Identity Theft and Fraud A Major Threat to the Australian...

Identity theft/fraud is becoming a major threat to the Australian community as technology advances. This section of crime produces substantial profits for offenders and causes considerable financial and emotions harm to the victims (Australian federal police, 2014). With this increasing alarm around identity theft/fraud in Australia, there has to be strong legal actions available to counteract the issue. Identity theft/fraud can be defined as a crime of obtaining the personal or financial information of another person for the sole purpose of assuming that person’s name or identity in order to gain benefit (investopedia, 2014). This essay will extensively discuss the current laws/legislations implemented for identity theft/fraud, the key stakeholders involved in the issue and an overview around the effectiveness of the current laws/legislations. After thoroughly analysing the current legislations used to counteract the threat of identity theft/fraud, it will be clear which aspe cts of the legislations are working efficiently and which aspects are proving inefficient for the Australian government. Identity Theft is the assumption of a person’s identity in order to obtain credit cards from back account and retailers; the crime varies from stealing money from existing bank accounts; renting apartments or storage units; applying for loans or establishing accounts using another’s name (legal dictionary, 2007). Identity theft and identity fraud are terms that are often usedShow MoreRelatedEffects Of Social Networking On The Internet3661 Words   |  15 Pagesconcentration, a significant increase or decrease in appetite and time spent sleeping, feelings of dejection and hopelessness, and sometimes suicidal tendencies.† (p.395). A social network is an online interaction service which manages to construct communities and connect them with shared interests (Boyd Ellison, 2007). Social networking sites such as Tumblr, Facebook, and Twitter attract millions of users who have incorporated these networks into their daily practices. Some of these sites cater toRead Mor eAustralian Politics And Its Impact On Social And Economic Issues3343 Words   |  14 PagesAustralian and American politics are both polarised by clashing philosophies between two major parties dominating the system, however, the United States is faced with a greater political dichotomy stunting the growth of legislation on social and economic issues. In Australian politics, these parties are the Australian Labor Party and the Liberal National Party and in the United States the Democratic Party and the Republican Party clash. These parties lie on opposite ends of the traditional politicalRead MoreTransnational Crime Essay3499 Words   |  14 PagesThe extensive effects of globalisation, world political and economic shifts, technological advances, security challenges and the implications of climate change, have all served to influence the crime environment and make the job of policing the community more challenging than ever before (Keelty 2007). According to Hills (2009) there i s a widely shared conviction that international police forces must co-operate if they are to respond effectively to the crime and insecurity facilitated by globalisationRead MoreAnalysis of the Causes and Measures of Curbing Fraud in the Banking Sector25289 Words   |  102 PagesCAUSES AND MEASURES OF CURBING FRAUD IN THE BANKING SECTOR. BY ESSIEN NSIKAK U. A RESEARCH PROJECT SUBMITED TO THE DEPARTMENT OF ACCOUNTING, COLLEGE OF BUSINESS AND SOCIAL SCIENCES, COVENANT UNIVERSITY, OTA. IN PARTIAL FULFILMENT OF THE REQUIREMENT FOR THE AWARD OF BACHELOR OF SCIENCE (B.sc) DEGREE IN ACCOUNTING. CERTIFICATION I certify that this project titled â€Å"The Analysis of the causes and measures of curbing fraud in the banking sector† was carriedRead MoreLegal Studies8128 Words   |  33 Pages†¢ Crime 30% of course time Principal focus: Through the use of a range of contemporary examples, students investigate criminal law, processes and institutions and the tension between community interests and individual rights and freedoms. Themes and challenges to be incorporated throughout this topic: †¢ the role of discretion in the criminal justice system †¢ issues of compliance and non-compliance in regard to criminal law †¢ the extent to whichRead MoreCyber Crime8138 Words   |  33 Pagesparties and which can be conducted through global electronic networks. Cyber crimes describe criminal activity in which the computer or network is a necessary part of the crime† (Govil, 2007). From the definition it is obvious that the computer is the major source of cyber crime. Cyber crime is a growing list of internet-facilitated offenses. Today street crimes are becoming something of the past. It is not to say that they don’t occur but computer crime is more convenient. Govel (2007) said it â€Å"has provenRead MoreCopyright Protection on Internet9657 Words   |  39 Pagesglobally, and with the simple click of a mouse. The ease of copying, the difficulty in detection, and the scale of reproduction and dissemination of infringing copies, poses significant problems to the publishing industry and the intellectual property community as a whole. The high rate of piracy in developing countries also suggests a reliance on infringing product from other countries, which inhibits the use of local cultural assets, and the growth of local creativity and industry. The problem of piracyRead MoreConstruction Industry15894 Words   |  64 PagesCharlotte-Mecklenburg Police Department to address the problem. A detailed analysis of security practices and risks of theft was made for 25 builders operating in one of the police service districts north of the city. This produced the recommendation that installation of appliances should be delayed until the new owners had taken up residence, thus effectively removing the targets of theft. Twelve of the larger builders agreed to experiment with this approach for a period of six months, though systematicRead MoreImpacts of Information Technology on Individuals, Organizations and Societies21097 Words   |  85 Pagesstudying this chapter, you will be able to: Space, and Distance Understand the changes that take place in the workplace and the lives of individuals when information technology eliminates geographical and spatial barriers. Describe some of the major impacts of information technology on individuals, organizations, and society. 17.3 Information Is Changing from a Scarce Resource to an Abundant Resource Discuss the positive and negative effects associated with the abundance of information madeRead MoreEthics of Information Communication Technology (Ict)27618 Words   |  111 Pagesaction to combat the incidence of malicious attacks on the confidentiality, integrity and availability of electronic data and systems, computer-related crimes, such as forgery and fraud, content related offenses, such as those related to child pornography, and violations of intellectual property rights (IPRs). Further, threats to critical infrastructure and national interests arising from the use of the internet for criminal and terrorist activities are of growing concern after the September 11 incident

