How to Interview a Relative - About Genealogy

Getting relatives to share their stories isnt always easy. But it can be rewarding and allow you to document stories, such as in a memory book. Follow these step-by-step ideas for a successful family history interview! Schedule a time in advance. This gives everyone a chance to prepare.Prepare a list of questions beforehand and either share them with your relative or give them an idea of what you want to cover. Bring several notepads and pens to the interview. If you plan to make a recording, be sure to have a tape player, digital recorder, or smartphone on which to record the interview, plus extra tapes, memory cards, chargers or batteries, as appropriate for your recording device.Take good notes and make sure you record your name, the date, the place the interview is being conducted and the interviewee.Begin with a question or topic that you know will elicit a reply, such as a story you have heard her tell in the past.Ask questions which encourage more than simple yes or no answers. Try to elicit facts, feelings, stories, and descriptions.Show interest. Take an active part in the dialogue without dominating it.  Learn to be a creative listener.Use props whenever possible. Old photographs, favor ite old songs, and treasured items may bring memories flooding back.Dont push for answers. Your relative may not wish to speak ill of the dead or may have other reasons for not wanting to share. Move on to something else.Use your prepared questions as a guideline, but dont be afraid to let your relative go off on a tangent. They may have many things to say that you never thought to ask!Dont interrupt or attempt to correct your relative; this can end an interview in a hurry!When you are done, be sure to thank your relative for her time. Tips for a Successful Family History Interview Put your relative at ease by telling them that they will have a chance to see and approve of anything that you write before you share it with others.Keep the interview length to no more than 1 to 2 hours at a stretch. Its tiring for both you and for the person being interviewed. This is supposed to be fun!Consider preparing a transcript or written report as a tangible thank you to your relative for her participation.If the relative and other participants agree, setting up a recorder in the corner of a room while sitting around a dinner table may help to get family stories flowing.

Models and Theorists in Organizational Developement

Organizational Development Change Assignment # 2 [pic] Submitted By: Hassan Masood Faruqui 08-0219 BBA Models and Theorists in Organizational Development Edgar Schein Modification of the Three Stage Process: Edgar Schein modified the three stage process through specifying the psychological mechanisms involved in each stage. In stage 1, unfreezing is where disconfirmation creates hassle and discomfort, which causes guilt and anxiety and drives and motivates the person towards change. But unless the person feels comfortable with dropping the old behaviors and adopting new ones then change will not occur. This means the person must be psychologically safe in order to replace the†¦show more content†¦5. Structure: The study of structure should not be confined to hierarchical structure; rather it should be a function based structure focusing on the responsibility, authority, communication, decision making and control structure that exists between the people of the organization. 6. Systems: Systems includes all types of policies and procedures with regards to both the people and the operations of the organization. 7. Management Practices: This would entail a study of how well the mangers conform to the organization’s strategy when dealing with employees and the resources. 8. Work Unit Climate: It is a collective study of how the employees think, feel and what do they expect. The kind of relationships the employees share with their team members and members of other teams is also an important aspect of work unit climate. 9. Tasks and Skills: This involves understanding what a specific job position demands and the kind of kind of skills and knowledge that an employee must have in order to fulfill the task responsibilities of that job position. It is important to see how well jobs and employees have been matched. 10. Individual Values and Needs: This dimension seeks to explore the employee’s opinion about their work so as to identify the quality factors that will result in job enrichment and better job satisfaction. 11. Motivation Level: Identifying the motivation level ofShow MoreRelatedLibrary Management204752 Words   |  820 Pages60 Section 2: Planning 4—Planning Information Services and Systems . . . . . . . 65 Techniques and Tools . . . . . . . . . . . . . . . . . . . . . . . . . . 66 Environment for Planning . . . . . . . . . . . . . . . . . . . . . . . 66 Planning Models . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 The Planning Process . . . . . . . . . . . . . . . . . . . . . . . . . . 72 Factors in Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 Time Frame . . . . . . . . .

