Raising Individual Financial Awareness Essay Example | Topics and Well Written Essays - 1250 words

Raising Individual Financial Awareness - Essay Example One type of personal pension is a defined contribution pension, also known as money purchase scheme, which is bought by contributions made by the employer and the employee. Defined benefit pension, also known as final salary schemes, is another type of pension scheme wherein the benefits are paid based on the scheme rules such as time and changing salary levels and mortality rates, etc. The best way to differentiate between the above mentioned 2 schemes is by identifying the riskholder. Employer is the risk holder as he underwrites the vast majority of costs attached with defined benefit schemes. Employee or the scheme member is the risk holder as contributions are paid back at fixed levels, therefore if the contribution rates are not increased when the returns are poor, the retirement benefits will also be lower than they had planned for (TSSA). Bill Murray, in case of , defined contribution scheme, can increase his contribution if he feels it is necessary to increase his pension. T herefore in case he wants to have ?18,000 as his annual retirement he needs to increase his pension pot to ?284,000, assuming ?100,000 pension pot fetches on average ?6341 to a healthy 65 year old male (Annuity). In case of, defined benefit pension he will know roughly how much he will get, as the amount will depend on the length of time he has worked and his final salary. Therefore, if the scheme is based on 60ths i.e. Bill will get 1/60th of his final salary for his pension each year, and assuming he has been working for 42 years, his final salary should be ?25,714. This should be easily achievable because the average salary in 2010 for marketing was ?37500 (ITJobsWatch). Bill Murray should choose the defined benefit scheme because it gives him certain amount irrespective of the state of the economy. The scheme will also pay him more if his salary is anywhere close to the average salary if not more. Government has proposed to s include an option for a flat rate State Pension of ar ound ?140 a week for a single person and change in the limit of state pension age (DirectGov, State pension Reforms). The reason behind is the need to meet the needs of future pensioners, who are saving lesser, and with people living longer, the burden of pension also increases on the Government. Part B Houses bought to be rented out should have a buy to let mortgage, which is often interest only. The full amount that was borrowed is repaid at the end of the mortgage. Buy to let mortgages often require the rental for the property to be a set percentage above the mortgage repayment (Mortgages). HSBC’s tracker rate mortgage is suitable for Annie. It has a repayment rate of 3.99% plus base rate and costs ?1499 to set up (HSBC). Table 1 below estimates if buying a flat and renting out is a worthwhile investment. The below estimates are based on an assumption the flat is occupied by tenants for all 12 months. Table 1: Estimates of renting the flat (all figures in ?) Rental Income (?1500*12) 18000 Commission (15% of ?18000) (2700) Insurance (assumed) (1000) Interest (based on HSBC rate) (5850) Maintenance (assumed) (1500) Other costs (assumed) (500) Profit/(Loss) 10550 As per the estimates above, Annie would make about ?10,550 annually. Interest payments are low merely because the deposit of ?70,000 which Annie has provided. When Annie intends to sell

IT System Analysis and Design Essay Example | Topics and Well Written Essays - 2250 words

IT System Analysis and Design - Essay Example The company is also serving the printing needs of some big companies that form the major chunk of its customers. The core product of the company is the security seal printing that it does for various companies. Historically, the company was using manual system for maintaining all sorts of records, finances, and performing day-to-day operations. However, with the expansion of the company as well as prospective benefits, the company has realized the need of having an automated Information System that would function within the whole enterprise, maintaining records of the employees, customers, carry out financial reporting and all sorts of other support. The Information system software would consist of three basic modules: Human resource management Customer management Financial Modules The organization has decided to move towards the most basic form of the Information System to make the transition as swift and easy as possible. They want that the system installed in the organization is e asy and consist of the most basic modules so that it is cost saving as well. The logic that comes to one’s mind is that ERP are very easily available and they just need to be deployed. However, the argument here is that they have too many functions that the business does not plan on using right now so the investment in the software would not be worthwile, moreover, the software available are generic whereas the company needs a customized software. Later on when they have fully evaluated the benefits of investing in an Information System, the do plan to keep on adding more improvements and updates as they come with time. The Company Coatings & Others Numerous U.V. Printing with Security Technology, UltraCoat Inc. was established in 1990, and it is now one of the leading Brand Protection Company catering to the needs of leading manufacturers of consumer products, institutions and organizations to safeguard their Brands against counterfeiting. The company has a wealth of informa tion, know-ledge, wide experience, sound understanding and in depth know-how to offer from the widest choice of highly efficient and cost effective intelligent solutions for every product. The core service or product that the company provides is brand protection and safety solutions using various methodologies to protect brands and their products from piracy, counterfeiting, especially for products such as life-saving drugs, edible items, etc. System Development Life cycle The system development life cycle provides a structure that the designers and developers of the system can follow. The cycle involves a sequence of activities that build upon on the results and outcomes of the previous activity. We can divide the activities of the system development life cycle into four major phases: planning, analysis, design, and implementation. A number of models of SDLC exist; some of the most popular ones are: the waterfall model, spiral model, prototype, incremental, fountain model. Each of these models have certain advantages and disadvantages and it depends on the type of the project, its requirements and the development team (Kay, 2002). The model that would be used to develop

Fluctuating Present Value Of A Cash Flow Finance Essay

Fluctuating Present Value Of A Cash Flow Finance Essay Answer: A cash flow stream is a series of cash receipt and payments over the life of an investment. It is the inflow and outflow of cash, which matters in practice. It is the cash, which a firm can invest, or pay to creditors to discharge its obligations, or distribute to shareholders as dividends. The assets are the items which are owned by the business. The level of interest rates arising in the capital market is associated with the cash flows `and the assets , when the rates increases , the availability of the funds decreases. As a result when the interest rates increase in the capital market, the obligation increases which leads to decrease in the availability of funds to invest in the investments. The present value of cash flow is equal to the sum of the present value of individual cash flows. The equation for present value of cash flow stream is as follows- PV= Where, PV=present value r= rate of interest t= the year n= the last year, where the cash flow occurs Interest rate is the rate at the interest is paid by the lender to the borrower for use of money by the borrowers from the lenders. So, the rise in the interest rates , the availability of cash flows streams due to higher rate of interest , the present value of cash flow streams will decline. 