Introduction. Addiction Is An Unexpected Problem Defined

Introduction Addiction is an unexpected problem defined by excessive drug consumption. Whereas each drug produces peculiar physical effectiveness, any mistreat usage of drugs of the same manner: more than often usage can affect the behavior of the brain. Administration of recreational drugs leads to elevation dopamine hormone level in your cerebrum, that simulate the sensibility of pleasure. Individual’s cerebrum recollects these feelings and necessarily them to be reproduced. When a person overuse these drugs, the drugs become as essential as other daily essential activities such as drinking and eating Other changes occur in individual’s cerebrum meddle with the ability of thinking clearly, attitude changes and disturbances, and failure†¦show more content†¦Ã¯â€š § Psychedelic drugs. Also named hallucinogenics, these drugs press on system of the focal sensory to regulate your point of view of reality, time, and space. This group also may be able to make you imagine that you re hearing or watching things that don t co-exist or imagine stories that didn t really happened .Psychedelic drugs combine psilocybin (found in enchantment mushrooms), lysergic corrosive diethylamide (LSD), peyote, and dimethyltryptamine (DMT) ï‚ § Opioids. These are the drugs that are shown through the opioid receptors. This group is featured as the most accepted pharmaceutically and are usually used to cure cough and 3 pain. This group include many examples such as heroin, codeine, morphine, fentanyl, hydrocodone, oxycodone, buprenorphine, and methadone. ï‚ § Inhalants. These are a wide group of drugs with the common feature of being basically consumed through breathing. The wide plurality of the drugs in this group is presented as a vapor form at room temperature. The widest amount of these drugs usually found as family unit medications, inhalants are usually misused by kids and teenagers. These include substances, for example, paint, stick, acetones, gas, marker or pen ink, and others. regarding the feature that these drugs pass through the lungs into the blood, these drugs can be for misused in the form of smelling, stowing, sniffing, showering, huffing and breathing, between other carriage courses. ï‚ § Cannabis. Cannabis is aShow MoreRelated Police Trauma and Addictions Essay1116 Words   |  5 PagesTrauma and Addictions Tabel of Contents Introduction†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦1 Post-Traumatic Stress Disorder†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.2 Substance Use and Abuse†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦..3 Alcohol Abuse Chart†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.3 Trauma Strass Interventions†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦..4 Conclusion†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.4 Bibliography†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦..5 A study of 852 police officers found that nearly 50 percent of male and 40 percent of female officers consumed excessive amounts of alcohol. Excessive amounts of alcohol is defined as moreRead MoreKurt Bruner And Steve Stroope Essay1133 Words   |  5 PagesUnfortunately, for many others—those that are unable to cope with the stressors children bring to a marriage—will view the experience as a detriment to their marriage. For some just deciding when to have children can be a marriage stressor. For others, an unexpected pregnancy can cause tremendous stress in a marriage. Parenting requires a change in lifestyle and brings with it many challenges to a marriage. Those couples that think they are prepared soon find out that there is no way to prepare for all thatRead MoreInvestigative Report of Internet Addiction3641 Words   |  15 PagesInternet Addiction Prepared for Dr. Jere Mitchum By Marwan November 4 , 1996 TABLE OF CONTENT LIST OF ILLUSTRATIONS ...............................................iv ABSTRACT.............................................................v INTRODUCTION ........................................................1 Purpose .............................................................1 Growth Of The Internet ..............................................1 THE ADDICTION ........Read MoreCharles Dickens Hard Times Essay1717 Words   |  7 Pagessystems are still as prevalent as they were in the 19th century, there are seven social classes, ranging from the elite at the top to the extreme poor at the bottom. Typically in English society social class was always defined by occupation, wealth, and education with an addiction of social and cultural classes added. Social classes is a prevalent aspect of British society since before recorded history, it was the addition of money, land and title that increased the division of the classes. As theRead MoreDrug Addiction on Younger Generation4029 Words   |  17 PagesPreface The primary objective of this assignment is to provide the basic concepts and information on drug addiction which need to know all people for their younger youth. This assignment reflects a specific concern to present drug addiction condition which certainly destroying our younger youth. Actually, Drug addiction is a complex illness. It is characterized by intense and, at times, uncontrollable drug craving, along with compulsive drug seeking and use that persist even in the face ofRead MoreThe Tipping Point By Gladwell Tails1887 Words   |  8 PagesIntroduction In The Tipping Point, Gladwell tails trends from their very beginning to their end and he tries to figure out why some ideas tip and others do not. Firstly, Gladwell mentions the three rules for the tipping point which are: contagiousness, the fact that little causes can have big effects, and transformation happens in one moment. In the introductory chapter of the book, Gladwell made use of the syphilis epidemic of Baltimore, along with other outbreaks of disease in order to illustrateRead MoreThe Tipping Point By Gladwell1879 Words   |  8 PagesIntroduction In The Tipping Point, Gladwell follows trends from their beginning to their end and he tries to figure out why some ideas tip and others do not. Firstly, Gladwell gives the three rules for the tipping point which are: contagiousness, the fact that little causes can have big effects, and transformation happens in one moment. In the introductory chapter of the book, Gladwell uses the syphilis epidemic of Baltimore, along with other outbreaks of disease, to illustrate his three rulesRead MoreThe New Fraud Triangle Model3669 Words   |  15 Pagesfraud models, fraud detection __________________________________________________________________________________________ INTRODUCTION â€Å"Trust violators when they conceive of themselves as Corporate fraud is a topic that has received having a financial problem which is non-shareable, significant and growing attention from regulators, have knowledge or awareness that this problem can auditors, and the public. External auditors are be secretly resolved by violation of the position of increasinglyRead MoreThe Biological and Psychological Impact of Smoking Cigarettes4626 Words   |  19 Pagesbreath(6). Another disease is pneumonia. This is another respiratory diseases commonly caused by smoking. It is a serious inflammation of the lungs caused by infection with bacteria, viruses and other organisms. It is sometimes defined by its distribution as lobar or bronchopneumonia. Organisms that cause pneumonia enter the lungs after being inhaled. The air sacs in the lungs fill with puss and other liquids. Oxygen has trouble reaching the blood; your body cells thereforeRead MoreThe Tipping Point By Gladwell Tails1886 Words   |  8 Pagespuppies shoes in the midst of a few of hipsters in Manhattan’s cutting-edge regions in the 1990s, a development which soon extended across the United States and resulted to exponential increases in the company’s sales. Using this sensation as an introduction to the book’s methodical theme, the author states that he will recognize, dissect and give details on the mechanisms by which certain trends occur, while others fail. Chapter 1: The Three Rules of Epidemics Gladwell declares that most trends, styles

