explanation for conglomeration in the 1960s, which takes place when firms with a high price-earnings ratio (P/E) took over low P/E target firms and fooled the stock market with an increased combined earnings-per-share. In the 1960s, external capital markets were less developed in terms of company-specific information production than in later years. The authors have classified company-specific information into two general categories. Firstly, production information; and secondly, financing and budgeting expertise. However, in this study information-intensive activities were introduced. This was because; it assists the manager to internally allocate capital across divisions of a diversified firm. It was suggested that diversified firms were perceived by the external capital markets to have an informational advantage, because external capital markets were less well developed at that time. Comparing it to the current decade, there was less access by the public to computers, data- bases, analyst reports, and other sources of company-specific information. Not only this there was less large institutional money managers and the market for risky debt was illiquid. The authors selected a sample of 392 acquisitions that occurred during the period from 1961 through 1970. Diversifying acquisitions were defined as those in which the bidder and target do not share any two- digit SIC code Matsusaka(1993), and related acquisitions as those in which they do share a two-digit SIC code. Further the Wall Street Journal was used for announcement date as the event date. Four measures of abnormal returns to the conglomerate bidding firm were calculated. These measures are as follows. Firstly, the usual percentage returns or the cumulative abnormal returns from five days before to five days after the event date. Secondly the percentage returns until date of last revision or the cumulative abnormal returns from five days before to five days after the date of the last revision (Lang et al. (1991)). Thirdly, the dollar returns or the percentage return times the market value of the bidder six days before the announcement (Malatesta(1983); Matsusaka(1993)). Lastly , the investment return defined as the change in the value of the bidder divided by the purchase price (Morck et al. (1990)). Tobins r ratio[6] is used as a proxy for a firms capital market opportunities. The evidence from these measures is mixed. Positive abnormal returns for all four measures were shown for related acquisitions. On the other hand, two of the four measures had shown statically significant positive abnormal returns for diversifying acquisitions in. Not only that diversifying acquisitions do not significantly earn less than related acquisitions in two of the four measures. Thus, evidence suggests, the capital markets believed acquisitions to be generally good for bidder shareholders during the 1960s. More significantly, it was found that when financially unconstrained buyers acquired constrained target firms, highest bidder returns were earned. Further, bidders generally retain target management, signifying that management may have provided company- specific operational information and the bidder on his part also provided capital budgeting expertise. Therefore, external capital markets expected information benefits from the formation of the internal capital markets. The study found no evidence in support of the bootstrapping hypothesis, as the coefficient on the dummy variable[7] was not statistically different from zero. This result is consistent with Matsusaka, (1993), who also finds no evidence for bootstrapping.Therefore, firms merged to form their own internal capital markets as there was a deficiency of well-developed external capital markets in the 1960s. Some firms apparently had an information advantage over the external capital markets and were expected to produce value in an internal capital market. In the 1960s diversified acquisitions were rewarded by financial markets, the informational advantage that acquiring firms appeared to possess was likely to be in the capital budgeting, allocation process and operational aspects of each division. Bidder firms generally retained the target management as it would facilitate them running the operational part of each target firm. The Motives discussed in the above mentioned articles are appealing; however evidence from the stock market suggests that shareholders preferred their firms to diversify. Using a data set from the 60s and early 70s, Matsusaka (1993) reported that, when the company announced an unrelated acquisition, the stock price of the bidder increased on average of $8 million. However, on the announcement of a related acquisition, the bidding firms stock price fell by $4 million. The difference between the two returns is quite significant. Thus it appears that investors fully believed that unrelated acquisitions benefited their firms relative to the alternatives. Thus the managers just did what the stock market told them to do that is to diversify. Evidence from 1980s stock market suggested that shareholders, again, liked what was happening. Shleifer, and Vishny (1992) found that in the 1980s, stock prices of the bidding firms rose when they bought other firms in the same industry, and fell with unrelated diversification. It is clear that the market disapproved unrelated diversification. Therefore it does not astonish that, in light of such market reception, managers stopped diversifying and did what the stock market directed them to do. 2.2 Legal Motives Matsusaka (1996) investigated whether the antitrust enforcement of the 1960s led firms to take on the diversification goal, by preventing them from expanding within their own core industries. If correct, diversification should have occurred more less frequently when small firms merged than when large firms merged since small mergers were less likely to have attracted antitrust attention. Further the author examined the diversification patterns