Ownership Structure, Managerial Behavior and Corporate Value

diary of inembodied finance 11 (2005) 645 660 www. elsevier. com/locate/econbase give function grammatical construction, managerial fashion and bodily prize J. R. Daviesa, David Hillierb,T, Patrick McColganc a University of Strathclyde, UK b University of Leeds, UK c University of Aberdeen, UK Received 21 November 2002 reliable 6 July 2004 Available online 20 April 2005 Abstract The nonlinear coitusship amid embodied economic economic determine and managerial allow for power is well documented. This has been attri neverthelessed to the onset of managerial entrenchment, which cases in a simplification of integrated treasure for increase aims of managerial retentivitys.We propose a new structure for this relationship that accounts for the effect of conflicting managerial incentives, and bring outback(a)(a) and internal disciplinary monitoring appliances. Using this specification as the basis for our analysis, we provide rise that the managerial willpower i n merged value relationship is co-deterministic. This finding is at odds with recent work which tracks that somatic value determines managerial self-will besides non vice-versa. D 2005 Elsevier B. V. All rights reserved.JEL classification G32 Keywords self-possession structure Capital expenditure integrated value Tobins Q 1. Introduction In a trade place without billet problems, integrated managers will choose investitures that exploit the wealth of shargonholders. In practice, competing objectives which be incompatible with the sh atomic number 18holder wealth-maximising image whitethorn alike be pursued. T Corresponding author. Leeds University Business School, University of Leeds, Maurice Keyworth Building Leeds, LS2 9JT, UK. Tel. +44 113 3434359 fax +44 113 3434459. E-mail address d. j. emailprotected c. uk (D. Hillier). 0929-1199/$ see front matter D 2005 Elsevier B. V. All rights reserved. doi10. 1016/j. jcorpfin. 2004. 07. 001 646 J. R. Davies et al. / dia ry of corporal finance 11 (2005) 645660 Following Jensen and Meckling (1976), a bear-sized literature has developed that examines how managerial look impacts upon squ be per rowance. A vibrant strand of this literature concerns the relationship between managerial willpower levels, the direct enthronisation funds decisions made by focus and the inherent value of the stanch, as proxied by Tobins Q ratio. Morck et al. 1988), McConnell and Servaes (1990), and Hermalin and Weisbach (1991) provide secern of a large nonlinear relationship between bodily value and managerial self-possession. Specifically, value increases with managerial holdings for low levels of self-possession. At some level, managers become entrenched in spite of appearance the satisfying resulting in a decrease in firm value. However, whereas Morck et al. (1988) and Hermalin and Weisbach (1991) document further changes in the unified valuemanagerial holdings relationship at high levels of paleness self -possession, McConnell and Servaes (1990) report no such change.Recent work has built upon the findings of Demsetz and Lehn (1985) who beg that levels of managerial monomania will be contumacious endogenously in equilibrium. Moreover, Cho (1998) and Himmelberg et al. (1999) have shed doubt upon the ahead findings of Morck et al. (1988) and McConnell and Servaes (1990) by lookling for the effects of endogeneity and unobservable (to the econometrician) firm characteristics in their analysis. After functionling for the effects of endogeneity in the corporate value managerial holdings relationship, they showed that managerial self-will had little or no effect on corporate value and coronation.Short and Keasey (1999) and Faccio and Lasfer (1999) utilize a cubic specification to position the corporate valuemanagerial holdings relationship and both report a planetary houseificant nonlinear soundal form, exchangeable to Morck et al. (1988), for British companies. However, unco mplete study fully examines the misspecifying impact of endogeneity on their results. In this paper, we propose a new structure to the managerial willpowercorporate value relationship which captures a more complex characterisation of the evolving behavior of managers. We bespeak that at high levels of managerial self-will when alfresco food market civilise becomes neffective, there will be a resurgence of entrenchment behavior. With fairness holdings around 50%, managers will have implicit control of their bon ton, but still do not have objectives completely aligned to remote shareholders. Only at very high levels of managerial holdings are incentives akin to opposite shareholders. When this model is applied to a large specimen of firms incorporated in the UK, managerial ownership is seen to have a authoritative impact on corporate value. This relationship is endogenous, and unvarying with Cho (1998) and Himmelberg et al. (1999), corporate value has a corresponding effe ct on managerial holdings.We excessively find that although ownership levels are continueed by firm level investment, there is no recount of the reverse occurring. In the next section we outline our model of the managerial ownershipcorporate value relationship. We gift empirical results in Section 3 and conclude in Section 4. 2. The model In this section, we propose an alternative structure to the managerial holdingscorporate value relationship and argue that the cubic, or simpler representations, used in earlier J. R. Davies et al. / ledger of Corporate finance 11 (2005) 645660 647 studies1 are unnecessarily repressing and misspecified.The model that is presented here captures further nonlinearities in this relationship at high levels of managerial holdings and has a quintic specification. guidance is faced with both forbid and positive incentives to ensure that they follow objectives which maximise shareholder wealth. The effectiveness of these incentives is potentially a turn of the level of managerial ownership in the firm. We view the propensity of management to maximise shareholder wealth to be a function of three unobserved factors remote market discipline, plain if it is weak, internal controls and crossroad of interests.Moreover, the strength of each factor can be viewed as a function of the level of managerial ownership in the firm. 2 2. 1. Low levels of managerial ownership For low levels of managerial ownership, international discipline and internal controls or incentives will dominate behavior (see Fama, 1980 Hart, 1983 Jensen and Ruback, 1983). Empirically, Morck et al. (1988), McConnell and Servaes (1990) and Hermalin and Weisbach (1991) report results consistent with this behavior for the relationship between managerial holdings and corporate value.However, there is also the possibility that lower levels of ownership within this range have endogenously arisen from performance think requital packages, such as deport options and s tock grants kinda than increased ownership in itself leading to higher(prenominal) Q ratios. 2. 2. Intermediate levels of managerial ownership At mediocre levels of managerial ownership, management interests begin to converge with those of shareholders. However, with great ownership comes greater power in the form of voting rights.Managers whitethorn, at this level of holdings, maximise their personal wealth by dint of increasing perquisites and guaranteeing their employment at the expense of corporate value. In addition, while low managerial ownership levels may have arisen through the vesting of pay plans, it is unlikely that such plans will provide management with a moderate ownership game in the firm. Moreover, even though external market controls are still in place, these and the effect of convergence of interests are not strong enough to align the behavior of management to shareholders.managerial labour markets melt down on the principal that poorly performing 1 See Mor ck et al. (1988), McConnell and Servaes (1990), Hermalin and Weisbach (1991), Cho (1998) and Himmelberg et al. (1999) for US companies and Short and Keasey (1999) and Faccio and Lasfer (1999) for UK companies. 2 For example, since compensation packages such as stock options are a transfer of wealth from shareholders to management, their value will lessen as managerial ownership increases. External market discipline is also a function of managerial ownership.Large shareholdings by aggrandisement management act as a deterrent for takeovers because of the greater efficacy to oppose a hostile bid or drive up premiums to the point where bidders no longstanding view the target ships participation as a positive net present value investment Stulz (1988). Finally, internal controls in the form of monitoring from large shareholders and corporate boards should reduce the scope for managers to diverge greatly from the interests of shareholders. Again, however, such discipline is likely to be inversely related to managerial control Denis et al. (1997). 648 J. R. Davies et al. / ledger of Corporate finance 11 (2005) 645660 anagers can be removed and appropriately disciplined. Studies by Denis et al. (1997) in the US and Dahya et al. (2002) in the UK both find an inverse relation between topmanagement turnover and managerial ownership. This need of discipline provides evidence of a deficiency in incentives for managers to maximise shareholder value at this level of ownership. Franks and Mayer (1996) also report that hostile takeover targets in the UK are not poorly performing firms, which is in contrast to the findings of a disciplinary role for corporate takeovers in the US by Martin and McConnell (1991).In this context, Franks and Mayer (1996) provide significant evidence that takeovers in the UK may not act to remove a self-serving board even when they are performing poorly. This lack of disciplinary control over poorly performing management may gird managements ability to pursue sub-optimal corporate policies at intermediate ownership levels. 2. 3. High levels of managerial ownership (less than 50%) As levels of managerial equity ownership grow, objectives converge further to those of shareholders. At ownership levels, below 50% management do not have jibe control of the firm and external discipline still exists.While perhaps no longer organism subject to any study discipline from external takeover markets, it is likely that even at these levels of ownership, managers are still subject to discipline from external block shareholders. This is disuniteicularly true in the UK, where because of strong informal ties between institutions (Short and Keasey, 1999), a idle regulatory environment concerning the ownership of listed companies (Roe, 1990) and low monitoring costs (Faccio and Lasfer, 1999), institutional activism is stronger than in the US. This view is also consistent with Franks et al. (2001) contention of strong minority protectio n virtues in the UK, whereby large shareholders cannot transact with related companies without the comply of the firms minority shareholders. The UK regulatory framework stands in contrast to US corporate law which limits minorities to seeking redress subsequently the related party transaction has taken place. Combined with monitoring from UK institutions, this may allow external shareholders to impose some form of control on management even at elatively large levels of managerial ownership. 2. 4. High levels of managerial ownership (greater than 50%) At levels above 50% ownership, management has complete control of the company. Although atomistic shareholders are unlikely to have been able to in influence managers at out-of-the- sort(prenominal) lower levels of ownership than this, there is always a possibility that a cartel of blockholders, confederate with minority shareholders rights under UK company law, may be able to mount a challenge to management if they give way to m ake decisions in shareholders best interests.For a more in-depth discussion of the institutional differences and alike(p)ities between the fall in Kingdom and United States, see Short and Keasey (1999) and Faccio and Lasfer (1999). 3 J. R. Davies et al. / journal of Corporate Finance 11 (2005) 645660 649 At greater than 50% managerial ownership, this is no longer likely to be a serious issue to management. Furthermore, with majority ownership, the probability of a hostile takeover effectively becomes zero.The failure of external discipline combined with a lack of blockholder incentives above 50% may result in a decrease in corporate value for a small window of managerial holdings above this level. This nightfall in corporate value is consistent with the theoretical predictions of Stulz (1988). 