The Stand Essays - The Stand, Randall Flagg, Abigail, Harold

The Stand Stephen King's The Stand is an exciting novel that depicts the powers of good against fiendish. In the year 1991, a plague strikes America, leaving just two or three thousand individuals alive who are resistant to the plague. Of the survivors, the individuals who serve Good intuitively participate in Boulder, Colorado, while the individuals who revere the Dark Man are attracted to Las Vegas, Nevada. The two gatherings independently re-fabricate society, until one must pulverize the other. Franni Goldsmith verges on murdering herself. She figures she can not manage her parent's demises, being unmarried and pregnant, and having the main other survivor in her old neighborhood of Ogunquit, Main be her as of late expired closest companion's bizarre sibling Harold Lauder. Fran sets aside her own affections for Harold aside, and goes with him to the spot in her fantasies, to Boulder, Colorado. On their way, they get together with six individuals from different states in the United States who went along with them on their excursion. Fran is upset by her fantasies, as every one of them are by their own. She dreams of an old woman named Abigail. This woman is benevolent and cherishing and vows to shield them from the fiendishness. In the fantasies there is additionally a Dark Man. He is consistently there hiding, holding back to assault. Harold admits to himself that he is enamored with Fran and goes insane when he understands how genuine Fran has become with Stuart Redman, one of the newcomers to their voyaging gathering. Harold turns out to be madly envious and plots to isolate them, regardless of whether it implies murder. Harold doesn't let it be known to any of them, yet his fantasies are unique in relation to theirs. In his fantasies the Dark Man offers Harold force and regard, something Harold would never envision in the past. Harold realizes his predetermination is to go to Las Vegas. The gathering shows up in Boulder, and not long after are joined by more than one thousand other people who long for Abigail and this spot. They eventuwilly structure a general public where they settled and has gatherings to choose what they would do about the Dark Man. Abigail tells the individuals that three of them, including Stuart, must be sent to devastate the Dark Man. In the interim Harold covertly leaves with the Dim Man's lady of the hour to-be (Nadine) to Las Vegas. Harold is prepared to execute Stuart, yet is slaughtered rather by the desire of Good. Nadine makes it securely to Las Vegas before Stuart and his two sidekicks are going to be hanged. Out of the sky the hand of Good comes and annihilates the Dark Man saving the three men. After much difficulty, Stuart comes back to Fran and her infant child and together they plant the seeds of another general public. The Stand is a book about human instinct. It shows individuals' the significance of good or wickedness. For the most part, it shows how it is in man's temperament to assemble society and to battle for his convictions. I seen this book as incredibly engaging in light of the fact that it was well composed and fairly fascinating, in spite of it's otherworldly perspectives. I would suggest this book for any individual who appreciates blood and gore flicks. Justin

Ethical Dilemmas On Social Work Practice Social Work Essay Essay Example

Moral Dilemmas On Social Work Practice Social Work Essay For this task I will explain individual qualities, biass, moral situation and the effect they have had on cultural work design by thinking about one of my convictions and how I needed to question myself to improve of it. Utilizing Marxists and Feminists places of enslavement I plan to put, perceive, respect and worth different people for which I will give a delineation of which happened to me and how I needed to contest partiality towards others. I will other than talk hypothetical models to undertaking oppression and partiality by using the PCS hypothetical record and how individuals can go enabled through gatherings, protagonism or rule law. Individual qualities, Biass, Ethical Dilemmas, Conflict of Interest and their effect on Social Work Practice We will compose a custom article test on Ethical Dilemmas On Social Work Practice Social Work Essay explicitly for you for just $16.38 $13.9/page Request now We will compose a custom article test on Ethical Dilemmas On Social Work Practice Social Work Essay explicitly for you FOR ONLY $16.38 $13.9/page Recruit Writer We will compose a custom exposition test on Ethical Dilemmas On Social Work Practice Social Work Essay explicitly for you FOR ONLY $16.38 $13.9/page Recruit Writer A worth is something that worries individual or a conviction they hold, this decides how an individual carries on, values do non find if something is said whether it is correct or wrong in today s society. Be that as it may, an individual s conviction s can affect how they carry on towards others. Preference is a term which has rather negative intensions and is typically taken to mean an unfriendly disposition towards an individual or gathering ( Billingham et al. 2008. Pg. 196 ) One of my qualities and an inclination of mine is that any occupation I am utilized in will at long last travel to individuals working in an outside state, especially India. This all stems from when I worked for an outsider acknowledgment card processor, in the wake of giving them nine mature ages of administration I was heading out to be made excess and my occupation would be actioned from individuals in India. For the accompanying two months I would hold to create individuals from that point all the applications I was by and by or had taken a shot at. This gave me a problem do state them all the data I knew or only some of it? I must be proficient, so I gave them as much data on the applications for which I thought about, I even made client ushers to help with the arrangement and they could use when I had left the organization. When addressing the individuals I found that we shared things practically speaking with one another and they were disheartened that an individual would lose their occupation. It was nt their error I was being made excess however the organizations in which we worked for. I had effectively tested the new conviction that had ascended from a pitiful situation. Valuess are just every piece great as the activities they brief ( Preston-Shoot, 1996. Pg 31 ) When working with individuals from different states I will require to save my ain qualities and biass, as everybody merits help and guidance in their lives no issue where they originate from known to man. In the event that I neglect to put my qualities and biass aside while working with them it will affect the guide they will have from me, I should be loosened disapproved to all human advancements. Thompson ( 2005 ) clarifies that there is an interest for validity ( congruity ) to be accomplished in cultural work, that a positive working connection between administration client and cultural specialist is required dependent on trust and respect for one another to create. Distinguish, Recognize, Respect and Value Diverse Persons Thompson ( 2006 ) portrays partiality as to put a distinction and is non needfully a negative term . Be that as it may, when utilized in footings of lawful, moral or from a political perspective it is alluded to as being out of line for example being cowardly treated for your sexual orientation or social start. On the off chance that this happens it can take to an individual being abused. When taking a gander at enslavement from a Marxists position DAmato claims that individuals are persecuted in light of the class in which they live in, that grown-up females, homophiles or individuals of shaded covering are low-level to the Bourgeoisie and Capitalism is required in the public arena as it shapes and relies upon oppression for its perseverance. Marxists contend that if bigotry, sexism or homophobia was to be grasped it will plan that an entrepreneur specialists would require to be ousted and that enslavement is key to the clash of communism. From an Extremist Feminists see Zeiber ( 2008 ) contends that grown-up females are mistreated inside the male centric framework, that marriage and the family unit are an outcome of industrialist economy. Holmstrom ( 2003 ) talks about Socialist Feminism, holding that grown-up females are persecuted by the laterality of work powers and of the monetary disparity as a result of the spots of intensity guys have inside society. I chip away at a ranch where we habitually have Polish each piece great as British individuals working at that place. One twelvemonth a colleague was doing boorish stiflers towards the Polish individuals, as others were doing cheerfulness at their development, and their Catholic convictions were erroneous. I could see that something was inaccurate, so I addressed them ; they revealed to me they believed they were being victimized and begun to encounter truly mistreated in light of the fact that they were non British. At that point I addressed my chief about the situation which was go oning and he left me to cover with. I needed to accept about how I was venturing out to approach it so the two gatherings would be content with the outcome. So I requested that the guilty party come outside and talk with me. I disclosed to him that the Polish individuals were miserable the way wherein he was taking care of them. He was stunned as he suspected they were all holding a giggle with one another. It was hard for me to confront the guilty party as it was my male parent, a grown-up male I gazed upward to. Thinking about what had happened I realized I had said the correct things to my male parent as they kept on working with each in agreement, non wanting to arouse one another, empowering a decent workplace for all. Segregation can be found in foundations like the congregation, jail or by a person in a position of intensity. It very well may be secretly actioned by using covers like the Klu Klux Klan in USA wear veils concealing their distinction or unmistakably actioned like politically-sanctioned racial segregation in South Africa or the BNP in Britain. Hypothetical Frameworks for Understanding Discrimination and Oppression Thompson ( 1997 ) shows how enslavement can be investigated using the PCS hypothetical record and there are three degrees: Individual ( P ) a man s positions for example inclination against a gathering of individuals. Social ( C ) shared qualities between others, what is off base or right, this in twist signifiers an agreement. Auxiliary ( S ) how enslavement of society is shaped through foundation who bolster social standards A ; individual convictions for example confidence, media or specialists. Here is an outline of the PCS hypothetical record in real life: Phosphorus: Young grown-up male in the nine you work at offers violative and derogative comments about a sprightly grown-up male who goes to other than. He says that gay individuals are non characteristic or ordinary . Degree centigrades: Gay individuals generally repel the network around him, and a significant number of the network individuals are engaged with the nearby church, keeping unfaltering situations about sexual moral thought processes . Second: Popular newspaper media chides the strange exercises of gay individuals. Strict pioneers of all religions back up the instatement of Torahs to end equivalent rights for bright individuals. Enactment is passed by parliament that bargains the privileges of gay, sapphic and promiscuous individuals. There is an overwhelming agreement of intensity utilized in all signifiers of basic life. ( Wood, J. 2001 ) By using the PCS hypothetical record it can help an individual form an idea with regards to why others act the way they do for example the generalization of a youthful have oning a goon, you accept they are issue shapers on account of what the media have announced, yet non each juvenile is out for issue. Another hypothetical model to undertaking oppression and bias is through approval. By approving individual intends to empower a person to determine command over and taking obligation for ain their activities. The Humanist assault via Carl Rogers ( 1959 ) urges individuals to go sceptered. As understudy cultural specialists we are educated about approving the administration client, to focus on their qualities and to cooperate as friends, we other than need to defend helpless individuals, to take into history an individual s financial, political and social foundation at a similar clasp. Gatherings other than work to approve individuals as they offer help and in the event that they go about as one they can go amazing. An outline of this is from the Times Online dated June thirteenth 2007 How football made us ( see connection 1 ) , by sorting out a football crew for intellectually wiped out patients they each got sceptered ready to make things on their ain without holding help from others. Make use of Schemes to Challenge Discrimination, Inequality and Injustice There are plots in topographic point to help teach individuals about disparity, partiality and shamefulness, for example, protagonism and rule law. As cultural specialists we have to back up and talk up for people that face being abused or oppressed. By using protagonism to represent the individuals who can't talk up for themselves. For example experience larning or conveying difficulties. Walker ( 2008 ) prompts that protagonism has it qualities however next to has its failings. Quality from using protagonism are: Peoples who have been socially rejected from standard society expansion a voice, when a help client has a cultural specialist who listens can be offered affirmation to talk for themselves, hence turni