in the United Kingdom, Canada, Germany, and France in the late 1960s and early 1970s, where none of these countries had legal restrictions on horizontal growth similar to those in the Unites States. The US Clayton Antitrust Act was the antitrust legislation in the postwar period (1950 Celler-Kefauver amendment to Section 7). The act, prohibited mergers that would substantially lessen competition, or tend to create a monopoly. This new law was used by the antitrust authorities and the courts to limit the number of mergers between vertically related and firms in the same lines of business. The strictness of the antitrust environment in 1968 is illustrated by the observation that in the earlier 12 years, all antitrust cases that reached the Supreme Court had been resolved in support of the government. The study indicates the following two implications. Firstly, large horizontal mergers were more liable to have been challenged on antitrust grounds than small horizontal mergers. Secondly mergers between unrelated firms were unlikely to have been blocked, regardless of size. Firms diversified in 1960s, since antitrust authorities prevented them from expanding in their home industries. Later when antitrust policy became less rigid in the 1980s, firms expanded horizontally, leading them to refocus on their core business. Stigler (1966) was perhaps the first to present evidence on the antitrust hypothesis, concluding that, the 1950 Merger Act has had a strongly adverse effect on horizontal mergers by large companies. The author selected a sample of 549 mergers (that took place in 1968) from the New York Stock Exchange. Results of the study were reported through Logit regressions .It was found that bidders were as likely to have entered new industries when they made small acquisitions as when they made large acquisitions, and small buyers were as likely to have diversified as large buyers. Further the total number of diversification acquisitions concerning small companies was high.Though, according to the antitrust hypothesis; diversification should have been widespread primarily in large mergers where same industry acquisitions were prohibited by tough antitrust enforcement. Secondly assembled international evidence indicated that diversification took place in many industrialized nations in the 1960s and 1970s, although restrictions against horizontal combinations were unique to the United States. Yet, most other industrialized Western nations[8] experienced diversification merger waves and general movements toward diversification in their largest companies (Chandler (1991)).Thus most of the evidence, is not consistent with the antitrust hypothesis, signifying that other explanations for corporate diversification should be emphasized not the anti trust hypothesis. Scholes and Wolfson (1990) state, that the changes in U.S. tax laws[9] in the 1980s had obvious affect on the desirability of mergers and acquisitions. However such transactions were not only motivated by tax factors but also non tax factors[10]. Tax laws can have number of affects on mergers and acquisitions , which can include the following capital losses, presence of tax-attribute carry forwards such as net operating losses , investment tax credits, and foreign tax credits, among others, that might be cashed in more quickly and more fully by way of a merger; the desire to step up the tax basis of assets for depreciation purposes to their fair market value; the desire to sell assets to permit a change in the depreciation schedule to one that is more highly accelerated. The authors in this study have examined the effect of changes in tax laws passed in 1980s on merger and acquisition activity in the United States. The authors selected the annual values of mergers and acquisitions from 1968 through 1987 in nominal dollars. The data source for nominal values was W. T. Grimm and Company for 1968-85 and Mergers Acquisitions (1987-88, rev. quarterly) for 1986 and 1987. Using time series analysis it was found that the dollar volume of merger activity between 1980-1981 increased from $44.35 billion to $82.62 billion (86%) in nominal terms. The percentage increase was approximately twice as large as the next largest percentage increase in annual merger and acquisition activity over the 1970-86 periods. There was spectacular increase in merger activity that began with the passage of the Economic Recovery Tax Act of 1981, however this was not the only merger wave that occurred in that time frame. Unusual merger activity was also witnessed in the 1960s. The termination of 1960s wave was accompanied by quite a few regulatory events that depressed such transactions. Firstly, the Williams Amendments had en larged the cost and difficulty of effecting tender offers. Secondly the issuance of Accounting Principles Board Opinions 16 and 17, forced many acquiring firms to boost depreciation expense, goodwill amortization and cost of goods sold. Thirdly the Tax Reform Act of 1969, made transferability of tax attributes (net-operating-loss carry forwards) more restrained. Therefore there was a sudden decline in merger activity from the peak in 1968. Relative to the tax benefits when the non tax benefits of the transaction were small, current management were the most efficient purchasers, as they had an advantage along the hidden information dimension. Therefore 1981 act had increased the incidence of cases in which non tax benefits were less than the common tax benefits of mergers and acquisitions. As a result, there was an increase in the number of transactions involving management buyouts. The annual dollar value of unit management buyouts between 1978-80 increased by a factor of 3, and by a factor in excess of 20 for the period 1981-86. The antitrust proposition mentioned above is appealing as one of the most important reason for diversification, during the 60s and 70s, which simply disallowed mergers of firms in the same industry, regardless of the effects of these mergers o