2. 5. Very high levels of managerial ownership Finally, as managerial shareholdings rise to very high levels, management effectively become sole owners of the company. This would lead to va lue-maximising behavior as predicted by Jensen and Meckling (1976). Consistent with Morck et al. 1988), Short and Keasey (1999) and Faccio and Lasfer (1999) at above a certain level of ownership, corporate managers are faced with such severe pecuniary penalties for failing to maximise the value of their companies that they are agonistic to make decisions which will maximise firm value, regardless of how this affects their private benefits of control. 2. 6. Summary Our characterisation of a passing nonlinear relationship between managerial equity holdings and corporate value is in contrast to earlier studies (Morck et al. , 1988 McConnell and Servaes, 1990 Hermalin and Weisbach, 1991 Cho, 1998 Himmelberg et al. 1999)4, which posit fewer go points in their analysis. There is little theoretical basis on which the several(prenominal)(prenominal) bout points can be determined, and the findings of Kole (1995) suggest that these will be in influenced by the size of the firms in the sample. However, it is expected that the second local maximum will be in the region of 50% managerial ownership reflecting the stage at which management gain integrality control of the company. In the next section, the main tests of our hypotheses will be carried out. 3. Empirical results 3. 1.Description of the information We use information on managerial and external block ownership for 1995 from the MacMillan London Stock rallying Year ledger for 1996 and 1997. The annual provides summary score entropy including a consolidated balance sheet, information on company directors, good information on the companys lawyers, auditors and stockbrokers, principle activities, company history, capital and dividend payments, and industrial sector for the McConnell and Servaes (1990) modelled the corporate valuemanagerial ownership relationship as a quadratic function, which by construction has merely one turning point. 650 J. R. Davies et al. / Journal of Corporate Finance 11 (2005) 645660 vast majority of all quoted companies and securities. 5 We restrict our attention to nonfinancial companies only and require that each firm has complete managerial and external ownership entropy for 1995, which leaves 802 industrial companies in our sample. 6 Data on capital expenditures, score assets sedulous, after tax profits, dispraise, supplement, equity market set, and seek and development costs are collected from Datastream. We count Tobins Q ratio (our proxy for corporate value) using the formula below Q?MVEQ ? PREF ? DEBT BV ASSETS ? 1? where MVEQ=the year-end market value of the firms mutual stock PREF=the yearend password value of the firmTs preference shares ( preferred stock) DEBT=the year-end book value of the firmTs total debt and BV ASSETS=the total assets employed by the firm, which is metrical as total assets deduction period liabilities. Our measure is consistent with the modified adaption of the formula as used by Chung and Pruitt (1994) who find that 96. 6% of the variability in the popular Lindenberg and Ross (1981) algorithmic rule of Tobins Q is explained by their estimation.Our method also avoids the data availability problems which arise from using the more austere algorithms proposed by Lindenberg and Ross (1981) and Lewellen and Badrinath (1997) in order to compute the replacement cost of assets. We use book values of preferred stock and long-term debt, rather than the market values proposed by Lindenberg and Ross (1981) and Lewellen and Badrinath (1997). In the UK, there is a far less active market for the trading of corporate debt than that which exists in the US, forcing us to rely on book values for these variants.In a final stratification of our sample, we mitigate the problem of potential outliers and trim 25 firms with the largest and smallest Tobins Q measure, leaving a final sample of 752 firms. 7 shelve 1 presents descriptive statistics for our sample data. The mean managerial ownership stake of all board members is 13. 02%, which is similar to comparable US studies, but slightly lower than Faccio and Lasfer (1999) who report mean ownership of 16. 7%. Tobins Q is slightly higher than that account for related US work with a mean value of 1. 96. The standard deviation of Tobins Q is 1. 21, which is also greater than some other studies.However, it is substantially less than the mean of 2. 47 account by Doukas et al. (2002) and is relatively similar to the mean value of 1. 86 that Short and Keasey (1999) report for their market military rating ratio. 8 The mean blockholder ownership is 37. 34% and is on a par with that reported for US firms by McConnell and Servaes (1990) (32. 4%) and 34. 57% reported by Faccio and Lasfer (1999) for UK firms. The full range of firm sizes is included in the sample with the 5 To establish the reliableness of the summary ownership data, we carried out a correlation analysis of a subsample of 422 firms from he original data set of 802 companies (52. 62%) for which we were able to obtain company annual reports. The yearbook data and company accounts data exhibited a correlation of 0. 90, with a pvalue of 0. 00. We also establish the robustness of our data by re-estimating the model using data for 1997. This result is discussed later in this section. 6 Recently listed, merged or acquired firms are not included. 7 This is a larger sample than that used by Morck et al. (1988)371 firms, Cho (1998)326 firms and Himmelberg et al. (1999)maximum 427 firms in any 1 year. Measured as the market value of equity divided by the book value of equity, minus any intangibles. J. R. Davies et al. / Journal of Corporate Finance 11 (2005) 645660 sidestep 1 Descriptive statistics uncertain way ownership Blockholder ownership Largest stakeholder Capital expenditures Total assets employed After tax profits less depreciation/assets employed Debt/assets employed Market value of equity Research and development Tobins Q Mean 13. 02% 37. 34% 18. 8 2% 21,221 255,642 0. 1425 0. 1411 335 2918 1. 9647 S. D. 18. 06% 23. 57% 21. 64% 75,317 1,583,274 0. 4763 0. 252 1399 44,108 1. 2092 Minimum 0. 00% 0. 00% 0. 00% 7 268 A10. 977 0. 0000 0. 68 0 0. 4502 651 Maximum 79. 90% 100. 00% 100. 00% 1,024,200 37,774,000 3. 4207 4. 8358 26,224 1,198,988 7. 0997 managerial ownership data measures the total level of holdings held by company management that are greater than 0. 5% of a companys equity. Blockholder data measures the total level of holdings by outside blockholders that are greater than 3% of a companys equity. Largest stakeholder is the largest single outside blockholder that holds at least 3% of companys outstanding equity.Capital expenditures (thousands), total assets employed (thousands), after tax profits, depreciation, leverage, equity market values (millions) and research and development costs (thousands) are collected from Datastream. Tobins Q is measured as the ratio of the market value of equity and book values of debt and p referred equity to the book value of assets in the firm minus current liabilities. Shareholdings data is taken from the London Stock Exchange Yearbook for 1996 and 1997. All data are for industrial companies quoted on the London Stock Exchange in 1995. mallest company having an equity market capitalisation of o680,000 and the largest companys equity valued at approximately o26 billion. The mean market capitalization of firms in the sample is o335 million. Table 2 provides the distribution of sample statistics grouped by managerial ownership. A very large proportion of the sample (62%) have managerial ownership levels less than or jibe to 10%. However, a large fraction of companies (11%) also in the sample had boards Table 2 partition of sample by managerial ownership Manager level Ownership Number of firms 464 87 75 41 34 26 21 4 Blockholder ownership, % 43. 34. 5 34. 4 24. 0 22. 7 13. 0 12. 7 5. 8 Tobins Q 1. 952 2. 033 1. 736 2. 109 2. 113 2. 257 1. 933 1. 808 Total assets emplo yed 393,861 44,093 26,186 34,322 35,864 28,190 14,234 10,127 Capital expenditures/ assets employed 0. 106 0. 161 0. 124 0. 117 0. 114 0. 100 0. 099 0. 114 Liquidity 0. one hundred thirty 0. 129 0. 157 0. 194 0. 194 0. 177 0. 169 0. 239 0VMOb10% 10VMOb20% 20VMOb30% 30VMOb40% 40VMOb50% 50VMOb60% 60VMOb70% 70VMOb100% Managerial ownership (MO) data measures the total level of holdings held by company management that are greater than 0. 5% of a companys equity.Blockholder ownership measures the total level of holdings by outside blockholders that are greater than 3% of a companys equity. Capital expenditure (thousands), total assets employed (thousands), after tax profits and equity market values (millions) are collected from Datastream. Liquidity is measured as cashflow divided by total assets employed. Tobins Q is measured as the ratio of the market value of equity and book values of debt and preferred equity to the book value of assets in the firm minus current liabilities. Sharehold ings data is taken from the London Stock Exchange Yearbook for 1996 and 1997.All data are for industrial companies quoted on the London Stock Exchange in 1995. 652 J. R. Davies et al. / Journal of Corporate Finance 11 (2005) 645660 Table 3 Regression results for Tobins Q on managerial ownership Variable Coefficient t-Statistic Adj. R 2 block off 1. 85 28. 14 0. 017 MO 0. 12 3. 23 MO2 A0. 013 A3. 08 F MO3 4. 63A10 2. 82 2. 651 A4 MO4 A6. 73A10 A2. 53 A6 MO5 3. 36A10A8 2. 24 The hobby equation was portendd using data for 752 firms listed on the London Stock Exchange during 1995. Q ? a0 ? a1 MO ? a2 MO2 ? a3 MO3 ? a4 MO4 ? a5 MO5 ? e where Q is Tobins Q and MO is managerial ownership.Ownership data is taken from the London Stock Exchange Yearbook and Tobins Q is calculated from Datastream. which owned at least 40% of all outstanding equity. As would be expected, outside blockholder ownership decreases with managerial ownership. At managerial ownership levels of 30%, blockholder owne rship is slightly less at 24%. It is probable that external discipline, as provided by blockholders, would still be strong at these levels of managerial holdings, particularly where informal coalitions among blockholders are more prominent (Short and Keasey, 1999).At higher levels of managerial holdings, blockholder ownership decreases sapiently leading to a collapse in the power of blockholders. Managerial ownership is a decreasing function of company size, which is consistent with Demsetz and Lehn (1985). Although firm sizes in the UK are considerably smaller than US firms, the ratios in Table 2 are similar to summary statistics provided in Morck et al. (1988), McConnell and Servaes (1990), Cho (1998) and Himmelberg et al. (1999). Table 2 also illustrates the nonlinear relationship between Tobins Q and managerial holdings.Visual inspection indicates two maximum points in the region of 10% to 20% and 50% to 60%, respectively. The convergence of managerial interests to those of sha reholders at very high levels of ownership is not apparent at this stage because of the small number of companies with managerial holdings above 70%. However, the statistics for all other groupings are consistent with our theoretical motivation. 3. 2. Estimation of ownership breakpoints In order to model the Tobins Qmanagerial ownership (MO) function as having two maximum and two minimum turning points, we specify a quintic function, as follows Q ? 0 ? a1 MO ? a2 MO2 ? a3 MO3 ? a4 MO4 ? a5 MO5 ? e ? 2? For the nonlinear relationship discussed in Section 2 to be valid, the coefficients in Eq. (2) must have the following signs a 0N0 a 1N0 a 2b0 a 3N0 a 4b0 a 5N0. The estimated values of the coefficients in Eq. (2) are habituated in Table 3. 9 The intercept coefficient, which is an estimate of Tobins Q in firms with no managerial holdings, is 1. 