Stress Management Among Working Womens in India

Stress refers to the pressure and reactions to our environment which results inpsychological and physical reactions. Whilst some stress is good for motivationand increasing efficiency, too much stress can result in negative impacts such asreduced effectiveness and efficiency. More and more people are feeling isolatedand disrespected at work, and this has led to greater occupational stress. Manycompanies have taken to consulting experts and professionals on ways toincrease connectedness and motivation of their employees. Some companies organize parties and make their employees feel valued atwork.These are measures to motivate employees and help them to feel secureat their jobs, translating into greater productivity. However, not all companieshave such measures in place, and some have not gotten it quite right. Hence, itis up to you to make sure that you can cope with stress at your workplace, anduse it to help you work better. Here are 3 simple steps to help you with copingwith stress in the workplace. Step 1: Raising Awareness Help yourself to identify when you are facing rising levels of stress, tipping thescales from positive to negative.This is important, as being able to identify signsof being stressed can help you to take steps to ensure that your overall quality of life does not drop. If left unacknowledged, the problem will only snowball, leadingto disastrous consequences to your health and overall wellbeing. You can identify if you are feeling stressed by checking if you have any physicalor psychological reactions, such as excessive sweating or heart palpitations, or the onset of headaches, irritability or the need to escape. If you experience anyof these reactions, identify if you are feeling any overwhelming negativeemotions, and if you are constantly worried.Step 2: Identify the Cause You need to be able to analyze the situation and identify what is causing the risein stress. These stressors can be external and internal. External stressors refer 18 t o things beyond your control, such as the environment or your colleagues atwork. Internal stressors refer to your own thinking and attitude. Often, we onlystart reacting to stress when a combination of stressors working together exceeds our ability to cope. Keep a diary or a list of events that have caused you to feel strong negativeemotions, or that are likely stressors.This will help you to identify the causes of your stress. Whilst it is not always possible to eradicate them, we can change theway that we cope with it. Step 3: Coping with Stress In order to deal with the situation that is causing you stress, you need to calmyour mind and body so as to stave off the reactions and cope with it in a positiveway. This can be through different methods, such as taking time off. If a situationis triggering your stress and you are unable to calm down, remove yourself fromit. Go outside and take a walk to calm down.Alternatively, you can tryimplementing relaxation techniques such as deep b reathing. If it is an internalstressor, stop your thought process until you are able to deal with it logically. The key to making these 3 steps work for you is to practice them. These are notinstantaneous solutions, and you need to condition your mind and practice themso that you can implement it when you are feeling stressed. (1. 2. 5) Stress Management Stress management is the need of the hour. However hard we try to gobeyond a stress situation, life seems to find new ways of stressing us out andplaguing us with anxiety attacks.Moreover, be it our anxiety, mind-bodyexhaustion or our erring attitudes, we tend to overlook causes of stress and theconditions triggered by those. In such unsettling moments we often forget thatstressors, if not escapable, are fairly manageable and treatable. 19 Stress, either quick or constant, can induce risky body-mind disorders. Immediate disorders such as dizzy spells, anxiety attacks, tension,sleeplessness, nervousness and muscle cramps can all resu lt in chronic healthproblems. They may also affect our immune, cardiovascular and nervoussystems and lead individuals to habitual addictions, which are inter-linked withstress.Like â€Å"stress reactions†, â€Å"relaxation responses† and stress managementtechniques are some of the body's important built-in response systems. As arelaxation response the body tries to get back balance in its homeostasis. Somehormones released during the ‘fight or flight' situation prompt the body to replacethe lost carbohydrates and fats, and restore the energy level. The knottednerves, tightened muscles and an exhausted mind crave for looseness. Unfortunately, today, we don't get relaxing and soothing situations withoutasking. To be relaxed we have to strive to create such situations. Recognizing a stressor:It is important to recognize whether you are under stress or out of it. Many times,even if we are under the influence of a stressful condition and our body reacts toit internall y as well as externally, we fail to realize that we are reacting under stress. This also happens when the causes of stress are there long enough for us to get habituated to them. The body constantly tries to tell us throughsymptoms such as rapid palpitation, dizzy spells, tight muscles or various bodyaches that something is wrong. It is important to remain attentive to suchsymptoms and to learn to cope with the situations. 20