Fresh Ink September 17, 2013

Fresh Ink September 17, 2013 HARDCOVER RELEASES   Help for the Haunted  by John Searles  (William Morrow) It begins with a call in the middle of snowy February evening. Lying in her bed, young Sylvie Mason overhears her parents on the phone across the hall. This is not the first late-night call they have received, since her mother and father have an uncommon occupation, helping haunted souls find peace. And yet, something in Sylvie senses that this call is different than the rest, especially when they are lured to the old church on the outskirts of town. Once there, her parents disappear, one after the other, behind the churchs red door, leaving Sylvie alone in the car. Not long after, she drifts off to sleep only to wake to the sound of gunfire. Nearly a year later, we meet Sylvie again struggling with the loss of her parents, and living in the care of her older sister, who may be to blame for what happened the previous winter.  As the story moves back and forth in time, through the years leading up to the crime and the months following, the ever inquisitive and tender-hearted Sylvie pursues the mystery, moving closer to the knowledge of what occurred that night, as she comes to terms with her familys past and uncovers secrets that have haunted them for years. Fortunately, the Milk  by Neil Gaiman  (HarperCollins) I bought the milk, said my father. I walked out of the corner shop, and heard a noise like this:thummthumm. I looked up and saw a huge silver disc hovering in the air above Marshall Road. Hullo, I said to myself.  Thats not something you see every day. And then something odd happened. When a father runs out to buy milk for his childrens breakfast cereal, the last thing he expects is to be abducted by aliens. He soon finds himself transported through time and space on an extraordinary adventure, where the fate of the universe depends on him and the milk. But will his children believe his wild story? Traveling Sprinkler  by Nicholson Baker  (Blue Rider Press) Paul Chowder, the poet protagonist of Nicholson Baker’s widely acclaimed novel  The Anthologist, is turning fifty-five and missing his ex-girlfriend, Roz, rather desperately. As he approaches the dreaded birthday, Paul is uninspired by his usual artistic outlet (although he’s pleased that his poetry anthology,  Only Rhyme, is selling “steadily”). Putting aside poetry in favor of music, and drawing on his classical bassoon training, Paul turns instead to his new acoustic guitar with one goal in mind: to learn songwriting. As he struggles to come to terms with the horror of America’s drone wars and Roz’s recent relationship with a local NPR radio host, Paul fills his days with Quaker meetings, Planet Fitness workouts, and some experiments with tobacco. Written in Baker’s beautifully unconventional prose, and scored with musical influences from Debussy to Tracy Chapman to Paul himself,  Traveling Sprinkler  is an enchanting, hilariousâ€"and very necessaryâ€"novel by one of the most beloved and influential writers today. The Last First Day  by Carrie Brown  (Pantheon) Ruth has always stood firmly beside her upstanding, brilliant husband, Peter, the legendary chief of New Englands Derry School for boys. The childless couple has a unique, passionate bond that grew out of Ruths arrival on Peters familys doorstep as a young girl orphaned by tragedy. And though sometimes frustrated by her role as lifelong helpmate, Ruth is awed by her good fortune in her life with Peter. As the novel opens, we see the Derry School in all its glorious fall colors and witness the loosening of the aging Peters grasp: he will soon have to retire, and Ruth is wondering what they will do in their old age, separated from the school into which they have poured everything, including their savings. The narrative takes us back through the years, revealing the explosive spark and joy between Ruth and Peter-undiminished now that they are in their seventies-and giving us a deeply felt portrait of a woman from a generation that quietly put individual dreams aside for the good of a pa rtnership, and of the ongoing gift of the right mans love. The Impersonator  by Mary Miley  (Minotaur Books) In 1917, Jessie Carr, fourteen years old and sole heiress to her family’s vast fortune, disappeared without a trace. Now, years later, her uncle Oliver Beckett thinks he’s found her: a young actress in a vaudeville playhouse is a dead ringer for his missing niece. But when  Oliver confronts the girl, he learns he’s wrong. Orphaned young, Leah’s been acting since she was a toddler. Oliver, never one to miss an opportunity, makes a propositionâ€"with his coaching, Leah can impersonate Jessie, claim the fortune, and split it with him. The role of a lifetime, he says. A one-way ticket to Sing Sing, she hears. But when she’s let go from her job, Oliver’s offer looks a lot more appealing.  Leah agrees to the con,  but secretly promises herself to try and find out what happened to the real Jessie. There’s only one problem: Leah’s act won’t fool the one person who knows the truth about Jessie’s disappearance. This Song Will Save Your Life  by Leila Sales  (Farrar, Straus Giroux) Making friends has never been Elise Dembowski’s strong suit. All throughout her life, she’s been the butt of every joke and the outsider in every conversation. When a final attempt at popularity fails, Elise nearly gives up. Then she stumbles upon a warehouse party where she meets Vicky, a girl in a band who accepts her; Char, a cute, yet mysterious disc jockey; Pippa, a carefree spirit from England; and most importantly, a love for DJing. Seven for a Secret  by Lyndsay Faye  (Amy Einhorn Books/Putnam) Six months after the formation of the NYPD, its most reluctant and talented officer, Timothy Wilde, thinks himself well versed in his city’s dark practicesâ€"until he learns of the gruesome underworld of lies and corruption ruled by the “blackbirders,” who snatch free Northerners of color from their homes, masquerade them as slaves, and sell them South to toil as plantation property.  The abolitionist Timothy is horrified by these traders in human flesh. But in 1846, slave catching isn’t just legalâ€"it’s law enforcement. When the beautiful and terrified Lucy Adams staggers into Timothy’s office to report a robbery and is asked what was stolen, her reply is, “My family.” Their search for her mixed-race sister and son will plunge Timothy and his feral brother, Valentine, into a world where police are complicit and politics savage, and corpses appear in the most shocking of places. Timothy finds himself caught between power and principles, desperate to protect his only brother and to unravel the puzzle before all he cares for is lost. Dead Girls Dont Lie by Jennifer Shaw Wolf (Walker Childrens) Rachel died at two a.m . . . Three hours after Skyler kissed me for the first time. Forty-five minutes after she sent me her last text. Jaycee and Rachel were best friends. But that was beforebefore that terrible night at the old house. Before Rachel shut Jaycee out. Before Jaycee chose Skyler over Rachel. Then Rachel is found dead. The police blame a growing gang problem in their small town, but Jaycee is sure it has to do with that night at the old house. Rachel’s text is the first clueâ€"starting Jaycee on a search that leads to a shocking secret. Rachel’s death was no random crime, and Jaycee must figure out who to trust before she can expose the truth. Bleeding Edge  by Thomas Pynchon (The Penguin Press HC) It is 2001 in New York City, in the lull between the collapse of the dot-com boom and the terrible events of September 11th. Silicon Alley is a ghost town, Web 1.0 is having adolescent angst, Google has yet to IPO, Microsoft is still considered the Evil Empire. There may not be quite as much money around as there was at the height of the tech bubble, but there’s no shortage of swindlers looking to grab a piece of what’s left. Maxine Tarnow is running a nice little fraud investigation business on the Upper West Side, chasing down different kinds of small-scale con artists. She used to be legally certified but her license got pulled a while back, which has actually turned out to be a blessing because now she can follow her own code of ethicsâ€"carry a Beretta, do business with sleazebags, hack into people’s bank accountsâ€"without having too much guilt about any of it. Otherwise, just your average working momâ€"two boys in elementary school, an off-and-on situation with her sort of semi-ex-husband Horst, life as normal as it ever gets in the neighborhoodâ€"till Maxine starts looking into the finances of a computer-security firm and its billionaire geek CEO, whereupon things begin rapidly to jam onto the subway and head downtown. She soon finds herself mixed up with a drug runner in an art deco motorboat, a professional nose obsessed with Hitler’s aftershave, a neoliberal enforcer with footwear issues, p lus elements of the Russian mob and various bloggers, hackers, code monkeys, and entrepreneurs, some of whom begin to show up mysteriously dead. Foul play, of course. PAPERBACK RELEASES The Dangerous Animals Club  by Stephen Tobolowsky  (Simon Schuster) If you ran into Stephen Tobolowsky on the street, you would not be mistaken: Yes, you’ve seen him before. A childhood dentist? A former geometry teacher? Your local florist? Tobolowsky is a character actor, one of the most prolific screen and stage presences of our time, having appeared in productions that range fromDeadwood  to  Glee, from  Mississippi Burning  to  Groundhog Day. But Stephen Tobolowsky, it turns out, is also a dazzlingly talented storyteller and writer.  The Dangerous Animals Club  is a beguiling series of stories combining biography and essay, with a tone both hilarious and introspective. The stories have heroics and embarrassments, riotous humor and pathos, characters ranging from Bubbles the Pigmy Hippo to Stephen’s unforgettable mother, and scenes that include coke-fueled parties, Hollywood sets, and hospital rooms. The Man in the Window  by Jon Cohen  (Amazon Publishing) Since he was disfigured in a fire sixteen years ago, recluse Louis Malone has remained hidden from the prying eyes of his neighbors in the small town of Waverly. Across town, Iris Shula, a lonely and unlovely nurse knows, at thirty-seven, it is unlikely that her Prince Charming will ever appear. But Iris is about to learn how wrong she is. When Louis accidently falls out of his second story window these two kindred souls are brought together. What unfolds is a most unlikely love story. One that will make you laugh and that will break and remake your heart. Book Lust Rediscoveries is a series devoted to reprinting some of the best (and now out of print) novels originally published from 1960 to 2000. Each book is personally selected by NPR commentator and Book Lust author Nancy Pearl and includes an introduction by her, as well as discussion questions for book groups and a list of recommended further reading. Beluga  by Rick Gavin  (Minotaur Books) A few months ago Nick Reid and his compadre Desmond liberated some money from a nasty meth dealer, and now they need to launder it.  After lending out a couple of thousand here and there, with hopes of getting a small return, all kinds of “investment opportunities” are coming out of the woodwork.  And one of them has trouble written all over it. The brother of Desmond’s ex-wife wants a small sum to set up a scheme involving a trailer full of stolen tires.  Which sets off all kinds of alarm bells, but Shawnica insists that Nick and Desmond help him out.   In the next few days, they are set upon by a ninja schoolgirl assassin and a couple of Delta gangsters. Soon all thought of recouping their investment goes out the window, and they’ll settle for staying alive. The Salinger Contract  by Adam Langer  (Open Road Media) Adam Langer, the narrator of this deft and wide-ranging novel by the author of the same name, tells the intertwining tales of two writers navigating a plot neither one of them could have ever imagined. There may be no other escape than to write their way out of it. Adam is a writer and stay-at-home dad in Bloomington, Indiana, drawn into an uneasy friendship with the charismatic and bestselling thriller author Conner Joyce. Conner is having trouble writing his next book, and when a menacing stranger approaches him with an odd-and lucrative-proposal, events quickly begin to spiral out of control. The Elementals  by Francesca Lia Block  (St. Martins Griffin) Ariel Silverman is a normal girl, making plans for college, when her mother reveals she has breast cancer.   On top of this Ariel is still recovering from the loss of her best friend Jeni who vanished on a school trip.   As she tries to adjust to college life in a new city, Ariel cannot let the mystery of Jenis disappearance rest and takes the now-dormant investigation upon herself.   Her journey will take her into a  world of astonishing beauty, sexual discovery, and danger. ____________________________ Sign up for our newsletter  to have the best of Book Riot delivered straight to your inbox every week. No spam. We promise. To keep up with Book Riot on a daily basis,  follow us on Twitter,  like us  on Facebook,  and subscribe to the Book Riot podcast in  iTunes  or via  RSS.  So much bookish goodnessâ€"all day, every day.