2. List and explain the points of financial impact on a company if it raises the credit standards required of its customers who utilized trade credit offered by the company. Answer: Credit standards are the criteria to decide the types of customers to whom goods could be sold on credit. If the firm has more slow-paying customers, its investments in accounts receivable will increase. Trade credit refers to the credit that a customer gets from providers of goods in the normal flow of business. In practice, the buying firms do not have to pay cash immediately for the purchase made .This deferral of payments is a short term financing called trade firms. The credit standard policy has significant impact on the financial condition of a company-The following are the financial impact on a company due to rise in credit standard . Decrease in credit sales- A rise in credit standards will have a limit on the buyers who will borrow from the company and as a result the sales will decrease as most of the buying firms do not pay cash immediately. This will lower the sales of the company leading to less in revenue generation. Decrease the demand-The rise in credit standards will lower the demand by the buyers which will lead to decrease in demand and decrease in revenue earning. Relatively faster average collection period- A rise in credit standards will make the average collection period relatively faster for the new customers leading to better collection process and increase in volume of cash in inflow. Prompt in collection by existing customers- The rise in standard will pull the collection by the existing customers and make the payments from them prompt and on time. Better return on investment- The rise in credit standards will lead to better return on investments made and credit allowed will be selected as the customers will be prompt in payments and the selection of the customers will be limited. 3. Define Weighted Average Cost of Capital and explain why a company must earn at least its Weighted Average Cost of Capital on new investments. What are the financial implications if it does not? Answer:- Weighted average cost of capital is organisations the calculation of cost of capital where each category of capital is proportionally weighted .A firm obtains capital from various sources due to the risk differences and contractual agreements between the firms and the investors, the cost of capital of each source of capital differs The cost of capital of each source of capital is component source of capital. The component costs are combined according to the weight of each component capital to obtain average cost of capital. The combined cost of all source of capital is called overall cost which also known as weighted average cost of capital. Thus, it is the overall return that firm must earn on its existing business operation in order to maintain or increase the current value of current stock. A company must earn at least weighted average cost of capital in new investments. By taking weighted average, the interest to be paid by the company for a investment is calculated. Wei ghted average cost of capital is the expected rate of return, weighted by proportion each to the overall financial structure. The minimum rate of return on the new investments must be earned so as not to reduce the shareholders. A firm should earn at least its average weighted rate on capital investment in its assets the weighted average cost of capital is used a discount rate to calculate the present value of the of a specific investment. If the firm does not earn the least average weighted cost of capital in its new investments, the firm will incur loss in that new investment, and so it should discontinue or should not invest further. The average weighted cost of capital is the minimum expected rate of return from an investment, so it should be calculated first and then the decision for the investment should be made. 4.As a corporation what are the benefits and ramifications of using convertible debt to finance a publicly traded company? As an investor what are the benefits and ramifications of purchasing convertible debt in a publicly traded company? Are there any conflicts between the goals of the investor and the goals of the corporation? Answer:- Convertible debt are the debts like bonds and debentures with an option to convert it into common stock in future date. The following are the benefits and ramifications of using convertible debt to finance a publicly traded company:- Attractions for the investors:-convertible debts will attract investors by providing safety of debt along with the option to convert it into common stock in future. The investors will lend money to the company with the view that the company will make regular interest payments and the return of capital. If the company achieves growth in future and the stock value increases, the investors has the option to convert it into common stock. Lesser fixed-rate borrowing cost-Convertible debt will allow the issuers to issue the debts at lower cost. Increase in total debt gearing -The convertible debt will increase the total amount of debt level in the company .It will provide additional funding to the company which will be beneficial to the issuers. Financing option- The convertible debts are good financing option for start up companies as equity shares pose a challenge for them. As the convertible debts carry low interest payments by the company, while remaining competitive. Fixed limited income- The convertible debt holders obtains fixed limited income until its conversion and it will benefit the company because more of operating income is available for the common stock holders. Voting solution is deferred- With the convertible debts, the voting rights of existing shareholders happens only on eventual conversion of debts. Ramifications of convertible debts to company- There are some complications for issuers as well .First one , is that financing with convertible debts draws the risk of debasing not only the EPS of its common stock, but also the control of the organisation. If a heavy part of the issue is purchased by one buyer, like investment banking company or insurance company, conversion will change over or take over the voting control from original owners of the company and toward the converters. This issue may not be a significant matter for bigger companies with millions of stock holders, but for the small company, it will be a real and important consideration. Due prominent use of debt will adversely affect a companys capability to finance operations in clips of economic downturn. If the company faces any downfall, it will experience great trouble in raising capital further. The following are the advantages and ramifications to the investors.- Safer investment -The convertible debts are the safer investment compared to buying common stock with returns They are less explosive than stocks and their value can only come down to a price where the yield would be equal to a non-convertible bond of the same terms. Strong protection- The convertible debts provide strong protection to the investors in the times of market fluctuations and at the same time providing periodic returns. Interest payments-The convertible debt holders have a right on the receiving of interest and periodic returns in spite of any downturn in the market. Larger claim on companys assets Convertible bond holders have a larger claim on the assets of the company as compared to the shareholders in case of collapse. More protection from economic downtrend- The convertible debt holder will have a gain during the economic downtrend due the option of conversion into equity shares. As a result, the market stock of share stocks will increase with market prices dissimilar for the debts where the interest rates are fixed. This means that bond holders will gain as during inflation because his money looses value more. Ramification to the investors- Convertible debts could have complication in the view that the debt holder will be obtaining considerably lower yield to maturity in comparison to the non-convertibles. But it is only a worry when the issuers equity does not gain the upward price predictions that would make taking the lower grant speculation worthy. Finally, the ability for predictions are reduced to a great extend when a call provision is bonded to the convertible bond. This will limits the upside and will let the debt holder to declare their debt at a discount to market. The goals of an investors towards the convertible debts is to invest in debts at lower cost and gain fixed returns whereas the goal of a issuing company is to achieve higher operating income with lower borrowing cost. 5) Which two of the six methods used to evaluate projects, and to decide whether or not they should be accepted, do you prefer as a financial manager?   