Communication in Early Childhood Essay

Communication is the most important factor for young children’s learning and social development. Humans have the unique skills of language and speech to enable the sharing of information, knowledge and feelings with others. Early childhood educators have an important job to nurture and support the development of communication in children. Communication skills are required in order to deliver the right message and convey it properly to the child. These involve body languages and facial expression. Without this, an educator loses the connection with a young child since one appears to be cold. As an example, when one smiles while delivering the message, the child will be more interested with what you have to offer in contrast to a stern look. Listening skills are those that are used in obtaining information and messages from others. It is imperative that you have the ability to receive feedback from the child so that you may know their needs. It helps to understand what a person thinks and feels and hence to understand the child closely. Skills for managing the process of communication will help the educator in recognising information required and developing a strong hold on the rules of interaction and communication (MacCallion, 1988). Communication has been described as the process where information is transmitted from one person to another. This includes the use of both verbal and non-verbal means to convey a message. Non-verbal communication includes facial expression as well as body language. Good communication skills involve listening, reading, writing and speaking. An early childhood educator deals with children between the ages of birth and 8years. It is at this age when the child learns to relate with others as well as society. Good communication skills are therefore essential for early childhood educators as they may influence the relationship between the teacher and children (Hubley, 1993). Teaching involves sending and receiving information from the students. Good communications skills will encourage the students to participate in the teaching process. This helps portray school as a place where the students can share ideas as well as relate with society. At this early age, most of the children perceive school as a place that separates them from their family. It is likely that most of the children at this age will prefer to stay at home rather than attend school. Good communication skills will help encourage students to appreciate school as a place of learning as well as a place they can express their own ideas (Joram, 1998). Good communication skills are essential in early childhood education. This is because at this age the child is learning how to express themselves both verbally and non-verbally. Children develop communication skills by exploring, sharing and interacting with adults through their own environment. According to recent studies, children at this age learn by observing how their parents and caretakers behave. It is therefore essential that the educator has good communication skills as this will affect how the children express themselves and learn in the future (knott, 1979). The main aim of early childhood education is to encourage academic, emotional and physical growth. However at this age the learning abilities of a child are not fully developed. In a recent study the concentration span of an adult is below 15 minutes while that of a child is less than 5 minutes. This means that the educator has to find ways to engage the child to maintain a longer concentration span. This involves the use of illustrations as well as demonstration that help capture the interest of the child. Good communication skills are essential in aiding the educators’ ability to maintain the child’s concentration span (Joram, 1998). Early childhood education involves the use of play as the mode of education. This is important in nurturing the child’s development as well as learning. Good communication skills are essential in providing an environment where the children feel free to play with each other as well as participate in the class activities. Play involves participation by the children as well the educator. It is essential for the early childhood educator to be able to create a nurturing environment where the child is confident to interact with others and express themselves. The role of the educator does not solely lie in teaching but also protecting  the child in the absence of their parents. The educator should promote the child’s wellbeing both at school and home. As an example an early childhood educator may notice that children are not interested in the book corner yet all the children enjoy story time and also enjoy looking through the books afterwards, however they will not look at the books in the designated area. With further observation and interaction with the children, it is discovered the children have a fear of the photo of a clown that is hanging above the book corner. Good communication skills cannot be ignored in providing an environment where the child feels able to express their fears openly. Listening, observing and interacting are a key role in enhancing good communication skills (Robinson, 2007). It is essential that the educator observes the children playing before participating in the play themselves. This helps the teacher understand the strengths and weaknesses of the children. It also helps the teacher avoid imposing adult ideas in the children’s play. Observation is a key aspect in developing good communication skills. It is through observation that the educator is able to take an initiative role. This means coming up with new ideas or processes that are based on the children’s ideas (McCarthy, 1996). Good communication skills can enable a teacher to organise parent teacher conferences which provide the opportunity for teacher and parents to discuss developmental skills, children’s work and to plan for future learning experiences. The educator can also engage the young child in cooperative learning where children complete a project or task. Pairs work best in kindergartens. The tasks are in such a way that success of the performance is based on the pair rather than the individual. A good educator should therefore be able to ensure that communication is established in such learning experiences (Wubbels, 1992). Use of illustrations has been shown to build the imagination of a child immensely. Good communications skills emphasis on the power of expressing yourself not only by facial and gestures but also employing other teaching materials such as illustrations. By illustrating sections of a story or particular events, children can improve their interpretation and  comprehension. Children employ responses and personal understanding when they see story characters visually. This develops a child’s imagination and the ability to visualise and interpret printed and spoken information (Hubley, 1993). The importance of communication cannot be stressed further when it comes to early childhood education. Communication skills are core of almost all activities that are practiced at this early age which dictates the type of person that one will grow to. Neither can the importance of communication skills be neglected or ignored. Effective communication promotes the interest and needs of the young child. The child will show interest only if the teacher is loaded with gestures, confidence and softness. Improving of the communication skills have been shown to bring about a tight bond between the childhood educator and the child. The most important aspects of life are greatly influenced by good communication skills. This leads to respectful and meaningful relationships between the educator and child. In order to feel and have the bliss of healthy emotions at home, there is a need to develop communication skills when it comes to children. Some educators are not worried when it comes to communication and therefore emotional attachments are rare. Emotions connect human beings in a complex fashion. It is therefore paramount that early childhood educators acquire good skills of communication to ensure that the young brain is able to gather as much as possible and express as much. In doing so, the young child would be able to learn more and the literacy and learning capability levels of the general population could reach unimaginable levels. Reference List MacCallion, M. (1998). The Voice Book. London, UK: Faber & Faber. Hubley, J. (1993) . Communication Health. London, UK: Macmillan. Joram, E. (1998). Transforming obstacles into opportunity. Teaching and teacher education, 14 (2), 175-191. doi:10. 1016/S0742-051X(97)00035-8 Knott, P. (1979). Nonverbal Communication during Early Childhood. Communicating with Young Children 18 (4) 226-233 http://www. jstor. org/stable/1476648 Robinson, M. (2007). Child Development and Behaviour 0-8: A Journey through the Early Years. Maidenhead, UK: Open University Press. McCarthy, P (1996). Speaking Persuasively. Sydney: Allen & Unwin.

Causes of World War vocab

The Tsarina, Alexandra, thought he was a miracle and welcomed him to the royal family. That's when he started Glenn bad advice to Tsar Nicolas. 3. Militarism Militarism is the belief that a country should have a strong military and to be prepared to use it whenever the country needs protection. Militarism is significant because this is part of the main causes of WWW. All the powers wanted to have a good military to be prepared for war. Because of being prepared all the time, WWW was quick to happen; because of just one event. 4. NationalismNationalism is the belief that your own county is the best and deserves all the power. Nationalism is significant because it's part of the base reasons why WWW happened. When Germany became a nation in 1871, it disturbed the balance of power in Europe. The other European countries thought that Germany would be a threat to their power. So all the powers thought they were the best and that caused conflicts, which caused WWW. 5. Imperialism Triple Ent ente Imperialism is a policy in which a strong nation looks to dominate other countries politically, economically or socially.This is an alliance consisting of Britain, France and Russia in 1907. This is significant because it was one of the earliest causes of WWW. The scramble for Africa to imperialism it caused many conflicts and tensions within the powers. The European powers were competing a lot between each other for African territory. Those rivalries played a big role later in the causing of WWW. This alliance was important because these were one of the biggest powers. All 3 had something in common: they didn't like Germany & Austria. That brought them to make an alliance ND had a common goal of getting rid of Germany and Australia's power.Soon that became more definite and was on the way to having WWW. 7. Triple Alliance This is an alliance consisting of Germany, Austria-Hungary and Italy in 1907. This alliance if significant because Germany and Austria were very close and ha d common ideas. Russia used to be with them (Emperors League) but since they got out because of the Congress of Berlin, Italy took its place. Their ideals were that they had to support previous alliances and provide a defense system against the other European powers. Because of these rivalries, it soon caused WWW. Blank Check The black check is a check that Germany gives to Austria; reassuring them that Germany will fully support Austria, no matter what. The Blank Check is significant because Germany, basically, blindly gives their support to Austria- without considering what's happen in the future. Since William II says that, it gives Austria an even bigger ego. Later Austria and Serbia have conflicts and are very close to war; at this point Germany can't back out now because they already gave their word to Austria. 9. Archduke Francis Ferdinand He is the hair to Austrian throne.He was soon to become the king of Austria until him and his wife, Sophia, got assassinated by Gabriele P rince; who was with the Black Hand group. Archduke Francis Ferdinand is significant because this is the event that really started WWW. Because of his assassination, by Gabriele Prince, Austria is furious and automatically thinks that it was Serbians doing; even without proper evidence. It does turn out that Gabriele Prince was with a group from Serbia, so that's when WWW began. 10. The Balkan states consisted of Serbia, Bulgaria, Montenegro, and Greece; it made â€Å"The Balkan League†.The Balkan states were under Ottoman control. The conflicts between these states caused Balkan wars. The Balkan Crises is very significant because the Balkan states wanted independence from the Ottomans. So in 1878, Bulgaria was created in the Treaty of San Stefan, it was viewed as a Russian satellite. Then it got reduced and returned to Ottomans in the Congress of Berlin. In 1912, Serbia, Bulgaria, Montenegro, and Greece defeated Ottoman provinces (Albania & Macedonia) but couldn't decide how to split it, resulting in the 2nd Balkan war (1913). Then Greece, Serbia Romania and Ottomans defeated Bulgaria.Because of that, Bulgaria got a little of Macedonia- the rest was divided by Serbia & Greece. Still, Serbia was unsatisfied of the amount of land. The two Balkan wars created more tensions among the great powers. 11. Black Hand/Gabriele Prince This group was a Serbian terrorist group that wanted to create a pan-Slavic nation. It was made up of military & some government officials. Gabriele Prince was part of this group. The Black Hand is significant because Gabriele Prince was part of it. He was a big deal because Prince was responsible for the assassination of Archduke FrancisFerdinand. Since he was heir to the throne, it caused a great deal of fury in Austria. This was the major event that caused WWW. 12. Austrian Ultimatum On July 23, 1914 Austria gave Serbia a set of extreme demands if they don't want to go to war with Austria. This ultimatum is very important because when Austria gave Serbia the ultimatum, Serbia didn't agree. Serbia didn't agree because the demands were very extreme and unrealistic for a country to agree with. That resulted in Austria declaring war on Serbia on July 28. Then that started involving other countries which turned into WWW.