Acquisitions - Free Essay Example

Sample details Pages: 19 Words: 5678 Downloads: 2 Date added: 2017/06/26 Category Statistics Essay Did you like this example? Table 3.1 First Merger Wave 1897 1904 10 Table 3.2 Merger and Acquisitions in 1990s 18 Figure 3.1 First Merger Wave 1897 -1904 11 Figure 3.2 Third Merger Wave 1963 1970 12 Figure 3.3 Merger Acquisitions in 1970 -1980 14 Don’t waste time! Our writers will create an original "Acquisitions" essay for you Create order LITERATURE REVIEW Many firms used corporate mergers or acquisitions as business strategy to accomplish various objectives. For instance, businesses used acquisitions to enter into new markets and regions, allocate capital or gain technical expertise and knowledge. Therefore, organizations often utilize strategic mergers and acquisitions in order to grow or survive. However most of the poorly managed acquisitions or merger resulted in disappointing performance and up to 50 percent are considered unsuccessful (see Louis, 1982). Furthermore, according to Smith and Hershman (1997), it was held by Mercer Management Consulting that in 1980s, 57 percent of acquisitions were failed and the successful corporate acquisitions in 1990s were hardly 50 percent (p.39, cited in Smith and Hershman, 1997). To date, merger or acquisition is one of the most widely used instruments to enhance the growth of organizations. Systematic and sophisticated corporate research helps companies to understand the pre and post-acquisitions performance and achieving other business objectives (as discussed in Singh Zollo, 2000). However, according to Sirower (1997), empirical academic literature does not provide any clear understanding, which facilitates the managers to maximise the success of acquisitions or merger programs. Therefore, understanding the source of value creation is critical to determine the causes of failure or success in corporate merger or acquisitions. The literature review presented in this section critically evaluates and analyze the earlier studies in order to solve the paradigm of à ¢Ã¢â€š ¬Ã…“Merger Acquisitions and Value Creationà ¢Ã¢â€š ¬?. Corporate Acquisitions and Their Research Paradigms Datta et al. (1992) suggested two distinct frameworks for acquisitions programmes to identify sources of shareholders wealth i.e. strategic management and financial economics literature and both approaches follow different research directions. The strategic management approach focused on factors that have been controlled by management. For instance, Datta et al (1992) suggested that in order to assess the post-acquisition performance, this approach attempts to differentiate between various diversification strategies and types of acquisitions or types of payment in acquisitions (i.e. stock vs. cash). In contrast, financial economic research attempted to prove the unique hypothesis of market for corporate control. This approach views the acquisition activities as a contest among different management teams in a competition to control corporate firms as argued by Datta et al (1992). Therefore, this view suggests that the value creation through merger or acquisitions is decided by capital market and its characteristics including its competitiveness such as regulatory modification affecting a particular market (see Datta et al, 1992). However, these two methodologies are unable to explain the factors resulting in unsuccessful corporate acquisitions. Thus, many academics such as Chatterjee (1992), attempted to identify critical variables of ineffective performance in acquisitions or merger activities by studying the relationship between post-acquisition performance and integration. While the initial notion by Kitching (1967) that the key factor for a successful corporate acquisition is the post-acquisition integration process, it was recognised that acquisition or merger activities create value not only from strategic factors realised through synergies (see Chatterjee, 1992), but also from the process itself, which leads to anticipated synergistic factors, as reflect in capital market expectations (see Jemison and Sitkin, 1986). Therefore, it is very important to understand the processes and factors resulting in corporate merger and acquisitions value creation before we critically evaluate the research paradigm of value creation. Evolution of Acquisitions In order to improve the understanding of the research hypothesis, firstly this paper attempts to review trends of acquisitions and mergers followed by comments on value creation during these periods. For illustration purposes, I will focus my attention to the US economy considering the fact that corporate sector is enriched with these activities and capital markets of United States are much developed comparative to rest of the world. Following section presents the analysis of corporate mergers and acquisitions programmes dated back to1897. The First Wave, 1897-1904: According to Gaughan (1999), this particular period is dominated by horizontal acquisitions resulting surge in stock markets and ultimately creation of monopolies. Some of the todays giant conglomerates created in first wave include General Electric, American Tobacco, Du Pont, Kodak and Standard Oil (see Gaughan, 1999). First Merger Wave 1897 1904 Year Number of Mergers 1897 69 1898 303 1899 1208 1900 340 1901 423 1902 379 1903 142 1904 79 Table 3.1 First Merger Wave 1897 1904 Source: Gaughan (1999), p.24 Figure 3.1 First Merger Wave 1897 -1904 Data Source: Gaughan (1999), p.24 The Second Wave, 1916-1929: In contrast to first wave which is termed as merging for monopoly, the second wave is termed as merging for oligopoly. Gaughan (1999) pointed out that the reason of this terminology is the predominance of vertical or horizontal integration of companies during the period of 1925 to end of the decade. Moreover, Jemison and Stikin (1986) argued that the abundant capital availability stimulated by favourable economic conditions resulted in prominent corporate mergers and integration. Further according to Gaughan (1999), the antitrust law force during this era was stricter comparative to the first merger wave, which created more oligopolies and vertical integration and fewer monopolies in contrast to earlier wave. The Third Wave, 1965-1969: According to Gaughan (1986), the decade of 1960s observed controversial of the merger and acquisitions activities and termed as conglomerates. The companies such as ITT (International Telephone and Telegraph Corporation, USA) and Textron acquired numerous unrelated businesses to diversify and to reduce cyclic risks. Furthermore, during this period the conglomerates not only grew rapidly and profitably but the management were perceived to be skilful as well, which facilitated the diversity in acquisitions and operations of the companies (see Judelson, 1969). For instance, Geneen (1984) documented that during this wave ITT built itself into a highly diversified conglomerate by acquiring various businesses such as insurance, food and car rentals. Moreover, he found that executives of the company used the advanced financial tools like detailed budgeting and tight financial controls to make these acquisitions successful and well-functioning. Following figure presents the overview of the a ctivities during the period: Scholars like Goold and Luchs (1993) argued that general management skills were one of the vital factors in successful acquisitions and mergers during this era, which also helped corporations to diversify in different businesses. Moreover, engaging in unrelated business by many companies was based on the assumptions that different businesses would not require dissimilar managerial skills (see Goold and Luchs, 1993). However, in late 1960s companies start facing performance problems and the share price of these conglomerates such as Textron fell almost 50% comparative to 9% drop in Dow Jones Industrial average (see Bonge and Coleman, 1972). Furthermore, in early 1970s companies began to experience profitless growth like General Electric sales increased by 40% from 1965 to 1970 but its profit actually dropped (see Goold and Quinn, 1990). According to Gaughan (1999), the era has been ended when ITT spin off in three different companies. It is perceived that most of the mergers during the period failed and companies jettisoned their under-performing and unrelated business to face the competitive environment (see Sikora, 1995). In addition, Sadlter et al (1997) observed that the combined value of businesses separated from their parent firms significantly increased to more than $100 billion in 1996 comparative to 1993 figure of $17.5 billion. Acquisitions in the 1970s: The merger and acquisition activities decreased significantly in 1970s, which can be seen in the following figure. Figure 3.3 Merger Acquisitions in 1970 -1980 Source: Gaughan (1999), p.36 As a consequence of problem in merger and acquisitions activities experienced by conglomerates, the senior executives realised that only general management skills are not sufficient for a successful transactions (see Chandler, 1962). Therefore, they focused their attentions toward the long term companys objectives instead of operating of strategic business units (see Christensen, 1965). Andrews (1971) highlighted that this change introduced the concept of corporate strategy for firms and most CEOs of the organizations started accepting that strategy is their unique and primary task. However, corporate strategy poses some practical problem and did not help executives in deciding about allocation of resources among businesses especially when each investment proposal has a different strategy (see Goold and Luchs, 1993). Moreover, Bower (1970) argued that investment decision should be part of overall business strategy rather than prevaricate on project to project basis. In 1970s these revolutions in corporate finance lead to the development of portfolio planning by Boston Consulting Group (1970). Soon, portfolio planning became famous in corporate sectors and according to the survey of Haspeslagh (1982) by 1979, 45 percent of the Fortune 500 companies were using portfolio planning in some form. However, with the passage of time problems related to portfolio planning emerged. As Goolds and Luchs (1993), argued that the corporate manager with long experience of particular sector of the industry found extremely difficult to manage their newly acquired businesses in vibrant and unfamiliar sectors. Consequently, this affected the performance of new acquisitions or mergers of the firms. In search of solution to this problem Hamermesh and White (1984) found that administration was a vital factor in explain business performance of mergers or acquisitions but many organizations incorrectly addressed the approach. The Fourth Wave, 1981-1989: The decade of 1980s seen another merger wave in business world. In this period, merger deals were frequent and larger and total value of mergers were approximately $.13 trillion in US (see Sikora, 1995). This was influenced by service sector and significant support from investors; lenders and globalization facilitated companies to finance the buyout deals (see Sikora, 1995). Moreover, the reasons of the fourth merger wave were excess capacity (see Jensen, 1993), agency problems (see Jensen, 1988), market failure (see Shleifer Vishny, 1997), and tax and antitrust law changes (see Bhagat et al, 1990). It seems that during 80s, diversified firms do not have capacity to create values therefore companies start re-thinking about role of corporate management as well as appropriate strategies for diversified firms. As highlighted by Goold and Luchs (1993) highlighted that in order to survive firms cut back costs and scale down their staffs but these were not adequate to create value. Furthermore, they argued that diversification strategies failed to create value for many businesses. Nevertheless, these failures compelled senior managers to transform their primary goals to creating shareholders values instead of building huge businesses (see Porter, 1987). Moreover, management of the companies started evaluating corporate performance like stock market by using economic indicator instead of accounting measures and take whatever steps were essential to enhance the value of their firms stock (see Goold and Luchs, 1993). However, value based planning based on financial tools of Return on Equity (ROE), internal rate of return and discounted cash flow provided different views to managers about competitive advantages and stock prices (see Rappaport, 1986). Further, Goold and Luchs (1993) pointed out that a higher stock price could be a reward for creating value. However, during the era of 80s firms that did not diversify into unrelated businesses and specialize into their core industry were able to create value and turn out to be successful companies (see Peter and Waterman 1982). Mintzberg and Lampel (1999) also support this notion by arguing that focused corporations which know their customers, have deep knowledge and understand their missions were better able to create value in contrast to companies that applied the diversification concept of value creation. In summary of the merger and acquisitions activities in 1960s and 1980s, it can be assert that conglomeration and diversification were the dominant trends in 1960s contrast to specialization and consolidations phenomena of 1980s. However, empirical evidence on value creation tends to suggest that significant merger and acquisitions of 60s reversed subsequently and did not lead to profitability. According to Shleifer and Vishny (1994) many of the conglomerates created in 1960s were destroyed in 1980s, which provides the evidence of failure in notion of à ¢Ã¢â€š ¬Ã…“merger acquisitions and value creationà ¢Ã¢â€š ¬? that was not expected in 1960s. The Current Wave, 1990-Present: According to Gaughan (1999), in contrast to 1960s decade of conglomerates and 1980s period of Leveraged Buyouts (LBO), the dominant deals of 90s were designed with a view to fit strategically among merging firms. Moreover, the forces behind the merger and acquisitions activities were different than earlier periods and corporate sector seen some of mega-deals during that period. For instance in 1996, the top 100 deals of merger and acquisitions were worth more than $1 billion or approximately 53.5% of total transactions (see Sikora, 1997). Merger Acquisitions in 1990s Year Number of Deals Value ($ Billions) 1980 1558 34.8 1981 2328 69.5 1982 2299 60.7 1983 2395 52.7 1984 3176 126.1 1985 3490 146.1 1986 2523 220.8 1987 2517 196.5 1988 3011 291.3 1989 3825 325.1 1990 4312 206.8 1991 3580 143.1 1992 3752 125.3 1993 4148 177.3 1994 4962 276.5 1995 6209 375.0 1996 6828 550.7 Table 3.2 Merger and Acquisitions in 1990s Data Source: (www.mergerstat.com) The era of 90s was said to the decade of Consolidation; which means combination of operating and management resources between two companies as well as their stocks, assets and liabilities (see Lipin, 1997). Furthermore, in 1990s, stable economic environment, relax antitrust laws, stock markets favourable conditions and low cost of capital were the catalyst of merger and acquisition trends. However, still many firms failed to create shareholder value and according to study by Mercer Management Consulting Inc. (1997) 48 percent of mergers failed to generate shareholder value in 90s comparative to 57 percent failure of 1980s (p.39, cited in Smith and Hershman, 1997). Nonetheless, the firms in 90s believed that larger pools of assets are essential either to survive or to grow but the question remains that how to discover ways to create value for portfolio of firms businesses? (see Goold and Luchas, 1993). To resolve this anomaly, three possible explanations have been identified: Firstly, as shown by Porter (1985) that diversification should be limited to companies which have synergy potential and without synergy a diversified business is nothing more than mutual fund. He also suggested that synergies can be attained when the portfolio of businesses create values more than sum of its individual components. Besides, the notion of synergy should be based on economies of scale and cost saving strategies (see Porter, 1985). However, in practice it has been found by studies such as Chatterjee (1992) that gaining synergy is not an easy task and most acquisitions and merger gains arise from either disposals of assets or from restructuring rather than synergistic benefits. It seems that synergy was a primary rationale for merger and acquisitions in the era but remains anomaly from value creation prospective as discussed by Goold and Luchs (1993). Secondly, the corporate strategy of the firms should focus on exploiting core competencies. For instance, Prahalad and Hamel (1989) suggested that the corporate portfolio should be based on technological competencies instead of portfolio of businesses. Similarly, Itami (1989) argued that invisible assets like reputation, brand names or customers list are the most valuable source for sustaining competitive advantage and could be used to create value by exploiting competitive opportunities. Furthermore, other competencies such as technology or managerial expertise can also be used to enhance the performance of business portfolio (see Haspeslagh and Jemison, 1991). However, this approach also has some drawbacks; for example, Goold and Luchs, pointed out that it can be difficult to assess the contribution of investment in building the competencies of a business especially when the investment is in new business area. Thirdly, the best way to create value via successful diversification is to build a portfolio of businesses, which fits with the managers logic and their management style (see Parahalad and Bettis, 1986). If conglomerates diversification is based on business with similar strategic logic then its possible to add value to business by adopting a common approach across all the business units. For instance Goold and Luchs (1993) exposed that sharing the skills or activities across organization can help corporate management to realize synergies. Moreover, Goold and Campbell (1987) found the evidence that top executives also find it difficult to deal with a wide range of styles and approaches. Review of Major Areas in MA This section presents the literature review of major areas focused by academics in merger and acquisition field. Consequently following five sub-sections have been established to review the academic literature: Performance Success in Merger and Acquisitions People in Merger and Acquisitions International Prospects of Merger and Acquisitions Best Practices in Merger and Acquisitions Valuation Issues in Merger and Acquisitions The measurement of success in merger and acquisition activities is mainly through quantitative research and is subject to various studies such as Gosh (2001); Healy et al (1992), in the field of finance or economics and also other directly related fields. People are normally unobserved in merger and acquisitions, however extensive studies like Bliss and Rosen (2001), addressed issues from ethical and organizational learning to more in depth personal perspective. Similarly, increasing trend of international trade and globalization attracted the attention of many researchers, for instance Rossi and Volpin (2004). The valuation of the companies is often overlooking in the field of merger and acquisitions. However, it is a very critical part of acquisition process and could be very helpful not only in the pre-acquisition stage but also during the acquisition process as well as at post-acquisition stage (see Becher, 2001). Finally, the best practices research in the field of merger and acquisition is usually done in the form of case studies but the quality and intensity of these studies vary widely (see Marks