85. Each slope coefficient is of the correct sign and statistically significant at the 5% level. Although the It is clear that Tobins Q will be in influenced by more than and managerial ownership.However, the objective of this paper is to investigate whether the standard quadratic and cubic specifications used in foregoing studies are too simplistic. To maintain parsimony, we therefore omit other factors from this specific model. Other relevant factors are incorporated into the analysis in a later table. 9 J. R. Davies et al. / Journal of Corporate Finance 11 (2005) 645660 653 Estimated Relationship between Tobins Q and Managerial Ownership 2. 40 2. 20 2. 00 1. 80 1. 60 1. 40 1. 20 0 0. 1 0. 2 0. 3 0. 4 0. 5 0. 6 0. 7 0. 8 0. 9 Tobins QInsider Ownership Fig. 1. Estimated relationship between Tobins Q and Managerial Ownership. Tobins Q was modelled as a quintic function of insider ownership using ordinary least squares relapsing. The estimated regression line is Q=1. 85+0. 12IOA0. 013OI2+4. 63A10A4IO3A6. 73A10A6IO4+3. 36A10A8IO5. adjusted R 2 is low, it is similar to that found in comparable US studies. The use of this model as a basis to estimate managerial ownership turning points leads to four critical values 7. 01%, 26. 0%, 51. 4%, 75. 7% and is illustrated in Fig. 1.To establish the robustness of our regression model, the spline approach as applied by Morck et al. (1988), Cho (1998) and Himmelberg et al. (1999) to estimate breakpoints was carried out using our generated turning points. Table 4 presents the coefficients resulting from the piecewise linear regression. Similar to Table 3, each coefficient has the expected sign and all but one variable is statistically significant at the 5% level. The only variable that is not significant, MOover 76% , has the correct sign. The probable cause for the lack of import is the small number of firms in this managerial ownership grouping.An examination of these results suggests that Tobins Q increases in firms for managerial ownership levels up to 7% and consequently declines to ownership levels of 26%. This is almost identical to the turning points in Morck et al. (1988) and Himmelberg et al. (1999) (5% and 25%, respectively) and is comparable to Cho (1998), who uses breakpoints of 7% and 38%. However, it differs from the UK studies of Short and Keasey (1999) and Faccio and Lasfer (1999) who each reports two turning points of 12. 99% and 41. 99%, and 19. 68% and 54. 12%, respectively.Earlier studies limit the turning points to two but in our extension, it is clear that there are another two turning points at untold higher levels of managerial ownership. It also appears that market discipline has an influence on managerial objectives up to the point where the board takes complete control (51%). Tobins Q then decreases until ownership levels reach 76%, after which Q increases. Denis and Sarin (1999) argue that cross-sectional studies may be subject to bias, whereby they fail to account for events with potentially large valuation consequences. 10 10Examples of such events may include receiving a takeover bid, top management tur nover, etc. 654 J. R. Davies et al. / Journal of Corporate Finance 11 (2005) 645660 Table 4 Spline regression results for Tobins Q on managerial ownership Variable Coefficient t-Statistic Adj. R 2 Intercept 1. 854 28. 38 0. 012 MOup 0. 056 2. 93 to 7% MO7% to 26% MO26% 0. 0187 2. 57 2. 769 to 51% MO51% A0. 053 A1. 99 to 76% MOover 0. 624 1. 12 76% A0. 020 A2. 62 F The following equation was estimated using data for 752 firms listed on the London Stock Exchange during 1995. Q ? a0 ? a1 MOup to 7% ? a2 MO7% to 26% a3 MO26% to 51% ? a4 MO51%to 76% ? a5 MOover 76% ?e where Q is Tobins Q and MOup to 7%=managerial ownership if managerial ownership b7%, =7% if managerial ownershipN7%. MO7% to 26%=0 if managerial ownership b7%, =managerial ownership minus 7% if 7%bmanagerial ownershipb26%, =26% if managerial ownershipN26%. MO26% to 51%=0 if managerial ownershipb26%, =managerial ownership minus 26% if 26%bmanagerial ownershipb51%, =51% if managerial ownershipN51%. MO51% to 76%=0 if manageria l ownership b51%, =managerial ownership minus 51% if 51%bmanagerial ownershipb76%, =76% if managerial ownership N26%.MOover 76%=0 if managerial ownershipb76%, =managerial ownership minus 76% if managerial ownershipN76%. Ownership data is taken from the London Stock Exchange Yearbook and Tobins Q is calculated from Datastream. As a further test of robustness, we carried out the quintic analysis for managerial ownership and Tobins Q for the same sample of available firms in 1997. 11 Again, each coefficient was significant with the correct signs and the turning points from the estimated model were relatively stable at 7. 9%, 26. 5%, 55. 2% and 86. 2%. . 3. Endogeneity of managerial equity ownership, investment and corporate value To analyse the effects of endogeneity in the managerial ownership, investment and corporate value relationship, we follow Cho (1998) and carry out a co-occurrent equations analysis using two-stage least squares. Cho (1998) and Himmelberg et al. (1999) showed that once endogeneity was controlled, the perceive impact of managerial ownership on corporate value disappeared. Moreover, corporate value was found to positively affect levels of managerial ownership.It is possible that if the model specification employed by these studies is wrong, what appears to be a lack of statistical significance in the endogenous variables in the simultaneous equations analysis may actually be referable to errors in variables arising from the intermediate regressions. We re-run the two-stage least squares analysis of Cho (1998) using our more complex specification. 12 The control variables in our regression are the same as in Cho (1998). Namely, managerial ownership, investment and corporate value are Some firms fell out of the sample because of mergers, delisting, and being taken over.Cho (1998) also attempts to control for specification error by re-estimating his simultaneous regression analysis using managerial ownership as a linear variable and again f inds no relationship between managerial ownership and corporate value. However, if then there is a nonlinear relationship between ownership and corporate value, such an approach would fail to capture this. 12 11 J. R. Davies et al. / Journal of Corporate Finance 11 (2005) 645660 655 defined to be endogenously determined by each other as well as some additional relevant exogenous variables. That is Managerial Ownership ? ? market value of firm0s common equity corporate value investment unpredictability of earnings liquidity industry? Corporate Value ? g? managerial ownership investment leverage asset size industry block ownership largest stakeholder? enthronisation ? h? managerial ownership corporate value volatility of earnings liquidity industry? For comparability, we define each of the above variables as in Cho (1998). For each company, industry dummy variables are set equal to one for each pecuniary quantify persistence Classification (FTIC) grouping that sample firms lie within, and zero otherwise.In addition to the variables used by Cho (1998), we include blockholder ownership and largest stakeholder in the corporate value regressions to reflect the potential impact of blockholder discipline in the UK and the role of a founding or dominant individual on corporate value. All accounting and market variables are taken at the financial year-end from Datastream. In Table 5, we report results from the simultaneous equations analysis. Taking the managerial ownership regression first, all variables with the exception of investment have coefficients with the expected sign.Managerial ownership is negatively related to the market value of equity, which reflects the fact that wealth constraints and risk-aversion will prevent managers from holding substantial stakes in large firms. Firm level liquidity is shown to be positively related to managerial ownership, which is a stronger result than Cho (1998) who reported no significance for this variable. Importantly , Tobins Q is found to be significant and positively related to the level of managerial ownership. This is consistent with Cho (1998) but is opposed to Demsetz and Villalonga (2001), who find the opposite effect.This result suggests that managers tend to hold larger stakes in firms that are successful or have higher corporate value. This may also be indicative of successful managers benefiting from equity-related compensation policies. The investment variable, which has a negative impact on managerial ownership is surprising as theory predicts that firm level investment will be positively related to managerial ownership. Himmelberg et al. (1999) contend that firms with high investment spending will have high managerial ownership to alleviate the monitoring problem caused by discretionary managerial spending.However, Jensen (1986) argued that firms may overinvest as a result of an earnings retention conflict, rather than underinvest as Jensen and Mecklings (1976) moral hazard theory would predict. When a firm is in this situation, managers may be able to maximise their size-related compensation by overinvesting, but are aware that this may ultimately reduce the value of their shareholdings. Although tentative, this could in part explain the negative relation between investment and ownership. Cho (1998) also finds a negative (but unimportant) coefficient on the investment variable using both capital and research and development expenditures. 56 J. R. Davies et al. / Journal of Corporate Finance 11 (2005) 645660 Table 5 Simultaneous equations analysis of managerial ownership, corporate value and investment Variable MVEQ Tobins Q Volatility Liquidity Investment supplement Asset size Largest stakeholder Blockholder ownership MO MO2 MO3 MO4 MO5 Industry dummies Adj. R 2 F Managerial ownership A1. 8A10 (A3. 74) 0. 127 (4. 63) A1. 0A10A6 (A0. 74) 0. 035 (2. 24) A1. 314 (A2. 67) A5 Corporate value Investment 0. 073 (2. 35) 3. 89A10A6 (A2. 86) 0. 013 (1. 01) Yes 0. 04 5 8. 014 5. 136 (2. 23) 1. 088 (4. 36) 3. 33A10A8 (1. 17) A0. 20 (A0. 06) A0. 837 (A2. 60) 1. 588 (3. 07) A0. 395 (A2. 22) 0. 037 (1. 64) A0. 001 (A1. 14) 1. 9A10A5 (0. 76) Yes 0. 033 3. 497 A0. 035 (A0. 46) 0. 018 (0. 72) A0. 003 (A0. 92) 1. 72A10A4 (1. 03) A3. 12A10A7 (A1. 07) Yes 0. 009 2. 497 Results from a simultaneous equations analysis of managerial ownership, corporate value and investment for 752 firms, using the two-stage least squares method to estimate the following equations Managerial Ownership ? f ? market value of firm0s common equity corporate value investment volatility of earnings liquidity industry? CorporateValue ? g? anagerial ownership investment financial leverage asset size industry block ownership largest stakeholder? Investment ? h? managerial ownership corporate value volatility of earnings liquidity industry? In the above equations, managerial ownership measures the total level of holdings held by company management that are greater than 0. 