Graduation Speech Essay

?It’s a rare opportunity to be given this privilege to talk to young minds like you–the youth whose minds and thinking are ideal, pure and filled with enthusiasm. Our theme is â€Å"The Graduate: A Partner Towards Transformational Society, An Answer to Societal Change†. We cannot effect social change if we ignore the social problems that are in our midst nowadays facing our very eyes. We should dig deeper to the root causes of these social problems. Every day, every hour, and every minute of our lives, we hear, we see the social problems besetting our country and our community. There is poverty, corruption in the government, violence, drug addiction, crimes, injustice and so on as if they are here to stay. Are there no more solutions for these ills of society? How and when can we stop this? The real root causes of these problems are the values of the people which they were brought up. Diploma is nothing without moral values. We have intelligent people in our society but they do not possess the right values. They think only for themselves. We have intelligent graduates but they ended up as greedy politicians and greedy businessmen. We have intelligent graduates but they are also indifferent, self-centered, irresponsible and lazy. What the society needs now are graduates who are disciplined, hardworking, honest, hospitable, makiKapwa, makaDiyos at Makabayan, not intelligent alone. Graduates, I encourage you to participate in our Sangguniang Kabataan actively in all its programs and activities. Let us always relive the bayanihan spirit and start it with the SK. It’s alright to aim for success in life. But true success is not only with becoming rich in material respect but rich with moral values. To our graduates, let’s not forget our Filipino values. Let’s keep our moral fibers intact as we go along the ladders of success. We know we cannot transform our society overnight. We know we cannot do it alone. As the future leaders of our society, you, graduates, should start now in your own little ways. Parents, and teachers, let’s us be a model to them and help our graduates in directing their path—to the path that is noble and worth living. To the graduates, congratulations, and may God Bless you.

Nutrition programs Essay

Traditionally, nutrition programs were targeted to the indigent and poor populations in developing countries. Many of today’s Americans are malnourished also, but they are inundated with unhealthy foods and require a multidisciplinary approach to nutrition education. What would be the three most important points to include in a public nutrition program? Provide current literature to support your answer and include two nutritional education community resources. Malnourishment is no longer an issue seen only in the indigent population and developing countries. Many Americans are also plagued with this issue, largely due to unhealthy food choices. Providing a multidisciplinary approach to public nutrition education will help in combating the problem. There are many aspects which should be covered in these programs, however, we will look at three top points. 1.) The relationship between eating behaviors and chronic diseases Several chronic diseases can occur in relationship to unhealthy eating. Cardiovascular disease, obesity and diabetes are a few. Eating foods high in fat can lead to coronary artery disease which can lead to heart blockage which can lead to death. High fat foods as well as over eating can lead to obesity, which can lead to cardiovascular disease and/or diabetes which can lead to death. Though most complications and/or diseases will manifest themselves in adulthood, looking back most will find the risk factors began in early childhood with poor food choices. As stated by Green Facts (n.d.), â€Å"The risks of developing chronic diseases begin in fetal life and continue into old age. Thus, adult chronic diseases reflect the combined effects of prior exposure to damaging environments.† As you can see, it is a vicious cycle we must be cognizant of throughout every stage of life. 2.) Mindful Eating Each time you prepare a meal your first thoughts should be on the nutritional value of the food and then â€Å"am I really hungry, or am I eating for some other reason?† For example, it is mid-afternoon at work and you are hungry and unable to wait until dinner time. Your choices are high calorie, high fat, nutrient dense items from the vending machine or a granola bar, fruit or yogurt. An appropriate snack choice would be the granola bar, fruit or  yogurt. Another example: you are sitting at home at 8:00pm on a Thursday night watching television. You go to your pantry and retrieve a bag of chocolate chip cookies. At this point, stop and ask yourself, â€Å"am I hungry or am I choosing to eat right now because I am bored?† If you are going to eat them out of boredom find something else to do to occupy your time, such as read a book, do a craft, or play a game with your family. As stated by Harris (2013), â€Å"The core principles of mindful eating include being aware of the nourishment available through the process of food preparation and consumption, choosing enjoyable and nutritious foods, acknowledging food preferences nonjudgmentally, recognizing and honoring physical hunger and satiety cues and using wisdom to guide eating decisions.† 3.) Cooking demonstrations When talking to individuals about healthy eating often times they say they do not know the proper foods to prepare or how to prepare them to maintain their nutritional value. Offering cooking demonstrations would offer a hands on approach to the issue. We also make sure we are teaching about foods that are affordable and easily accessible in the area. Nutritional education community resources in the greater Houston, Texas area: Houston Food Bank Portwall Headquarters 535 Portwall Street Houston, Texas 77029 713-223-3700 Texas Department of State Health Services, Women, Infants and Children Program (WIC) 711 N. Velasco, Ste. A Angleton, Texas 77515 1 (800) 942-3678 Reference: Harris, C. (2013). Mindful eating. Today’s Dietitian, 15. Retrieved from http://www.todaysdietitian.com/newarchives/030413p42.shtml Green Facts: Diet and nutrition prevention of chronic diseases. Retrieved November 17, 2014 from http://www.greenfacts.org/en/diet-nutrition/l-2/3-childhood-eating-habits.htm#1 Houston Food Bank: Nutrition education. Retrieved November 16, 2014 from http://www.houstonfoodbank.org/programs/nutrition-education/ Texas Department of State Health Services, Women, Infants and Children Program (WIC). Retrieved November 16, 2014 from http://www.dshs.state.tx.us/wichd/

Chinese Parenting Style

Amy Chua, a ‘tiger mom’, shared her Chinese parenting style with the public through publishing book and writing article. Her harsh and rigid parenting style raised lots of discussion and concern around the public. They all raise a question- this parenting style can help children to succeed in the future? I think it may not be that easy to raise a child with harsh parenting style. To a large extent, I disagree the harsh parenting style equal a better future of the child. First we have to define what ‘tiger mom’ is.It is a Chinese parenting style that harshly and toughly pushes their children to meet their target or expectation, usually in the aspect of academic. In my opinion, better future includes better physical and mental health, wealth. According to a research which is done by Desiree Baolian Qin, a professor in the department of human development and family studies at Michigan State University, Chinese-American kids were more disadvantageous concerning levels of anxiety and depression and the amount of conflict in their families when comparing European-American kids.The parents do not care what their children’s feeling and perception is. The parents use their authority to push their children. There is a high possibility of conflict between different expectation from parents and children. As sometimes parents have high expectation to children, this put large amount of pressure on children. So, it triggers a certain level of anxiety of children. These combination make children become low self- esteem. Although they will become a profession in the future, they have a bad relationship and a negative impression on parents.Also, tough parenting style will affect children’s communication skill that largely relate to better future. Like popular tiger parent Amy Chua, she does not allow her daughter to stay at school to play with friends after school. A key concept of schooling is developing students’ social and commun ication skills. Parents do not let their children to go out but follow their tied schedule. The children will become not sociable. In workplace, there are not just apply professional skills but also communication and social skills that help people to promote to upper managerial level and work ffectively. Therefore, tiger mom is not equal to a better future. However, a coin has two sides, although Chinese parenting style is very mean, it has certain advantages on children’s future. Focusing on effort but not inherent ability is a feature or advantage of Chinese parenting style. Also, it is the key of distinguishing American and Chinese parenting style. Amy Chua doesn’t let her kids believe they can’t succeed. The style nurtures the children with inculcating the concept of working hard. It pushes children to limit to attain the goal which is set by their parents.This let the children realize that they can make it when working hard. It gradually develops their self confidence and determination to attain a goal. It is well prepared for future to work with colleagues. He or she will become a hard working and determined person in workplace. These are crucial feature of high position in management level. So, a tiger mom equals a better future in this way. Moreover, although parents giving lots of pressure on children will make the relationship tight, it trains children AQ when living and working under pressure.Adversity Quotient (AQ) is the ability of a person to deal with problems. Chinese parenting style harshly push children to achieve certain goals which is not easy to attain. In this time, children have to think of some ways to cope with the problems to satisfy their parents’ desire. As a result, the skills of problem solving are significant in workplace and also live independently. However, this style will largely effect children emotion when there is high possibility that conflict between children and parents.Even some kids have bee n diagnosed of mood disorder. This largely affects the relationship between parents and children and causes apparently mentally unhealthy. So, this is a better future for a child. In conclusion, I admit Chinese parenting style improves children ability of problems solving and develops their determination mind that give them a better future and achievement. However, the parenting style is tremendously rigid to a kid that easily harms their esteem and destroys family relationship.It will give a negative memory in their mind, even get an unrecoverable wound in their heart. Even though their future is bright and recognized, they have negative feeling and history in their mind that I am not notice as ‘better future’. Thus, I disagree a tiger mom equals a better future in a small extent. Reference list: http://www. livescience. com/18023-tiger-parenting-tough-kids. html http://www. raisesmartkid. com/all-ages/1-articles/47-authoritarian-strict-parenting-vs-permissive-which-is -better

How Technology Impacts Wellness Essay Example | Topics and Well Written Essays - 1000 words - 1

How Technology Impacts Wellness - Essay Example These have made communication easy and more convenient for people that many have found themselves doing two or three things at the same time. Nevertheless, like the old saying goes too much of a good thing can be bad. The people behind Frontline’s documentary entitled Digital Nation takes a step back to assess the impact of technology on the different aspects of an individual’s well-being. At the start of the computer age, everyone was amazed at how fast it had become to do things. With the creation of the Internet, everyone was in awe that they could see colleagues and family from the other side of the world. Now, the Internet and the computer have become so much a part of a person’s life these people find it difficult to imagine how their life would be without the conveniences of today. Computers, cellular phones and the Internet have become a necessity for the people in the digital world, making them feel vulnerable without it. Mentally, technology has made some people cope better with events in their life. For example, the documentary featured the military employing technology in recruitment, the treatment of post-traumatic stress disorder and selected missions. Through simulations of actual military activities, people in the service who have come back with PTSD are able to evaluate the stressful circumstances over and over again until they overcome their anxiety. According to the film, these simulations have also encouraged eligible youth to sign up and help protect the country in the face of objections from parents. The youths say they are old enough to distinguish between games and real combat to make their own decisions. Technology has also helped lower the casualties in combat situations through the use of drones. Controlled remotely from the US, the personnel are able to hurt the county’s enemies but are safe from retaliation. Multi-tasking is a common practice in the digital age. As the students and professors in the documentary shared, they will be sending messages from their phones while browsing the Internet on the computers and listening to music on their MP3 players.     

POLITICAL EXPERIENCE ANALYSIS Essay Example | Topics and Well Written Essays - 1500 words

POLITICAL EXPERIENCE ANALYSIS - Essay Example In effect, whether it is to protest some program of the government or to display your endorsement for a specific contender is known by all that majority of rallies achieve nothing. For oppressed cultures, where injustice is the order of the day, the rally has the opposite effect. Put it another way, there is nothing more powerful that thousands of people making the simple demand of, say, liberation. The odd successful rally in recent-day America invariably is a response to the attendance of coercion or inequality. During spring, I attended a rally for Barrack Obama in Ewes, Iowa. Preceding that experience, I had never attended any rally. I am in University. Obama’s rally at Iowa State University was promptly organized by some assiduous group. Why did I feel the urge to go? To put in another way, I was quite startled. This rally provided an opportunity to contribute in a time-privileged student tradition. I believe that the presence of some rally along the path of life is archetypal to the experience of any young man who is semi-educated and has the jot of political opinions. In a sense, this belief was accurate, just because is function to show the imprudence of swinging out of old political varieties for new time. It was a hot dreary day, as nature has added brushstrokes to the atmosphere to emphasize the farce of the attendees endeavor. We all stood around underneath the steps of the University’s Agricultural Building, and attempted to think ourselves as the re-embodiments of activists protesting at that very spot against the military’s Don’t Ask, Don’t policy and Obama’s abortion rights stance. A man got to his feet at the top of the stops and started shrieking into the microphone to get the rally going. The first few epistles were met with a proper amount of fervor mixed with ire. However, I had not expected to enter some arena of political thoughtfulness nor seriousness. But this one proved me wrong. I had

Preparing Risk Management Guidelines Assignment

Preparing Risk Management Guidelines - Assignment Example ated and economical application of resources to minimize, monitor and control the probability and /or impact of unfortunate events (Howells & Schulze, 2009, p. 89). There are various causes of business risks such as natural causes, financial risks, market risks, credit risks, accidents, legal liabilities, and projects failures among others. A business should have well defined strategies to manage and control various risks that may occur in business including the contractual and vicarious liabilities (Austen-Baker, 2011). The risk management guidelines will help the business management to establish resources for designing and delivering professional and effective risk management strategies during execution of business its operations. The parties in a contract must follow the right channel of communication in order to minimize liability. For example, if some conditions arise that makes discharge of the contractual duties impossible or delayed the party should communicate with the other party immediately and agree on the best course of action to take (Austen-Baker, 2011). The most common methods of managing risks in business includes averting of risks, transfer of risk to a third-party such as insurance, reducing the negative impact of risks and acceptance of some or all consequences of risks (Stone & Devenney, 2014). The parties to the contract should do all they can to avoid the occurrence of risk during the implementation of the contract. If one party failed to perform according to the contract and the other party had an opportunity to mitigate the loss suffered due to partial performance or lack of performance of the contract, both parties will be held responsible, and the offended will be liable for contribut ory negligence. The damages that the offender can pay in such a case are reduced by the amount of damage contributed by the offended person as stated in the case of Nettleship v Weston [1971] 2 QB 691 in which the trainee driver was held partly accountable

Fabrication of a Reinforced Concrete Beam Lab Report

Fabrication of a Reinforced Concrete Beam - Lab Report Example Thirdly this gives sufficient space for the main reinforcement to develop full stressing and strength, which consequently prevents slipping of the bars. Lastly a sufficient cover gives a smooth surface which improves the aesthetics of the component as well. 3. 4. Bar codes are on the schedule so that the reader must understand that how the steel bar is is to be bended and what angles and shapes are to be made. In addition to this the reader can easily calculate the length of the bar, and consequently by using the diameter and the type of bar the total weight of the bar can be calculated and finally the total weight of the reinforcement. 5. The cover can be maintained by different methods. One method can be made by placing Metal plastic tipped bar chairs under the reinforcement so that a specified height can be maintained between the bottom surface and reinforcement. Then another method is to give spacer blocks, these can be small marble pieces or concrete plates. Another method used for very heavy reinforcement is the employment of Plastic strip bar chairs. 6. a) coarse aggregate = 122.4 Kg b) fine aggregate = 81.6 Kg c) cement = 40 Kg d) water = 22 Kg 7. Water cement ratio of the concrete is (weight of water / weight of cement ) is w/c = 22/40 = 0.55 SSD or saturated surface dry is a condition of the aggregate when all the surface pores of aggregate are fully filled and there is no excess water on its surface. In addition no more water will be absorbed by the aggregate when immersed in water. This aspect is important because if the aggregate is not saturated then it will start absorbing the water of the concrete which was supposed to be consumed in the hydration of the concrete. If there is less water in the concrete than required the concrete will not acquire the desired strength and the concrete will have microscopic cracks further weakening the concrete and this will also disturb the desired water cement ratio. Then this state helps in finding the absorptio n value of aggregates and also the specific gravity of aggregate. Lastly the aggregate must be saturated surface dry as the dry surface will help and ensure a good bond between the concrete and aggregate. 8. A clean beam form is important because presence of any loose material will attach on the surface of the beam and when the beam is subjected to bending the concrete around this loose material and the loose material it self will spall off. Hence the cover would be compromised and there is a chance that the steel reinforced will be naked and prone to environment resulting into its rusting and corrosion. 9. The indication of completion of the compaction is that the firstly there is no decrease/ decay in volume or height of the concrete and the movement of aggregates due to vibration in the concrete will very low. In addition the final indication is that the water will come on the surface of the concrete and it must be noted that as soon as the water film appears on the surface of th e concrete the vibrator must be pulled out of the concrete or else the concrete will segregate, resulting into separation of cement paste and aggregate. 10. The compaction of concrete is very important for its acquisition of desired strength, In essence compaction is the process in which the entrapped air is released from the

Multivariate Data Analysis Assignment Example | Topics and Well Written Essays - 1500 words

Multivariate Data Analysis - Assignment Example These variables need to be specified prior to setting up a structural model. The process through which these latent variables are decided is known as Confirmatory Factor Analysis (CFA). Thus, the measurement model for a CFA also comes in the form of a multivariate regression equation. However, CFA precedes SME since the exogenous variables included in an SME are determined through CFA. CFA and SME together form a measurement model and help in evaluating the underlying relationship between variables, with least measurement errors. An SEM generally consists of a number of multivariate equations which often leads to errors in recording the inputs. Hence the preferred form of input representation in an SEM should be through a covariance matrix with defined row and column names, so as to avoid confusion and errors in providing inputs. Post-estimation, there remains the task of assessing the fitness of the predicted model. Model fit implies the degree to which the estimated model can resemble the observed population model. Hence, the more that the observed covariance matrix corresponds to the estimated one, the better is the model fitness. Generally, model fit could be of two types – goodness of fit and badness of fit; in the former case, the estimated model is considered to be a good representation as the value of the statistic rises in contrast to what the defining factor should be in case of the badness of fit. Examples of the goodness of fit are GFI, CFI, and TLI and those of badness of fit are RMSEA and SRMR. However, there is no benchmark to evaluate the validity of the model based on the value of goodness of fit of the same. The only way-out would be to assess the goodness of fit by figuring out the same via multiple indices.

