Legislative Polices for Healthcare Essay Example | Topics and Well Written Essays - 250 words

Legislative Polices for Healthcare - Essay Example Leiyu Shi and Douglas A. Singh states that healthcare policies in America is shaped by accepting ideas from a number of agencies, campaigns, cabinet members and advisers in healthcare scenario (Leiyu and Douglas 544). The ‘Health Care and Education Reconciliation Act’ (2010), aims to adopt reformatory measures in healthcare sector. This Act is divided into two, the first part deals with healthcare and the second part deals with the student loan system. The Patient Protection and Affordable Care Act or PPACA, (2010), is similar to the first Act/ Law and aims to reform the healthcare sector. These Acts/Laws helps one to realize the importance of reformatory measures adopted by current legislative polices for healthcare in USA. At the same time, the current legislative polices for healthcare provides immense importance to insurance coverage to the needy, especially young adults and uninsured individuals. For instance, the current legislative policies aim to reform the health insurance scenario by reforming insurance practices and available insurance coverage. Besides, the current legislative polices aim to reform the current health plan administration by improving appeals process and non-discriminatory measures or rules for insurance plans. The current health plans impose additional costs on healthcare sector. At the same time, there exists provision in the form of subsidies and tax credits to lessen the burden of taxation. Summing, the current legislative polices for healthcare in USA aims to reform the healthcare sector. Besides, the current legislative sector is ever ready to inculcate innovation to the healthcare sector through effective and timely

It is not an essay but quistions Example | Topics and Well Written Essays - 1000 words

It is not an but quistions - Essay Example AS a result, the number reduced making it inferior to withstand the forces from the north. The other success was in Gettysburg. In the battle, the army under the command of Lee suffered a significant loss. In the battle, there were massive casualties. As a result, Lee side was demoralised on invasion of the north and, therefore, had to retreat to Virginia. The 1890 can be described as a watershed of the 1900’s in different ways. In the period, various changes defined the 1900’s. First, there was consolidation of various railway projects that had begun in the second part of the century. The consolidation helped in emergence of various industries that helped spur economic growth in the 1900’s. Moreover, the emergence of industries led to economic dominance of United States in the following century. Secondly, industrialization led to increased immigration to America. For example, there was increasing number of immigrants. Most came from Europe. They were looking for work and increased freedom. Consequently, there was growth of cities where the immigrants settled leading to increased urbanization. However, the period also saw increased discrimination. The discrimination was directed to African American. The period saw the passage of authoritarian laws such as Jim Crow laws that authorised segregation of African Americans. The law also allowed lynching of African Americans in the southern side. The changes led to rise of civil rights groups in then 1990’s. Moreover, there was a rise of exceptional leaders agitating for equality of different races over the same time such as Dubois and Martin Luther King. Additionally, the period saw the rise of various political parties. The parties were because of activism of farmers. In the period, farmers complained of reduced prices of commodities such as wheat and cotton. One of such parties was the People’s Party (Populist Party). The party was agitating for political

Analysis of variance models

Analysis of variance models Abstract: Analysis of variance (ANOVA) models has become widely used tool and plays a fundamental role in much of the application of statistics today. Two-way ANOVA models involving random effects have found widespread application to experimental design in varied fields such as biology, econometrics, quality control, and engineering. The article is comprehensive presentation of methods and techniques for point estimation, interval estimation, estimation of variance components, and hypotheses tests for Two-Way Analysis of Variance with random effects. Key words: Analysis of variance; two-way classification; variance components; random effects model 1. Introduction The random effects model is not fraught with questions about assumptions as is the mixed effects model. Concerns have been expressed over the reasonableness of assuming that the interaction term abij is tossed into the model independently of ai and bj . However, uncorrelatedness, which with normality becomes independence, does seem to emerge from finite sampling models that define the interaction to be a function of the main A and B effects. The problem usually of interest is to estimate the components of variance. The model (1) is referred to as a cross-classification model. A slightly different and equally important model is the nested model. For this latter model see (5) and the related discussion. 2. Estimation of variance components The standard method of moments estimators for a balanced design(i.e., = n ) are based on the expected mean squares for the sums of nij squares. The credentials of the estimators (4) are that they are uniform minimum variance unbiased estimators (UMVUE) under normal theory, and uniform minimum variance quadratic unbiased estimators (UMVQUE) in general. They do, however, suffer the embarrassment of sometimes being negative, except for .e which is always positive. The actual maximum likelihood estimators would occur on a boundary rather than being negative. The best way is to always adjust an estimate to zero rather than report a negative value. It should certainly be possible to construct improved estimators along the lines of the Klotz-Milton-Zacks estimators used in the one-way classification. However, the details on these estimators have not been worked out by anyone for the two-way classification. Estimating variance components from unbalanced data is not as straight-forward as from balanced data. This is so for two reasons. First, several methods of estimation are available (most of which reduce to the analysis of variance method for balanced data), but no one of them has yet been clearly established as superior to the others. Second, all the methods involve relatively cumbersome algebra; discussion of unbalanced data can therefore easily deteriorate into a welter of symbols, a situation we do our best (perhaps not successfully) to minimize here1. On the other hand, extremely unbalanced designs are a horror story. A number of different methods have been proposed for handling them, but all involve extensive algebraic manipulations. The technical detail required to carry out these analyses exceeds the limitations set for this article. On occasion factors A and B are such that it makes no sense to postulate the existence of interactions, so the terms abij should be dropped from (1). In this case .ab disappears from (3) and the estimators for .a and 1 Djordjevic V., Lepojevic V., Henderson?s approach to Variance Components estimation for unbalanced data, Facta Universitatis, Vol.2 No.1, 2004. pg. 59 Another variation on the model (1) gives rise to the nested model. In general, the nested model for components of variance problems occur more frequently in practice than does the cross-classification model. In the nested model the main effects for one factor, say, B, are missing in (1). The reason is that the entities creating the different levels of factor B are not the same for different levels of factor A. For example, the levels (subscript i ) of factor A might represent different litters, and the levels (subscript j) of factor B might be different animals, which are a different set for each litter. The additional subscript k might denote repeated measurements on each animal. To be specific, the formal model for the nested design is: and independence between the different lettered variables. It is customary with this model to use the symbol b rather than ab because the interpretation for this term has changed from synergism or interaction to one of a main effect nested inside another main effect. For a balanced design the method of moments estimators are based on the sums of squares: which have degrees of freedom I-1, I (J-1), and IJ(n-1) , respectively. The mean squares corresponding to (7) have the expectations: The increasing tier phenomenon exhibited in (8) holds for nested designs with more than two effects. The only complication arises when one or more of the estimates are negative. This is an indication that the corresponding variance components are zero or negligible. One might want to resent any negative estimates to zero, combine the adjacent sums of squares, and subtract the combined mean squares from the mean squares higher in the tier. Extension of these ideas to the unbalanced design does not represent as formidable a task for the nested design as it does for the crossed design. The sums of squares (7), appropriately modified for unbalanced designs, form the basis for the analysis. It is even possible to allow for varying numbers Ji of factor B for different levels of factor A. 3. Tests for variance components The appropriate test statistics for various hypothesis of interest can be determined by examining the expected mean squares in the table of analysis of variance. However, we encounter the difficulty that even under the normality assumption exact F tests may not be available for some of the   An analogous F statistic provides a test for H0:.b 2 =0 . Under the alternative no null hypotheses, these ratios are distributed as the appropriate ratios of multiplicative constants from (10) times central F random variables. Thus power calculations are made from central F tables for fixed effects models. The F tests of H :.2 =0 and H :.2 =0 mentioned in the 0 ab 0 a preceding paragraph are uniformly most powerful similar tests. However, they are not likelihood ratio tests, which are more complicated because of boundaries to the parameter space. Although their general use is not recommended because of their extreme sensitivity to no normality, confidence intervals can be constructed based on the distribution theory 10. The complicated method of Bulmer (1957), which is described in Scheffe [11 pg. 27-28], is available. However, the approximate method of Satterhwaite [10 pg. 110-114] may produce just as good results. The distribution theory for the sums of squares (7) used in conjunction with nested designs is straightforward and simple. To test the hypothesis H0:.b2 =0 one uses the F ratio MS (B)/MS(E), and to test H0:.a 2 =0 the appropriate ratio is MS (A)/MS (B). In all nested designs the higher line in the tier is always tested against the next lower line. If a conclusion is reached that .b2 =0 , then the test of H0:.a2 =0 could be improved by combining SS (B) and SS(E) to form a denominator sum of squares with I(J-1) + I J (n-1) degrees of freedom. Under alternative hypotheses these F ratios are distributed as central F ratios multiplied by the appropriate ratio of variances. This can be exploited to produce confidence intervals on some variance ratios. However, one still needs to rely on the approximate Satterhwaite [10 pg. 110-114] approach for constructing intervals on individual components. 4. Estimations of individual effects and overall mean For the two-way crossed classification with random effects interest The classical approach would be to use the estimates ?^ij = yij. The idea would be to shrink the individual estimates toward the common mean as in. where the shrinking factor S depends on the sums of squares SS (E), SS (AB), SS(B), and SS(A) . Unfortunately, the specific details on the construction of an appropriate S have not been worked out for the two-way classification as they have been for the one-way classification. Alternatively, attention might center on estimating a1,, aI , or, equivalently, on the levels of factor B. Again, specific estimators have not been proposed to date for handling this situation. In the nested design one sometimes wants an estimate and confidence interval for ?. One typically uses ?^= y . In the balanced case this estimator has variance. This can be estimated by MS (A)/I J n. In the unbalanced case an estimate for the variability of y can be obtained by substituting estimates .^2, .^b2 and 2 into the expression for the variance of y . Alternative estimators using different weights may be worth considering in the unbalanced case. 5. Conclusion Analysis of variance (ANOVA) models have become widely used tools and play a fundamental role in much of the application of statistics today. In particular, ANOVA models involving random effects have found widespread application to experimental design in a variety of fields requiring Two-Way Analysis of Variance for Random Models measurements of variance, including agriculture, biology, animal breeding, applied genetics, econometrics, quality control, medicine, engineering, and social sciences. With a two-way classification there are two distinct factors affecting the observed responses. Each factor is investigated at a variety of different levels in an experiment, and the combination of the two factors at different levels form a cross-classification. In a two-way classification each factor can be either fixed or random. If both factors are random, the model is called a random effects model. Various estimators of variance components in the two-way crossed classification random effects model with one observation per cell are compared under the standard assumptions of normality and independence of the random effects. Mean squared error is used as the measure of performance. The estimators being compared are: the minimum variance unbiased, the restricted maximum likelihood, and several modifications of the unbiased and the restricted maximum likelihood estimators.

Emory Douglas: All Power to the People Essay -- Artists

Gun-slinging, militant-looking, irate adolescent African American men, women, and children: an incessant image employed by the revolutionary artist Emory Douglas. Douglas is perhaps one of the most iconic artists’ of the 20th century and has created thousands of influential protest images that remain unforgettable to this day. Through the use of compelling images Emory Douglas aided in defining the distinct visual aesthetic of the Black Panther Party’s newspapers, pamphlets, and posters. It was through such mediums that Douglas had the ability to enlighten and provoke a predominately illiterate and uneducated community via visual communication, illustrating that art can evolve into an overpowering device to precipitate social and political change. Emory Douglas was born and raised in Grand Rapids, Michigan, until 1951 when he and his mother relocated to the San Francisco Bay Area. At the time San Francisco was the hub of African American organizations that arranged events aimed at overthrowing the social injustices within the Bay Area’s black communities. As a minor immersed within the community Douglas became captivated by Charles Wilbert White, an African American social realist artist whom created various monochrome sketches and paintings, â€Å"transforming American scenes into iconic modernist narratives.† Not long after, Douglas was incarcerated at the Youth Training School in Ontario, California where he spent countless hours working in the penitentiary’s printery. It was not until the mid-1960’s when Douglas registered in the City College of San Francisco, majoring in commercial art and graphic design. Soon after, Douglas went to a Black Panthers rally, where he encountered Bob by Seale and Huey Newton; during ... ...ion. Tucson, AZ: John Brown Party, 1971, 1-2 Gaiter, Colette. â€Å"VISUALIZING A REVOLUTION: EMORY DOUGLAS AND THE BLACK PANTHER NEWSPAPER.† AIGA. 8 June 2005. http://www.aiga.org/visualizing-a-revolution-emory-dou... (accessed Mar. 9, 2012). Moyer, Carrie. â€Å"Minister of Culture: the Revolutionary Art of Emory Douglas.† Modern Painters 19, no.9 (2007): Art Full Text (H.W. Wilson), EBSCOhost (Apr. 11, 2012). Ross, Alice. â€Å"Emory Douglas - Interview.† Digital Arts. 26 Jan. 2009. http://www.digitalartsonline.co.uk/features/?FeatureID... (accessed Mar. 8, 2012), 2 Stewart, Sean. On the Ground: An Illustrated Anecdotal History of the Sixties Underground Press in the U.S.. Oakland, CA: PM Press, 2011, 28 Wikipedia. Wikimedia Foundation, Inc., s.v. â€Å"Emory Douglas.† http://en.wikipedia.org/wiki/Emory_Douglas (accessed March. 7, 2012).