5% of a compa nys equity. Blockholder data measures the total level of holdings by outside blockholders that are greater than 3% of a companys equity. Largest stakeholder is the largest single outside blockholder that holds at least 3% of companys outstanding equity.Investment is defined as capital expenditure divided by total assets employed, leverage is the ratio of total debt to total assets employed and liquidity is measured as cashflow divided by total assets employed. Capital expenditure, total assets employed, after tax profits, depreciation, leverage, equity market values and profit volatilities are collected from Datastream. Tobins Q is measured as the ratio of the market value of equity and book values of debt and preferred equity to the book value of assets in the firm minus current liabilities.Shareholdings data is taken from the London Stock Exchange Yearbook for 1996 and 1997. All data are for industrial companies quoted on the London Stock Exchange in 1995. t-Statistics are in pare nthesis. The estimated coefficients from the corporate value regression are given in the second mainstay of Table 5. Corporate value is shown to be positively related to investment and leverage. While the investment coefficient is as expected, the sign of the leverage variable requires more discussion. Morck et al. 1988) find that leverage has a negative but insignificant impact on corporate value and attribute this to the possibility of managers in highly levered firms holding a higher than average level of ownership. However consistent with our results, McConnell and Servaes (1990) report a positive significant coefficient for leverage. Leverage can have various effects on firm value. The notion that high debt levels lead to greater corporate value has been argued by Modigliani and Miller (1963) with respect J. R. Davies et al. / Journal of Corporate Finance 11 (2005) 645660 57 to valuable tax shields, Ross (1977) and Myers (1977) with respect to a signalling hypothesis and Jens ens (1986) free cashflow hypothesis. Ultimately, leverage is one way of imposing external discipline on management and if it is effective, will lead to increased corporate value. Alternatively, Demsetz and Villalonga (2001) depict a negative association between leverage and firm value as being due to relative inflation between the current time period and the earlier time period where companies had issued much of their debt.We view the most important result from the corporate value regression as being the significance of the managerial ownership variables. Our results indicate that although managerial ownership levels are determined by corporate value, corporate value itself is determined in part by managerial ownership. This finding is at odds with Cho (1998) and Himmelberg et al. (1999) but consistent with the classical view of Jensen and Meckling (1976) and empirical work by Morck et al. (1988) and McConnell and Servaes (1990). An fire result is that blockholder ownership is sho wn to negatively impact Tobins Q.This result is consistent with Faccio and Lasfer (1999, 2000). McConnell and Servaes (1990) suggest that this could be due to a conflict of interests, which results from blockholders being forced into aligning themselves with managers so as not to jeopardize their other dealings with the firm. Alternatively, the negative coefficient may be explained by the strategic alignment hypothesis, which argues that blockholders and managers find it mutually beneficial to cooperate with each other. Finally, such findings may be consistent with the arguments of Burkart et al. 1997) in that too much block ownership will also constrain management and reduce their ability to take value-maximising investment decisions. The investment regression coefficients presented in column three of Table 5 show a significant positive effect of corporate value on investment and a negative effect of profit volatility on investment. The finding that corporate value has a positive effect on investment is consistent with the arguments of Cho (1998) that highly valued firms will have large investment opportunities. Also, firms with variable earnings will be reluctant to invest if future income is uncertain.Managerial ownership is found to have no impact on firm level investment. However, this may reflect optimality in that investment policy may be one way in which managers affect value, but not the only means. Ultimately we view our findings of a causal relation between ownership and firm value as being of greater significance than the lack of a relation between ownership and investment. These results are consistent with Cho (1998) but slightly stronger, in that volatility of earnings is significant in our regressions but insignificant in Cho (1998). . Conclusions Debate as to the relationship between corporate value and managerial ownership in the US is still unresolved. Studies such as Morck et al. (1988), McConnell and Servaes (1990), and Hermalin and Weisb ach (1991) document a nonlinear relation between these two variables. More recent work by Cho (1998), Himmelberg et al. (1999), and Demsetz and Villalonga (2001) shows that when controlling for endogeneity, managerial ownership is determined by corporate value but not vice-versa. 658 J. R. Davies et al. Journal of Corporate Finance 11 (2005) 645660 We argue that even accepting that corporate value and managerial ownership are endogenously related to each other, misspecification of the managerial holdingcorporate value relationship may lead to spurious conclusions concerning the direction of causality. Applying a quintic structure, we present results which suggest that the correct form of this relationship is a double humped curve. This is in contrast to other studies that have assumed a cubic or quadratic specification and by construction only one hump.The second hump or local maximum is attributed to a collapse in external market discipline at or around the point where managers tak e overall control of their firm. At this point, which is around 50% ownership, the management is not sufficiently akin to owners but have sufficient power to disregard any form of external monitoring or discipline. This has a detrimental affect on corporate value for a short window of managerial holdings. At high levels of managerial ownership, managers are effectively majority owners of their firm leading to a convergence of interests with other outside shareholders.Utilizing the quintic specification for managerial ownership, we show that even when controlling for endogeneity, not only is corporate value a determinant of managerial ownership but managerial ownership is also a determinant of corporate value. This finding is consistent with the classical work of Jensen and Meckling (1976), as well as the early empirical work of Morck et al. (1988) and McConnell and Servaes (1990) who do not control for endogeneity in their analysis of corporate value and managerial ownership.We beli eve our analysis to have several important contributions to the literature on the relationship between managerial ownership and corporate value. First, our quintic specification extends introductory work in this area and successfully captures the complex nonlinear relationship between corporate value and managerial ownership. Second, by analysing a completely different market which is similar in structure to the United States, we strengthen the power and insights gained from earlier comparable US studies. Third, we provide evidence that corporate value, firm level investment and managerial holdings are interdependent with each other.This has implications for the debate on the effectiveness of compensation policies involving stock options for top managers. Moreover, our findings suggest that some levels of managerial ownership may not be beneficial to outside shareholders even when these levels are high. At the very least, this paper has served to add to the debate concerning the im portance of managerial ownership on corporate value by providing evidence that even controlling for endogenous effects, managerial ownership and stock compensation schemes do have a significant influence on corporate value.Our research has provided an initial step towards a more accurate characterisation of the corporate valuemanagerial ownership relationship. While we do not posit that our specification can be applied to every given data set, we argue that previous research may be misspecified where it has failed to fully explore alternative specifications of the managerial ownershipcorporate value relationship.Future work in this area may focus on other structural forms, which more effectively reflect the interdependence of managerial ownership and corporate prospects. The nonlinear endogenous impact of blockholders on corporate value and managerial ownership would also provide interesting insights on the external discipline that is faced by firm managers and the impact this has o n corporate value. J. R. Davies et al. / Journal of Corporate Finance 11 (2005) 645660 659Acknowledgements The authors would like to thank John Capstaff, Scott Linn, Andrew Marshall, James Wansley and seminar participants at the Financial commission Association International (2001), European Financial Management Association (2002), Dublin economics Workshop, the University of Strathclyde and an anonymous subscriber for their valuable comments on earlier versions of the paper. The normal caveat applies. References Burkart, M. , Gromb, D. , Panunzi, F. , 1997. Large shareholders, monitoring, and the value of the firm. Quarterly Journal of frugals 112, 693 728. Cho, M. H. , 1998.Ownership structure, investment, and the corporate value an empirical analysis. Journal of Financial economics 47, 103 121. Chung, K. H. , Pruitt, S. W. , 1994. A simple approximation of Tobins Q. Financial Management 23, 70 74. Dahya, J. , McConnell, J. J. , Travlos, N. G. , 2002. The Cadbury committee , corporate performance and top management turnover. Journal of Finance 57, 461 483. Demsetz, H. , Lehn, K. , 1985. The structure of corporate ownership causes and consequences. Journal of Political Economy 93, 1155 1177. Demsetz, H. , Villalonga, B. , 2001. Ownership structure and corporate performance.Journal of Corporate Finance 7, 209 233. Denis, D. J. , Sarin, A. , 1999. Ownership and board structures in publicly traded corporations. Journal of Financial Economics 52, 187 223. Denis, D. J. , Denis, D. K. , Sarin, A. , 1997. Ownership structure and top executive turnover. Journal of Financial Economics 45, 193 221. Doukas, J. A. , McKnight, P. J. , Pantzalis, C. , 2002. Security analysis, agency costs and UK firm characteristics. Working Paper. Faccio, M. , Lasfer, M. A. , 1999. Managerial ownership, board structure and firm value the UK evidence. Working Paper. Faccio, M. , Lasfer, M. A. , 2000.Do occupational bounty funds monitor firms in which they hold large stakes? Jo urnal of Corporate Finance 6, 71 110. Fama, E. F. , 1980. Agency problems and the theory of the firm. Journal of Political Economy 88, 288 307. Franks, J. , Mayer, C. , 1996. Hostile takeovers and the correction of management failure. Journal of Financial Economics 40, 163 181. Franks, J. , Mayer, C. , Renneboog, L. , 2001. Who disciplines management in poorly performing companies? Journal of Financial Intermediation 10, 209 248. Hart, O. D. , 1983. The market mechanism as an incentive scheme. Bell Journal of Economics 14, 366 382. Hermalin, B. Weisbach, M. , 1991. The effects of board composition and direct incentives on firm performance. Financial Management 20, 101 112. Himmelberg, C. P. , Hubbard, R. G. , Palia, D. , 1999. Understanding the determinants of managerial ownership and the link between ownership and performance. Journal of Financial Economics 53, 353 384. Jensen, M. C. , 1986. Agency costs of free cashflow, corporate finance and takeovers. American Economic Re view 76, 323 329. Jensen, M. C. , Meckling, W. H. , 1976. Theory of the firm managerial behavior, agency costs and ownership structure. Journal of Financial Economics 3, 305 360.Jensen, M. C. , Ruback, R. S. , 1983. The market for corporate control the scientific evidence. Journal of Financial Economics 11, 5 50. Kole, S. , 1995. Measuring managerial equity ownership a comparison of sources of ownership data. Journal of Corporate Finance 1, 413 435. Lewellen, W. G. , Badrinath, S. G. , 1997. On the quantity of Tobins Q. Journal of Financial Economics 44, 77 122. 660 J. R. Davies et al. / Journal of Corporate Finance 11 (2005) 645660 Lindenberg, E. , Ross, S. , 1981. Tobins Q ratio and the industrial organization. Journal of Business 54, 1 33. Martin, K. J. , McConnell, J.J. , 1991. Corporate performance, corporate takeovers, and management turnover. Journal of Finance 46, 671 687. McConnell, J. J. , Servaes, H. , 1990. Additional evidence on equity ownership and corporate va lue. Journal of Financial Economics 27, 595 612. Modigliani, F. , Miller, M. H. , 1963. Corporate income taxes and the cost of capital a correction. American Economic Review 53, 433 443. Morck, R. , Shleifer, A. , Vishny, R. W. , 1988. Management ownership and market valuation an empirical analysis. Journal of Financial Economics 20, 293 315. Myers, S. C. , 1977. Determinants of corporate borrowing.Journal of Financial Economics 5, 147 175. Roe, M. J. , 1990. Political and legal restraints on ownership and control of public companies. Journal of Financial Economics 27, 7 42. Ross, S. A. , 1977. The determination of financial structure the incentive-signalling approach. Bell Journal of Economics 8, 23 40. Short, H. , Keasey, K. , 1999. Managerial ownership and the performance of firms evidence from the UK. Journal of Corporate Finance 5, 79 101. Stulz, R. E. , 1988. Managerial control of voting rights financing policies and the market for corporate control. Journal of Financia l Economics 20, 25 54.