Historical Change- Describe the drive for African American Civil Essay

Historical Change- Describe the drive for African American Civil Rights 1863 1968 - Essay Example is period only served to set precedence to later activities that culminated in great achievement not only for the blacks in American but also for the many people with similar problems across the globe. In America, the civil right movement focused much in the south, a region that was inhabited by a large African American population. This region was characterized by a blatant racial inequality in economic opportunity, education and legal and political process (Smith, & Wynn, 2009, pg 12-14). In 1808 the U.S congress abolished slave trade following the passage of the constitution which banned slavery. This became the central divisive matter in the early republic. Such is the case that this law came into force at a time when the south was heavily dependent on cheap slave labor for their agriculture contrary to the north that was speedily embracing industrialization. The newly found division between the south and north aggravated political and cultural differences and resulted to great animosity. One such difference revolved around the issue of admitting new states. Here, the question was as to whether to admit them as free or slave oriented. The effect of this crisis came up in 1820 when Missouri requested for admission stating its intention to operate a slave state. The north came out strongly against Missouri admission fearing that the slave holding states would gain majority share in the senate. This was however resolved through a compromise that saw Missouri granted i ts request as a slave state but not without the admission of a free Maine( cut out of Massachusetts). This move ensured preservation of the balance of power between the two antagonistic parties but never resolved the raging controversies. Following the growing antislavery campaigns, especially from the north, the abolitionist movement alongside other charities undertook a move that saw them purchase slaves with the sole aim of sending back to Africa, this was in the early 1800s. For instance,

Letter of recommendation Essay Example | Topics and Well Written Essays - 250 words - 2

Letter of recommendation - Essay Example She/he also had calm and organized approach to her/his daily duties and also took initiative in performing duties that were out of the ordinary. XYZ always displayed a talent for multitasking and always focused on details. XYZ’s pleasing personality makes him/her a wonderful colleague to work with and we find her/ his dedication to work both motivating and inspiring. She/he showed great composure during hectic work hours, and was flexible and willing to work for more hours to compensate her/ his peers who were on leave. She/he was an ideal people’s person. XYZ was a vital member of our team and I am sure the program would certainly help her/him nurture his/ her budding professional qualities. I would highly recommend her/ him as an ideal candidate for your program and hope that you would kindly consider the application. â€Å"Sample Recommendation Letters – Sample Letters of Recommendation.† About.com. 10 December 2011.

Forensic Medicine Essay Example | Topics and Well Written Essays - 1250 words

Forensic Medicine - Essay Example It entails relation with the observations and the doctors are the primary witnesses and they are required to give their opinions based on truth and without any bias towards the side they are representing. Medical confidentiality can raise conflicts between law and medicine (Forensic-Medecine.info, n.d.). Forensic medicine is an important area of forensic science and it involves the application of medical knowledge to civil and criminal law. The areas of medicine that are used in forensic medicine are pathology, psychiatry, and anatomy. Forensic medicine is involved in cases such as those concerning mental illness, blood relationship, death resulting from violence, and injury. Autopsy is basically used in the determination of the cause of death (such as poison or gunshot wound) specifically in situations where it is suspected there was foul play. Post-mortem examination can also provide important information such as the length of time a person has been dead (the information can assist in tracing the killing) (Forensic-Medecine.info, n.d.). Every minute a number of people are either injured in a crime or are killed under unknown circumstances. The determination of the cause of the injury or death is sometimes very difficult especially when a foul play is suspected to have happened. Forensic medicine has come in handy to assist in the investigation of the type of crime and manner used in inflicting injury and the cause of death. Forensic medicine is an exhilarating subject since it offers the investigator in this case a forensic pathologist to explore the mechanisms and manner of death of the victim in question. It has also assisted in solving rape cases and a number of court cases that involved the death of the victim in question. In simple times, forensic medicine can be equated to the application of medicine in the legal field. The relationship between law and medicine started in the early periods and the bonds which united