Explain why you decided on these two and not the other four. List the perceived deficiencies of the four not selected. The six methods which are used to evaluate projects, and to decide whether or not they should be accepted are as follows:- Investment decisions for a project evaluation postulate special aide due to the following reasons The projects influence the long term growth of the firm. The decision for a project will affect the risk factor of the firm Evaluation of the project is an important tool as it involves commitment of large amount of finances or stocks They are one of the most difficult conclusions to arrive at. The six methods are as follows:- Accounting rate of return (ARR) Internal rate of return (IRR) Net Present Value (NPV) Payback Period Profitability index Modified Internal rate of return Accounting rate of return ARR is also referred as Return on investment (ROI), as it uses the information of accounting revealed by the financial statements, to measure the gainfulness of an investment. The calculation of ARR involves the ratio of the average tax after profit divided by the average investment done Disadvantages: it can be calculated in a lot of ways profit is not a good alternate option for cash flow adjustment is not considered to calculate the time value of money Impulsive break-off date Contrary decisions can be made. Net Present Value NPV is the method of measuring the investment proposals. It is the discounted cash flow technique that explicitly acknowledges the time value for money. It rightly takes that cash flow coming up from various time periods differ in values and are comparable only when their corresponding present values are taken out. Advantages Says if the finances invested will increase the firms value Takes into account all the cash flows Takes into account the time value of money Takes the risk of future cash flows. Profitability Index The profitability Index is the ratio of present value of cash influxes to the initial of cash outlay of investment at a required rate of return Advantages Says if the finances invested can increase the firms value Takes into account all cash flows of the project Takes the time value of money Takes the risk of future cash flows Provide ranking and selection of projects when capital is rationed out. Internal Rate of Return (IRR) IRR is the way of DCF(Discounted Cash Flow), which takes into consideration the intensity and timing of cash inflows and outflows. The concept of IRR is quite simple to understand in the case of a one-period project. Disadvantages It needs to have a projection of the COC (Cost of Capital) to make a decision The given value-maximizing decision when used to compare mutually exclusive projects may not give the proper decision The given value-maximizing decision when used to choose any projects when there is capital rationing may not give the proper decisions Its not useful in the situations in which sign of cash flows for a project changes more than once during the life of the project. Payback Payback is the number of years needed to retrieve the original cash expenditure invested in a project. If the project yields constant annual cash influxes, the computation of payback period is carried out by dividing cash outlays by the annual cash influxes. Disadvantages 1) the decision criteria is not that concrete to show if an investment increases the firms value 2) Refuses the cash flows beyond the payback period 3) Refuses the time value of money 4) Refuses the risk of future cash flows I will take into consideration the Net present value and the profitability index for the consideration of two of the techniques for the project which will be undertaken due to the advantages which has been described above. I dint find much disadvantages in those methods and so I have given the advantages of those two methods which will be taken under consideration by me, the other methods I dint find of much worth in respect to evaluation for the concerned project as they have less advantages and more disadvantages and so I have written the same above for them. 6.What are the benefits and costs of placing a financially troubled company into a Chapter 11 Bankruptcy proceeding? Is this a legitimate and ethical vehicle for management to use for the benefit of the companys stakeholders? A)   Bankruptcy is a legal process for financial debtors who seek to eliminate their debts. Bankruptcys governs the federal statutory law which is there in the Title 11 of the U.S. Code. It provides for federal procedures of statutes and courts which objects the debtors to put their financial matters under the hold of the bankruptcy court. Chapter 11 Bankruptcy Chapter 11 bankruptcy says to restructure a business under some kind of supervision, rather getting liquidated because the business will still be functioning, but in case of a whole new different circumstances, the benefits of the retirement may or may not be ceased. Protection Benefits Federal law entitles a person to get pensions with some protection. When an employee announces himself to be bankrupt, finances for pensions are not to be utilized for the repayment to creditors. Also, all the retirement benefits you have earned being an employee will not be enforced to him. Federal Insurance The federal government assures standard and effective retirement plans. Any employer who cannot fund Federal government will fund temporarily. This type of insurance is not eligible for 401(k) plans. Chapter 11 Bankruptcy is the most costly anatomy of Bankruptcy in respect to average cost front. It is the most expensive form of bankruptcy and the small businesses should also take this into consideration before filling the bankruptcy. It is expensive as it involves two separate elements which are debt repayment plan and reorganization plan a. The reorganization plan means the person has to convince the court and the debtors that you can put in profit very soon which should be detailed and supported by proper research wherein you have to show a budget through which you need to assess how you are going to pay your creditors in the next several years. Its a process wherein you have to negotiate the same with the creditors and the court. A minimum of $15,000 have to be paid if there is no disputes and expensive attorneys over your reorganization plan but for Chapter 11 bankruptcy it will exceed to $ 100,000 and also this amount can vary depending upon the attorneys and disputes filed by the creditors. I understand that its not an ethical and legitimate step for the stakeholders but when there is no words to express the matter in concern and already the things have gone wrong and worse there can be few things which, if kept in mind can at least fetch some benefits for the stakeholders Filling in Court This is the first way when you can file in the court for a recovery notice wherein you owe the creditors and attorneys that you will come up with the company in a stipulated years of time and also by paying a fees for the time being just to show a courtesy to the creditors and the attorneys. Cost Minimization In this approach, an effort to minimize the cost of Chapter 11 Bankruptcy can be exercised while it may not work in most cases. The matters can be sorted out with the help of an attorney a fee agreement which would imply that most of the paper work preparation planning and filling must be carried out by the concerned person and he would simply pay his attorney to act as a legal coach in case of any need or questions. Most of the attorneys may not accept this type of payment agreement due to the complexity of plan of Chapter 11. Warning The rate of success in Chapter 11 bankruptcies is exceedingly low, which means that a very small percentage of reorganization plans will actually obtain approval from the court. As without the approval the plan will be worthless. There will be higher chance of spending lot of money and putting together a plan along with creditors negotiation and attending to win approval from the court, but this could be a failure too.