Health Care Essay

Under indemnity insurance, the insurers guarantee payment to any licensed health care provider for all covered services. In recent years, fee-for-service indemnity plans also have grown more similar to man- aged care plans. Traditionally, fee-for-service indemnity plans gave individuals an unrestricted choice of licensed health care professionals. Care providers were free to determine which services were appropriate based on their professional judgment and were reimbursed for all the care they delivered. Today, nearly all fee-for-service plans have adopted some form of the utilization- management strategies formerly associated with managed care, such as preauthorization for hospitalization or referral to specialists. In my opinion the indemnity design will not be around in the next thirty years it is losing favor with employers. HMOs are the most tightly closed of all managed care systems. HMOs typically provide no coverage for out-of-plan services and require health care providers to share the financial risk for the amount of services provided. Data have shown that, at an aggregate level, premiums are lower n communities with a higher penetration of HMO plans and more intense competition among health plans (Stein, 1997). Restricted provider networks and a strong reliance on primary care physicians have been major forces allowing HMOs to keep health care premiums below those of other plans. However, the tradeoff between low cost and limited provider choice has been unacceptable to ma ny consumers, as evidenced by the recent trend toward looser and more expensive forms of managed care, such as PPOs and POS plans (Sisk, Gorman, Reisinger, 1996, Stroul, 1996). This trend is likely to raise premium levels and individual copayments and deductibles in the future. Because of the rising of premiums I predict that within the next thirty years HMOs will slowly fade away. In the mid-80s, legislation allowing insurers to contract selectively with different providers at different reimbursement rates provided a starting ground for the development of preferred provider organizations (PPOs) (Gabel &Ermann 1985). Generally, the term PPO refers to a third-party payer system that contracts certain providers for patient services on a discounted fee-for-service basis. Patients are encouraged to select these â€Å"preferred providers† with economic incentives including broader coverage, and in-network providers gain a larger patient base in return for their discounted services (Gabel & Ermann 1985). Unlike health maintenance organization (HMO) coverage, PPO patients retain the ability to go out-of-network for care. Although patients are responsible for most of the costs in such situations, there is usually a yearly limit on out-of-pocket payments that allows patients who experience severe chronic conditions to access long-term out-of-network specialty care without prohibitive costs. PPOs have made a huge leap in the past two decades as a model for health insurance (Sengupta & Kreie 2011): In 1988, PPOs represented 11 percent of employer-provided health care; by 2005, 85 percent of large employers offered at least one PPO option (Hirth, Grazier, Chernew, & Okeke, 2007). PPO will be around for the next thirty years because it allows PPO patients to retain the ability to go out-of-network for care. Very long paragraph here 2. Debate whether or not private health insurance violates the standard principles of insurance. Don’t start at bottom of page. Start at top of next page PHI began with coverage principally for hospital and physicians’ services. As political debates in the United States continue regarding health insurance, there has been considerable argument and criticism about the overhead generated by the PHI mechanism (Woolhandler & Himmelstein, 1991). From1960 to 2000, the total overhead costs of PHI averaged about 12 percent of premiums, ranging from about 9 to 16 percent. This total includes administrative costs, taxes, profits and other nonbenefit expenses (Lemieux, 2005). The full cost of PHI administration to Americans including insurer’s administrative cost, net additions to reserves, rate credits and policyholder dividends, premium taxes, and carrier’s profits or losses is estimated to be about 15 percent of total national health expenditures. None of this including the formidable â€Å"hidden† costs to providers for filing claims, collecting data on quality of care, and submitting various financial reports to insurers. Private health insurance is made up of the three principal entities, which is commercial carriers, the Blues, and HMOs plus self- funded plans. The important of PHI as a source of financing for personal health care expenditures has increased slowly, but steadily (Williams & Torrens, 2010). Although there is no denying that some government health insurance programs such as Medicare deliver benefits at far less administrative cost per dollar of reimbursement than the PHI industry, health insurance by itself is not always a profitable business for insurers. This is particularly true at the high end of the market, where self-funded administrative-services-only customers generate relatively narrow profit margins for most group insurers. Indeed, the health insurance industry suffered a net underwriting loss in many years since 1976. Health insurance is beneficial for many insurers because it servers as a vehicle for selling other, more profitable products (such as insurance) and because health insurance premiums generate revenues via investment income (Whitted, 2001). A number of health insurance entities (including commercial carriers and the blue) offer insurance coverage for individuals and their families (pPauly & Percy, 2000). Some f the nation’s largest commercial accident and health insurers sell few or no individuals policies. Ordinary individual policies for basic medical (hospital and the physician coverage are extraordinarily expensive. This is because of adverse selection: insurers assume that the individual knows something that the insurance plan doesn’t future health needs. Therefore, the insurer adds on premium can easily reach $5,000 per year, even for HMO plans with extensive cost-sharing provisions. In addition, underwriting guidelines for individuals policies have become increasingly stringent; so many people who might wish to purchase coverage are not able to do so (Saver & Doescher, 2000). . Analyze the evolution of the promotion of health and disease prevention in the U. S. and identify the point at which a clear shift in the thinking in the dominant culture occurred residing in the greatest impact on the health care insurance system in the United States. Organized public health activities in the United States began in local seaport communities and only gradually expanded to state and federal government agencies. The Constitution of the United States reserves to the state all functions such as health not specifically earmarked to the federal government. For most of our country’s history, public health was an activity that was primarily carried out by a local or state governmental agency, and it was only after World War II that it was received as necessary or appropriate to have a federal cabinet-level Department of Health, Education, and Welfare. This development would suggest that our country views public health activities and perhaps health activities in general as a local and state matter; federal government involvement developed mostly after World War I, and mostly because of the abundance of federal tax revenues to be redistributed to states and local governments. The continuing efforts to reduce the size and scope of the federal government and to return basic functions and funds to local and state government in recent years may be seen as a continuation of this general idea (Williams & Torrens, 2010). According to (Williams &Torrens, 2010), organized public health activities in the United States began with the quarantine and isolation of potential disease carriers, moved on to the improvement of sanitation in the environment, then went on to focus on immunization of children and control of individuals with contagious infectious disease. Almost all the activities focused on acute infectious diseases, regardless of their origins. This has given rise to an unofficial and generally unspoken agreement that the primary mission of organized public health efforts in the United States should be toward the prevention and control of acute illness rather than chronic disease. Organized public health efforts in the United States have focused on out breaks of illness such as diphtheria and polio because of the suddenness and the severity of any outbreaks of this illness. The much more serious and public health problems of the United States are no longer-term degenerative conditions such as heart disease, cancer, and stroke. Because of the unfortunate political controversies of the 1930’s around a possible national health insurance program, it would have to be admitted that there has been a relatively guarded relationship between the private medical sector and organized public health agencies throughout the country. As long as the organized public health agencies kept to the more traditional public health role of sanitation, immunizations, and infectious diseases control, their activities were generally supported by the private sector. However, whenever the public health sector became more active in the provision of general health services or in the governance or planning facilities and personnel in the private sector, considerable opposition arose. As a result of this opposition, organized public health agencies have been rather cautious about expanding their efforts beyond the boundaries of what were perceived as â€Å"tradition† public health activities (Williams & Torrens, 2010). It is assumed that public health must protect the interest of the public in obtaining access to appropriate health services of high quality, but that has not been an accept role for organized public health in the United States until now. References Gabel J, & Ermann D. (1985). Preferred provider organizations: performance, problems, and promise. Health Aff (Millwood). 1985; 4(1): 24-40. Hirth RA, Grazier KL, Chernew ME, Okeke EN. Insurers’ competitive strategy and enrollment in newly offered preferred provider organizations (PPOs). Inquiry. 2007; 44(4): 400-411. Lemieux, jJ. (2005). Perspective: Administrative cost of private health insurance plans. Washington, DC: America’s Health Plans. Pauly, M. V. , & Percy, A M. (2000). Cost and performance: A comparison of the individual and the group health insurance markets. Journal of the health politics policy and law, 25,9-26 Saver, B. G. , & Doescher, M. P. (2000). To buy, or not to buy: Factors associated with the purchase of non- group private health insurance. Medical Care, 38, 141-151. Sengupta B, & Kreier RE. (2011) A dynamic model of health plan choice from a real options perspective. Atlantic Econ J. 2011; 39(4): 401-419. Sisk, J. E. , Gorman, S. A. , & Reisinger, A. L. , List all authors here etal(1996). EvaluationofMedicaidmanagedcare: Satisfaction, accessanduse. ?Journal of the American Medical Association (1996) 276:50–55. Stein, R. E. K. , ed. Health care for children: What’s right, what’s wrong, what’s next. New York: United Hospital Fund, 1997. Stroll, B. , ed. (Year) Children’s mental health: Creating systems of care in a changing society. Baltimore, MD: Paul H. Brookes Publishing Company, 1996. Whitted, G. (2001). In S. J. Williams & P. J. Torrens (Eds. ), Introduction to health services (6th ed. ). Albany, NY, Delmar. Williams, S. J. , Torrens, P. R. , (2010). Introduction t health services (7th ed. ). Albany, NY, Delmar. Woodhandler, S. , & Himmelstein, D. (1991). The deteriorating administrative efficiency of the U. S. health care system. New England Journal of Medicine, 324(18), 1253-1258.

Is friar Lawrence to blame Essay

Friar Lawrence is the local Roman Catholic priest who is also an apothecary. He is the confident of both Romeo and Juliet and plays an important role in the fate of both. He is more than aware of the family’s feuding and seems to be well thought of by everybody. Romeo respects Friar Lawrence very much and sees him as a father figure. When Romeo feels suicidal when he has just been banished from Verona, the Friar tells him to straighten up. `This is dear mercy, and thou seest it not. ` When Romeo confesses that he wants to marry Juliet, Friar Lawrence teases Romeo about how fickle in love he is. `Is Rosaline, that thou didst love so dear, So soon forsaken? ` But in spite of this he still agrees to marry the young couple as he hopes it will end the family’s feuding. `For this alliance may so happy prove, To turn your households’ rancour to pure love. ` He only agreed to it because he had their best interests at heart. I don’t think he is to blame for marrying them as he did what he thought was right. And even if Friar Lawrence hadn’t married them, who’s to say that another Friar wouldn’t have married them? Romeo and Juliet both feel as if they can turn to him when they are in trouble. We see this when Romeo has been banished, because he stabbed Tybalt and Juliet has been told that she must marry Paris. Romeo doesn’t seem as if he is very close to either of his parents but Juliet usually has her nurse to turn to, but even the nurse, in the end the nurse rejects her too. `I think it best u married with the county. ` So in desperation each one goes to Friar Lawrence for help. Romeo is helped by being giving him a hide out in Mantua until Juliet can meet him. Juliet, being ordered to marry Paris, has gone to Friar Lawrence in desperation and has asked for help. First of all the Friar has to help Romeo escape. He allows Romeo to spend one night with Juliet, but before dawn he must leave. It is at this time that Juliet has been told to marry Paris. So she goes to the Friar. Friar Lawrence then devises a plan that will ensure Juliet and Romeo’s happiness. In some ways this shows us the Friars cunning, we are also shown that he is quite a smart man. We know that the friar is also an apothecary, so he gives Juliet a potion, which will make Juliet look as if she is dead. When she is taken to the family tomb, the friar will wait until she awakens, and by which time Romeo will hopefully already be there and take Juliet away. While devising this plan he still has the families’ interests at heart. He is only doing this in the hope that the two families, Montague and Capulet will reconcile. Although it could be argued, that he only helped them because he wanted to save himself. I personally don’t think so. I think he would have known that he would have had to `cover his tracks` before he married the couple. He seems like a prudent man, one that will think things through; he would never have married them and helped them elope for selfish reasons. But the Friar did deceive both the Capulet and Montague parents. And although this was wrong, it was also, in my opinion justified. I think this because he didn’t really have much choice. If he had wanted to succeed with his plan then they would have had to be kept in the dark, there was no other way round it. If they had been told, neither parent would have agreed to let their child associate with the child of the enemy. Priests do have the best interests of their parishes at heart and they do not lie and deceive people needlessly, but I think in this case it was allowed. Even though everything didn’t turn out the way it should have, it achieved the one thing the Friar wanted: peace between the families. And although the price paid was very high, almost too high, the motivation was honourable he genuinely didn’t act selfishly. I think everyone, in the play recognised this including the prince. `We still have known thee for a holy man. ` Friar Lawrence really was a decent man, even if his plans did go slightly wrong.