Cultural Geography Modeling and Analysis in Helmand Province

HELMAND 1. PROVINCIAL pen source UNDSS peasant Assess workforcet provided by UNAMA I. GENERAL INFORMATION A. Geography Helmand Province is located in the s bulgeh-west of Afghanistan, bordered by Paktya, Ghor, Daikundy, and Uruzgan in the North-East, Kandahar in the East, Nimroz in the West, and Farah in the North-West. It in any case has a gray border with Pakistan. The Helmand River is the largest river running through the land, from Baghran district in the north of the state to the fishhook of the Helmand River running west into Nimroz res publica then into Iran.Except for the mountainous northerly r severallyes of the province which experience heavy snowfalls in winter, Helmand is a empty tableland with rocky prohibitedcrops of up to 1,000 metres. The province covers an business line of operations of 61,829 km2, representing slightly 9% of the total Afghan territory. More than a quarter of the province (28. 9%) is mountainous or semi mountainous terrain fleck above three-fifths of the atomic number 18a (61%) is made up of flat land, as the pursuit(a) table shows Topography Type by govern territory Flat Mountainous Semi Mountainous Semi Flat Not Reported foliate 1 of 13 tyke study Plan, Helmand bucolic visibility number 61. 0% 15. 8% 13. 1% 9. 7% .4% Source CSO/UNFPA Socio frugal and demographic visibleness The province is divided into 13 districts. The provincial capital is Lashkargah which has a community of ab bulge 201,546 inhabitants. B. demography and tribe Helmand has a total macrocosm of 1,441,769. there be 189,552 ho procedureholds in the province and each household on come has 9 members. The following table shows the population by district Population by regulariseDistrict Lashkargah-Helmand Centre Nahr-i-Saraj Nad Ali Nawa-i-Barikzayi Garm Ser Sangin Qala Kajaki Baghran Musa Qala Nawzad Washeer Reg-i-khan Nishin Dishu Total Total Population 201,546 166,827 235,590 89,814 107,153 66,901 119,023 129,947 138,896 108, 258 31,476 17,333 29,005 1,441,769 Source CSO/UNFPA Socio Economic and Demographic pen Around 94% of the population of Helmand lives in farming(prenominal) districts while 6% lives in urban atomic number 18as. Around 51% of the population is male and 49% is female. The population is largely Pashtun, although there is a monumental minority made up of Balochi tribes.Pashtu is spoken by 92% of the population. The second closely frequent wording is Dari, spoken by the majority of residents in 75 villages representing 4. 4% of the population, followed by Balochi which is the majority language in 28 villages. Helmand province alike has a population of Kuchis or nomads whose numbers vary in antithetical seasons. In winter 95,325 individuals, or 4% of the overall Kuchi population, stay in Helmand living in 49 communities. Nearly one in five of these (17%) be short-range partially migratory, and more than three in five (63%) argon long partially migratory.Overall, for both(preno minal) categories, 20% of the community is settled. In the winter the long-range migratory Kuchi stay mostly in one location and dont move close to during the season. In the summer season, all of the short-range migratory communities that move to Garm Ser, Nishin, and Lashkargah districts belong to the Balochi tribes, while the Pashtun tribes are preponderantly long-range migratory and hold up mostly to Ghor, Ghazni, and Zabul provinces. scallywag 2 of 13 eclogue Development Plan, Helmand tike visibleness C. institutional framework In total the government employs 4,363 people in Helmand province.As the table downstairs shows, 66% of these are employees and 34% are contract workers, 94% of government workers are men and 6% are women scrap of Government Employees Male 1,345 Contract workers 2,764 Employees 4,109 Total Workers Source CSO Afghanistan statistical Yearbook 2006 womanish 118 136 254 Total 1,463 2,900 4,363 In addition, each province has a Provincial Development C ommittee (PDC) which is responsible for overseeing the progress made on implementation of the Provincial Development Plan, and which will lead the provincial ontogeny think process in the future.The PDC involves all government line departments and other key stakeholder groups involved in developing activities in the province. It also has a number of working groups devoted to different sectors, each of which should be chaired by the director of the core responsible line department. The structure of the PDC and its associated working groups approved by the Ministry of thrift for use in all provinces is shown in the diagramme below Provincial Development Committee Structure endorsed by Ministry of Economy Governor/D. Gov PDC central office Ministry of Economy Secretariat Department of EconomyEconomic judicature & Private Sector Development Economy (DEc) Dep of Finance Chamber of commerce Banks Youth and Culture Donors AISA UN Agencies Private sectors Provincial Council (PC) Socia l vindication horticulture & rude Development wellness & Nutrition teaching stem & Natural Resources Governance, Rule of lawfulness & Human Rights Courts Attorney General Department of Justice Womens Affairs Civil Service committal Human Rights Commission Audit & Control mightiness Anti corruption (GIACC) Provincial Council (PC) PRT UN agencies NGOs( N &Int)Security push back and Social Affairs (DoLSAMD) Womens Affairs rural Rehabilitation and Development Refugees and Repatriates Border Affairs tribal and Kuchi Affairs Red Crescent Provincial Council (PC) UN agencies PRT NGOs (N & Int) culture (DoAIL) Rural Rehabilitation and Development Counter Narcotics environmental protection Provincial Council (PC) PRT UN agencies NGOs (N &Int) commonplace Health (DoPH) urban Development Municipality Red Crescent Water provide Private sector Environmental protection Provincial Council (PC) UN agencies NGOs (N& Int)Education (DoE) Higher Education Womens Affairs grasp and Social Af fairs, Martyrs and disabled Youth and Culture Border Affairs Tribal and Kuchi Affairs Provincial Council (PC) UN agencies PRT NGOs (N &Int) Public works (DPW) Urban. Development Transport Rural Rehabilitation and Development Municipality Communications Mines& industries Water& Power Agriculture Environmental Protection Provincial Council (PC) Private sector Banks PRT UN agencies NGOs (N &Int) national Security Council topic Police.National Army National Security Border Affairs Demining Counter Narcotics Foreign Affairs Provincial Council (PC) UN agencies PRT Source Ministry of Economy The Provincial Development Committee in Helmand province was formed in late 2005. In April 2007 UNAMA made the following assessment of the PDC in Helmand UNAMA assessment of Provincial Development Committee in Helmand province Supporting Agencies carrying into action Status of PDC meetings PRT and DFID support. UNAMA requested to train PDC members Meetings take place regularly once a monthPage 3 of 13 Provincial Development Plan, Helmand Provincial Profile Source UNAMA, April 2007 Helmand also has a number of other bodies which hornswoggle an agile role in development planning at the local level. There are 14 District Development Assemblies ready agent in 14 districts of the province, involving 435 male members and no females. Each DDA has its own District Development Plan. There are also 487 Community Development Councils in the province which are active in development planning at the community and village level.The following table shows the number of CDCs active in each district CDCs by District District Lashkargah Nahr-i-Saraj Musa Qala Baghran Nawzad Nawa-i-Barikzayi Garm Ser TOTAL Number of CDCs 80 152 32 1 72 38 112 487 Source MRRD, National Solidarity Programme (NSP) D. Donor Activity In addition to the activities of government agencies, a number of national and international organizations play an active role in promoting development in the province. For example, 8 UN agencies are currently involved in reconstruction and development projects in different parts of the province.These are shown in the following table UN Operations in Helmand Activities Governance, follow up on DIAG, homophile rights UNAMA and capacity building in government. WHO Health and vaccination programmes WFP Work for food, school feeding, emergencies UNICEF Education, health, WATSAN UNOPS Infrastructure development UNDP Support to MRRD UNHCR Muhktar IDP encampment UN Habitat City profile Source UNDSS Provincial Profile provided by UNAMA Agency Location Lashkargah All Districts All Districts All Districts All Districts All Districts Muhktar IDP Camp LashkargahThere are also at least(prenominal) 7 national and international Non-Governmental Organizations (NGOs) supporting development projects crossways a range of sectors in the province, as the following table shows International and Non-Governmental Organizations in Helmand Organization BRAC USAID/Communics Ibnesina Activities NSP and micro-finance activities pick Livelihood Programs Health activities Location Lashkargah Lashkargah Lashkargah Page 4 of 13Provincial Development Plan, Helmand Provincial Profile Mercy corps CADG PEP Emergency Agriculture Agriculture Poppy Eradication Program Health Lashkargah Lashkargah Lashkargah Lashkargah Source UNDSS Provincial Profile, provided by UNAMA In addition the following Non-Governmental Organization (NGO) operates as a facilitating partner (FP) for the National Solidarity Programme (NSP) in different districts in the province, as shown below NGOs Facilitating NSP by District Facilitating Partner Garmser BRAC Lashkar Gah BRAC Musa Qala BRAC Nahri Sarraj BRAC Naw Zad BRAC Naway i Barakzayi BRAC Reg Source MRRD,National Solidarity Programme (NSP) District II. CURRENT STATE OF DEVELOPMENT IN THE PROVINCE A. Infrastructure and Natural Resources The provide of basic infrastructure such as water and sanitation, energy, transport and communications is one of the key elements required to provide the building blocks for cloistered sector expansion, equitable scotch growth, increased employment and accelerated rude productivity. In Helmand province, on average only 28% of households use safe potable water.About 94% of households take on direct access to their primary(prenominal) source of drinking water within their community, and the remainder 6% of households has to travel for up to an bit to access drinking water, as the table below shows Time required accessing main source of drinking water In Community 94% Source NRVA 2005 Less than 1 hour 6% 1-3 hours 0% 3-6 hours 0% On average only 5% of households in the province acquit access to safe toilet facilities.The following table shows the kinds of toilet facilities used by households in the province Toilet facilities used by households None/ Dearan / Sahrah (area in compound bush but not pit) feed field 7% 12% Source NRVA 2005 Open pit Traditional covered latrine 64% impro ve latrine 5% Flush latrine 12% 0% In terms of meeting the basic requirements for energy, on average 21% of households in Helmand province adjudge access to electricity with more than two-thirds of these having access to public electricity. Page 5 of 13Provincial Development Plan, Helmand Provincial Profile The transport infrastructure in Helmand is reasonably well developed, with 62% of roads in the province able to take car traffic in all seasons, and 32. 5% able to take car traffic in many seasons. However, in 5% of the province there are no roads at all, as shown in the following table thoroughfare Types District Lashkargah-Helmand Centre Nahr-i- Saraj Nad Ali Nawa-i-Barikzayi Garm Ser Sangin Qala Kajaki Baghran Musa Qala Nawzad Washeer Reg-i-khan Nishin Dishu Total Cars all season 62. % 51. 5% 78. 0% 91. 8% 90. 5% 60. 8% 78. 2% 19. 0% 98. 1% 66. 9% 45. 3% 42. 9% 32. 8% 62. 0% Cars some seasons 37. 3% 36. 9% 21. 3% 7. 5% 8. 8% 37. 3% 12. 4% 68. 6% . 9% 33. 1% 39. 1% 50. 0% 6 7. 2% 32. 5% No roads . 0% 11. 2% . 0% . 0% . 0% 2. 0% 8. 8% 11. 7% . 0% . 0% 15. 6% 4. 8% . 0% 5. 0% Not Reported . 0% . 5% . 6% . 7% . 7% . 0% . 6% . 7% . 9% . 0% . 0% 2. 4% . 0% . 5% Source CSO/UNFPA Socio Economic and Demographic Profile (AIRD analysis)The following table indicates road travel generation surrounded by the provincial capital, Lashkargah, and the major district centres in the province, and other key provincial centres in the region Road trip Times Time just about 2 hrs200 Lashkargah Kandahar City km rough 45 minutes Lashkargah Grishk 80 km Approximately 2 hrs150 Lashkargah Sangin km Approximately 2 hrs150 Lashkargah Musa Qala km Approximately 2 hrs 150 Lashkargah Garm Ser km Approximately 4 hrs300 Lashkargah Baghran km Source UNDSS Provincial Profile, provided by UNAMA From To Road Condition Excellent/good (Route 1-bitumen road) Good (hard-packed gravel) Poor/Good (mix of desert and hard-packed gravel) Poor/Good (mix of desert and hard-packed gravel) Poor/Goo d (mix of desert and hard-packed gravel) Poor/Good (mix of desert and hard-packed gravel) As far as telecommunications is concerned, both the main mobile telephone operators, Roshan and AWCC, are present in the province.The signal of these two mobile operators covers primarily the provincial capital, Lashkargah, and Route 1 from Lashkargah to Khanadahar City. Page 6 of 13 Provincial Development Plan, Helmand Provincial Profile B. Economic Governance and Private Sector Development Creating the conditions in which a dynamic and competitive private sector can flourish, is key to promoting economic growth, employment creation and poverty reduction. Helmand is mainly an country province. There are two industrial crops big(p) in the province, Cotton is produced in 57% of villages, mainly in Nad Ali, Nawa-i-Barikzayi, and Garm Ser districts. Tobacco is produced in 24% of villages, mostly in Garm Ser, Kajaki, Baghran, Nad Ali, and Nahr-i-Saraj.To a smaller extent, benny is produced in 10 % of villages, mainly in Kajaki, Garm Ser, and Nad Ali and sugar extracts in 6% of villages, again in Kajaki and Nad Ali mostly. The majority of commercial activity in Helmand is related to agriculture, animal husbandry, transport companies for import and exportation as well as the merchandise and trafficking of narcotics. Agriculture is a major