Progress and Necessity :: Essays Papers

Progress and Necessity That theater has undergone many changes since its early incarnation in ancient Greece is a fact obvious even to the casual observer. And it is likewise clear that, as the cultural and social structure of the world shifts and changes over time, it is appropriate that its art forms change as well, in order to address appropriately the new reality in which they exist. However, perhaps not too unexpectedly, there are those who reject our modern manifestation of theater as insincere or false -- indeed, as there are in every time those who contest the latest evolutions of all types of art. Chief among those who disapprove of the theater of their own (and, in fact, nearly all) time is Friedrich Nietzsche, a philosopher who seems to have made his reputation largely by being gloomy and arrogant. It should not be surprising to us that a man who had little good to say about anything (other than himself and the things he liked) would criticize the greater portion of the history of any art form, but what is interesting -- and, moreover, an instance of a particular mistake which seems to have afflicted others as well -- is the reason he gives for his displeasure. According to Nietzsche, worthwhile tragedy perished even before the fall of ancient Greece, and the cause of its demise was the rise of reason. As he says in The Birth of Tragedy, "When after all a new genre sprung into being which honored tragedy as its parent, the child was seen with dismay to bear indeed the features of its mother, but of its mother during her long death struggle. The death struggle of tragedy had been fought by Euripides . . . . Tragedy lived on there in a degenerate form, a monument to its painful and laborious death (Nietzsche 70)." As we find out later, Euripides was merely acting under the influence of Socrates -- a terrible man, a plague upon the Athenian state, whose listed faults remind one of Nietzsche himself -- but that is little comfort; the damage is done. And what is the crime of Euripides, this upstart dramatist, who dared introduce a new element to the theater? Apparently, that he "succeeded in transporting the spectator onto the stage (ibid.)" -- that he permitted the common man in the audience to identify with the actors in a more personal way, and therefore shortened, perhaps eliminated, the distance between the two camps.

Bancolumbia: Talent, Culture and Value Creation Management in Mergers Essay

Any organizational culture interventions are designed to address issues that affect almost everybody within that culture. These interventions are done for a number of reasons. There are always enormous pressures on organizations to reduce costs, increase productivity, speed up cycle time of product development, clarify direction, improve morale, and increase participation. Sometimes organizations approach large scale interventions consciously and intentionally, such as when they develop a 3 to 5 year strategic plan, engage in a culture change initiative, or acquire/merge with another organization like in the case of Bancolombia. Change may also be forced on the organization unintentionally due to changes that occur inside the organization such as an unexpected structure change which was also the case for the parties involved in the Bancolombia merger. Organizations often choose a large-scale intervention when the task is complex or urgent, or when multiple people are required to accomplish it. Whatever the reason, the purpose of a cultural intervention in a large system is to make lasting change in the character and performance of an organization, a standalone business unit, or a large department. The large-scale organizational interventions significantly affect integral aspects of the organization’s functioning, structure, and processes. Thus, these interventions are visible, wide-ranging, and require significant commitment and attention of organizational leaders and members. Once culture is established and accepted, it becomes a strong leadership tool to communicate the â€Å"new† organization’s beliefs and values to its members, and especially new comers. When leaders promote the culture, they become successful in maintaining organizational growth, the good services demanded by customers, the ability to address problems before they become disasters and consequently are competitive against rivals. Ultimately, if executed properly, corporate culture can be the only truly sustainable competitive advantage.

Corporate Governances Impact On Capital Investment Decision - Free Essay Example

Sample details Pages: 15 Words: 4355 Downloads: 5 Date added: 2017/06/26 Category Statistics Essay Did you like this example? Introduction Overview Through various studies over the years, different scholars and financial analysts have been able to establish a relationship of cash flow on firmsà ¢Ã¢â€š ¬Ã¢â€ž ¢ investment spending. It was significantly proven by (Modigliani Miller, 1958) that a firmà ¢Ã¢â€š ¬Ã¢â€ž ¢s financial status is irrelevant for real investment decisions in a world of perfect and complete capital markets, after controlling for the cost of capital. In case of managerial discretion, based on (Jensen, 1986) free cash flow theory, firms increase investment (including projects with negative present value) based on the availability of cash flows with incentive of increasing firmsà ¢Ã¢â€š ¬Ã¢â€ž ¢ value beyond level of optimal investment. Moreover, an agency costs also appreciate the borrower net worth by charging a premium on the external financing. The discussion above explains that the firmsà ¢Ã¢â€š ¬Ã¢â€ž ¢ investment decisions are dependent on the availability of internal funds, as cost advantage over external fund is evident. Don’t waste time! Our writers will create an original "Corporate Governances Impact On Capital Investment Decision" essay for you Create order While choosing an appropriate capital structure, there are certain trade-offs which affects the decision. These trade-offs include tax advantage through acquiring debt against the bankruptcy cost which advocates the use of equity. Keeping this in view, various different models have been supported to explain this corporate capital structure behavior. Pecking Order Theory, initially mitigated by (Donaldson, 1961) describes the financing practice as prioritizing the means of financing, which is necessary for the management to counter against asymmetric information. Either they should generate the funds internally or acquire funds externally through debt rather than equity. Implications to the pecking order theory involves the positive impact of leveraging on the market price, which means, financing through debt sends a positive signal into the market about the firmà ¢Ã¢â€š ¬Ã¢â€ž ¢s future prospects. Furthermore, intermediaries also undermine the role of management as the financial intermediaries such as investment banks function as the insider to the firm. Consequently, keeping an eye on the firms operations and influencing the firmà ¢Ã¢â€š ¬Ã¢â€ž ¢s capital financing decision. However, Pecking order theory of (Myers, 1984) argues that the firms operating in imperfect or incomplete capital markets where the cost of external capital exceeds that of internal funds, the financial structure may be appropriate to the investment decisions of companies facing uncertain prospects. Gauging the level of corporate investment in any firm is based on the corporate governance; market position of a firmà ¢Ã¢â€š ¬Ã¢â€ž ¢s asset against its book value can be termed as Tobinà ¢Ã¢â€š ¬Ã¢â€ž ¢s q ratio. Identified by (Chung Pruitt, 1994), Tobinà ¢Ã¢â€š ¬Ã¢â€ž ¢s q as proportion of firmsà ¢Ã¢â€š ¬Ã¢â€ž ¢ market value to replacement cost of its assets. Tobinà ¢Ã¢â€š ¬Ã¢â€ž ¢s q can be considered an effective tool for determining financial performance as the data can be collected readily from a balance sheet. When calculating Tobinà ¢Ã¢â€š ¬Ã¢â€ž ¢s q ratio, the replacement cost can be determined approximately by the book value of firmà ¢Ã¢â€š ¬Ã¢â€ž ¢s plant and equipment. Approximate q can be replaced with the actual Tobinà ¢Ã¢â€š ¬Ã¢â€ž ¢s q to make the calculations unproblematic and data can be readily available without any discrepancies. Problem Statement To study the impact of corporate governance on the capital investment decision through cash flow and Tobinà ¢Ã¢â€š ¬Ã¢â€ž ¢s q interaction in relation with Capital Investment HypothesEs H0: Firmsà ¢Ã¢â€š ¬Ã¢â€ž ¢ cash flow having a significant impact on its capital investment