Fair Value or Cost Mode Drivers of Choice for Ias 40 Free Essays

European Accounting Review Vol. 19, No. 3, 461– 493, 2010 Fair Value or Cost Model? Drivers of Choice for IAS 40 in the Real Estate Industry A. We will write a custom essay sample on Fair Value or Cost Mode Drivers of Choice for Ias 40 or any similar topic only for you Order Now QUAGLI? and F. AVALLONE ? Department of Accounting and Business Studies (DITEA), University of Genova, Genova, Italy and ? ? Department of Computer and Management Science (DISA), University of Trento, Trento, Italy (Received September 2008; accepted February 2010) ABSTRACT The IFRS mandatory adoption in European countries is an excellent context from which to assess the validity of accounting choice theory, which postulates that information asymmetry, contractual ef? iency (agency costs) and managerial opportunism reasons could drive the choice. With this aim, we test the impact of these factors to explain the adoption of fair value for investment properties (IAS 40) in the real estate industry, taking into account the ‘revaluation’ option offered by IFRS1 and using historical cost without revaluations as a baseline category for comparison purposes. We select a sample of European real estate companies from Finland, France, Germany, Greece, Italy, Spain and Sweden, all ? rst-time adopters of the IFRS. Using a multinomial logistic model, we show that information asymmetry, contractual ef? iency and managerial opportunism could account for the fair value choice. Particularly, the most signi? cant ? ndings are that size as a proxy of political costs reduces the likelihood of using fair value while market-to-book ratio is negatively associated with the fair value choice. On the other hand, leverage, another typical proxy of contracting costs, seems not to in? uence the choice. This evidence con? rms the current validity of traditional accounting choice theory even if it reveals, in such a context, the irrelevance of the usual relations between accounting choice and leverage. . Introduction We analyse if the choice between cost or fair value for investment property under IAS 40 aims at (i) reducing agency costs (contractual ef? ciency Correspondence Address: A. Quagli, Department of Accounting and Business Studies (DITEA), University of Genova, Via Viva ldi 2, 16126 Genova (GE), Italy. E-mail: quaglia@economia. unige. it 0963-8180 Print/1468-4497 Online/10/030461–33 # 2010 European Accounting Association DOI: 10. 1080/09638180. 2010. 496547 Published by Routledge Journals, Taylor Francis Ltd on behalf of the EAA. 462 A. Quagli and F. Avallone easons), (ii) mitigating information asymmetries, as standard setters claim, or (iii) allowing managerial opportunism, typical motives de? ned by accounting choice theory (Holthausen, 1990; Fields et al. , 2001). Using a multinomial logistic regression, we test these hypotheses using 73 observations from real estate companies located in European countries (Finland, France, Germany, Greece, Italy, Spain and Sweden) which do not allow the fair value method in the pre-IFRS mandatory period in order to eliminate the in? uence of pre-existing fair value adoption. All these ? rms are ? sttime IFRS adopters, enabling us to compare the same accounting choice in a similar situation (? rst-time adoption). The mandatory adoption of IAS 40 (Investment properties) by European listed companies offers a unique opportunity to verify managers’ behaviour in a composite context of accounting choice. In fact, IAS 40 allows two alternative methods for appraisal of investment property assets: the cost method or the fair value method with recognition of fair value changes through pro? t and loss. Additionally, taking into account the IFRS1 ‘fair value as deemed cost’ option, the cost choice could be split into two lternatives: (i) historical cost without revaluation, (ii) historical cost with the IFRS1 option to revaluate investment property. This second option could represent a partial substitute for the fair value method, showing its effects only in equity without in? uencing pro? t and loss. 1 Thus, our model assumes the choice of applying historical cost without revaluating it as the referent outcome category to compare (Y ? 0), and forms logits comparing the ch oice of using historical cost with IFRS1 revaluations of investment property (Y ? 1) and fair value choice (Y ? 2) to it. Our ? dings suggest that all the rationales described by accounting choice theory (information asymmetry, contractual ef? ciency and managerial opportunism) drive the decision to adopt fair value. Indeed, regarding contractual ef? ciency reasons in particular, we ? nd that the larger the size (proxy of political costs), the less likely fair value is to be chosen, while leverage and consequent lenders’ protection seems to be insigni? cant for the choice. Furthermore, our results show that market-to-book ratio (MTBV) (proxy of information asymmetry) is negatively related to the fair value choice. This ? nding, that con? cts with existing literature, could be accounted for in the real estate industry due to the fact that high levels of MTBV in this context reveal growth opportunities associated with a fair estimation of investment properties and therefore wit h a low information asymmetry. Managerial opportunism behaviour, measured by a dummy variable for earnings smoothing, seems to have an in? uence on fair value choice. While all these variables seem to have an in? uence on the fair value choice, the same variables do not explain the choice of historical cost with the IFRS1 revaluation option in preference to the cost maintenance approach. This paper offers various contributions to current literature. Firstly, to the best of our knowledge, it is one of the ? rst papers speci? cally focused on the choice Fair Value or Cost Model? 463 between cost and fair value in the IFRS context. We perform the analysis using a sample of ? rst-time IFRS adopters from several European countries adopting only the cost method in the pre-IFRS phase in order to both not limit the research to the traditional comparison between German and UK ? rms and eliminate the risk of in? uence from past experience. Secondly, this paper introduces to the accounting choice literature a research designed to analyse the in? uence of multiple motivations (contractual ef? ciency, information asymmetry and managerial opportunism) for a multiple-choice environment (cost, cost with IFRS1 revaluation or fair value through pro? t and loss), testing through a multinomial logistic regression all the possible causes. Previous research, on the contrary, usually overlooks a comparison of multiple motivations (Fields et al. , 2001, pp. 290 – 291). In other words, compared to existing studies we conduct an analysis using an innovative multiple motivations – multiple choices approach that better captures the complexity of accounting choices in management decisions. Finally, we contribute to the current debate on fair value showing which ? rm characteristics drive the choice of this method. While information asymmetries are the most discussed motives for fair value, we demonstrate the in? uence of contractual ef? ciency motivation as well as managerial opportunism, and the actual choices by ? ms demonstrate only a ‘partial enthusiasm’ towards fair value, even in a sector where liquid markets exist. The paper proceeds as follows. Section 2 concerns the literature related to our analysis. Section 3 goes on to describe the main features of IAS 40 and the preIFRS domestic GAAP of the countries sampled. Section 4 illustrates the development of our hypotheses, while Section 5 provides details on the empirical model design, variable de? nition, sample selection and data. Finally, Section 6 describes descriptive statistics, the main ? ndings and the robustness of the results. . Theory and Relation to Existing Research The choice between fair value and cost is a central topic in the current debate on accounting. Fair value is generally preferred due to the fact that ?nancial statements reveal a higher level of information (CFA Institute Centre, 2008),2 even if its adoption requires speci? c conditions: liquid markets, large database of available prices (Barth and Landsman, 1995; Ball, 2006), as well as new competencies in developing measurement models in the absence of liquid markets, making it possible to enhance estimate reliability (Schipper, 2005). On the other hand, the reliability of fair value estimates is the most critical point (Martin et al. , 2006; Watts, 2006; Whittington, 2008), with the potential damage brought to the stewardship function of ? nancial statements. More generally, the demand for fair value has to be evaluated in its speci? c country context. The demand for fair value and the related preference for a higher level of information vs. reliability of ? nancial statements in Common law countries is quite different from the same demand in Code law countries (see Ball et al. 2000). 464 A. Quagli and F. Avallone Alternatively, a cost model seems more ef? cient in a contractual perspective because it reduces agency costs generated by creditors’ protection, political visibility, taxation and litigation (Watts, 2003; Qiang, 2007). Recent studies, however, seem to ignore the importance that the analysis of the adoption of IFRS evaluation alternatives could have in providing some more explanations for managers ’ accounting choices and, consequently, for the progress of accounting choice theory. Therefore, the choice between cost and fair value is a central topic in this sense. Following the framework of Francis et al. (2004), fair value and cost affect the properties of accounting numbers in a very different way. Fair value is more value relevant,3 and provides more predictable and timely earnings ? gures because it is more oriented towards future cash ? ows (derivable by the current value of some assets); on the contrary, the cost method approach supports conservatism, smoothness and the accrual quality, due to the recognition of value changes only if realized. While it is dif? cult to suppose the impact on earnings persistence, depending on the size of fair value changes, the aforementioned aspects will give rise to different accounting behaviours. The information about future cash ? ows derived by fair value will be more appreciated in ? nancial markets (analysts and equity investors), because it will contribute to mitigate information asymmetries. On the other hand, the cost method is less costly and has more utility for income smoothing and contractual ef? ciency for which conservatism is a precious support. In other words, each of these methods has, at a theoretical level, pros and cons and the actual choice will likely depend on ? rm-speci? c circumstances. The different impact of these two methods strongly implies the need of the accounting choice theory to investigate the topic. A powerful starting point for accounting choice investigation is offered by Holthausen (1990; see also Watts and Zimmerman, 1978; Fields et al. , 2001) who classi? ed in: (i) contractual ef? ciency (agency costs), (ii) information asymmetry and (iii) managerial opportunism, the reasons for accounting choices. i) Expectations derived from the accounting choice theory concerning the impact of fair value on contractual ef? ciency could lead to a supposed negative relationship: the choice of fair value could increase agency costs for several reasons. The greater income ? uctuations induced by fair value compared to the cost model could enhance the perceived risk by investors (European Central Bank, 2004) and, con sequently, the cost of capital, as the high level of reported pro? ts could increase political costs due to higher company visibility (Hagerman and Zmijewski, 1979). Additionally, the doubtful veri? bility of fair value compared to cost measures, in some contexts (illiquid markets) could increase litigation and its related costs (Watts, 2003), as well as the fact that fair value through pro? t and loss could anticipate taxation costs. Furthermore, we can infer from the contractual ef? ciency reasons regarding lenders’ protection contrasting hypotheses on fair value preference. On the one hand (Watts, 2003; Qiang, 2007), lenders prefer Fair Value or Cost Model? 465 conservatism (thus the cost method) because it reduces the risk of distributing ? rm value through dividends. On the other hand, fair value represents the current value of assets and it could be more ef? cient in negotiating for debt covenants. In this sense Christensen and Nikolaev (2008), basing their research on a sample of French and German multi-industry companies, ? nd that the fair value method is preferred by companies with high leverage and they account for this through information asymmetry: the current value of ? xed assets gives more thorough information about the ? rm’s solvency capability. In this sense, IFRS1 revaluation option could be a ‘partial’ substitute of IAS 40 fair value, that is, ? ms could use the conservative cost approach to guarantee lenders’ protection but they could opportunistically revaluate investment assets through IFRS1 to beat covenants or to give a signal about their solvency capability. In other words, while IAS 40 fair value is a ‘long-term strategy’ whose effects are uncertain (fair value could give rise to futu re revaluations or impairments), the IFRS1 option could be seen as a ‘short-term strategy’, the accounting consequences of which could be made available before its adoption (the revaluations ex IFRS1 option must exist at the transition date, that is, one year before the ? st exercise IFRS compliant). In this sense, this option would encourage opportunistic (and aggressive) accounting behaviour. All these propositions, however, could fail to be applied if we take into account that covenants use, on average, to exclude revaluation reserves in ? nancial ratios. (ii) Looking at asymmetries for market participants, measured by market-tobook ratio (MTBV), fair value could be preferred to cost method because of its higher and updated level of information divulgated to ? nancial statement users. This is the main argument supporting the fair value primacy from a current standard setters’ viewpoint (Barlev and Haddad, 2003; Ball, 2006; Danbolt and Rees, 2008; Whittington, 2008). For this hypothesis, IFRS1 option could be a partial substitute for IAS 40 fair value, because of its in? uence on equity and, consequently, on MTBV. (iii) When a ? rm is choosing between cost and fair value, the managerial opportunistic accounting behaviour, previously demonstrated by income smoothing practices (Barth et al. , 1999; He? in et al. 2002; Graham et al. , 2005) is less likely with fair value through pro? t and loss, which obliges large earnings impact due to the volatility of market prices. However, the choice of the IFRS1 option in this sense should be irrelevant (thus not competing with fair value through pro? t and loss method), because this accounting option in? uences only equity and has no impact on pro? t and loss. Our objective is to test empirically how these multiple, and in part controversial, reasons (managerial opportunism, contractual ef? iency and information asymmetries) account for the choice of either fair value or the cost model due to the recent mandatory adoption of IFRS. In the typical discussion about IFRS, in 466 A. Quagli and F. Avallone fact, the power of fair value is recognized speci? cally regarding its potential to reduce information asymmetries (Whittington, 2008). Our analysis is based on the assumption that recognition is more value relevant than simple disclosure. Since IAS 40 requires footnote disclosure of fair value investment properties for ? ms adopting cost (see Section 3), it could be assumed that the choice between cost and fair value is not relevant, because the information about fair value is available for ? nancial statement users whatever the accounting policy chosen for investment properties. Nonetheless, our paper poses disclosure not equivalent to recognition according to the prevailing literature4 (for a revie w see Schipper, 2007). In all probability, the reasons can be found in a different reliability of data included in the footnotes relating to the balance sheet measures (Schipper, 2007). As af? med by Cotter and Zimmer (2003), speci? cally for revaluations of ? xed assets, ‘the value relevance of recognized revaluations is not due to recognition per se, but rather to the fact that the assets being revalued are more reliably measured’ (p. 1). 