Police use of Racial Profiling Essays

Police use of Racial Profiling Essays Police use of Racial Profiling Paper Police use of Racial Profiling Paper I disagree with the vast majority, because I think the use of race in deciding whom to treat as a suspect is Just one of many factors in a police officers decision. According to Nadia Karee Nettle Racial profiling is a form of discrimination by which law enforcement uses a persons race or cultural background as the primary reason to suspect that the individual has broken the law (Para. 1). Others that oppose this view say that it is racist to consider race as a factor in any situation because it is treating a person of one race differently than a person of another race. Law enforcement considering the race of an individual is viewed as a violation of a persons right to equality under the law. And this violation is very accurate if and only if the race is the only factor being considered when suspecting an individual otherwise it is Just another observation about the situation that the law enforcement officer makes. Racial profiling is normally associated with racism even though the act of racial profiling is not inherently racist. According to Randall Kennedy (1999) racial profiling is not necessarily evil or immoral, but it is the use of facts and the environment that make a police officer use race as a factor in deciding whether or not to be suspicious of a certain person (Para. 6). An example of using many factors to identify a suspect would be when a Kansas City DEAD officer stopped a young black man who was acting in suspicious ways in an airport, and information regarding the local area said that gangs of young black men have been moving drugs into the area through major transportation hubs such as the airport (Kennedy, 1999, Para. 1). With the information the agent was given he was able to make an educated guess as to whether or not the young man was worth any more of his attention. When that young man was detained it was discovered that he did indeed have illegal substances on him with the intent to transport it. This situation is a great example of how the police use context clues and piece together a bigger picture using many factors, and one of those factors happens to be race. The Department of Justice fact sheet on racial profiling (2003) states that racial profiling is considered acceptable to use in order to identify terrorists (p. 5). It is considered acceptable to use race in order to narrow a search field so that the chances of finding a terrorist are even greater. This would make sense of why random searches are not actually random, but there is a set of factors that come into play not saying that every random search has a purpose, but it would be pointless to randomly search a 10 year old girl caring a teddy bear with her pregnant mother. Even a federal agency has acknowledged that in order to narrow a search field the use of race as a factor is acceptable. Just because race is used to help narrow a suspect field does not mean racial profiling is racist. Police encounter accusations of racism every day and that is because police have Jobs that require hem to deal with all kinds of people for hours on end, and those people are of all different types of races. Police officers stop people all day long and one of the many ways they do that is with a traffic stop. Police are always in danger because the Job is a dangerous one, but traffic stops are one of the most dangerous occasions that a police officer encounters, because the person the officer Just stopped is a complete stranger and the officer has no idea what is inside the car or if the person has a weapon. It is one of the few occasions where an officer is likely to have zero idea of hat he or she is walking into. Since there is such a big danger with traffic stops the officer must use every piece of information that can be gathered, one of which would be the race of the driver. According to Vito Walsh (2008) when officers go to the police academy to learn to become a police officer they are taught how to identify odd behavior and driving activities as criminal behavior ( p. 91). Police can use intuition and experience to make a decision about a situation. For example if an area has a high rate of Latino Americans participating in illegal immigration a police officer will be more suspicious of a windowless van driving around following every road law to the finest detail with a Latino American driving than he/she would be of a minivan with a 35 year old white female driving. It would be the logical decision to pull over the windowless van because all of the clues point to that being the more likely option, because all of the information the police officer has about the area, and his training tell him that the windowless van would pose a more likely candidate for transporting illegal immigrants. Police discretion involves reasonable suspicion and probable cause. Probable cause Exists when facts and circumstances within a police officers knowledge, which are based on reasonably trustworthy information, are sufficient to warrant a person of reasonable caution to believe that an offense has been or is being committed by the person being arrested (Cox, Macrame, Carmella, 2014, p. 207). The courts system of the United States places discretionary power in the hands of the police and these two terms are deeply rooted in the way police operate when they approach any situation. One of the tools of discretion police officers have is reasonable suspicion, and it is defined as the Objective facts and logical conclusions given a specific set of circumstances (Cox, Macrame, Carmella, 2014, p. 208). Reasonable suspicion is a very good representation of how the police are told to observe facts and make logical conclusions about every situation. Establishing reasonable suspicion is a tough Job though because it needs to be backed up in court if it makes it that far. The situations where reasonable suspicion is most applicable would be with a stop and frisk. As mentioned below the court case Terry v. Ohio established reasonable suspicion as enough to stop an individual and frisk them. Seeing as how reasonable suspicion is based on objective facts and logical conclusions then the law views anything that makes coming to a logical conclusion using objective facts, such as race, perfectly acceptable for police officers use (Cox, Macrame, Carmella, 2014, p. 208). The police are given many powers by the people of the United States in order to serve and protect the public. One of those powers is a terry stop this is the result of a supreme court case know as Terry v. Ohio. This case gives the police power to stop somebody as long as the officer has reasonable suspicion of criminal behavior. They are also allowed to frisk the individual, but only if the officer has reason to believe the individual poses a threat to the officer or other citizens (Nubian Thompson, 1968, p. 33) Although the action that the court has approved is at its heart not racist, because the United States legal system views everyone equally, that doesnt stop some police officers from abusing it and choosing to make racist decisions. In this aspect we trust the police to use their discretion and actually make an unbiased decision that is best for the protection of everybodys rights. The police are given a very large amount of discretion in terms of how they treat people and a pproach situations. We trust them to follow the law and protect everyones freedoms, but there will always be people that abuse the power that is given to them. Stop and frisk policies have become a hot button issue because it leaves the choice of whom to stop and frisk up to the police office. There was a situation in New York city where mayor Michael R. Bloomberg enacted a law giving the police the power to stop anyone if the police officer reasonably suspects he or she is in danger (NYC Criminal Procedure, 2014). According to Mayor Bloomberg in a Huffing Post article (2013) Ninety percent of all people killed in our city -? and 90 percent of all those who commit the murders and other violent crimes -? are black and Hispanic (Para. ). The reason for the majority of people being stopped belonging to a minority is because the areas where the police officers are sent to are areas where a large number of minorities live and the crime rate is really high, and the city feels that it would be more effective to apply police to these high crime areas (Bloomberg, 2013, Para. 2-8). The results are eradicable if this is the case. The only logical conc lusion is that more African Americans, Latino, and other minorities will be stopped and frisked if more police are sent to areas with a high population of minorities. The police are not sent to these areas because of the minorities in the area, but instead they are sent there because of the high crime rates with the intent of lowering that high crime rate and making those areas safer for the innocent residents who are victimized by the criminals that do live in the area. Since there is a lot of discretion given to police officers there are always those few officers that abuse the power given to them and end up making decisions such as whom to stop and frisk based entirely on the race of the individual. Those police officers actions are wrong and not the type of racial profiling that is acceptable. Officers that do use race as a sole factor in determining a suspect cannot properly call their actions racial profiling, but instead those actions should be considered acts of racism. Racist behavior is not tolerated in law enforcement because that would be bringing personal biases into the work place and hat would compromise the individual officers ability to make an unbiased decision. Racist decisions have no place in law enforcement because they create a situation where the eyes of the law do not view someone as equal, but instead are viewed as lesser than other human beings. Police officers who make racist decisions have no place in law enforcement and they are the few that tarnish the reputation of the many. It was previously mentioned that there are many factors leading into a police officer making his/her decision to treat someone as a suspect or not. The police use sat experiences as well as their training in order to identify a suspect using many factors. The environment that the officer is in, including the characteristics and crime rates of the neighborhood plays a part in his/her decision making process. Another group of factors that the police take into consideration is the characteristics of the person being looking at. Factors such as gender, age, and the size to formulate a profile of this individual and decide whether or not to be suspicious of the individual being observed (Albert, Bennett, Dunham, ; Stressing, 2005, p. 369). If the arson of interest is in a neighborhood with a high crime rate and there have been past occurrences of violence towards police officers, then the officer in the area will be more likely to treat everyone with more suspicion. Also if the individual in question is a young Japanese man dressed in a gang outfit in a neighborhood known for its connection to the Japanese mafia then the police officer will take interest in that person, and possibly pursue or stop him. The factors involved in a police officers decisions are a lot more complex than we think, because police look at the environment and the individual both at the same time. Sometimes the complicated line of decision making police officers use may lead the public to make blanket perception about all members of law enforcement. The main reason that citizens disagree with racial profiling is that the public view it as racist and therefore an unfavorable action. Those who oppose racial profiling claim it is racist to use race as a factor at all in deciding to treat someone as a suspect. I disagree with that statement, because the police use race as an aid to help them make a more precise decision about the person they suspect of a crime. There is statistical evidence Enid officers choice to suspect one race over another while investigating a crime. According to the Bis Uniform Crime Report in table AAA (2011) there are crimes that are more common among certain races of people like how 65% of the people arrested for forcible rape were white, and 55. 6% of arrests for robbery were African Americans (FBI). Also in the same report shows that 72. 9% of arson arrests are of someone who is white, and 86. 7% of arrests for gambling are African American (FBI). These statistics go to show that there are indeed certain racial groups of people that commit certain rimes more than others. These particular tables are of national data so the exact numbers vary in every local area so the officers in their respective precincts react differently to the data they collect. Data gathered through research influences something known as the police subculture, because the police react to new crime patterns and those are created using statistical evidence. The police subculture can be described as the shared values, attitudes, and norms created within the occupational and organizational environment of policing (Cox, Macrame, Carmella, 2014, p. 8). Police adopt a whole new view of the world whenever they start their Jobs, and they all adopt a similar if not exactly the same view. The reason this subculture would play such a huge role in all the factors a police officer uses to decide whom to suspect is because the police are always in danger with their line of work and they need every single tool at their disposal in order to protect themselves and other innocent civilians. Due to this subculture that all police become part of, the police in general view every citizen as a possible threat and danger to the public, and homeless, and that requires the police to use any and all environmental factors in order to make an educated decision. (Cox, Macrame, Carmella, 2014, p. 178). Racial profiling as defined before is intertwined with the police subculture and not viewed as a weapon against minorities but more as a tool to be used to aid the police in their efforts to prevent crime and keep the public safe from harm. When people stand up against racial profiling they are painting Just one group to be the subject of racial profiling, and those subjects are said to be the minority populations. Though he African American, Latino American, Asian American, etc.. Populations get profiled so do white Americans. The notable example of this would be the profiling of a serial killer. After a string of murders is identified as serial killings the next decision is to find the person responsible because they are extremely dangerous if they are left in society to run rampant. The police instantly start building a profile of the serial killer, and the first thing they do is assume the suspect will be white because statistically 80% of the serial killers that have been caught are white males (Sun, 2009, Para. ). This is racial profiling, and the police do it so that they can narrow their search field and not have to waste resources in unlikely areas. One could argue that the police doing such a thing makes it likely to skip over the actual suspect, but that is false because all the police are doing is limiting the search field. They are not completely eliminating groups of people from the suspect pool because they do not match the assumption that the serial killer would be white, because this is where the other factors that police look at come into play and they look beyond race for other elites. So it is a moot point to argue that racial profiling could skip over the actual perpetrator, because there are more factors being looked aside from the race of a profile. Race is not Just used against minorities when profiling a suspect, but it is also used against the majority sometimes so this would go to show that race is not used exclusively to target a single race or group of races. The police only use race as a factor in order to narrow a search pool and use their resources wisely while maximizing their effectiveness. Police officers all around the world wake up every ironing and put on a bullet proof vest and go to work to protect and serve the community. Police are forced to confront situations that a majority of Americans will never face in their lives and in order to make decisions the police need to use every aspect of every situation in order to make the safest and most logical decision. Police officers always will have to use the discretion that the citizens of the United States have given to them in order to make the best educated decision they can. Sometimes that Judgment is influenced by race, but that is not the sole factor in the average officers decision.