Film Reaction Movie Review Example | Topics and Well Written Essays - 1250 words

Film Reaction - Movie Review Example Sauri replaces his father as leader and Kumaglak's favorite Tulimaq is cursed. The film illustrates how lust for power and personal advancement can divide a community and cause pain, suffering, and untimely death. It demonstrates the law of attraction, how humans can bring evil on themselves and others by harboring bad thoughts. The role of a shaman is not necessarily always a good one in terms of having positive intentions and effects. The film illustrates the nature of the spirit world which also reflects the thoughts, emotions and actions of those living in the physical world. Kumaglak's wife Panikpak takes pity on Tulimaq's poor family. After years of discontent and discord under Sauri's despotic leadership, Tulimaq's sons Amajuaq, the Strong One and Atanarjuat, the Fast Runner, grow up to be skilled hunters and rebels. Atanarjuat falls for Atuat, the betrothed of Sauri's ill-tempered, jealous son Oki. The plot is full of intrigues and the seed of discontent and malice is passed down to the next generation. Oki loses a head punching competition to which he challenges Atanarjuat. But the two young men's battle is also a battle of spirits. The deceased shaman Kumaglak's spirit, summoned by the elder Panikpak, protects Atanarjuat and brings him victory. This is an example that death does not end spirit matters; the power of the spirit persists beyond the physical world and can traverse across world to make its influence felt. The story addresses taboos and breaks them, telling of Puja, Atanarjuat's troublesome second wife, sleeping with her brother-in-law Amajuaq. This causes a deep rift between the brothers. The lack of forgiveness is another spiritual wound, both for the person who refuses to forgive and the one who is refused forgiveness. Puja sets the two brothers up and they are attacked while they sleep by Oki and his friends. They murder Amajuaq, who urges Atanarjuat to flee. There's a parallel here to other myths and spiritual traditions, the lesser brother is elevated to spiritual heights just as Joseph was after being sold by his jealous brothers, or Jacob, or even young David who killed Goliath and became king. Atanarjuat is helped by a spirit to soar over a wide crack and escape Oki. He is aided by Qulitalik, Panikpak's brother who escaped the evil camp with Kumaglak's rabbit foot, the symbol and embodiment of the shaman leader's spirit. This is a good example of the material instruments and p ower objects that shamans use. Qulitalik recognizes Atanarjuat's need to heal spiritually and emotionally and sends him on a spiritual path, collecting animal droppings in a shit bag and with the aid of the rabbit foot, Kumaglak's tool. Qulitaik's role is much like the assistants who help apprentice shamans find their path and accept their destiny. Picking up feces is like holding on to emotional refuse. It is senseless and unhealthy. Atanarjuat has troubling visions, but finally comes to terms with his past and forgives his brother. Forgiveness is the key to his healing and opens the way to healing for the community, too. Atanarjuat has a vision in which his heart is pierced by the evil shaman. This is a highly symbolic event. The piercing of the heart represents deep spiritual pain and potentially fatal suffering. The heart

Substance Abuse Coursework Example | Topics and Well Written Essays - 250 words

Substance Abuse - Coursework Example In relation to Miller family document, Sam Miller, who is 50 years old, is experiencing alcoholic characteristic signs and symptoms that have both biological and psychological significance. Sam is divorced and is estranged from both the son and the ex-wife. He equally has a long history of work and legal problems that are instigated by his drinking habit. According to the family history of Sam Miller, neither the father nor the mother is alcoholics and the same can be said to the grandparents. It is thus evident that the alcoholism as portrayed by Sam is not genetically acquired. Nevertheless, environmental factors can work in synergy to influence alcoholism in an individual, like peers one associate with and the nature of one’s work (Krohn, 2013). Having begun abusing alcohol at an early age, Sam has become dependent on the substance, thus has had profound implication to his life making him be termed as a social failure. Beginning consumption of alcohol at an early stage of life leads to addiction to the drug followed by dependence. When one depends on drug, he/she becomes inefficiently functional in the absence of the drug, thus the fact that Sam Miller began consuming alcohol at an earlier stage in life has increased the dependency on alcohol. Brunetti, M., Di Tizio, L., Dezi, S., Pozzi, G., Grandinetti, P., & Martinotti, G. (2012). Aripiprazole, alcohol and substance abuse: A review. European Review for Medical and Pharmacological