3. Main Features of IAS 40 and Differences with the Domestic GAAP of Countries Sampled IAS 40 is concerned with investment property that is property (land or a building) held to earn rentals or for capital appreciation or both, rather than for use as a site in which to run a manufacturing business or as a good to sell in the ordinary course of business. The most relevant feature for our interests in IAS 40 is the evaluation method. IAS 40 permits evaluation of investment properties choosing alternatively: . fair value model, by which an investment property is measured, after an initial measurement, at fair value with changes in fair value recognized in the income statement and with no depreciation; . cost model, with the same rule as in IAS 16 (the property is to be measured after initial recognition at depreciated cost less any accumulated impairment losses). This feature makes IAS 40 unique within the IFRS because it represents the only case where the two main evaluation criteria, fair value and cost, are alternatively admitted in their ‘pure’ form; the IAS 40 fair value re? ects its changes from one period to another in the income statement and not directly in an equity reserve as established by IAS 16 or IAS 38. As a consequence, managers are conscious that the choice between these accounting methods implies substantial variations in accounting results. As reported in the Basis for Conclusions, in the 2003 IAS 40 revision (par. BC 12), the IASB discussed whether to eliminate the choice between the fair value model and cost model, thus implicitly enforcing the former as the only evaluation Fair Value or Cost Model? 467 method allowed. However, it was decided to leave the choice between the two approaches for two main reasons: the ? rst was to give preparers and users time to acquire experience before using a fair value model. Obviously, with regard to the practice of fair value assessment the second was to allow time for countries with less-developed property markets and valuation professions to mature. The IASB planned to reconsider the option of using the cost model at a later date, in the light of ‘fair value supremacy’ pervading the International Accounting Standards. Nonetheless, the fair value primacy is notable for its disclosure clause, requesting the fair value of the investment property for the entities that choose the cost model, this means that an entity is obliged to assess fair value in all cases, which is a logical premise to permitting an easier transition to the fair value method at a later date. Additionally, the entity has to declare in notes whether it applies the fair value model or the cost model and the methods and signi? cant assumptions applied in determining the fair value, including a statement whether the determination of fair value was supported by market evidence or was more heavily based on other factors (which the entity should disclose) relating to the nature of the property and the lack of comparable market data. The fair value method benchmarked by IAS 40 is a novelty for several European countries. Our sample looks at domestic accounting rules; it is made up of companies from countries which allow only the cost method for investment property: Germany (Deloitte Touche, 2001), Finland (KPMG, 2003a), France (KPMG, 2003b), Greece (Tsalavoutas and Evans, 2009), Italy (PWC, 2005), Spain (Perramon and Amat, 2007), Sweden (KPMG, 2005). More speci? cally, in Spain and Italy an asset revaluation credited to equity is permitted only if a special law allows it. In France a revaluation to equity is permitted only if it embraces all ? ed assets and the long-term ? nancial assets. In Greece, it is possible to revaluate ? xed assets to equity every four years following a revaluation index established by the Government. In Germany no revaluations are allowed. Finnish and Swedish GAAP permit a revaluation of properties credited to equity if their fair value exceeds cost in a permanent, signi? cant and reliable way. The choice of countries using only the cost model in the pre-IFRS mandatory phas e allows us to eliminate the in? uence of any pre-existing in? ence of fair value adoption. 4. Hypothesis Development Following Section 2, we develop our hypotheses concerning: (i) ef? ciency reasons, in terms of both the reduction of political costs and the lenders’ protection, (ii) information asymmetry and (iii) managerial opportunism. 468 A. Quagli and F. Avallone (1) Contractual Ef? ciency Following the hypothesis that conservatism accounting should reduce agency costs through a greater lenders’ protection (Watts, 2003; Qiang, 2007), we suppose a negative correlation between leverage and fair value method. We do not conjecture the opposite assumption (Holthausen and Leftwich, 1983) that in order to beat covenants, higher leverage could induce earnings increasing policies (like, in our speci? c context, the choice of fair value through pro? t and loss) because covenants usually do not take into account fair value revaluations (Citron, 1992; Christensen and Nikolaev, 2008). Thus, H1: The probability of choosing fair value decreases if company has a high leverage ratio level before IFRS adoption. We do not posit any assumption on the relationship between leverage and the choice of historical cost with the IFRS1 option for the aforementioned exclusion of revaluation reserves in ? nancial ratios used by covenants. As already described in the part of Section 2 that looks at political costs, we can suppose from the literature that conservative accounting reduces political costs because the high level of reported pro? ts could affect them due to higher company visibility (Hagerman and Zmijewski, 1979; Watts, 2003). In order to verify the impact of political cost on fair value choice, we adopt the ? m size as an independent variable. The size per se has been mentioned speci? cally as a criterion for actions against corporations since several studies document that the magnitude of political costs is highly dependent on the size of corporation (Watts and Zimmerman, 1978). Thus, we conjecture that the political costs increase according to the company size; the larger it is the higher are the political costs and the lower is the probability that is advantageous to choose a fair value approach. Accordingly, our research proposition is: H2: The probability of choosing fair value decreases with the size of the ? m. Even in this case, we do not suppose any relationship between political costs and the choice of historical cost with the IFRS1 option, because this option has no impact on pro? t and loss. (2) Information Asymmetry If information asymmetry exists in the speci? c context investigated, managers could choose fair value in order to clearly inform the market about the ‘true’ value of the ? rm. So, under the assumption that disclosure is not equivalent to recognition (Schipper, 2007), a positive association between the choice of the fair value method and information asymmetry is assumed. Fair Value or Cost Model? 469 Many studies (Smith and Watts, 1992; Amir and Lev, 1996) use market-tobook ratio (MTBV) as a proxy for information asymmetry, starting from the intuition that while market value captures the present value of growth opportunities, the book value approximates the value of assets in place. As a result, we posit that MTBV is positively related to information asymmetry and, consequently, positively related to fair value choice. Therefore, we assume: H3a: The probability of choosing fair value increases the more marked is the difference between market value and the book value of equity. We could also develop a concurrent hypothesis to H3a, on the basis that, in this case, the choice of historical cost with IFRS1 option, in? uencing equity, could be a ‘partial’ substitute of fair value through pro? t and loss. Thus, we expect a positive association between the choice of historical cost with IFRS1 option and information asymmetry, as measured by MTBV ratio. H3b: The probability of choosing historical cost with IFRS1 option increases the more marked is the difference between market value and book value of equity. (3) Managerial Opportunism From the theory we derive that managerial opportunistic accounting behaviour is demonstrated by income smoothing practices (Barth et al. , 1999; He? in et al. , 2002; Graham et al. , 2005) and we thus suppose that fair value through pro? t and loss with its volatile changes contrasts smoothing policies. So, a negative association between fair value choice and pre-IFRS earnings smoothing is expected. Hence: H4: The probability of choosing fair value decreases if managers reduce the variability of reported earnings using accruals. We do not suppose any relationship between managerial opportunism estimated by earnings smoothing and the choice of historical cost with IFRS1 revaluation, because this option has no impact on pro? t and loss. 5. Research Design Empirical Model and Variable De? nitions Two statistical procedures are used in our analysis: (i) the non-parametric Mann – Whitney two-sample rank-sum test is used to analyse the difference in explanatory variables between the group of ? rms that have adopted the fair value model or cost model with the IFRS1 revaluation and the group that have chosen the cost 470 A. Quagli and F. Avallone model (the cost group has been taken as a referent category). Additionally, (ii) we use a multinomial logistic regression model (MNL) to test the relationship between the ? rm accounting choice for investment properties and the hypothesized explanatory variables. Under the multinomial logistic model with three outcome categories (0, 1 and 2), p covariates and a constant term (b) denoted by the vector x, two logit functions are described as follows (Hosmer and Lemeshow, 2000): g1 (x) = ln[P(Y = 1| x)/P(Y = 0| x)] = b10 + b11 X1 + b12 X2 + . . . + b1p Xp (1) and 2 (x) = ln[P(Y = 2| x)/P(Y = 0| x)] = b20 + b21 X1 + b22 X2 + . . . + b2p Xp . (2) It follows that the conditional probabilities of each outcome category given the covariate vector are: P(Y = 0| x) = 1/1 + eg1 (x) + eg2 (x) P(Y = 1| x) = eg1 (x) /1 + eg1 (x) + eg2 (x) (3) P(Y = 2| x) = eg2 (x) /1 + eg1 (x) + eg2 (x) . Our model assumes the choice to use historical cost without revaluating as the refere nt or baseline outcome category to compare (Y ? 0), and forms logits comparing the choice to use historical cost with the IFRS1 revaluation of investment properties (Y ? 1) and fair value choice (Y ? 2) to it. Furthermore, the model assumes the following relation between the proposed explanatory variables and the fair value accounting choice: ln[P(Y = FV| x)/P(Y = COST| x)] = b0 + b1 LEV + b2 SIZE + b3 MTBV + b4 SM + b5 CNT + b6 EPRA + b7 ACT + 1 (4) where b ? CHOICEi ? bFV; dependent variable equal to 2 if the ? rm i adopts fair value model under IAS 40 in ? rst-time adoption (FTA), 1 if ? rm i adopts the historical cost and uses IFRS1 to revalue investment properties and 0 if the ? rm i adopts the historical cost without revaluating; Fair Value or Cost Model? LEVi ? SIZEi MTBVi ? ? SMij ? CNTi ? EPRA ? ACT ? 471 he average debt to asset ratio for ? rm i, measured over two years before FTA; log of the average total asset over the two years before FTA; market-to-book value of ? rm i calculated over the last month of the FTA year since the market is in? uenced by the IFRS immediately after the FTA year; dummy variable coded 1 if ? rm i has an earnings smoothing index . the average index of earnings smoothing in country j (? rm’s country of domicile) and 0 otherwise; dummy variable coded 1 if ? rm i has an external market capitalization on GNP . the average external market capitalization on GNP for his legal country of origin (from La Porta et al. 1997) and 0 otherwise; dummy variable coded 1 if ? rm i is a member of the European Public Real Estate Association (EPRA) and 0 otherwise; ratio between total rents and total operating income estimated over the ? scal year preceding the IFRS mandatory adoption. Following Leuz et al. (2003) and Burgstahler et al. (2006) our proxy to capture earnings smoothing policies in the pre-IFRS period is computed as the ratio of the standard deviation of operating income divided by the standard deviation of cash ? ow from the operation, both measures being computed over the four years before IFRS mandatory adoption. The ratio is then multiplied by 2 1 so that higher values are associated with higher earnings smoothing policies. Moreover, in order to capture the real signi? cance of the smoothing ratio (only values around zero denote strong earnings smoothing activities but the more the values decrease the more the smoothing signi? cance disappears), in our analysis for each ? rm we only measure the distance from the average value of the same ratio for the country of origin as measured in Burgstahler et al. (2006). So, the resulting dummy variable is equal to 1 if the ? m has an earnings smoothing index higher than the average index estimated for the country of origin and 0 otherwise. This procedure enables us to capture the peculiarity of each country due to the different local GAAP adopted before IFRS (Leuz et al. , 2003; Burgstahler et al. , 2006). We control for three variables we conjecture to affect the fair value choice by including them as independent variables in the model. Controlling f or both the country of origin and the EPRA (European Public Real Estate Association) membership allows us to include two exogenous factors that could affect the fair value choice. The former factor is considered because the differences in the nature of ? nancial systems around Europe are innate factors for international divergences in accounting (Nobes, 1998), thus in? uencing the fair value choice as well. The 472 A. Quagli and F. Avallone latter factor is considered because the EPRA’s Best Practices Committee encouraged the members to adopt fair value accounting to enhance uniformity, comparability and transparency of ? nancial reporting by real estate companies (EPRA, 2006). Additionally, it makes sense to control for the ? m activity since the business segments within the real estate industry could be considerably different (long-term investments, trading activity, development or services). With reference to the country (CNT), we do not use the distinction between Code Law Countries and Common Law Countries (Ball et al. , 2000), because our sample is entirely made up of Code Law Countries. Since accounting practices usually adhere to ? nancing syste ms (systems based on banks are generally more conservative than systems based on markets), we decided to capture the country effect with the level of ? ancial market