Free Essays on The Power and The Glory

The Extended Allegory in The Power and The Glory Graham Greene pieced together The Power and the Glory from his own personal memoirs in 1940 after a three-year trip to Mexico. Drawing from his own observations of a small town torn between the anti-religious laws of the secular government and the people’s religious beliefs, Greene created the story of a Catholic priest being pursued by the police to illustrate the conflicting relationship between the church and state (Greene 2-4). Greene used his experiences in Mexico to create an extended allegory that illustrates the conflict between the two world views and, in turn, reveals his own values and philosophy. Drawing from his experience in Mexico, Greene developed a "whiskey priest," a character introduced to Greene by a friend in Mexico in a story of a drunken priest that christened a child by the wrong name, to embody the religious world view. The priest, who remains nameless throughout the novel to emphasize his allegorical role, is less an individual than a symbol of the "Church [and] of the cumulative wisdom of the past, in short, of Western Humanism" (DeVitis 89). The priest, however, is seen as a traitor to the state and to his religion. The last Catholic priest in a secular Mexican state, the priest’s photograph is hung next to that of a notorious American gangster on the wall of the police office. The priest’s tendency towards gin, cowardliness, and his moral weakness make him a traitor to his faith and religious order. On the allegorical level of the novel, the priest’s flight from the police is seen as a "flight from God" and away from becoming a saint (DeV itis 90). Refu! sing to accept his destiny of being captured by the police and becoming a martyr for his faith, partially out of fear of pain and his own refusal to abandon the Catholic people of the state, his escape becomes a journey of self-recognition. Only after a "half-caste," a "Judas figure of evil and ... Free Essays on The Power and The Glory Free Essays on The Power and The Glory The Extended Allegory in The Power and The Glory Graham Greene pieced together The Power and the Glory from his own personal memoirs in 1940 after a three-year trip to Mexico. Drawing from his own observations of a small town torn between the anti-religious laws of the secular government and the people’s religious beliefs, Greene created the story of a Catholic priest being pursued by the police to illustrate the conflicting relationship between the church and state (Greene 2-4). Greene used his experiences in Mexico to create an extended allegory that illustrates the conflict between the two world views and, in turn, reveals his own values and philosophy. Drawing from his experience in Mexico, Greene developed a "whiskey priest," a character introduced to Greene by a friend in Mexico in a story of a drunken priest that christened a child by the wrong name, to embody the religious world view. The priest, who remains nameless throughout the novel to emphasize his allegorical role, is less an individual than a symbol of the "Church [and] of the cumulative wisdom of the past, in short, of Western Humanism" (DeVitis 89). The priest, however, is seen as a traitor to the state and to his religion. The last Catholic priest in a secular Mexican state, the priest’s photograph is hung next to that of a notorious American gangster on the wall of the police office. The priest’s tendency towards gin, cowardliness, and his moral weakness make him a traitor to his faith and religious order. On the allegorical level of the novel, the priest’s flight from the police is seen as a "flight from God" and away from becoming a saint (DeV itis 90). Refu! sing to accept his destiny of being captured by the police and becoming a martyr for his faith, partially out of fear of pain and his own refusal to abandon the Catholic people of the state, his escape becomes a journey of self-recognition. Only after a "half-caste," a "Judas figure of evil and ...

A View of Alex Garland’s Film, Ex Machina

A View of Alex Garland’s Film, Ex Machina In the bathroom scene in Ex Machina (2015), Caleb (Domhnall Gleeson) performs a test on himself, to see if he is an android like Ava, and, as he has just discovered, Kyoko. While one would think this scene should resolve the question, it only muddies the water. As Caleb examines himself in the mirror, green and blue digital effects flash on his face. Is this a function of the mirror, or a HUD of Caleb’s potentially robotic eyes? Or perhaps it is a non-diegetic element solely to heighten the viewer’s curiosity. Sound design plays an integral role in this scene as well. As he pulls at his teeth, small click sounds emanate from his mouth, which could be plastic pieces snapping, or just the sound of his fingers clicking on his teeth. The score features electronic instruments and synthesizers playing non-lyrical rising tones. This both reflects a mechanical mood, hinting that Caleb may be an android, and instills a sense of rising tension with the viewer, anxiously anticipat ing a reveal. The cinematography is vital to this scene’s function. The camera work toys with the viewer, first with quick, non-continuous cuts, followed by long, suspenseful shots, keeping the audience disoriented and unable to predict the pace of the scene. As the scene progresses, the lighting shifts to emphasize his bone structure, tantalizing the audience to see what is below his skin. One particular shot is composed so that Caleb’s arm and body form a triangle with his face obscured behind it. This separates the audience from Caleb, making the viewer wonder if they can trust and relate to him anymore. Is this a moment of revelation for him as he looks at his cut open arm? The framing of the shot, with his eye at the top of the triangle formed by his arm and body, is ever so slightly reminiscent of the Illuminati symbol, which could allude to the conspiracy facing Caleb. What is most compelling in this scene is Gleeson’s performance. What kind of human can cut deep into their own arm without so much as flinching or uttering a sound of pain? Though he begins the scene frantic and curious, he ends the scene staring at his reflection, unblinking in a very Terminator-like fashion. He ends the scene by punching the mirror, creating a shatter which very poetically mirrors the shatter on the glass between him and Ava. Though this ultimately proves to be a red herring, this scene all but convinces the viewer that Caleb is likewise a robot.

Leadership theories Research Paper Example | Topics and Well Written Essays - 2000 words

Leadership theories - Research Paper Example Leadership is ever green immortal and probably the most talked about topic. Perhaps the reason of its immortality is its relevance to our lives not only professional or business but personal and social life as well.It will not be an overstatement to say that leadership is that life-enriching and vital experiences which is crucial for our existence. Its scope is very vast which cannot be restricted to a single task, job, role or a certain organizational level. In this paper I will discuss in detail what is leadership? Different accepted styles of leadership, theories of leadership their merits and demerits and what was the need for the new theory to evaluate. It will basically be a comparative study of the two theories of leadership. What is leadership? Leadership is very vital and its importance is widely accepted. In order to understand fully different theories of leadership we first need to have a clear picture of what leadership is all about. It may sound simple but in fact leader ship is a very complex and complicated social process which depends not only the ways of thinking, vision, creativity, knowledge, skills characteristics and values of the leader but also the followers. Leadership is not all about aura and charisma of a person but a good leader is one who can see the clear picture of the present understands it’s various aspects and through his vision can guide its followers to the bright future. Good leadership (V.Gallos, 2008)is emotional; it compels drives and motivates you to achieve something. It is a continuous process of building and maintaining the relationship between the follower and the leader. In its spirit it is multidimensional which encompasses different skills, vision, process, map, issues, organization levels, cultures, policies, practices and issues. A good leader has to pass the test of time banking on the strengths and minimizing weaknesses while materializing the opportunities and avoiding the threats in the environment wit hout overreliance on any single person or process. Leadership Theories In the twentieth century theories about leadership started to evolve. Classical theories of leadership were based on traits of the leaders such remained the case for about thirty years and then it evolved to behavioral theory of leadership. There are basically six types of theories of leadership. Trait based leadership Contingency leadership Behavioral leadership Participative leadership Transactional leadership Transformational leadership All these theories concentrate only on the leader and do not take into account followers. It was observed that all these theories actually led to a prototypical leader. All the leaders were supposed to have a typical defined set of qualities, characteristics and a set of accepted and laudable behavior. This stereo type leader was a male white. These theories ignored diversity both in the gender and racial sense. According to different studies conducted these leadership theories had many biases. This will be discussed in detail below. Leader Categorization First of all we have to determine what we exactly mean by leader Categorization. Leader categorization theory (George R. Geothals, 2006) says that there are widely accepted and shared beliefs and perceptions about leaders their traits their behavior. Followers have specific and fixed views about general and specific task based upon preconceived ideas and notions about how a leader should be. It includes personal traits such as openness, active, initiator, visionary, focused, determined, interested,

Starbucks Failure in International Market Essay

Starbucks Failure in International Market - Essay Example The company that is the subject of this research is Starbucks, an international coffee and Spice Company that operates in over 60 countries in the global food and beverages industry. The company has invested in the food and drinks industry, which has become a target for many investors today. The company started from a humble beginning back in 1987 in the US under the leadership of Baldwin, Bowker, and Siegel, and now is one of the top international companies that supplies coffee products. As the pressure in the domestic market increased, the company management focused on international expansion to evade competition and market saturation. However, the company’s international expansion has faced a wide range of challenges due to the complexity of the international market. The weakness of the company hails from its inability to focus on the characteristics of the international market such as culture, competition, customer behavior patterns, which has led to losses. This article s eeks to detect the cause of Starbuck’s failure in the international market, Japan for this purpose, and develop strategies to overcome these challenges. Therefore, this piece of work will provide the company with a platform to succeed in the international market. In international strategy, organizations look for markets that are potential for their products and one that provides an opportunity for organizational development. One of the international markets that Starbucks has focused on is the Japanese market, one of the largest coffee consumer markets. A rapid development of the Japanese economy has been an attractive feature for many investors. As the economy stabilizes, the purchasing power of the consumers will increase and hence the demand will escalate. Therefore, the company’ choice for this market was a wise decision.

Creative Method of Reflexivity Essay Example | Topics and Well Written Essays - 2000 words

Creative Method of Reflexivity - Essay Example Since I feel the term â€Å"great leader† has been taken from a myth, which the parents and junior schoolteachers love to tell little kids. And even the different theories penned down by scholars about leadership can only be viewed as their fantasies and aspirations about how a leader should be. Disclaimer: All of my above criticism applies if I limit my scope to the political and societal big wheels of the current world only. I may be a cynic but I do whole-heartedly respect the leaders of once upon a time. The god sends that saved and made nations. Therefore, to the keep the derision out of my journal, I’d rather focus on my journey on the leadership trail as I relate my days to the class lectures and discussions I participate. Dated: September 9, 2011 Entry 2 – My Leader After attending each lecture on leadership, I get home with a new picture of leadership in my mind. From the books I’ve read I’ve learnt that to lead one shall be determined, foc used, reliable, decisive, enthusiastic, and courageous and the list goes on. And above all a true leader must possess the charm to draw attention, to create followers and to instigate a movement. Just thinking about the ingredients of perfect leadership creates an image in my mind. A man (no offense meant to females here, since I know leadership exists in the bearings of a human irrespective of sex, class, race, age or nationality) who looks physically fit, standing impeccably dressed facing an expectant crowd with honest, experienced, intelligent eyes, bearing a smile full of promise and unswerving confidence. This is my leader. If we try to fit a face into the picture my mind conjured up, Mr. Barack Obama may be the most likely candidate. Although I’m not in accord with his political motives and certain decisions he makes as a politician, I have high regard for his commitment to his people and country. A black presiding over a nation of whites certainly puts to proof the gr eatness of this man. Fear of social acceptance, I believe, is a fear not so easy to surmount. I wonder if Mr. Obama ever saw that as an obstacle. An average person would surely be traumatized at even the prospect of standing up to be elected as a prospective leader and anticipate acceptance from the very people whose ancestors had been compulsive racists. But Mr. Obama is not an ordinary man. He never was. Dated: September 17, 2011 Entry 3 – Perceptions My last entry dated September 9 helped me sketch out the leader I aspired to have to help me bring about the changes I want in the world around me. When I reread that entry two days ago I got fascinated about the leader figures that inhabit the minds of people around me. I sent messages to my friends and family via cell phone asking who a leader is or placed the question when I met them in class or at home. The one-liner statements they gave are not their comprehensive descriptions of a leader surely, but they presented me wit h interesting angles to â€Å"Aspired Leaders†. Relative 1: â€Å"One who can influence the decisions made by others.† This image on the right definitely goes with the description presented by my relative. There is no greater influence than influence at the point of a gun. Ironically, the

Writting assignment Essay Example | Topics and Well Written Essays - 500 words

Writting assignment - Essay Example Contrary, gender roles in tribal society are defined by the individual’s capability. Although women have the primary responsibility for domestic roles, other tribes allow women to take part in subsistence food production. Men are involved in the tough task, such as hunting and gathering which is occasioned during drought (Scupin Chapter 8). At times, both genders participate in agriculture making it a shared responsibility. The gender roles in the two societies are based on food production. In the band society, the role of the women is valued so much that they are not allowed to participate in dangerous assignments. Because of this, their roles revolve around domestic duties and caring of home gardens, which the society perceives to be safe. Similarly, the home gardens are next to their houses that they can easily manage. Similarly, the inadequacy of food supplies during dry spells makes men resort to other avenues other than farming. They resort to gathering food through hunting. This is a hard duty, which women are not performing (Erickson 16). Therefore, availability of food also play a role in reinforcing gender roles. On the other hand, tribes are not involved in gender role specialization as in the case of the band. Women play attention to food production because of the sedentary life that this society lives. They take actions towards preserving what they have (Otte). Similarly, any of the gender can take part in food production since they are all available for the task. In the band society, there is a division of labor where women play different roles in the food production. There are some roles such preparing the fields for planting that women do not do. This is left for men because it is a task, which demands a lot (Otte). Because of this, there is inequality in terms of gender. Both genders are not equal and participate in different levels in food production. On the other hand, tribal society has a relationship