and Mirvis, 2001). Performance and Success in MA As stated before companies often engaged in the series of acquisitions and merger activities and early studies such as Barney (1988), tend to show that related acquisitions performed better than other acquisition transactions. However, relatedness itself does not create value for acquiring companies but synergy is the vital factor that helps companies to generate abnormal returns from acquisition programs. For example, Barney (1988) showed that synergistic cash flow stemming from relatedness, which is unique and private creates abnormal returns for shareholders of acquiring firm. However, later studies such as Hayward (2002), suggested that different level of relatedness results in various degree of success and moderately similar companies tend to be more successful than the companies that are highly similar or dissimilar in business or size to one another. He further concluded that if a firm experienced small losses in past acquisition in contrast to high losses or high gains then it has better chances of success in prospective acquisition. In addition, the timing of acquisition plays a vital role in success of the transaction and should not be too close or far-away from central acquisition (see Hayward, 2002). Similarly, Brown and Eisenhard (1997) argued that companies benefit differently depending upon their experimenting and timing of the merger and acquisition activities. Moreover, when the acquiring company has some inimitable resources then it can create value by utilizing these resources in targets company as suggested by Capron and Pistre (2000). However, they also added that if the source of synergies is recognized in target firm than market associate expected gains to target firm due to the competition among potential bidders. Consequently, this competition raises the price of target firm and would create value for shareholders of the target firm but also lead to under performance of acquirer. Nevertheless, performance success through merger and acquisitions is still controversial among academics as pointed out by Cording et al (2002). To resolve the issue Chatterjee (1992) measured the cumulative average of abnormal returns (CAAR) during the period of 11 months before the tender offer until 60 months after the tender offer. After studying the sample of 577 tender offers between the periods of 1963 to 1986; he suggested that net gain arises for the economy from these transactions but it does not necessarily create gains for everyone involved in merger and acquisition. More specifically, CAAR after 60 months were observed to be negative for unsuccessful bidders, zero for successful bidder and positive for target company. Furthermore, Chatterjee (1992) found much higher positive CAAR for restructured target companies in contrast to non-restructured targets. Certain studies view the merger and acquisition transactions from a different prospective. For example, Golbe and White (1993) proved in their study that macroeconomic environments influence the merger activities and the number of merger transactions increases in time of economic expansion comparative to decrease in programme at the time of economic down turn.Similarly, Amburgey and Miner (1992) studied the effects of companies momentum on merger activities and suggested that managers follow the past patterns. The academics such as Capron (1999), also attempted to assess the performance of the merger and acquisition activities by conducting the survey of prime stakeholders in merger activities. He further concluded that the available financial data is too gross to allow the separation between the types of pure value-creating mechanism. Moreover, he also argued that more often the objective of the companies is to retain the top management team of the targets firm, whether its a conglomerate or related merger. International Prospects of MA The emergence of globalisation and increasing trends in international trade fasten the number of local as well as cross-border acquisitions and merger activities. For instance, the cross-border acquisition activities in United States increased to 19% in 1999 from 6% in 1985 (see Seth et al, 2001). According to the study of Seth et al (2001), the evidence suggests that there are three motives for cross-border acquisitions such as synergy seeking, managerilism and managerial hubris. Moreover, the research tends to show that there is a positive relationship between the level of value creation and reverse internalization, asset sharing, financial sharing and market seeking ( as discussed by Seth et al, 2001). In addition, there seems to be association between value creation and governance system of bidders country. For instance, Seth et al (2001) argued that bidding companies from group-oriented governance system like Japan and Germany appear to be engaged in acquisitions and merger activities with higher level of value creation in contrast to bidding firms from market oriented governance system such as United Kingdom. Further enhancement of research in the area of cross-border merger and acquisition suggests that experience in merger and acquisition activities can be utilized to create value in another country. For example, Gugler et al (2003) compared the data of 15 years and proved that post merger patterns are similar across different countries. Moreover, their evidence also signifies that there are no major differences between domestic and cross-border mergers as well as manufacturing and service sectors around the world. With the passage of time and in the era of globalization the merger and acquisitions activities are increasing especially in emerging economies. The multinational companies often use the tools of acquisition and mergers to penetrate in new markets and economies particularly in emerging countries such as Central and Eastern Europe (see Milman, 1999). However, in many countries MNC mergers and acquisitions are seen as threats by government agencies, privatized companies and state enterprises. Therefore, in order to develop a successful alliance the acquisition or merger program should be designed in such as way that creates value for companies as well as the host-country governments (see Rondinelli and Black, 2000). Lastly, yet the number of merger and acquisitions across border appears to be increasing but it seems difficult to integrate and manage the successful processes. Hence, Inkpen et al (2000) suggested that the companies should critically evaluate the areas of decision making, communication, networking and socialisation, communication and the structure of authority and responsibility before involving in the process of MA. People in MA Only looking to financial aspects might limit the understanding about the question why MA activities are so widely used by companies as a tool to grow. Hence, another area focused by academics, such as Karitzki and Brink (2003), is related to merger and acquisitions and people. Generally, one of the motives for merger activities is to follow the cost-cutting strategies including synergy and targets customers. Often, the employees are laid off in the process of merger and acquisitions and consequently this creates new but conflicting networks of relationships in new companies as suggested by Vermeulen and Barkema (2001). Thus, it affects the success and results in under-performance of merger and acquisition programmes. Therefore, considering the affects of MA on employee or managers of the potential target firms are of similar importance as financial issues. Similarly, the research in the area of executive compensation pointed out that prior to acquisition or merger, management of acquiring company receive significant higher packages comparative to the executives of target firms (see Lynch and Perry, 2002). Hence, these issues can lead to turnover and morale issues that ultimately affect the success of anticipated integration from MA. Furthermore, in extreme circumstances, issues like these emerging from dissimilarities create hurdles to achieve the objective of the original merger and acquisitions. Thus, reconciling the differences is one of the major issues faced by the combined company to create value (as discussed in Lynch and Perry, 2002). Moreover, successful merger or acquisition depends upon the people in both target and acquiring firms. The attitude and opinion of the employees regarding acquisition or merger can change over the time. Schweiger and DeNisi (1991) conducted the survey of employees and compared the attitudes in pre-acquisition and post-acquisition period. Their results show that attitudes of the employees three months after the announcement of merger changed significantly and turn towards continual negative consequences (see Schweiger and DeNisi, 1991). Likewise, Covin et al (1996) studied the attitude of 2845 employees from a large manufacturing concern in post merger period. The results show significant differences between the target firm and acquiring companys employees in satisfaction with merger. The employees of acquired company faced high level of dissatisfaction and ultimately felt more stress due to changes introduced after merger. In addition, this stress is aggravated due to the direct competition between target firm and acquiring company. Furthermore, Covin et al (1996) pointed out that factors such as loss of power and status, changes in salary or benefits and lack of managerial direction result in high level of stress and dissatisfaction from merger activities. Hence, it has been suggested that in addition to financial aspects these types of issues should not be overlooked in order to create value and to develop a successful merger and acquisition programme (see Karitzki and Brink, 2003). Best Practices in MA It is often suggested that acquisitions are predominantly unsuccessful and numerous studies like Aiello and Watkins (2000), confirmed this fact. However, generally the conditions and environment is relevant before judging the results. Furthermore, there is lack of research in answering the question; what would happen if both the companies continued in their own separate way. Therefore, estimating the successfulness of merger or acquisition is a tricky anomaly (as discussed in Chaudhuri and Tabrizi, 1999). Moreover, the unsuccessful MA activities are more highlighted in contrast to successful programmes. Ed Libby, the chairman and CEO of AllState stated that when MAs fails they draw more notice despite the fact that lot of other projects fails in business but no one can see them because they remain within internal walls of the companies (cited in Cary, 2000). As stated earlier, there is no one strategy that fits all kinds of merger and acquisition activities, however systematic approaches such as suggested by Jan Leschly, can help companies to develop a successful plan. Jan Leschly, retired CEO of SmithKline Beecham suggested that they put their people on the boards of different companies by investing small amounts. Once the companies get going then they decide whether to buy it completely or not (cited in Cary, 2000). Likewise, understanding the various components of merger process is very vital to develop a successful merger or acquisition deal. However, it is very hard to enumerate the components especially when these are integrated with each other. According to Marks and Mirvis (2001), the successfulness of merger and acquisition is highly depended on following factors: Acquisition Plan Implementation of this plan Post-acquisition cooperation between firms after acquisition Moreover, they collected a number of factors that were mentioned in previous research such as strategic objective, clear selection, search and selection process etc. They also argued that pre-acquisition planning is very important for successful merger and acquisition plan and more prepared the people will more synergies in a combination will result (see Marks and Mirvis, 2001). Similarly, Aiello and Watkins (2000) suggested that every MA deal pass through following five stages: Screening potential deal Reaching initial agreement Conducting due diligence Setting final terms Achieving closure They suggested that splitting the merger or acquisition deal in above mentioned stages and approaching them systematically can help companies to create value through business combination (see Aiello and Watkins, 2000). However, sometimes the reasons for MA failure could be different from the reasons of other MA success. Gadish et al (2001) studied the causes of merger and acquisition failure and suggested that poor strategic rationale, sever cultural mismatch, overpayment for acquisition, inadequate integration planning and execution, setting rational and problems in executive leadership and strategic communication are the main factors that lead to the under-performance and sometime failure of any merger or acquisition deal. Valuations Issues in MA The last area of MA research focused by academics are the valuation of the companies involved in deal. There are several methodologies such as discounted cash flows or P/E multipliers, used by analyst to value the company. However, Hall (2003) suggested three main methods to estimate the value of business. These are comparable companies method, discounted future earning method or asset model, which can be use to appraise the value of company. However, application of these models requires careful judgement of analyst and may not be appropriate to apply in all circumstances. For instance, in current economic turmoil application of comparable companies model on traded firms can skew the valuation of business (see Hall, 2003). Moreover, additional premium price needs to be paid for most of the merger and acquisition deals. The valuation of the business could be relatively simple if it is stand alone but additional value created due to synergies and closing acquisition cost integrated in the process construct further challenges in estimation (see Gadish et al, 2001). However, there is range of sophisticated techniques available to help in estimation and often the final price is based on weighted average of number of valuations as suggested by Eccles et al, (1999). Evidence of Post-Acquisition Performance and Value Creation Many studies such as Dodd (1980) and Firth (1980), have attempted to identify the value creation of corporate acquisitions by examining the stock returns of the acquiring companies. However, empirical evidence suggests mixed results in terms of post acquisitions returns to shareholder of the acquiring firms. Some studies found negative returns to the acquirers (see Malatesta, 1983; Eger, 1983) in contrast to other research, which reported significant abnormal returns for the shareholder of acquiring companies (see Chung and Weston, 1982; Asquith et al, 1983). Particularly the studies of long run performance of acquiring firms provided the evidence of significant abnormal return over the period of one to three years after post acquisition (see Langetieg, 1978). However, contrary to that Agrawal et al (1992) reported the 10 percent loss to acquiring firms in post acquisition period of five years. The previous research mainly focused to investigate the relationship between types of acquisitions like vertical integration, unrelated acquisitions and related integrations but has not concentrated on the reasons of success. Moreover, many academics have been attracted to the paradigm of corporate acquisition and value creation; however, the results of studies of unrelated and related diversification were mixed (see Lecraw, 1984). For instance, Rumelt (1982) proved that higher profitability is associated with related acquisition comparative to unrelated acquisitions. Similar results has been reported by Christensen and Montgomery (1981) and Varadarajan and Ramanujam (1987). However, other research like Michel and Shaked (1984) found the evidence that unrelated acquisition outperformed the related acquisition. Likewise, Weston et al (1972) also concluded that unrelated acquisitions performed better than related acquisitions. Furthermore, Luffman and Reed (1984) support this notion by studying the unrelated and related acquisitions activities and reported that firms engaged in unrelated acquisition are in better position to create value in contrast to firms involved in related acquisitions. However, there are some studies such as Grinyer et al, (1990), which did not find any significant difference among various types of acquisition and merger strategies. In fact, most research was unable to find the exact forces which drive the successful corporate acquisitions modes, as stated earlier; therefore it is difficult to identify the determinants of successful acquisition process. More specifically, empirical evidence, for instance Chattterjee (1986) suggests that horizontal acquisitions outperformed the vertical acquisitions and conglomerates and associated with higher synergies. However, some studies like Lubatkin (1983) proved that vertical acquisitions and conglomerates provided superior performance than horizontal acquisitions. However, to sum up the previous studies Loughran and Vijh (1997) suggested three typical results from various research studies. Firstly, the stakeholders of target firm gained high abnormal returns from acquisitions activities. Secondly, the shareholders of acquiring firms does not gain abnormal returns or very little from tender offers. Finally, the acquiring companys shareholders gained negative abnormal returns from the merger activities (see Bradley et al, 1983; Kummer and Hoffmeister, 1978; Jensen and Ruback, 1983). In general, evidence from academic research shows that acquisitions and mergers do not create value instead results of acquisitions and mergers are associated with negative returns rather than positive as suggested by Ruback (1988). Furthermore, these negative abnormal returns are inconsistent with the hypothesis of market efficiency and tend to show that market participant overestimates the anticipated efficiency gains from takeover transactions (see Jensen and Ruback, 1983). In addition, Agrawal et al (1992) suggested three important implications of underperformance findings. Firstly, the hypothesis of capital market efficiency is a very important concept in corporate finance and systematic poor performance from post-merger transaction is inconsistent with this hypothesis. Secondly, they argued that most performance research examines the returns around announcement dates by implicitly assuming that markets are efficient and therefore ignore the examination of post announcement returns. Hence they noted that market inefficiency findings on post announcement basis could be calls into question. Finally, the findings of underperformance might show poor accounting performance of firms after the merger or acquisitio n transaction. However, there are studies such as Healy et al (1992), which provided opposite results. Likewise the study by Mercer Management Consulting found that since mid-80s, 57 percent of merger and acquisitions deals, which worth $500 million or more generated poor results over the period of three years after the acquisition transaction comparative to industry average. Further findings of the study were that during 1990s, the success rate of the acquisition transaction was barely 50 percent (p.39, cited in Smith and Hershman, 1997). Finally, we can assert that acquiring firms underperformed market after the acquisition, as suggested by most research such as Agrawal et al (1992) examined the post merger performance of companies and reported that acquiring companies underperformed by 10% on average in post-acquisition period over the five years. However, they also argued that it is still an unsettled issue in finance literature and it depends upon how the performance is measured.