development. So, following Nobes (1998), we theoretically classify countries included in our sample in two groups: countries where the role of ? nancial markets is more developed (capital market-based systems) and countries where ? nancial markets are less developed (credit-based systems). We can assume that the adoption of the fair value method should be easier in capital market based systems, where the indirect cost of information production should be lower and the more developed market could better appreciate the informative content of fair value estimates. In order to summarize ? ancial market development, we use the same variable and values as in La Porta et al. (1997). Speci? cally, we ? rstly computed the ratio of stock market capitalization held by minorities to gross national product. Hence, the higher ratio va lue is associated with highly diffused equity and, as a consequence, with more ? nancially developed markets. Therefore, we adopt a dummy variable coded 1 if the ? rm has an external market capitalization on GNP higher than the average external market capitalization on GNP for its legal country of origin (from La Porta et al. , 1997) and 0 otherwise. The stock market capitalization held by minorities is computed as the product of the aggregate stock market capitalization and the average percentage of common shares not owned by the top three shareholders in the 10 largest non-? nancial, privately owned domestic ? rms in a given country. The lack of availability of certain data forced us to use the same values estimated by La Porta et al. With reference to the EPRA membership, we only use a dummy variable (EPRA) that takes a value of 1 for ? rms that are EPRA members and 0 otherwise. Lastly, we control for ? rm activity (ACT). Particularly, since real estate companies could operate in many businesses (renting out investment properties, services, trading of investment properties and development), we use a variable to discriminate the ? rms which generally rent out investment properties from ? rms that operate in trading, services and development. Thus, we use the ratio between total rents and total operating income as a proxy of ? rm activity. So, the high values of the ratio suggest that the renting activity may be considered the company’s core business while low values of the ratio express the opposite. Both rents and total operating income are hand-collected from ? nancial statements for the ? scal year preceding the IFRS mandatory adoption and the latter Fair Value or Cost Model? 473 has been computed as the sum of rents, services, realized gains/losses on investment property sales and other operating revenues. In terms of empirical predictions, we conjecture a positive relationship between the fair value choice (CHOICE) and both ? nancial market development (CNT) and EPRA membership (EPRA). The present work makes no prediction with respect to the other control variable (ACT). Table 1, Panel A presents the proxies used for independent variables and the predicted sign of each relation between covariates and fair value choice for investment properties under IAS 40. Moreover, Table 1, Panel B only shows the relations between independent variables and the choice to use historical cost with IFRS1 revaluation, if theoretically signi? cant. Sample and Data Our study focuses on a sample of real estate ? rms from countries where a systematic use of fair value model was not allowed for investment property assets by pre-IFRS domestic GAAP. A sample of 76 companies was selected from a population of 216 European real estate companies listed in their own country of origin in December 2007 in the following stock markets: Finland, France, Germany, Greece, Italy, Spain and Sweden. In December 2007, the Datastream International database revealed 216 real estate ? rms from the countries that were analysed (235 items, of which 19 were paid rights, preferred share, etc. ). This sample was then screened against a set of conditions: (i) the availability of the full version of the ? rst ? ancial statement complying with IFRS, obtained from the corporate website or via a speci? c request to Investor Relators, (ii) investment property assets on the balance sheet (as de? ned by IAS 40) not equal to zero, and (iii) the full data availability in the Datastream International database. Of the original 216 ? rms, 40 had neither website nor IR contact, 26 had ? nancial statements not complying with IFRS in the period of analysis (2005â€⠀œ 2007), 7 had no investment properties, 27 failed to respond and 40 ? rms did not have complete availability of data in ? nancial statements or in the Datastream database. Thus, only 76 ? rms had suf? cient information for the above-mentioned explanatory variables to be included in the sample. Table 2, Panel A shows the sample selection procedure. The described procedure clearly illustrates that our sample consists of the maximum number of companies for which it is possible to obtain suf? cient information for the analysis, starting from the initial number of companies identi? ed in the database (N ? 216). Nevertheless, our analysis could have introduced a selection bias if an association between ? rms’ disclosure policies (e. g. assuring the availability of the full ? ancial statement on the corporate website or replying to a speci? c request) and the accounting choice had existed. In order to remove any doubts, we test whether there is a difference in drivers of choice used in our analysis between ? rms that provide an annual report or disclose it 474 A. Quagli and F. Avallone Table 1. Proxies and predicted signs for explanatory variables. The variables are grouped according to the main hypotheses for fair value choice and for the choice to use historical cost with IFRS1 revaluation Hypotheses Predicted sign Proxies Explanatory variables Panel A: explanatory variables and fair value choice 1) Contractual ef? ciency The probability of choosing (H1) 2 Debt/asset LEV fair value model decreases (leverage) with higher leverage The probability of choosing (H2) 2 Log of total asset SIZE fair value model decreases with the size (2) Information asymmetry The probability of choosing (H3a) + Market-to-book MTBV the fair value model value increases the higher is information asymmetry (3) Managerial opportunism The probability of choosing (H4) 2 Earning SM the fair value model Smoothing decreases with the extent to Index (dummy which corporate insiders variable) reduce the variability of eported earnings (earnings smoothing) (4) Control variables Firm’s country of origin + External cap/ CNT (? nancial markets GNP (dummy develo pment) variable) EPRA members (European + Yes/no (dummy EPRA Public Real Estate variable) Association) Firm activity ? Total rents/total ACT operating income Panel B: explanatory variables and historical cost with the IFRS1 option (2) Information asymmetry The probability of choosing (H3b) + Market-to-book MTBV the historical cost with value IFRS1 option increases the higher is the information asymmetry after request (the sample) and those that do not. Of course, we could only test the difference between the variables we collected from the Datastream database because we do not have access to the ? nancial statements of non-disclosing ? rm. Thus, we do not control if a difference exists in ? rm activity (ACT) between sampled and non-sampled ? rms. Fair Value or Cost Model? 475 Table 2 . Sample selection procedure and breakdown by country Number Panel A: sample selection procedure European Real Estate Firms listed in their own country of origin in December 2007 in the following stock markets (source: Datastream): Finland, France, Germany, Greece, Italy, Spain and Sweden (countries where systematic revaluation of investment properties was not allowed before the IFRS adoption) Excluding the ? rms: – not reporting under IAS/IFRS in the period of analysis (2005– 2007) – with no investment property assets (or with investment properties equal to zero) – with neither website nor IR contact – failing to respond – with insuf? cient data to estimate equation (3) (in ?nancial statements or in Datastream database) Per cent 216 100% 2 26 12% 27 3% 2 40 2 27 2 40 18. 5% 13% 18. 5% Final sample 76 35% Panel B: breakdown of sampled ? ms by country and the number (percentage) of companies selecting fair value, cost with the IFRS1 revaluation or cost method Country No. of sampled Weight Fair value Cost with the Cost (%) companies (%) (%) IFRS1 (%) Finland France Germany Greece Italy Spain Sweden Total 4 26 22 4 8 4 8 76 5 34 29 5 11 5 11 100 4 (100) 11 (42) 12 (55) 3 (75) 2 (25) 0 (0) 8 (100) 0 (0) 4 (16) 4 (18) 1 (25) 1 (12) 3 (75) 0 (0) 0 (0) 11 (42) 6 (27) 0 (0) 5 (63) 1 (25) 0 (0) Panel B shows the breakdown by country of the sample and the proportion of companies that select fair value, cost with IFRS1 revaluation or cost method without revaluating in each country. We considered companies listed in: Helsinki (Finland), Paris (France), Frankfurt and Munich (Germany), Athens (Greece), Milan (Italy), Madrid (Spain) and Stockholm (Sweden). Of the original 67 non-disclosing ? rms (which have neither website nor IR contact or failed to respond), 34 ? rms did not have complete data availability on the Datastream database. Thus, only 33 ? rms had suf? cient information to be included in the test. For non-disclosing ? rms, we collected data using the same rules as applied in the sample and considering 2005 as a reference date unless companies were still not listed. In that case the reference date has been considered as the listing year. The results show that disclosing ? rms (the sample) are not statistically different from the non-disclosing ? rms in terms of the explanatory variables we selected except for the size ( p-value of 0. 000). 476 A. Quagli and F. Avallone This result is consistent with the literature that shows disclosure levels are usually positively correlated with ? rm size because of the decrease in the cost of disclosure (Lang and Lundholm, 1993). However, we keep the variable in the analysis for two reasons. Firstly, the ? m size (our proxy for political costs) could have both a possible negative relationship with fair value choice and a positive relationship with earnings smoothing (Watts and Zimmerman, 1978). If we do not include the ? rm size in the analysis, a signi? cant negative relation between earnings smoothing and fair value choice could be observed even if the size were the true explanatory variable. Secondly, even if a difference between sampled ? rms and non-disclosing ? rms exists in terms of size, summary statistics show a deviation in size within the sample that does not affect the results of the analysis. With reference to the control variables, among the non-sampled ? rms only one company is an EPRA member. This is an expected result because the EPRA’s objective is to establish best practices in reporting and to provide high-quality information to investors. The result, however, does not introduce a selection bias in the analysis because the sample is made of both EPRA’s members (34 ? rms, around 45% of the sample) and companies that are not (42 companies, 55% of the sample). For these reasons, the results validate our sample and suggest that the sample selection did not introduce a bias into the analysis. We relied on two sources for obtaining data for tests: (i) the ? rst ? nancial statement compliant with IFRS and (ii) the Datastream database. The former source enables us to verify the ? rms’ fair value or cost method choice for investment properties (IAS 40), the choice of ‘fair value as deemed cost’ under IFRS1 and to hand-collect from notes the portion of revenue that is a result of rental activities. The latter source provides all the accounting and non-accounting data we need to de? ne the other explanatory and control variables. Non-accounting data includes market-to-book ratio while the accounting data consists of leverage (debt to asset ratio), total asset, operating income and cash ? ow from the operation (the last two accounting numbers have been used to estimate the earnings smoothing ratio) and the revenues that come from rents. Since the aim of this study is to ? nd out why fair value might be preferred to cost under IAS 40, we have commonly used data which is not in? uenced by the choice. In order to make sense of this key assumption, we referred to different periods for market records and information collected from ? ancial statements when collecting data. Market data refers to the end of the FTA year because the market is in? uenced by IFRS immediately after the FTA year. In other words, immediately after the FTA ? nancial data under IFRS is actually disclosed in ? nancial statements (which explains why the market-to-book value is collected during the last month of the ? rst-time adoption ? scal ye ar). Financial data was collected over the two ? scal years before the FTA. Two years of ? nancial data rather than one year is considered to be more representative of a ? rm’s general characteristics and, in particular, able to reduce the effects Fair Value or Cost Model? 477 that might occur from any unusual or abnormal data from a single year. Only the earnings smoothing ratio required a longer period of time; we used a four-year time period before the FTA for both operating income and cash ? ow from operation in order to estimate the related standard deviations. These two values were then compared to detect any earnings smoothing propensity. Financial information about the Swedish ? rms is converted into euros on the date of download from Datastream. Market data was automatically converted by the Datastream database. 6. Analysis of Results Summary Statistics Table 2, Panel B shows the sample by country breakdown and displays both the number and the proportion of companies that select fair value, fair value with IFRS1 or cost model, respectively, in each country. At ? rst glance, Table 2, Panel B seems to reveal some national patterns in explaining the selection between fair value, historical cost with IFRS1 and cost model without revaluating investment properties. Despite the relatively small number of companies selected in some countries, it has still been possible to observe that companies from Finland, Greece and Sweden are extremely prone to adopting the fair value method. Conversely, Italian companies seem to prefer historical cost without revaluating, Spanish companies have a preference for historical cost with the IFRS1 choice to revalue investment properties, while companies from France and Germany, the main countries in our study in terms of number of companies examined, do not show an a priori preference. Thus, the results justify our choice to control for a country variable through the multivariate analysis. Table 3 presents summary statistics for the full sample of 76 ? rms. It should be noted that the two variables, market-to-book value (MTBV) and leverage (LEV), give rise to outlying observations implied by the values in the minimum and maximum columns of the table. One ? rm in particular had problematic values of both MTBV (value below zero) and LEV (value above one), due to a negative book value and this observation was removed from the analysis. Additionally, we isolate the outlying observations by means of the three sigma (standard deviation) rule (Barnett and Lewis, 1994), thus separating companies which have x ? m(x) ? 3s(x) (5) where s(x) is the standard deviation of the variable (x). To remove the possible effects of the outliers on the results, we present both the nonparametric analysis and the multinomial logistic regression excluding these values (N ? 