Project management Essay Example | Topics and Well Written Essays - 250 words - 21

Project management - Essay Example Product description- Clients will be enabled to track their asset managements with the firm, trade and access securities at their door steps and any other service offered by the organizations such as credit facilities. Each of the customers will be provided with their respective business numbers which enables them to view transactions from our website. Milestone- To determine the project progress, their will be weekly meetings that provides for analysis in the project development. Various cost reviews are likely to take place to ensure the cost estimates are adhered to. Time periods will be maintained as determined by the critical path analysis while every stakeholder is expected work on their assigned roles. Rough Order of Magnitude- The cost of the project will be relatively sums that are derived at by the project manager but limited to the amounts that do not negatively affect the financial base of the company. It is expected to last for a period of three months beginning the month of March. Key initial personnel- Project development manager will be the key leader in the project working very closely with IT manager. He will be expected to report to the chief executive officer on weekly basis to provide briefings which will be addressed to the board of the

Creative Method of Reflexivity Essay Example | Topics and Well Written Essays - 2000 words

Creative Method of Reflexivity - Essay Example Since I feel the term â€Å"great leader† has been taken from a myth, which the parents and junior schoolteachers love to tell little kids. And even the different theories penned down by scholars about leadership can only be viewed as their fantasies and aspirations about how a leader should be. Disclaimer: All of my above criticism applies if I limit my scope to the political and societal big wheels of the current world only. I may be a cynic but I do whole-heartedly respect the leaders of once upon a time. The god sends that saved and made nations. Therefore, to the keep the derision out of my journal, I’d rather focus on my journey on the leadership trail as I relate my days to the class lectures and discussions I participate. Dated: September 9, 2011 Entry 2 – My Leader After attending each lecture on leadership, I get home with a new picture of leadership in my mind. From the books I’ve read I’ve learnt that to lead one shall be determined, foc used, reliable, decisive, enthusiastic, and courageous and the list goes on. And above all a true leader must possess the charm to draw attention, to create followers and to instigate a movement. Just thinking about the ingredients of perfect leadership creates an image in my mind. A man (no offense meant to females here, since I know leadership exists in the bearings of a human irrespective of sex, class, race, age or nationality) who looks physically fit, standing impeccably dressed facing an expectant crowd with honest, experienced, intelligent eyes, bearing a smile full of promise and unswerving confidence. This is my leader. If we try to fit a face into the picture my mind conjured up, Mr. Barack Obama may be the most likely candidate. Although I’m not in accord with his political motives and certain decisions he makes as a politician, I have high regard for his commitment to his people and country. A black presiding over a nation of whites certainly puts to proof the gr eatness of this man. Fear of social acceptance, I believe, is a fear not so easy to surmount. I wonder if Mr. Obama ever saw that as an obstacle. An average person would surely be traumatized at even the prospect of standing up to be elected as a prospective leader and anticipate acceptance from the very people whose ancestors had been compulsive racists. But Mr. Obama is not an ordinary man. He never was. Dated: September 17, 2011 Entry 3 – Perceptions My last entry dated September 9 helped me sketch out the leader I aspired to have to help me bring about the changes I want in the world around me. When I reread that entry two days ago I got fascinated about the leader figures that inhabit the minds of people around me. I sent messages to my friends and family via cell phone asking who a leader is or placed the question when I met them in class or at home. The one-liner statements they gave are not their comprehensive descriptions of a leader surely, but they presented me wit h interesting angles to â€Å"Aspired Leaders†. Relative 1: â€Å"One who can influence the decisions made by others.† This image on the right definitely goes with the description presented by my relative. There is no greater influence than influence at the point of a gun. Ironically, the

Project management Essay Example | Topics and Well Written Essays - 250 words - 21

Project management - Essay Example Product description- Clients will be enabled to track their asset managements with the firm, trade and access securities at their door steps and any other service offered by the organizations such as credit facilities. Each of the customers will be provided with their respective business numbers which enables them to view transactions from our website. Milestone- To determine the project progress, their will be weekly meetings that provides for analysis in the project development. Various cost reviews are likely to take place to ensure the cost estimates are adhered to. Time periods will be maintained as determined by the critical path analysis while every stakeholder is expected work on their assigned roles. Rough Order of Magnitude- The cost of the project will be relatively sums that are derived at by the project manager but limited to the amounts that do not negatively affect the financial base of the company. It is expected to last for a period of three months beginning the month of March. Key initial personnel- Project development manager will be the key leader in the project working very closely with IT manager. He will be expected to report to the chief executive officer on weekly basis to provide briefings which will be addressed to the board of the

The secret sharer Essay Example for Free

The secret sharer Essay The secret sharer by Joseph Conrad, is a tale of two strangers who meet in unusual circumstances. Legatt who was the first mate of the Sephora, escapes his ship where he was held captive after murdering a member of his crew. He swims to another ship and admits the whole truth to the captain. Both the captain and Legatt have bad relationships with their crew and they empathise with each other. Legatt is to be kept secret from the crew. His secrets are that he has murdered and is hiding to escape punishment and death. The captains secrets are that his men, the ship and the responsibility of his first command daunt him. The two of them share these secrets with each other and an intense relationship is built between them. Thus giving the title The secret sharer.. The captain and Legatt share physical similarities, they are the same size. My sleeping suit was just right for his size (pg6-7) And they share a very close resemblance of each other; this is reflected in the description of Legatt by the captain. The shadowy, dark head, like mine (pg 7) Legatt and the captain share very similar backgrounds, which draw a closeness and bond between these two men. They both attended the same sea school. Youre a Conway boy? (pg 7) And there was only a two-year difference in age. . but being a couple of years older (pg 7) Throughout the story you can feel the connection Legatt and the captain share by both feeling complete strangers on board the ships. I knew very little of my officers! (pg 2) The complete lack of knowledge and bond is felt here between the captain and his crew. In the beginning of the story, the captain is very uneasy when he is thrown into the position of captain, of a ship traveling a long and arduous journey. The captain begins to feel insecure about running his ship and questions his ability to lead his ship. During one of the first nights on board the ship, the captain demonstrates his thoughts of insecurity and self-consciousness, when he does something that a captain would not normally do: he plans to take part in a night watch. I felt painfully that I a stranger- was doing something unusual when I directed him to let all hands turn in without getting an anchor watch. (pg 4) The captain is so self- conscious and insecure about his actions that he reacts almost painfully to the crews judgement of his orders. The captain states that he perceives himself to be a stranger amongst the others. Among his insecurities, the captain also sees himself as a stranger to himself and not fit to run his own ship. But what I felt most was my being a stranger to the ship: and if all the truth must be told, I was some what of a stranger to myself. The captain feels isolated and completely in the dark where his crew and ship are concerned, he is a complete stranger to them. . ship of which, I knew nothing, manned by men of whom I knew very little more. (pg 4) Legatt and the captain are both aware of feeling strangers aboard the ship, this draws a bond between them and closeness and understanding of each other builds their relationship. My second mate. But I dont know much more of the fellow than you do(pg 12) I was almost as much of a stranger on board as himself (pg 12)