Malls in America Free Essays

When observing an autocratic atmosphere, one’s mind, body and soul becomes engrossed within their surroundings. Richard Francaviglia highlights this perspective through his article â€Å"The Mall as Disneyland. † H e explains how Walt Disney’s Main Street USA has set the precedent for all malls around America because it incorporates all aspects that entice one to enter this environment. We will write a custom essay sample on Malls in America or any similar topic only for you Order Now David Guterson maintains a similar perspective in relation to Francaviglia’s article. Guterson further enlightens the reader in his article â€Å"The Mall as Prison† on the negative effects the Mall of America has, compared to Disneyland. The previous articles have provided thorough explanations on the social atmosphere of malls, whereas Lizabeth Cohen’s article â€Å"The Mall as Threat to Democratic Values,† addresses the legal aspects of malls in America. Each article, although not identical in their views, are effective in explaining each aspect a mall in America encompasses by using strong evidence to support each position maintained throughout the articles. Walt Disney played a larger role in American society than just providing entertainment; many developers turn to his park, Main Street USA, for ideas when they are designing modern American shopping malls. Walt Disney purposely designed Main Street USA to create a joyful environment. He carefully designed each of his small towns to a specific feature. One of those towns, Main Street USA, sole purpose was social interaction. Shopping malls are an abstract reincarnation of Disney’s Main Street USA. According to Richard Francaviglia in his article â€Å"The Mall as Disneyland,† Disney’s Main Street does not feature those inevitable services that indicate the other side, or darker sides of life. † He did not have pool halls, bars, or funeral parlors in his town. Disney tried to make fantasy come true. He used magical lighting to brighten up his town at night. By placing abstract images in exact spots he made reality appear joyful. Like malls today, Disney made his town so perfect that people would not want to leave. David Guterson’s narrative about the Mall of America delves into several facets that are embedded throughout the mall both physically and mentally. A vivid description about the mall’s interior design makes the audience feel like they have visited the mall. Guterson describes how people, individually and as a society, are affected psychologically by this pseudo-metropolis. The grandeur of the mall is, without question, second to none. Shoppers are drawn to visit because of all the modern frills contained within. A theme ark, arcade, hundreds of shops, and eateries are the staples of the mall, but the gardens, flowers, and trees define the mall as being â€Å"the best of the best. † The atmosphere created by combining â€Å"Mother Earth† with twentieth century technology creates a certain mystique to the mall and gives the shopper a very comfortable place to spend the day or maybe even days. In â€Å"The Mall as Disneyland† Disney himself does not sh ow any form of dark side of life, he created an abstracted image that it is so tempting to confuse with reality. Main Street USA is not the only instance of a shopping center providing an alternate sense of reality. In David Guterson’s writing â€Å"The Mall as Prison†, malls are compared to prisons. Guterson writes about how every mall can be like a prison, or an entrapment for the mind. There are, as Guterson points out, no windows or clocks or anything else to distract you from your shopping. Therefore you are consumed in the atmosphere which was built for the sole purpose of spending money and not thinking of reality. In Lizabeth Cohen’s article she states the legal actions malls have to endure when confronted with situations of free speech and social class. Diverse social groups are no longer integrated into central consumer marketplaces but rather are confined to differentiated retail institutions, segmented markets, and new hierarchies. In â€Å"The Mall as Disneyland† and â€Å"The Mall as A Prison† you are not limited to public shopping malls, according to your social status. Everyone is treated equally. Their main goal is to consume you into their world, the owners of the malls have used business strategies to keep their public focused on one thing; buying. By keeping you engaged with majestic structures and great distractions of light shows, movie theatres, roller coaster and much more. How to cite Malls in America, Papers