73). 478 Variable Explanatory variables: LEV SIZE MTBV SM Control variables: CNT EPRA ACT Mean Std. dev. Minimum Q1 Median Q3 Maximum 0. 5881 12. 7876 1. 4739 0. 3684 0. 2802 1. 6774 1. 1350 0. 4855 0 8. 2765 2 0. 17 0 0. 4829 11. 9451 0. 965 0 0. 6015 12. 9058 1. 3 0 0. 7235 13. 9800 1. 615 1 2. 07 16. 6882 8. 94 1 0. 4736 0. 4473 0. 4999 0. 5026 0. 5005 0. 3492 0 0 0. 1834 0 0 0. 4551 1 1 0. 7778 0 0 0 1 1 1 LEV ? leverage; SIZE ? og of total asset; MTBV ? market-to-book value; SM ? earnings smoothing (dummy); CNT ? ?nancial market development (dummy); EPRA ? EPRA member (dummy); ACT ? ?rm activity. A. Quagli and F. Avallone Table 3. Summary statistics of explanatory variables for sampled ? rms (n ? 76) Fair Value or Cost Model? 479 Nonparametric Mann – Whitney Test To begin by analysing the characterist ics of the ? rms that adopt the fair value method or the historical cost with the IFRS1 revaluation in comparison to those that adopt the historical cost without revaluation, we use a Mann–Whitney twosample rank-sum test. In view of the small size of the three groups, a nonparametric alternative to a conventional t-test is justi? ed because of the less challenging assumptions it requires, although this test has some limitations of its own, including being somewhat less powerful than the t-test. Table 4 shows evident differences across our independent variables, some of which appear statistically signi? cant. Consistent with the information asymmetry hypothesis (H3a), the output shows that there is a statistically signi? cant difference in MTBV between real estate ? ms that choose the fair value method and real estate ? rms that adopt historical cost without revaluation (difference signi? cant at 0. 000 level). The analysis of both means and median for fair value and cost groups makes the direction of the difference clear (for the fair value group, a mean of 1. 203 and a median of 1. 11 against 1. 775 and 1. 49 for the cost group). The output exhibits a negative relation between the MTBV and the fair v alue choice, contrary to the prediction derived by the traditional meaning of MTBV as proxy for information asymmetry. In fact, the usual interpretation of high MTBV ratios as a signal of information asymmetry is based on the existence of growth options well known by managers, not revealed by accounting rules and, consequently, not identi? ed by investors. In theory, more growth options for high-tech ? rms in particular, are supposed as a consequence of a large bulk of intangibles whose recognition in ? nancial statements is not allowed, even though investors can estimate their importance (Smith and Watts, 1992; Amir and Lev, 1996). However, in the real estate industry the relevance of intangibles seems less important than in high-tech ? rms. The main assets are investment properties, whose fair value could be easily estimated by ? nancial analysts. In this context, the meaning of high MTBV ratios might be in direct con? ict with the original intuition. In the cost accounting systems before IFRS adoption, higher values of MTBV ratios revealed growth opportunities associated with a fair estimation of investment properties and therefore with a lower information asymmetry. Conversely, lower MTBV ratios for real estate ? ms adopting the cost method could feasibly be the effect of information asymmetries on investment properties value and managers could prefer to use fair value method to reduce these asymmetries. In more precise terms, under the assumption that disclosure is not equivalent to recognition (Schipper, 2007), lower MTBV ratios estimated before the IFRS adoption for real estate ? rms adopting historical c ost should be the result of information asymmetries on investment properties value. Thus, lower MTBV ratios could justify the managers’ preference to the fair value method in order to reduce the asymmetries. This reasoning makes it possible to demonstrate the validity of the hypothesis (H3a), even if the sign of the variable is opposite to the traditional interpretation of the relationship between MTBV and information asymmetry. 480 A. Quagli and F. Avallone Table 4. Mann– Whitney two-sample rank-sum test. Fair Value Group vs. Cost Group (NFV ? 38; NCOST ? 16) and Cost with IFRS1 revaluation vs. Cost Group (NIFRS1 ? 19; NCOST ? 16) Group Explanatory variables: LEV SIZE MTBV SM Control variables: CNT EPRA ACT Z-Statistics Pr . |Z| FV vs. COST IFRS_1 vs. COST FV vs. COST IFRS_1 vs. COST FV vs. COST IFRS_1 vs. COST FV vs. COST IFRS_1 vs. COST 2 0. 114 1. 192 0. 682 0. 762 3. 543 1. 258 0. 814 2 1. 185 0. 909 0. 233 0. 495 0. 446 0. 000 0. 208 0. 415 0. 235 FV vs. COST IFRS_1 vs. COST FV vs. COST IFRS_1 vs. COST FV vs. COST IFRS_1 vs. COST 2 2. 018 2 1. 931 2 1. 007 0. 040 2 3. 523 2 0. 364 0. 043 0. 053? 0. 314 0. 968 0. 000 0. 715 This table presents the Mann–Whitney two-sample rank-sum test for both explanatory and control variables. ? , and indicate statistical signi? cance at less than 10%, 5% and 1% level, respectively. The sample (excluding the outliers) comprises 73 companies from seven countries, split into three groups: ? ms that adopt the fair value model (NFV ? 38), ? rms that choose the historical cost and use the IFRS1 option to revalue investment properties (NIFRS1 ? 19) and ? rms that adopt the cost model without revaluating (NCOST ? 16) for investment properties under IAS 40. LEV ? leverage; SIZE ? log of total asset; MTBV ? market-to-book value; SM ? earnings smoothing (dummy); CN T ? ?nancial market development (dummy); EPRA ? EPRA member (dummy); ACT ? ?rm activity. Furthermore, both the ? nancial market development (CNT) and the ? rm activity (ACT) appear statistically signi? ant as well, with a difference signi? cant at 0. 043 and 0. 000 levels, respectively. The analysis of the means and median for CNT (mean of 0. 5526 and median of 1 for the fair value group against a mean of 0. 25 and median of 0 for the cost group) also shows a direction for the difference consistent with our assumption. Particularly, more developed ? nancial markets (estimated as in La Porta et al. , 1997) with the ratio of stock market capitalization held by minorities to GNP) seem to facilitate the adoption of fair value. Hence, the companies from countries where the role of ? ancial markets is more developed (capital market based systems) appear to view the fair value method more favourably than companies from countries where the markets are less developed (credit-based systems). With respect to the ? rm activity (ACT), we made no prediction of the sign. Both the output and the analysis of the mean and the median (mean of 0. 6558 and median of 0. 7507 for the fair value group against a mean of 0. 3005 and median of 0. 2756 for the cost group) show a positive direction of the difference. The result suggests that the predominant activity of the ? rms that choose the fair Fair Value or Cost Model? 481 value model seems to be investment properties’ rental instead of other activities such as development and trading. Renting out properties implies a longer time period than other activities like development or trading, where assets would typically be sold in a shorter time. Thus, we could interpret the relation with fair value choice as the ? rms need to show the market value of their properties on the balance sheet when their realization will be in a longer time (rental activity). This would reduce the information asymmetry otherwise existing if properties were evaluated at cost. Conversely, when the business is more concentrated on development and trading, the need for fair value recognition is less strong, due to a shorter time horizon for the realization of these assets. Further explanatory variables, such as leverage (LEV), dimension (SIZE) and earnings smoothing (SM), appear not to be signi? cant in the univariate analysis. However, even if not signi? cant it seems interesting to highlight that for both the size (SIZE) and the earnings smoothing (SM) the analysis of the mean and median reveals differences coherent with our research proposition, hence larger size and earnings smoothing for ? ms adopting historical cost (for size, mean of 12. 781 and median of 12. 905 for the fair value group against mean of 13. 167 and median of 12. 932 for the cost group; for earnings smoothing, mean of 0. 263 and median of 0 for the fair value group against mean of 0. 375 and median of 0 for the cost group). Except for the ? nancial market development (CNT), neither exp lanatory nor control variables seem to explain the managers’ choice to adopt the historical cost with the IFRS1 option to revalue investment properties rather than opting for historical cost without revaluation. As for fair value choice, the analysis of the means and median for CNT (mean of 0. 578 and median of 1 for the IFRS1 group against a mean of 0. 25 and median of 0 for the cost group) shows a direction for the difference consistent with the idea that in countries where the role of ? nancial markets is more developed (capital market based systems), companies seem to view the revaluation of investment properties allowed by IFRS1 more favourably than in countries where the markets are less developed (creditbased systems). Multivariate Analysis Before presenting the results of the multinomial logistic regression, we report the Spearman (rank) correlation coef? cients for the variables (Table 5). Considering the following multinomial logistic regression analysis, the dependent variable has been split into three variables: (i) CHOICE, equal to 0 if companies adopt the historical cost, 1 if companies adopt the historical cost with the IFRS1 revaluation and 2 if ? rms embrace the fair value; (ii) FV vs. COST that only regards as fair value choice (Y ? 1) and historical cost (Y ? 0) and (iii) IFRS1 vs. COST that only takes into account the choice to adopt historical cost with the IFRS1 revaluation (Y ? 1) and the historical cost (Y ? 0). With reference to the dependent variable, Table 5 con? rms the previous univariate 482 Variables CHOICE FV vs. COST IFRS1 vs. COST LEV SIZE MTBV SM CNT EPRA ACT CHOICE – – – 0. 0552 2 0. 0620 2 0. 4343 2 0. 1728 0. 1890 0. 1462 0. 4707 FV vs. COST IFRS1 vs. COST – – 0. 0122 2 0. 0978 2 0. 4745 2 0. 0983 0. 2499? 0. 1356 0. 472 – 2 0. 2045 2 0. 1306 2 0. 2131 0. 2033 0. 3311? 2 0. 0068 0. 0625 LEV SIZE – 0. 1780 0. 1657 2 0. 1818 2 0. 312 0. 0895 2 0. 1136 – 0. 0915 0. 0781 0. 2874 0. 3638 0. 0239 MTBV SM CNT EPRA ACT – 0. 0633 – 2 0. 0826 0. 2091? – 0. 1176 0. 2734 0. 0400 – 2 0. 2627 2 0. 0525 0. 4447 0. 1659 – This table provides Spearman (rank) correlation matrix for both explanatory and dependent variables. Considering the following multinomial logistic r egression analysis, dependent variable has been split into three variables: CHOICE, equal to 0 if companies adopt historical cost, 1 if companies adopt historical cost with the IFRS1 revaluation and 2 if ? rms adopt the fair value; FV vs. COST that only regards the fair value choice (1) and the historical cost (0) and IFRS1 vs. COST that only takes into account the choice to adopt the historical cost with IFRS1 revaluation (1) and the historical cost (0). Values indicated in bold show statistically signi? cant relationship between variables. ? , and indicate statistical signi? cance at less than 10%, 5% and 1% levels, respectively (two-tailed). Pearson correlation shows similar results. LEV ? leverage; SIZE ? log of total asset; MTBV ? market-to-book value; SM ? earnings smoothing (dummy); CNT ? ?nancial market development (dummy); EPRA ? EPRA member (dummy); ACT ? ?rm activity. A. Quagli and F. Avallone Table 5. Spearman (rank) correlation matrix Table 6. Multinomial logistic regression results Panel A: model summary – goodness of ? t Number of obs. ? 73 LR chi2 (14) ? 41. 81 Prob . chi2 ? 0. 0001 Pseudo-R2 ? 0. 2799 Log-likelihood ? 2 53. 766523 Panel B: estimated coef? cients Variable Hypothesis 1 LEV SIZE MTBV SM CNT EPRA ACT Constant LEV SIZE MTBV SM CNT EPRA ACT Constant – – (H3b) – – – – 2 (H1) (H2) (H3a) (H4) Predicted sign + 2 2 + 2 + + ? Coeff. 2 0. 6117228 2 0. 4409383 2 0. 6115429 0. 2741504 1. 900273 0. 8488012 2 0. 708886 6. 279216 1. 734055 2 0. 6789767 2 1. 662586 2 1. 692808 1. 510263 2. 449269 2. 263975 8. 836272 Std. err. 1. 681102 0. 2748586 0. 5957133 0. 8804852 0. 9408805 1. 124734 1. 421061 3. 866769 1. 715306 0. 289514 0. 6609104 0. 9636362 0. 949826 1. 124299 1. 353768 3. 969725 z 2 0. 36 2 1. 60 2 1. 03 0. 31 2. 02 0. 75 2 0. 68 1. 62 1. 01 2 2 . 35 2 2. 52 2 1. 76 1. 59 2. 18 1. 67 2. 23 P . |z| 0. 716 0. 109 0. 305 0. 756 0. 043 0. 450 0. 494 0. 104 0. 312 0. 019 0. 012 0. 079? 0. 112 0. 029 0. 094? 0. 026 95% conf. interval 2 3. 906621 2 0. 9796511 2 1. 779119 2 1. 451569 0. 0561811 1. 355637 2 3. 756117 2 1. 299512 2 1. 627883 2 1. 246414 2 2. 957947 2 3. 5815 2 0. 3513614 0. 2456834 2 0. 3893613 1. 055755 2. 683176 0. 0977746 0. 5560336 1. 99987 3. 744365 3. 053239 1. 81434 13. 85794 5. 095992 2 0. 1115397 2 0. 3672257 0. 1958842 3. 371888 4. 652855 4. 91731 16. 61679 483 (Continued ) Fair Value or Cost Model? LOGIT 484 Panel C: estimated odds ratios LOGIT Variable Odds ratio 1 LEV SIZE MTBV SM CNT EPRA ACT LEV SIZE MTBV SM CNT EPRA ACT 0. 5424156 0. 6434324 0. 5425132 1. 315413 6. 68772 2. 336844 0. 3787464 5. 663571 0. 5071357 0. 1896479 0. 1840021 4. 527923 11. 57988 . 621254 2 Std. err. 0. 9118557 0. 1768529 0. 3231823 1. 158201 6. 292345 2. 628327 0. 5382217 9. 714756 0. 1468229 0. 1253403 0. 1773111 4. 300739 13 . 01925 13. 02494 z 2 0. 36 2 1. 60 2 1. 03 0. 31 2. 02 0. 75 2 0. 68 1. 01 2 2. 35 2 2. 52 2 1. 76 1. 59 2. 18 1. 67 P . |z| 0. 716 0. 109 0. 305 0. 756 0. 043 0. 450 0. 494 0. 312 0. 019 0. 012 0. 079? 0. 112 0. 029 0. 094? 95% conf. interval 0. 0201083 0. 3754421 0. 1687867 0. 2342026 1. 057789 0. 2577831 0. 0233743 0. 1963449 0. 2875341 0. 0519254 0. 0278339 0. 7037294 1. 278495 0. 6774894 14. 63149 1. 102714 1. 743742 7. 388093 42. 8214 21. 18385 6. 137025 163. 3658 0. 8944559 0. 6926533 1. 216386 29. 13348 104. 884 136. 6346 Choice ? 0 (historical cost) is the base outcome. This table presents coef? cients/odds ratios from multinomial logistic regression (MLN). Our model assumes the choice to use the historical cost without revaluating as the baseline outcome category to compare (Y ? 0), and forms logits comparing the choice to use the historical cost with the IFRS1 revaluation of investment properties (Y ? 1) and their fair value choice (Y ? 2) to it. We present Wald statisti cs, log-likelihood and McFadden pseudo-R2. , and indicate signi? cance at less than 10%, 5% and 1% level, respectively. LEV ? leverage; SIZE ? log of total asset; MTBV ? market-to-book value; SM ? earnings smoothing (dummy); CNT ? ?nancial market development (dummy); EPRA ? EPRA member (dummy); ACT ? ?rm activity. A. Quagli and F. Avallone Table 6. Continued Fair Value or Cost Model? 485 analysis results. Our proxy for information asymmetry, the market-to book ratio (MTBV), has a strong negative association with fair value choice, thus discriminating the fair value model group from the cost model group. The result con? rms the above-mentioned interpretation of this sign. Furthermore, both the ? nancial market development (CNT) and the ? rm main business (ACT) condition the choice as well. Conversely, the choice to adopt the historical cost with IFRS1 revaluation is not accounted for by the explanatory variables except for the ? nancial market development (CNT). With reference to independent variables, Table 5 shows that some statistically signi? cant How to cite Fair Value or Cost Mode Drivers of Choice for Ias 40, Essay examples