Impact of Financial Leverage on Investment

Impact of Financial Leverage on Investment The term Investment is frequently used in jargon of economics, business management and finance. According to economic theories, investment is defined as the per-unit production of goods, which have not been consumed, but will however, be used for the purpose of future production. The decision for investment, also referred to as capital budgeting decision, is regarded as one of the key decisions of an entity. Leverage is a method of corporate funding in which a higher proportion of funds is raised through borrowing than stock issue. It is measured as the ratio of total debt to total assets; greater the amount of debt, greater the financial leverage. Financial Leverage is the ability of a company to earn more on its assets by taking on debt that allows it to buy or invest more in order to expand. Nowadays financial leverage is viewed as an important attribute of capital structure alongside equity and retained earnings. Financial leverage benefits common stockholders as long as the borrowed funds generate a return greater than the cost of borrowing, although the increased risk can offset the general cost of capital. In the past years, a large body of the literature has provided robust empirical evidence that financial factors have a significant impact on the investment decisions of firms. While traditional research on investment was based on the neoclassical theory of optimal capital accumulation (where under the assumption of perfect capital markets, the cost of financing does not depend on the firms financial position), more recent literature has increasingly incorporated frictions such as asymmetric information and agency problems as a source behind the relevance of the degree of financial pressure faced by the firm in determining the availability and the costs of external financing This chapter will seek to enclose literature on the impact of financial leverage on investment and other factors that may affect investment in firms. 1.1 Modigliani Miller (MM) 1958 theory with no taxation In what has been hailed as the most influential set of financial papers ever published, Franco Modigliani and Merton Miller addressed capital structure in a rigorous, scientific fashion, and their study set off a chain of research that continues to this day. Modigliani and Miller (1958) argued that the investment policy of a firm should be based only on those factors that will increase the profitability, cash flow or net worth of a firm. The MM view is that companies which operate in the same type of business and which have similar operating risks must have the same total value, irrespective of their capital structures. It is based on the belief that the value of a company depends upon the future operating income generated by its assets. The way in which this income is split between returns to debt holders and returns to equity should make no difference to the total value of the firm. Thus the total value of the firm will not change with gearing, and therefore neither will its Weighted Average Cost of Capita (Pandey, 1995). Many empirical literatures have challenged the leverage irrelevance theorem of Modigliani and Miller. The irrelevance proposition of Modigliani and Miller will be valid only if the perfect market assumptions underlying their analysis are satisfied Under the original MM propositions, leverage and investment were unrelated. If a firm had profitable investment projects, it could obtain funding for these projects regardless of the nature of its current balance sheet. 1.2 Modigliani Miller 1963 theory with tax M M (1963) found that the corporation tax system carries a distortion under which returns to debt holders (interest) are tax deductible to the firm, whereas returns to equity holders are not. They therefore concluded that geared companies have an advantage over ungeared companies, i.e. they pay less tax and will have a greater market value and a lower WACC. Following this research, the consensus that emerged was that tax is positively correlated to debt (Graham 1995, Miller 1977) and is considered a major influence in the debt policy decision. Modigliani et al (1963) argued that we should not waste our limited worrying capacity on second-order and largely self correcting problems like financial leveragingà ¢Ã¢â€š ¬Ã… ¸. That is firms should not be worried about growth as long as they have good projects in hand, since they will always be able to find means of financing those projects. 1.3 The Trade-Off Models Some of the assumptions inherent in the MM model can be relaxed without changing the basic conclusions as argued by Stiglitz (1969) and Rubenstein (1973). However, when financial distress and agency costs are considered, the MM models are altered significantly. The addition of financial distress and agency costs to the MM model results in a trade-off model. In such a model, the optimal capital structure can be visualized as a trade-off between the benefit of debt (the interest tax shield) and the costs of debt (financial distress and agency costs) as presented by Myers (1997) The trade-off models have intuitive appeal because they lead to the conclusion that both no-debt and all-debt are bad, while a moderate debt level is good. However, the trade-off models have very limited empirical support, Marsh (1982), suggesting that factors not incorporated in this model are also at work. Jensen and Meckling (1976) invoked a moral hazard argument to explain the agency costs of debt, proposing that high levels of debt will induce firms to opt for excessively risky investment projects. The incentive for such a move is that limited liability provisions in debt contracts imply that risky projects will provide higher mean returns to the shareholders: zero in low states of nature and high in good states. However, the higher probability of default will induce investors to demand either interest rates premiums or bond covenants that restrict the firms future use of debt. 1.4 Pecking-Order Theory Initiated by Donaldson (1961), the Pecking-Order theory argues that firms simply use all their internally-generated funds first, move down the pecking order to debt and then lastly issue equity in an attempt to raise funds. Firms follow this line of least resistance that establishes the capital structure. Myers noted an inconsistency between Donaldsons findings and the trade-off models, and this inconsistency led Myers to propose a new theory. Myers (1984) suggested asymmetric information as an explanation for the heavy reliance on retentions. This may be a situation where managers have access to more information about the firm and know that the value of the shares is greater than the current market value. If new shares are issued in this situation, there is a possibility that they would be issued at a too low price, thereby transferring wealth from existing shareholders to new shareholders. 1.5 Investment and Leverage One of the main issues in Corporate Finance is whether financial leverage has any effects on investment policies. The corporate world is characterized by various market imperfections, due to transaction costs, institutional restrictions and asymmetric information. The interactions between management, shareholders and debt holders will generate frictions due to agency problems and that may result in under-investment or over-investment incentives. Whenever we refer to investment, it is essential to distinguish between over- investment and under-investment. In his model, Myers (1977) argued that debt can create an overhang effect. His idea was that debt overhang reduces the incentives of the shareholder-management coalition in control of the firm to invest in positive net-present-value investment opportunities, since the benefits accrue, at least partially, to the bondholders rather than accruing fully to the shareholders. Hence, highly levered firms are less likely to exploit valuable growth opportunities as compared to firms with low levels of leverage. Underinvestment theory centers on a liquidity effect in that firms with large debt commitment invest less, no matter what their growth opportunities (Lang et al, 1996). In theory, even if debt creates potential underinvestment incentives, the effect could be attenuated by the firm taking corrective action and lowering its leverage, if future growth opportunities are recognized sufficiently early (Aivazian Callen, 1980). Leverage is optimally reduced by management ex ante in view of projected valuable ex post growth opportunities, so that its impact on growth is attenuated. Thus, a negative empirical relation between leverage and growth may arise even in regressions that control for growth opportunities because managers reduce leverage in anticipation of future investment opportunities. Leverage simply signals managements information about investment opportunities. The possibility that leverage might substitute for growth opportunities is referred to as the endogeneity problem. Over-investment theory is another problem that has received much attention over the years. It is described as investment expenditure beyond that required to maintain assets in place and to finance positive NPV projects. In these kind of situations, conflicts may arise between managers and shareholders (Jensen,1986 Stulz,1990). Managers seek for opportunities to expand the business even if that implies undertaking poor projects and reducing shareholder worth in the company. Managers abilities to carry such a policy is restrained by the availability of cash flow and further tightened by the financing of debt. Issuing debt commits the firm to pay cash as interest and principal, forcing managers to service such commitments with funds that may have otherwise been allocated to poor investment projects. Thus, leverage is one mechanism for overcoming the overinvestment problem suggesting a negative relationship between debt and investment for firms with weak growth opportunities. Too much debt also is not considered to be good as it may lead to financial distress and agency problems. Cantor (1990) explains that highly leveraged firms show a heightened sensitivity to fluctuations in cash flow and earnings since they face substantial debt service obligations, have limited ability to borrow additional funds and may feel extra pressure to maintain a positive cash flow cushion. Hence, the net effect would be reduced levels of investment for the firm in question. Accordingly, Mc Connell and Servaes (1995) have examined a large sample of non financial United States firms for the years 1976, 1986 and 1988. They showed that for high growth firms the relation between corporate value and leverage is negative, whereas that for low growth firms the relation between corporate value and leverage is positively correlated. This trend tends to indicate that to maximise corporate value, it is preferable to keep down leverage to a low level and to increase investment. Lang, Ofek and Stulz (1996) used a pooling regression to estimate the investment equation. They distinguish between the impact of leverage on growth in a firms core business from that in its non-core business. They argue that if leverage is a proxy for growth opportunities, its contractionary impact on investment in the core segment of the firm should be much more pronounced than in the non-core segment. They found that there exists a negative relation between leverage and future growth at the firm level. Also they argued that debt financing does not reduce growth for firms known to have good investment opportunities. Lang et al document a negative relation between firm leverage and subsequent growth. However, they find that this negative relation holds only for low q firms, i.e. those with fewer profitable growth opportunities. Thus, their findings appear to be most consistent with the view that leverage curbs overinvestment in firms with poor growth opportunities. Myers (1997) has examined possible difficulties that firms may face in raising finance to materialize positive net present value (NPV) projects, if they are highly geared. Therefore, high leverages may result in liquidity problem and can affect a firms ability to finance growth. Under this situation, debt overhang can contribute to the under-investment problem of debt financing. That is for firms with growth opportunities, debt have a negative impact on the value of the firm. Peyer and Shivdasani (2001) provide evidence that large increases in leverage affect investment policy. They report that, following leveraged recapitalizations, firms allocate more capital to business units that produce greater cash flow. If leverage constrains investment, firms with valuable growth opportunities should choose lower leverage in order to avoid the risk of being forced to bypass some of these opportunities, while firms without valuable growth opportunities should choose higher leverage to bond themselves not to waste cash flow on unprofitable investment opportunities. Ahn et al. (2004) document that the negative relation between leverage and investment in diversified firms is significantly stronger for high Q segments than for low Q business segments, and is significantly stronger for non-core segments than for core segments. Among low growth firms, the positive relation between leverage and firm value is significantly weaker in diversified firms than in focused firms. Their results suggest that the disciplinary benefits of debt are partially offset by the additional managerial discretion in allocating debt service to different business segments within a diversified organizational structure. Childs et al (2005) argued that financial flexibility encourages the choice of short-term debt, thereby dramatically reducing the agency costs of under-investment and over-investment. However the reduction in the agency costs may not encourage the firm to increase leverage, since the firms initial debt level choice depends on the type of growth options in its investment opportunity set. Aivazian et al (2005) analysed the impact of leverage on investment on 1035 Canadian industrial companies, covering the period 1982 to 1999. Their study examined whether financing considerations (as measured by the extent of financial leverage) affect firm investment decisions inducing underinvestment or overinvestment incentives. They found that leverage is negatively related to the level of investment, and that this negative effect is significantly stronger for firms with low growth opportunities than those with high growth opportunities. These results provide support to agency theories of corporate leverage, and especially to the theory that leverage has a disciplining role for firms with weak growth opportunities 1.6 Investment, Cash Flow and Tobins Q It was traditionally believed that cash flow was important for firms investment decisions because managers regarded internal funds as less expensive than external funds. In the 1950s and 1960s, this view led to numerous empirical assessments of the role of internal funds in firm investment behaviour. These studies found strong relationships between cash flow and investment. Considerable empirical evidence indicates that internally generated funds are the primary way firms finance investment expenditures. In an in-depth study of 25 large firms, Gordon Donaldson (1961) concludes that: Management strongly favoured internal generation as a source of new funds even to the exclusion of external funds except for occasional unavoidable bulges in the need for new funds. Another survey of 176 corporate managers by Pinegar and Wilbricht (1989) found that managers prefer cash flow over external sources to finance new investment; 84.3% of sample respondents indicate a preference for financing investment with cash flow. Researchers have also discovered the impact of cash flow on investment spending in Q models of investment. Fazzari, Hubbard, and Petersen (1988) find that cash flow has a strong effect on investment spending in firms with low-dividend-payout policies. They argue that this result is consistent with the notion that low-payout firms are cash flow-constrained because of asymmetric information costs associated with external financing. One reason these firms keep dividends to a minimum is to conserve cash flow from which they can finance profitable investment expenditures. Fazzari and Petersen (1993) find that this same group of low-payout firms smooths fluctuations in cash flow with working capital to maintain desired investment levels. This result is consistent with the Myers and Majluf (1984) finding that liquid financial assets can mitigate the underinvestment problem arising from asymmetric information. Whited (1992) also extended the Fazzari, Hubbard, and Petersen (1988) results in a study of firms facing debt financing constraints due to financial distress. She found evidence of a strong relationship between cash flow and investment spending for firms with a high debt ratio or a high interest coverage ratio, or without rated debt. Himmelberg and Petersen (1994) in a study of small research and development firms find that cash flow strongly influences both capital and R D expenditures. They argue that the asymmetric information effects associated with such firms make external financing prohibitively expensive, forcing them to fund expenditures internally, that is by making use of cash flows. An alternative explanation for the strong cash flow/investment relationship is that managers divert free cash flow to unprofitable investment spending. One study assessing the relative importance of such an agency problem was performed by Oliner and Rudebusch (1992), who analysed several firm attributes that may influence the cash flow/investment relationship. They find that insider share holdings and ownership structure (variables that proxy for agency problems) do little to explain the influence that cash flow has on firm investment spending. Carpenter (1993) focused on the relationships among debt financing, debt structure, and investments pending to test the free cash flow theory. He finds that firms that restructure by replacing large amounts of external equity with debt increase their investment spending compared to non-restructured firms. He sees these results as inconsistent with free cash flow behavior, because cash flow committed to debt maintenance should be associated with reductions in subsequent investment spending. Findings by Strong and Meyer (1990) and Devereux and Schiantarelli (1990) support the free cash flow interpretation. Strong and Meyer (1990) disaggregate the investment and cash flow of firms in the paper industry into sustaining investment (i.e., productive capacity maintaining) and discretionary investment, and total cash flow and residual cash flow (i.e., cash flow after debt service, taxes, sustaining investment, and established dividends). Residual cash flow and discretionary investment are found to be positively and strongly related. This evidence suggests that residual cash flow is often used to fund unprofitable discretionary investments pending. Devereux and Schiantarelli (1990) find that the impact of cash flow on investment spending is greater for larger firms. One explanation they provide for this result is that large firms have more diverse ownership structures, and are more influenced by manager/shareholder agency problems. The Q model of investment relates investment to the firms stock market valuation, which is meant to reflect the present discounted value of expected future profits, Brainard and Tobin (1968). In the case of perfectly