Data Analysis On Data Analytics - 1270 Words

Problem Area An important area for growth in the health sector over the past few decades has been the adoption of Electronic Health Records (EHRs) aimed at improving patient outcomes and enhancing hospital efficiency. Historically, hospital data has been stored in hard copy format, however, with EHRs the availability data from various sources becomes widely available. And in this digital age, data is integral to our healthcare as it likely holds the promise of supporting a wide range of medical and healthcare functions. This of course identifies the need to effectively understanding and build knowledge around data analytic techniques to transform healthcare data into meaningful outcomes. There is an abundance of data, yet, the†¦show more content†¦This research design is appropriate because the responses of the participants and observation will lead to assessing the need and usefulness of data analytical capabilities in hospital settings. Sampling and Participants A purposeful sample will be selected for this study due participant’s expertise in their respective fields. This will provide more meaningful data relevant for this research. Participants recruited will all be within the same hospital. Recruiting will start with an email sent to prospective department managers asking if they would be interested in participating in a research study regarding the data analytics and how it relates to their departmental day-to-day activities. Departments that agree to participate will be contacted and a convenient time for initial interviews will be set-up. Following the interview, department workflow observations and document analysis will be carried out at the convenience of the departments This being a qualitative study, a small and selective sample of 15 departments will be selected due to the depth of the research. The following inclusion and exclusion criteria will be used to acquire the purposeful sample. Inclusion Criteria †¢ Department reliance on EHR †¢ Departments that produce or use large quantities of data †¢ Department staff that actively deal with data †¢ Departments with minimum of 6 staff (toShow MoreRelatedData Analytics And Analysis : Data Science1619 Words   |  7 PagesData analytics and analysis are often used in conjunction with one another, and can be applied in variety of situations, enterprises, and domains. Data analytics and analysis often fall under the umbrella of data science, which is the discipline associated with structured and unstructured data [1]. However, there are altering views of what each term represents, as well as how they are interrelated. One source describes analytics as a subset of analysis, with analysis being the larger entity [2].Read MoreAnalysis Of Big Data, Data Mining, And Data Analytics Essay1080 Words   |  5 Pagesto get the most accurate consumer data to create advertising and marketing plans. Today marketing is more personalized, immediate, and accurate than it ever has been before. The gathering and organizing of this data into useful insights is something that has interested me for quite some time. After I earn my degree, I would love to work for a company helping analyze and sort their market data either through consulting or in house work. Taking thousands of data bits to find patterns in consumerRead MoreBig Data And Analytics Analysis1316 Words   |  6 Pages BIG DATA AND ANALYTICS: The emergence of new technologies, applications and network systems makes it hard to run the current business models and huge data types, and thus emerged various types of analytic tools like Big Data, which make this work easier by way of proper organization of data. Big Data is all about analyzing different forms of data (Structured, Semi-structured and Un-structured) and it is not about the procedure, creation or consumption of data. Definition of BigRead MoreBig Data And Analytics Analysis1760 Words   |  8 Pages BIG DATA AND ANALYTICS: The emergence of new technologies, applications and network systems makes it hard to run the current business models and huge data types, and thus emerged various types of analytic tools like Big Data, which make this work easier by way of proper organization of data. Big Data is all about analyzing different forms of data (Structured, Semi-structured and Un-structured) and it is not about the procedure, creation or consumption of data. Definition of BigRead MoreStatistical Analysis : The Big Data Analytics1399 Words   |  6 PagesThe big data analytics deals with a large amount of data to work with and also the processing techniques to handle and manage large number of records with many attributes. The combination of big data and computing power with statistical analysis allows the designers to explore new behavioral data throughout the day at various websites. It represents a database that can’t be processed and managed by current data mining techniques due to large size and complexity of data. Big data analytic includesRead MoreData Analytic Analysis Paper Example1011 Words   |  5 PagesUnderstanding my chosen path†¦ thinking back Thinking back to the day the application to SNHU for this Data Analytics Program was submitted, it was months of weighing options before the final decision to take the plunge. There were a few reasons to why this program was chosen. Career growth was definitely the first reason for this motivation. The realization of a need to find a professional ‘me’ was the decision maker. Seeking something interesting yet challenging was the goal. Realizing that callingRead MoreAnalysis Of Big Data And Analytics Systems1576 Words   |  7 PagesBig Data and Analytics systems are fast emerging as one of the most critical system in an organization’s IT environment. But with such a huge amount of data, there come many performance challenges. If Big Data systems cannot be used to make or forecast critical business decisions, or provide insights into business values hidden under huge amounts of data at the right time, then these systems lose their relevance. This article talks abo ut some of the critical performance considerations in a technologyRead MoreWeb Analytics Analysis And Reporting Of Web Data For Purposes Of Understanding And Optimizing Web Usage Essay1801 Words   |  8 PagesWeb analytics is the measurement, collection, analysis and reporting of web data for purposes of understanding and optimizing web usage. It is used to enable a business to attract more visitors, retain or attract new customers for goods or services, or to increase the dollar volume each customer spends. Web analytics is often used as part of customer relationship management analytics. The analysis can include determining the likelihood that a given customer will repurchase a product after havingRead MoreManaging Business And Research Data Is A Big Trend Right Now1566 Words   |  7 PagesIBM Watson Analytics Shreya Prabhu, San Jose State University, San Jose CA Abstract Managing business and research data is a big trend right now. In the dearth of skilled data analysts and data scientists as to the ever increasing need of managing and analyzing data, it is the need of the hour to search for tools and solutions that can achieve big data analysis. IBM Watson Analytics gives tools to access data in an easy way and enables users to do truly complex analytics in minutes on tasks whichRead MoreThe Big Data Related Activities1487 Words   |  6 PagesThe world is changing with respect to the growth in big data and to the way in which it is used. Growth in big data brings with it many challenges, but it also presents new opportunities. Figure 1, helps understand some of the big data related activities that are taking place in the world with respect to volume of data that is being consumed by these activities over the next 5 years. Fig. 1: Data is predicted to grow to more than 160,000 terabytes in the next 5 years. Apple was Teradata’s â€Å"fastest

What is a research hypothesis Free Essays

What is a research hypothesis? Define directional, nondirectional, and statistical/null hypothesis statements. A research hypothesis is a statement about two variables, independent and dependent, and their relationship with an expected outcome based on the research question which, if directional, will state the expected direction of the relationship between the independent and dependent variables. If the research hypothesis is nondirectional it will not state the expected direction within the relationship of the variables but that a relationship exists. We will write a custom essay sample on What is a research hypothesis or any similar topic only for you Order Now The statistical hypothesis or null hypothesis states there is no relationship between the independent and dependent variables and failure to reject the null hypothesis will support the research hypothesis. (LoBiondo-Wood Haber, 2006) Define the following: independent variable, dependent variable (note that the dependent variable is of primary interest to the researcher). The independent variable is manipulated in experimental research studies and assumed to occur naturally in nonexperimental studies to measure or observe the effect on the dependent variable. The dependent variable is not changed or manipulated and is the variable that is studied by changes in the independent variable. The dependent variable is what the researcher is interested in explaining, understanding, or predicting. (LoBiondo-Wood Haber, 2006) Identify the independent and dependent variable in the following statement: Women who attend childbirth classes will be less likely to use pain medication than women who do not attend childbirth classes. The dependent variable is pain medicine, which women would take less of if independent variable, childbirth classes, is present. In your own words, explain the interrelationships between a research question, literature review, theoretical framework, and hypothesis. The research question must be measurable, show relationship between variables ith a stated population, which will guide the literature review. The literature review is focused on research questions, or guided by the research questions, along with the theoretical framework, which also guides the research in what will be measured or compared in the research question, together they all form the hypothesis. The research hypothesis will be guided by the literature review, research question, and theoretical framework to give an answer to the research question that can be validated. Know that the main purpose of literature review is to gain insight and understanding of research that has been done related to a particular area of topic of interest. Define and differentiate between primary and secondary sources. Primary sources are from the person who conducted studies, developed the theory, or prepared the discussion on a concept or topic. They are essential in literature review; most are published but some may not be. Secondary sources or used sometimes but should be limited in literature review. They are from someone other than the original author. The work is usually a critique or review of the work and may or may not be published. (LoBiondo-Wood Haber, 2006) What does it mean if a journal is refereed or peer-reviewed? A refereed journal has external and internal reviewers or editors who are experts in various fields to study or judge the article or manuscript before publication which will enhance its credibility. A peer-reviewed article or manuscript is evaluated by fellow specialists of research that has been done to assess its correctness for publication or further development. How to cite What is a research hypothesis, Essay examples

Reaction Paper on the Rise and Fall of Enron.Doc Uploaded Essay Example

Reaction Paper on the Rise and Fall of Enron.Doc Uploaded Essay Inc.Group 10 November 19, 2010 Members:AC 516 8:30-10:30 Alfie Mae ManaulSir Sevilla John Vershir Lumacang Agapito Yang The Rise and Fall of Enron As one of the world’s leading electricity, natural gas, communications and pulp and paper companies with claimed revenues of nearly $101 billion in the year 2000, Enron should have not ignored the importance of transparency which gives assurance. Transparency is defined as the quality or state of being understood and candid. Every investor wishes that he will be able to get better and transparent information about the financial data of the company. In fact, it is the quality of the report which helps investors in making certain investment decision. However, to keep its financial statements and company’s performance impressive in the eyes of its investors and other users, Enron had continuously reported income, cash flow up, inflated asset values and understated its liabilities. Enron is more on in the line of environment-related course of business. Personally, it was an ineffective decision for Enron to have signed a 20-year agreement with Blockbuster Video for it to introduce on-demand entertainment to various United States cities. For sure, Blockbuster Video had the knowledge on the operation yet for Enron to have that deal is just out of its scope and simply, too risky. Although, it had recognized estimated profits of more than $110 million from the deal, still, analysts had questioned the technical viability and market demand of its service. Enron continued to recognize future profits, even though the deal resulted in a loss. We will write a custom essay sample on Reaction Paper on the Rise and Fall of Enron.Doc Uploaded specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Reaction Paper on the Rise and Fall of Enron.Doc Uploaded specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Reaction Paper on the Rise and Fall of Enron.Doc Uploaded specifically for you FOR ONLY $16.38 $13.9/page Hire Writer They tried to cover up their own failures. With Enron’s adoptability on the so-called â€Å"gain-on-sale† accounting method which allows the company to estimate the future profitability of a trade made today and book a profit today based on the present value of those estimated future profits, it had tempted the management to aggressively make excessive assumptions. It was a mistake for Enron to sell their own company stocks while preventing most of its employees from selling theirs. This act would result to having a new management which means new leadership and control. Enron as well didn’t pay attention to its employee. They didn’t treat such as a responsibility. In economics, too much of something is bad. Enron was constantly focusing on its stock price. It had recorded accounting results as soon as possible just to keep up with the companys stock price which had helped ensure deal-makers and executives, for them, to receive large cash bonuses and stock options. It was a mistake for Enron to continuously think of protecting their company’s reputation and the compensation although their business began to perform poorly. Conflict of interest is one of which that could possibly corrupt the motivation for an act in the other. Who would not love money? Of course, everyone does. Enrons auditor firm, Arthur Andersen, was accused of applying reckless standards in their audits because of a conflict of interest over the significant consulting fees generated by Enron. The auditors methods were questioned as either being completed solely to receive its annual fees or for their lack of expertise in properly reviewing Enrons revenue recognition, special entities, derivatives, and other accounting practices. Due to the fall of Enron, it had brought into question the accounting practices and activities of many corporations throughout the United States and became a factor in the creation of the Sarbanes–Oxley Act of 2002. Thus, government regulations and rules need to be updated for the new economy. Character is destiny. As what Andre Maurois had said, â€Å"If you create a habit, you create a character. If you create a character, you create a destiny. † Therefore, in business, there shall be no room for arrogance.

Vocabulary Test 2 Is Live!

Vocabulary Test 2 Is Live! Vocabulary Test 2 Is Live! Vocabulary Test 2 Is Live! By Daniel Scocco It was about time to release another one of our tests, right? We are going back to the vocabulary test, with 20 new words. If you have been reading the blog for a while, you shouldnt have a problem scoring a 100%! We covered all the words in the past, inside the Word of the Day column. Here is a teaser: 1. Befuddle means: to harass to threaten to confuse to insult Click here to go to the Vocabulary Test 2 page. Ah, and dont forget to let us know your score with a comment below. Want to improve your English in five minutes a day? Get a subscription and start receiving our writing tips and exercises daily! Keep learning! Browse the General category, check our popular posts, or choose a related post below:How Many Tenses in English?Comma Before ButParticular vs. Specific

Language Family Definition and Examples

Language Family Definition and Examples A language family is a set of languages deriving from a common ancestor or parent. Languages with a significant number of common features in phonology, morphology, and syntax are said to belong to the same language family. Subdivisions of a language family are called branches. English, along with most of the other major languages of Europe, belongs to the Indo-European language family. The Number of Language Families Worldwide It is estimated that there are more than 250 established language families in the world, and over 6,800 distinct languages, many of which are threatened or endangered. (Keith Brown and Sarah Ogilvie,  Concise Encyclopedia of Languages of the  World. Elsevier Science, 2008) The Size of a Language Family The number of languages that make up a language family varies greatly. The largest African family, Niger-Congo, is estimated to consist of about 1,000 languages and several times as many dialects. Yet there are many languages that do not appear to be related to any other. These single-member language families are referred to as language isolates. The Americas have been more linguistically diversified than other continents; the number of Native American language families in North America has been judged to be more than 70, including more than 30 isolates. (ZdenÄ›k Salzmann, Language, Culture, and Society: An Introduction to Linguistic Anthropology. Westview Press, 2007) Catolog of Language Families The website ethnologue.com catalogs the worlds 6,909 known living languages. It lists the major language families and their members and tells where they are spoken. The number of speakers of these languages varies from the hundreds of millions whose native tongue is English or Standard Chinese to the relatively small populations who speak some of the rapidly disappearing American Indian languages. (C. M. Millward and Mary Hayes,  A Biography of the English Language, 3rd ed. Wadsworth, 2012) Levels of Classification In addition to the notion of language family, language classification now uses a more complex taxonomy. At the top we have the category of a phylum, i.e. a language group which is unrelated to any other group. The next lower level of classification is that of a (language) stock, a group of languages belonging to different language families which are distantly related to each other. Language family remains a central notion, emphasizing the internal links between the members of such a family. (Renà © Dirven and Marjolyn Verspoor,  Cognitive Exploration of Language and Linguistics. John Benjamins, 2004)​ The Indo-European Language Family Indo-European (IE) is the best-studied language family in the world. For much of the past 200 years more scholars have worked on the comparative philology of IE than on all the other areas of linguistics put together. We know more about the history and relationships of the IE languages than about any other group of languages. For some branches of IEGreek, Sanskrit, and Indic, Latin and Romance, Germanic, Celticwe are fortunate to have records extending over two or more millennia, and excellent scholarly resources such as grammars, dictionaries and text editions that surpass those available for nearly all non-IE languages. The reconstruction of Proto-Indo-European (PIE) and the historical developments of the IE languages have consequently provided the framework for much research on other language families and on historical linguistics in general. (James Clackson, Indo-European Linguistics: An Introduction. Cambridge University Press, 2007)