Research Paper Proposal free essay sample

American girl. Race, in its entirety, has always been a controversial issue. I took special interest in this topic after a lecture by my anthropology teacher. In this lecture, he explained how many people associate race with the physical appearances. When in all actuality, race was something created by man to classify human beings, in order to distinguish the superior from the inferior. There has always been a challenge with toy manufacturers when it comes to diversifying their products.In an attempt to diversify The research question that addresses the topics of race and consumerism is How do certain childrens toy manufacturers perpetuate racial stereotypes? This research question will allow me to break down every aspect of the stereotypes associated with the four races that I intend to focus on. As I address the stereotypes, I will attempt to address how toy manufacturers, Matter and American Girl, indirectly promote racial profiling through an attempt to target a broad consumer group. We will write a custom essay sample on Research Paper Proposal or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page A potential source that plan to use in this research paper is the article Multicultural Barbie listed in the Inquiry to Academic Writing book. Also, I intend to use secondary sources, on articles about the research collected from the manufacturer companies during their production and decision making process of their multicultural products. I also intend to use scholarly articles on studies on stereotypes associated with races. Research Paper Proposal free essay sample English comp II Jenna Fussell July 4, 2010 Research Proposal As a student pursuing a degree in Health Care Administration with plans to work in Organizational Behavior, which is the understanding and utilization of knowledge on how individuals and groups interact in organizations. It covers a wide range of topics such as human behavior, culture, diversity, communication, change, leadership and teams. The study of Organizational Behavior will help me to understand how people think, feel, react in a structured organized environment. Although it is a relatively new field of study, and draws most heavily from the psychological and sociological sciences, it also looks to other scientific fields of study for insights. I enjoy talking to people and understanding how they think as well as behave. When a company is thinking of implementing Organizational Behavior principals in its sites, it would need to consider a lot of factors, lots of research would need to be conducted on a lot of things that will determine which principals would need to be implemented in the ompany. We will write a custom essay sample on Research Paper Proposal or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Organizational Behavior attempts to target the root cause of interactions between two professionals at the workplace. Organizational Behavior accomplishes laying rules and guidelines for human behavior at work and asking the employees to focus and adhere to the micro-level practices. Upon completion of reading and researching all the information on Organizational behavior I have learned a lot and have found this to be something I will enjoy learning so much more about. Going into this field of study I will learn all spects of different individuals behavior in the work place and come to work on getting help for it if needed. There are four major models of frameworks that organizations operate out of: Autocratic: The basis of this model is power with a managerial orientation of authority. Custodial: The basis of this model is economic resources with a managerial orientation of money. The employees in turn are oriented towards security and benefits and dependence on the organization. The employee need that is met is security. The performance result is passive ooperation. Supportive: The basis of this model is leadership with a managerial orientation of support. The employees in turn are oriented towards Job performance and participation. The employee need that is met is status and recognition. The performance result is awakened drives. Collegial: The basis of this model is partnership with a managerial orientation of teamwork. The employees in turn are oriented towards responsible behavior and self-discipline. The employee need that is met is self-actualization. The performance result is moderate enthusiasm.