competitive markets and constant returns to scale technology, Hayashi (1982) showed that average Q, the ratio of the maximised value of the firm to the replacement cost of its existing capital stock, would be a sufficient statistic for investment rates. Tobins Q, further assumes that the maximised value of the firm can be measured by its stock market valuation. Under these assumptions, the stock market valuation would capture all relevant information about expected future profitability, and significant coefficients on cash-flow variables after controlling for Tobins Q could not be attributed to additional information about current expectations. However if the Hayashi conditions are not satisfied, or if stock market valuations are influenced by bubbles or any factors other than the present discounted value of expected future profits; then Tobins Q would not capture all relevant information about the expected future profitability of current investment. If that is the case, then additional explanatory variables like current or lagged sales or cash-flow terms could proxy for the missing information about expected future conditions. The classification of q ratios into high and low categories is based on a cut-off of one Lang, Stulz, and Walkling (1989). The latters motivation for this cut-off is partially based on the fact that under certain circumstances firms with q ratios below one have marginal projects with negative net present values (Lang and Litzenberger, 1989). However, q is also industry specific and one may argue that managers should not be held responsible for adverse shocks to their industries. As such, the industry average may be a useful alternative cut-off point to separate high q firms from low q firms. Hoshi, Kashyap, and Scharfstein (1991) regressed investment on Tobins q, other controlling variables, and cash flow. They interpreted differences in the importance of cash flow between different groups of firms as evidence of financing constraints. Results obtained by Vogt (1994) indicate that the influence of cash flow on capital spending is stronger for firms with lower Q values. This result suggests that cash flow-financed capital spending is marginally inefficient and provides initial evidence in support of the FCF hypothesis. The stronger the influence cash flow had on capital spending in this group, the larger the associated value of Tobins Q. After the results presented by Kaplan and Zingales (1997 and 2000), several studies have criticised the empirical test based on the cash flow sensitivity as a meaningful evidence in favour of the existence of financing constraints. The significance of the cash flow sensitivity of investment, it was argued, may then be the consequence of measurement errors in the usual proxy for investment opportunities, Tobins Q, and may provide additional information on expected profitability rather than being a signal of financing constraints. Gomes (2001) showed that the existence of financing constraints is not sufficient to establish cash flow as a significant regressor in a standard investment equation, while Ericson and Whited (2000) demonstrate that the investment sensitivity to cash flow in regressions including Tobins Q is to a large extent due to a measurement error in Q. Likewise, Alti (2003) shows that investment can be sensitive to changes in cash flow in the benchmark case where financing is frictionless. 2.3 Investment and Profitability The idea that investment depends on the profitability of a firm is amongst the oldest of macroeconomic relationships formulated. The sharp fluctuations in profitability in the average cost of capital since the 1960s revived interest in this relationship (Glyn et al, 1990). However the evidence for the impact of profitability on investment remains sketchy. Bhaskar and Glyn (1992) concluded that profitability must be regarded as a significant influence on investment, though by no means the overwhelming one. Their results indicated that enhanced profitability is not always a necessary, let alone a sufficient condition for increased investment. However, years later Glyn (1997) provided an empirical study that examined the impact of profitability on capital accumulation. He tested the impact of profitability in the manufacturing sector on investment for the period 1960-1993 for 15 OECD countries. His findings suggested that the classical emphasis on the role of profitability on investment wass still highly significant and had a very tight relationship. Korajczyk and Levy (2003) investigated the role of macroeconomic conditions and financial constraints in determining capital structure choice. While estimating the relation between firms debt ratio and firm-specific variables, they found out that there was a negative relation between profitability and target leverage, which was consistent with the pecking order theory. This indicated that if leverage of the firm is low, profitability will be high and the entity will be able to invest in positive NPV projects i.e. increase investment. Bhattacharyya (2008) recently provided an empirical study where he examined the effect of profitability and other determinants of investment for Indian firms. He found that Short-run profitability does not have consistent influence on investment decisions of firms, implying that one should concentrate on the long-run profitability of a firm. This indicates that profitability is still regarded as one of the major determinants underlying investment decisions of firms. However, he suggested that liquidity is relatively more important than profitability when it comes to firms investment decisions. 2.3 Investment and Liquidity Under the assumptions of illiquid capital and true uncertainty, management can never be sure that investment projects will produce sufficient liquidity to cover the cash commitments generated by their financing. Yet failure to meet these commitments may result in a crisis of managerial autonomy or even in bankruptcy. Thus, capital accumulation is a contradictory process. Investment is inherently risky, while the failure to invest will ultimately lead to the firms marginalization or demise. Crotty and Goldstein (1992) Chamberlain and Gordon (1989) used the annual domestic investment of all nonfinancial corporations in the United States between 1952 and 1981 in an attempt to determine the impact of liquidity on the profitable investment opportunities available to the corporation. They have put forward that in their long-run survival model, liquidity variables play an essential role as it captures the firms desire to avoid bankruptcy. It was also noted that there was a significant improvement in the explanation of investment when liquidity variables were added to the profitability variables of their regression, thereby supporting the view that liquidity is a pre-dominant determinant of investment and that they are positively related. Hoshi, Kashyap and Scharfstein (1991) attempted to find the relationship between investment and liquidity for Japanese firms. They found that high current profits increase current liquidity, thereby generating further investment from the firm to ensure future profitability and increased output to meet demand. Myers and Rajan (1998) suggested that liquid assets are generally viewed as being easier to finance and therefore, asset liquidity is a plus for nonfinancial corporations or individual investors. However, Myers and Rajan argued that although more liquid assets increase the ability to invest in projects, they also reduce managements ability to commit credibly to an investment strategy that protects investors. Johnson (2003) found that short debt maturity increases liquidity risk, which in turn, negatively affects leverage and the firms investment. Jonson also suggested that firms trade off the cost of underinvestment problems against the cost of increased liquidity risk when choosing short debt maturity 2.4 Investment and Sales Sales growth targets play a major role in the perceptions of top managers. Using surveys, Hubbard and Bromiley (1994) find sales is the most common objective mentioned by senior managers. Additional explanatory variables like current or lagged sales are very important in the investment equation as they can act as proxy for the missing information about expected future conditions in case such information has not been captured by Tobins Q. Kaplan and Norton (1992, 1993, 1996) argue that firms must use a wide variety of goals, including sales growth, to effectively reach their financial objectives. They suggested that Sales growth influences factorsà ¢Ã¢â€š ¬Ã‚ ¦..all the way to the implied opportunities for investments in new equipment and technologiesà ¢Ã¢â€š ¬Ã‚ ¦.. According to this study of 396 corporations, Kopcke and Howrey (1994) found that the capital spending of many of the companies corresponds very poorly with their sales and profits. These divergences suggest that sales and profits do not represent fully an enterprises particular incentives for investing. Consequently, these findings do not support generalizations contending that companies with more debt are investing less than their sales and cash flows would guarantee. Athey and Laumas (1994) using panel data over the period 1978-86, examined the relative importance of the sales accelerator and alternative internal sources of liquidity in investment activities of 256 Indian manufacturing firms. They found that when all the selected firms in the sample were considered together, current values of changes in real net sales and net profit were all significant in determining capital spending of firms. Azzoni and Kalatzis (2006) considered the importance of sales for investment decisions of firms. They found that sales presented a positive and significant relationship with investment in all cases. Impact of Financial Leverage on Investment Impact of Financial Leverage on Investment The term Investment is frequently used in jargon of economics, business management and finance. According to economic theories, investment is defined as the per-unit production of goods, which have not been consumed, but will however, be used for the purpose of future production. The decision for investment, also referred to as capital budgeting decision, is regarded as one of the key decisions of an entity. Leverage is a method of corporate funding in which a higher proportion of funds is raised through borrowing than stock issue. It is measured as the ratio of total debt to total assets; greater the amount of debt, greater the financial leverage. Financial Leverage is the ability of a company to earn more on its assets by taking on debt that allows it to buy or invest more in order to expand. Nowadays financial leverage is viewed as an important attribute of capital structure alongside equity and retained earnings. Financial leverage benefits common stockholders as long as the borrowed funds generate a return greater than the cost of borrowing, although the increased risk can offset the general cost of capital. In the past years, a large body of the literature has provided robust empirical evidence that financial factors have a significant impact on the investment decisions of firms. While traditional research on investment was based on the neoclassical theory of optimal capital accumulation (where under the assumption of perfect capital markets, the cost of financing does not depend on the firms financial position), more recent literature has increasingly incorporated frictions such as asymmetric information and agency problems as a source behind the relevance of the degree of financial pressure faced by the firm in determining the availability and the costs of external financing This chapter will seek to enclose literature on the impact of financial leverage on investment and other factors that may affect investment in firms. 1.1 Modigliani Miller (MM) 1958 theory with no taxation In what has been hailed as the most influential set of financial papers ever published, Franco Modigliani and Merton Miller addressed capital structure in a rigorous, scientific fashion, and their study set off a chain of research that continues to this day. Modigliani and Miller (1958) argued that the investment policy of a firm should be based only on those factors that will increase the profitability, cash flow or net worth of a firm. The MM view is that companies which operate in the same type of business and which have similar operating risks must have the same total value, irrespective of their capital structures. It is based on the belief that the value of a company depends upon the future operating income generated by its assets. The way in which this income is split between returns to debt holders and returns to equity should make no difference to the total value of the firm. Thus the total value of the firm will not change with gearing, and therefore neither will its Weighted Average Cost of Capita (Pandey, 1995). Many empirical literatures have challenged the leverage irrelevance theorem of Modigliani and Miller. The irrelevance proposition of Modigliani and Miller will be valid only if the perfect market assumptions underlying their analysis are satisfied Under the original MM propositions, leverage and investment were unrelated. If a firm had profitable investment projects, it could obtain funding for these projects regardless of the nature of its current balance sheet. 1.2 Modigliani Miller 1963 theory with tax M M (1963) found that the corporation tax system carries a distortion under which returns to debt holders (interest) are tax deductible to the firm, whereas returns to equity holders are not. They therefore concluded that geared companies have an advantage over ungeared companies, i.e. they pay less tax and will have a greater market value and a lower WACC. Following this research, the consensus that emerged was that tax is positively correlated to debt (Graham 1995, Miller 1977) and is considered a major influence in the debt policy decision. Modigliani et al (1963) argued that we should not waste our limited worrying capacity on second-order and largely self correcting problems like financial leveragingà ¢Ã¢â€š ¬Ã… ¸. That is firms should not be worried about growth as long as they have good projects in hand, since they will always be able to find means of financing those projects. 1.3 The Trade-Off Models Some of the assumptions inherent in the MM model can be relaxed without changing the basic conclusions as argued by Stiglitz (1969) and Rubenstein (1973). However, when financial distress and agency costs are considered, the MM models are altered significantly. The addition of financial distress and agency costs to the MM model results in a trade-off model. In such a model, the optimal capital structure can be visualized as a trade-off between the benefit of debt (the interest tax shield) and the costs of debt (financial distress and agency costs) as presented by Myers (1997) The trade-off models have intuitive appeal because they lead to the conclusion that both no-debt and all-debt are bad, while a moderate debt level is good. However, the trade-off models have very limited empirical support, Marsh (1982), suggesting that factors not incorporated in this model are also at work. Jensen and Meckling (1976) invoked a moral hazard argument to explain the agency costs of debt, proposing that high levels of debt will induce firms to opt for excessively risky investment projects. The incentive for such a move is that limited liability provisions in debt contracts imply that risky projects will provide higher mean returns to the shareholders: zero in low states of nature and high in good states. However, the higher probability of default will induce investors to demand either interest rates premiums or bond covenants that restrict the firms future use of debt. 1.4 Pecking-Order Theory Initiated by Donaldson (1961), the Pecking-Order theory argues that firms simply use all their internally-generated funds first, move down the pecking order to debt and then lastly issue equity in an attempt to raise funds. Firms follow this line of least resistance that establishes the capital structure. Myers noted an inconsistency between Donaldsons findings and the trade-off models, and this inconsistency led Myers to propose a new theory. Myers (1984) suggested asymmetric information as an explanation for the heavy reliance on retentions. This may be a situation where managers have access to more information about the firm and know that the value of the shares is greater than the current market value. If new shares are issued in this situation, there is a possibility that they would be issued at a too low price, thereby transferring wealth from existing shareholders to new shareholders. 