will be linked with high Q values. (FCF Theory) HA: Firms being liquidity constrained due to least payout will have significant investment-cash flow sensitivity, and will be linked with high Q values in the market. (PO Theory) Outline of the study The report contains the contemplation of research data that will study the phenomenon of cash flows and investment discussed earlier in this paragraph. The study categorizes firms according to characteristics (such as dividend payout, size) which will help measure the level of constraints faced by firms. The study will help readers to understand the complexities of Pecking order theory and Free Cash Flows concept with regard to asymmetric information available and corporate governance which influences decision of the firms. To measure the effect that cash flow-financed (internally sourced) capital spending and Q has on firmsà ¢Ã¢â€š ¬Ã¢â€ž ¢ investment, Ordinary Least Square Regression model will be used to estimate the function. To compute the influence on the Investment, instruments used are: (1) Cash Flow, (2) Approximate q, and (3) an interaction of both variables are created. Through studying the parameter estimates of interaction variable, positive influence on investment will support the Pecking Order hypothesis and negative influence will govern the Free Cash Flow hypothesis. The equation hypothesized in the next part is linear. Definitions Pecking Order Theory: (Myers, 1984): à ¢Ã¢â€š ¬Ã…“A firm is said to follow a pecking order if it prefers internal to external financing and debt to equity if external financing is used.à ¢Ã¢â€š ¬? Free Cash Flow Theory According to (Jensen, 1986), à ¢Ã¢â€š ¬Ã…“free cash flow theory, high cash flow and low debt create agency costs associated with conflicts between manager and share holder over the payout of this free cash, which is the cash left after the firm has invested in all available positive net present value projects.à ¢Ã¢â€š ¬? Capital Structure à ¢Ã¢â€š ¬Ã…“A careful and systematic analysis of how claims against a corporations assets can or should be determined, assessed, and accounted for.à ¢Ã¢â€š ¬? (Riahi-Belkaoui, 1999) Capital Investment Decision à ¢Ã¢â€š ¬Ã…“Capital Investment decisions are those decisions that involve current outlay in return for a stream of benefit in future years.à ¢Ã¢â€š ¬? (Drury, 2006) Tobinà ¢Ã¢â€š ¬Ã¢â€ž ¢s q à ¢Ã¢â€š ¬Ã…“Tobins q is a measure of investors expectations concerning a firms future profit potential. It is defined as the ratio of the market value of a firm to the replacement cost of its assets.à ¢Ã¢â€š ¬? (Strecker, 2009) Literature Review Vogt (Vogt, 1994) explained the capital spending behavior of companies with respect to change in dividend cash paid, cash flows, sales, and market value of assets. The regression equation models the variables to proportion of fixed assets, and distributes the firmsà ¢Ã¢â€š ¬Ã¢â€ž ¢ data in segments of Dividend Payout Groups and Asset Groups. Primarily, Dividend Cash has a strong negative impact on capital spending; it explains that in order to finance additional fixed investment firm needs to sock cash by reducing their dividend. Cash flow, Sales, and Q Ratio having a positive coefficient demonstrates that with an increase in future cash flows, the firm will improve its capital spending. A relationship has been developed between the firmsà ¢Ã¢â€š ¬Ã¢â€ž ¢ investment decision and the firmà ¢Ã¢â€š ¬Ã¢â€ž ¢s financial status by Cleary (Cleary, 1999), financial status has been studied with respect to the liquidity constraints. The data is classified into groups through a discriminant analysis on basis of dividend payout policy. Groups taken into study have made possible to identify firmsà ¢Ã¢â€š ¬Ã¢â€ž ¢ which are more financially constrained more likely to be investment-cash flow sensitive, furthermore, availability of internal sources of funds have a greater impact on firms with high credit worthiness, and vice versa. It has been proposed that the various ownership structures make managerial decision based on the interaction between investment and the firmsà ¢Ã¢â€š ¬Ã¢â€ž ¢ liquidity constraints. The study conducted by Dedoussis Papadaki (Dedoussis Papadaki, 2010) mentioned that the management can be held separate from its ownership, even on basis of the nationality of the company. On the other hand, it also explained that the relative shareholding of CEO and the controlling shareholders can also be the basis of separation. The sample used in the study was separated and grouped on basis of dividend payout, asset size of the firm, age of the firm, source of control, and kind of ownership. On the given sampling criterion; greater asset size firms, older firms, lower Q (high investment opportunity), and high dividend payout firms showed higher cash flow sensitivity towards investment. Findings support that the Low Q, small, and new firms under the generalized model are facing asymmetric information problems. Indeed these firms are expected a priori to face financing problems that affect the cost of their external financing. On the other hand, low Q, old and low dividend firms are more likely to face managerial discretion problems that result to over-investment. The impact of Tobinà ¢Ã¢â€š ¬Ã¢â€ž ¢s Q is mainly used to determine the investment opportunity of the firm. In this article, marginal Tobinà ¢Ã¢â€š ¬Ã¢â€ž ¢s Q has been taken to evaluate the firmsà ¢Ã¢â€š ¬Ã¢â€ž ¢ investment and Research Development expenditures. The asymmetric information (AI) hypothesis proposed that firms provided with a profitable investment-project may be not able to source it through internal cash flows and for the reason that the cost of external funds is too high due to the capital markets ignorance of the firms investment opportunities. On the other hand, agency or managerial discretion (MD) hypothesis constructs the investment-cash flow relationship on the assumption that managers are well qualified in context with proficiency they obtain from managing a huge and fast paced firm and thus exceeding the wealth shareholders beyond their expectations. (Gugler, Mueller, Yurtoglu, 2004) Taking in viewpoint the impact of capital structure on the capital investment decision, firmsà ¢Ã¢â€š ¬Ã¢â€ž ¢ investment demands is the more susceptible towards cost-of-capital or tax-based capital incentive. Whereas, capital structure seems irrelevant as against internal sources of funds can be effectively substituted with sources of funds generated externally. The size of the investment project can be a deterministic factor towards it. Fazzari, Hubbard, Peterson, Blinder, Poterba (Fazzari, Hubbard, Peterson, Blinder, Poterba, 1988) explicates that cash flow/investment relationship is more sensitive when taken in reference with firmsà ¢Ã¢â€š ¬Ã¢â€ž ¢ dividend behavior. Comparison based on firms having more or less liquidity constraints can be further improved when compared on a division based on the scale of the firms, i.e. young or small firms versus large ones. This way the researchers can address the problem of firms lacking the asymmetric information. Under the impression where capital investments decisions mainly pertains to the capital structure or choosing the appropriate source of investment, Schaller (Schaller, 1993) conducted three different empirical tests to determine that information asymmetries have a huge influence on the firmsà ¢Ã¢â€š ¬Ã¢â€ž ¢ investment behavior. Differences among the informational base of investors and creditors was also considered a capital market imperfection. Ownership status and age of the firms has an impact on the cost of equity financing, mature firms pay comparatively less price for it than young firms. Same aspect goes for the firms with concentrated with comparison to dispersed ownership. Borrowing is considered a more rational source for investment-projects. Pledgeable assets generate greater borrowing capacity, which afterwards makes firms invest more in pledgeable assets. As suggested by Almeida Campello (Almeida Campello, 2007), such a phenomenon can be termed as a credit multiplier. In case of financially constrained firms, a multiplier relates to the sensitivity of firmsà ¢Ã¢â€š ¬Ã¢â€ž ¢ investment-cash flow relationship that is reflected as the increase in the tangible assets of the firm. Therefore, it is proposed that with fewer tangible assets firms are more likely to be financially constrained. The sensitivity of investment-cash flow relationship is evidently influenced by the tangibility of a firm, as latter discussed. Managers while