source of revenue for 69% of households in Helmand province, including 70% of rural households. Sixty seven percent of rural households own or fudge agricultural land or garden plots in the province. However, more than one quarter of households (26%) in rural areas derive income from trade and operate. A fifth of households (20%) earn some income through non-farm related labour. caudex also accounts for income for a quarter of rural households (25%) as the following table shows Sources of income reported by households Source of Income Agriculture Livestock Opium Trade and Services Manufacture Non-Farm Labor Remittances Other Source NRVA 2005 Rural (%) 70 25 41 26 0 20 2 1 Urban (%) Total (%) 69 26 41 26 0 20 2 2 In 2005 there were 29 agricultural cooperatives active in Helmand involving 5,266 members. This was an increase of around 15% in membership over 2003 when the figure was only 4,616 members. In 2005, agricultural cooperatives controlled a total of 20,063 Ha of land and achieved a surplus of produce for sale of 10,000 tons. As a result of this, each member held a share in the capital of the cooperative to the jimmy of 825,900Afs.To all extents and purposes small industry is absent in Helmand and there is only a small production of handicrafts mostly related to jewelry, mainly in Nad Ali, Nawzad, and Garm Ser districts, and rugs in Nad Ali, Baghran, and Nawzad. Honey is also produced in 16 villages of 693, and karakul skin in seven. In 2005 23% of households in Helmand reported taking out loans. Of these loans, a small percentage was used to invest in economic activity such as buying land (1%), agricultural inputs (10%) and business investment (1%). C. Agriculture and Rural Development Enhancing licit agricultural productivity, creating incentives for non-farm investment, developing rural infrastructure, and supporting access to skills development and financial services will allow individuals, households and communities to go in licitly and productively in the economy.As agriculture represents the major source of income for more than two-thirds of the households in the province, rural development will be a key element of progress in Helmand. The most important field crops grown in Helmand province include wheat maize, and melon/water melons. The most common crops grown in garden plots include fruit and nut trees (67%) and grapes (26%). Wheat is also frequently gown in garden plots in the province (4%). Page 7 of 13 Provincial Development Plan, Helmand Provincial Profile Almost all of the households with access to fertilizer use this on field crops (95%) and to a much lesser degree on garden plots (1%), although 4% of households use fertilizer on both field and garden.The main types of fertilizer used by households in the province are shown in the following table important types of fertilizer used by households Human % Animal % % 93 Urea Average Kg per sign of the zodiac 466. 3 Kg % 86 DAP Average Kg per Household 268. 4 Kg 31 46 Source NRVA 2005 On average 97% of households in the province strike access to irrigated land, and 5% of households pose access to rain-fed land. Households (%) access to irrigated and rain-fed land rile to irrigated land Access to rain-fed land Source NRVA 2005 Rural 97 5 Urban Average 97 5 Seventy six percent of rural households and 97% of Kuchi households in the province own livestock or poultry.The most commonly owned livestock are poultry, sheep, cattle and goats as the following table shows Households (%) owning poultry and livestock Livestock Cattle Oxen Horses donkey Camel Goats Sheep Poultry Source NRVA 2005 Kuchi 6 0 0 8 8 31 97 94 91 Rural 57 6 2 21 0 45 57 71 Urban 0 0 0 0 0 0 0 0 Average 56 6 2 22 1 45 58 71 D. Education Ensuring good prime(a) education and equitable access to education and skills are some of the important ways to raise benignant capital, degrade poverty and facilitate economic growth. The overall literacy rate in Helmand province is 5%, however, while 8% of men are literate, this is true for only 1% of women. In the population aged between 15 and 24 the situation for men is not much better with 9. 1% literacy, whereas for the women there is no improvement 0. 9%).The Kuchi population in the province has particularly low levels of literacy with just 0. % of men and no women able to read and write. On average only 6% of children between 6 and 13 are enrolled in school, however the figure is high-pitcheder for boys at 11%. Furthermore, amongst the Kuchi population in Helmand, no boys or girls attend school during the summer or winter months. Overall, there are 225 primary and se condary schools in the province catering for 80,121 students. Boys account for almost 94% of students and about 99% of schools are boys schools. There are 1,452 teachers working in schools in the Helmand province, about one of ten of whom are women (12%). Page 8 of 13 Provincial Development Plan, Helmand Provincial Profile prime and Secondary EducationStudents boys girls 70,761 4,992 Primary 4,243 125 Secondary 75,004 5,117 Total 225 80,121 Source CSO Afghanistan Statistical Yearbook 2006 boys 164 58 222 girls 1 2 3 Schools Teachers Male female 1,280 172 1,452 Primary schools exist in only 101 of the total 1,705 villages which are al-Qaida to 9% of the population. Fourty three percent of students must(prenominal) travel more than 10 kilometres to reach their hand-to-hand primary school, while 29% must travel up to five kilometres. Secondary schools exist in only 45 villages, which are home to 2. 9% of the population. To reach their closest secondary schools 57% of students sti mulate to travel more than 10 kilometres, and more than one in five have to travel at least five kilometres. Access to high schools is even more difficult.They exist in only 17 villages in the province, and almost seven out of ten students must travel more than 10 kilometres to reach their high school, while another 12% must travel at least five kilometres. Helmand province also has a number of high education facilities, although there is currently no governmental or private university in the province. There is an Agriculture Vocational High School with 2 teachers catering for a total of 146 students, all of whom are men and a Mechanics High School with 8 staff and 117 male students. In 2005, 14 students have from the Agriculture School and 8 from the Mechanics School. There is also a teacher training play which had 134 students in 2005, 75% of whom were men and 25% women.Seventy two new teachers graduated from Helmand Teacher Training initiate in 2005, of which 67% were women a nd 33% men. E. Health Ensuring the availability of basic health and hospital services, and developing human resources in the health sector is indwelling to reduce the incidence of disease, increase life expectancy and alter the whole population to participate in sustainable development. A basic infrastructure of health services exists in Helmand province. In 2005 there were 31 health centers and 2 hospitals with a total of 172 beds. There were also 60 doctors and 120 nurses employed by the Ministry of Health working in the province, which represented a come down of about 15% in the number doctors and 14% in the number of nurses compared to 2003.The major health facilities in the province are shown in the following table HEALTH CENTERS District Lashkargah Reg-i-khan Nishin Nahr-i-saraj Sangin Qala Musa Qala Kajaki Nawzad Washeer Garm Ser Nad Ali Nawa-i-Barikzayi Baghran grassroots Health Center 3 1 2 2 1 2 3 1 4 2 3 3 Comprehensive Health Center 2 1 1 1 1 1 1 1 0 2 1 2 Provincial /District Hospital 1 0 1 0 0 0 0 0 1 0 0 0 Page 9 of 13 Provincial Development Plan, Helmand Provincial Profile Dishu 0 0 Source UNDSS Provincial Profile, provided by UNAMA 0 The province also has 205 pharmacies of which 203 are owned privately and 2 are run by the government. The majority of communities do not have a health worker permanently present in their community.Eighty five percent of mens shura and 73% of womens shura reported that there was no community health worker present, and both groups most commonly verbalise that their closest health facility was a Basic Health Center clinic without beds. come forth of the total 1,705 villages, only 39 have a health center within their boundaries, and only 64 have a dispensary. Access to health care is very difficult for many people in the province with more than half of the population having to travel over 10 Km to get aesculapian attention 62. 4% for health centers and 56% for dispensaries. F. Social Protection Building the c apacities, opportunities and shelter of extremely suffering and vulnerable Afghans through a process of economic empowerment is essential in order to reduce poverty and increase self-reliance.The level of economic hardship in Helmand is reasonably high. A quarter of households in the province (25%) report having problems satisfying their food needs at least 3 6 times a twelvemonth, and a further almost third of households (31%) face this problem up to three times a year, as the following table shows Problems satisfying food need of the household during the last year Never Households 39 (%) Source NRVA 2005 Rarely (1-3 times) 31 Sometimes (3-6 times) 25 Often (few times a month) 5 closely (happens a lot) 1 Nearly half of the population in the province (49%) is estimated to accept less than the minimum daily caloric intake necessary to maintain good health.Almost two thirds of the population (64%) has low dietary revolution and poor or very poor food pulmonary tuberculosis as shown below Food consumption classification for all households Households Very poor (%) food consumption 21 Rural 20 Total Source NRVA 2005 Low dietary diversity Better dietary diversity Poor Slightly better Better food consumption food consumption food consumption 43 35 1 44 34 2 In 2005, 30% of the population of Helmand province received allocations of food aid, which reached a total of 428,608 beneficiaries. In addition, of the 23% of households who reported taking out loans, 58% said that the main use of their largest loan was to buy food. A further 14% used the coin to cover expenses for health emergencies.In the same year, nearly a quarter of the households in the province (23%) reported tactual sensation that their economic situation had got worsened compared to a year ago, and a third (34%) felt that it had remained the same, as the following table shows Comparison of overall economic situation compared to one year ago frequently worse 7 Households (%) Source NRVA 2005 W orse 16 Same 34 Slightly better 35 Much better 9 Page 10 of 13 Provincial Development Plan, Helmand Provincial Profile In 2005 two in five of all households in the province (40%) report having been negatively affected by some unexpected event in the last year, which was beyond their control.Households were most vulnerable to shocks related to agriculture, followed by problems related to drinking water, natural disasters and risk as the following table shows Households experiencing shocks in the province (%) Types of shocks beverage water verdant Natural disaster Insecurity Financial Health or epidemics Source NRVA 2005 Rural 27 86 24 22 3 3 Urban Average 27 83 25 21 3 3 Of those households affected, over a third reported that they had not recovered at all from shocks experienced in the last 12 months (37%), and three in five said they had recovered only partially (61%). G. Governance, Law and Human Rights Establishing and strengthening government institutions at the central and sub-national levels is essential to achieve measurable improvements in the delivery of services and the protection of rights of all Afghans No relevant info analysed at provincial level available from national sources has been identified in this area. H. SecurityEnsuring a legitimate monopoly on force and law enforcement that provides a secure environment for the fulfillment of the rights of all Afghans is essential to ensure emancipation of movement for people, commodities and ideas, and to promote social and economic development. A recent assessment made by the coupled Nations Department of Safety and Security (UNDSS) reported that the prevailing security situation in Hilmand province be extremely unstable, and is assessed by some security actors as being the most volatile province in Afghanistan. The prevailing security situation can best be considered by three distinct geographic areas north, center and south. The north of the province, encompassing the Districts of Nawzad, Musa Qala, Sangin Qala, Baghran, Washeer and Kajaki is by far the most unstable area in the province, and perhaps the most volatile in the country.Throughout 2006 and 2007 insurgents and the International Security Assistance Force (ISAF) experienced significant, peculiar clashes, each suffering large numbers of casualties. It is assessed that both ISAF and the Government have no control in these areas. The center consists of the provincial capital, Lashkargah and four other districts. These are also assessed to be extremely volatile, although they are calmer than the northern and gray regions of the province. ISAF and the Government are also assessed to have little control of the area outside of Lashkargah, in particular because of constant attacks against Government targets in these areas.The south of the province encompasses the districts of Garm Ser, Dishu and Reg-i-khan Nishin, and the southern international border with Pakistan. ISAF assesses that the southern frontline is a n east-west line running parallel to the Hilmand river as it fishhooks to the west in Garm Ser District, South of that line Government and ISAF have effectively no control of the area. At times patrols will enter the area for specific targeting and forebode narcotics operations however there is no enduring presence. Garm Ser District Centre fell into the hands of insurgents on several occasions during 2006 ISAF forces remain in the District Centre and conduct operations through out the district. Page 11 of 13 Provincial Development Plan, Helmand Provincial ProfileThe UNDSS assessment highlights the following key factors of insecurity in the province Factors of Insecurity Illegally arm Groups (IAG) continue to operate in the province in a quasi-legitimate way, due to a lack of Government presence. Many groups are being referred to as capture Police or Special Police and are being deployed to the northern districts of Helmand and other problematic areas of the province for military operations. The Disarmament of Illegally Armed Groups (DIAG) programme is not currently operating in the province. The security situation within the province remains volatile with capable insurgent groups active, or at least present, in most districts.Criminality is no more significant in Helmand than in the surrounding southern provinces. digression from drug-related crime, the Ring Road has been targeted by bandits as well as by insurgents. Property crime is also prevalent. Helmand is the largest opium producing province in Afghanistan.. Eradication efforts to date have not been successful. Although tens of millions of dollars have been spent and Ministry of Interior policemen have been killed carrying out eradication activities, in 2005-2006 the opium crop increased by 162%. Poppy cultivation is concentrated around the Helmand River with the plenty of production taking place in the Sangin Valley and surrounding areas.The quality and potency of the opium from these areas is reno wned in the region. Involvement of Government officials in the drug trade is widespread in the province and beyond. Moreover, there are also clear linkages between the narcotics trade and the insurgency, with the groups cooperating with each other for mutual benefit. The Afghan Eradication Forces (AEF) sponsored by the Ministry of the Interior has been deployed to the province in order to undertake eradication and have met with fierce resistance. Illegally Armed Groups (IAGs) Anti-Government Elements (AGEs) Criminality and Organized Crime Narcotics Source UNDSS Provincial Profile, provided by UNAMA Profile compiled by NABDP / MRRD entropy SourcesAfghanistan Statistical Yearbook 2006, Central Statistics Office Geography Area Demography and Population Rural and Urban population Institutional Framework Total Government employees Economic Governance & Private Sector Development Agricultural cooperatives, members, land, surplus, capital Education Primary and secondary schools, students and teachers, Higher education faculties, total students, first year students and graduates, Students in university dormitories, Vocational high schools, staff, students and graduates, Teacher training institutes, students and graduates. Health Number of Health centers, Hospitals, beds, Doctors, Nurses, Pharmacies.Social Protection Allocations of food aid, Page 12 of 13 Provincial Development Plan, Helmand Provincial Profile Socio Economic and Demographic Profiles (per province), 2003, Central Statistics Office/ UNFPA Geography Topography, No of Districts, Provincial capital population Demography and Population Population by district, Number of households, Main Languages Spoken Infrastructure and Natural Resources Road types (analysis by Afghanistan Institute for Rural Development) Economic Governance & Private Sector Development Industrial crops, small industries and handicrafts Education Distance from educational services Health Distance from Health ServicesThe National Risk an d Vulnerability Assessment 2005, Ministry of Rural Rehabilitation and Development and the Central Statistics Office, June 2007 Demography and Population Average household size Infrastructure and Natural Resources Use of safe drinking water, Travel time to drinking water, Access to safe toilet facilities, Toilet types, Household access to electricity, Access to public electricity Economic Governance & Private Sector DevelopmentSource of household revenue, Households taking out loans, loan investment in economic activity Agriculture and Rural Development Most important field crops and garden crops, Fertilizer use and type, Access to irrigated and rainfed land, Ownership of livestock and poultry Education Literacy rate overall and for population 15 to 24, school enrolments Health Availability of community health workers, closest type of health facility Social Protection Problems satisfying food needs, Population receiving less than minimum recommended daily caloric intake, dietary div ersity & food consumption, Comparison of economic situation with 12 months ago, loanword use for food and medical expenses, Vulnerability to shocks, Kinds of shocks , Recovery from shocks National Multi sectoral Assessment on Kuchi, Frauke de Weijer, May 2005 Demography and Population Kuchi population Winter and Summer Education Literacy rate for Kuchi, School attendance for Kuchi (summer / winter)UNDSS Provincial Assessments or UNAMA Provincial profiles, Supplied by UNAMA Geography MAP , Location and description, Demography and Population Major ethnic groups and tribes, Institutional Framework Line Department offices, Donor Activity UN agencies and projects, IO/NGO agencies and projects Infrastructure and Natural Resources Road Travel times, Mobile Network Coverage Economic Governance & Private Sector Development General economic profile, Major industries/ commercial activities Health Health facilities Security Assessment of the security situation, Factors of insecurity Informatio n supplied by United Nations Assistance Mission to Afghanistan (UNAMA) Provincial Development, Provincial Budgeting and Integration of the Provincial Development Plans into the Afghan National Development Strategy (ANDS). Draft Discussion Paper for the ADF) Institutional Framework Assessment of functioning of PDC Information supplied by Ministries Institutional Framework PDC structure (Ministry of Economy), DDAs and CDCs (Ministry of Rural Rehabilitation and Development) Donor Activity NGO facilitating partners for NSP (Ministry of Rural Rehabilitation and Development)

The Effects of Technology on Teens

The Effects of applied science on Teens Modern solar twenty-four hours technological advancements are unendingly seen throughout every(prenominal) aspect of life. kiosk phones, portable net income availabi illumey, laptop computers, iPods, mp3 players of every brand, and m each a(prenominal) refreshed(prenominal) devices, are everywhere. They seem to possess interminable practical detriments, but, along with such(prenominal) issues, technology also has confirming impacts on immediatelys youth. In close to situations, the net profit and iPod prevent sociability, though in others they may be the cause of increased societal activity.Overall, modern technology has the capability to bring raft together as well as levy the affable abilities of the instantlys youth however, if used without discretion, feces also create a little interactive generation, frequently depending on technology for satisfaction. The immense capabilities of the Internet today are astonishing, and offer many positive opportunities for teens. Primarily, the Internet makes sharing in doation fast and simple, despite factors that in other cases would prohibit such simple distribution.According to Jean-Francois Coget in Source C, With the Internet, information can be transmitted and received with ease at any time of the day to and from any number of friends. It is possible to send videos, pictures, papers, projects, and a quantity of other things with the click of a button. The transfer can happen in seconds. The amazing capability of modern day Internet simplifies teenage life, by providing a way to convey knowledge. A nonher way in which Internet proves positive is by providing a way to keep in touch with friends and family worldwide, or exclusively crossways town.Whether its a friend that switched schools and is never around, or a family member in London, the Internet makes it possible to email, instant message, and even video chat. Such qualities of Internet communicat ion bring people together with more than frequent contact, boosting sociability and relationships. In addition, the Internet also has the capability to, foster openness, self-confidence, and a greater genius of ease, and comfort in dealing with others (Source C).Since it is not obligatory to reveal physical appearance or social status over the Internet, it grants an opportunity to be a completely hot person, who is entirely open and confident. Internet chats, even with mere acquaintances, can supply a chance for socially challenged teens to experience a form of social interaction, in order to create a sense of composure. Modern day Internet advancements not only offer an easier way to share information, but also contribute to sociability by providing a way to communicate with distant friends and family, as well as giving socially challenged teenagers an opportunity for interaction.Likewise, another(prenominal) modern day technology, the iPod, may also have a positive effect on so me teenagers, by presenting a different view of the world as well as uniting individuals through musical taste. In the eyes of Kelly Doyle-Mace, in Source D, music deepens the experience of walking through the world, alternatively than detracting from it. There are millions of songs out thither, one to match every possible mood. Sometimes, turning on just the right song can be motivational and provide a completely new mental capacity on a certain circumstance.In addition, lyrics are often relatable to ad hominem life and can be important or simply encouraging. Another way in which iPods and personal musical taste is a positive effect on teens is by uniting people of different backgrounds and diversities through their music choice. Lisa and Johnny Rocket, hosts of iPod DJ nights, describe that one night a month they invite guests to bring their iPods to a London bar. Where they can play whatever songs they choose (Source D). Even more diverse than the music are the members the i Pod acts to bring people together, Lisa explains (Source D).These gatherings prove that as diverse as music can be, it is also unifying. The multitudes of people attending these parties, from every race background and belief, are united through their assorted music taste. IPods have the potential to positively affect todays youth by matching any and every mood with music, resulting in a deeper walk through life, as well as bringing people together by means of musical interest. The alternative argument is that the Internet can be a significantly banish entice on teenagers, if overused. Constant Internet use detracts time that could be spent with friends and family.Hours wasted outside(a) typing useless messages is detrimental to personal relationships with the ones who really matter. It was discovered through a exact in Pittsburgh that people who use the Internet most often are put downing less time lecture with their familieskeeping up with fewer friends (Source B). It is of n o use to spend so much time talking to people over the Internet, when one could just as easily walk down the stairs and spend time with family, or go to see friends instead. According to Source F, Internet users participate in near 244. minutes per day spent with friends and family, while non-Internet users spend on average 381. 6 minutes per day with friends and family. Modern day Internet opportunities are decreasing physical interaction and essential quality time. The Pittsburgh study also determined that such teens are feeling more lonely and depressed (Source B). Even though teenagers are simply using the Internet for interpersonal communication, it is causing reliance on brightly lit screens and keyboards, instead of sincere personal interactions with close friends and family members (Source B).Investing too much on Internet chats will needfully produce a sense of deprivation, and a resulting sense of loneliness from a lack of real relationships and personal contact. Obsessi ve or constant use of the Internet as a social tool deprives teens from obligatory relationships that are crucial to life, especially throughout high school and college, which will ultimately result in a damaging sense of loneliness and depression. Similarly, iPods, much like the Internet, become a shun influence on teenagers, when in constant use.According to a university students study of iPods, the main appeal of the iPod is that it preoccupies you so you are no longer obligated to interact with the uncontrollable factors of everyday life (Source E). IPods provide an light(a) escape from having to interact with strangers in a public situation because, in just about any situation, pressing play can zone everything out. This portable instant entertainment takes away opportunities to meet new people, or just admire the surroundings and environment of a new place.Although it is a solution to boredom, there are other, more advantageous, solutions such as social interaction. Such di sregard to discovering new people and new places leads to isolation. The obvious signal iPods send out is dont bother trying to talk to me (Source E). Headphones ceaselessly blasting music often prevent conversations that could prove to be much more worthwhile. The need to continuously be surrounded by ones own familiar environment results in unfathomable missed opportunities for meeting new people or experiencing natural sights and ounds (Source E). The Internet and iPod affect todays youth in positive ways however, when not used in moderation, can become negative influences. Modern technologies are positive by providing simple communication, unifying diversities, and deepening the experiences of the world through music. Those identical technological advancements can become highly addictive, and like all addictions, have negative consequences. Teens who are constantly engaged in using technologies become so addicted that they spend less time with love ones, and feel lonely and depressed.Technological addiction is leading to a more isolated generation, overly dependent on technology. Modern technological advances, particularly the Internet and iPod, have many positive effects on todays youth, yet if overused can lead to addiction, which consequently produces negative influences and over obsession. Although technology can be profitable, it must be used in moderation, as not to damage the social ability of todays youth.