A research paper on the Ancient Panatheniac Olympic stadium

A on the Ancient Panatheniac Olympic stadium - Research Paper Example 3). The stadium was refurbished by Herodes between 140 and 144 AD in the present form after excavated in 1870. The length and width of the Panatheniac Olympic Stadium designed in horseshoe shape is 204.07 meters and 33.35 meters respectively. Herodes constructed another such portico at the front of the stadium. Herodes also repaired the Illissos river bridge at the Stadium’s gate to make it bigger by putting three archways on its base. The bridge was there till 1778 (Meander Travel par. 1-3). A semi-circular wall was added to the north of the Stadium parallel to the sphendone of the southern side (â€Å"Olympic-Legacy,† par. 2). The archaeologist Earnst Ziller found the Stadium during excavations of the 1869-70, which was rebuilt again in 1896 for holding the first Olympiad in Athens by G Averof. Anastase Metaxas helped in remaking the Stadium to the capacity of 69,000 seats. The same marble from Mt. Penteli, which was used 2,400 years before, was used again for making of the Parthenon on the Acropolis. The Stadium was adorned as if it was the Grecian temple, the outline of which was still intact with its porticos and colonnades (Olympic-Legacy,† par. 3-8). Lycurgos as head of the overseers’ team was conferred the title of â€Å"caretakers of the Stadion†. ... Lycurgos changed the valley not only into a Stadium but also circumvented the arena with a parapet, which straightway marked the place for the competitions. A line of stones was laid down to label the starting point and the finish of an ordinary route. A passage was constructed behind the parapet, which made the circumference of the route. Below the footpath a covered passage was running along to take the flow of the rain water out from the Stadium. Some remains of this passage are still there to be seen. During that period, inclines were not sheltered with marble benches as the audience seating arrangements were made on the ground. The place named â€Å"the first wood† was meant for VIPs of that time, earmarking their seats (Lambros & Polites, â€Å"The Olympic Games B.C. 776. — A. D. I896.† pp.35-36). There are inscriptions that inform the repairing of the Stadium dating Third Century BC by Heracleitos in a â€Å"befitting manner†. In the second Century after Christ the Stadium was totally refurbished by Herodes Atticus. Herodes Atticus was selected the â€Å"Athlothete of the Panathenaia† (Lambros & Polites, â€Å"The Olympic Games B.C. 776. — A. D. I896.† p. 36). Worth description by Herodes was the ship on wheels on whose pole people laid their offerings because the goddess there is depicted as sail. It operated through a secret method sailing beside the ground. While addressing the people of Athens, Herodes finished his speech of thanks giving by saying: â€Å"It will be in a Stadium of marble that I hope to receive you, oh Athenians, yourselves as well as the Athletes and strangers, who will then be our guests.† In a span of 4 years he presented an altogether new look to the Stadium fully decorated. Such was the appeal of the Stadium that no other

The Church's View on Contraception Essay Example | Topics and Well Written Essays - 1000 words

The Church's View on Contraception - Essay Example Based on the Scriptures, particularly in the Book of Genesis 38:8-10, the act of Onan spilling his seed – which is an equivalent of coitus interruptus – was condemned by God and the Jewish law. Based on the ancient Jewish law of fathering children, it was a duty of the brother to perform to his sister-in-law the role of husband if his brother dies. However, Onan changed his mind about fathering a child which was supposed to be his brother’s and thus â€Å"spilled the semen on the ground†¦And what he did was displeasing in the sight of the Lord, and he slew him also† (Brom; Gen. 38:9-10). In Deuteronomy 25:7-10, it is stated that the man who does not give children to his sister-in-law in case his brother dies would naturally get punished with public humiliation. However, since God slew Onan, then the spilling of one’s semen – or more loosely, the concept of contraception – is obviously a more serious moral offense that simply not g iving one’s brother’s widow a child. Other books of the Bible also condemn contraception. In the New Testament, Paul’s Epistle to the Romans states, â€Å"God has given them over to shameful passions. ... These writings were after all based on the principles of the Bible and the natural law. Onanism, or the act of Onan spilling his semen, was echoed by several church fathers during the early years of the Church. One of the most prominent Church Fathers who condemned contraception in this way was Clement of Alexandria, who, in 195 AD, wrote in The Instructor of Children 2:10:91:2, â€Å"Because of its divine institution for the propagation of man, the seed is not to be vainly ejaculated, nor is it to be damaged, nor is it to be wasted† (Brom). Although the aforementioned statement of Clement of Alexandria somehow includes even acts like masturbation, it is still clear that the Church condemns contraception in whatever form that it can be carried out. The Protestant Reformer Martin Luther also expressed condemnation against onanism and referred to it as â€Å"the exceedingly foul deed of Onan† and that Onan â€Å"deserved to be killed by God† (Brom). Luther, therefo re, emphasizes, through Onan’s example, that the sinner deserves God’s punishment. John Calvin of the Calvinist Church echoed Luther’s condemnation by saying that the intentional spilling of semen is â€Å"a monstrous thing† (Brom). Moreover, John Wesley, founder of the Methodist Church, stated that onanism was â€Å"very displeasing to God† and was tantamount to the destruction of the soul (Brom). Contraceptives and methods to tighten the reproductive system have also long been condemned by the ancient Christian Church. Another Church Father in the name of Hippolytus of Rome indicated in his Refutation of All Heresies 9:12, in 255 AD, that â€Å"the so-called faithful [should not] use drugs of sterility or bid themselves tightly in order to expel a fetus which

Analysis of Macbeth Essay Example | Topics and Well Written Essays - 500 words

Analysis of Macbeth - Essay Example Shakespeare has employed Macbeth as a means to convey his opinion of the way aspiration and guilt affect an individual of weak character. Macbeth may be considered as irreversible evil, though the weakness of his character contrasts with other villains of Shakespeare’s plays including Edmund and Iago in King Lear and Othello respectively in that the latter are strong enough to surmount their own self-doubt and feeling of guilt. â€Å"Probably composed in late 1606 or early 1607, Macbeth [also happens to be] the last of Shakespeare's four great tragedies, the others being Hamlet, King Lear and Othello† (eNotes). Despite being a great warrior, Macbeth is not strong enough to boldly face the psychological consequences of his crime. Macbeth is overcome by guilt and worries before murdering Duncan, so he tends to almost abort the mission but his wife’s objectivity of purposefulness makes him commit the crime. Macbeth says, â€Å"Prithee, peace: I dare do all that may become a man; Who dares do more is none† (Shakespeare 16).