making capital investment decision considers externally-sourced funds costlier, therefore, overconfident managers over assessing the profitability of an investment-project invests more when having abundant internal funds to utilize. However, deciding not to source externally in case where they are short of internal funds to generate. There has been an evidence of significant relationship between the managerial discretion and investment-cash flow sensitivity. Equity concentrated firms are more likely to be influenced by overconfident managers, unless compensation tools can be used to reduce the effects of managerial overconfidence. (Malmendier Tate, 2005) Goyal Yamada (Goyal Yamada, 2004) have explained the impact of asset pricing in the stock market against investment-cash flow sensitivity. Overvalued stock prices triggers an increased in investment spending and are cut back when stock are being undervalued, consequently, inflated prices collateral assets attract higher level of external financing. Inflationary pressures primarily determined by the economic monetary policy impacts on the variation of cost on external financing, though it reflects highly on cost of external financing, marginally impacts less on the investment-cash flow sensitivity. It has been observable that less financially constrained firms have significantly higher investment-cash flow sensitivity. Characterizations of firms based on financial constraint can sometimes create confusion. Firms having unusually high cash holdings can either be characterized as unconstrained based on the opportunities it has to invest or constrained based on the assumption that it needs to have a precautionary savings to invest in future investment projects. Therefore, financial constraints cannot be used as an influential determinant for investment-cash flow sensitivity. (Kaplan Zingales, 1997) Hu Schiantrlli (Hu Schiantarelli, 1998) put into picture the effect of general economic factors and various firmsà ¢Ã¢â€š ¬Ã¢â€ž ¢ characteristics on the value of the firmsà ¢Ã¢â€š ¬Ã¢â€ž ¢ net worth. Mainly financial status is the most important determinant for the level of asymmetric information problem that managers face. A strong balance sheet position can reflect good sign of firmsà ¢Ã¢â€š ¬Ã¢â€ž ¢ performance which enhances the market value of the firmsà ¢Ã¢â€š ¬Ã¢â€ž ¢ asset to its stake holders, mainly investors and creditors. Q models assumption also assists in determining the sensitivity of the investment-cash flow relationship, where the indicators determine the investment opportunity and the sources of funds to choose from. Understanding the market influence in proxy of q can also give a clear picture to the movements in the firmsà ¢Ã¢â€š ¬Ã¢â€ž ¢ investment over a period. Net worth of firms helps manager determine if the sourcing of funds externally is a viable option in contrast to the investment opportunity which underlies. (Hubbard, 1998) Research conducted on the investment-cash flow sensitivity addresses many aspects of the firmsà ¢Ã¢â€š ¬Ã¢â€ž ¢ financial strength. Further study by Calomiris Hubbard (Calomiris Hubbard, 1995) shows that when firmsà ¢Ã¢â€š ¬Ã¢â€ž ¢ tax taken under investigation also reflected a significant influence on the volume of spending on investment-projects. They explored the impact of surtax margin, as a tax experiment, on the cost of internal and external funds. Surtax when levied on undistributed profits, obligate the firms to incur certain cost on the internal funds. This effects the managersà ¢Ã¢â€š ¬Ã¢â€ž ¢ decision to invest and is also reflected on the investment-cash flow sensitivity against the surtax margin. As a result to evade burden of higher cost on internal funds, firms with high surtax-margin exhibits elevated sensitivity in investment-cash flow relationship. Quan (Quan, 2002) discusses the Pecking Order theory with reference to the Modigliana-Miller proposition that works under the assumption of perfect market. Here it is stated that value of the firm is irrelevant and based on a few limitations the choice of financing can be determined via gauging the strength of the firm. These factors pertain to the imperfect market and influence the managers to make their capital investment decision. Once the assumptions are released the financing structure shows a clear picture. The association between Free Cash Flow theory and Agency theory has always been under the limelight when there is a question of retaining the undistributed profits. FCF Theory taken under consideration gives out an option to the management to hold on to excess cash sacrificing the shareholders opportunity cost. These excess funds can be generated to better internal operational efficiency or at managersà ¢Ã¢â€š ¬Ã¢â€ž ¢ discrepancy to source its investment-projects. (Wang, 2010) Research Methods The chapter explains the model used in the given research study. The study focuses on analyzing the influence of Cash Flows and Tobinà ¢Ã¢â€š ¬Ã¢â€ž ¢s q on Corporate Investment. The equation represented by a dependent variable as a ratio of capital spending to the beginning net fixed asset (I/K) predicted by independent variables: (1) ratio of cash flow to the beginning gross fixed asset (CF/K), and (2) beginning Tobins q (Q). Method of Data Collection Main source of collecting the required data is from secondary sources. It includes the Balance Sheet Analysis of Joint Stock Company listed in Karachi Stock Exchange provided by State Bank of Pakistan consisting of data of our relevant variables. The data was taken in annual terms to conduct this research. Sampling Technique The Convenience sampling or grab or opportunity sampling would be use in this research. Sample population selected because it is readily available and convenient. Sample Size The sample period taken under study covers 8-years period beginning at the start of 2000 and ending at the close of 2008. The data was taken from a sample of 70 (non-banking and non-financial) companies which are listed on Karachi Stock Exchange and included in KSE-100 index. Research Model Statistical technique Ordinary Least Square Regression technique is used to study the impact of variables included in the study. It helps studies the relationship between a dependent variable and several independent variable. It also assumes the relationship to be linear or à ¢Ã¢â€š ¬Ã…“straight line,à ¢Ã¢â€š ¬? where the values of predictors lies directly proportional to Criterion variable. SPSS Software is used to develop the regression model and evaluate the influence of predictors on dependent variable. Results Findings and interpretation of results Aggregate Sample: Table : Represents the model summary of regression estimates for the full sample of 69 firms The predictors, i.e. main effects of Cash Flow and Tobinà ¢Ã¢â€š ¬Ã¢â€ž ¢s q and an interaction variable of both combined, included in the model explains 78.5% of Investment (Table 1) shown mentioned as R Square. Least variation in Adjusted R Square suggests that the variable to observation ratio in the given model is sufficient. Casewise diagnostic was also conducted to eliminate the outliers in the data to improve the results. Table : Studies the F-statistics to test whether the model predicts the dependent variable significantly The F-statistics (Table 2) is significant and it determines the regression model with the given predictors can significantly predict the outcomes at a 0.05 significance level. Table : The parameter estimation for full sample of 69 firms with respect to dependent variable, t-statistics is used to test the null hypothesis ÃŽÂ ²1 = ÃŽÂ ²2 = ÃŽÂ ²3 = 0 The coefficient values of all predators included in the test are significant at a 0.05 significant level (Table 3), which shows that they have a strong influence on the investment of the firm. The standard coefficient shows that Cash Flows have a much greater impact on Investment than market value on the firm, which is exemplified through Tobinà ¢Ã¢â€š ¬Ã¢â€ž ¢s q. Dividend Payout groups: Table : Presents the sample statistics for 69 KSE listed (non-banking and non-financial) companies which are included in the KSE-100 index. The three rows distribute the statistics into High, Medium, and Low payout policies. Average dividend-to-income ratios of greater than 0.35, between 0.35 and 0.10, and less than 0.10 define High, Low, and Medium dividend-payout firms, respectively. While studying the dividend-payout groups (Table 4), the descriptive helps to identify characteristics to confirm whether the data being