The Statistics and Business Research Methods

Question: Describe about the statistics and business research method. Answer: Introduction Present powers of progress - Consumer, rivalry as well as the alteration itself, is driving organizations to persistently enhance and to improve as far as rate, adaptability, quality, administration, expense et cetera. The velocity of change of an association needs to coordinate, if not surpass the powers of progress to pick up a key upper hand or to get by in the business. In this manner organizations, open or private, whether in the assembling or the administration division, have dependably been hunting down the "aggregate arrangement". The "Shut Loop Manufacturing Resource Planning" that will be utilized to the panacea for every ERP issues in the relatively recent past, has now turned out to be just a subset of these general destinations. Today, the whole venture must be overseen inside a more worldwide, firmly incorporated, shut circle arrangement. This extended usefulness will be called "Venture Resource Planning". This is a demonstrated bundled programming arrangement that tries to address the data preparing necessities of an association. It is finished by firmly incorporating different elements of an association utilizing a procedure perspective of the association. Business Research Topic The topic that the researcher has chosen to conduct a research is Business process reengineering relation to enterprise resource planning. Many studies regarding the topic has revealed that the business process reengineering play an important role in the implementation of the planning of resources in enterprises. Some of the vital components of BPR include information technology and structure, the organisation and processes (Eresourceerp.com 2016). These components of the BPR regulate the business processes across the organisation. The BPR helps to form a well managed and properly designed system of information across the organisation. To implement ERP the organisation can follow two methods. They can either directly implement the resource planning strategies or they can implement the ERP after reengineering the processes of the business. Thus the business process reengineering has a great significance in implementing the resource planning across the enterprise. Literature review of the topic Hammer introduced the concept of the Business Process Reengineering (BPR) in the year 1990. Hammer defined BPR as a process of redesigning the processes involved in business to improve some of the important areas in business such as the quality of the services, cost and speed (Anon 2016). Studies have shown that the BPR has began as a technique for the private sector to help enterprises to rethink fundamentally how they perform to improve the efficiency in manufacturing, to enhance the services provided to the customers. BPR also allowed the organisations to reduce their operational cost and become top ranked competitors in the world of business. One can see that the Business Process reengineering has become an inevitable tool of management for handling rapid change in the business and technology in todays competitive business environment. In the recent times, e-commerce, management of customers relationship, systems of the enterprises and other technology driven business practices h ave increased largely. Due to the advent of the above mentioned issues businesses face huge changes in short intervals of time. The implementation of the resource planning in the enterprises is very useful and popular in improving the efficiency of the manufacturing process. In todays world ERP is also used to improve the competitiveness by utilizing all the resources and assets of the organisation. Researchers have pointed out that the systems of the enterprise depict one of the important categories of information technology. Studies have shown that a successful resource planning in the organisation can reduce the cost of operation to a great extent. Further, the successful ERP can help in generating exact forecast for future demands and can improve the services provided to the customers. Proper ERP also enhances the speed of the cycles of production. Hence, one can see that implementing proper resource planning can save the enterprise from losing million dollars. Studies have revealed that ERP has helped to reduce the inventory of the company (Becker et al. 2013). This is due to the fact that the managers w ho are involved in material planning get access to data that are very accurate. Hence the managers get to know beforehand the amount of inventory that was already present in the pipeline. This would help the managers to perform their job of forecasting the demand for the future better and more accurate. Proper implementation of the resource planning help in improving the management of cash, reduce the demand for skilled labours. ERP also reduces the overall cost of information technology by doing away with information that is not necessary to the running of the business (Ram et al. 2014). Some of the studies dealing with implementation of ERP and BPR reveal that scholars thought them to be two independent events involved in the business. The researchers were of the view that each of the BPR and ERP can exist in an enterprise without the help of each other (Sundtoft and Mouritsen 2013). In the business practices, researchers have seen that both the process of ERP and BPR exist at the same time in the business and depends on or influences each other (Hoch and Dulebohn 2013). Hence, one can observe that the BPR and the implementation of ERP are the two integral parts of business processes. Research Questions The discussion held above regarding the role and significance of Business Process Reengineering in Enterprise Resource planning leads the researcher to pose the following research questions. The researcher would answer the following questions by conducting a study on this topic. The research questions are as follows: What are the essential drivers of the discontent of Enterprise resource planning usage? Why do organizations neglect to understand the advantages discussed initially? What is the degree of BPR needed in an Enterprise resource planning ventures in manufacturing industries? What issues are associated with Business Process reengineering in manufacturing industries? What is the most vital utilization of PCs and data innovation in a reengineered organization? When an organization needs to reengineer itself what is the most vital thing it ought to do? What are the methods of Business Process Reengineering that an organization can adopt to implement the enterprise resource planning? Research Methodology The research looked to set up the components important for effective execution of business process reengineering activities in ERP environment. What's more, the concentrate likewise tried to decide how business forms reengineering activities have affected on ERP execution. The research will utilize a graphic study outline which was fitting in deciding and reporting data concerning the present status of undertakings It was trusted that the exploration would give a more complete picture on the elements which impact execution of business process reengineering activities. What's more, meetings were additionally directed to give profundity of the data being looked for. There are some important components present in the business to effectively execute the Business Process Reengineering methods in the ERP. The researcher tries to highlight the methods by which the organization can implement the resource management policies by conducting the research (De Toni et al. 2015). The researcher has decided to use a graphic method to conduct the research. Graphic studies help to understand the topic, under study, better. The graphic study would also help to implement the findings of the research in the business processes. Description of the research process A process for this research is to contemplate the utilization of Business