Ethics and Compliance of Starbucks free essay sample

Starbucks has grown to now 18,000 stores in 62 countries and has become the premier roaster and retailer of coffee in the world. The company has strived to purchase and roast high quality whole bean coffees and has become the beacon for all of coffee lovers everywhere. Starbucks company website states that it is their goal to â€Å"make a positive impact one person, one cup and one neighborhood at a time. † Starbucks has committed to a good corporate citizen; using their scale for good to catalyze change â€Å"across entire industries so that Starbucks and everyone we touch can endure and thrive. Starbucks 2012 Annual Global Responsibility report shows more than 9,400 company operated stores were open as of September 30, 2012. In the United Kingdom, 595 stores were open as of September 30, 2012. As a global corporate citizen, Starbucks is doing well in achieving their goals of ethically sourcing their coffee, getting the customers more involved in their communities and recycl ing; just a few of their global goals. We will write a custom essay sample on Ethics and Compliance of Starbucks or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page However, as a billion dollar global corporation, Starbucks has found legal ways to avoid paying their fair share of taxes. In October 2012, an article published by Daniel Johnson of the Daily Mail, stating that Starbucks had managed to avoid paying taxes on $1. 2 billion pounds in sales over the past three years. The company employs at least three legal ways of avoiding tax payments on profits. First, the company charges their own overseas subsidiaries royalties for the right to use its brand and products. Each time a citizen of the United Kingdom purchases a cup of coffee, six percent of the price is a royalty paid back the United States parent company branches. Some of the royalties are placed in tax havens. The royalties would have been counted as profits in the United Kingdom and taxed at 24 % but because the royalties are sent back to the United States the money cannot be taxed. Second way of avoiding tax payments is accomplished by requiring the UK subsidiaries to pay the Holland subsidiary to roast the beans and to buy beans from its Switzerland subsidiaries Holland and Switzerland end up reporting profits because of this. Starbucks used its supply chain to move its profits out of the UK. The profits earned in Holland are taxed at 25%. Swiss law does not require Starbucks to report its profits, which are taxed at only 5 percent. By moving its supply chain operations out of the UK, the company has managed to move its profits out of the UK also. Finally, the company avoids paying taxes by funding the United Kingdom operations through the use of borrowing high interest rate loans from another part of the firm. This action lowers the profits made in the United Kingdom. Starbucks actions are not illegal, but they are not the most ethical practices either. By not paying their corporate taxes, the company is contradicting itself when it states that it desires to make everyone â€Å"endure and thrive. † Instead of being a corporation that inspires change it follows the pattern of the rest of the large corporations who seek to earn a profit by legally avoiding tax payments. â€Å"The U. S. financial markets consist of many separate markets for diverse products offered on a range of trading platforms and exchanges. Among the many products traded are fixed-income securities, equities, foreign exchange and derivatives. (U. S. Department Of The Treasury, 2010). In the United States people rely on other companies to buy their stocks and bonds so the company selling these stocks and bond can to receive money to increase their business. One example of the most popular financial market is the stock markets. This here all types of companies can sell stocks and bonds. There are three types of stock markets in the United States, New York Sto ck Exchange, over-the-counter market, and American Stock Exchange. The New York Stock exchange usually consists of the larger business whereas the Over-the-counter market is mostly made of smaller businesses. The way businesses can earn extra money they loan to the borrower is by charging them interest on the funds they had borrowed. A SEC filing helps the government keep track of a company and make sure they are not breaking any laws but this SEC filing helps the investor as well. The SEC filing helps the investor by showing them how well or how bad the company has been doing in their financial statements. Starbucks relies on their employees as well to follow the SEC regulations, which means for the employees that the board can to come in at any time to a store to regulate the jobs and duties of the employees. The committee is also able to check the stores books to make sure they are putting in all financial information and keeping correct taps on items sold as well as materials used. â€Å"The primary purpose of the Audit and Compliance Committee (the â€Å"Committee†) is to oversee the accounting and financial reporting processes of Starbucks Corporation (the â€Å"Company†) and the internal and external audit processes. The Committee also assists the Board of Directors of the company in fulfilling its oversight responsibilities by reviewing the financial information that is provided to shareholders and others, the systems of internal control which management and the Board of Directors have established, the Company’s risk management practices, and compliance with the Companys Standards of Business Conduct, Code of Ethics for the CEO and Finance Leaders and the Policy for the Review and Approval of Related Person Transactions Required to be Disclosed in Proxy Statements. (Starbucks Corporation Audit and Compliance Committee Charter, 2012) According to the formula current ratio = current assets/current liabilities, the current ratio for Starbucks in 2011 was 1. 83. The formula debt ratio= total liabilities/total assets, the debt ratio was . 40. The formula return on equity ratio = net income/shareholders equity, the return on equity ratio was . 28. According to the formula days receivable ratio = accounts receivable/ (credit sales/365), the days receivable ratio was 164. 47 (Google, 2013). According to the same formulas, in 2012 the current ratio was 1. 90. The debt ratio was . 38. The return on equity ratio was . 27. Finally, the day’s receivable ratio was 197. 52. The financial health of Starbucks is trending upward. The higher current ratio in 2012 implies that it was easier in 2012 for the company to pay back short-term obligations. The lower debt ratio in 2012 implies that the company can manage assets and debt. The return on equity remained close both years, implying that the company generated almost equal profit both ears with the money that the shareholders have invested. The day’s receivable ratio did climb, which means that it is taking the company longer to collect. This could be an issue if the company was smaller, but the size of the company, it should not be a problem at this point. Starbucks has been a wealthy business for some time now. It is the place to get the best coffee around. They seek to find the best coffee beans to roast and brew up into a specialty coffee. As we have read in this paper Starbucks has found legal ways to get around avoiding paying taxes. By selling the coffee in Holland and Switzerland, Starbucks is allowed to not pay taxes on everything sold overseas then send to the United States. This is an unethical way of managing taxes, but it is legal in those areas. The businesses ratios are well in the successful range and are doing very well for themselves. They are certainly holding up to their motto of inspire and nurture the human spirit one person, one cup, and one neighborhood at a time(Starbucks Corporation, 2012). Works Cited: Google. (2013). Retrieved from http://www. oogle. com/finance? fstype=iiamp;q=NASDAQ:SBUX Johnson, D. (2012, Oct 17). Starbucks and the stench of hypocrisy. Daily Mail. Retrieved from http://search. proquest. com/docview/1112339262? accountid=35812 http://www. starbucks. com/responsibility/global-report STARBUCKS CORPORATION AUDIT AND COMPLIANCE COMMITTEE CHARTER. (2012). Retrieved from http://team. starbucks. net/sites/CORP U. S. Department of the Treasury. (2010). Retrieved from http://www. t reasury. gov/resource-center/faqs/Markets/Pages/finmarketsfaq. aspx

Free Essays on Developmental Progression

The developmental progression is different for everyone whether you are a male or a female. Humans start to develop at all different ages. Girls tend to start about two years earlier than boys. Girl’s bodies also go through a more difficult process than the male body does. When a human is born, they are classified as either a boy or a girl. Little girls are usually dressed in pink and white lacy clothing with head bands or ribbons in their hair. Boys are usually dressed in blue. Girls’toys also differ from the boys. Girls are supposed to play with dolls while boys play with trucks. When I was growing up; I had two older brothers and I received the hand-me-downs. I played in the dirt with my GI-Joes just like my brothers did. Girls are taught to be proper and to do all those â€Å"girlie† things. Right when they think they’ve known all to be known about being a girl, puberty comes and smacks them in the face. As early as the age of eight, the female body starts to go through some changes. Breasts start to develop, hair begins to grow and then menstruation begins. The school systems makes you watch that movie thinking that it’s going to prepare you for it all, but it makes the children more confused than before. Puberty for females is more noticeable then it is for males. I never had the problem of having my breast develop too young, but I know girls that went through all the teasing because they had these odd shapes poking out of her shirt. Eventually as the years go on, all the females go through puberty and start to menstruate. Through this time I can assure you that there was a lot of teasing going on. Every time I would get into an argument with my brothers they would automatically assume that I was â€Å"on the rag† or â€Å"aunt flow was in town†. Because of all the teasing and name calling, I can say from experience, I was taught to keep my menstruation a secret. I was almost embarrassed about it. When growing up, it ... Free Essays on Developmental Progression Free Essays on Developmental Progression The developmental progression is different for everyone whether you are a male or a female. Humans start to develop at all different ages. Girls tend to start about two years earlier than boys. Girl’s bodies also go through a more difficult process than the male body does. When a human is born, they are classified as either a boy or a girl. Little girls are usually dressed in pink and white lacy clothing with head bands or ribbons in their hair. Boys are usually dressed in blue. Girls’toys also differ from the boys. Girls are supposed to play with dolls while boys play with trucks. When I was growing up; I had two older brothers and I received the hand-me-downs. I played in the dirt with my GI-Joes just like my brothers did. Girls are taught to be proper and to do all those â€Å"girlie† things. Right when they think they’ve known all to be known about being a girl, puberty comes and smacks them in the face. As early as the age of eight, the female body starts to go through some changes. Breasts start to develop, hair begins to grow and then menstruation begins. The school systems makes you watch that movie thinking that it’s going to prepare you for it all, but it makes the children more confused than before. Puberty for females is more noticeable then it is for males. I never had the problem of having my breast develop too young, but I know girls that went through all the teasing because they had these odd shapes poking out of her shirt. Eventually as the years go on, all the females go through puberty and start to menstruate. Through this time I can assure you that there was a lot of teasing going on. Every time I would get into an argument with my brothers they would automatically assume that I was â€Å"on the rag† or â€Å"aunt flow was in town†. Because of all the teasing and name calling, I can say from experience, I was taught to keep my menstruation a secret. I was almost embarrassed about it. When growing up, it ...

Department of Homeland Security Essay Example | Topics and Well Written Essays - 2250 words

Department of Homeland Security - Essay Example The DHS uses the outdated security controls and the Internet connections that are unverified and untrustworthy (Hicks). This finding has been reported by the Inspector General’s latest report in 2013. In other words, the DHS itself is violating the mandate it has received from the government in which it is authorized to use possible and reliable resources and methods for carrying out the process of security surveillance. If it continues to use such non-verified methods, it will not be able to perform its critical role and without appropriately satisfying its role, it will instead of decreasing the cyber security threat.The reason for choosing this weakness is that the cyber security becomes more serious and grave threat than the scourge of extremism and terrorism. It s devastating impact is so severe that within a span of few minutes it can disrupt the functioning of critical infrastructure which could bring serious financial and infrastructural loss to the United States of Am erica.Using verified and trustworthy security controls and the Internet connections offer the best solution for the weakness. Before going to implement any new security protocol, it must always be ensured that it is trustworthy and authentic and has been appropriately approved by the relevant department within the DHS. In addition, if any problem occurs while operating the security controls, it must be timely reported to the concerned authority and any subsequent changes must also be duly informed to the related authorities.