Free Essays - Hunting Scenes in Sir Gawain and Green Knight :: Sir Gawain Green Knight Essays

Sir Gawain and the Green Knight – The Hunting Scenes Often when a story or lesson is to be relayed, the teller will describe the story or lesson by using an example that parallels the lesson. This can be an effective method of portraying a story. in Sir Gawain and the Green Knight, the hunting scenes of Bertilak parallel the tests given to Gawain during his stay at Hautdesert Castle. Bertilak's first hunting scene was of a deer hunt. Bertilak knew when he first started his hunt that he would have to use similar skills against this animal of great speed and nimbleness. Bertilak knew he would have to display patience and stealth to hunt this animal- Back at the castle, Gawain also had to use similar skills to resist Bertilak's wife's advances. When first approached by Bertilak's wife, Gawain reacted by lying still as if he were asleep, and then using his alertness and stealth to evade Bertilak's wife's temptations. This was portrayed when the author writes, "Lay hidden till the light of day gleamed on the walls,/Covered with fair canopy/" (1181-1182). Sir Gawain evaded Bertilak's wife's advances using skills of patience and stealth, which paralleled the skills that would similarly be used when hunting deer. Bertilak then hunts a viscous boar- In this hunt, people and animals were severely injured. Different from hunting a deer, Bertilak must use different skills to hunt the boar. Similarly, Gawain must use a different approach when he is again visited by the lady. Like the boar, the lady's approach to Gawain is more forward. Both Bertilak and Gawain must each use strength, aggressiveness and stamina in their battles. Sir Gawain shows this strength when he says, 'Tor I dared not do that lest I be denied./ If I were forward and refused, the fault would be mine./" (1494-1495). In the third and final hunting scene, Bertilak hunts a cunning fox. In this instance, the hunter must use his own wit to outsmart the fox. Bertilak knows this. He uses his intelligence and quick wit to outsmart the fox. Sir Gawain also experienced a cunning test. Gawain used his sly wit against the lady's third visit by cunningly resisting her offers because of his vows and the fact that he is a guest in Bertilak's home. Sir Gawain resists the lady's advances, as well as her offer of an expensive gift, The lady then offered Sir Gawain a green sash. Free Essays - Hunting Scenes in Sir Gawain and Green Knight :: Sir Gawain Green Knight Essays Sir Gawain and the Green Knight – The Hunting Scenes Often when a story or lesson is to be relayed, the teller will describe the story or lesson by using an example that parallels the lesson. This can be an effective method of portraying a story. in Sir Gawain and the Green Knight, the hunting scenes of Bertilak parallel the tests given to Gawain during his stay at Hautdesert Castle. Bertilak's first hunting scene was of a deer hunt. Bertilak knew when he first started his hunt that he would have to use similar skills against this animal of great speed and nimbleness. Bertilak knew he would have to display patience and stealth to hunt this animal- Back at the castle, Gawain also had to use similar skills to resist Bertilak's wife's advances. When first approached by Bertilak's wife, Gawain reacted by lying still as if he were asleep, and then using his alertness and stealth to evade Bertilak's wife's temptations. This was portrayed when the author writes, "Lay hidden till the light of day gleamed on the walls,/Covered with fair canopy/" (1181-1182). Sir Gawain evaded Bertilak's wife's advances using skills of patience and stealth, which paralleled the skills that would similarly be used when hunting deer. Bertilak then hunts a viscous boar- In this hunt, people and animals were severely injured. Different from hunting a deer, Bertilak must use different skills to hunt the boar. Similarly, Gawain must use a different approach when he is again visited by the lady. Like the boar, the lady's approach to Gawain is more forward. Both Bertilak and Gawain must each use strength, aggressiveness and stamina in their battles. Sir Gawain shows this strength when he says, 'Tor I dared not do that lest I be denied./ If I were forward and refused, the fault would be mine./" (1494-1495). In the third and final hunting scene, Bertilak hunts a cunning fox. In this instance, the hunter must use his own wit to outsmart the fox. Bertilak knows this. He uses his intelligence and quick wit to outsmart the fox. Sir Gawain also experienced a cunning test. Gawain used his sly wit against the lady's third visit by cunningly resisting her offers because of his vows and the fact that he is a guest in Bertilak's home. Sir Gawain resists the lady's advances, as well as her offer of an expensive gift, The lady then offered Sir Gawain a green sash.