Instructional planning & strategies task Essay Example for Free

Instructional planning strategies task Essay On the past times the Florida State Standards for Mathematics had a problem and some comments for revision was proposed on it. Fortunately all the conflicts encountered were already ended well. Through the help of the Florida Department of Education the State Standards for mathematics had improved and developed. This was a guide for the level standards particularly grade 6-8 stating those that the students should learn and what they can do at the grade level intervals eventually. The following are one of the standards for each level followed by the corresponding goals and objectives. Standard for Grades 6-8: Students already know the concept of numbers and some mathematical operations. However, for a specific grade, the goal and objectives are heighten as each student upgrades or proceeds to its new level, considering the knowledge they have gained from previous grades. Grade 6: Goal: students figure out whether the existing numbers are fractions, decimals, percents, scientific notations, exponent, radicals and absolute value by just looking at its form. Objectives: At the end of the school year the students are expected to do the following so that they will be well familiar with the other branching and composition of numbers. 1. write and categorize numbers according to their forms (e. g. fractions, decimals, exponents) 2. convert a given amount of number in fraction, decimal or scientific notation, and state it correctly. 3. tell whether numbers articulated in diverse forms are identical through some board works. Grade 7: Goal: students must clarify eventually the four fundamental operations used for whole numbers, fractions as well as mixed numbers and decimals, the opposite relationship of positive and negative numbers Objectives: At the end the students are able to fulfill the following because the relevance of the operations will be useful in dealing with other mathematical matters. 1. enumerate results of four fundamental operations on whole numbers and the forms mentioned above. This is to show that the students already know something about it. 2. make use visuals to present the connections of addition, subtraction, multiplication, and division on its dealing with different forms of numbers to show that children are not confused of it. 3. state and pertain clearly the properties of rational numbers in solving mathematical problems. Grade 8: Goal: eventually the students are aware of and make use of exponential and scientific notation. Therefore, the students must perform indicated operations on examinations board works and group activities. Objectives: the students in due course can do the expected performance for the assurance that coped up already the knowledge in the whole number system. 1. write and recite numbers in exponential notations even if these numbers contain negative exponents 2.tell correctly numbers ranging from 0 to 1 converted in scientific notations 3. appraise numerical or algebraic expressions that enclose exponential notation so as to prove that they are able to surpass various forms of training in numbers for the previous years. Reference: Focus on Success: A REVIEW OF THE FLORIDA SUNSHINE STATE STANDARDS FOR RIGOR AND ALIGNMENT TO COLLEGE READINESS, Retrieved August 25, 2007, http://etc. usf. edu/flstandards/math/College_Board. pdf.

Determination of Glucose Concentration Using Trinder Method

Determination of Glucose Concentration Using Trinder Method The Trinder method is used to determine glucose concentration only, (Lott et al, 1975). This method was first described by Trinder in 1969 thus named after him, (Lott et al, 1975). It uses an enzyme glucose oxidase for the first reaction and peroxidase for the second reaction thus the name of the enzyme Glucose oxidase/peroxidase (GODPOD), (Meiattin, 1973). Enzymes are biological or any chemical catalysts that speed up a reaction without it being used up, (Jan, 2010). It functions to catalyse a reaction by lowering the activation energy of the reaction. Activation energy is the energy needed to initiate the reaction. It is a point of high energy and requires more energy than the substrates. An enzyme also contains an active site for the substrate to catalyse the reaction. Its efficiency depends on the concentration of the substrate and conditions like temperature or pH, (Hames et al, 2005). The Trinder method, is based on two sequential enzymatic reactions, the first one involves the oxidation of glucose to gluconic acid and H2O2, (Casabnon et al, 2005). This reaction is catalysed by the enzyme Glucose oxidase. Then, the H2O2produced is quantified by a chromogenic reaction with peroxidase (POD), as the enzyme that catalyses the reaction with the reduced dye, (Casabnon et al, 2005). The oxidised dye changes colour to pink or red according to the glucose concentration. The colour formed is stable at room temperature for at least two hours after development, (Anon, 2010). The main advantage of this method is that it is very specific. It doesnt target other sugars except glucose. It is also simple straight forward and easy to manipulate. Its results are very reliable and specific, (Bauninger, 1974). Its final products are stable as they are not reactive at room temperature. Other colorimetric methods to identify glucose include, oxidation of glucose in the presence of Cu+2 to give Cu2O, and different types of Chromatography, (Casabnon et al, 2005). Glucose can be detected with o-toledine or other amines, (Casabnon et al, 2005). The experiment had to check for the specificity of the assay thus other carbohydrates were assayed. These were galactose, fructose, maltose and ribose. Maltose is a disaccharide which is made up of two glucose molecules joined together by a glycosidic bond. Galactose is a major sugar found in milk, (Hames et al, 2005). Its structure consists of six carbons with a glycosidic bond to join the next glucose molecule, (Berg et al, 2007). Fructose is abundant in fruits. It is a monosaccharide with six carbons as its structure. Ribose is a pentose sugar molecule with 5 carbons. It is mostly abundant in the nucleotides. The aim of the experiment was to determine glucose concentration in different concentrated solutions and unknown solutions. The specificity of the assay was to be determined by application of the assay on different sugar molecules. A standard curve was to be drawn from the absorbencies acquired from the spectrophotometer at 515nm Materials 12 Test tubes 2 Long pipette tips 1ml of 0.5mM Fructose 1ml of 0.5mM Maltose 1ml of 0.5mM Galactose 1ml of Unknown Glucose 1ml of 0.5mM Ribose 5ml of 0, 5mM Glucose 5ml of Distilled water 7ml of 0.1% Phenol 20ml of GODPOD Reagent 9 pipette tips 8 Disposable Cuvettes Black Marker Stop watch P100 Pipette Automatic pipette Recoding paper and pen Spectrophotometer at 515nm Water bath at 37oC Test tubes rack Blotting paper Method The test tubes were marked T1 to T6, for those that had to be inoculated with glucose and S1 to S6, for those that had to be inoculated with different types of sugars. They were arranged in order of concentration on the rack. One row was left out for agitating the test tubes. Inoculation commenced by transferring glucose into different test tubes T1being the least concentrated. 0.5mM of Glucose was transferred using a P100 pipette and not changing the tip. 0.2cm3 was inoculated into T2, 0.4 cm3 into T3, 0.6 cm3 into T4, 0.8cm3 into T5 and 1.0 cm3into T6. Distilled water was then inoculated into the test tubes using a different tip to avoid cross contamination. One centimetre cubed was inoculated into T1, 0.8 cm3 into T2, 0.6 cm3 into T3, 0.4 cm3 into T4 and 0.2 cm3 into T5. There was no water inoculated into the last tube T6. Phenol was then inoculated into all the twelve test tubes. It was transferred using a different tip to avoid cross contamination. One centimetre cubed of different sugars were inoculated in specific S tubes. 0.5mM of Galactose was inoculated into S1, 0.5mM of Glucose was inoculated into S2, Glucose unknown was inoculated into S3, 0.5mM of Fructose was inoculated into S4, 0.5mM of Maltose was inoculated into S5 and then 0.5mM of Ribose was inoculated into S6. These transfers were done with different tips for different sugars. One and half millilitres of GODPOD reagent was then inoculated into all the test tubes using an automatic pipette and a long pipette tip. The test tubes were then agitated on the rack and incubated in the water bath for forty minutes. The temperature was constantly checked during incubation. After forty minutes, the solutions changed colour from colourless to light pink according to the concentration. These different solutions were then read on a spectrophotometer in a cuvette. The spectrophotometer was zeroed at first then absorbencies of Glucose and other sugars were read and recorded. A cuvette was wiped on the soft side to minimize absorbencies caused by contamination. These different absorbencies were recorded on a table. Discussion The reactions of glucose with the GODPOD were slow due to the fact that the enzyme was stored in ice thus it took long for the reaction to take place. The enzymes structure was disrupted because it was kept in cold thus it took time to equilibrate with the conditions. The reason why GODPOD was slow to react was because it is sensitive to its environment, (Teal et al, 1985). Enzymes are sensitive to pressure, temperature and pH. This added to the fact that the colour produced was not very dark because the enzyme was adjusting to the conditions. The enzyme also didnt denature because it was kept in ice at 4oC not in the heat above 40oC. On the graph, the points that are not on the line of best fit might have appeared because there might have been a competitive inhibitor thus the reaction didnt go on well owing to reduced absorbance. The inhibitor might have been so because of cross contamination. The same pipette might have been used to transfer the solutions thus cross contamination. The specificity of the enzymes might have caused the other solutions not to produce reliable results. Enzymes are sensitive to pH, (Jan, 2010). The pH of the test tube might have been so low or higher than the required thus some of the points are not in the line of best fit. This might have been avoided by carrying out the experiment repeatedly and then getting average values. When the enzyme was applied to the other sugars, there was no absorbance at all because the enzyme is specific to one substrate thus it didnt catalyse the reaction of other sugars and GODPOD. There might have no absorbance because these sugars might have their own wavelengths they absorb the light. This might have been avoided by scanning the various wavelengths and determine the exact wavelength. The unknown glucoses were determined by the use of the graph. The line of best fit was used to determine the glucose concentration. An equation was used also to determine the concentrations. The other points not on the line of the best fit might be there because the transitional state might have been great, thus when thirty minutes had passed, the enzyme had not gone past the transitional stage. This might have been characteristic of the colours produced according to the concentration of the different solutions. The unknown glucose solutions showed to have the same concentration as the stock solution. It might have the same compounds and properties as the stock solution. The results of the experiment were according to the literature values. This was highlighted by the absorbencies of stock solutions and different sugars. The specificity of the reaction was achieved. In conclusion, the aims of the experiment were achieved by obtain reliable data and results. The standard curve showed the absorbencies of the different solutions and unknowns.