Corporate social responsibility Essay Example for Free

Corporate social responsibility Essay Social responsibility is an ethical theory that an entity, be it an organization or individual, has an obligation to act to benefit society at large. Social responsibility is a duty every individual has to perform so as to maintain a balance between the economy and the ecosystems. Businesses can use ethical decision making to secure their businesses by making decisions that allow for government agencies to minimize their involvement with the corporation. Critics argue that Corporate social responsibility (CSR) distracts from the fundamental economic role of businesses; others argue that it is nothing more than superficial window-dressing; others argue that it is an attempt to pre-empt the role of governments as a watchdog over powerful corporations though there is no systematic evidence to support these criticisms. A significant number of studies have shown no negative influence on shareholder results from CSR but rather a slightly negative correlation with improved shareholder returns. Corporate social responsibility (CSR, also called corporate conscience, corporate citizenship, social performance, or sustainable responsible business/ Responsible Business) is a form of corporate self-regulation integrated into a business model. CSR policy functions as a built-in, self-regulating mechanism whereby a business monitors and ensures its active compliance with the spirit of the law, ethical standards, and international norms. In some models, a firms implementation of CSR goes beyond compliance and engages in actions that appear to further some social good, beyond the interests of the firm and that which is required by law. CSR is a process with the aim to embrace responsibility for the companys actions and encourage a positive impact through its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere who may also be considered as stakeholders. FUNCTIONS OF CORPORATE SOCIAL RESPONSIBILITY The function of corporate social responsibility is for corporations to hold themselves accountable for the ethical, legal, societal and ecological impacts of their business practices. Corporate social responsibility practices are self-monitoring, meaning there arent laws requiring corporations to behave in a socially responsible manner. Rules regarding corporate responsibility practices are generally written into the corporate bylaws, mission statements and employee handbooks. Ethical Function Ethics are one of the most important aspects in corporate governance and therefore have an important function in corporate social responsibility. A company must have internal controls regarding the expected ethical behavior and consequences of unethical business practices of its top executives and employees. Behaving ethically makes the company as a whole accountable to its investors, shareholders and consumers. The ethical function of corporate social responsibility helps to prevent conflicts of interest between earning corporate profits and maintaining the integrity of the company and the goods and services it produces. Legal Function The legal function of corporate social responsibility is to encourage transparency in a companys business practices and financial reporting. Maintaining high levels of legal business practices, such as adhering to Occupational Safety and Health Administration, or OSHA, regulations promotes goodwill toward employees. Maintaining high levels of legal financial practices maintains good will among investors, stakeholders and government financial-reporting regulatory agencies such as the Securities and Exchange Commission, or SEC. Societal Function The societal function of corporate social responsibility is to respect and invest in the communities in which the company operates. Companies are aware of how the production of their products affects the local community. These companies take necessary actions to diminish the negative impacts of factors such as increased traffic, noise and pollution for the communities in which they operate. The societal function of corporate social responsibility also includes companies reinvesting in the communities in which they operate, such as donating money to local charities. Ecological Function The ecological function of corporate social responsibility is to not only respect the immediate environment in which the company operates but also to respect the companys effect on the global environment. Companies are aware of the environmental impact the production of their products have on their local communities. In corporate social responsibility, these companies adhere to strict standards in an effort to diminish the negative impact of the environmental byproducts such as air and water pollution from the production of their products. Having such standards impacts both the local and global environments. CHARACTERISTICS OF CORPORATE SOCIAL RESPONSIBILITY The idea of Corporate Social Responsibility, CSR, first appeared in the late 1960s in response to the need for businesses to address the effect of their pursuits on the environment and society, in addition to the interests of their shareholders. CSR attempts to portray corporations as responsible citizens who are concerned with issues of social and environmental welfare. The Public CSR argues that corporations bear responsibility for the effect they have on other sectors of society. The activities of corporations have an impact on individuals who dont work for them and dont buy their products, through, for example, secondary economic impacts and degradation of the natural environment. CSR acknowledges this, and attempts to make the interactions between corporations and society positive and productive. This can be done by consulting with neighbors and citizens who are affected by corporate activities and by striving for transparency in corporate pursuits so that the public knows what is going on. The Environment Increased knowledge on the part of the public about declining resources, toxic waste and global warming is compelling companies to make more efforts to be more environmentally benign. The traditional view that the natural world is merely a source of materials and an equally convenient dump for waste is being challenged from many quarters, and CSR is an attempt by corporations to respond to these concerns. The sincerity of changes being made on the part of corporations includes some serious efforts to achieve sustainability and other efforts that are essentially greenwashing, activities in which corporations put more effort into appearing green than into actually being green. Clients CSR challenges the traditional wisdom that the interests and needs of the clients of a corporation will be adequately protected by the market itself. Because the free market has been severely compromised by a combination of government subsidies and manipulative marketing practices, CSR attempts to remedy this situation by installing practices into corporate life that will monitor the interaction between corporations and their clients in an attempt to ensure that nobody is being exploited or cheated. Consumer protection can be enforced by the government or voluntarily pursued by companies, the latter course have clear advantages for the public relations of the company. Staff Staff and employees of corporations have a right to expect fair pay, safe working conditions and meaningful work. CSR is one aspect of a transformation in the corporate world that attempts to overcome archaic views of workers as mere means to an end on the part of shareholders. Particularly in less developed countries that are often the sites of intensive resource extraction, the treatment of labor is frequently substandard. CSR is intended to promote the rights of all workers and to ensure that corporations respect these rights and make whatever changes are required to prevent the exploitation and mistreatment of labor. FOUR TYPES OF CORPORATE SOCIAL RESPONSIBILITY As large corporations begin to dominate the world economy, it raises questions about the importance of corporate social responsibility in business. A variety of types of corporate social responsibilities have emerged in public discussions, and understanding their implications is important. Environmental Responsibility People expect businesses to exhibit environmentally responsible behavior, as evidenced by a PricewaterhouseCoopers survey that found that the No. 1 issue for companies in the future, according to U. S. respondents, is carbon emissions reductions. Specific environmental issues that affect businesses include global warming, sustainable resources and pollution. Businesses are being urged by environmental groups and governments to reduce their carbon footprint, to obtain their materials from sustainable sources and to reduce their pollution. Human Rights Responsibility The 21st-century marketplace is highly global. This means that when a product is purchased in the United States, for example, it may have been produced in China, or have components from South America. The ethical issue for corporations is ensuring that human rights are respected throughout all levels of the supply chain. Major companies have received criticism for their use of sweat shops and for sourcing resources that are harvested by unfairly treated workers. This has lead to a push for the use of strict labor standards to be applied to suppliers, and a demand for fair trade products such as chocolate and coffee. Financial Responsibility Financial responsibility is an important issue in corporate social responsibility. In the wake of the accounting fraud perpetrated by Enron and Arthur Andersen and Ponzi schemes orchestrated by the likes of Bernie Madoff, businesses are questioned about the accuracy of their financial reporting by increasingly skeptical shareholders and government officials, as evidenced by the Sarbanes-Oxley Act. Employees are expected to act as whistle blowers in such situations, and white collar crime is seeing high-profile prosecutions like that of Martha Stewart or former Worldcom CEO Bernie Ebbers. Political Responsibility Trading with repressive regimes is a difficult issue in corporate social responsibility. Some businesses argue that working with these regimes will help to advance them and bring rights to the countries. People and governments have demanded that businesses stop trading with repressive regimes, which was most notably observed when several western governments launched an embargo against the Apartheid government in South Africa during the 1980s. Shell Oil received considerable consumer backlash during the 1990s for its complicit involvement with the Nigerian government that murdered anti-oil activists. These issues make doing business with certain governments an important consideration for corporate social responsibility. PROS CONS OF CORPORATE SOCIAL RESPONSIBILITY Corporate social responsibility is generally perceived as a positive business ideology in the 21st century, despite some challenges. A significant expansion of basic business ethics, CSR establishes guidelines for ethical and socially responsible behavior. It addresses how companies that want to satisfy government and societal requirements should treat key stakeholder groups, including customers, suppliers, employees and the community. Pro 1: Social Responsibility and Customer Relationships One of the foundational elements of CSR is that it causes companies to reason beyond basic ethics to consider the benefits of active involvement in communities. In his article The 7 Principles of Business Integrity, business strategist Robert Moment argues that 21st-century companies must prove themselves to customers to build long-term, trusting relationships. They must also get involved in the community to give back. This community connection endears your company to the local markets in which you operate. Pro 2: Motivated Employees Employees are a companys most valued asset. This is the premise of a companys obligation to this key stakeholder group with regard to CSR compliance. This means treating employees with respect and offering fair working conditions. It also means establishing fair hiring practices and promoting a non-discriminatory workplace. This improves morale within the workplace and encourages teamwork. Additionally, a writer on the As You Sow website stresses the importance of managing a diverse workplace so that you can benefit from a variety of backgrounds and life experiences. Con 1: Expenses The main reason any company would object to participating in CSR is the associated costs. With CSR, you pay for environmental programs, more employee training and efficient waste management programs. Proponents of CSR agree that any expenses to businesses are ultimately covered by stronger relationships with key customers. However, David Vogel indicates in his Forbes article CSR Doesnt Pay that investment in CSR programs may not necessary result in measurable financial results. Con 2: Shareholder Expectations Another challenge for companies when considering CSR is the possible negative perception of shareholders. Historically, publicly-owned companies had a primary focus of maximizing shareholder value. Now, they must balance the financial expectations of company owners with the social and environmental requirements of other stakeholder groups. Some shareholders are happy to invest in companies that operate with high integrity. Others may not approve of the aforementioned expenses of operating under CSR guidelines. IMPORTANCE OF CORPORATE SOCIAL RESPONSIBILITY Social responsibility is so important to current and long-term business success that corporate social responsibility, CSR, has become a widely recognized business process in the early 21st century. An entrepreneur point out that CSR is an evolution of corporate ethics because it involves balancing the social expectations of all stakeholders, including shareholders, citizens, providers and customers, along with environmental responsibility. Basic Integrity Most experts and CSR analysts agree that this broad business concept is an evolution of basic business ethics and integrity. Entrepreneur and business strategist Robert Moment The 7 Princes of Business Integrity agree that treating stakeholders with respect and earning trust of customers through ethical business operations is the CSR foundation. Leading advocate of corporate accountability, the As You Sow Foundation, also stresses the importance of internal business controls that mandated ethics from corporate leaders and employees. Community Relations The word social is key to understanding how CSR goes beyond basic integrity. Moment states in one of his seven principles that as a CSR adherent, you must remain involved in community-related issues and activities thereby demonstrating that your business is a responsible community contributor. This community involvement and participation shows your marketplace that you are interested in more than just taking money from their pockets. In the long run, this strategy leads to a stronger public reputation and more profitable business relationships. The Environment Another reason CSR is much broader than conventional business ethics is its necessary inclusion of environmental responsibility. Once an opportunity for companies to add value and enhance their brand image, green-friendly operations are now a societal requirement with CSR. As You Sow discusses the importance of preserving the environment, optimizing efficient use of natural resources, such as renew, reuse and recycle, and reduction of waste as important to the environmental component of CSR. Companies that do not consider these initiatives draw the ire of the government, public and consumer watch groups. Bottom Line The underlying question is whether CSR operations improve a companys bottom line performance. David Vogel argues in his 2008 Forbes article that CSR Doesnt Pay. Vogel argues that operating under CSR guidelines is not likely to produce higher tangible profits for a company throughout time. Now that socially responsible behavior is expected, it goes largely unnoticed, argues Vogel. He does agree, though, that companies that ignore CSR may experience public backlash and negative business consequences. Still, many advocates of CSR believe that companies can still profit in the long run through stronger business and customer relationships. PRINCIPLES OF CORPORATE SOCIAL RESPONSIBILITY The main principles involving corporate social responsibility involve economic, legal, ethical and discretionary aspects. A corporation needs to generate profits, while operating within the laws of the state. The corporation also needs to be ethical, but has the right to be discretional about the decisions it makes. Levels of corporate social responsiveness to an issue include being reactive, defensive, responsive and interactive. All terms are useful in issues management. Selecting when and how to act can make a difference in the outcome of the action taken. CSR has inspired national governments to include CSR issues into their national public policy agendas. The increased importance driven by CSR has prompted governments to promote socially and environmentally responsible corporate practices. Over the past decade governments have considered CSR as a public issue that requires national governmental involvement to address the very issues relevant to CSR. The heightened role of government in CSR has facilitated the development of numerous CSR programs and policies. Increasingly, corporations are motivated to become more socially responsible because their most important stakeholders expect them to understand and address the social and community issues that are relevant to them. Understanding what causes are important to employees is usually the first priority because of the many interrelated business benefits that can be derived from increased employee engagement (i. e. more loyalty, improved recruitment, increased retention, higher productivity, and so on). Key external stakeholders include customers, consumers, investors (particularly institutional investors), and communities in the areas where the corporation operates its facilities, regulators, academics, and the media. The debate, on whether responsibility of a business enterprise is only to its shareholders (owners) or to all stakeholders, including environment and the society at large, is an on going one and continues. In received literature â€Å"Stakeholder†, as an expression is fairly recent in origin, reportedly appearing first in an internal memorandum of the Stanford Research Institute in the year 1963. According to a definition given by Edward Freeman â€Å"A stakeholder is any group or individual who can effect, or is affected by the activities and achievements of an organization. † Friedrich Neubauer and Ada Demb in â€Å"The Legitimate Corporation† identify six groups of distinguishable stakeholders (not necessarily in this order) as follows a) Providers of funds b) Employees c) General public d) Government e) Customers and f) Suppliers An increasing number of companies are reporting publicly on their social, environmental and ethical performance, both as a communication to stakeholders, and as a management tool. However, as this practice has only become more widespread since the mid 1990s, there is as yet no standard format to address the type of information companies choose to report, or how that information is collected, analyzed and presented. At the same time, many stakeholders are becoming increasingly sophisticated in the type and quality of information they are demanding from companies. In an effort to meet these demands as well as to strengthen the credibility of their social and environmental reports some companies are choosing to have their reports externally verified. In doing so, companies recognize that verification by a third party can add value to the overall social and environmental reporting process by enhancing relationships with stakeholders, improving business performance and decision-making, aligning practice with organizational values, and strengthening reputation risk management. Social Responsibility Principles The Corporate Social Responsibility is based on the following principles: Legal Compliance Principle: The enterprise shall comply with and understand all applicable, local, international, written, declared, and effected laws and regulations, in accordance with fixed, specific procedures. Adherence to Customary International Laws Principle: The enterprise shall adhere to international and governmental agreements, executive regulations, declarations, covenants, decisions, and guidelines, when setting its policies and practices pertinent to Social Responsibility. Respecting Related Stakeholders lefts Principle: The enterprise shall acknowledge and accept the diversity of related stakeholders’ lefts and interests, and the diversity of the major and minor enterprises activities and products, among other elements, which may affect such related stakeholders. Transparency Principle: the enterprise shall clearly, accurately, and comprehensively declare its policy, decisions, and activities, including known and potential effects on environment and society. Moreover, such information shall be available to affected persons, or those who are likely to be affected materially by the enterprise. Respect for Human lefts Principle: the enterprise shall execute policies and practices which shall result in respecting existent human lefts in the Universal Declaration of Human lefts. Because CSR can influence economic, environmental and social factors in a variety of ways, there is no â€Å"one size fits all† approach. An effective CSR strategy must consider alignment with the organization’s business strategy, commercial added value, and sustainability of impact. The benefits of an effective CSR approach to an organization can include: Stronger performance and profitability Improved relations with the investment community and access to capital Enhanced employee relations and company culture Risk management and access to social opportunities Stronger relationships with communities and legal regulators CORPORATE SOCIAL RESPONSIBILITY AT RELIANCE POWER LTD Reliance Power Limited is part of the Reliance Anil Dhirubhai Ambani Group, one of India’s largest business houses. It was established to develop, construct and operate power projects in the Indian and international markets. Reliance Energy Limited, an Indian private sector power utility company and the Anil Dhirubhai Ambani Group promote Reliance Power. With its subsidiaries, it is developing 13 medium and large-sized power projects with a combined planned installed capacity of 33,480 MW. Reliance Natural Resources merged with Reliance Power in 2010, shortly after its initial public offering. The group operates across multiple sectors, including telecommunications, financial services, media and entertainment, infrastructure and energy. The energy sector companies include Reliance Infrastructure and Reliance Power. Reliance Power has been established to develop, construct and operate power projects both in India as well as internationally. The Company on its own and through its subsidiaries has a portfolio of over 35,000 MW of power generation capacity, both in operation as well as capacity under development. The power projects are going to be diverse in terms of geographic location, fuel type, fuel source and off-take, and each project is planned to be strategically located near an available fuel supply or load centre. The company has 1,540 MW of operational power generation assets. The projects under development include seven coal-fired projects to be fueled by reserves from captive mines and supplies from India and elsewhere; two gas-fired projects; and twelve hydroelectric projects, six of them in Arunachal Pradesh, five in Himachal Pradesh and one in Uttarakhand. Reliance Power has won three of the four Ultra Mega Power Projects (UMPPs) awarded by the Indian Government so far. These include UMPPs in Sasan( Madhya Pradesh),Krishnapatnam( Andhra Pradesh) Tilaiya(Jharkhand). UMPPs are a significant part of the Indian governments initiative to collaborate with power generation companies to set up 4,000 MW projects to ease the country’s power deficit situation. Besides these, Reliance Power is also developing coal bed methane (CBM) blocks to fuel gas based power generation. The company is registering projects with the Clean Development Mechanism executive board for issuance of Certified Emission Reduction (CER) certificates to augment its revenues. Reliance Power in its continuous efforts to positively impact the society, especially the areas around its sites and offices, has formulated policies for social development that are based on the following guiding principles: Adopt an approach that aims at achieving a greater balance between social development and economic development. Adopt new measures to accelerate and ensure the basic needs of all people. Work towards elimination of all barriers for the social inclusion of disadvantaged groups- such as the poor and the disabled Give unfailing attention to children for in their hands lies the countrys future. It is for their sake that health, education and environment get topmost priority in our programs and investments. In areas around its power plant sites in Sasan,Rosa,Krishnapatnam,Butibori,Chitrangi and others, Reliance Power has been actively involved in various social and environmental organizations to address the issue of sustainable development and social uplift. The Company in discharge of its responsibility as a corporate citizen actively contributes to community welfare measures and takes up several social initiatives every year. Reliance Power Ltd. has been closely working with institutions and social organizations and supporting their programs for social development, adult literacy, adoption of village, tree plantation schemes etc. HEALTH Health and safety are of universal concern across the spectrum of communities. As a company, we are not only committed to compliance with legal norms but its is our endeavour to voluntarily go beyond that and provide quality healthcare facilities in the regions around our site. We are committed to providing all possible support to create awareness on various health related issues impacting the local people. We believe in a multidimensional approach that considers the needs of the area leading to an effective plan to address all issues in consultation with the local administration, community workers and NGOs working in the area. At its various project sites, Reliance Power sites runs medical facility center, physiotherapy center, and mobile medical vans that dispenses free medicines and provide free health check-ups. Also periodically we come up with health camps like general health check up camps, gynecology camps, eye check up camps and corrective surgery camps for disabled children. EDUCATION Education is a basic tool to bring development to an area and its people. We aim to create an awareness pool of human resource both within and across our area of operations. We are committed to bridging the digital divide between the ‘haves’ and ‘have nots’ in educational infrastructure and facilities. Exposure to technology along with a sustainable education model could be strengthened through partnership with government and quasi-government agencies. Reliance Power is involved in a surfeit of activities that have changed the lives of the people residing at the sites or the PAFs (Project Affected Families). Education is the main thrust of these activities. Major contributions made in the area include building of a DAV school at the site for the children of the PAFs and the children of the villages around the sites, free school bus facility for the students, stipend to every child who attends school (a boy child gets Rs. 250 per month while a girl child gets a stipend of Rs. 300 per month), free uniforms, study tours for children, teaching aids to the teachers, training of teachers, as well as night schools for uneducated adults etc. EMPLOYMENT Community is an integral part of the business environment and the basic commitment lies towards augmenting the overall economic and social development of local communities by discharging our social responsibilities in a sustainable manner. Reliance Power invests significantly in skill up gradation of people around the sites. The trained manpower available for construction will ensure quality and accident free working. CIDC, a Government of India initiative has been engaged and has trained about 300 project affected youths as electricians, welders, carpenters and masons and bar benders in batches of 40 each. To further encourage them we paid them, a monthly stipend of Rs. 1000 per month. In addition efforts are on to enroll the oustees in short term courses at the ITI operating in the region. Apart from these, training is also provided are: Computer coaching centre English speaking classes Personality development classes Physiotherapy training center Training by NAC (National Academy of Construction) and use them for future requirement of the construction. For the women folk of the villages, in an effort to empower them the company trains them in soft skills like tailoring and poultry farming etc. Reliance Power provides assistance to women keen on starting their own businesses. THE HUMAN TOUCH BEYOND POLICY IMPERATIVES Although the main thrust of Reliance Power’s CSR lies in providing quality education, health care and livelihood, we don’t restrict ourselves to it. In order to better lives around our areas of interest and business, we strive to provide basic amenities like electrification in the villages, augmentation and development of roads connecting the village to the main roads, old age support for senior citizens of the project affect families, development of the grazing lands for the cattle of the villagers, afforestation and veterinary camps for domestic cattle. Moral and financial support is extended during social occasions like marriages, community prayers, funerals and other such occasions.

Jail and Prison Essay Example for Free

Jail and Prison Essay Many people in the United States do not know that there are differences between jail and prison and what they are. Local jurisdictions, such as counties and cities, use jails to detain offenders for short periods of time. A prison, or penitentiary, is controlled by the state, and is used to detain convicted criminals for longer duration (Schmallenger, 2011). A jail is designed for short term offenders, and has more amenities than a prison. Jails house individuals who have been convicted to serve a short sentence, usually one year or less, detain individuals awaiting trial, waiting to pay bail or denied bail, and detainees held on suspicion of committing a crime. Most jails are designed to hold a very small number of criminals, and have low security when compared to prisons. As an example, the Durango Jail in Phoenix, Arizona, houses approximately 2,214 inmates. They provide a general-purpose day room area with seating areas, and a bathroom area with sinks, toilets, and showers, and have two large outside areas for recreation. The jail also includes a medical clinic, chapel and education classrooms where inmates can attend scheduled religious and educational programs throughout the day (Mcso, 2013). Jails play an important role in the criminal justice system, and without them, there would not be a place to hold these short term inmates and offenders. A prison is much larger than a jail, and capable of handling far more prisoners. The prisoners are typically categorized and separated on the basis of the types of crimes that they have been convicted of as a safety precaution, and there are three types of prisons: minimum security, medium security, and maximum security. Minimum security inmates often have private rooms and have the ability to walk around more freely, as well as commissary visits to purchase candy and tobacco. Medium security prisons are more dorm-like and have walled recreation areas. Maximum security prisons have more barriers, towers, armed guards, and inmates have far less free time and open areas. According to Arizona Department of Corrections (2013), the Tucson Prison Complex in Tucson, Arizona, currently has a total population of approximately 3,700 inmates and a capacity to hold up to 5,170 inmates. Amenities include exercise areas, common areas for eating and socializing in lower security areas, church facilities, and an educational facility (Schmallenger, 2011). Because of the long duration of most prison sentences, a complex social, and political structure arises among the prisoners. Prisoners form cliques and strive to create their dominance inside the fences and walls. Prison culture and subculture affect the daily lives of inmates from the moment they step foot in to a prison. Inmates are defined by their position, or hierarchy, and are fueled by having power over others and their reputation is at stake. Bartering items such as tobacco, food, drugs and makeshift weapons is a way of gaining power, as well as using sexual force and dominance (Schmallenger, 2011). Groups are formed, gangs are created and multiplied, and are often based on race, ethnicity, religion and who you were involved with outside of the prison gates. Due to these subcultures, violent crimes occur, the STD rate increases and the prison medical costs increase. Placing offenders on probation or parole may effect the statistics, but not by much, as occurrences and violence are always ongoing. Probation, an alternative form of sentencing, allows convicted offenders to avoid jail time. They are released back into the community, but must follow a strict set of rules. Rules can include curfew, maintaining a job, and checking in with a probation officer regularly. Probation is a beneficial tool for the community, as it allows offenders to become positive role models in society by participating in community service as well as saving tax payer dollars on potentially unnecessary prison costs. Parole is governed by the executive branch and is the conditional release of a convict who has served part of his term in prison (University of Phoenix, 2011). The primary purpose is to return offenders gradually to productive lives and are usually granted by a parole board to a prisoner with a good record and good conduct while in prison. Sentencing offenders to probation or releasing individuals on parole can free up thousands of dollars annually, as it can cost anywhere from $12,000 to $60,000 per year to house an inmate (CNN Money, 2013). There are also a few other alternatives to probation and parole that are also beneficial, such as drug treatment facilities, house  arrest and electronic monitoring, halfway houses, boot camp prisons, and work-release programs. Jails and prisons, as a part of the criminal justice system, play an important role in society. By deterring crime, securing criminals, and attempting to rehabilitate those who have broken the law, they not only educate society, but make an example of those who successfully have completed sentencing and rehabilitation and have made themselves flourishing products of society. References MCSO. (2013). Retrieved from http://www.mcso.org/JailInformation/Durango.aspx Schmallenger, F. (2011). Criminal Justice Today. An Introductory Text for the 21st Century (11th ed.). : Prentice Hall. University of Phoenix. (2011). CJi Interactive. Retrieved from University of Phoenix, CJA204 website. Arizona Department of Corrections. (2013). Retrieved from http://www.azcorrections.gov/prisons/Prisca_Prisons_Tucson.aspx CNN Money. (2013). Retrieved from http://www.money.cnn.com/infographic/economy/education-vsprisoncosts/