International Multimedia Conference Essay

Camuri, A. , Mazzarino, B. , Ricchetti, M. , Timmers, R. , and Volpe, G. (2004). Multimodal analysis of expressive gesture in music and dance performances. In Gesture-Based Communication in Human-Computer Interaction, 2915, 357-358. The article focuses on research concerning the analysis of expressive gesture from the perspective of multimodal interaction and the development of systems of multimodal interaction by considering the role that non-verbal expressive gesture would play in the communication process. The multimodal analysis focuses mainly on dance and music because they provide a comprehensive emotional and expressive content. The authors explained the involvement of auditory and visual gestures in demonstrating the expressive purpose of the performers. They tested the model of auditory and visual gestures by making a comparison of the performances with the ratings of audiences of the same dance and music performances. Other topics that students can get from the article include the definition of the expressive gesture, framework for multimodal analysis of expressive gesture in terms of the ability of performers to relay their emotions to the audience, and automated extraction of auditory and visual cues. Dowling, R. G. , Dowling, R. , Reinke, D. , & National Cooperative Highway Research Program (2008). Multimodal level of service analysis for urban streets. Washington, D. C. : Transportation Research Board. The authors highlighted the findings of a study on how the public can interpret the quality of multimodal service offered by urban streets. The study focuses mainly on various factors that influence or affect the perception of various travelers when it comes to the level of service of urban streets, particularly the perceptions of automotive drivers, bicycle riders, bus riders, and pedestrians. The authors stressed the importance of using models of level of service in analyzing the benefits that urban travelers can get from context-focus street designs. The book will help widen the knowledge of students in applying multimodal analysis to urban streets. It provides students with insights into the definition of urban streets and transits, techniques of analyzing the level of service for urban streets, and economic and safety aspects of level of service. Other topics covered in the book include the integration of four models of level of service in order to have the same level of service rating system and suggested level of service for bicycle riders, transit passengers, and pedestrians. Foote, J. , Boreczky, J. , Girgensohn, A. , & Wilcox, L. (1998). An intelligent media browser using automatic multimodal analysis. International Multimedia Conference. Proceedings of the Sixth ACM International Conference on Multimedia, 375-380. The article provides a way to automatically analyze multimedia using an intelligent browser. The automatic multimodal analysis allows users to have informed decisions on various interests in the field of media in order to avoid searching areas outside the scope their interest. The article provides explanation on two types of automatic multimodal analysis, the audio similarity to identify the speaker and the frame differences to detect shot. Recognition of gesture, motion, and face in the browsing scheme and the combination of audio and video analysis are integrated in the automatic multimodal analysis. The article can enhance the knowledge of students on automatic analysis of multimedia resources by providing various ways to make noisy and erroneous automatic estimates more applicable to the user. Some examples of multimedia resources include digital ink, closed captions, audio, video, and text annotations. Kress, G. & Van Leeuwen, T. (2001). Multimodal discourse: the modes and media of contemporary communication. Arnold, New York: Oxford University Press. The authors provided insights into the role that the communication theory will play in the era of interactive multimedia. They compared how the design thinking and production thinking will interact during the design and development of communicative messages. They explained that design thinking and production thinking are two important types of thinking processes that take place during an individual’s interaction with resources and media he or she utilized. The book is very relevant to the research concerning multimodal analysis because it helps widen the knowledge of students and readers in the field of communication, language, and media. Moreover, students will learn to take the challenge brought by the emergence of multimedia, multimodality, and multi-skiing. The book will supplement students’ understanding of designing multimedia that was learned in school. It is not only catered to students but all types of professionals who are interested in multimodal design such as journalists, designers, photographers, and other people who are connected to the of science and mathematics. O’Halloran, K. L. (2006). Multimodal discourse analysis: systematic-functional perspectives. London, England: Continuum International Publishing. The book discusses important research in the field of multimodal texts and multimodal discourses. It focuses mainly on the development of the theory and the methodology of analyzing discourses by utilizing various semiotic resources like visual images, architecture, language, and space. The book provides an explanation on how the multimodal discourses are produced through the interaction of different semiotic modes of communication. Different modes of communication may include static and dynamic visual images, language, electronic media, architecture, electronic print, or electronic film. The book provides explanation on phase and transition, interaction of body movement and camera, use of color, typography, and layout. Other topics covered in the book include the development of multiple integrated semiotic model, visual semiosis in electronic films, application of system-functional theory in various semiotic resources, and analysis of three-dimensional space such as the Sydney Opera House. Ventola, E. , Charles, C. , & Kaltenbacher, M. (2004). Perspectives on multimodality. Amsterdam, Netherlands: John Benjamins Publishing Co. The authors provided a background on various perspectives about multimodal discourse by focusing on methodological and theoretical issues such as multiple semiotic systems, mode hierarchies, and multimodal corpus annotation. The advent of computer and the growing use of the Internet allow scholars to be particularly interested on the characteristics of different modes of communication and the way these modes of communication can function semiotically and integrate in the emerging discourse analyses around the world. The book can help widen the understanding of students on the similarity between language and non-linguistic semiotic mode of communication, different signs of nature within the multimodality perspective, role of text imaging in providing positive outcomes for the learners, and the influence of semiotic transformation in the formal language of mathematics on the effectiveness of science to provide description of the physical world. Moreover, students can learn how to apply multimodal analysis in various fields such as entertainment, medicine, mathematics, design of buildings, and translation. References Camuri, A. , Mazzarino, B. , Ricchetti, M. , Timmers, R. , and Volpe, G. (2004). Multimodal analysis of expressive gesture in music and dance performances. In Gesture-Based Communication in Human-Computer Interaction, 2915, 357-358. Dowling, R. G. , Dowling, R. , Reinke, D. , & National Cooperative Highway Research Program (2008). Multimodal level of service analysis for urban streets. Washington, D. C. : Transportation Research Board. Foote, J. , Boreczky, J. , Girgensohn, A. , & Wilcox, L. (1998). An intelligent media browser using automatic multimodal analysis. International Multimedia Conference. Proceedings of the Sixth ACM International Conference on Multimedia, 375-380. Kress, G. & Van Leeuwen, T. (2001). Multimodal discourse: the modes and media of contemporary communication. Arnold, New York: Oxford University Press. O’Halloran, K. L. (2006). Multimodal discourse analysis: systematic-functional perspectives. London, England: Continuum International Publishing. Ventola, E. , Charles, C. , & Kaltenbacher, M. (2004). Perspectives on multimodality. Amsterdam, Netherlands: John Benjamins Publishing Co.