studied has the authenticity and the behavior pattern which commonly related to the groups assigned. The values of Investment, Cash Flow, and Tobinà ¢Ã¢â€š ¬Ã¢â€ž ¢s q associated with the groups are in complete correspondence with the hypothetical occurrence. Firms having a higher (lower) dividend payout have greater (lower) market value, and lower(higher) level of cash flows and investments. Table : Represents the model summary of regression estimates of 69 firms split by High, Medium, and Low dividend-payout policies. The model helps explains 81.9%, 66.7%, and 80% data in High, Medium, and Low dividend-payout firms (Table 5), shown in R Square. Least variation in Adjusted R Square suggests that the number of observations is sufficient with respect to variables in each group separately. Table : Studies the F-statistics to test the null hypothesis of ÃŽÂ ²1, H = ÃŽÂ ²1, M = ÃŽÂ ²1, L The F-statistics (Table 6) in each dividend payout group is significant and it determines that each regression model with the given predictors can significantly predict the outcomes at a 0.05 significance level. Table : Shows the parameter estimation for each payout groups with respect to dependent variable, t-statistics is used to test the null hypothesis ÃŽÂ ²1 = ÃŽÂ ²2 = ÃŽÂ ²3 = 0 The coefficient values of predators in High and Low dividend payout groups are all significant at a 0.05 significant level (Table 7), which shows that they have a strong influence on the investment of the firm. Except for Medium dividend payout group, which has insignificant coefficient values of Tobinà ¢Ã¢â€š ¬Ã¢â€ž ¢s q, showing no impact on the investment. The standard coefficient shows that Cash Flows have a much greater impact on Investment than market value on the firm, which is exemplified through Tobinà ¢Ã¢â€š ¬Ã¢â€ž ¢s q. Hypothesis Assessment Summary Hypothesis Independent Variables B t Sig. Comments Firmsà ¢Ã¢â€š ¬Ã¢â€ž ¢ cash flow having a significant impact on its capital investment will be linked with high Q values. (FCF Theory) Cash Flow ÃÆ'— Q H0: ÃŽÂ ²3 0 ÃŽÂ ²3,H = .135 5.295 .000 Rejected ÃŽÂ ² 3,M = .072 .991 .324 ÃŽÂ ² 3,L = .140 5.482 .000 Firms being liquidity constrained due to least payout will have significant investment-cash flow sensitivity, and will be linked with high Q values in the market. (PO Theory) Cash Flow ÃÆ'— Q HA: ÃŽÂ ²3 0 ÃŽÂ ² 3,H = .135 5.295 .000 Accepted ÃŽÂ ² 3,M = .072 .991 .324 ÃŽÂ ² 3,L = .140 5.482 .000 Dependent Variable: Investment (I/K) Table : Summarizes the results and explains that the hypothesis accepted is directly in correspondence with the aggregate hypothesis. As illustrated (Table 8) capital spending of low payout firms is positively and strongly influenced by the interaction term, consistent with the PO hypothesis, the parameter estimate for the high payout firms are also positive but marginally significant. Conclusion, Discussions, Implications And Future Research Conclusion The results illustrated above demonstrates that the positive relationship between the degree of the Investment-Cash flow relationship and Q represented latter in the aggregate data (Table 3) is concentrated in low or no dividend paying firms. This finding is in further support with the PO hypothesis. Discussions The objective was to study and test the causes of universal relationship between Cash Flow and Investment Spending. Hence, two hypotheses were included in the research to study the source of this relationship: the free cash flow hypothesis (FCF) hypothesis, which works on the assumption that managers prefer investing its free cash flow excessively into investment projects that are not profitable, and the pecking order hypothesis (PO) purports that managers are prone to investment comparatively less than the opportunity provided due asymmetric information-induced liquidity constraint. As advocated in favor of Pecking Order Theory by (Fazzari, Hubbard, Peterson, Blinder, Poterba, 1988) and many others, for groups which consists of small firms with low-dividend payout to fund capital spending, exhibits heavy reliance on cash flow and cash changes. The relationship can be more significantly studied when the impact of larger q value is associated with this group. Evaluating the impact of corporate governance on investment-cash flow relation requires a critical judgment as to how do the firmsà ¢Ã¢â€š ¬Ã¢â€ž ¢ cash flow and the existing market value influence the investment decision. Financially constraint firms may have a larger impact on liquidity associated matters and managers might take discretion in choosing the right sources to tap. Agency cost may be involved in making such a decision where managers may consider paying dividend as a higher opportunity cost as it reduces the firmsà ¢Ã¢â€š ¬Ã¢â€ž ¢ free cash flow to exploit new profitable investment projects. Implications and Recommendations In the current market situation where external pressures existing can also be taken into proxy. When managers making a capital investment decision they need to take in view other non-financial aspects that also influences the decisions to a certain extent. Furthermore, financial intermediaries having a certain level of involvement and sharing information sensitive to the market can also be a major factor that might be giving a varying result against Investment. Investing in profitable-investment projects can bring in greater resources to the firm in future and it entails a huge decision burden upon the shoulders of the managers. Shareholders expecting to earn a greater return through investing in them can also be undermined when manager decided to have a low payout policy. Funds generated internally is a possibility where there is a healthy cash flow, but it is also preferable if this free cash is invested into marketable security for allocating the resources into a profitable venture for a time being to make it a positive impression. Future Research In future studies there may be more aspects of cash flow-investment relationship which can be studied for assessing the degree impact it has on this relationship, i.e. sales, debt performance, capital structure, firm size, etc. The research study may also be improved if the observation of firms are increased that will in turn reflect a more clear picture about the relationship in the current scenario. References Almeida, H., Campello, M. (2007). Financial Constraints, Asset Tangibility, and Corporate Investment. The Review of Financial Studies , 20 (5), 1429-1460. Calomiris, C. W., Hubbard, R. G. (1995). Internal Finance and Investment: Evidence from the Undistributed Profits Tax of 1936-37. The Journal of Business , 68 (4), 443-482. Chung, K. H., Pruitt, S. W. (1994). A Simple Approximation of Tobins Q. Financial Management , 23 (3). Cleary, S. (1999). The Relationship between Firm Investment and Financial Status. The Journal of Finance , 54 (2), 673-692. Dedoussis, E., Papadaki, A. (2010). Investment spending and corporate governanc: Evidance from the ASE listed firms. Managerial Finance , 36 (3), 201-224. Donaldson, G. (1961). Corporate Debt Capacity: A Study of Corporate Debt Policy and the Determination of Corporate Debt Capacity. Division of Research, Graduate School of Business Administration, Harvard University . Drury, C. (2006). Cost and management accounting: an introduction (6 ed.). Cengage Learning EMEA. Fazzari, S. M., Hubbard, R. G., Peterson, B. C., Blinder, A. S., Poterba, J. M. (1988). Financing Constraints and Corporate Investment. Brookings Papers on Economic Activity , 1988 (1), 141-206. Goyal, V. K., Yamada, T. (2004). Asset Price Shocks, Financial Constraints, and Investment: Evidence from Japan. The Journal of Business , 77 (1), 175-199. Gugler, K., Mueller, D. C., Yurtoglu, B. B. (2004). Marginal q, Tobins q, Cash Flow, and Investment. Southern Economic Journal , 70 (3), 512-531. Hu, X., Schiantarelli, F. (1998). Investment and Capital Market Imperfections: A Switching Regression Approach Using U.S. Firm Panel Data. The Review of Economics and Statistics , 80 (3), 466-479. Hubbard, R. G. (1998). Capital-Market Imperfections and Investment. Journal of Economic Literature , 36 (1), 193-225. Jensen, M. C. (1986). Agency costs of free cash flow, corporate finance, and takeovers. American Economic Review , 76, 323-9. Kaplan, S. N., Zingales, L. (1997). Do Investment-Cash Flow Sensitivities Provide Useful Measures of Financing Constraints? The Quarterly Journal of Economics , 112 (1), 169-215. Malmendier, U., Tate, G. (2005). CEO Overconfidence and Corporate Investment. The Journal of Finance , 60 (6), 2661-2700. Modigliani, F., Miller, M. H. (1958). The cost of capital, corporation finance, and the theory of investment. American Economic Review , 48 (3), 261-97. Myers, S. C. (1984). The capital structure puzzle. The Journal of Finance . Quan, V. D. (2002). A rational justification of the pecking order hypothesis to the choice of sources of financing. Management Research News , 25 (12), 74-90. Riahi-Belkaoui, A. (1999). Capital structure: determination, evaluation, and accounting. Quorum. Schaller, H. (1993). Asymmetric Information, Liquidity Constraints, and Canadian Investment. The Canadian Journal of Economics , 26 (3), 552-574. Strecker, N. (2009). Innovation Strategy and Firm Performance: An Empirical Study of Publicly Listed Firms. Gabler Verlag. Vogt, S. C. (1994). The Cash Flow/Investment Relationship: Evidence from U.S. Manufacturing Firms. Financial Management , 23 (2), 3-20. Wang, G. Y. (2010). The Impacts of Free Cash Flows and Agency Costs on Firm Performance. Journal of Service Science and Management , 3 (4), 408-418.