process reengineering practice in Establishments actualizing enterprise resource planning arrangements, which will give a comprehension of the measure of Business process reengineering, required for an organization to effectively execute an enterprise resource planning. To answer the research questions posed in this study, the researcher collects the data required to find the answers. The researcher interrogates the managers of the enterprises and other employees. The main subjects of interrogation include the managers of different levels, especially those working in the department for implementing the enterprise resource policy. The interviewer interrogates the subjects through questionnaire. The interviewer distributes the questionnaires to the managers and employees containing questions regarding the business process reengineering techniques that the company follows. Then the researcher would analyze the data by qualitative methods. Description of data collection and analysis methods The essential source for the desired data would be the various associations in manufacturing industries from various divisions. The researcher collects the data through a poll review. The poll is intended to distinguish the variables, which prompt achievement in enterprise resource planning ventures in manufacturing industry. The objective of this study is to derive genuine conclusions from the encounters of undertaking groups that would be useful in undertaking ventures and to assess the impact of the business process reengineering methods to enterprise resource planning. In building up the survey, information accumulated from specialists and writing was considered. For collecting the information, the researcher would first pin point the organizations who have executed enterprise resource planning frameworks in manufacturing industry. The researcher would do this by the help of the organizations who sell the resource planning programs or by discussing over the telephone or through p ersonal contacts. This will bring about distinguishing at least 10 organizations who have executed enterprise resource planning frameworks. The researcher would utilize graphic techniques to analyze the data. Plain strategies will be utilized to condense information and graphical techniques, for instance, pie charts, as well as bar diagrams will be utilized to distinguish examples of information. The analyst would utilize the software such as MS Excel, SPSS, and other statistical packages to analyze the data and represent it in a form that everyone can understand. The analyst would establish the connections between the variables using the Chi square tests. Auxiliary sources of information will be by referencing books, as well as writing from the Internet on fluctuates sites and worldwide scrutinizes led by consultancy firms in regards to enterprise resource planning execution, business process reengineering, Change administration, Project administration, yardstick for pre-eminent practices, plus inputs from specialists in the field of enterprise resource planning as well as business process reengineering. Expected research outcomes By conducting the research, the researcher expects that the major part of the association of the Business Process Reengineering to the ERP would alter (Tarhini et al. 2015). SAP ERP was the normally utilized bundle as a part of the specimen and fund. Assembling and dissemination were the regularly utilized modules as a part of manufacturing industry. The utilization of specialists in the ranges of progress administration and Business Process reengineering is lesser than in different territories. These are some of the outcomes that the researcher would expect from the study. The research conducted helped in distinguishing the principle reasons for success of Enterprise resource planning ventures in the manufacturing industries. Association availability Building up the Enterprise resource plan of action before usage Building up the business case with money saving advantage investigation Having venture administration mastery inside the association Appropriate Business Process reengineering Venture checking and mix testing Attack of the ERP bundle to organizations' procedures Clear comprehension of business procedures Top administration duty Better preparing and instruction Better venture administration Try not to change each part of Enterprise resource planning Successful change administration Select right work force Adequate end client contribution Not depending a lot on outer specialists Legitimately closing down every procedure (organization and seller) Not taking after alternate ways and does not surge the framework Collaboration to accomplish the destinations and points of reference Better correspondence among all levels All of the discoveries identified with Business Process reengineering recommend that to make a successful execution of an Enterprise resource planning, a far reaching Business Process reengineering should be done equivalent to the Enterprise resource planning venture. Keeping in mind the end goal to do this, we have to locate the best practice forms that could be utilized as a part of each of the zones reengineered. A standout amongst the most gainful parts of an Enterprise resource planning framework is to unite the different resource planning practices into one area. Knowing about Enterprise resource planning best practices and additional superlative practices for effective fabulousness will help administrators make their Enterprise resource planning ventures a success. This will likewise aid them to advance their association to the level of associations working keeping pace with world class principles. References: Anon, (2016). Becker, J., Kugeler, M. and Rosemann, M. eds., 2013.Process management: a guide for the design of business processes. Springer Science Business Media. Calitz, A. and Calitz, M. (2000).Evaluating the BPR Effect of a SAP R/3 Implementation in a Manufacturing Environment. De Toni, A.F., Fornasier, A. and Nonino, F., 2015. The impact of implementation process on the perception of enterprise resource planning success.Business Process Management Journal,21(2), pp.332-352. Donovan, M. (n.d.).Successful ERP Implementation the First Time. Eresourceerp.com. (2016). BPR in ERP Implementation | Why is BPR important in an ERP Implementation Explain by EresourceERP. Esteves, J., Pastor, J. and Casanovas, J. (2002).Monitoring Business Process Redesign in ERP Implementation Projects. Garg, V. and Venkitakrishnan, N. (2004).Enterprise resource planning. New Delhi: Prentice-Hall of India Private Limited. Hoch, J.E. and Dulebohn, J.H., 2013. Shared leadership in enterprise resource planning and human resource management system implementation.Human Resource Management Review,23(1), pp.114-125. Monk, E. and Wagner, B. (2013).Concepts in enterprise resource planning. Australia: Course Technology Cengage Learning. Porsci. (2016). Reengineering Overview. Ram, J., Wu, M.L. and Tagg, R., 2014. Competitive advantage from ERP projects: Examining the role of key implementation drivers.International Journal of Project Management,32(4), pp.663-675. Skok, W. (2001).Potential Impact of Cultural Differences on Enterprise Resource Planning (ERP) Projects. Sundtoft Hald, K. and Mouritsen, J., 2013. Enterprise resource planning, operations and management: Enabling and constraining ERP and the role of the production and operations manager.International Journal of Operations Production Management,33(8), pp.1075-1104. Tarhini, A., Ammar, H. and Tarhini, T., 2015. Analysis of the critical success factors for enterprise resource planning implementation from stakeholders perspective: A systematic review.International Business Research,8(4), p.25. Thawani, S. (2016).BPR or ERP - What Comes First?. [online] Docplayer.net. Weicher, M., Chu, W., Lin, W. and Yu, D. (1995).Business Process Reengineering Analysis and Recommendations. Wight, O. (2005).The Oliver Wight Class A checklist for business excellence. Hoboken, N.J.: J. Wiley Sons.