African Americans History As Slaves And Contemporary Poverty History Essay

African Americans History As Slaves And Contemporary Poverty History Essay It is often argued that the main cause of Africas poverty rates is mainly related to the lack of pro-growth derived from either the colonial system or the period of slavery. (Jerven, p.77) This argument has recently been applied to the United States social scene in order to explain the existent and continuing problems of income and economic inequality especially within the African American race. In fact, the phenomenon is so troubling that several campaigns have been recently launched to combat the problem. Among these is the Campaign to Reduce Poverty in America whose aim is to accomplish a decrease of 50% in poverty rates by 2020. (Catholic Charities USA) The problem of poverty is thus present and confirmed in the high rates of unemployment, the social disparities and the various and different attempts to deal with the problem whether by private, religious or governmental organizations. However, what is especially interesting to analyze further in this discussion are the causes of this social and economic problem. The origins of poverty are for example drawn upon by Gunja SenGupta in his book From Slavery to Poverty: The Racial Origins of Welfare in New York, 1840-1918, in which he argues that the historic roots of the problem run deeper than the present which consequentially implies the need to reflect on historic events that could be a determinant and influential factor in the continuance of contemporary social dilemmas. (NYU Press) This author is not the only person who perceived a link between poverty and historical problems such as slavery. In fact, although slavery was abolished over a hundred and forty years ago many people believe that the enslavement of humans has continued in the less direct but similarly hash and cruel form of poverty; a belief that challenges the notions of slavery itself. In short, the current problem of African American poverty is intrinsically related to the long history of subjugation, oppression and racial segregation that we re in their turn caused by the slavery system. Poverty is indeed a reality in America, a country that is considered to be among the richest and most progressed nations in the world. According to the US Census Bureau, 35.9 million people live below the poverty line in America, a number that includes also around 12.9 million children. The statistics are in fact shocking when gathered together. For example, according to the Bread for the World Institute, 3.5% of U.S households experience hunger which means that some members within these families skip meals or eat less than required to sustain a healthy lifestyle. (Siddiqi) The facts are more troubling when applied to the African American community. In a country where 12 percent of the population is black it is also noted that approximately a quarter of African Americans are classified as poor, a problem that has been part of the American social scene for many years. Poverty is thus very common among the members of this particular race. Poverty among African Americans is deeply conne cted to many issues among which is the lack of proper education that many African American children still do not receive. This decreases the chances of good employment and increases the possibility of experiencing poverty. There are other reasons through which to understand the problem of poverty among African Americans. However, what is interesting to reflect on further is the relationship between these high rates of poverty among African Americans and the problems of race and inequality that are still found socially and do impact the quality of life of the blacks in America. As Jonathan Alter, a writer for Newsweek, pointed out: Poverty is caused by a tangle of financial and personal pain that often goes beyond insufficient resources and lack of training, wage stagnation, social isolation, and a more subtle form of class-based racism. (Green) This quote affirms the existence of deeper rooted cause as an explanation of African American poverty. The link between racism and lesser op portunities and chances to advance are clear and hardly require any further elaboration. Since racism is related to the institutionalized system of slavery it is hence important to draw further on the significance of this system in the continued existence of poverty among African Americans. One of the most famous statements in the Declaration of Independence that has come to be part of what being an American means is: We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. This sentence is one that stipulates the basic human rights of every American citizen which is freedom, equality, safety and equal chances to realize their dreams of economic prosperity. This sentence has been quoted during the era of the Civil War and the Civil Rights movements to argue against the injustice of slavery that the black people were subjected to. However, equality for all was never part of the social reality even after the abolition of slavery. The perception of white people regarding the blacks was one of superiority that minimized and trivialized the importance of any contribution that could be possibly made by African Americans. For this reason, blacks were denied the same education opportunities as white people which only added to the poverty rates. The fact is that African Americans still lag behind in education attainment compared to white or other minority groups such as Asian Americans. African Americans attend college at half the rate of white citizens. (Kozol, p.26) The historic problem of segregation is deeply linked to these current statistics. Since education empowers an individual to compete in the work force it is hence evident why over a quarter of African Americans continue to experience poverty. Slavery expanded quickly from the time of is introduction until the beginning of the Civil War that lasted from 1861 to 1865. By the time the war started, nearly 4 million slaves were part of the southern society. Their work was diverse but was founded mainly on the principle of sustaining and enhancing the agricultural economy. They picked or planted cotton. Some other blacks worked within the house. There were slaves trained in the art of blacksmiths or carpentry among others. Slavery was a diverse system that was spread across different sectors of society in the South. Yet, what all types of work had in common is the deprivation of all black people from their rights of choice and ability to earn anything dignifying, materialistically or emotionally, from their work. Slavery is one of the most well-documented, well-known yet not most pride igniting phases of American history. It has effectively managed to leave its impacts on society, racial integration and ethnic tolerance throughout the centuries since its abolishment and up to the present day. African Americans were enslaved for centuries beginning with the time the United States came into existence in the 17th century until after the Civil War when slavery was officially declared to be unconstitutional. The War itself was mainly caused as a result of the differences in opinion about the issue between the Northern states, the abolitionists, and the Southern states, that depended on the slave system for the maintenance and growth of their agricultural economy. The history of slavery in the United States is however more complicated than a simple time line can serve to shed light on. The institution did not simply start for one obvious reason at one specific time and the same thing can be said ab out the way it came to an end after the Civil War. Though the wars purpose was the liberation of slaves and the provision of equal rights for all, slavery did not stop right after the war and continued to be part of the social picture, though to a lesser extent, especially in certain Southern regions. Southern states did especially not desire to completely eliminate the institution of slavery, which was an integral part of their economy, leading with that to the development of a complicated pattern in how the issue came to be dealt with right before, during and after the Civil War. All this implies that slavery was based on the exploitation of individuals for profit; an aspect of the system that served to dehumanize the black population to grave extents. This dehumanizing dimension of slavery served to complicate the integration of African Americans and led to problems of racism and deep-rooted rejection of their integration in American society. This rejection has on the other hand impacted the economic conditions of the blacks as it extended over all areas of life including work and education. It is no secret that there was a sharp division historically between the Southern and Northern states about the subject of slavery. What is however pertinent in this fact is its application to the economic conditions of blacks in the North versus the South during the 19th century. Racism was more prevalent in the South where many states refused to loosen their harsh racial policies that restricted African Americans to working mainly working in the fields. Though racism was also present in the northern states it was less severe and allowed the black population the opportunity to prosper culturally and intellectually; a growth that is for example evident in the Harlem Renaissance. However, despite these periods of flourishing, the history of African Americans is especially characterized by inequality; an inequality whose main cause is directly related to the centuries of enslavement. As noted before, racism is one of the main causes of the continued economic disadvantage of many Africa n Americans. When slavery was ended, notions as natural rights were socially introduced and impacted the perception of blacks of their own role in society. Blacks started becoming aware of the extremely suffocating environment that they were part of and which desperately attempted to keep them in the dark about their rights a human beings and citizens of a nation based on the principles of equality for all. (Mcpherson, p.39) It are these aspects and perceptions of oppression, cruelty and savageness of treatment for the mere promotion of selfish economical gain that continue to generate feelings of freedom and oppression which has managed , and continues, to make the greatest difference nowadays in the interaction of black and white people. Though theoretically slaves were no longer slaves after the Civil War, they continued to be treated as an extremely inferior race. This was of course different from area to another. In the south, ex-slaves were treated with the same attitude as before the Civil War while in northern states, where the bitterness was more directed towards white southern Americans rather than African-Americans, ex-slaves were treated better than slaves yet not fully as citizens. Emancipation had become a reality with the end of the war but it remains obvious that the place of African-Americans in society was far from being either resolved or clear. The questions that arose consequentially about race served to define the discourse and the relationships between the two different races and are still traceable in the many sensitive taboos that characterize certain racial subjects and words. In the aftermath of the Civil War, practical problems arose in the south in regard to the manner of integrating slaves within society. Whether the freedmen ought to be regarded as citizen and be granted rights as the ability to possess property was central to the debate. Voting rights were another concern as they gave significant importance to the freedmen enabling them to contribute and impact society and their level of prosperity within it. The most important question of all seemed however to revolve around the possibility or impossibility of the peaceful co-existence of blacks and whites together which is a question history has managed to answer so far. (Tallant, p.5) The rise of intolerance, the problem of segregation and the prevention of blacks from voicing their economic or political needs through the democratic voting system have all led to the enhancement of sentiments of antagonism among both sides which led to the blacks desire to create their own defensive and distinct identity that was at the core resentful of white peoples influence, and led the white population to adopt on the other hand a segregated and superior outlook. This shows how the history of slavery and the subsequent rise of the problems of racism distanced the two groups from interacting and mutually benefitting from the same opportunities. In short, because of slavery and racism many blacks did not and do not get the chance to benefit from the same opportunities as white people which complicates the chances of finding a good job later on and increases as a result the chances of poverty. Blacks continued to work mostly on lands owned by white farmers due to the aforementioned complications that arose when they desired to purchase a piece of land for themselves. Neither the federal government nor the local people seemed to support that and the final choice they were left with in the post war era was to keep working for the white planters. There was of course a difference in the way they lived compared to the period before the war. The freedmen exercised now more control over their lives and could not be treated with the same inhumanity as before. They did not have to work before sunrise and continue until after sunset. They could determine their workload more favorably compared to their previous working conditions. They could also determine whom of their family members they wished to be part of the plantation work. Previously, their children were forced at an early age to do the work and this could be prevented with the choices they had after he Civil War. This does o f course not mean that the situation changed dramatically to the better including complete freedom and equal rights. To claim that is to dismiss the fundamental aspect about social change: it happens gradually. The living conditions had simply significantly improved from the completely intolerable to the harsh and challenging. Overcoming the social challenges caused by their racial status proved to be a long and trying process that spanned over many years and continues until the present day in the form of the continued attempt to decrease the problems of the black community such as a high level of crime, poverty and a lower rate of educational degrees among the youth. The fact is that blacks have been perceived to be inferior for a long time in America which is a prejudice that affected the opportunities available for this particular race and hence impacted their current economic social position. It is thus undeniable that slavery had an extremely malignant and negative influence on the development of African- American culture and identity. Being regarded as an inferior race, especially in the South where the idea was the main justification provided to legitimize the slavery institution, was detrimental to the enhancement of any sense of pride in ones heritage. The change towards that began only slowly. The way they were treated, the destruction of any sense of belonging and attachment to their African heritage during the years of enslavement, the restriction of simple communication between slaves are all facets of slavery that significantly influenced the emancipation process and the development of the African-American culture in addition to complicating the nature of relationships and the form of interaction between whites and blacks. Slavery disrupted thus the sense of belonging to the African heritage and led to the emergence of a defensive attitude among blacks. Even aft er emancipation, slavery continued to play a role on African Americans future and chances of progress. This is evident in the themes of their music and art whether written or visual. These themes deal often with the idea of social inequality, oppression and economic disadvantage as a direct consequence of racial history. Slavery made blacks without doubt socially disadvantaged and led to the subsequent rise of the Civil Rights Movement in the 20th century. The racism and harassment that African Americans have had to deal with is still part of the races consciousness until the present day. This is nowhere signified but in the multitude of subjects that continue to rise a sense of sensitivity when brought up. It is thus no exaggeration to conclude that slavery has left a tremendous impact on the African-Americans as a whole. The resolution of such a problem had to be done, and continues to be struggled with, over the period of two centuries. Overcoming the past completely has proven t o be impossible. The history of enslavement is part of what defines every African-American up to the present despite many peoples refusal to admit this. Though most blacks do not reflect on the period of enslavement, the impacts of it, in the form of social disadvantages still experienced through work and educational chances, are not easily dismissible and serve as a harsh reminder.(Healey, p.175) The removal of their culture, the limitation of their freedom, the oppression of their most fundamental basic rights for centuries, and the final negative development of social distinctions between blacks and whites in the period after emancipation, have all managed to impact the culture the African-American ethnic group has since then created a culture whose characteristics include for example less favorable economic conditions for millions of African Americans. Slavery has thus proven to be a very powerful institution whose impacts are hard to erase. The discussion of poverty among African Americans in the present day is thus incomplete without an analysis of their historic journey that is characterized by a long period of oppression and segregation which impacted both white and black peoples attitude towards the other race. The fact that millions of African Americans live in poverty is hardly a random fact but is deeply rooted in the historical experience of this race. The historical experience of African Americans has already been drawn upon in detail. What merits however further analysis is the consequent question that rises in regard to the future. If slavery and the long history of racism and unequal opportunities in education and work, are among the main factors in the current high rates of poverty among African Americans then what is the solution? Does this conclusion imply that African Americans are destined for poverty? Regardless of the present and continued rates of poverty and inequality, it is undeniable to note that African Americans went through different stages of progress that were not as successful or as fast as desired at all times but made the necessary advancement that enabled the country to be led by a black president for the first time in the countrys history. What was essential to the assurance of advancement was persistence and endurance, two characteristics of the African American long struggle for rights as freedom, dignity, respect and equality. The period from 1976 until the present marked the growing representation of African Americans in politics, arts and entertainment and academic disciplines among others. The larger opportunities enabled African Americans to be elected to legislative positions and work in the executive and judicial branch. This does clearly not mean that the situation is ideal in the present. Regardless of the election of the first black president and the in creasing influence of this race in the United States, full equality is still a subject of heated debate and controversy. As noted, many African Americans continue to live in poverty and the ruling elite of the US is still predominantly white. While school segregation is officially over, facts point to the dominance of the continuance of the phenomenon in several public white schools where the presentation of white student exceeds 99%. (essay-911.com) However, regardless of these points that affirm the need for more progress despite the positive accomplishments obtained, the fact is that African Americans have endured a long history of oppression, pain and segregation and managed to rise above the many challenges to their current position. While the present situation requires progress advancement has been and will continue to be made while racial tension will continue to decrease. Affirming that the black race is destined for poverty seems therefore to be an implausible and pessimist ic outlook on the future and history alike. In conclusion, the history of African Americans has thus been long and complex in the United States. It is this experience that led to the formation of the present African American identity with all that that encompasses in terms of culture, art and literature. As mentioned before, blacks were largely denied opportunities for education and personal advancement until after the Civil Rights Movement. The fact that many blacks live still in poverty does however not mean that this movement was unsuccessful or that no advancement has been achieved. Continuous social change needs to be still made since the rates of unemployment among blacks compared to whites is relatively the same as it was in the early 1960s. Employment opportunities are still hard to obtain for black men while neighborhood segregation is still present in many areas in the United States. Research confirms also that blacks continue to be victims in the real estate market. (Friedlander) This all proves that blacks are stil l socially disadvantaged. However, as has been noted, racial segregation in public has been ended and more African Americans have come to contribute in elective politics signifying the slow but existent rise of this race from the dark impacts of slavery.