The Too Big to Fail Problem - Free Essay Example

Sample details Pages: 7 Words: 2152 Downloads: 3 Date added: 2017/06/26 Category Finance Essay Type Narrative essay Did you like this example? Too big to fail was a very regular term we all heard during the Great Recession of 2008, but did we truly understand the term? To understand this overused term, we must first define what it means to be a firm that is Too Big to Fail. According to Stern and Fieldman, too big to fail'(TBTF), a term describes the receipt of discretionary government support by a banks uninsured creditors who are not automatically entitled to government support. (8). Citi Group is an example of this term that easily comes to mind; the government never considered that a firm as large as them would ever be on the verge of collapse. It was only after their announcement to the US government in August of 2008 stating their bankruptcy, the government took action guaranteed this mega-firm that they would pay off their bad investments. But why would our very own government consider such action? A reasonable answer would be that the government considered the perceived dangers of letting a bank of this size collapse and the repercussions that the economy would experience if they allowed this to happen. The main concern is, how did government regulations become so lax? Why do they allow a bank to become so large and overleveraged, that if they were to fail, it would resonate throughout the global economy. What can the government do to solve this problem at hand? To understand how we fell into the Great Recession, we have understand how these firms were able to get so oversized. In 1932 Congress passed the Glass-Steagall Act; which banned commercial banks from underwriting securities. Banks were forced to choose between being commercial banks, that held deposits and made loans, and investment banks that conducted securities transactions(Crawford,128). However in November of 1999,a new regulation, supported by the banking industry, called the Gramn-Leach-Bliley Act repealed the Glass-Steagall Act.   What made Congress go back into regulations and repeal the act? In the boom of the 90s, the feeling of financial sector was that the Glass-Steagall Act hampered Americas financial companies from being competitive globally.   An ambitious CEO, Sandy Weill of Travelers Group(one of the largest insurance companies), had a dream in which his corporation would merge with Salomon Smith Barney(one of the largest investment banks at the time) and Citicorp(the largest commercial bank) to form a super conglomerate. However, at the time, this deal was illegal because the Glass-Steagal Act was still in effect. The size of Citicorp and Travelers were so big that they were able to go to Congress and demand action, and Congress folded. Weill was able to convince Alan Greenspan(Chairmen of the Federal Reserve), Paul Rubin(Secretary of Treasury), and   President Clinton to allow the merger with the expectation that Congress would repeal the Glass-Steagall Act. Citicorp and Travelers had their lobbyist push their merger so hard that the legislation, H R10, House Resolution 10, which became the Financial Services Modernization Act, was referred to as the Citi-Travelers Act on Capitol Hill(Bill Clinton). Not only was this act passed with a dominate 90-8 vote in the Senate, but also an overwhelming 362-57 vote in the House. This repeal would serve as the key corner stone that allowed bank to perform mergers of this nature, and allow them to get so oversized.   Ãƒâ€šÃ‚  Ãƒâ€šÃ‚  Ãƒâ€šÃ‚  Ãƒâ€šÃ‚  Ãƒâ€šÃ‚  Ãƒâ€šÃ‚  Ãƒâ€šÃ‚  Ãƒâ€šÃ‚  Ãƒâ€šÃ‚  Ãƒâ€šÃ‚  Ãƒâ€šÃ‚  Ãƒâ€šÃ‚  Ãƒâ€šÃ‚  Ãƒâ€šÃ‚   After the repeal of the Glass-Steagall Act these new conglomerate became so large and interconnected that once the Great Recession started, the failure of one bank would mean the failure of the entire financial system. American International Group(AIG), an insurance company, is a example of this. With the repeal of the Glass-Steagall Act, AIG suddenly transformed into a company with General insurance, Life insurance retirement services, Fina ncial Services, and Asset Management (Sjostrom 946). AIG was able to use premiums paid for life insurance to leverage creation of credit default swaps; A CDS is a privately negotiated contract where one party( the protection seller),in exchange for a fee, agrees to compensate another party(The protection buyer) if a specified credit event(Such as bankruptcy or failure to pay) occurs with respect to a company( the reference entity) or debt obligation(the reference obligation). CDS are used for a variety of purposes including hedging, speculation , and arbitrage (Sjostrom 948). For example, if a company like Goldman Sachs wants to hedge on mortgage defaults; they would go to AIG, and enter into a credit default swap with them. They would then pay AIG a fee upfront, and if the mortgage was to default, AIG would agree to pay the defaulted value thus limiting the risk to Goldman Sachs. Problem is rather than AIG setting aside the value, they would need to pay Goldman Sachs if the mortgag e was to default. AIG would instead use the fee they received for the credit default swap to leverage the fee into creating more credit default swaps. Goldman Sachs, viewing that they had protection on their mortgages, would go out and buy more mortgages using future interest and principles payments on those mortgages. However, once the crisis occurred, foreclosures went through the roof. AIG faced a mountain of credit default swaps that they had to pay out to. Since they were so overleveraged they didnt have enough cash on hand to pay out all the credit default swaps. If AIG defaulted, Goldman Sachs would then not receive the money they were expecting from the credit default swaps, and would also not be receive the monthly payment on the mortgage thus creating a short-fall for them as well, since mortgage were usually re-packaged and resold. An AIG default would have not only affected companies in the U.S, it would have also caused a catastrophic ripple throughout the global bankin g sector. However, AIG was deemed too big to fail and the U.S government stepped in to pay all of AIGs credit default swaps thus preventing wide spread chaos. As the chaos subsided, various economists have presented solutions to the Too Big to Fail problem, including ending securitization, lowering leverage level, enforcing more transparency, create morally defensible incentives, and breaking up companies deemed too big to fail. By ending securitization, we would face higher interest rates for borrowers but, as Cohan states If financial engineers can find a way to bundle loans into securities that are guaranteed not to lose money for investors, then securitization should continue (Cohan). However this is a pipe dream and facing the possibilities of another global recession or higher interest rates the later, should be preferred. If we enforce lower leverage levels on all actors in the financial system including banks, hedge funds, insurance companies, businesses and households t o set clear targets for maximum leverage and to ensure that none of them is able to exceed those targets. (Cohan) This will bring balance not only to Wall Street, but also to America. For far too long Americans have lived beyond their means and the growth of credit card debt is a clear example of this. If all leverage were to be scaled back the environment for future