Corporate Governance in Australia After Hih Essay

In the light of various corporate scandals, regulatory bodies and corporate governance were placed under pressure by shareholders and stakeholders to form a tighter grip in governing corporation’s conduct. The obligations, roles and responsibilities of company’s stewards are under scrutiny of Corporations Act, listing rules, country’s code of corporate governance, ethics as well as social standards. At the same time, advocates of market forces as a replacement to regulations and legislation continue to pursue for market deregulation and liberalisation based on the believe that government intervention will only distort resources allocation and hinder market growth. The collapse of Australian company HIH Insurance Ltd (HIH) in 2001 was analysed in terms of its conduct and compliance to the Corporations Act, listing rules as well as code of corporate governance as released by the Australian Securities Exchange (ASX) Corporate Governance Council (CGC). Reforms in regulations and the Corporate Governance Principles and Recommendations 2007 by ASX CGC were used to recommend best practices in corporate governance that should have taken place in HIH. Lastly, the effect of globalization and challenges to good corporate governance resulting from globalization were discussed from the perspective of national government, regulatory bodies as well as the corporation itself. Justice Neville Owen, The Royal Commissioner in the HIH Royal Commission Report described corporate governance as the framework of rules, relationships, systems and processes within and by which authority is exercised and controlled in corporations, and the Australian Securities Exchange (ASX) Corporate Governance Council added that corporate governance relates to and influences how the objectives of the company are set and achieved, how risk is monitored and assessed, and how performance is optimized (The HIH Royal Commission, 2003; ASX Corporate Governance Council, 2007). The meaning of corporate governance has evolved over time but, in the strictest sense, is linked to the legislation that allows its existence. The law sets forth a company’s rights and responsibilities but this can differ from country to country. However, it is generally accepted that corporate governance extends beyond the law to include a consideration of best practices and business ethics (Birt, Chalmers, Beal, Brooks, Byrne, & Oliver, 2008). The structure of corporate governance as put forth by Farrar (2005) and represented in the figure below illustrates the relationship within the corporate governance structure: Figure: The structure of corporate governance (Farrar, 2005). The issues surrounding the rights and responsibilities of corporations are complex and ever changing as financial markets become more global, corporations become larger and more powerful, and society’s perception of the corporate role changes. A school of thoughts advocates for market forces to be the regulator of the financial market. The neo? liberals assume that factor markets work efficiently without government intervention if property rights and competition are guaranteed. They considered government interventions as less efficient than market? based solutions and stresses that government interventions hamper private sector development and that government should concentrate on improving the enabling of business environment through deregulation (Emeseh, Ako, Okonmah, Obokoh, & Ogechukwu, 2010). Neo-liberalism challenges the conventional structuralist orthodoxy of government intervention by highlighting the negative effects of â€Å"financial repression† on economic growth and development. They refer financial repression to be the set of government legal restrictions preventing financial intermediaries in the economy from functioning at their full capacity. The distortion of domestic financial markets through rules and legislation is claimed to have negative impact on economic growth. In essence, corporations should be relied on in the main to self? regulate in the critical aspect of business activities. Neo-liberalism has prompted many countries to implement liberalisation and deregulation of their financial markets on the recommendations of the World Bank and IMF (Emeseh, Ako, Okonmah, Obokoh, & Ogechukwu, 2010). The significant role of market forces in contributing to good corporate governance and strong corporate performance has for some time been emphasised in economic literature on the corporation and corporate law. In fact, advocates consider the influence of market forces to be an effective substitute for formal legal regulation (duPlessis, McConvill, & Bagaric, 2005). However, through-out the last two decades, legislation reforms and corporate governance has also grown rapidly, particularly since the collapse of Enron Corporation in 2001 and the subsequent financial problems of other companies in various countries. As financial scandals continue to emerge, there will be continued attention placed on corporate governance issues, especially relating to transparency and disclosure, control and accountability, and the most appropriate form of board structure that may be capable of preventing such scandals occurring in future (Mallin, 2007). In pursuance of good corporate governance, an area of interest would be how directors’ conduct and decisions should be in the best interest of the company, its shareholders and other relevant stakeholders. In this context, the agency theory is a very suitable framework that can describe the problems associated with the principal-agent relationship caused by separation of ownership and control between shareholders (the principal) and directors (the agent) in corporations. Information asymmetry, moral hazard, difference in attitude towards risk and difference in interest between shareholders versus directors are common agency problems that would usually be at the expense of shareholders (Mallin, 2007; Rahman, & Salim, 2010). For example, directors may have a wider range of economic and social needs (such as to maximize compensation, security, status and to boost their own reputation), while shareholders are interested only in maximizing return on investments. Furthermore, as directors are usually contracted to the company on short term basis, they may be eager for short-run payoffs within their contract term, whereas shareholders’ interest would be based on long-term success. Australian companies have a unitary board structure and the regulatory framework for corporate governance and directors’ duties is governed by (i) Statute (notably the Corporations Act), (ii) Common law rules (for example, cases relating to directors’ duties), (iii) The company’s constitution, and (iv) Guidelines issued by the Australian Securities and Investments Commission (ASIC) (Dibbs Barker Gosling Lawyers, 2003). ASIC plays a vital role in enforcing and regulating company and financial services laws to protect Australian consumers, investors and creditors. It acts as Australia’s corporate regulator and administers various legislations including the Corporations Act 