Boondock Saints Essay :: essays research papers

The Boondock Saints movie exhibits and demonstrates many possible causes and reasons for social deviance. One example of this is shown in the Subjective view of deviance through a Constructionist Theory. The Subjectivist believes that a deviant person is a conscious, feeling, thinking subject and that one should understand the experience of that person. From a Constructionist perspective, deviants are actively seeking meanings in the deviant activities. The brothers in the movie are seeking meaning from their killing. They believe that they are on a mission from God, and that they will be protected and blessed for doing this. The brothers in the movie are a good study on mass murder. While they are not murdering everyone at exactly the same time in the same place, they are doing it in a cult-like sort of way. They believe that they are on a mission from God, to kill all criminals in Boston. They believe that they are following a direct order from God, much like what certain cults believe. Most of their murders are also pre-meditated. Perhaps the biggest factor in why these brothers murder can be attributed to the theory of Subculture of Violence. Subculture of violence states that those who are poor or less fortunate are more likely to engage in violent acts, such as murder and rape. This is attributed to their social standing, and their inability to get out of the lower social classes. The actual cause of violence in these situations is poverty and social inequality. While the brothers are not lashing out at those who are significantly richer than them, they are lashing out at those who are more powerful than them. They are also lashing out at those who make others poor and impoverished. Last but not least, one can also look at the brothers’ acts as acts of terrorism. These murders are not terrorism towards the general populace, but towards those who are criminals, and to those who might become criminals.

St. Anselns Ontological Argument For The Experience Of God :: essays research papers

St. Anselm’s ontological argument for the experience of God. God’s existence may vary from philosopher to philosopher, but according to the late St. Anselm, Archbishop of Canterbury there was absolutely no doubt that God’s presence is certain, and yet the philosopher desires the understanding of faith. As stated; if god cannot be thought to exist, then whomever which may be conceived, only a fool would believe that he God does not exist. Only a fool says from his or her heart there is no God, was the largest idea discussed in the presentation quoted by Anselm. It is one thing for an object to be in the understanding, and another to understand that objects exist, he both, has it in has understanding and he understands that it exists because he has made it. There is not a doubt that there exists a being, than which nothing greater can be conceived. And it exists both in the understanding and in reality, then, so truly than a being which nothing greater can be conceived to exist, our God? If a mind could conceive of a being better then thee, the creature would rise above the Creator; and this is absurd. God can be conceived to not exist; but in the later, not at all. For example, no one who understands what God is can conceive that God does exist; God is that than which a greater cannot be conceived. The nonexistence of that than which a greater cannot be conceived is inconceivable. Gaunilo’s argumentative criticism claims that in the dual existence, with understanding and in reality, for this reason it must exist. For if it does not exist, any lord who really exists will be more

The Influence of The History of Rasselas on A Vindication of the Rights

The Influence of The History of Rasselas on A Vindication of the Rights of Woman  Ã‚  Ã‚        Ã‚   A surprising commonality found between Johnson's The History of Rasselas, Prince of Abissinia and Wollstonecraft's A Vindication of the Rights of Woman is their shared views on women's issues. This commonality is surprising since the two authors had different political viewpoints. While Johnson was a conservative Tory, Wollstonecraft was a social nonconformist and feminist. Although Wollstonecraft and Johnson adhered to different political agendas, Wollstonecraft revered many of Johnson's literary works. One example of Wollstonecraft's admiration of Johnson is found in her uncompleted short story "Cave of Fancy". Wollstonecraft began writing "Cave of Fancy" in 1786 and based it on Johnson's Rasselas. Like Rasselas, the setting of "Cave of Fancy" is "an unnamed fairy-tale realm where characters remain untouched by everyday concerns" (Conger 61). The similarities between the two works are apparent in their opening lines. Johnson addresses the reader of Rasselas with the following statement: Ye who listen with credulity to the whispers of fancy, and persue with eagerness the phantoms of hope; who expect that age will perform the promises of youth, and that the deficiencies of the present day will be supplied by the morrow; attend to the history of Rasselas prince of Abissinia. (1) The influence of Johnson is apparent in Wollstonecraft's opening lines: Ye who expect constancy where every thing is changing, and peace in the midst of tumult, attend to the voice of experience, and mark in time the footsteps of disappointment; or life will be lost in desultory wishes, and death arrive before the dawn of wisdom. (Basker 43) ... .... Although Johnson and Wollstonecraft focus on women's issues for different reasons in Rasselas and Vindication, the necessity for an increase in women's education in the 18th century is apparent in both works. Both authors agree that a woman needs to be educated in order for society to progress. For Wollstonecraft, women's education is needed for the success of the family. For Johnson, women's education is needed for society's progress as a whole.    Works Cited Basker, James. Women Writers, Marginal Texts, and the Eighteenth-Century Canon. New York: Clarendon, 1996. Conger, Syndy. Mary Wollstonecraft and the Language of Sensibility. New York: Associated UP, 1994. Johnson, Samuel. The History of Rasselas, Prince of Abissinia. New York: Oxford UP, 1998. Wollstonecraft, Mary. A Vindication of the Rights of Woman. New York: Norton, 1988.   

Huckleberry Finn’s Impact on Modern American Literature Essay

Ernest Hemingway once said â€Å"all modern American literature began with Huckleberry Finn. † Huckleberry Finn, a remarkably well written novel by Mark Twain, has received almost excessive praise since it was written and first published in 1884. On the other hand, it has been condemned for vulgarity and accused of stealing Uncle Tom’s Cabin’s thunder. Uncle Tom’s Cabin is a similar novel about slavery written about thirty-two years earlier. Huckleberry Finn’s impact on modern American literature was so great that it could be compared to Shakespeare’s impact on European theater. To be the true basis of modern American literature, a novel would have to be centered on American concepts. One of the most prominent American concepts is â€Å"the American Dream†. Huckleberry Finn is the first novel to encompass â€Å"the American Dream†, chronically many different Americans’ approach to their own American dream, and how they chase it. One instance of this in Huckleberry Finn is when Huck and Jim coincidentally become raft-mates with two swindlers, going about their dream of finding fortune in an illegal and morally wrong way, taking advantage of ladies, children, the elderly and even men. Twain does a superb job of demonstrating â€Å"the American dream† and the consequences of chasing it ruthlessly. Intertwined with the stories of dream chasers is another American concept, a black slave’s mistreatment and his search for his dream, freedom. Although Twain wrote the novel after slavery was abolished, he set it several decades earlier, when slavery was still a fact of life. But even by Twain’s time, things had not necessarily gotten much better for blacks in the South. In this light, one might read Twain’s depiction of slavery as an allegorical representation of the condition of blacks in the United States, even after the abolition of slavery. This is shown prominently throughout the novel through the co- protagonist, a black slave named Jim, and his adventures and misadventures. A particular instance is when Jim and Huck have been nothing but accommodating to the two swindlers mentioned previously but the swindlers report Jim as a runaway slave and have him captured for monetary gain. The white swindlers show the unjust, repulsive way that blacks are being treated. Modern American literature is used expertly as a propaganda tool and Huckleberry Finn is one of the first instances of using literature to enlighten the masses about the evils of slavery. Another important contribution that Huckleberry Finn has made to American literature is vernacular speech. This is a key characteristic of American literature and helps to show American regionalism from that time period. Dialogue in the book is directly affected by the race of the speaker and his or her region of origin. Through Twain’s sometimes inappropriate character speech, a reader feels as if they are truly listening to people talk because of the uncensored feel to the dialogue. Huckleberry Finn has also been under fire for its â€Å"straight- talk†, particularly for using racial slurs involving Jim and other slaves. However, Twain’s use of racial slurs ironically helps portray the anti- racist attitude of the book. Opponents to the statement that Huckleberry Finn is the basis for all modern American literature would venture to say that Uncle Tom’s Cabin by Harriet Beecher Stowe is a more influential novel. An argument for this is that Uncle Tom’s Cabin came before Huckleberry Finn and showed a more detailed account of the horrors of slavery because the novel was based simply on slavery. While it is correct that Uncle Tom’s Cabin came before Mark Twain’s novel, Huckleberry Finn is the clear winner because of the way Mark Twain subliminally weaves in his view on slavery and is able to lead any reader to understand why slavery is morally wrong, without the reader even realizing it. While Shakespeare is inarguably the best playwright of all time, Huckleberry Finn takes on a similar title for American literature, though somewhat less grand. Huckleberry Finn is such a prime American work because of its encompassment of American concepts, ability to persuade, subliminal anti-slavery morality, and vernacular language, of which no other American novel before it can also brag, including Uncle Tom’s Cabin. Huckleberry Finn is a novel entirely worthy of the honorable title â€Å"basis for all modern American literature†.