Lab Report Essays - Antonie Van Leeuwenhoek, Microorganism, Staining

Lab Report Morphological Unknown Lab Report Introduction: There are many types of microorganisms in the world that may seem alike but are very different in function and purpose. That is why when one has to find what an unknown organism is he or she sees that its difficult to classify it based on its outer appearance. That is why there are many ways in order to classify microorganisms under microscopes. Two of the ways to identify microorganisms are by looking at the colony and cell morphologies or by conducting a series of stain procedures on the microorganisms. A colony is a mass of microbial cells (Colome, Ex6:28). Morphology is the colony's structure and form. There are six parameters used to describe a colony's morphology: overall appearance, colony margin (edge), elevation, size, pigmentation, and consistency (Colome, Ex6:28). Although colony morphology isn't the best way to identify microorganisms, it's helpful in recognizing some types. The other more efficient way to identify microorganisms is by staining them. A stain is used to co lor a microorganism and its background. On September 25, 2000, each microbiology lab student was given an unknown microorganism and was told to use series of staining procedures to identify his/her unknown organism. The identification key on page 61b of the microbiology lab manual was used in identifying the unknown organisms. Science

12 Classic Essays on English Prose Style

12 Classic Essays on English Prose Style Despite the changes in English prose over the past few centuries, we may still benefit from the stylistic observations of the old masters. Here, chronologically arranged, are 12  key passages from our collection of Classic Essays on English Prose Style. (To read the complete essays, click on the highlighted titles.) Samuel Johnson on the Bugbear StyleThere is a mode of style for which I know not that the masters of oratory have yet found a name; a style by which the most evident truths are so obscured, that they can no longer be perceived, and the most familiar propositions so disguised that they cannot be known. . . . This style may be called the terrifick, for its chief intention is, to terrify and amaze; it may be termed the repulsive, for its natural effect is to drive away the reader; or it may be distinguished, in plain English, by the denomination of the bugbear style, for it has more terror than danger.(Samuel Johnson, On the Bugbear Style, 1758) Oliver Goldsmith on Simple EloquenceEloquence is not in the words but in the subject, and in great concerns the more simply anything is expressed, it is generally the more sublime. True eloquence does not consist, as the rhetoricians assure us, in saying great things in a sublime style, but in a simple style, for there is, properly speaking, no such thing as a sublime style; the sublimity lies only in the things; and when they are not so, the language may be turgid, affected, metaphoricalbut not affecting.(Oliver Goldsmith, Of Eloquence, 1759) Benjamin Franklin on Imitating the Style of the SpectatorAbout this time I met with an odd volume of the Spectator. I had never before seen any of them. I bought it, read it over and over, and was much delighted with it. I thought the writing excellent, and wished, if possible, to imitate it. With that view, I took some of the papers, and making short hints of the sentiment in each sentence, laid them by for a few days, and then, without looking at the book, tried to complete the papers again, by expressing each hinted sentiment at length and as fully as it had been expressed before, in any suitable words that should come to hand.(Benjamin Franklin, Imitating the Style of the Spectator, 1789) William Hazlitt on Familiar StyleIt is not easy to write a familiar style. Many people mistake a familiar for a vulgar style, and suppose that to write without affectation is to write at random. On the contrary, there is nothing that requires more precision, and, if I may so say, purity of expr ession, than the style I am speaking of. It utterly rejects not only all unmeaning pomp, but all low, cant phrases, and loose, unconnected, slipshod allusions. It is not to take the first word that offers, but the best word in common use.(William Hazlitt, On Familiar Style, 1822) Thomas Macaulay on the Bombastic Style[Michael Sadlers style is] everything which it ought not to be. Instead of saying what he has to say with the perspicuity, the precision, and the simplicity in which consists the eloquence proper to scientific writing, he indulges without measure in vague, bombastic declamation, made up of those fine things which boys of fifteen admire, and which everybody, who is not destined to be a boy all his life, weeds vigorously out of his compositions after five-and-twenty. That portion of his two thick volumes which is not made up of statistical tables, consists principally of ejaculations, apostrophes, metaphors, similesall the worst of their respective kinds.