growth rather than present day payoff would be much brighter. Transparency in the financial market is also very lacking as witnessed by the Bernie Madoff scandal; in which Madoff scammed his investors out of 65 billion dollars. Wall Street firms are still not held to a high enough level of transparency to provide consumers with a true picture of a firms strength. Another big problem is how bankers are compensated for their work. Their bonuses are tied to the size and amount of deals they perform in the year and it would serve no purpose to them to be cautious in making deals. A clear solution to this is one suggested by Cohan, rather than bankers receiving all bonuses that year they put all the money into an escrow account, and wait five years, if the investment were still valuable, the banker would receive the money out of escrow, otherwise, the escrow would pay the losses that the investor incurred from the bad deal. This kind of structure could reduce the moral hazard in the current incentive system. (Cohan) This would provide bankers the incentive to perform deals that are more likely to make money for investors rather than for their own selfish purpose. Finally, the one solution that might make the most sense to the average consumer, would be to just break up companies deemed too big to fail by the government. Cohan believes that there should be a limit on how big a bank could get, we shouldnt be rewarding managers for building big companies that cant earn profits that exceed their cost of capital. And we should not require taxpayers to pay for the cost of such failures. Although all five of these steps would be necessary to prevent systemic risk it will still, also require the diligence and regulation from the federal government to avert a financial crisis weve had. The United States Government has listened to the economists and the first of the financial reform regulations had finally been passed on June 29th , 2010 . The passing of Dodd-Frank Wall Street Reform and Consumer Protection Act incorporated many of the solution that have been mentioned above. To deal with the issues of lowering leverage levels and enforcing better transparency, the Dodd-Frank Act created a Financial Stability Oversight Council in which its made up of expert members of the financial community, headed by the Treasury Secretary and includes the Chairmen of the Federal Reserve and other government financial agencies. What this new council will do is make recommendations to the Federal Reserve for increasingly strict rules for capital, leverage, liquidity, risk management, and other requi rement as companies grow in size and complexity, with significant requirement on companies that pose risks to the financial system (US Senate). This council will make changes to regulations depending on the size and complexity of the bank and prevent too big to fail banks from getting over leveraged and investing in questionable investments. This council will also solve the issue of breaking up a bank if its deemed too large or complex, they are able to approve, with a 2/3 vote and vote of the chair, a Federal Reserve decision to require a large, complex company, to divest some of its holdings if it poses a grave threat to the financial stability of the United States- but only as a last resort. (US Senate) This gives the power to this council to essentially force a bank deemed too large, to sell some of its assets to be reduced to a more manageable size. The act also brings back some of the components of the Glass-Steagall Act in the form of the Volcker Rule, which requires regulato rs implement regulation for banks, their affiliates and holding companies, to prohibit proprietary trading, investments in and sponsorship of hedge funds and private equity funds, and to limit relationships with hedge funds, and private equity funds (US Senate). By separating savings and loan banks from proprietary trading and other risky investments, this will significantly lower the risk a bank will be willing to take. Bank used to be faced with the decision to either make very modest returns on mortgages and loans or high returns from hedge funds and proprietary trading and faced with that decision greed over takes all reasoning. On the last point of incentives, large banks have realized that the public now views incentive based bonuses very negatively, instead they are moving away from giving record bonuses every year, and instead started to double or triple salary in some cases. In the past, banks have preferred to keep salaries low and use bonuses as a way to drive performa nce. Now instead investment banks such as Credit Suisse, UBS and Morgan Stanley have also added so-called clawback provisions to bankers pay, allowing the banks to take back some pay from employees who fail to meet certain performance goals. (Werdigier) Rather than having set performance based incentives, these more flat salary increase might allow the bankers a bit of a wiggle room to make deals that are more financial sound. This Dodd-Franks act is a step in the right direction, but there is still much to do in order to prevent this from happening again. Vigilance and patience is what we need now, to rebuild and recuperate from this fiasco. There is no point in going back to the age of the Glass-Steagall Act since the complexity and size of global financial organization have grown. All the act would do now is hamper U.S firms. With these new government regulation and with good self-regulation, financial firms from this point forward should be able to maintain a leverage level where a failure of one firm, wouldnt cause a systemic collapse of the entire sector. However, greed is everlasting, and only through persistence can we prevent the financial firms from getting so close to the edge of collapse again. Don’t waste time! Our writers will create an original "The Too Big to Fail Problem" essay for you Create order

Persuasive Essay On Abortion - 1575 Words

â€Å"In her own case, Ms. Brenneman said she was a 21-year-old junior at Harvard when her birth control failed and she had an abortion. ‘It allowed me to choose when to become a mother,’ she said. ‘As a mother now, I know I was correct at 21†¦ I didn’t have a college degree†¦ I didn’t have an income. I didn’t have a marriage. I didn’t have anything a child needs. And I didn’t want it† (Liptak, 2016). Brenneman, among the 24% of women who will undergo an abortion during their lifetime by the age of 45, chose the best decision for herself at that specific instance in her life, described in the personal testimony above (Jones, 2014, p. e1). The recent attacks on women’s reproductive rights by the Republican Party, although grounded in â€Å"protecting†¦show more content†¦Wade, which federally legalized abortion in the United States. Instead of fighting to overturn the supreme court case, pro-life r epublicans strategically utilized the tenth amendment, which discusses state’s rights, to simply limit women’s access to abortion. They believe the way to end abortion is to completely eradicate it, and concluded that increasing the difficulty of attaining the procedure will accomplish that. While limiting women’s access to abortion, congressional republicans also began stripping them of their birth control and contraceptives. In 2011, â€Å"House Republicans voted to eliminate funding for Title X family planning to end federal funding for Planned Parenthood, a leading source of birth control; and†¦ eliminate the existing requirement that the program cover contraception for its low-income beneficiaries† (Brownstein, 2012, p.15). Republicans, in addition to abortion, want to decrease the availability of contraceptives and this anti birth control trend has continued under the current Trump administration, where more pronounced anti birth control rhetor ic and rollbacks are currently taking place. In October of 2017, the administration â€Å"rolled back an Obama-era rule requiring most employers to provide their employees with birth control coverage without co-payments. The mandate†¦ eliminat[ed] out-of-pockets costs for contraception† (Pear, 2017). The contraceptive coverage mandate being attacked gave approximatelyShow MoreRelatedPersuasive Essay About Abortion993 Words   |  4 Pagesin two peoples perspectives. The story consisted of a daughter (Deb) and mother’s perspective after the death of her father. The purpose of this layout is to show how they are both grieving in individual ways. Writing for the persuasive was presented as an essay on why abortion