Financial Reporting Quality: Red Flags and Accounting Warning Signs

Financial Reporting Quality and Investment Efficiency Rodrigo S. Verdi The Wharton School University of Pennsylvania 1303 Steinberg Hall-Dietrich Hall Philadelphia, PA 19104 Email: [email  protected] upenn. edu Phone: (215) 898-7783 Abstract This paper studies the relation between financial reporting quality and investment efficiency on a sample of 49,543 firm-year observations between 1980 and 2003. Financial reporting quality has been posited to improve investment efficiency, but there has been little empirical evidence supporting this claim to date. Consistent with this claim, I find that proxies for financial reporting quality are negatively associated with both firm underinvestment and overinvestment. Further, financial reporting quality is more strongly associated with underinvestment for firms facing financing constraints and with overinvestment for firms with large cash balances, which suggests that financial reporting quality mitigates information asymmetries arising from adverse selection problems and agency conflicts. Finally, the relation between financial reporting quality and investment efficiency is stronger for firms with low quality information environments. Overall, this paper has implications for research examining the determinants of investment efficiency and the economic consequences of enhanced financial reporting. Current Version: February 14, 2006 _____________________________________________ I thank members of my dissertation committee: John Core, Gary Gorton, Christian Leuz, Scott Richardson, and Catherine Schrand (Chair) for their guidance on this paper. I appreciate comments from Patrick Beatty, Jennifer Blouin, Brian Bushee, Gavin Cassar, Francesca Franco, Wayne Guay, Luzi Hail, Bob Holthausen, Rick Lambert, Frank Moers, Jeffrey Ng, Tjomme Rusticus, Irem Tuna, Ro Verrecchia, Missaka Warusawitharana, Sarah Zechman, Zili Zhuang, and seminar participants at the Wharton School. I also gratefully acknowledge the financial support from the Wharton School and from the Deloitte Foundation. Any errors are my own. Financial Reporting Quality and Investment Efficiency . Introduction This paper studies the relation between financial reporting quality and investment efficiency. Recent papers (e. g. , Healy and Palepu, 2001; Bushman and Smith, 2001; Lambert, Leuz, and Verrecchia, 2005) suggest that enhanced financial reporting can have important economic implications such as increased investment efficiency. However, despite solid theoretical support for such a relation, there is little empirical evidence supporting these claims. I hypothesize that financial reporting quality can improve investment efficiency by reducing information asymmetry in two ways: (1) it reduces the information asymmetry between the firm and investors and thus lowers the firm’s cost of raising funds; and (2) it reduces information asymmetry between investors and the manager and thus lowers the shareholders’ cost of monitoring managers and improves project selection. The two key constructs in the analysis are investment efficiency and financial reporting quality. I conceptually define a firm as investing efficiently if it undertakes all and only projects with positive net present value (NPV) under the scenario of no market frictions such as adverse selection or agency costs. Thus inefficient investment includes passing up investment opportunities that would have positive NPV in the absence of adverse selection (underinvestment). Likewise, inefficient investment includes undertaking projects with negative NPV (overinvestment). I measure investment efficiency as deviations from expected investment using a parsimonious investment model which predicts expected investment as a function of growth opportunities (Tobin, 1982). Thus, both underinvestment (negative deviations from expected investment) and 1 overinvestment (positive deviations from expected investment) are considered inefficient investment. I conceptually define financial reporting quality as the precision with which financial reporting conveys information about the firm’s operations, in particular its expected cash flows, in order to inform equity investors. As described in the FASB Statement of Financial Accounting Concepts No. 1, financial reporting should â€Å"†¦provide information that is useful to present and potential investors in making rational investment decisions†¦Ã¢â‚¬  (par. 34) and â€Å"†¦provide information to help present and potential investors in assessing the amounts, timing, and uncertainty of prospective cash receipts†¦ † (par. 37). Further, expected cash flows is a key input to firm capital budgeting, which is particularly important in the context of this paper which studies financial reporting implications for corporate investment. I proxy for financial reporting quality using measures of accruals quality based on the idea that accruals improve the informativeness of earnings by smoothing out transitory fluctuations in cash flows (Dechow and Dichev, 2002; McNichols, 2002). The use of accruals quality relies upon the fact that accruals are estimates of future cash flows and earnings will be more representative of future cash flows when there is lower estimation error embedded in the accruals process. I study the relation between financial reporting quality and investment efficiency on a sample of 49,543 firm-year observations during the sample period of 1980 to 2003. The analysis yields three key findings. First, the proxies for financial reporting quality are negatively associated with both firm underinvestment and overinvestment. This result extends research in Wang (2003) who predicts and finds a positive relation between 2 capital allocation efficiency and three earnings attributes (value-relevance, persistence, and precision) without making the distinction between under- and overinvestment. Second, cross-sectional tests indicate that the impact of financial reporting quality on investment efficiency is due to the alleviation of adverse selection and agency costs. For instance, financial reporting quality is more strongly negatively associated with underinvestment for firms facing financing constraints. This result suggests that, for this type of firm, financial reporting quality improves investment efficiency by lowering its cost of raising funds. Likewise, financial reporting quality is more strongly negatively associated with overinvestment for firms with large cash balances. This result suggests that financial reporting quality improves investment efficiency for these firms by lowering shareholders’ cost of monitoring managers and improving project selection. Finally, I predict that the relation between financial reporting quality and investment efficiency is stronger for firms with poor information environments. Financial reports are just one source of information to investors, and investors are more likely to rely on financial accounting information to infer the economic conditions of the firm’s operations for companies with otherwise weak information environments. I proxy for the information environment using the number of analysts following a firm as an ex-ante measure for the amount of publicly available information about the firm, and bid-ask spreads as an ex-post measure of the information asymmetry between the firm and investors (e. g. , Amihud and Mendelson, 1986; Roulstone, 2003). Consistent with the prediction, the relation between financial reporting quality and investment efficiency is stronger for firms with low analyst following and for firms with high bid-ask spreads. These results suggest that financial reporting quality can affect investment efficiency directly in addition to the link through price informativeness documented in Durnev, Morck, and Yeung (2004). In addition, the findings using analyst following are consistent with Botosan (1997) who finds that greater disclosure is associated with lower cost of capital for firms with low analyst following. Although my results suggest that firms with higher financial reporting qual ity are associated with more efficient investment, one cannot conclude from this paper that increasing financial reporting quality would necessarily translate into higher investor welfare. Enhanced financial reporting may improve investment efficiency by reducing information asymmetry. However, firms must weigh this benefit against the costs (e. g. , proprietary costs) and against alternative ways to reduce information asymmetry such as courting more analysts. Further, it may even be impossible for some firms to increase financial reporting quality given the limitations imposed by GAAP. Nonetheless, this paper contributes to literature on the economic consequences of enhanced financial reporting by showing that financial reporting quality can be associated with more fficient investment. The remainder of the paper proceeds as follows. Section 2 develops the hypotheses and Section 3 describes the measurement of investment efficiency and financial reporting quality. Section 4 presents the results. Section 5 offers some sensitivity analysis and Section 6 concludes. 2. Hypothesis development In this section I first review the determinants of investment efficiency. Then I di scuss how financial reporting quality can affect investment efficiency. Finally, I develop predictions on the relation between financial reporting quality and investment efficiency, and the channels through which this relation is expected to take place. Figure 1 describes these links. 2. 1. Determinants of investment efficiency There exist at least two determinants of investment efficiency. First, a firm needs to raise capital in order to finance its investment opportunities. In a perfect market, all projects with positive net present values should be funded; however, a large literature in finance has shown that firms face financing constraints that limit managers’ ability to finance potential projects (Hubbard, 1998). One conclusion of this literature is that a firm facing financing constraints will pass up positive NPV projects due to large costs of raising capital, resulting in underinvestment (Arrow 1 in Figure 1). Second, even if the firm decides to raise capital, there is no guarantee that the correct investments are implemented. For instance, managers could choose to invest inefficiently by making bad project selections, consuming perquisites, or even by expropriating existing resources. Most of the literature in this area predicts that poor project selection leads the firm to overinvest (Stein, 2003), but there are also a few papers which predict the firm could underinvest (e. g. , Bertrand and Mullainathan, 2003). These links are presented respectively by Arrows 2A and 2B in Figure 1. Information asymmetry can affect the cost of raising funds and project selection. For instance, information asymmetry between the firm and investors (commonly referred as an adverse selection problem) is an important driver of a firm’s cost of raising the capital required to finance its investment opportunities Arrow 3 in Figure 1). Myers and Majluf (1984) develop a model in which information asymmetry between the firm and investors gives rise to firm underinvestment. They show that when managers act in favor 5 of existing shareholders and the firm needs to raise funds to finance an existing positive NPV project, managers may refuse to raise funds at a discounted price even if that means passing up good investment opportunities. Also, information asymmetry can prevent efficient investment because of the differential degree of information between managers and shareholders (commonly referred as a principal-agent conflict). Since managers maximize their personal welfare, they can choose investment opportunities that are not in the best interest of shareholders (Berle and Means, 1932; Jensen and Meckling, 1976). The exact reason why managers inefficiently invest shareholders’ capital varies across different models, but it includes perquisite consumption (Jensen, 1986, 1993), career concerns (Holmstrom, 1999), and preference for a â€Å"quiet life† (Bertrand and Mullainathan, 2003), among others. More importantly, the predicted relation is that agency problems can affect investment efficiency due to poor project selection (Arrow 4A in Figure 1) and can increase the cost of raising funds if investors anticipate that managers could expropriate funded resources (Arrow 4B in Figure 1) (Lambert, Leuz, and Verrecchia, 2005). In sum, the discussion above suggests that information asymmetries between the firm and investors and between the principal and the agent can prevent efficient investment. In the next section, I discuss how financial reporting quality can enhance investment efficiency by mitigating these information asymmetries. . 2. Role of financial reporting Financial reporting quality can be associated with investment efficiency in at least two ways. First, it is commonly argued that financial reporting mitigates adverse selection costs (Arrow 5 in Figure 1) by reducing the information asymmetry between the 6 firm and investors, and among investors (Verrecchia, 2001). For i nstance, Leuz and Verrecchia (2000) find that a commitment to more disclosure reduces such information asymmetries and increases firm liquidity. On the other hand, the existence of information asymmetry between the firm and investors could lead suppliers of capital to discount the stock price and to increase the cost of raising capital because investors would infer that firms raising money is of a bad type (Myers and Majluf, 1984). Thus, if financial reporting quality reduces adverse selection costs, it can improve investment efficiency by reducing the costs of external financing and, as discussed in more detail below, the potential for financial reporting quality to improve investment efficiency is greatest in firms facing financing constraints. Second, a large literature in accounting suggests that financial reporting plays a critical role in mitigating agency problems. For instance, financial accounting information is commonly used as a direct input into compensation contracts (Lambert, 2001) and is an important source of information used by shareholders to monitor managers (Bushman and Smith, 2001). Further, financial accounting information contributes to the monitoring role of stock markets as an important source of firmspecific information (e. g. Holmstrom and Tirole, 1993; Bushman and Indjejikian, 1993; Kanodia and Lee, 1998). Thus, if financial reporting quality reduces agency problems (Arrow 6 in Figure 1), it can then improve investment efficiency by increasing shareholder ability to monitor managers and thus improve project selection and reduce financing costs. 1 2. 3. Predictions For example, Bens and Monahan (2004) find a positive association between AIMR disclosure ratings and the excess value of diversification as defined by Berger and Ofek (1995). They conclude that disclosure plays a monitoring role in mitigating management’s investment decisions. 1 7 Based on the discussion above that financial reporting affects both adverse selection and agency conflicts, I predict an average negative relation between financial reporting quality and both underinvestment and overinvestment. These links complement research in Bushman, Piotroski, and Smith (2005), which studies the relation between country measures of timely loss recognition and the country propensity to liquidate bad projects (i. e. , itigate overinvestment), and in Wang (2003) which explores the relation between capital allocation efficiency and accounting information quality for a sample of US firms, without making a distinction between under- and overinvestment. 2 H1: Financial reporting quality is negatively associated with underinvestment. H2: Financial reporting quality is negatively associated with overinvestment. In addition to investigating the average relatio n between financial reporting quality and investment efficiency, I also investigate the mechanisms through which financial reporting quality can affect investment efficiency using cross-sectional analysis. First, I predict that the relation between financial reporting quality and firm underinvestment is stronger for firms facing financing constraints. By definition, constrained firms are those for which the ability to raise funds is the most likely impediment to efficient investment, and for these firms, financial reporting quality is especially important in mitigating adverse selection costs. H3: The relation between financial reporting quality and underinvestment is stronger for financing constrained firms. 2 One concern with Hypotheses 1 and 2 is that causality goes the other way. For instance, poorly performing managers could be investing inefficiently and thus choose to report low quality financial information in order to hide their bad performance (e. g. , Leuz, Nanda, and Wysocki, 2003). I discuss the empirical tests used to address this alternative hypothesis in Section 4. 8 Second, I predict that the relation between financial reporting quality and firm overinvestment is stronger for firms with large cash balances and free cash flows. Managers of firms with large cash balances and free cash flows have more opportunity to engage in value destroying investment activities (e. g. , Jensen, 1986; Blanchard, Lopezde-Silanes, and Shleifer, 1994; Harford, 1999; Opler et al. , 1999; Richardson, 2006). Consequently, financial reporting quality can play a more important monitoring role in mitigating agency problems for these firms. H4: The relation between financial reporting quality and overinvestment is stronger for firms holding large cash balances and free cash flows. Third, I study the complementary and substitute relation between financial reporting quality and a firm’s information environment, and how it affects investment efficiency. Financial reporting quality is just one source of information about the firm’s operations used by investors. For instance, investors in firms followed by a large number of analysts or firms with informative stock prices may be less dependent on financial reports when other elements of the firm’s information environment are of high quality. Thus I hypothesize that financial reporting quality is more important in improving investment efficiency when the amount of information publicly available about the firm is low. 3 H5: The relation between financial reporting quality and investment efficiency is stronger for firms with relatively poor information environments. 3. Empirical work 3. 1. Proxies for investment efficiency One concern with Hypothesis 5 is that financial reporting quality and the firm’s information environment are likely to be correlated. Indeed, Verdi (2005) shows that the firm information environment can be aggregated in accounting-based and market-based correlated constructs. Hypothesis 5 implicitly assumes away this correlation by investigating the effect of financial reporting quality on investment efficiency holding the market-based information environment constant. 3 9 In order to construct measures of investment efficiency, I first estimate a model that predicts firm investment levels and then use residuals from this model as a proxy for inefficient investment. The data are from the Compustat Annual file during the years 1980 to 2003. Total new Investment in a given firm-year is the sum of capital expenditures (item 128), R&D expenditures (item 46), and acquisitions (item 129) minus sales of PPE (item 107) and depreciation and amortization (item 125) multiplied by 100 and scaled by average total assets (item 6), following Richardson (2006). This measure uses an accounting-based framework to estimate new investment as the difference between total investment and investment required for maintenance of assets in place. In the sensitivity section I also discuss the robustness of the results to the use of only capital expenditures as an alternative proxy for investment that is frequently used in the literature (e. g. , Hubbard, 1998). I estimate a parsimonious model for investment demand as a function of growth opportunities measured by Tobin’s Q (Tobin, 1982). This model is based on the argument that growth opportunities should explain corporate investment when markets are perfect (Hubbard, 1998). Investmenti,t = ? 0 j,t + ? 1 j,t * Qi,t-1 + ? i,t (1) I estimate the model cross-sectionally for all industries with at least 20 observations in a given year based on the Fama and French (1997) 48-industry classification. Q is calculated as the ratio of the market value of total assets (defined as 4 A large finance literature uses investment cash flow sensitivities as a proxy for inefficient investment (or market frictions). I do not use this approach for two reasons: First, traditional papers measure cash flow without making the distinction between cash flows and accruals, and Bushman, Smith, and Zhang (2005) illustrate the sensitivity of the results to the appropriate measurement of operating cash flows. Second, positive investment cash flow sensitivities could mean both financing constraints and/or agency problems which makes it impossible to test the cross-sectional hypotheses of the paper (Hypotheses 3 to 5). 