PDP Essay Example | Topics and Well Written Essays - 1500 words

PDP - Essay Example wledge and skills in business management, accounting and financial management, human resources management, strategic management, marketing management, change management, and social communication skills among others (UWBS 2012). Furthermore, I also expect this course to improve my analytical thinking and basic research skills. After taking this course, my long-term goal is to pursue a financial management career in the government’s Ministry of Finance. My personal and career ambition is to hold the highest possible position in a government financial institution. When working for a government institution, the culture of corruption and red tape is quite common and is very difficult to control. With regards to this matter, Tanzi and Davoodi (2000, pp. 3 – 4) revealed that there is â€Å"a negative association between corruption perception indexes and levels of economic development which is measured by the real per capita GDP†. Not all students who are enrolled are currently employed in a business organization. In order to help fight corruption within the public sector, I expect this MBA course to give me the opportunity to reflect upon the role and responsibilities of internal and external auditors including the importance of corporate governance within the practice of accounting and finance (Moeller 2009). Among the basic subjects that I have taken up at UWBS, the most applicable to my chosen profession is accounting and finance management. Before taking up the Masters studies, my personal and interpersonal skills were not quite developed. Although I worked for a government institution back in our country, it was quite unusual for me to be able to be exposed and mingle with a diverse group of people. With regards to my academic skills, areas that needs improvement includes doing research work. Although I was already familiar with regards to some of the theories related to marketing, human resource management, operations management, and basic accounting and

How religion has an impact on marketing Essay Example | Topics and Well Written Essays - 1750 words

How religion has an impact on marketing - Essay Example Due to the increase in the population of the Islam, their behavior has been noted to influence how things are done as their immense numbers is a reflection of real economic figures. It is impressive to note that marketing in commerce is very important to Muslims as they inhabit most of the richest countries in the world. The practice of business in Muslim religion has to be compliant with the Quran and the Muslim law. For instance, during advertisements, the female image used represents a typical Muslim woman with a head scarf as such trends are more identifiable with the conservative Muslim trends. This paper seeks to provide insights into the impacts of marketing on Islamic culture by illuminating on the intersection of business conduct and Islamic teachings. There are various reasons that has motived the growth of commerce in Islamic religion thereby making it one of the most important global economy. First, the increased Muslim population forming a fifth of the world’s population has an impact on the behaviors an attitudes of Muslim adherents. Moreover, during the 2008-2009 financial crises, most of the world’s economies were shattered. This allowed traders practicing Islamic finance to benefit heavily from the gains at that time thereby boosting their prosperity. Muslim traders were also boosted by the oil boom and the fact that the Muslims were increasingly becoming the most affluent consumers globally thereby promoting Muslim trade. Other reason include the improvement in the level foreign investment, the efforts towards the formation of a Muslim trading bloc, globalization and the efforts put forward in enhancing Islamization of countries with majority of their population being Muslim. Such efforts include defining Mu slim codes to be followed in all conducts of life, this will impact of commerce too (Saeed et al. 2001). Sharia is the Islamic law that is responsible for