1.5 Investment and Leverage One of the main issues in Corporate Finance is whether financial leverage has any effects on investment policies. The corporate world is characterized by various market imperfections, due to transaction costs, institutional restrictions and asymmetric information. The interactions between management, shareholders and debt holders will generate frictions due to agency problems and that may result in under-investment or over-investment incentives. Whenever we refer to investment, it is essential to distinguish between over- investment and under-investment. In his model, Myers (1977) argued that debt can create an overhang effect. His idea was that debt overhang reduces the incentives of the shareholder-management coalition in control of the firm to invest in positive net-present-value investment opportunities, since the benefits accrue, at least partially, to the bondholders rather than accruing fully to the shareholders. Hence, highly levered firms are less likely to exploit valuable growth opportunities as compared to firms with low levels of leverage. Underinvestment theory centers on a liquidity effect in that firms with large debt commitment invest less, no matter what their growth opportunities (Lang et al, 1996). In theory, even if debt creates potential underinvestment incentives, the effect could be attenuated by the firm taking corrective action and lowering its leverage, if future growth opportunities are recognized sufficiently early (Aivazian Callen, 1980). Leverage is optimally reduced by management ex ante in view of projected valuable ex post growth opportunities, so that its impact on growth is attenuated. Thus, a negative empirical relation between leverage and growth may arise even in regressions that control for growth opportunities because managers reduce leverage in anticipation of future investment opportunities. Leverage simply signals managements information about investment opportunities. The possibility that leverage might substitute for growth opportunities is referred to as the endogeneity problem. Over-investment theory is another problem that has received much attention over the years. It is described as investment expenditure beyond that required to maintain assets in place and to finance positive NPV projects. In these kind of situations, conflicts may arise between managers and shareholders (Jensen,1986 Stulz,1990). Managers seek for opportunities to expand the business even if that implies undertaking poor projects and reducing shareholder worth in the company. Managers abilities to carry such a policy is restrained by the availability of cash flow and further tightened by the financing of debt. Issuing debt commits the firm to pay cash as interest and principal, forcing managers to service such commitments with funds that may have otherwise been allocated to poor investment projects. Thus, leverage is one mechanism for overcoming the overinvestment problem suggesting a negative relationship between debt and investment for firms with weak growth opportunities. Too much debt also is not considered to be good as it may lead to financial distress and agency problems. Cantor (1990) explains that highly leveraged firms show a heightened sensitivity to fluctuations in cash flow and earnings since they face substantial debt service obligations, have limited ability to borrow additional funds and may feel extra pressure to maintain a positive cash flow cushion. Hence, the net effect would be reduced levels of investment for the firm in question. Accordingly, Mc Connell and Servaes (1995) have examined a large sample of non financial United States firms for the years 1976, 1986 and 1988. They showed that for high growth firms the relation between corporate value and leverage is negative, whereas that for low growth firms the relation between corporate value and leverage is positively correlated. This trend tends to indicate that to maximise corporate value, it is preferable to keep down leverage to a low level and to increase investment. Lang, Ofek and Stulz (1996) used a pooling regression to estimate the investment equation. They distinguish between the impact of leverage on growth in a firms core business from that in its non-core business. They argue that if leverage is a proxy for growth opportunities, its contractionary impact on investment in the core segment of the firm should be much more pronounced than in the non-core segment. They found that there exists a negative relation between leverage and future growth at the firm level. Also they argued that debt financing does not reduce growth for firms known to have good investment opportunities. Lang et al document a negative relation between firm leverage and subsequent growth. However, they find that this negative relation holds only for low q firms, i.e. those with fewer profitable growth opportunities. Thus, their findings appear to be most consistent with the view that leverage curbs overinvestment in firms with poor growth opportunities. Myers (1997) has examined possible difficulties that firms may face in raising finance to materialize positive net present value (NPV) projects, if they are highly geared. Therefore, high leverages may result in liquidity problem and can affect a firms ability to finance growth. Under this situation, debt overhang can contribute to the under-investment problem of debt financing. That is for firms with growth opportunities, debt have a negative impact on the value of the firm. Peyer and Shivdasani (2001) provide evidence that large increases in leverage affect investment policy. They report that, following leveraged recapitalizations, firms allocate more capital to business units that produce greater cash flow. If leverage constrains investment, firms with valuable growth opportunities should choose lower leverage in order to avoid the risk of being forced to bypass some of these opportunities, while firms without valuable growth opportunities should choose higher leverage to bond themselves not to waste cash flow on unprofitable investment opportunities. Ahn et al. (2004) document that the negative relation between leverage and investment in diversified firms is significantly stronger for high Q segments than for low Q business segments, and is significantly stronger for non-core segments than for core segments. Among low growth firms, the positive relation between leverage and firm value is significantly weaker in diversified firms than in focused firms. Their results suggest that the disciplinary benefits of debt are partially offset by the additional managerial discretion in allocating debt service to different business segments within a diversified organizational structure. Childs et al (2005) argued that financial flexibility encourages the choice of short-term debt, thereby dramatically reducing the agency costs of under-investment and over-investment. However the reduction in the agency costs may not encourage the firm to increase leverage, since the firms initial debt level choice depends on the type of growth options in its investment opportunity set. Aivazian et al (2005) analysed the impact of leverage on investment on 1035 Canadian industrial companies, covering the period 1982 to 1999. Their study examined whether financing considerations (as measured by the extent of financial leverage) affect firm investment decisions inducing underinvestment or overinvestment incentives. They found that leverage is negatively related to the level of investment, and that this negative effect is significantly stronger for firms with low growth opportunities than those with high growth opportunities. These results provide support to agency theories of corporate leverage, and especially to the theory that leverage has a disciplining role for firms with weak growth opportunities 1.6 Investment, Cash Flow and Tobins Q It was traditionally believed that cash flow was important for firms investment decisions because managers regarded internal funds as less expensive than external funds. In the 1950s and 1960s, this view led to numerous empirical assessments of the role of internal funds in firm investment behaviour. These studies found strong relationships between cash flow and investment. Considerable empirical evidence indicates that internally generated funds are the primary way firms finance investment expenditures. In an in-depth study of 25 large firms, Gordon Donaldson (1961) concludes that: Management strongly favoured internal generation as a source of new funds even to the exclusion of external funds except for occasional unavoidable bulges in the need for new funds. Another survey of 176 corporate managers by Pinegar and Wilbricht (1989) found that managers prefer cash flow over external sources to finance new investment; 84.3% of sample respondents indicate a preference for financing investment with cash flow. Researchers have also discovered the impact of cash flow on investment spending in Q models of investment. Fazzari, Hubbard, and Petersen (1988) find that cash flow has a strong effect on investment spending in firms with low-dividend-payout policies. They argue that this result is consistent with the notion that low-payout firms are cash flow-constrained because of asymmetric information costs associated with external financing. One reason these firms keep dividends to a minimum is to conserve cash flow from which they can finance profitable investment expenditures. Fazzari and Petersen (1993) find that this same group of low-payout firms smooths fluctuations in cash flow with working capital to maintain desired investment levels. This result is consistent with the Myers and Majluf (1984) finding that liquid financial assets can mitigate the underinvestment problem arising from asymmetric information. Whited (1992) also extended the Fazzari, Hubbard, and Petersen (1988) results in a study of firms facing debt financing constraints due to financial distress. She found evidence of a strong relationship between cash flow and investment spending for firms with a high debt ratio or a high interest coverage ratio, or without rated debt. Himmelberg and Petersen (1994) in a study of small research and development firms find that cash flow strongly influences both capital and R D expenditures. They argue that the asymmetric information effects associated with such firms make external financing prohibitively expensive, forcing them to fund expenditures internally, that is by making use of cash flows. An alternative explanation for the strong cash flow/investment relationship is that managers divert free cash flow to unprofitable investment spending. One study assessing the relative importance of such an agency problem was performed by Oliner and Rudebusch (1992), who analysed several firm attributes that may influence the cash flow/investment relationship. They find that insider share holdings and ownership structure (variables that proxy for agency problems) do little to explain the influence that cash flow has on firm investment spending. Carpenter (1993) focused on the relationships among debt financing, debt structure, and investments pending to test the free cash flow theory. He finds that firms that restructure by replacing large amounts of external equity with debt increase their investment spending compared to non-restructured firms. He sees these results as inconsistent with free cash flow behavior, because cash flow committed to debt maintenance should be associated with reductions in subsequent investment spending. Findings by Strong and Meyer (1990) and Devereux and Schiantarelli (1990) support the free cash flow interpretation. Strong and Meyer (1990) disaggregate the investment and cash flow of firms in the paper industry into sustaining investment (i.e., productive capacity maintaining) and discretionary investment, and total cash flow and residual cash flow (i.e., cash flow after debt service, taxes, sustaining investment, and established dividends). Residual cash flow and discretionary investment are found to be positively and strongly related. This evidence suggests that residual cash flow is often used to fund unprofitable discretionary investments pending. Devereux and Schiantarelli (1990) find that the impact of cash flow on investment spending is greater for larger firms. One explanation they provide for this result is that large firms have more diverse ownership structures, and are more influenced by manager/shareholder agency problems. The Q model of investment relates investment to the firms stock market valuation, which is meant to reflect the present discounted value of expected future profits, Brainard and Tobin (1968). In the case of perfectly competitive markets and constant returns to scale technology, Hayashi (1982) showed that average Q, the ratio of the maximised value of the firm to the replacement cost of its existing capital stock, would be a sufficient statistic for investment rates. Tobins Q, further assumes that the maximised value of the firm can be measured by its stock market valuation. Under these assumptions, the stock market valuation would capture all relevant information about expected future profitability, and significant coefficients on cash-flow variables after controlling for Tobins Q could not be attributed to additional information about current expectations. However if the Hayashi conditions are not satisfied, or if stock market valuations are influenced by bubbles or any factors other than the present discounted value of expected future profits; then Tobins Q would not capture all relevant information about the expected future profitability of current investment. If that is the case, then additional explanatory variables like current or lagged sales or cash-flow terms could proxy for the missing information about expected future conditions. The classification of q ratios into high and low categories is based on a cut-off of one Lang, Stulz, and Walkling (1989). The latters motivation for this cut-off is partially based on the fact that under certain circumstances firms with q ratios below one have marginal projects with negative net present values (Lang and Litzenberger, 1989). However, q is also industry specific and one may argue that managers should not be held responsible for adverse shocks to their industries. As such, the industry average may be a useful alternative cut-off point to separate high q firms from low q firms. Hoshi, Kashyap, and Scharfstein (1991) regressed investment on Tobins q, other controlling variables, and cash flow. They interpreted differences in the importance of cash flow between different groups of firms as evidence of financing constraints. Results obtained by Vogt (1994) indicate that the influence of cash flow on capital spending is stronger for firms with lower Q values. This result suggests that cash flow-financed capital spending is marginally inefficient and provides initial evidence in support of the FCF hypothesis. The stronger the influence cash flow had on capital spending in this group, the larger the associated value of Tobins Q. After the results presented by Kaplan and Zingales (1997 and 2000), several studies have criticised the empirical test based on the cash flow sensitivity as a meaningful evidence in favour of the existence of financing constraints. The significance of the cash flow sensitivity of investment, it was argued, may then be the consequence of measurement errors in the usual proxy for investment opportunities, Tobins Q, and may provide additional information on expected profitability rather than being a signal of financing constraints. Gomes (2001) showed that the existence of financing constraints is not sufficient to establish cash flow as a significant regressor in a standard investment equation, while Ericson and Whited (2000) demonstrate that the investment sensitivity to cash flow in regressions including Tobins Q is to a large extent due to a measurement error in Q. Likewise, Alti (2003) shows that investment can be sensitive to changes in cash flow in the benchmark case where financing is frictionless. 2.3 Investment and Profitability The idea that investment depends on the profitability of a firm is amongst the oldest of macroeconomic relationships formulated. The sharp fluctuations in profitability in the average cost of capital since the 1960s revived interest in this relationship (Glyn et al, 1990). However the evidence for the impact of profitability on investment remains sketchy. Bhaskar and Glyn (1992) concluded that profitability must be regarded as a significant influence on investment, though by no means the overwhelming one. Their results indicated that enhanced profitability is not always a necessary, let alone a sufficient condition for increased investment. However, years later Glyn (1997) provided an empirical study that examined the impact of profitability on capital accumulation. He tested the impact of profitability in the manufacturing sector on investment for the period 1960-1993 for 15 OECD countries. His findings suggested that the classical emphasis on the role of profitability on investment wass still highly significant and had a very tight relationship. Korajczyk and Levy (2003) investigated the role of macroeconomic conditions and financial constraints in determining capital structure choice. While estimating the relation between firms debt ratio and firm-specific variables, they found out that there was a negative relation between profitability and target leverage, which was consistent with the pecking order theory. This indicated that if leverage of the firm is low, profitability will be high and the entity will be able to invest in positive NPV projects i.e. increase investment. Bhattacharyya (2008) recently provided an empirical study where he examined the effect of profitability and other determinants of investment for Indian firms. He found that Short-run profitability does not have consistent influence on investment decisions of firms, implying that one should concentrate on the long-run profitability of a firm. This indicates that profitability is still regarded as one of the major determinants underlying investment decisions of firms. However, he suggested that liquidity is relatively more important than profitability when it comes to firms investment decisions. 2.3 Investment and Liquidity Under the assumptions of illiquid capital and true uncertainty, management can never be sure that investment projects will produce sufficient liquidity to cover the cash commitments generated by their financing. Yet failure to meet these commitments may result in a crisis of managerial autonomy or even in bankruptcy. Thus, capital accumulation is a contradictory process. Investment is inherently risky, while the failure to invest will ultimately lead to the firms marginalization or demise. Crotty and Goldstein (1992) Chamberlain and Gordon (1989) used the annual domestic investment of all nonfinancial corporations in the United States between 1952 and 1981 in an attempt to determine the impact of liquidity on the profitable investment opportunities available to the corporation. They have put forward that in their long-run survival model, liquidity variables play an essential role as it captures the firms desire to avoid bankruptcy. It was also noted that there was a significant improvement in the explanation of investment when liquidity variables were added to the profitability variables of their regression, thereby supporting the view that liquidity is a pre-dominant determinant of investment and that they are positively related. Hoshi, Kashyap and Scharfstein (1991) attempted to find the relationship between investment and liquidity for Japanese firms. They found that high current profits increase current liquidity, thereby generating further investment from the firm to ensure future profitability and increased output to meet demand. Myers and Rajan (1998) suggested that liquid assets are generally viewed as being easier to finance and therefore, asset liquidity is a plus for nonfinancial corporations or individual investors. However, Myers and Rajan argued that although more liquid assets increase the ability to invest in projects, they also reduce managements ability to commit credibly to an investment strategy that protects investors. Johnson (2003) found that short debt maturity increases liquidity risk, which in turn, negatively affects leverage and the firms investment. Jonson also suggested that firms trade off the cost of underinvestment problems against the cost of increased liquidity risk when choosing short debt maturity 2.4 Investment and Sales Sales growth targets play a major role in the perceptions of top managers. Using surveys, Hubbard and Bromiley (1994) find sales is the most common objective mentioned by senior managers. Additional explanatory variables like current or lagged sales are very important in the investment equation as they can act as proxy for the missing information about expected future conditions in case such information has not been captured by Tobins Q. Kaplan and Norton (1992, 1993, 1996) argue that firms must use a wide variety of goals, including sales growth, to effectively reach their financial objectives. They suggested that Sales growth influences factorsà ¢Ã¢â€š ¬Ã‚ ¦..all the way to the implied opportunities for investments in new equipment and technologiesà ¢Ã¢â€š ¬Ã‚ ¦.. According to this study of 396 corporations, Kopcke and Howrey (1994) found that the capital spending of many of the companies corresponds very poorly with their sales and profits. These divergences suggest that sales and profits do not represent fully an enterprises particular incentives for investing. Consequently, these findings do not support generalizations contending that companies with more debt are investing less than their sales and cash flows would guarantee. Athey and Laumas (1994) using panel data over the period 1978-86, examined the relative importance of the sales accelerator and alternative internal sources of liquidity in investment activities of 256 Indian manufacturing firms. They found that when all the selected firms in the sample were considered together, current values of changes in real net sales and net profit were all significant in determining capital spending of firms. Azzoni and Kalatzis (2006) considered the importance of sales for investment decisions of firms. They found that sales presented a positive and significant relationship with investment in all cases.