2001, Australian Securities and Investments Commission Act 2001, etc. (Australian Securities ; Investments Commission, 2010a). By the Corporations Act, general duties imposed on directors and officers of companies are stated as (i) the duty to exercise their powers and duties with the care and diligence that a reasonable person would have which includes taking steps to ensure they are properly informed about the financial position of the company and ensuring the company doesn’t trade if it is insolvent, (ii) the duty to exercise their powers and duties in good faith in the best interests of the company and for a proper purpose, (iii) the duty not to improperly use their position to gain an advantage for themselves or someone else, or to cause detriment to the company, and (iv) the duty not to improperly use information obtained through their position to gain an advantage for themselves or someone else, or to cause detriment to the company (Australian Securities ; Investments Commission, 2010b). Beyond their legal duties and obligations, directors are also expected to meet commercial expectations in th e interest of stakeholders, which include, but are not limited to, shareholders. These commercial expectations essentially require directors to drive the bottom line and provide appropriate shareholder returns. Taking it a step further, many directors of today are challenged to embrace triple bottom line reporting and consider the economic, social and environmental ramifications of their corporate activities (Lucy, 2006). While the scope and laws governing the conduct of directors are wide and many, intentional and unintentional breach has shocked the financial market and public numerously. Till today, HIH Insurance Ltd (HIH) that went into liquidation in early 2001 is well remembered by almost every Australian as a collapse caused by mismanagement of the company, and various board members were brought to court on charges including giving misleading information with the intention of deceiving other board members and the company’s auditor. As one of Australia’s largest insurers, the company ran into debts of over AUD$5 billion and subsequent to the collapse, the government carried out an expensive exercise to underwrite many of the failed policies (Mallin, 2007). According to the HIH Royal Commission Report on the failure of HIH, it was concluded that investigators did not find fraud or embezzlement to be behind the collapse. The failure was more the result of attempts to paper over the cracks caused by over-priced acquisitions (notably FAI Insurance Ltd) and too much corporate extravagance based on a misconception that the ‘money’ was there in the business. The primary reason for the huge loses was that adequate provision had not been made for insurance claims and past claims on policies had not been properly priced. HIH was mismanaged in the area of its core business activity (Bailey, 2003). In chorus, the HIH Royal Commission report fundamentally states that the main reasons for the failure of HIH was poor management and greed characterised by (i) a lack of attention to detail and skills, (ii) a lack of accountability for performance, and (iii) a lack of integrity in the company’s internal processes and systems (Nicholson, 2008). Justice Neville Owen further commented in the report on what was the essence of good corporate governance: â€Å"The governance of a public company should be about stewardship. Those in control have a duty to act in the best interests of the company. They must use the company’s resources productively. They must understand that those resources are not personal property. The last years of HIH were marked by poor leadership and inept management. Indeed, an attitude of apparent indifference to, or deliberate disregard of, the company’s underlying problems pervades the affairs of the group. † (The HIH Royal Commission, 2003). The above comment can be loosely translated to say that the directors of HIH have failed their duties. Notably, in April 2005, Mr Ray Williams, the former Chief Executive Officer (CEO) of HIH, was sentenced to four-and-a-half years’ jail with a non-parole period of two years and nine months. Mr William’s sentencing follows ASIC’s successful civil penalty proceedings on the three criminal charges which Mr. William pleaded guilty to. The three criminal charges were (i) that he was reckless and failed to properly exercise his powers and discharge his duties for a proper purpose as a director of HIH Insurance Limited when, on 19 October 2000, he signed a letter that was misleading, (ii) that he authorised the issue of a prospectus by HIH on 26 October 1998 that contained a material omission, and (iii) that he made or authorised a statement in the 1998-99 Annual Report, which he knew to be misleading, that overstated the operating profit before abnormal items and income tax by $92. 4 million (Australian Securities & Investments Commission, 2005a). ASIC’s HIH investigation also led to criminal prosecutions of 9 other former senior executives, including directors of FAI, HIH and associated entities on 31 Corporations and Crimes Act charges. Of high public interest was Mr Rodney Adler, a former director of HIH and the majority owner of FAI was sentenced to four-and-a-half years’ jail, with a non-parole period of two-and-a-half years, on four charges arising from his conduct as a director of the HIH group of companies in 2000. ASIC’s chairman, Mr Jeffrey Lucy, in his public statement said, â€Å"Mr Adler was in a position of trust as a director of HIH but he put his own financial interests before the interests of HIH shareholders† (Australian Securities & Investments Commission, 2005b). Mr Adler was sentenced after pleading guilty to four criminal charges: (i) two counts of disseminating information on 19 and 20 June respectively, knowing it was false in a material particular and which was likely to induce the purchase by other persons of shares in HIH contrary to s999 Corporations Act 2001, (ii) one count of obtaining money by false or misleading statements, contrary to s178BB Crimes Act 1900 (NSW), and (iii) one count of being intentionally dishonest and failing to discharge his duties as a director of HIH in good faith and in the best interests of that company contrary to s184(1)(b) Corporations Act 2001 (Australian Securities & Investments Commission, 2005b). HIH’s disastrous business ventures in U. K. , U. S. , acquisition of FAI Insurance Ltd. nd the Allianz joint venture were identified as what ultimately brought HIH down. These instances of poor decision-making were caused by and reflect a poor corporate governance culture. Corporate governance issues identified included (i) an over-dominant CEO whose decisions were never questioned, (ii) an ineffective chairman who failed his responsibility to oversee the functioning of the board, (iii) an ineffective board who failed to grasp the concept of conflicts of interest, and was unable to monitor and does not question management performance, (iv) inappropriate conduct in remuneration setting and performance measurement (mostly made by Mr. Williams who, although not