Factors Influencing Corporate Strategy: UK Supermarkets

Factors Influencing Corporate Strategy: UK Supermarkets Tesco Plc Corporate Strategy The definition of corporate strategy has changed over the years. In the past it was deemed to be a set of internal plans and policies designed to enable a business to succeed in the pursuit of its aims and objectives (Pettigrew et al 2002). Robert Grant (2004, p.7) in his study stated that the implementation of successful strategy could not happen until the business managers had appraised the available or required resources, have an in-depth knowledge of the competitive environment they operated within and the whole team had agreed upon the objectives. More recently, the understanding of corporate strategy has been extended to include external forces and thus it can rely upon the definition statement made by Collis and Montgomery (1997, p.5) which observes that: â€Å"Corporate strategy is the way a company creates value through the configuration and coordination of its multimarket activities.† The purpose of this paper is to promote further understanding of the factors that influence corporate strategy within a particularly competitive industry sector. For this purpose the supermarket retail sector has been chosen for analysis. To assess how these factors impact upon the market players, the Tesco organisation has been used a focus for a case study. The reasoning behind this particular choice is that Tesco Plc has maintained a position of industry dominance, despite strong competition from other players, including Asda and Sainsbury Retail Industry Supermarkets During the course of the past four or five decades the Supermarket has taken a progressively increasing share of the grocery retailing market, with their store size and low prices driving local and independent stores in increasing numbers. In 2005 the organisations had reached a position where collectively their revenue accounted for approaching two thirds of total UK grocery sales. in Supermarket sales now account for around nearly two thirds of total grocery sales in the UK and were having an increasing impact in other retail sectors. However, as can be seen from the breakdown of the supermarket sales in grocery products, there is a considerable amount of competition between the supermarket players (see table 1). Table 1: Supermarket grocery sales 2005 (Source: BBC News 2006 and company reports) As can be seen from the above Tesco’s leads the industry sector by a considerable margin in terms of percentage. Furthermore , despite the intensity of competition that is focused upon around a dozen competitors, in revenue terms Tesco’s sales are almost equivalent to the sum of their three closet rivals, which gives them a commanding lead in terms of the number of consumers that are attracted to their stores. Tesco operates a total of 3,262 stores internationally, including 1,988 located throughout the UK. Employing in excess of 450,000 people globally, the business has so far achieved a market leadership position in four other countries as well as the UK and is currently considering expanding its operations in the US. Similarly, in line with other retailing organisations, the business is expanding its home delivery and Internet presence through the development of its online retailing website. (www.tesco.com). As Hill and Jones (2007) identify in their research into the subject of strategic management, the key drivers change and the market players have to respond positively to these changes. The supermarket industry is no exception to this rule. Initially supermarket organisations were driven by the need to create a competitive advantage. In essence this is achieved when the business reaches a position â€Å" â€Å"whenever it outperforms its competitors† (Pettigrew et al 2002, p.55), but as Grant (2004) observes, ultimately it needs to build upon that advantage, thereby reducing the opportunities for others to compete. Grant (2004, p.30), Collis and Montgomery (1998, p.65) state that competitive advantage can be gained through cost or differentiation, either of which return greater value to the consumer. However, competitive advantage is also relevant to the business marketing process, where it is important for the organisation to â€Å"understand its consumers and the decision processes they go through (Kolter et al 2004, p.29). However, advantage in this area is also achieved by a better understanding than that of competitors Consumers also drive the industry as has been seen through recent years. Initially the consumer determinant was for lower prices, wide range of selection, convenience and to a lesser extent the ability to do a one-stop shop, hence the development of the supermarket and out of town hypermarket locations, where all the weekly shop could be performed at one time. They have achieved the objective on price through a strategy of low cost and strategy through a process of low cost and the offering of substitute products (Hill and Jones 2007), which as a side effect, has also enable d the businesses to achieve a level of power over suppliers that has forced such organisations to address their own internal issues in order to remain economically viable. However, more recently consumer demands have changed and the emphasis has now moved to other areas of importance. These include the need for quality, customer service and â€Å"organic† and environmentally friendly products. Similarly, w ith the advent of concerns regarding the natural environment supermarkets are having to respond to these changes as well. To address consumer issues human resource management has also become an important driver in the industry development. The majority of researchers believe that the manner by which a business manages their HR resources has a significant impact on strategy (Collis and Montgomery 1998, p.163) and (Grant 2004, p.144). Thus the supermarket organisations have devoted a considerable amount of effort to increasing motivation and satisfaction within their workforce. The more successful organisations, such as Tesco’s and Asda have created the appropriate style of leadership and team building that has helped them achieve success in this area (Pettigrew et al 2002, p.285). As Hills and Jones (2007) have identified, the better the abilities of management and leaders in dealing with HR management, the easier it is to get a corporate strategy accepted and implemented. Technological developments have also brought about a change in the supermarket retailing industry. By incorporating these within all aspects of the supply chain, such as using new software and Internet systems that enable a closer control of stock, this has â€Å"set the overall context of competition for all firms in the industry (Porter 21004, p.142). It has also enabled organisations such as Tesco’s to continue to maintain their position within the industry. As the supermarkets have increased size and market share, so there have found themselves being increasing subject to the constraints of external forces being exerted upon them for the political and legislative stakeholders(Porter 2004, p.56 and Collis and Montgomery 1998, p.68). For example, the competition commission has often stepped in during the past few years to halt development of new stores on the grounds that it would be detrimental to fair competition. Similarly, as a result of the increasing concerns being expressed regarding health and environmental issues, the supermarket has be driven to introduce new â€Å"health† and â€Å"organic† brands and, as part of the brand management process, to increase the level of product knowledge in respect of these issues that appears upon the packaging. Therefore, all of these external issues are now having to be borne in mind during the planning of the strategy process.(Pettigrew et al 2002, p.190). In essence, at present the critical success factors for the industry can be identified as relating to three specific areas. The first of these is the efficient management of its supply chain, where the effective performance of each part is important to the smooth running of the whole (Porter 2004, p.311). Secondly, the quality of its products and customer services and effective marketing of the brand is important in order for the business to maintain both its market position and competitive advantage. Thirdly, is the effectiveness of its change management strategy. In this later respect it is essential that there is a â€Å"continuous interaction between strategy formulation and strategy implementation in which strategy is constantly being adjusted and revised in light of experience† Grant (2004, p.17). All of these factors are important to the industry players in that there form the vital elements that enable the maintenance of the business main objective, which is to continue to add value for the business stakeholders (Hills and Jones, 2007). The structure of an organisation, how it manages its resources and the relationship that it builds with employees and customers are key elements in a business that is seeking success and profitability. The level to which each organisation can achieve the harmonisation of all these factors will determine both the competitive advantage and the position that the organisation holds with the industry. As will be shown in the following section, Tesco’s has been consistently achieving a position of successfully incorporating all of these elements into their corporate strategy. Tesco Case Study During the past five years, and before this period, Tesco’s have based the main thrust of their corporate strategy on Porter’s â€Å"cost leadership.† By concentrating upon ensuring that all aspects of the supply chain were cost driven, thereby lowering unit price, the business has been able to maintain its policy of reduce prices to the consumer whilst at the same time ensuring that it has the funds and ability to invest in the new technology needed to maintain this advantage (Porter 2004, p36). In terms of the former, this can be evidenced by the fact that, as one of the current advertising campaigns states, there are able to maintain a price advantage over all of their competitors across a wide range of their products. Even given that, partially because of the business cycle, which can be said to have reached a level of some maturity (Hills and Jones 2007), together with the constraints that have been placed upon the industry by political, regulatory and legislative forces, the same low cost strategy is being maintained as the Tesco’s organisation seeks to enter and make an impact upon other market segments, for example fashion, home products and finance. For example, the current range of prices throughout all of these non-core products are still promoted using the organisation’s brand marketing message of â€Å"every little helps,† which indicates that the consumer will receive the same approach to low prices as has been offered within the grocery retail segment of the business revenue. However, as will be noted from their website[1], the business has taken info account the other factors that are important to the cusses of corporate strategy. For example, the human resources management policies are prominent in terms of the employee importance to the business, as is the relationship that the business is maintaining within both its suppliers and consumers, mainly through the increasing use of technology. Another import element of Tesco’s success has been its ability to manage change. As Porter (2004, p.21) suggests, different stages of the business life cycle can bring about change, as can the movement of the consumer demands and aspirations (Collis and Montgomery 1998, p.3). Tesco’s has respond quickly top both of these areas of change rapidly and in an efficient manner (Porter 2004, p.71 and Grant 2004, p.382). In the former instance, as indicated, it has moved into other market segments, and in terms of the latter, it has introduced new brands, including those that concentrate upon the environmental and health issues being raised by consumers and to address the issue of quality, where it now includes a â€Å"Tesco’s finest† range. However all of these moves have been performed whilst still maintaining a dedication to the core business strategy of cost leadership. As can be seen from the following graph, during the course of the past five years, as witness to the success of the Tesco corporate strategy, the business has consistently outperformed the FTSE 100 and the shares of its nearest UK quoted rival Sainsbury. The only time there was any near convergence of the two supermarket chains share value was earlier this year, and this was because of potential bidders showing an interest in Sainsbury, not related to their performance. Conclusion As has been shown during the course of this research, Tesco’s have consistently led the UK supermarket retailing sector of the business during the course of the past few years. This has been achieved by the implementation and maintenance of a successful corporate strategy, which has enabled the business to maintain a competitive advantage despite strong competition from other industry players. In reality this success, which has been evidenced from the financial performance, has been achieved by their turning this strategy into a unique business culture, which as Hofstede et al (2004) has created a situation where the business is seen to have, has resulted in the:- â€Å"†¦the collective programming of the mind that distinguishes the members of the group or category of people from others† Anther major element of the organisation’s success is the effectiveness of the way in which they manage change, being able to respond appropriately and rapidly to anything that poses a threat to the business future. There is little doubt that as long as the management remain focus on these strategies, that the business will maintain its present marketplace position. References Collis, David J and Montgomery, Cynthia A (1998). Corporate Strategy: A resource Based Approach. McGraw Hill. US. BBC News (2006). Tesco’s market share still rising. Retrieved 19 November 2007 from http://news.bbc.co.uk/2/hi/business/4694974.stm Faulkner, David and Campbell, Andrew (2006). The Oxford Book of Strategy: A Strategy Overview and Competitive Strategy. New ed. Oxford University Press. Oxford, UK. Grant, Robert (2004). Contemporary Strategy Analysis. 5th Edition. Blackwell Publishers. Oxford, UK. Gregory, David (2005). Supermarkets and Standards. Presentation, UK. Retrieved 27 September 2007 from http://www.odi.org.uk/speeches/apgood/Agric_in_Africa_05/apgood_nov23/index.html Heavens, Andrew (2005). E-commerce soars by 88%. Times Online. Retrieved 25 September 2007 from http://business.timesonline.co.uk/tol/business/industry_sectors/retailing/article417278.ece Hill, C.W.L. Jones, G.R. (2007). Strategic Management Theory: An Integrated Approach. (7th ed) Houghton Mifflin. Boston, US. Hofstede, G. Hofstede, G.J.(2004). Cultures and Organizations: Software of the Mind. New York: McGraw-Hill. Kelly, Sean. (2005). Customer intelligence From Data to Dialogue. John Wiley Sons Ltd. Chichester, UK. Lucas, R. Lupton, B. Mathieson, H. (2007). Human Resources Management in an International Context. London: CIPD. Pettigrew, Andrew M. Thomas, Howard and Whittington, Richard (2002). The Handbook of Strategy and Management. Sage Publications Ltd. London, UK. Porter, Michael E (1985). Competitive Advantage. The Free Press. New York. US. Porter, Michael E (2004). Competitive Strategy: Techniques for Analysing Industries and Competitors. The Free Press. New ed. The Free Press. New York, US. Survey (2006). The UK’s Best Online Shopping Experience 2006. www.blastradius.com. Retrieved 26 September 2007 from http://www.blastradius.com/ukshopping2006.pdf Tesco (2007). Tesco at a glance. Retrieved 27 September from http://www.tescocorporate.com [1] http://www.tescocorporate.com/page.aspx?pointerid=3DB554FCAE344BD88EEEEFA63D71B831 Analysis of the Accrual Anomaly | Accounting Dissertation Analysis of the Accrual Anomaly | Accounting Dissertation Sloan (1996), in a determinative paper, added the accrual anomaly in the list of the market imperfections. Since then, academics have focused on the empirical investigation of the anomaly and the connection it has with other misspricing phenomena. The accrual anomaly is still at an embryonic stage and further research is needed to confirm the profitability of an accruals based strategy net of transaction costs. The current study investigates the accrual anomaly while taking into consideration a UK sample from 1991 to 2008. In addition, the predictive power of the Fama and French (1996) factors HML and SMB is being tested along with the industrial production growth, the dividend yield and the term structure of the interest rates. Chapter 1 Introduction Since the introduction of the random walk theory which formed the basis for the evolvement of the Efficient Market Hypothesis (EMH hereafter) proposed by Fama (1965), the financial literature has made many advances but a piece of the puzzle that is still missing is whether the EMH holds. Undoubtedly, the aforementioned debate can be considered as one of the most fruitful and fast progressing financial debates of the last two decades. The Efficient Market Hypothesis has met many challenges regardless of which of its three forms are being investigated. However, the weak form and semi strong hypothesis have been the most controversial. A literally vast collection of academic papers discuss, explore and argue for phenomena that seem to reject that the financial markets are efficient. The famous label of â€Å"anomaly† has taken several forms. Many well-known anomalies such as the contrarian investment, the post announcement drift, the accruals anomaly and many others are just the beginning of an endless trip. There is absolutely no doubt that many more are going to be introduced and evidence for the ability for the investors to earn abnormal returns will be documented. Recently, academics try to expand their investigation on whether these well-documented anomalies are actually profitable due to several limitations (transaction costs etc) and whether the anomalies are connected. Many papers are exploring the connection of the anomalies with each other proposing the existence of a â€Å"principal† misspricing that is documented into several forms. The current study tries to look into the anomaly that was initially documented by Sloan (1996) and has been labelled as the â€Å"accrual anomaly†. The accrual anomaly can be characterised as being at an embryonic stage if the basis for comparison is the amount of publications and the dimensions of the anomaly that light has been shed on. The facts for the accrual anomaly suggest the existence of the opportunity for investors to earn abnormal returns by taking advantage of simple publicly available information. On the other hand, accruals comprising an accounting figure have been approached from different points of view with consequences visible in the results of the academic papers. Furthermore, Stark et al (2009) challenge the actual profitability of the accrual anomaly by simply taking transaction costs into consideration. The present paper employs an accrual strategy for a sample comprising of UK firms during 1991-2008. The aim is to empirically investigate the profitability of such strategies during the whole data sample. The methodology for the calculation of accruals is largely based on the paper of Hardouvelis et al (2009). Stark et al (2009) propose that the positive excess returns of the accruals’ strategy are based on the profitability of small stock. In order to investigate the aforementioned claim, the current study employs an additional strategy by constructing intersecting portfolios based on accruals and size. Finally, five variables are being investigating at the second part of the study for their predictive power on the excess returns of the constructed portfolios. The monumental paper of Fama and French (1996) documented an impressive performance of two constructed variables (the returns of portfolios named HML and SMB). In addition, the dividend yield of the FTSE all share index, the industrial production growth and the term structure of the interest rates will be investigated as they are considered as potential candidates for the prediction of stock returns. Chapter 2 Literature review 2.1. Introduction During the last century the financial world has offered many substantial advances. From the Portfolio Theory of Markowitz (1952) to the development of the Capital Asset Pricing Model of Sharpe (1964) and Lintner (1965), and from the market Efficient Market Hypothesis (hereafter EMH), developed by Fama (1965), to the recent literature that challenges both the CAPM and the EMH, they all seem to be a chain reaction.   The financial academic world aims to give difficult but important answers on whether markets are efficient and on how investors should allocate their funds. During the last two decades, many researchers have documented that there exist strategies that challenge the claim of the supporters of the efficient and complete markets. In this chapter, the effort will be focused on reviewing the financial literature from the birth of the idea of the EMH until the recent publications that confirm, reject or challenge it. In a determinative paper, Fama (1970) defined efficient markets and categorised them according to the type of information used by investors. Since then, the finance literature has offered a plethora of studies that aim to test or prove whether markets are indeed efficient or not. Well known anomalies such as the post announcement drift, the value-growth anomaly or the accruals anomaly have been the theme of many articles ever since. 2.2. Review of the value-growth anomaly We consider as helpful to review the literature for the value growth-anomaly since it was one of the first anomalies to be investigated in such an extent. In addition, the research for the value-growth anomaly has yielded a largely productive debate on whether the documented returns are due to higher risk or other source of mispricing. Basu (1970) concluded that stocks with high Earnings to Price ratio tend to outperform stocks with low E/P. Lakonishok, Shleifer and Vishny (1994) documented that stocks that appear to have low price to a fundamental (book value, earnings, dividends etc) can outperform stocks with high price to a fundamental measure of value. Lakonishok, Shleifer and Vishny (1994) initiated a productive period that aimed to settle the dispute on the EMH and investigate the causes of such â€Å"anomalies†. Thus, the aforementioned researchers sparked the debate not only on the market efficiency hypothesis but also on what are the sources for these phenomena. Fama and French (1992) supported the idea that certain stocks outperform their counterparts due to the larger risk that the investors bear. Lakonishok, Shleifer and Vishny (1994) supported the idea that investors fail to correctly react to information that is available to them. The same idea was supported by many researchers such as Piotroski (2001). The latter also constructed a score in order to categorise stocks with high B/M that can yield positive abnormal returns (namely, the F Score). Additionally, the â€Å"market efficiency debate â€Å"drove behavioural finance to rise in popularity. The value-growth phenomenon has yielded many articles that aim to find evidence that a profitable strategy is feasible or trace the sources of these profits but, at the same time, the main approach adopted in each study varies significantly. Asness (1997) and Daniel and Titman (1999) examine the price momentum, while Lakonishok, Sougiannis and Chan (2001) examine the impact of the value of intangible assets on security returns. In addition, researchers have found evidence that the value-growth strategies tend to be successful worldwide, as their results suggest. To name a few, Chan, Hamao and Lakonishok (1991) focused on the Japanese market, Put and Veld (1995) based their research on France, Germany and the Netherlands and Gregory, Harris and Michou (2001) examined the UK stock market. It is worth mentioning that solely the evidence of such profitable strategies could be sufficient to draw the attention of practitioners, but academics are additionally interested in exploring the main cause of these arising opportunities as well as the relationship between the aforementioned phenomena (namely, the value growth, post announcement drift and the accrual anomaly). In general, two schools of thought have been developed: the one that supports the risk based explanation or, in other words, that stocks yield higher returns simply because they are riskier, and the one that supports that investors fail to recognise the correct signs included in the available information. 