UK Telecommunications Management of Interest Rates

UK Telecommunications Management of Interest Rates INTRODUCTION In business world today many companies are faced with the increase in volatility of financial markets which has lead to increase in financial price risk. Many companies are faced with exposure to financial risk which are caused by unanticipated exchange rate and interest rate movements. These unanticipated movement in exchange rate which is caused by international competition can results into large gain or loss if the risk is not managed properly. Exchange rate movement generate business risks which can vary the current foreign assets and liabilities and interest rate movement can have indirect impact on companys value on its future cash flows. Domestic and multinational companies who are faced with these kind of risks must assure that they control these risks otherwise if they are unmanaged then this can result into total failure of business. Financial Institutions have introduced different products to help companies in risk management. These products are Forward contracts on exchange rate, Futures contracts, Interest rate swaps and Options. Forward contract being the oldest product to be introduced to manage both foreign exchange and interest rate risks. 1.1 Problem statement Changes in business environment and increase in movement of interest rate and exchange rate has resulted into rise in financial risk exposure. These movements can affect not only companys profit but also companys survival in indirect way. Financial risks management has turn to be a significant area of pertain for UK corporations. Therefore this proposal attempt to find out how UK Telecommunications industry handle financial risks in an increasing business risk environment. Research aim and objectives Aim The main aim of the study is to determine how firms in UK Telecommunications industry manage interest rate and foreign exchange financial risks by looking into use of derivatives. 1.3 Research Objectives The primary objectives of the research will be; To determine how companies manage risk To determine whether derivatives are used or not To determine which derivatives are used and for what purpose Disclosure of financial instruments 1.4 Research Questions The following research questions will guide this research How companies manage risk? Are derivatives used or not used? Which derivatives are used and for what purpose? What are the disclosure of financial instruments? 2. LITERATURE REVIEW Derivatives are financial instruments whose values are deduced from some underlying assets or rate/price. Derivatives are now of paramount importance to the business world, with imaginary value of more than $200 trillion of these derivatives are being traded on coordinated and over the counter markets in 2004 (Bank for International Settlements, 2004). The financial products which are provided by FinanciaI Institution are options, futures contract, forward contract and interest rate swap. The common Interest rate derivative is Interest rate swaps and others are future contracts and interest rate options while for foreign exchange derivatives are forwards contracts, currency swaps, foreign exchange futures and options. Forward contract gives the owner the obligation to buy an asset at set price and maturity date as agreed in the contract. Future as like forward but in futures are public traded while forwards are private contracts. Unlike future and forward, options give the owner the right but not obligation to buy or sell an asset at a fixed price on or before specified date (Prevost et al, 2000). Derivatives are used to cut down cash flows and earnings volatility caused by changes in foreign currency exchange rates, commodity prices, interest rates and other risk factors (Barton J, 2000). Use of financial derivatives is widespread, especially among large publicly traded companies and is still increasing sharply. For example, in a study done by Guay and Kothari, (2003) based on annual reports information of 413 largest firms in the U.S revealed that 57% were using derivatives. In another study of 314 Fortune 500 firms showed that 72% were using derivatives (Barton J, 2001). Mallin et al. (2001) did survey analysis on the use of derivatives in risk management, he mailed questionnaire to 800 UK non financial firms listed on London stock exchange. Results showed that of 231 respondents 32% were applying at least one derivative instrument. Another researchers Bodnar et al (2003) studied derivative usage in managing risk to 167 non-financial Netherlands firms and revealed 84 usable responses which is 50.3%. In India a study was conducted to examine derivatives usage in managing foreign exchange risk to 640 companies which were faced with foreign exchange exposure and results showed that 70.4% of respondents used foreign exchange derivatives to manage risk (Anand and Kaushik 2007). Whilst many firms use derivatives in managing risk, misuse of it may result into major losses. This was proved by Karpinsky (1998) who revealed companies like Sumitomo Corporation lost $3,500 million in 1996 because of copper future. On the other hand El-Masry (2003) collected data from questionnaire mailed to 401 non financial companies listed on London stock exchange, 50% of respondents did not use derivatives because the risk exposure was not substational. Likewise suryey done by Bodnar et al (1995) revealed lower use of derivatives and the reason being low insignificant exposure. Regarding to mostly used derivatives to manage risk exposure, survey done by Marshall (1997) pointed that options, swaps and forwards were normally used to manage interest rate and foreign exchange risks. In El-Masry (2003) survey of UK non financial firms, results indicated that firms use options at 29.4%, forward/future at 23.7% and swaps 23.1%. 3.0. RESEARCH METHODOLOGY Research design This study will be conducted as a quantitative survey Sources of data The main source of data will be the annual reports of 10 companies in the UK telecommunications industry for the past three years. Documentary source Bell (1999) state documentary source involves the reading of relevant information from library source such as text books, journals, newspapers and internet. Secondary source will enable a researcher to conduct broad investigation and help confirm the reliability of the findings given that the findings may be subjective and this source will be used as well to cut down reliance on the annual reports as the main source of data used in the study. Sampling selection Selection of sample will be based on the public data information of the companies and the eligibility criteria will base on following factors; The company must be in the telecommunication services industry The company must be either a Domestic or a Multinational one which is exposed to financial risks as an outcome of international competition The company should be among of the listed London Stock Exchange companies Data analysis Data collected will be analysed using Statistical Package for Social Sciences (SPSS) and presented using frequency table. 4. CONCLUSION Measuring and managing financial risk exposure are crucial functions in cutting down companies vulnerabilities from major exchange and interest rate movements. Financial derivatives are very important in risk management of corporations 5. REFERENCE Anand m., Kaushik k. p., (2007).Management Motivations for Use of Foreign Currency Derivatives in India, IIML Working Paper Series. Bank for International Settlements. (2004). Triennial Central Bank Survey of Foreign Exchange and Derivatives Market Activity in 2004. http://www.bis.org/publ/rpfx05.htm. Barton, J. (2001). Does the Use of Financial Derivatives Affect Earnings Management Decisions? The Accounting Review, 76, 1-26. Bell, Judith. (1999). Doing your Research Project: A guide for first time researcher in Education: 3rd Edition Buckingham, Open University press.UK Bodnar g. m., de jong a., macrae v., (2003). The impact of Institutional Differences on Derivatives Usage: a Comparative Study of US and Dutch Firmsà ¢Ã¢â€š ¬?, European Financial Management vol. 9, No. 3, pp. 271-297. El-masry a.,(2003) A survey of derivatives use by UK non financial companies, Social science research network Manchester Business School pg.455. Grant, K. and Marshall, A. P. (1997), à ¢Ã¢â€š ¬Ã…“Large UK companies and derivativesà ¢Ã¢â€š ¬?, European Financial Management, vol. 3 no. 2, pp. 191-208. Guay W Kothari, S. P. (2003). How Much Do Firms Hedge with Derivatives? Journal of Financial Economics, 70, 423-461. Hentschel, L., Kothari, S. P. (2001). Are Corporations Reducing or Taking Risks with Derivatives. Journal of Financial and Quantitative Analysis, 36, 93-118. Mallin c.; Ow-yong k. and Reynolds m.,(2001) Derivatives usage in UK non-financial listed companies, The European Journal of Finance Vol. 7 (2001), pp. 63-91. Saunders, M., Lewis, P. Thornhill, A. (2007). Research Methods for Business Students. 4th Edition. Pearson Education Limited UK. Prevost, A. K., Rose, L. C., Miller, G. (2000). Derivatives Usage and Financial Risk Management in Large and Small Economies: A Comparative Analysis. Journal of Business Finance and Accounting, 27, 733-759.