a member of the committee, attended all meetings by invitation), (v) an ineffective audit committee who showed no concern with risk management and internal control, and (vi) compromised auditor independence (the auditing company was Arthur Andersen and HIH’s board had three former Andersens partners – one of them was the chair of the board yet continued receiving fees under a consultancy agreement. Andersens also derived significant fees from non-audit work which gave rise to a conflict of interest with their audit obligations) (Lipton, 2003). Subsequent to HIH’s collapse, The Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004 (commonly known as ‘CLERP 9’) came into force on 1 July 2004. CLERP 9 incorporated a number of recommendations made in the HIH Royal Commission Report. Reforms were made relating to (i) disclosure of directors’ remuneration, (ii) financial reporting, (iii) au ditors independence, (iv) continuous disclosure, and (v) enhanced penalty provisions. CLERP 9 also deals with accounting standards, expensing of options, compliance controls, and encouragement of greater shareholder participation at meeting – all of which represents a significant development in the corporate law framework (Deloitte Touche Tohmatsu, 2005; Alcoc, & Bicego, 2003). Prior to CLERP 9 coming into force, advocates of corporate governance were delighted with Australian Stock Exchange Limited (ASX) release of the â€Å"ASX Corporate Governance Council’s (CGC) Principles of Good Corporate Governance and Best Practice Recommendations† in March 2003. ASX CGC adopted the same ‘principles based’ approach as taken in the UK Combined Code which governs entities listed on the London Stock Exchange. ASX listed entities are at liberty not to comply with the recommendations, but if they do not, they must explain why not. The Guidelines were built on the belief that one size does not fit all companies. The Guidelines contained 10 ‘essential’ Corporate Governance Principles (Principles) and 28 Best Practice Recommendations (Recommendations) which was later revised in August 2007 as â€Å"Corporate Governance Principles and Recommendations† (Guidelines) comprising of 8 Principles and 26 Recommendations (Farrell, Harding, ; Spilsbury, 2003). The Guidelines also reflect ASX CGC’s emphasis in continuous disclosure by listed companies. Each Principle has a ‘Guide to reporting’ about the Recommendations at the end of the ‘chapter’ discussing what should be disclosed and where. Under ASX Listing Rule 4. 10. 3, companies are required to provide a statement in their annual report, disclosing the extent to which they have followed the Recommendations in the reporting period. Where companies have not followed all the Recommendations, they must identify the Recommendations that have not been followed and give reasons for not following them – the â€Å"if not, why not† approach (ASX Corporate Governance Council, 2007). In relation to HIH’s case, a number of the Guidelines’ Principles provide fairly extensive coverage of corporate governance issues identified in HIH earlier. Principle 1 highlights the need for companies to establish and disclose the respective roles and responsibilities of the board and management. In the 2007 edition, the Guidelines added the Recommendation 1. 2 for companies to disclose the process for evaluating the performance of senior executives (ASX Corporate Governance Council, 2007). This Principle serves to provide disclosure in relation to HIH’s situation of an over-dominant CEO and ineffective chairman and board. Where HIH was highlighted to have a board that was ineffective and failed its duties, Principle 2 states that companies need to structure the board to add value with an effective composition, size and commitment to adequately discharge its responsibilities and duties. Recommendations in the principle placed importance in having a majority of the board and the chairman being independent directors to ensure independence in board decisions and prevent conflict of interest. Recommendation 2. 4 suggests that companies should establish a nomination committee to ensure appropriate selection and appointment practices in the company. This Recommendation also provides resolution in relation to HIH’s case whereby the board was mostly made up of directors hired by Mr. William, including the former Andersen partners. In the 2007 edition, the Guidelines added the Recommendation 2. 5 for companies to disclose the process for evaluating the performance of the board, its committees and individual directors (previously this was part of Principle 8 in the 2003 edition, titled â€Å"encourage enhance performance†). This Recommendation helps to ensure directors are given access to continuing education to update and enhance their skills and knowledge that are necessary in performing their duties (ASX Corporate Governance Council, 2007). Principle 3 discusses how companies should promote ethical and responsible decision-making. Beyond legal obligations, directors are expected to make decisions that satisfy not only the company’s shareholders but other stakeholders as well (this principal includes amalgamation from Principle 10 of the 2003 edition Guidelines which was to â€Å"recognize the legitimate interests of stakeholders†). To achieve this, Recommendation 3. 1 encourages companies to establish and disclose their code of conduct pertaining to integrity practices, legal practices and handling of unethical practices. Aligned with this, Recommendation 3. 2 promotes the establishment and disclosure of company’s policy concerning trading in company securities by directors, senior executives and employees (ASX Corporate Governance Council, 2007). Relating to Principle 3 and Principle 7 titled â€Å"recognize and manage risk†, HIH has been considerably questioned of its various business decisions, mostly of which contributed to huge loses and ultimately the company’s insolvency. Criticized decisions made by the company are many, and on top of the list include (i) the acquisition of FAI Insurance (majority-owned by Mr. Adler who later became a member of HIH’s board of directors) for A$300 million which FAI was later estimated to be worth just A$100 million, (ii) re-entering the California market in 1998 and failure to take the difficult decision to exit the market when it proved unprofitable, and (iii) the decision to enter a sector (insurance and re-insurance of film-financing) that has proved problematic for many market participants in London (Cagan, 2001). The lack of risk management within HIH was apparent and Mr. Adler’s unethical conduct was evident with his imprisonment. In view of the importance of risk management, Recommendation 7. 1 urges companies to establish policies for the over sight and management of material business risks (that is financial risks and non-financial risks) and disclose a summary of those policies while Recommendation 7. 2 call for the board to require management to design and implement risk management and internal control system to manage the company’s material business risks and report to it on whether those risks are being managed effectively.