2.3. The accruals anomaly 2.3.1. Introduction of the accrual anomaly. Sloan (1996) documented that firms with high (low) accruals tend to earn negative (positive) returns in the following year. Based on this strategy, a profitable portfolio that has a long position on stocks with low accruals and short position on stocks with high accruals yields approximately 10% abnormal returns. According to Sloan (1996) investors tend to overreact to information on current earnings. Sloan’s (1996) seminar paper has been characterised as a productive work that initiated an interesting to follow debate during the last decade. It is worth noting that even the very recent literature on the accrual anomaly has not reached reconciling conclusion about the main causes of this particular phenomenon and about whether a trading strategy (net of transaction costs) based solely on the mispricing of accruals can be systematically profitable. At this point it is worth mentioning that the accruals have been found to be statistically significant and negative to predict future stock returns. On the other hand, there are papers that examine the accruals and its relations with the aggregate market. A simple example is the paper published by Hirshleifer, Hou and Teoh (2007), who aim to identify the relation of the accruals, if any, with the aggregate stock market. Their findings support that while the operating accruals have been found to be a statistical significant and a negative predictor of the stock returns, the relation with the market portfolio is strong and positive. They support that the sign of the accruals coefficient varies from industry to industry reaching a peek when the High Tech industry is taken into account (1.15), and taking a negative value for the Communication and Beer/Liquor industry. 2.3.2 Evidence for the international presence of the phenomenon. Researchers that investigated the accruals anomaly followed different approaches. At this point, it is worth noting that the evidence shows the accrual anomaly (although it was first found to be present in the US market) to exist worldwide. Leippold and Lohre (2008) examine the accrual anomaly within an international framework. The researchers document that the accrual anomaly is a fact for a plethora of markets. The contribution of the paper though, is the large and â€Å"complete† number of tests used, so that the possibility of pure randomness would be eliminated. Although, similar tests showed that momentum strategies can be profitable, recent methodologies used by the researchers and proposed by Romano and Wolf (2005) and Romano, Shaikh and Wolf (2008), suggest that the accruals anomaly can be partially â€Å"random†. It is noteworthy that the additional tests make the â€Å"anomaly† to fade out for almost all the samples apart from the markets of US, Australia and Denmark. Kaserer and Klingler (2008) examine how the over-reaction of the accrual information is connected with the accounting standards applied. The researchers constructed their sample by solely German firms and their findings document that the anomaly is present in Germany too. We should mention at this point that, interestingly, prior to 2000, that is prior to the adoption of the international accounting standards by Germany, the evidence did not support the existence of the accrual anomaly. However, during 2000-2002, Kaserer and Klingler (2008) found that the market overreacted to accrual information. Hence, the authors support the idea that an additional cause of the anomaly is the lack of legal mechanisms to enforce the preparation of the financial statements according to the international accounting standards which might gave the opportunity to the firms to â€Å"manipulate† their earnings. Another paper that focuses on the worldwide presence of the accruals mispricing is that of Rajgopal and Venkatachalam (2007). Rajgopal and Venkatachalam examined a total of 19 markets and found that the particular market anomaly exists in Australia, UK, Canada and the US. The authors’ primal goal was to identify the key drivers that can distinguish the markets where the anomaly was documented. Their evidence supports the idea that an accrual strategy is favoured in countries where there is a common law tradition, an extensive accrual accounting and a low concentration of firms’ ownership combined with weak shareholders’ rights. LaFond (2005) also considers the existence of the phenomenon within a global framework. The author’s findings support the notion that the accrual anomaly is present worldwide. In addition, LaFond argues that there is not a unique driving factor responsible for the phenomenon across the markets. It is worth noting that LaFond (2005) documented that this particular market imperfection is present in markets with diverse methodology of accrual accounting. Findings are against the idea that the accrual anomaly has any relation with the level of the shareholders protection or a common law tradition, as suggested by Rajgopal and Venkatachalam (2007). Finally, the author suggests that, if any, it is not the different method of accrual accounting (measurement issues) that favours or eliminates the accrual anomaly, but the accrual accounting itself. 2.3.3. Further Evidence for the roots of the accruals anomaly. Additionally, papers such as those of Thomas and Zang (2002) or Hribar (2000) decompose accruals into changes in different items (such as inventory, accounts payable etc). The findings catholically suggest that extreme changes in inventory affect returns the most. On the other hand, many articles connect the accruals with information used by investors, such as the behaviour of insiders or analysts, as the latter can be considered a major signal to the investors for a potential manipulation of the firms’ figures. In particular, Beneish and Vargus (2002) documented that firms with high accruals and significant insider selling have substantial negative returns.  Bradshaw (2001) and Barth and Hutton (2001) examine the analysts’ reports and their relation with the accruals anomaly. Their findings support that the analysts’ forecasting error tends to be larger for firms with high accruals, while analysts do not revise their forecasts when new information for accruals is available. Gu and Jain (2006) decompose accruals into changes in inventory, changes in accounts receivable and payable and depreciation expenses and try to identify the impact of the individual components to the anomaly. Consistent with Sloan (1996), Gu and Jain (2006) document that the accrual anomaly exists at the components level. The findings are important since Desai et al (2004) supported the connection of the accrual anomaly with a single variable (cash flows from operations). The researchers suggest that the results yielded by Desai et al (2004) were highly dependent on the methodology used and thus, suggested that the accruals anomaly is â€Å"alive and well†. Moreover, other articles try to confirm whether the anomaly is mainly caused by the wrong interpretation of the information contained in accruals. Ali et al. (2000), investigate whether the naà ¯ve investors’ hypothesis holds. Following the methodology introduced by Hand (1990) and Walther (1997), they found that for smaller firms, which are more likely to be followed by sophisticated investors, the relation between accruals and negative future returns is weaker compared to larger firms, which are followed by many analysts. Therefore, the researchers suggest that, if anything, the naà ¯ve investors’ hypothesis does not hold. In contrast to other market anomalies where findings suggest that the naà ¯ve investors hypothesis holds, the accruals anomaly is suggested as unique. Shi and Zhang (2007) investigate the earnings fixation hypothesis suggesting that the accruals anomaly is based on the investors â€Å"fixation† or â€Å"obsession† on earnings. Their primal hypothesis is that if investors are highly based on the reports about earnings and misprice the value-relevant earnings, then the returns should be dependent not only on the accruals but also on how the stock’s price changes according to reported earnings.  The researchers’ hypothesis is confirmed and finding support that an accrual strategy for firms whose stocks’ price highly fluctuates according to earnings yields a 37% annual return. Sawicki and Shrestha (2009) aim to examine two possible explanations for the accruals anomaly. Sloan (1996) proposed the fixation theory under which investors fixate on earnings and thus overvalue or undervalue information for accruals. Kothari et al. (2006) proposed the â€Å"agency theory of overvalued equity† according to which managers of overvalued firms try to prolong the period of this overvaluation which causes accruals to increase.  The paper uses the insider trading and other firm characteristics and tries to compare and contrast the two major explanations. Evidence produces bd Sawicki and Shrestha (2009) support the Kothari et al. (2006) explanation for the accrual anomaly. In a relatively different in motif paper, Wu and Zhang (2008) examine the role that the discount rates play in the accrual anomaly. They argue that if anything, the anomaly is not caused by irrationality from the investors’side but by the rationality of firms as it is proposed by the q-theory of investment. They argue that since the discount rates fall and more projects become profitable (which makes accruals to increase) future stock returns should decline. In other words, if the capital investment correctly adjusts to the current discount rates, the accruals should be negatively correlated with the future returns and positively correlated with the current returns. The evidence of Wu and Zhang (2008) support that the accruals are negatively correlated with the future stock returns but the contribution of the paper is in that they document that current stock returns are positively correlated with the accruals. 2.3.4. The relation of the accrual anomaly with other market imperfections. Many papers examine the relation between the accruals anomaly and other well-known anomalies such as the post announcement drift or the value-growth phenomenon. Desai et al. (2002), suggest that the â€Å"value-growth† anomaly and the accruals anomaly basically interact and conclude that the  ¨accruals strategy and the C/P reflect the same underlying phenomena†. Collins and Hribar (2000) suggest that there in no link between the accruals anomaly and the â€Å"PAD†, while Fairfield et al. (2001) support that the accruals anomaly is a sub-category of an anomaly caused by the mistaken interpretation of the information about growth by the investors. Cheng and Thomas (2006) examine the claim that the accrual anomaly is a part of a broader anomaly (and more specifically, the value-glamour anomaly). Prior literature suggested that the operating cash flows to price ratio subordinates accruals in explaining future stock returns (Deshai et al (2004)). Their evidence suggests that the Operating CF to price ratio does not subsume neither abnormal nor total accruals in future announcement returns. This particular result does not confirm the claim that the accrual anomaly is a part of a broad value-glamour anomaly. Atwood and Xie (2005) focus on the relation of the accrual anomaly and the mispricing of the special items first documented by Burgstahler, Jiambalvo and Shevlin (2002). Their hypothesis that the two phenomena are highly related is confirmed since the researchers found that special items and accruals are positively correlated. Additionally, further tests yielded results that suggest that the two imperfections are not distinct, while the special items have an impact on how the market misprices the accruals. Louis and Sun (2008) aim to assess the relation between the abnormal accrual anomaly and the post earnings announcement drift anomaly. The authors hypothesize that both anomalies are related to the management of the earnings and thus, they aim to find whether the two are closely connected. The findings are consistent with the primal hypothesis, as they found that â€Å"firms with large positive change of earnings that were least likely to have manipulated earning downwards† did not suffer from PEAD, while the same result was yielded for firms that had large negative change of earnings that were least likely to have managed their earnings upwards. As supported by many researchers the value-growth anomaly and accruals anomaly might be closely related or they might even be caused by the similar or even identical roots.  Fama and French (1996) support that the book to market factor captures the risk of default, while Khan (2008) suggests that in a similar pattern firms with low accruals have a larger possibility to bankrupt. Therefore, many researchers try to connect the two phenomena or to answer whether a strategy based on the accruals can offer more than what the value growth strategy offers. Hardouvelis, Papanastopoulos, Thomakos and Wang (2009) connect the two anomalies by assessing the profitability of interacting portfolios based on the accruals and value-growth measures. Their findings support that positive returns are obtainable and magnified when a long position is held for a portfolio with low accruals while combined with stocks that are characterised as high market to book. The difference of a risked-based explanation or an imperfection of the markets is considered to be a major debate, as it can challenge the market efficiency hypothesis. Many researchers, such as Fama and French (1996) noted that any potential profitable strategy is simply due to the higher risk that the investors have to bear by holding such portfolios. In a similar way, the profitable accruals strategies are considered as a compensation for a higher risk. Stocks that yield larger returns are compared or labelled as stocks of firms that are close to a financial distress. Khan (2000) aims to confirm or reject the risk-based explanation of the accruals anomaly. The researcher uses the ICAPM in order to test if the risk captured by the model can explain the anomaly first documented by Sloan (1996). It is worth noting that the descriptive statistics results for the sample used showed that firms that had low accruals also had high bankruptcy risk.  The contribution of the paper is that, by proposing a four factor model enhanced by recent asset pricing advances, it showed that a great portion of the mispricing that results in the accrual anomaly can be explained within a risk-based framework. Furthermore, Jeffrey Ng (2005) examines the risk based explanation for the accrual anomaly which proposes that accruals include information for financial distress. As proposed by many papers, the accrual anomaly is simply based on the fact that investors bare more risk and thus low accrual firms have positive abnormal returns. The researcher tries to examine how and if the abnormal returns of a portfolio which is short on low accruals stocks and long on high accrual firms changes when controlling for distress risk. Evidence supports that at least a part of the abnormal returns are a compensation for bearing additional risk. Finally, the results support that the big portion of the high abnormal returns of the accrual strategy used in the particular paper is due to stocks that have high distress risk. 2.3.5. The accruals anomaly and its relation with firms’ characteristics. A noteworthy part of the academic literature examines the existence of some key characteristics or drivers that are highly correlated with the accruals anomaly. Many researchers have published papers that aim to identify the impact of firm characteristics such as the size of the firm, characteristics that belong to the broader environment of the firms such as the accounting standards or the power of the minority shareholders. Zhang (2007) investigates whether the accrual anomaly varies cross-sectionally while being related with firms’ specific characteristics. The researcher primarily aims to explain which the main reason for the accrual anomaly is. As Zhang (2007) mentions, Sloan (1996) attributes the accrual anomaly to the overestimation of the persistence of accruals by investors, while Fairfield (2003) argues that the accrual anomaly is a â€Å"special case of a wider anomaly based on growth†. The evidence supports the researcher’s hypothesis that characteristics such as the covariance of the employee growth with the accruals have an impact on the future stock returns. Finally, Zhang (2007) documents that that accruals co-vary with investment in fixed assets and external financing. Louis, Robinson and Sbaraglia (2006) examine whether the non-disclosure of accruals information can have an impact on the accruals anomaly. The researchers, dividing their sample into firms that disclose accruals information on the earnings announcement and firms that do not, investigate whether there exists accruals’ mispricing. The evidence supports that for firms that disclose accruals information, the market manages to correctly understand the discretionary part of the change of the earnings. On the contrary, firms that do not disclose accruals information are found to experience â€Å"a correction† on their stock price. Chambers and Payne’s (2008) primal aim is to examine the relation of the accrual anomaly and the auditing quality. The researchers’ hypothesis is that the accruals mispricing is related with the quality of auditing.  Additionally, their findings support that the stock prices do not reflect the accruals persistence characterising the lower-quality audit firms. Finally, their empirical work finds that the returns are greater for the lower-quality audit portfolio of firms. Palmon, Sudit and Yezegel (2008) examine the relation of the accruals mispricing and the company size. Evidence shows that company size affects the returns and, as the researchers documented, the negative abnormal returns are mostly due to larger firms while the positive abnormal returns come from the relatively small firms. Particularly, as the strategy with the highest profits they found the one that had a short position in the largest-top-accrual decile and a long position in the smallest-low-accrual decile. Bjojraj, Sengupta and Zhang (2009) examine the introduction of the Sarbanes-Oxley Act and the FAS 146 and how these two changes affected the accrual anomaly. FAS 146 (liabilities are recognized only when they are incurred) reduced the company’s ability to â€Å"manipulate† earnings while the SOX aims to enhance the credibility of the financial statements. The evidence recognises a change on how the market conceives information about restructurings charges. The authors propose that a possible explanation is that before the introduction of SOX and the FAS 146, the market was reluctant due to the ability of the firms to manage earnings. Finally, Bjojraj, Sengupta and Zhang (2009) document that post to the FAS 146 and the SOX act, low accrual portfolios do not generate positive abnormal returns. 2.4. The applications of the accruals phenomenon and reasons why it is not arbitraged away. The importance of the analysis of the anomalies is substantial for two reasons. Firstly, the profitability of a costless strategy challenges the EMH, especially if the strategy is based on bearing no additional risk. Secondly, managers’ incentives to manipulate the financial statements and consequently the accruals would be obvious if a profitable strategy based on such widely available information existed. Chen and Cheng (2002) find that the managers’ incentive to record abnormal accruals is highly correlated with the accrual anomaly. The hypothesis of the researchers, which their findings support, was that the investors fail to detect when the managers aim to record abnormal accruals and that may contribute to the accruals anomaly. Richardson’s (2000) main objective is to examine whether the information contained in the accruals is utilized by short sellers. As the researcher mentions, previous articles such as that of Teoh and Wong (1999) found that sell side analysts were unable to correctly â€Å"exploit† the information contained in accruals for future returns. Richardson suggests that short sellers are considered as sophisticated enough to utilize the accruals information. Findings confirm previous work, such as that of Sloan (2000), who suggests that even short sellers do not correctly utilize the information contained into accruals. Ali, Chen, Yao and Yu (2007) examine whether and how equity funds benefit from the accrual anomaly by taking long position into low accruals firms. The researchers aim to identify how exposed are the equity firms to such a well known anomaly and what characteristics these funds share. By constructing a measure called â€Å"accruals investing measure† (AIM), they try to document the portion of the low accruals firms into the actively managed funds. The evidence shows that generally funds are not widely exposed to low accruals firms but when they do so, they have an average of 2.83% annual return. It is worth noting that the annual return is net of transaction costs. Finally, the side-effects of high volatility in returns and in fund flows of the equity funds that are partially based on the accrual anomaly might be the reason behind the reluctance of the managers. Soares and Stark (2009) used UK firms to test whether a profitable accrual strategy is feasible net of transactions costs. Their findings support that indeed the accrual anomaly is present in the UK market. The authors suggest that for such a strategy to be profitable, someone is required to trade on firms with small market capitalization. They also suggest that although the accruals’ mispricing seems to exist also in the UK, the transaction costs limit the profits to such an extent that the accrual anomaly could be difficult characterised as a challenge to the semi strong form of the efficient market hypothesis. Finally, we should not neglect to mention two papers that discourse on why the markets do not simply correct the accruals anomaly. According to the classical theory, markets are so imperfect that can produce the incentive to the market to correct the â€Å"anomalies† at any point of time. Mashruwala, Rajgopal and Shevlin (2006) examined the transactions costs and the idiosyncratic risk as possible reasons of why the accrual anomaly is not arbitraged away. The researchers aimed to investigate why the market does not correct the anomaly, but also to identify whether the low accruals firms are riskier. The paper poses the question of what stops the informed investors from taking long positions into profitable stocks according to the accrual anomaly so that they can arbitrage it away. The paper examines the practical difficulty of finding substitutes so that the risk can be minimized and its relation with the accrual anomaly. Additionally, the paper investigates the transaction co sts and findings support that according to the accrual anomaly, the profitable stocks tend to be the ones with low stock prices and low trading volume. Lev and Nissim (2004) focus on the persistence of the accr