(Thomas Babington Macaulay, On Sadlers Bombastic Declamations, 1831) Henry Thoreau on a Vigorous Prose StyleThe scholar might frequently emulate the propriety and emphasis of the farmers call to his team, and confess that if that were written it would surpass his labored sentences. Whose are the t ruly labored sentences? From the weak and flimsy periods of the politician and literary man, we are glad to turn even to the description of work, the simple record of the months labor in the farmers almanac, to restore our tone and spirits. A sentence should read as if its author, had he held a plow instead of a pen, could have drawn a furrow deep and straight to the end.(Henry David Thoreau, A Vigorous Prose Style, 1849) Cardinal John Newman on the Inseparability of Style and SubstanceThought and  speech  are inseparable from each other. Matter and expression are parts of one;  style  is a thinking out into  language. This is what I have been laying down, and this is literature: not  things, not the verbal  symbols  of things; not on the other hand mere  words; but thoughts expressed in language. . . .  A great author, Gentlemen, is not one who merely has a  copia verborum, whether in prose or verse, and can, as it were, turn on at his will any number of splendid  phrases  and swelling sentences; but he is one who has something to say and knows how to say it.(John Henry Newman, The Idea of a University, 1852) Mark Twain on Fenimore Coopers Literary OffencesCoopers word-sense was singularly dull. When a person has a poor ear for music he will flat and sharp right along without knowing it. He keeps near the tune, but it is not the tune. When a person has a poor ear for words, the result is a literary flatting and sharping; you perceive what he is intending to say, but you also perceive that he does not say it. This is Cooper. He was not a word-musician. His ear was satisfied with the approximate words. . . . There have been daring people in the world who claimed that Cooper could write English, but they are all dead now.(Mark Twain, Fenimore Coopers Literary Offences, 1895) Agnes Repplier on the Right WordsMusicians know the value of chords; painters know the value of colors; writers are often so blind to the value of words that they are content with a bare expression of their thoughts . . .. For every sentence that may be penned or spoken the right words exist. They lie concealed in the inexhaustible wealth of a vocabulary enriched by centuries of noble thought and delicate manipulation. He who does not find them and fit them into place, who accepts the first term which presents itself rather than search for the expression which accurately and beautifully embodies his meaning, aspires to mediocrity, and is content with failure.(Agnes Repplier, Words, 1896) Arthur Quiller-Couch on Extraneous Ornament[L]et me plead that you have been told of one or two things which Style is not; which have little or nothing to do with Style, though sometimes vulgarly mistaken for it. Style, for example, is not- can never be- extraneous Ornament. . . . [I]f you here requ ire a practical rule of me, I will present you with this: Whenever you feel an impulse to perpetrate a piece of exceptionally fine writing, obey it- wholeheartedly- and delete it before sending your manuscript to press. Murder your darlings.(Sir Arthur Quiller-Couch, On Style, 1916) H.L. Mencken on Woodrow Wilsons StyleWoodrow knew how to conjure up such words. He knew how to make them glow, and weep. He wasted no time upon the heads of his dupes, but aimed directly at their ears, diaphragms and hearts. . . . When Wilson got upon his legs in those days he seems to have gone into a sort of trance, with all the peculiar illusions and delusions that belong to a frenzied pedagogue. He heard words giving three cheers; he saw them race across a blackboard like Socialists pursued by the Polizei; he felt them rush up and kiss him.(H.L. Mencken, The Style of Woodrow, 1921) F.L. Lucas on Stylistic HonestyAs the police put it, anything you say may be used as evidence against you. If handwriting reveals character, writing reveals it still more. . . . Most style is not honest enough. Easy to say, but hard to practice. A writer may take to long words, as young men to beards- to impress. But long words, like long beards, are often the badge of charlatans. Or a writer may cult ivate the obscure, to seem profound. But even carefully muddied puddles are soon fathomed. Or he may cultivate eccentricity, to seem original. But really original people do not have to think about being original- they can no more help it than they can help breathing. They do not need to dye their hair green.(F.L. Lucas, 10 Principles of Effective Style, 1955) For the complete collection, visit Classic Essays on English Prose Style.