should be accessible in every country, and to also outline the shame women receive. Purpose Purpose for writing publication- Purpose for writing a real-estate article was to inform a potential buyer on the house showed. AlsoRead MoreAbortion Persuasive Essay1119 Words   |  5 Pages To begin with, there has always been an extensive issue with the topic of abortion, why? Well, it’s a tough subject and can get extremely emotional and very defensive. Honestly, people just need to open up their eye’s and understand that its murder and not just a choice. It is murder because two can create a blessing and the choice of aborting it, is more like a sacrifice for the reason a mother can’t carry a baby for nine months. Whether a person is a minor, young adult, or an adult and is inRead MoreAbortion Persuasive Essay755 Words   |  4 Pagesinstead these babies are torn limb by limb, burned, and many other tortuous methods to end the precious life. Abortion is murder and is not only very cruel to the unborn baby but it also harms the mother. Pro-choice is an escape from the harsh reality that a baby is being murdered, and in my eyes a life should only be terminated if God himself is ready to call them home. One reason why abortion is wrong is because they are many other safe solutions that would give the child a chance at life. AdoptionRead MorePersuasive Essay On Abortion917 Words   |  4 PagesAbortions in Texas consist of ending a pregnancy of an unborn child before it can live out of the mother womb. However if the pregnancy ends not on purpose before the twenty four week mark then technically it would be considered a miscarriage. Though inducing the abortion on purpose has caused a lot of controversy over the past century. Deliberately putting people on one of two sides of this issues, of either being for it, which would be considered Pro Choice. Or in the other category of the ProRead MorePersuasive Essay On Abortion1635 Words   |  7 Pagessolve this issue the option of abortion was brought to the forefront by scientists and advocates such as Dan Savage who mentioned that abortion should be mandatory for the next 30 years in or to control the population. (Ertlet) For countri es such as the U.S. with a growth rate being 1.6%, the proposal of widespread abortion is highly recommended as mentioned by obstetricians and gynecologists. (MumfordKessel) Who now leaves the question as to if the option of abortion should be used as a means ofRead MorePersuasive Essay On Abortion1228 Words   |  5 Pagesmillion pregnancies each year in the United States, 1.6 million end up in abortion† (Hern). Because of the numerous traumatic psychological, physical, and overall irresponsible behavior or actions constantly encouraged due to abortion, it should be banned, and forever illegal. Killing one’s own fetus has been linked to psychological distress which has been channeled into many different cases of substance abuse. â€Å"Induced abortion has been linked to increased rates of substance abuse, especially amongRead MoreAbortion Persuasive Essay804 Words   |  4 Pagesfamily with someone. Often times accidents happen in which people didn’t plan for, and can lead to many financial problems or neglect of one’s child because the parents weren’t prepared to be parents. This is why there should be the option of abortion. Abortion needs to be an option for everyone because it helps from long lasting mental states, infection, economical problems, and or having conceived from a non consensual circumstance. Pregnancy is a hard and unforgiving to the woman’s body. In factRead MorePersuasive Essay On Abortion954 Words   |  4 Pagesand nations who destroy life by abortion and euthanasia are the poorest. I do not say legal or illegal, but I think that no human hand should be raised to kill life, since life is God’s life in us, even in an unborn child.† Do you know what abortion really is? Abortion is the ending of pregnancy by removing a fetus or embryo before it can survive outside the uterus. Abortion seems to be more common in today’s society. Numerous amounts of individuals support abortion, and do not realize how it affectsRead MoreAbortion Persuasive Essay736 Words   |  3 Pagesfavor of abortion rights. The decision was 7-2, it stated that it showed a â€Å"right of privacy.†Abortions have been performed for thousands of years all around the world, even though many women died from it. Women nowadays have a choice of whether they want to get an abortion. Abortions do come with risk, one of them being death, but women should still have a right and say what they want to do with pregnancy and not be judged by others for doing so. Today the debate across the world is if abortion shouldRead MorePersuasive Essay On Abortion1321 Words   |  6 Pagessomeone who may be suicidal or who is suicidal himself/herself. As for taking away fetus’ lives, the damage that abortion makes on life can be proven with the statistics. According to Casey, â€Å"over the past 44 years, one-sixth (60,000,000) of the American population has been killed by elective abortion. Twenty-five percent of African-Americans are killed in the womb America,† (Should Abortion Be Legal n.p.). The figure 60,000,000 is a depressing number considering that these children could have been future

Liberty vs responsibility Free Essays

Liberty v/s Responsibility Liberty is the most valued and sought after outcome of any political society. It is a mark of a productive and prosperous society where people enjoy a set of fundamental rights for e. g. We will write a custom essay sample on Liberty vs responsibility or any similar topic only for you Order Now :- right to free speech, fair trial, etc. On the other hand social responsibility towards others and oneself unites the community and increases social well-being. Various political philosophers have come up with different ways to prioritize one over the other and some have believed to strike a balance between the two. This leads to an interesting political debate that at what point we draw a line etween liberty and responsibility, where in we have maximum liberty and minimum responsibility. In this paper I assert the libertarian political thought which resolves this debate by striking a fine balance between liberty and responsibility. To support my argument, I apply the ideas of John Locke who was a 17th century classical liberal philosopher (for first reason) and much of libertarian political thought is inspired from his works. For second reason I apply the ideas of libertarian philosopher Friedrich Hayek. Towards the end I discuss the principles of libertarianism which clearly address this conflict. The first reason is the primary reason why people have desire to loot or plunder and that reason is scarcity. Scarcity is also the main reason why we have to follow a set of rules and act responsibly. If there were no scarcity, then there would be a surplus of goods and resources for everyone and any person’s wishes and desires would be fulfilled no matter how unlimited they were and his/her actions would have no consequence on anybody else. But we do live in a world where there is scarcity and that cannot be avoided. So, we have to interact and exchange goods with one another and that involves a set of rules for social conduct. In this context, John Locke believed in the rightful accumulation of property (scarce good) by mixing labor with natural resources (Nozick 175). He didn’t believe in accumulation of property via coercion, fraud or theft. As far as the extent of accumulation is concerned he believed that too much property should not be consumed that very little is left for others because that would hinder someone else’s right to accumulation of private property. Nozick had given this a term â€Å"Lockean Proviso† (Nozick 175). Applying the Lockean proviso to the conflict between liberty and responsibility, in the presence of carcity, there has to be a certain set of responsibilities that people need to fulfill (mentioned above, Locke called them â€Å"natural laws† (Korab)) mainly including the one where they don’t over-consume resources so that less is left for others and at the same time enjoy the liberties granted by the social contract. It’s important to note that the responsibilities are optimum that if there are more or less responsibilities there will be less to no liberty. The second reason is that responsibility is important for liberty to exist is that it encourages good decision making by making people accountable for their actions. Friedrich Hayek in his book