10 otal assets (item 6) plus the product of stock price (item 199) and the number of common shares outstanding (item 199) minus the book value of equity (item 60)) to book value of total assets (item 6) at the start of the fiscal year. The sample consists of 98,675 firm-year observations with available data to estimate Investment and Q during the sample period of 1980 to 2003. Consistent with previous literature, financial firms (i. e. , SIC codes in the 6000 and 6999 range) are excluded becaus e of the different nature of investment for these firms. In order to mitigate the influence of outliers I winsorize all variables at the 1% and 99% levels by year. 5 Table 1 presents the results from the investment model in Equation 1. Panel A offers descriptive statistics for Investment and Q. The mean (median) firm in the sample invests 7. 26% (3. 84%) of total assets per year and has an average (median) Q equal to 1. 90 (1. 32), consistent with related literature (e. g. , Richardson, 2006; Almeida, Campello, and Weisbach, 2004). Panel B presents mean and median values of the estimated industry coefficients on Q, the average R-square, and the number of significant positive coefficients for each year. In all years the mean and median coefficients are positive and relatively stable during the sample period. The mean R-square ranges from 6% in 1997 to 14% in 1991. 6 Finally, in each year, more than half of the industry coefficients on Q are positive and statistically different from zero at a five percent significance level. 7 The model in Equation 1 includes an intercept which imposes that for each industry-year the mean firm will have a zero residual. In untabulated analysis, I re-estimate the model adding the intercept back to the residual so that it allows industry-years to have a non-zero mean (for example, industries that overinvest or periods with large economic growth). The results are robust (in general even stronger) to this test. 6 Note that the reported R-squares measure only the within industry-year variation because the model is estimated separately for each industry-year. An equivalent approach in which the model is estimated across all industry-years with separate intercepts and coefficients for each industry-year leads to an R-square of 23. 5%, suggesting that the overall explanatory power of the model is larger than that reported in Table 1. 7 A current ongoing debate in the finance literature is the implications for measurement error in the estimation of Q (Erickson and Whited, 2000; Gomes, 2001; Alti, 2003). Since the subsequent analysis hinges on the investment model in Equation 1, I perform two sensitivity tests: First, I include past returns in 5 1 I measure investment efficiency using the residuals from the model in Equation 1. Overinvestment is the positive residuals of the investment model and Underinvestment is the negative residuals of the investment model multiplied by negative one, such that both measures are decreasing in investment efficiency. In untabulated analysis, I repeat all tests after excluding firms with the smallest 10% and 20% investment residuals because these firms are more likely to be affected by measurement error in the investment model (i. e. , misclassified as overinvesting or underinvesting firms). The results for these analyses are similar to those reported below. Table 1 – Panel C presents descriptive statistics for Investment Residual, Overinvestment and Underinvestment. By construction, Investment Residual has a mean value of zero; ranging from -64. 46% to 80. 43%. There are 39,107 (59,568) firms classified as overinvesting (underinvesting) firms. The mean (median) value is 9. 73% (5. 63%) for Overinvestment and 6. 39% (4. 71%) for Underinvestment. These results show that the residuals from the investment model are more frequently negative, although in smaller magnitude. Panel D presents Pearson correlations between the measures of investment efficiency and firm characteristics. Investment Residual is uncorrelated with firm size (measured as the log of total assets (item 6) at the start of the fiscal year) and slightly negatively correlated with return volatility (measured as the standard deviation of daily returns during the prior fiscal year). However, when the residuals are separated into Overinvestment and Underinvestment, I find that these variables are negatively correlated with size and positively correlated with return volatility and Q (the magnitude of the he investment model to capture growth opportunities not reflected in Q (Lamont, 2000; Richardson, 2006); and second, I exclude all industry-year observations in which the estimated coefficient on Q is not positive and significant. The subsequent results are not sensitive to these tests. 12 correlations range from 0. 18 to 0. 32). These results suggest either that: (1) small firms, with mor e growth opportunities and volatile operations, have more inefficient investment; or (2) the investment model is a poor fit for these firms. In any case, it highlights the importance to control for these firm characteristics in the subsequent analysis. In order to better understand the properties of the residuals from the investment model I perform analyses testing the persistence of investment efficiency over time. First, I find that 40% (48%) of the firms in the top (bottom) Investment Residual quintile in a given year remain in the top (bottom) quintile in the following year, and 27% (36%) remain three years later (Panel E). In addition, one lag of Investment Residual in an autoregressive model explains 16% of current Investment Residual (untabulated). The inclusion of higher orders of past residuals has a small contribution in explanatory power (R-square of only 18% if five lags are included in the model). These analyses suggest that residuals of the investment model are not random, which seems to support the view that they capture a firm investment characteristic. However, I cannot rule out the explanation that the persistence in the residuals is a function of an omitted correlated variable in the investment model. . 2. Proxies for financial reporting quality The conceptual definition of financial reporting quality used in this paper is the accuracy with which financial reporting conveys information about the firm’s operations, in particular its expected cash flows, in order to inform investors in terms of equity investment decisions. This definition is consistent with the FASB – SFAC No. 1 which states that one objective of financial reporting is to inform present and potential investors 13 in making rational investment decisions and in assessing the expected firm cash flows. I proxy for financial reporting quality using measures of accruals quality derived in prior work (Dechow and Dichev, 2002; McNichols, 2002) based on the idea that accruals are estimates of future cash flows, and earnings will be more representative of future cash flows when there is lower estimation error embedded in the accruals process (McNichols, 2002). 8 I estimate discretionary accruals using the Dechow and Dichev (2002) model augmented by the fundamental variables in the Jones (1991) model as suggested by McNichols (2002). The model is a regression of working capital ccruals on lagged, current, and future cash flows plus the change in revenue and PPE. All variables are scaled by average total assets. Accrualsi,t = ? + ? 1*CashFlowi,t-1 + ? 2*CashFlowi,t + ? 3*CashFlowi,t+1 + ? 4*? Revenuei,t + ? 5*PPEi,t + ? i,t. (2) where Accruals = (? CA – ? Cash) – (? CL – ? STD) – Dep, ? CA = Change in current assets (item 4), ? Cash = Change in cash/cash equival ents (item 1), ? CL = Change in current liabilities (item 5), ? STD = Change in short-term debt (item 34), Dep = Depreciation and amortization expense (item 14), CashFlow = Net income before extraordinary items (item 18) minus Accruals ? Revenue = Change in revenue (item 12), and PPE = Gross property, plant, and equipment (item 7). All variables are deflated by average total assets (item 6). Following Francis et al. (2005), I estimate the model in Equation 2 crosssectionally for each industry with at least 20 observations in a given year based on the Fama and French (1997) 48-industry classification. AccrualsQuality at year t is the 8 I discuss the sensitivity of the results to the use of alternative measures of accruals quality and other attributes of earnings in Section 5. 4 standard deviation of the firm-level residuals from Equation 2 during the years t-5 to t-1, assuring that all explanatory variables are measured before period t for the computation of AccrualsQuality in that year. I multiply AccrualsQuality by negative one so that this variable becomes increasing in financial reporting quality. As discussed in Dechow and Dichev (2002) and McNichols (2002), the estimation of AccrualsQuality captures the absolute variation in the residuals of Equation 2 rather than the variation relative to a benchmark. One concern with this approach is that AccrualsQuality may be capturing some underlying degree of volatility in the business, and the results in Table 1 show that investment efficiency is negatively correlated with firm uncertainty. Thus, I follow the suggestion in McNichols (2002) and create a relative measure of accruals quality. In particular, I measure AccrualsQualityRel as the ratio of the standard deviation of the residuals from Equation 2 during the years t-5 to t-1 to the standard deviation of total accruals during the years t-5 to t-1 multiplied by negative one. This measure captures the relative variance of the estimation errors in accruals compared to the total variance. I show below that this measure is only slightly correlated with firm size and cash flow volatility, mitigating the concern that the proxies for financial reporting quality are associated with investment efficiency because of the spurious effect of firm uncertainty. 4. Results To investigate hypotheses 1 and 2, I first present preliminary analysis on the univariate relation between the measures of investment efficiency and financial reporting quality. Table 2 – Panel A presents descriptive statistics for a smaller sample than reported in Table 1 due to data availability for AccrualsQuality and AccrualsQualityRel. 15 The sample consists of 49,543 firm-year observations and all variables are winsorized at the 1% and 99% levels by year. In this sample, there are 19,473 (30,070) firms classified as overinvesting (underinvesting) firms. The mean (median) value for Overinvestment is 7. 81% (4. 45%) and for Underinvestment is 5. 37% (4. 09%). The magnitudes are smaller than reported in Table 1 because the data required to estimate AccrualsQuality and AccrualsQualityRel bias the sample toward larger firms. Among the financial reporting quality proxies, the mean (median) firm in the sample has an AccrualsQuality of -0. 04 (0. 03) and an AccrualsQualityRel of -0. 74 (-0. 64). Finally, I include descriptive statistics on firm size, cash flow volatility, and Tobin Q because these firm characteristics are shown to be associated with investment efficiency in Table 1. The distribution of Q is slightly changed (as compared to Table 1) to a mean (median) Q of 1. 63 (1. 23) again reflecting the sample bias toward larger firms. Panel B presents Pearson (Spearman) correlations above (below) the main diagonal for the variables in Panel A. By construction, Overinvestment and Underinvestment cannot be correlated because each firm-year observation can only be in one group. Most importantly, Overinvestment is negatively correlated with Acc rualsQuality (Pearson correlation equals -0. 19) and with AccrualsQualityRel (Pearson correlation equals -0. 8); the same is true for Underinvestment (Pearson correlations equal -0. 22 and -0. 10 respectively). These results present preliminary evidence for the relation between financial reporting quality and investment efficiency in hypotheses 1 and 2. Finally, as in Dechow and Dichev (2002), AccrualsQuality is highly correlated In Table 1, I use return volatility instead of cash flow volatility to avoid imposing the five-year data requirement for the estimation of cash flow volatility. However, this data is required to estimate AccrualsQuality and does not impose any sample bias at this stage of the analysis. I use cash flow volatility in the remainder of the paper because AccrualsQuality is highly correlated with cash flow volatility as discussed by Dechow and Dichev (2002). However, the results are not sensitive to this choice. 9 16 with Size (Pearson correlation equals 0. 42) and with CashFlowVol (Pearson correlation equals -0. 66). However, note that AccrualsQualityRel is much less correlated with these variables (correlations of -0. 08 and 0. 04 with size and cash flow volatility respectively), supporting the argument that this variable is uncorrelated with firm uncertainty. 0 Table 3 presents the multiple regressions. The estimated model is a regression of investment efficiency on financial reporting quality, firm characteristics, and industry (based on the Fama and French (1997) 48-industry classification) and year fixed effects. The dependent variable is Underinvestment in the first two columns and Overinvestment in the remaining columns. All standard errors are clustered by firm using the HuberWhite procedure. 11 As predicted in hypothesis 1, Underinvestment is negatively related to AccrualsQuality and AccrualsQualityRel (both coefficients are significant at 1% level). The estimated coefficients are also negative and significant for Overinvestment, supporting the prediction in hypothesis 2. The estimated coefficients suggest that increasing AccrualsQuality (AccrualsQualityRel) by one standard deviation is associated with a reduction on Underinvestment of 0. 21% (0. 11%) and on Overinvestment of 0. 31% (0. 22%). Given that the mean values for Underinvestment and Overinvestment in Table 2 are 5. 73% and 7. 81%, these changes average between 1% and 5%, suggesting that the economic significance of the effect is moderate. One alternative explanation for the results in Table 3 is that causality goes the other way. For instance, suppose that poorly performing managers are more likely to The signs of the correlations between AccrualsQuality and size and cash flow volatility are the opposite of the ones presented in Dechow and Dichev (2002) because I multiply AccrualsQuality by negative one so that this variable is increasing in reporting quality. 11 Petersen (2005) suggests two methods to correct for both cross-sectional and time-series dependence in the data: the Huber-White procedure and adjusted Fama-MacBeth. Since, neither method is perfect, I repeat all subsequent analysis using Fama-MacBeth (1973) estimators adjusting for time-series dependence. The results lead to the same inferences as reported in the text. 10 17 invest inefficiently and also choose to report low quality financial information in order to hide their bad performance (e. g. , Leuz, Nanda, and Wysocki, 2003). Then one could spuriously find a positive association between financial reporting quality and investment efficiency. In order to address this concern, I perform two tests. First, I repeat the analysis using the financial reporting quality proxies lagged by two periods (the variables in the model are already lagged by one period). Second, I explicitly control for past investment efficiency in the model. The intuition behind this test is that if past investment efficiency drives financial reporting quality then there should be no relation between financial reporting quality and future investment efficiency after controlling for past investment efficiency. Table 4 – Panel A presents the results of the two sensitivity analyses when Underinvestment is used as the dependent variable. When AccrualsQuality and AccrualsQualityRel (Columns I and II) are lagged by two periods, the inferences are unchanged. The estimated coefficients are statistically negative at conventional levels. In Columns III and IV, I include past Underinvestment in the model. In this case, the estimated coefficient on AccrualsQuality is still negative and significant, while the coefficient on AccrualsQualityRel is negative but only marginally significant (two-sided p-value of 0. 14). Table 4 – Panel B repeats the analysis for Overinvestment. Again, all the inferences are unchanged since the estimated coefficients on AccrualsQuality and AccrualsQualityRel are statistically negative in all models. Overall, the results in Tables 3 and 4 support hypotheses 1 and 2 that financial reporting quality is negatively associated with both underinvestment and overinvestment, 18 consistent with the argument that financial reporting mitigates both adverse selection and agency costs. 4. 1. Cross-sectional Partitions In this section, I discuss the empirical approach used to test hypotheses 3, 4, and 5. These hypotheses involve cross-sectional predictions about the relation between financial reporting quality and investment efficiency across sub-groups of the sample. Thus, I estimate separate coefficients for these sub-groups as described in the model below: (Investment Inefficiency) i,t = ? 0 + ? 1* Partition i,t-1 + ? 2* ReportingQuality i,t-1 + ? 3* ReportingQuality* Partition i,t-1 + ? 4* Controls i,t-1 ? ? t * Year t + ? ? j * Industry j + ? it. where Investment Inefficiency is either Underinvestment or (3) Overinvestment, ReportingQuality is either AccrualsQuality or AccrualsQualityRel. Partition is coded as an indicator variable based on measures of financing constraints, excess cash, or information environment described below (results are similar if the Partition is used as a continuous or ranked (deciles) variable). The partitioning variables are defined such that a negative coefficient on the interaction term (? 3) implies that the relation between financial reporting quality and inefficient investment is stronger for firms in the subgroup of interest (e. g. , financially constrained firms). As additional analysis, I test the null hypothesis that the sum of the coefficients ? and ? 3 is equal to zero in order to test whether the relation between financial reporting quality and investment efficiency is at least present in the sub-group of interest. 12 12 Hypotheses 3 to 5 are also important in mitigating the concern that an omitted correlated variable could be driving the positive association between financial reporting quality and investment efficiency. For inst ance, if managers choose better (worse) investment projects and report more (less) informative financial accounting information when they know more (less) about growth opportunities and expected cash flows, 9 4. 1. 1. Financing Constraints In this section, I investigate hypothesis 3 which predicts that the relation between financial reporting quality and Underinvestment is stronger for financing constrained firms because these firms are, by definition, limited in their ability to raise funds. I follow the approach in Hubbard (1998) to classify firms into financially constrained and unconstrained categories. In particular, I use five different criteria because of the lack of consensus about which approach provides the best classification (Almeida, Campello, and Weisbach, 2004). First, I classify firms into Payout Constrained if the firm is in the bottom three quartiles in terms of total payout in a given year and unconstrained otherwise. I measure total payout as the sum of dividends and share repurchases deflated by year-end market capitalization using the method described in Boudoukh et al. (2005). Second, I classify firms into Age Constrained if the firm is in the bottom three quartiles of firm age in a given year (and unconstrained otherwise) based on the argument that young firms are more likely to face financing constraints. Age is measured as the difference in years since the first year the firm appears in the CRSP database. Third, I classify firms into Size Constrained if the firm is in the bottom three quartiles of total assets in a given year and unconstrained otherwise. Fourth, I measure Rating Constrained if the firm has long-term debt outstanding (item 9) but does not have public debt rated by S&P (item 280) and unconstrained otherwise. Finally, I construct the KZ Index following the approach in Kaplan and Zingales (1997) and classify a firm as KZ Index Constrained hen a positive relation between financial reporting quality and investment efficiency could just be a reflection of the quality of the manager’s information set and might not be related to financial reporting quality. However, this alternative hypothesis would not predict the relation between financial reporting quality and investment efficiency to be dependent on financing constraints, cash balances, or the existing information environment. Thus, if such interactions exist, then it would strengthen the result that financial reporting quality per se is associated with investment efficiency. 0 if the firm is in the top three quartiles of the KZ Index in a given year and unconstrained otherwise. 13 Untabulated analysis show that the first four classifications are positively correlated (Pearson correlations ranging from 0. 11 to 0. 45) but the KZ Index classification is not correlated with the remaining criteria (Pearson correlations ranging from -0. 01 to 0. 11), consistent with previous research (e. g. , Almeida, Campello, and Weisbach, 2004). 14 Further, all financing constraint proxies are positively correlated with Underinvestment (Pearson correlations range from 0. 1 to 0. 