Maintain a General Ledger Research Paper Example | Topics and Well Written Essays - 2750 words

Maintain a General Ledger - Research Paper Example These kinds of assets are known as 'fixed assets'. Current assets represent the stock of business assets held by the company, the debtors and cash and bank balances. There are intangible assets like goodwill also. Liabilities represent the amounts payable by the company to different constituents of the business like banks, creditors or other agencies. Liabilities may be classified as 'long term liabilities' representing the loans obtained by the company from banks or other financial institutions for running the business and 'current liabilities' representing the amounts payable to The Revenues are the income being earned by any business. Revenues include sales and other earnings from investments of the business. Rental income and interests from investments are also considered as revenues. The revenues are the cash inflows for the business and determine the profits of the company. Expenses are the cash outflows from the business in connection with the running of the business. Expenses may be of capital in nature representing purchase of additional assets or machinery. Revenue expenses are those incurred on a day to day basis for running of the business. The revenue expenses are charged against the income of the business and the profits determined. In the double entry book keeping principle every accounting entry should have a corresponding debit or credit entry reflected in another account. These entries are known as contra entries. Contra entries are passed through general journal and mostly represent non-cash transaction entries like accounting for depreciation. Writing off a bad debt In the course of business sales are done on a credit basis and the parties to whom the credit sales are made sometimes may not be able to make payment for the goods or services bought or availed due to their financial difficulties or bankruptcy. In those cases the amount due to the business is termed as a 'bad debt'. Usually these bad debts are charged off against revenue of the company as expense. This is known as 'writing off a bad debt'. Debtors also known as Accounts Receivables In the process of doing business many a times sales are being made to different parties on credit terms implying that the party instead of making the payment on cash basis will make the payment after a certain agreed period of time. These parties to whom sales are made on credit terms are known as 'Debtors' also known as 'Accounts Receivable' Creditors also known as Accounts Payable Just as the sales are being made on credit terms the business may procure the goods and services on credit terms with the payment to be made within definite periods mutually agreed between the suppliers and the business. These parties who supply the goods or services are known as 'Creditors' also known as 'Accounts Payable'. General Journal General Journal Sales Journal Sales Returns and Allowances Journal Purchase Journal General Ledger - Capital Account General Ledger -

Compare and contrast the Virginia and New Jersey plans presented at Essay

Compare and contrast the Virginia and New Jersey plans presented at the Constitutional Convention - Essay Example equitable ratio of white and other free citizens of every age, sex and condition and 3/5th of rest of the persons except Indians who do not pay taxes in each state. However New Jersey plan is more specific about confederation and states about diminishing or increasing number of states as well. According to Virginia Plan, the national legislature may have the power of legislation by confederation in all cases where individual states are incompetent or harmony of the country may be at stake. It may have the right to negate all laws that are passed by states found contravening to articles of Union. New Jersey Plan offers the same power in addition to the authority to promote commerce, impose levy and raise revenues in the states. According to both plans, executive may negate any legislation that may not be passed by 2/3rd of national legislature. Executive may have powers to execute national laws to appoint to offices or impeach for certain reasons. New Jersey Plan states the same powers for executive in addition to directing military operations without taking any command over troops. Comparing both the plans, it is specifically found that New Jersey plan offers more power to the new federal government because it focuses to revisit and enlarge articles of confederation and gives executive authority to direct military operations as

General Motors (GM) Case Study: Porters Five

General Motors (GM) Case Study: Porters Five In this given case-study is explained in bits and pieces about how the GM lost its market share owing to a number of factors.GM is an American based company concentrating on a lot of Brands,models and having a large spread of price-bands.So the market focus failure in GM can be related to its portfolio proliferation and replication, which in return has given the company a set of negative effects on cash flow. On the other hand its competitor companies like Toyota and Honda have acquired a huge market share with a limited portfolio and a large acquisition of the market share. So the purpose of this report is to critically analyse the different strategic levels of GM motors with respect to the coroporate, business and operational level. Also to analyse and identify the capabilities that would allow GM to achieve the lost competitive advantage and regain the market focus. CRITICAL ANALYSIS OF THE GM MOTORS CASE-STUDY On critically analysing the given case-study, GM lost $30.9 billion for the year 2008 and around $38.7 billion in the year 2007. So far , GMs market share has fallen to 24 percent from 31 percent last year, while Fords has risen to 18 percent from 15.5 percent. Chryslers Northeast Ohio market share has slipped to 9.8 percent from 10.3 percent a year ago. GMs national market share is about 20 percent, down from 22.5 percent a year ago. Fords national share is about 16 percent so far this year, up from 14.5 percent. A diagrammatic presentation of the financial performance of these automobile companies is as given below: WHERE F-FORD MOTORS DCX- DAIMLER AND CHRYSLER GM- GENERAL MOTORS HMC- HONDA MOTORS COMPANY NSANY- NISSAN TM- TOYOTA MOTORS Business Level Strategy The key elements to be highlighted at the business strategic level are as follows: Integrated BLS [business level strategy] Failed application Trade-off between cost and differentiation Implications of united labour force and legal costs. Corporate Level Strategy They process have a multilayer structure and the key process are all centralised that in turn is having a lot of impact on the company, they do not have any regional head and so there is no one who look are each regain in specify terms they only listen to the manager and then decide what is right and is wrong. From the given data, we can come to a conclusion that the major reason behind the market loss was the lack of entrepreneurial spirit. The important this is that they do not have a specific structure as well, what they need to concentrate is that as different companies such as its competitors concentrate on a specific segment and get there profits, the spirits are low and they are not going in the right direction, they will have to work hard and promote the right segment to the right consumer needs, they are not even sure of what environment they are using the other problem that they are facing is that they are not concentrating on the right consumer product for the right enviro nment and so resulting in dip of the sales and in turn loss for the company. STRENGTHS OF GM TO ACHIEVE COMPETITIVE EDGE The following are the capabilities that are exhibited by GM motors in order to revive back its position and achieve a competitive advantage in the market: 1. Large Market Share Though the General Motors is been struggling to make profits in the past few years and it is running out of cash flow still it hold a very high sales market in japan and United states, the problem is that it is not making profits as it is not allowing a lot of cash flow to occur but still it is one of the largest automobile company in the world and it hold a large amount of market share. 2. Global Experience The company being one of the largest company in the manufacturer of automobiles it has a get a global name for itself as it has a lot of brands, as it has got a lot of brands and thought it all may not be successful it has made a mark in the global market and it has got a global experience and that is again a very big advantage that the company has. 3. Wide range of brands General motors has the highest number of cars it has already got 95 different types of cars and as aware there are around 18 segments in automobile industry and it has got 3 cars for each segments, that is one thing that only General Motors have been able to achieve, thought it has been criticized by lot for not able to concentrate on any specific segment, but if they concentrate each segment properly and put the hard work in right direction they are bound to succeed. PORTERS FIVE FORCES MODEL The competitive structure of an industry is another important component of identifying factors that are a threat to diminish profitability. One of the most efficient ways to assess competitive issues is to consider Michael Porters five-force analysis. Porter (1980, 1985) has highlighted five such factors: (1) rivalry between existing competitors, (2) threat of entry by new competitors, (3) price pressure from substitute or complementary products, (4) bargaining power of buyers, and (5) bargaining power of suppliers http://www.themarketers.in/wp-content/uploads/2010/01/Porter_Five_Forces1.jpg Rivalry between existing competitors: There is always rivalry with other the competitors and that it needs to give a lot of importance, and it is the competitors with a better product that succeed in the todays market, so general motors but give a lot of importance to its competitors and always try and be ahead of them, in the present situation they are lacking being them in a lot of ways, the rivals have got a lot of products which is more competent and that is more of the requirement that the customers are looking for and they are also getting that important as they are quite important that they thing what the rivals are dont and what they are not doing. Threat of entry by new competitors: In the present days market there, in any industry there is a lot of threat of new entrants in the market, s you should always think out of the box and try and be innovative as much as you can so that you have an advantage over your competitors and even if there are any new entrants into the market, The another threat of the entry on a new company or competitors is that they might give you a thought price in the price and so you might need to cut on the prices of your products and this will indeed lead to less profits, Thought an automobile market is not a small market and there are a lot of hurdles for a new entrant into this sort of market that might lead them to trouble and this in turn will not let the new entrant to enter the market as this is require a lot of investment , moreover the new entering will have to capture a large amount of market share to have a good hold of the market. Price pressure from substitute or complementary products For instance the demand will never come directly in play for this section but it will have an impact with a lot of factors that influence it and it will generally be the substitute and the complements. For example in the U.K. when you want to travel to Central London you even though you have a car you will still not consider going with your own car, there are few reasons for not taking your car along with you and firstly you have a substitute that is available as taking a transportation in a form of tube is much easier it will save your time, money and you will not have the hassles of going through all he traffic this a substitute a lot of people use in London, the reason behind this is that firstly the transportation by your own car will be expensive and other thing is that in Central London there are a lot of parking problem and they will charge you congestion, so traveling by the tube will save all this hassles. So that is more beneficial for you, and this days a lot of people fee l that the fuel prices or in other terms the gas prices are rising and so it will be better to find an alternative or substitute to car as so this is reduce the sales of car not directly but indirectly. 4. Bargaining Power of Buyers Bargaining power of the buyer here means that the power of the consumers who are will to buy a car, in this form of bargaining if a consumer who is not aware of the prices and goes for a bargain for a car if the dealer doesnt agree to sell the car on that bargain then the impact will come directly on to the dealer and not to the manufacturer directly, the consumer might go to some other dealer to get his deal done. So it is the consumers who will benefit from that and this will lead the deals to give the customers a good deal and in this form the consumers are not dealing directly with the customers and so the dealers will suffer a less profit and not the manufacturer, so it will not always but might have an impact on the manufacturer. 5. Bargaining power of the suppliers The bargaining power of the suppliers means, the cost of raw material that is being used in the manufacturer, the labour function and the services that is being provided to them, and so in an auto manufacturer the labourer and the raw material, along with the the technology services are being used are playing a very important role, for instance we can go back into the case of General Motors and know that they had serious issues with the powers of the suppliers that is the labour that they had and that a lot of demands and that had to be fulfilled and that they were claiming a lot of pension, medical and seek leave and also wanted their wages to be increase so that was all the troubles of that they were facing in the past and the reason that they lost a lot of business was the reason behind it. ENVIRONMENTAL ISSUES OF GM- 2011 Shanghai   Shanghai GMs Drive to Green strategy, which was launched in January 2008, is aimed at introducing products that offer better performance, consume less energy and generate lower emissions than vehicles currently on the road. The success of the green strategy didnt work out they. They are trying to work on the environment issues that a lot of cars this are using a lot of fuel and this generates a lot of smoke in the air leading to air pollution and so the amount of oxygen in the air throughout the word is decreasing with the increase in carbon-monoxide will lead to a lot of environmental problems, they are there for trying to drive people towards the direction of hybrid cars and they have named the project as green strategy and they are really promoting it, those it has not been a hit it has just been a flop they are still working on different strategies and they and conclude on a high node.