â€Å"Constitution of Liberty’ said that a free society depends more than any other on people being held responsible for their actions (â€Å"American Spectator†) Applying his idea, in lite it one is awarded tor achieving a set ot goals by the proper use of resources he/she was provided with, then that person should also not be helped and made to suffer the consequences of making a bad decision. In the long term, this suffering will help him make better decisions. Additionally, if the person doesn’t suffer the consequences, he/she will develop a propensity for xcessive risk taking which wouldn’t be good for the society. Another implication of not taking responsibility is that someone else ends up taking responsibility for it and then that person has a right to curb the latter’s freedom. For e. g. :- if the government decides to bailout a firm which didn’t make right decisions, then the government will force the company to take some hard decisions which might go against the interests of the people in that company. So, learning to take responsibility from bad choices increases self-ownership and thereby upholds one’s liberty. It also improves one-self hich is always beneficial towards society. Libertarianism has two main principles: the non-aggression principle and the preservation of individual rights and private property (â€Å"Libertarianism†). According to Libertarianism these are the only two responsibilities the person owes to other people in the community. He/she ought not to show aggression and encroach upon any other person’s rights in the community. Any responsibility more than that comes at the cost of liberty. Based on the reasons that I gave, Libertarianism strikes a fine balance between liberty and responsibility by not placing laws that achieve a specific outcome unlike a eviathan government. At the sane times the laws that it places are minimal and only lead to a further expansion of liberty among all. One doesn’t want too many laws because that leads to a powerful government where there is no liberty and one also can’t manage not having any laws because scarcity and greed will lead to a state of war of â€Å"one against all†. Libertarianism gives a solution that is somewhere between those two extremes. To conclude, libertarianism believes in the importance of individual liberty which can be found in the fundamental rights that people enjoy and duties/responsibilities hich people are obligated to follow. It’s important for fundamental duties to exist because without which liberty won’t exist. However, responsibility wouldn’t have any meaning in the absence of liberty and that it derives its existence from the presence of the latter. How to cite Liberty vs responsibility, Papers

Cutting Force Analysis for Machining Indicator Performance

Question: Describe about the Cutting Force Analysis for Machining Indicator Performance. Answer: Introduction The cutting force measurement is the most effective indicator of the machining performance. There are two components of the cutting force, one is static and the other one is dynamic, which provide information about the state of the chip formation and of the cutting tools (Mfg.mtu.edu, 2016). The piezoelectric force measurement system measures the force with the help of piezoelectric effect which generates charges depending upon the applied mechanical force. This work presents the analysis and review of the data obtained regarding the cutting forces obtained during end milling of different metal and alloys from the piezoelectric dynamometer. Experiment Procedure The aim of the milling is to produce the various shapes that by the process of material removing. For the process, different tools are used for varied applications (Li et al. 2016). For the experiment one block each of aluminum, brass, and stainless steel is required and finally the piezoelectric dynamometer is required for measuring the cutting force. Metal cutting mechanics Metal shaping and cutting is done by moving the work piece and the cutting tool by using the relative motion to scrap off the metal off the surface. There are two types of metal cutting procedure involving single point cutting tool. If the cutting edge, that rubs the surface, is at 90o to the travel direction of the block then it is called vertical mill and if the angle between them is zero, i.e. the plane of the tool and metal is same then the tool is call the horizontal mill. For the investigation of the performance of the cutting tools, the cutting force measurement is essential (Mehta et al. 2016). Cutting forces Single point cutting tool cut the block at a single point, hence the force applied is on a single axis but for the ease of understanding it is divided into two components. The figure depicted below shows the components of milling tool and the force that is being applied in order to cut the metal into desired shape, the components of the force are shown as P1 and P2 (Sequeira et al. 2012). These components are-: Fx: The thrust force that acts in radial direction (Shown by P1). Fy: The cutting force acts to remove the metal (Shown by P2) Figure 1: Shows the milling process Image source: Dombovari and Stepan, 2015 Dynamometer The dynamometer used here is the piezoelectric dynamometer which uses piezoelectric components for measurement of forces. Dynamometers are the devices that are used to measure physical parameters like force and torque. Dynamometer measures the two cutting force components, which are perpendicular to each other. The measured numerical values that has been generated during milling is stored in computers with the help of DAS(Data Acquisition System) (Kistler.com, 2016). The piezoelectric outputs are initially amplified and are then sent to computer for storage and analysis as depicted in figure. Figure 2: Represent the force measurement by Piezoelectric Dynamometer (Image Source: As created by Author) Block Materials Aluminum Brass Copper Results Fx is the Thrust cutting (N) Fy is the Cutting force (N) T is the Time (s) Aluminum Figure 3: Shows the obtained data for Aluminum Figure Source: As created by author Brass Figure 4: Shows the obtained data for Brass Figure Source: As created by author Stainless steel Figure 5: Shows the obtained data for Stainless Steel Figure Source: As created by author Comparison and discussion The three graphs that have been obtained during the experimentation can be seen in the previous section. Aluminum is a high strength, malleable and low density metal contributing to its low weight. This can be seen in the figure; the low density allows lesser force required for cutting but the higher metal strength makes the thrust force required for the movement very high. In case of brass the alloy is extremely malleable but the hardness is lesser compared to steel. The high malleability makes the starting thrust force very high but as the transient phase passes, the force ease and decreases, and the cutting force is high as the metal is very tough. In case of stainless steel the metal is hard but brittle hence the cutting force is high but the thrust force is very less compared to other metals. Conclusion This report discusses the various data that has been obtained and realized during performing the experiment. The experiment was done in a CNC and the force data were obtained with the help of the piezoelectric sensor available in the dynamometer. Finally the obtained data was compared and summarized which helped in understanding the property of the material. References Sequeira, A.A., Prabhu, R., Sriram, N.S. and Bhat, T., 2012. Effect of Cutting Parameters on Cutting Force and Surface Roughness of Aluminium Components using Face Milling Process-a Taguchi Approach.IOSR Journal of Mechanical and Civil Engineering,3(4), pp.7-13. Mehta, M., Nandwana, B.P., Saloda, M.A., Khidiya, M.S., Jindal, S. and Barvaliya, S., 2016. Experimental Analysis of the Cutting Forces in Dry Turning of EN8 Steel.Imperial Journal of Interdisciplinary Research,2(7). Rao, P.N., 2013.Manufacturing technology: metal cutting and machine tools. v. 2. Tata McGraw-Hill Education. Kistler.com. (2016). [online] Available at: https://www.kistler.com/?type=669fid=65model=download [Accessed 12 Sep. 2016]. Li, C.P., Kim, M.Y., Islam, M.M. and Ko, T.J., 2016. Mechanism analysis of hybrid machining process comprising EDM and end milling.Journal of Materials Processing Technology,237, pp.309-319. Mfg.mtu.edu. (2016). case. [online] Available at: https://www.mfg.mtu.edu/cyberman/quality/metrology/case.html [Accessed 12 Sep. 2016].