DOCUMENTARY CINEMA Essay Example | Topics and Well Written Essays - 1000 words

DOCUMENTARY CINEMA - Essay Example This essay will delve into various aspects of the film Dark Days by way of relating them to the broader social, cultural and political contexts. Firstly, homelessness in the United States can be traced back a long way. The direct and circumstancial evidence for this is available in literary and performing arts of the last one and half centuries. Prominent among the artists who dealt with this subject are Walt Whitman, Jack London, Charlie Chaplin, Woody Guthrie, John Dos Passos, Bill Mauldin, Jack Kerouac and John Steinbeck. In the early twentieth century slang, homeless people were casually referred to as hoboes, which is a term of denigration. These so-called hoboes had a reputation for being barbaric, wild, lazy and unscrupulous. The first detailed representation of these people living on the fringes of society started appearing after the end of the Civil War. We further learn that â€Å"following the Civil War, a legion of men traveled the country with no visible means of support. Some earned the sobriquet "hobo," which they embraced it as a nickname for a migrant laborer, that is, a "hoe boy." Whatever the origin, sociologists of the 1920s used the phrase "hobohemia" to describe a subaltern lifestyle embraced by white working-class males. When congregating in places such as Chicagos "main stem," they forged a swaggering counterculture that defied domesticity. They embraced the labor radicalism of the Wobblies, even while they were parodied by vaudeville and motion picture comics.† (Lookingbill, 2005, p.314) During these early days, homelessness in the United States was largely an issue of social class and was caused by the huge disparities in wealth distribution between the top ten percent of the population and the rest. But in the last century, the issue has grown to encompass factors of racial discrimination, drug abuse and homosexuality. Of the half a

Anti Discrimination Law Case Study Example | Topics and Well Written Essays - 3000 words

Anti Discrimination Law - Case Study Example Discrimination is strictly condemned and discouraged everywhere in Europe, though there are slight differences between the European law and the English law in the determination of rights and obligations delegated by the constitution to the public at large. It is, therefore, the courts and tribunals adjudicating the cases, both civil and criminal in nature, take into serious consideration the facts regarding whether there is any sign of prejudiced behavior made by any member or organization of society while dealing with the complainant or treating as well as interacting with him under the biased attitude. In addition, the law forbids bestowing of more favors to anyone because of his personality traits and features. The provisions of law aim to set up a society where equality, justice, and fair play can be observed in all walks of life. Hence several acts have been issued and bills have been passed in order to combat the discrimination dilemma with an iron hand. Though law always recom mends equality and justice to all and sundry, it is not actually the case in reality. On the contrary, exploitation of minority groups and biased behavior towards the weaker stratum of society is actually in vogue in almost all societies of the world. Before embarking upon the topic under study, it would be advisable to define anti-discrimination law. Anti-discrimination law refers to the statute of law that prohibits any special rights or privileges to the individuals belonging to some particular race, gender, ethnicity, age group or towards the persons obtaining any physical as well as mental abilities or disabilities. The law also prohibits violation and condemnation of human rights of the individuals on the basis of their innate characteristics.

History Essay Example | Topics and Well Written Essays - 500 words - 6

History - Essay Example (http://www.npg.si.edu/exh/roosevelt/rrwh2.htm). 2. Hay-Bunau-Varilla Treaty, November 18, 1903 is an agreement between the United States of America and the Republic of Panama to insure the construction of a ship canal across the Isthmus of Panama to connect the Atlantic and Pacific oceans. It entails the authorization for the U.S. through the president to acquire within a reasonable time the control of the necessary territory of the Republic of Colombia. This is made possible through the powers vested in the Republic of Panama to have sovereignty over Colombia. This is one of the self-protective efforts of the U.S. against likely invasion or opposition from other rising powers like China. (http://www.npg.si.edu/exh/roosevelt/rrwh2.htm). covers his declarations and adherence to the U.S. Foreign Policy. He stressed out the importance of the Army and the Navy in its foreign policy. He talked about the peace of justice and the positive and negative factors regarding the concept of peace. It entails both rights and responsibilities to the home country in relation to the other countries and the world at large.

Impact of Financial Leverage on Investment

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