How does H.G Wells create suspense in The Cone? Essay -- English Liter

How does H.G Wells create suspense in The Cone? There are numerous techniques that an author can use to create interest and suspense when writing a gothic story. Examples of these are short sentences, pathetic fallacy, and emotive language. However Wells then goes on to combine this with a romantic element, and incorporates a crime of passion into the story. So not only does Wells use the gothic genre and its techniques to create tension, but also that of the romantic genre. This story is written in the third person, which works superbly as it gives an overview of the opinions of all the characters and their thoughts. For instance Wells writes, ‘She had an impulse to warn him in an undertone, but she could not frame a word. â€Å"Don’t go!† and â€Å"Beware of him!† struggled in her mind, and the moment passed.’ This technique allows us to connect with more than one of the characters and understand the different points of view, and feelings emerging from them. In a way it prevents the reader from becoming overly bias, because they can see situations from more than one persons perspective. The story starts with a description, using long sentences and scores of adjectives, ‘The night was hot and overcast, the sky red, rimmed with the lingering sunset of midsummer†¦Ã¢â‚¬â„¢ This sets the scene in a serene way that leads the reader into a false sense of security, a beautiful night with two lovers talking in lowered voices. However on reading the story retrospectively the opening paragraph could be viewed differently. The sky could be interpreted as angry, or brooding. It could be ominously setting the scene for things to come, it already informs us that the story is set a night, could this be the first gothic element to... ...e word cone is mentioned over twenty times and is featured in the title. Therefore I think that Wells really wants us to take notice of this and start speculating on how this affects the end of the story, of course, once read we discover that the cone is actually the piece of machinery that kills Raut, and finishes the story. At the very end of the story Horrocks’ conscience comes back to him and he says, ‘Oh god! What have I done?’ This shows that he is not a cold-hearted murderer and it shows the reader that perhaps normally he would have been a nice man, but under the circumstances was pushed to do something he wouldn’t have normally done. In conclusion it appears that Wells uses many gothic styles throughout the story to increase tension. He uses description, long sentences, passion, and betrayal. This creates a very gothic and interesting story.