14). Table 5 presents the results related to hypothesis 3. All models include the control variables size, cash flow volatility, Q, and industry and year fixed effects as before but the coefficient estimates on these variables are not t abulated for brevity. The estimated coefficients on the control variables are similar to those reported in Table 3. The results are separated for AccrualsQuality and for AccrualsQualityRel. For AccrualsQuality, the estimated coefficients on the main effect (third column labeled ‘Reporting Quality’) are all egative with only one statistically significant coefficient. These results indicate that, for a sample of unconstrained firms, the relation between AccrualsQuality and Underinvestment is basically not significant. The estimated coefficients on the interaction terms, however, are negative in four out of five cases and significant in two. Further, the F-test rejects the hypothesis of no relation between AccrualsQuality and Underinvestment in almost all cases for the sample of financially constrained firms. The only exception is 3 The KZ Index is calculated using the following formula: KZ Index = -1. 002 * CashFlow + 0. 283 * Q + 3. 139 * Leverage – 39. 368 * Divi dends – 1. 315 * Cash. For more details see Almeida, Campello, and Weisbach (2004, p. 1790). 14 Principal component analysis on the five financing constraints proxies yields two factors. The first factor explains 40% of the variation and loads on all proxies but the KZ Index. The second factor explains another 20% of the variation in the data and loads on the Payout and the KZ Index measures. 1 when the KZ Index is used as the criteria for financing constraint classification. 15 When AccrualsQualityRel is used as the financial reporting quality proxy, the results are largely the same. In terms of economic significance, increasing AccrualsQuality (AccrualsQualityRel) by one standard deviation is associated with a reduction in Underinvestment of 0. 26% (0. 16%) for firms classified as Rating Constrained and 0. 08% (0. 06%) for unconstrained firms (compared to 0. 21% (0. 11%) for the full sample as discussed above). Overall, the results present marginal support for hypothesis 3 that the relation between financial reporting quality and Underinvestment is stronger for financing constrained firms. 4. 1. 2. Cash Balances In this section, I investigate hypothesis 4 which predicts that the relation between financial reporting quality and Overinvestment is stronger for firms with large cash balances and free cash flows because these firms are more likely to overspend existing resources (Jensen, 1986). I use two criteria to classify firms based on cash holdings and one proxy for free cash flow. First, I create an indicator variable, High Cash, coded as ‘1’ if the firm is above the median in the distribution of cash balances deflated by total assets in a given year and ‘0’ otherwise. Second, I follow the approach in Opler et al. (1999) who predict cash balances as a function of firms’ characteristics, and use residuals from this model as a proxy for excess cash. Opler et al. show that firms hold more cash in the presence of growth opportunities and firm uncertainty, and less cash when they are forced to payout interest obligations and have more access to financing (proxied by leverage and size). Thus, I estimate annual regressions of cash balances (item 1) deflated by total 15 The inconsistent result using the KZ Index is consistent with prior work in the finance literature (e. g. , Almeida, Campello, and Weisbach, 2004; Almeida and Campello, 2005) which finds opposite results when this variable is used as a proxy for financing constraints. 22 assets (item 6) on firm size, leverage, Q, and cash flow volatility. Leverage is measured as the sum of the book value of short term (item 34) and long term debt (item 9) deflated by the book value of equity (item 60) and the remaining variables are the same as described above. The explanatory power of the models ranges from 16% in 1986 to 42% in 2003. I create an indicator variable, Excess Cash, coded as ‘1’ if the firm has a positive residual from the model predicting cash balances, and ‘0’ otherwise. Finally, following Richardson (2006), Free Cash Flow is equal to cash flow from operations plus R&D expenses minus depreciation and the predicted investment for the firm as estimated in Table 1. Free Cash Flow is recoded as an indicator variable coded as ‘1’ if the computation of free cash flow is positive and ‘0’ otherwise. Table 6 presents the results related to hypothesis 4. As before, all models include the control variables size, cash flow volatility, Q, and industry and year fixed effects (estimates not tabulated). The first set of results presents estimated coefficients for AccrualsQuality and the second reports coefficients for AccrualsQualityRel. The results show that the estimated coefficients on the main effect of financial reporting quality are negative but not significant in all six models (three models for AccrualsQuality and three for AccrualsQualityRel). The estimated coefficients on the interaction term, on the other hand, are negative in all cases and significant in three out of six cases, and the F-test rejects the hypothesis of no relation in all cases. In terms of economic significance, increasing AccrualsQuality (AccrualsQualityRel) by one standard deviation is associated with a reduction on Overinvestment of 0. 41% (0. 35%) for firms classified as High Cash and 0. 06% (0. 06%) for firms with low cash (compared to 0. 31% (0. 22%) for the full sample as discussed above). Overall, the results support hypothesis 4 by showing that the 23 relation between financial reporting quality and Overinvestment is stronger for firms with large and excessive cash balances but the results are not statistically significant for firms generating free cash flows. This support the hypothesis that financial reporting quality reduces firm overinvestment by lowering shareholder’s cost of monitoring managers and thus limiting managers’ ability to undertake inefficient investment projects. 4. 1. 3. Information Environment In this section, I investigate hypothesis 5 which predicts that the relation between financial reporting quality and investment efficiency is stronger for firms with poor information environments because investors of these firms are more likely to rely on financial accounting information to infer the economic conditions of the firm’s operations. I use two proxies for the firm information environment: the number of analysts following the firm and the bid-ask spread. I use the number of analysts following a firm as a proxy for the amount of publicly available information about the firm. Analysts are an important source of information for investors; they issue forecasts, reports about individual companies, and stock recommendations. Roulstone (2003) examines the role of analysts in improving market liquidity and finds that analysts provide public information that reduces information asymmetries between firms and market participants. I collect data on analyst following from IBES and measure the number of analysts following the firm as the maximum number of analysts forecasting annual earnings for a firm during the fiscal year t. If the firm is not followed by IBES I assume that the number of analysts following the firm is zero. I consider a firm as Low Analyst if the firm is in the bottom three quartiles in a given year (coded as ‘1’ and ‘0’ otherwise). 24 The second proxy for a firm’s information environment is the bid-ask spread. See Amihud and Mendelson (1986) and Roulstone (2003) among others for discussions of spreads as a proxy for the information asymmetry between the firm and investors. I collect intraday trade data to compute bid-ask spread from the Trades and Quotes database (TAQ) and from the Institute for the Study of Security Markets database (ISSM). The TAQ database includes trades and quotes starting in 1993, and the ISSM database contains intraday data for NYSE/AMEX firms from 1983 to 1992 and for NASDAQ firms from 1987 to 1992. I measure quoted bid-ask spread as the ask price minus the bid price divided by the average of the bid and ask prices. The bid-ask spread is averaged across all transactions during the day for each firm, then daily mean bid-ask spreads are averaged during the month t. Finally I compute bid-ask spread as the average of the monthly bid-ask spreads during the fiscal year t. I consider a firm as High Spread if the firm is in the top three quartiles in a given year (coded as ‘1’ and ‘0’ otherwise). Table 7 presents the results related to hypothesis 5. As before, all models include the control variables (estimates are untabulated). The table is divided into Underinvestment and Overinvestment results. The first set of results presents estimated coefficients for AccrualsQuality and the second reports coefficients for AccrualsQualityRel. When bid-ask spread is used as the partitioning variable, I find that none of the coefficients on the main effect of financial reporting quality are significant, and three out of four coefficients on the interaction term are significant. The only exception is the coefficient on the interaction between High Spread and AccrualsQualityRel for Underinvestment. Further, in three out of four cases the F-test rejects the hypothesis of no effect of financial reporting quality on investment efficiency 25 for the sample of firms with High Spread. As for Low Analyst, the results on the estimated coefficients on the interaction terms are weaker; only one coefficient is statistically negative. Still, in three out of four models the F-test rejects the hypothesis of no relation for the sample of firms with Low Analyst. Overall, the results provide weak support for the hypothesis that the effect of financial reporting on investment efficiency is more important when the firm information environment is of low quality. 16 5. Sensitivity Analysis In this section I discuss some robustness tests to the analysis presented in the paper. First, I study the sensitivity of the results to inclusion of omitted control variables using firm fixed-effect estimation. The advantage of this approach is that it controls for all time-invariant unobservable firm characteristics. However, since the estimation of AccrualsQuality and AccrualsQualityRel is done using five years of data, the within-firm variation is small, which makes the fixed-effect estimation very conservative. The analysis is done for all firms with at least five, ten, or fifteen years of data in order to increase the within firm variation (sample sizes of 43,739, 33,454, and 24,420 firm-year observations respectively). Untabulated analyses show that the results in Hypotheses 1 and 4 are mostly robust to the firm fixed-effect estimation. Results of Hypotheses 2 and 3 are weaker (coefficients are of the same sign but in most cases not significant at conventional levels) and, in the case of Hypothesis 5, the results are similar (weaker) when Underinvestment (Overinvestment) is used as the dependent variable. I also performed tests using a 2Ãâ€"2 classification based on the firm’s financial reporting quality and information environment (sorted independently as a low/high). Either high financial reporting quality or high information environment is sufficient to mitigate Underinvestment but only financial reporting quality is sufficient to mitigate Overinvestment, suggesting a substitute relation between financial reporting quality and the firm information environment in improving investment efficiency. 16 26 Second, I investigate the sensitivity of the results to the use of alternative measures of accruals quality such as the non-linear discretionary accruals model in Ball and Shivakumar (2005) and the accrual quality measures developed by Wysocki (2006). The key innovation in Wysocki’s (2006) measures is to remove the smoothness effect of accruals in the Dechow and Dichev (2002) model. Results using the Ball and Shivakumar (2005) model are very similar to those reported on the paper. The use of Wysocki’s measure, on the other hand, leads to similar results for hypotheses 1, 2, and 5 but insignificant results for hypotheses 3 and 4. As discussed in more detail below, these results are not surprising given that Wysocki’s (2006) measure excludes the smoothness component of accruals, and smoothness is positively associated with investment efficiency. In addition, I investigate the sensitivity of the results to the use of alternative attributes of earnings as proxies for financial reporting quality. Accruals quality represents one dimension of financial reporting quality but other dimensions of earnings have also been used as a proxy for financial reporting quality (Francis et al. , 2004). These attributes of earnings would not necessarily affect investment efficiency in the same way. For instance, one could argue Timeliness and Conservatism are more important in conveying information about bad firm’s economic states, thus improving Overinvestment but may not be associated with Underinvestment. Nevertheless, it is useful to see how these measures are related and the respective association with investment efficiency (Verdi, 2005). Francis et al. (2004) identify six earnings attributes (other than AccrualsQuality) previously used in accounting research to characterize desirable features of earnings. The six attributes are: Persistence, Predictability, Smoothness, 27 ValueRelevance, Timeliness, and Conservatism. I also include a measure of price informativeness as used by Durnev, Morck, and Yeung (2004). When Underinvestment is used as the dependent variable (Hypotheses 1 and 3), I find consistent results using Persistence, Predictability, and Smoothness but insignificant results for the remaining variables (with the exception of Informativeness in which the relation is positive and significant, against the prediction). The analysis using Overinvestment (Hypotheses 2 and 4) yield weaker results since only the estimated coefficients on Smoothness and Informativeness are negative and significant in the expected direction. The remaining coefficients are either insignificantly negative or positive in the case of Persistence. Overall the results provide marginal support for the relation between other dimensions of earnings and Underinvestment, and weak support for Overinvestment. The finding that Smoothness is negatively associated with both Underinvestment and Overinvestment explains the weaker results using Wysocki’s measure of accruals quality given that this measure excludes the smoothness component in the accruals quality measure developed by Dechow and Dichev (2002). In the third sensitivity test, I repeat the analysis using capital expenditures (deflated by average total assets) as a measure of investment in order to make the results more comparable with the extant finance literature. In addition, the investment measure used in the paper includes only cash acquisitions and ignores stock acquisitions which constitute the majority of M&A transactions. Untabulated analyses using CAPEX show that the results in Hypothesis 1, 3, and 5 are similar to those reported. Results in Hypothesis 2 are consistent but weaker when AccrualsQuality is used as the proxy for 28 inancial reporting quality. Finally, results are inconsistent with Hypothesis 4 (estimated coefficients on the interaction terms are mostly insignificant). Finally, I include goodwill (item 204) in the discretionary accruals model. As discussed in Jones (1991), PPE is included in the model to capture the normal level of depreciation, and using the same logic, goodwill would capture the normal level of amortization in accruals. This inclusion is justified because the measure of investment includes acquisitions. Goodwill is only available from Compustat starting in 1988 which is why it is excluded in the main tests. In untabulated analysis I find little impact on the discretionary accruals model (the Pearson correlation between discretionary accruals including and excluding goodwill is 0. 99), and the results presented in the paper are unchanged if I restrict the sample to post 1988 and include goodwill in the discretionary accruals model. 6. Summary and conclusion Despite recent claims that financial reporting quality can have economic implications for investment efficiency, there is little evidence on this relation empirically. This paper studies the relation between financial reporting quality and investment efficiency. The analysis is done on a sample of 49,543 firm-year observations during the sample period of 1980 to 2003. I find that proxies for financial reporting quality, namely measures of accruals quality, are negatively associated with both firm underinvestment and overinvestment. The relation between financial reporting quality and underinvestment is stronger for firms facing financing constraints, consistent with the argument that financial accounting information can reduce the information asymmetry between the firm and investors, and 29 thus lower the firm’s cost of raising funds. Likewise, the relation between financial reporting quality and overinvestment is stronger for firms with large cash balances, which suggests that financial reporting quality can reduce the information asymmetry between the principal and the agent and thus lower shareholders’ cost of monitoring managers and improving project selection. Finally, I find that the relation between financial reporting quality and investment efficiency is stronger for firms with low quality information environments. Overall, this paper contributes to the extant accounting literature that investigates the economic implications of enhanced financial reporting. This literature has shown that financial reporting quality has economic consequences such as increased liquidity, lower costs of capital, and higher firm growth (e. g. , Leuz and Verrecchia, 2000; Francis et al. , 2004, 2005; Martin, Khurana, and Pereira, 2005). This paper extends this research by showing that financial reporting information can reduce information asymmetries that impede efficient corporate investment policies. 30 References Almeida, H. , and M. Campello, 2005. Financial constraints, asset tangibility, and corporate investment, working paper, New York University. Almeida, H. , M. Campello, and M. Weisbach, 2004. The cash flow sensitivity of cash. Journal of Finance 59, 1777-1804. Alti, A. , 2003. How sensitive is investment to cash flow when financing is frictionless? Journal of Finance 58, 707-722. Amihud, Y. and H. Mendelson, 1986. Asset pricing and the bid-ask spread, Journal of Financial Economics 17, 223-249. Ashbaugh, H. , J. Gassen, and R. LaFond, 2005. Does stock price synchronicity represent firm-specific information? The international evidence, working paper, University of Wisconsin – Madison. Ball, R. , and L. Shivakumar, 2005. Earnings quality in U. K. private firms. Journal of Accounting and Economics 39 (1), 83-128. Bens, D. , and S. Monahan, 2004. Disclosure quality and the excess diversification. Journal of Accounting Research 42 (4), 691-730. value of Berger, P. , and E. Ofek, 1995. Diversification’s effect on firm value. Journal of Financial Economics 37, 39–65. Berle, A. , and G. Means, 1932. The modern corporation and private property (Macmillan, New York). Bertrand, M. , and S. Mullainathan, 2003. Enjoying the quiet life? Corporate governance and managerial preferences. Journal of Political Economy 111, 1043–1075. Blanchard, O. , F. Lopez-de-Silanes, and A. Shleifer, 1994. What do firms do with cash windfalls? Journal of Financial Economics 36, 337-360. Botosan, C. , 1997. Disclosure level and the cost-of-equity-capital. The Accounting Review 72, 323-349. Boudoukh, J. , R. Michaely, M. Roberts, and M. Richardson, 2005. On the measure of payout yield and implication for asset pricing. Journal of Finance, forthcoming. Bushman, R. , and R. Indjejikian, 1993a. Shareholder demand for ‘‘distorted’’ accounting disclosures. The Accounting Review 68 (4), 765–782. 31 Bushman, R. , J. Piotroski, and A. Smith, 2005. Capital allocation and timely accounting recognition of economic losses: international evidence, working paper, University of Chicago. Bushman, R. , and A. Smith, 2001. Financial accounting information and corporate governance. Journal of Accounting Economics 31, 237-333. Bushman, R. , A. Smith, and F. Zhang, 2005. Investment-cash flow sensitivities are really capital investment-working capital investment sensitivities, working paper, University of North Carolina at Chapel Hill. Dechow, P. , and I. Dichev, 2002. The quality of accruals and earnings: the role of accrual estimation errors. The Accounting Review 77, supplement, 35-59. Durnev, A. , R. Morck, and B. Yeung, 2004. Value-enhancing capital budgeting and firmspecific stock return variation. Journal of Finance 59 (1), 65-105. Erickson, T. , and T. Whited, 2000. Measurement error and the relationship between investment and Q. Journal of Political Economy 108, 1027-1057. Fama, E. , and K. French, 1997. Industry costs of equity. Journal of Finance 43, 153-193. Fama, E. and J. MacBeth, 1973. Risk, return, and equilibrium: empirical tests. Journal of Political Economy 81, 607–636. FASB, 1978. Statement of Financial Accounting Concepts No. 1. Objectives of Financial Reporting by Business Enterprises. Francis, J. , R. LaFond, P. Olsson, and K. Schipper, 2004. Cost of equity and earnings attributes. The Accounting Review 79 (4), 967-1010. Francis, J. , R. LaFond, P. Olsson, and K. Schipper, 2005. The market pricing of accruals quality. Journal of Accounting and Economics 39 (2), 295-327. Gomes, J. , 2001. Fi