Biology :: Biology

Biology is the science of living systems. It is inherently interdisciplinary, requiring knowledge of the physical sciences and mathematics, although specialities may be oriented toward a group of organisms or a level of organization. BOTANY is concerned with plant life, ZOOLOGY with animal life, algology with ALGAE, MYCOLOGY with fungi, MICROBIOLOGY with microorganisms such as protozoa and bacteria, CYTOLOGY with CELLS, and so on. All biological specialties, however, are concerned with life and its characteristics. These characteristics include cellular organization, METABOLISM, response to stimuli, development and growth, and reproduction. Furthermore, the information needed to control the expression of such characteristics is contained within each organism. FUNDAMENTAL DISCIPLINES Life is divided into many levels of organization--atoms, molecules, cells, tissues, organs, organ systems, organisms, and populations. The basic disciplines of biology may study life at one or more of these levels. Taxonomy attempts to arrange organisms in natural groups based on common features. It is concerned with the identification, naming, and classification of organisms. The seven major taxonomic categories, or taxa, used in classification are kingdom, phylum, class, order, family, genus, and species. Early systems used only two kingdoms, plant and animal, whereas most modern systems use five: MONERA (BACTERIA and BLUE-GREEN ALGAE), PROTISTA (PROTOZOA and the other ALGAE), FUNGI, PLANT, and ANIMAL. The discipline of ECOLOGY is concerned with the interrelationships of organisms, both among themselves and between them and their environment. Studies of the energy flow through communities of organisms and of the environment (the ecosystem approach) are especially valuable in assessing the effects of human activities. An ecologist must be knowledgeable in other disciplines of biology. Organisms respond to stimuli from other organisms and from the environment; behaviorists are concerned with these responses. Most of them study animals--as individuals, groups, or entire species--in describing ANIMAL BEHAVIOR patterns. These patterns include ANIMAL MIGRATION, courtship and mating, social organization, TERRITORIALITY, INSTINCT, and learning. When humans are included, biology overlaps with psychology and sociology. Growth and orientation responses of plants can also be studied in the discipline of behavior, although they are traditionally considered as belonging under development and PHYSIOLOGY, respectively. Descriptive and comparative EMBRYOLOGY are the classic areas of DEVELOPMENT studies, although postembryological development, particularly the aging process, is also examined. The biochemical and biophysical mechanisms that control normal development are of particular interest when they are related to birth defects, cancer, and other abnormalities. Inheritance of physical and biochemical characteristics, and the variations that appear from generation to generation, are the general subjects of GENETICS. The emphasis may be on improving domestic plants and animals through controlled breeding, or it may be on the more fundamental questions of molecular and cellular mechanisms of HEREDITY. A branch of biology growing in importance since the 1940s, molecular biology essentially developed out of genetics and biochemistry. It seeks to explain biological events by studying the molecules within

Psy/265 Sexuality at Different Life Stages Essay

There are changes in every stage of life including sexual changes that follow us as we grow older. With the following scenario’s that talk about the different points of our awareness and stages of sexual relationships, I will suggest from a counselors perspective ways to help each person in the settings presented. The first case is Anna, an adolescent girl, is very much in love with her boyfriend who is three years older than she. He is putting a lot of pressure on her to have sex. At the same time, she is anxious about her parents’ attitude towards her boyfriend. Her mother constantly warns her about dating an older boy and assumes that he intends to take advantage of her. The first thing I would go about is setting a relaxed and comfortable exchange to allow Anna to express her own opinions, in doing so I would simply ask her what she feels about having sex with her boyfriend, not how her parents feel, not how her boyfriend feels, but how does she feel about it. I would then ask her is she was prepared to have sex, has she discussed with her boyfriend what precautions they would take, and what they would be prepared to do if something happened and she became pregnant. Some of the questions would be directed towards her once I could visually observe her, I would ask her if she was feeling peer pressure to have sex, or if her boyfriend was pressuring her to have sex. I would also explain that sometimes it is okay to say no to sex and just because her friends say they have or are encouraging her to have sex does not necessarily mean it is the right decision for her. I would also enter into a discussion of what sex means to her, and bring about the questions to see if she feels if she does not have sex with him she would perhaps loose him. I would recommend to her that she see a gynecologist or her family doctor to further explore all the birth control options and make sure she understands that even though it is a shared responsibility with her and her boyfriend, she should make sure she is practicing safe sex. For me I would also mention that her mother is concerned, because Anna is her daughter. I would ask her if she had any questions for me, and then assure her that what ever we discuss is between us and she can feel free to come to talk with me at anytime. I would also tell her to take all the time she needed to come to her decision, and make it because it is what is right for her. I am a realist, and all we can do is provide the kids with good information and hope that we have given them enough of it for them to make a decision that is right and safe for them. Tom and Susan are an elderly couple. Tom has been retired for several years, and Susan is more recently retired. She has shown a renewed interest in sexual activity. Tom has not reciprocated Susan’s interest as he is anxious about his sexual ability at this age. I feel it would be best to first address some issues with Tom and see if he felt there was a possible physical reason that perhaps he had not brought up prior to this. Several factors may play a role in sexual inactivity including declining activity, physical problems, boredom, and attitudes about sex among older people. If he was having physical issues I would suggest to him that perhaps he should see his physician about some of the things that may help in this area. Many men have problems with erections due to stress and other factors, and when you can get to the cause of it, there is often help for it. I would discuss with them about Susan’s recent retirement and see if that change has triggered her to have some extra energy and less stress from not having a regular scheduled job. I would suggest that they try date night, or think about activities or things that used to make them feel more romantic, and suggest that they try to stop thinking about it and just let it naturally occur. Go out and do things that make you both happy, couple things, individual things, get to know each other again because in a sense that is what they are doing, getting to know each other again. I would encourage them to communicate and talk about things, not turn the television on or the phone on when they go to bed, and discuss their needs openly with each other and figure out what will meet both of their needs. Bill has been paralyzed from the waist down since he was a child. He is involved in a romantic relationship and wishes to be intimate with his partner but is unsure how to express his interest. Bill becomes very nervous and uncomfortable when talking about this subject Sex and the ability to have sex with a partner and have a long term intimate relationship is desired as much by people with a disability as it is with most people. The amount of physical sexual function and ability to feel pleasure or pain sensation is often the first thing they think of, raising fear and anxiety. Yet it is something we all desire because sex enriches our lives and brings us to understanding and closer relationships with our partners. People with a physical disability often have a poor self body image, thinking they are damaged goods, broken, somehow less than. These feelings are normal you should talk about them with your partner, but don’t dwell on them. Healthy love making is about pleasing your partner. Often people in Bill’s situation find excitement and release simply from the closeness of pleasuring their partner. Healthy sexuality involves warmth, tenderness, and love, not just genital contact, so I would encourage Bill to step outside of his comfort zone and talk to his partner about how he feels. I recommend that Bill seek his physician’s medical opinion and assistance to see if one of the clinical treatments for erectile dysfunction, such as Viagra could improve the quality of erections and sexual activity with him. I would also remind him that orgasm after paralysis is possible for some men but it is often not the same as it is usually defined. It can become less physical, less focused on the genitals and more about his state of mind. It is important Bill comes to understand that the loss of sensation does not rule out loss of sexuality. In conclusion, we all experience sexual awareness and activity during all ages of our lives. So we all need to take a moment to just breathe and know we are not alone. Talk to our partners, talk with our physicians/counselors and learn what will work for you in your own situation. Take control of your life and learn to understand your own body. References Rathus, S. A. , Nevid, J. S. , and Fichner-Rathus, L. (2011). Human sexuality in a world of diversity. (8th ed. ) Boston, MA: Allyn and Bacon.

Financial Reporting Quality: Red Flags and Accounting Warning Signs

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