Activity Based Management Essay

Activity ground direction (antiballistic missile) is an ap proach to trouble that aims to maximize the protect adding activities to the guests while minimizing or eliminating non- evaluate adding activities. The objective of antiballistic missile is to alter the readiness and effectiveness of an organization in securing its markets. It draws on practise establish- damageing (first principle) as its major source of tuition and foc expends on managing activities to (1) reduce speak to, (2) create executing measures, (3) improve cash flow and quality and, (4) produce levyd value crossways in dictate to improve node value ( channel Dictionary.com). This antiballistic missile dusts top precession is in eliminating or improving those activities to increase emolumentability by meetking out beas where a moving in is losing money such as the factors which cause activities to be performed or follow through at law address to dislodge.Undeniably, in narrate to improve an organizations work processes and activities to effectively and efficiently meet the rapidly changing environs in this globalisation world, way expends and methods have changed over the last decade and impart continue to change in future. THE TRADITIONAL ABSORPTION COSTING is the first musical arrangement lend oneselfed to keep track of the lawful live of a product or servicing. It imputes indirect price to follow object and uses unsophisticated methods to assign indirect hail. It allots overheads to production and service password sections and uses nonaged number of 2nd stage personify device drivers to allocate costs from cost centres or pools to productions or cost objects.This dust depart just be appropriate when the (i)direct costs were the dominant costs, (ii)indirect costs were relatively small, (iii) data costs are high, (iv)there is a lack of intense global contestation and (v)a limited range of products is produced, it expertness be difficult for e very organization to use it. For instance, this governing body skill not be appropriate for companies with labyrinthine processes and manufacturing practices. The large increase of indirect and overhead expenses entrust manipulate the traditional costing method less efficient. Therefore, in 1980s, ACTIVITY-BASED COSTING (ABC) was introduced to overcome theseproblems.ABC is a body for managing the organization bust. It is a one-off exercise that measures the activities cost and performance, resources and the objects which consume them so as to generate overmuch absolute and meaningful education for decision-making. It uses sophisticated or modern methods to assign the indirect costs. This ABC organisation allocates overheads to apiece major activity but not to departments and allocates costs to products or cost objects. However, it limits the company to have avail of the ABC technique. It raftnot be used for official record keeping as the IRS and stockholders require t he use of traditional methods to create necessary reports for taxes.In an another(prenominal) words, companies imply to use two contrastive costing methods in order to formulate the benefit. The musical arrangement is costly to build, knotty to sustain and to modify. Therefore, the emphasis has shifted from ABC to ACTIVITY-BASED MANAGEMENT (antiballistic missile) which is as well as known as ACTIVITY-BASED COST MANAGEMENT (ABCM) later on. ABC is a subset of antiballistic missile as the screening of ABC evolved from a manufacturing product costing orientation to a perplexity philosophy of activity management applied in industries and organizations (headache Dictionary.com).ABM has grown largely out of the work of the Texas-based Consortium for Advanced Manufacturing- planetary (CAM-I) (Investopedia). The CAM-I has initiated the cultivation of a comprehensive glossary on ABCM terms by clarifying the signifi ceaset confusion regarding the semantic and acronym associated with the activity based information (Investopedia). This ABM scheme pull aheads the cost and operating information useful to improve decision making. Through the ABM outline process, the management will gain a thorough reason of its line of calling processes and cost behaviour and management team in the company.In addition, the departs of an ABM analysis can support a company generate more accurate budgets and financial forecasts (Investopedia). It gives management insight into the cost structures for making and selling diverse products. In a simplified term, ABC is used to answer the question, what do things cost? and for ABM, a process view is taken to understand factors which cause the costs to occur. This system focuses on the ways to redirect and improve the use of resources, by employABC data, to enhance the value created for customers and other stakeholders (Investopedia).These two systems (ABC and ABM) have attracted high levels of interest from two academics and pr actitioners since its emergence in the late 1980s. It is mainly referable to the significant change in cost management systems they have brought. Due to the lack of pertinence and relevance of traditional costing that leads to mutual subsidy between products and cost, ABC and ABM are used to enhance or replace the traditional cost calculation methods.For example, ABM approach reports by activities while traditional analysis is by departments ABM reporting is by sub-activities but traditional is by expense categories and ABM reporting can reports information on activities that are cross departmental boundaries whereas traditional is not allowed(Drury C, 2008). Thus, ABM is concluded to have more meaningful information as it gives more visibility to the cost of attempt the activities that acquit up the organization and may raise the issues that are not highlighted in traditional analysis. near forward-thinking companies have implemented them, or are in the process of doing so as it can be applied to different types of companies, including manufacturers, service tenderrs, non-profits, schools and government agencies (Business Dictionary.com).CONTENTS1. Features of ABM system_A. STAGES OF IMPLEMENTATION_In order to implement ABM system, the companies are required to carry out the three out of the four stages in ABC (Drury C, 2008). The steps are listed as below(i) Identify major activities that result in costs creation incurred,The activities are the aggregation of units of work or tasks such as machineset-up cost, purchasing cost and repositing cost that use up resources. In order to find all the activities within the company, activity analysis has to be carried out. The activities chosen must be at a reasonable level of aggregation based on the cost verses benefit criteria. In addition, the activities have to be either influenced by the total cost of activity centre or the ability of a single cost driver to provide a satisfactory determinant of the cost of the activity.(ii) Assign cost centers to each activity, andThe companies should not use the arbitrary trysts in assigning the significant proportion of costs to activities as it will reduce the reliability of cost. They have to come in and assign the direct costs to specific activity and assign the indirect costs on cause-and-effect cost drivers. By doing so, the cost incurred on each activity can be gibed.(iii) Determine the cost driver for each major activityIn this stage, the drivers are called as activity cost drivers. In selecting the cost driver, there are two factors which the companies need to consider. Firstly, the cost driver should provide a good write up of costs of each activity cost pool. Additionally, the cost driver should be measurable easily, and the data should be easily obtained and be identifiable with products. (The cost driver can be production or service oriented)._B. TWO CATEGORIES OF ABM APPLICATION_Based on the source adapted by Kaplan & Cooper (19 98), this system accomplishes its objectives by means of two complemetary applications which are the operational ABM (Doing things right) and strategic ABM (Doing the right things).Operational ABM enhances efficiency of operation and asset utilization and lowers costs. Its focus are mainly on doing things right and do activities more efficiently. Management techniques such as activitymanagement, business process reengineering, total quality management, and performance measurement are used in the ABM application.As for strategic ABM, it attempts to change the activities demands and boost protability by improving activity efficiency. It focuses on choosing proper activities for the operation, eliminating non-essential activities and selecting the most protable customers. Strategic ABM applications use management techniques such as process design, customer protability analysis, and value chain analysis.2. analogy between Activity-based management system (ABM) and traditional systemA BM focuses on activity performed by business and hence, it views business as a set of linked activity that ultimately adding value to customers. Its goal is to avenge customer needs while making fewer demands on organizational resources. Hence, ABM could have information of activities such as why activities to be performed, how to perform the activities and how well they are performed. In contrast, traditional system focuses on types of cost from departments. It gives less information to manager for the needs in decision making. ABM is break-dance than traditional system as ABM could provide wider information and information could go deeply and more detailed as needed by the management in decision making. overly, the ABM system only seeks to use cause-and-effect cost driver which is different than the traditional system. It does not rely on arbitrary allocation bases. As we can see from table 1, the information provided by both systems is about customer order processing. However, these two systems take into account different information while preparing the customer order processing. ABM focuses on information that is relevant in the process of customer ordering while traditional analysis focuses on the types of cost incurred in the customer order processing.ABM ANALYSIS RMPreparing Quotations 100Receiving Customer Order 280Expediting cxxTotal 500TRADITIONAL ANALYSIS RMSalaries 110Telephone bill 170Depreciation of summation 120Total 500Table 1In addition, ABM is different from traditional system in terms of the report approach. ABM report is determined by activities while traditional system is determined by departments. It can include crossing departmental boundaries. For instance, solid purchasing process might involve not only one department but it includes inventory influence department, purchasing department and account payable department. The manager will be able to know how the amount spent (e.g RM 2000) to be used in purchasing material under ABM s ystem. It may show the relevant information such as inventory reviewing, sending purchase requisition and sending purchase order. The manager will be able to know how purchasing of material works on and what are the reasons of purchase custody as well as how to minimize the cost of purchase.It focuses on information based on activity. As for traditional system, manager can get the information on material purchase which costs for RM2000 only. However, this RM2000 does not comply with the amount of goods order. By feel at one information itself, the reasons of non-compliance cannot be tracked as there is lack of information. Therefore, ABM system is better since it did not focus on information based on cost but it assignscost of activities to products according to products demand for activities and relies on cost centres and cost drivers that cause activity resource consumption. Other than that, it assigns activity costs to cost objects on prat of cost driver usage and measures res ources consumed by cost objects more accurately.In addition, ABM system provides both information from value and non value added activities. As for traditional system, it provides information on value added activity only. honour added activity is an activity that supports primary objective of producing outputs. For instance, activity like colouring adds value to a book. down the stairs value added activity, traditional report will show the amount spent in colouring since it adds benefit to customers. Customers would likely to buy books with some colouring or some pictures rather than books with only words as it might help them in memorizing and understanding the information stated in the book better. However, if the profit does not increase like what the company expected, manager will be able to trace back the cost incurred by looking at amount spent in colouring non-value added activity.Hence, non value added activity is of the essence(p) as it may affect the companys profit. Non value added activity is an activity where an opportunity is in stock(predicate) for cost reduction without decreasing products service potential to customer such as storing and moving raw materials. Under ABM system, manager will be able to draw economic aid on this issue and trace back the reasons such as waste in the production. Manager will be able to track the cost which has been wasted in the production by reducing material movement and improving production flow without reducing the value added to customer. In other words, customer can have same quality of products-same kind of books while management could reduce the cost of production.3. Benefits and Limitations of ABM systemOne of the benefits of the system is to help the management in decision making. It provides better decision making as the information provided by the ABM system is more useful and reliable. The management can make communicate decision about product mix, lines of business, process, product design,ser vice, capital investment and pricing. For instance, manager will able to make decision on how much capital to invest in impertinently product and what kind of sore product to be launched based on information that manager obtains in ABM system.Furthermore, ABM is a system for continuous improvements. The system is not just an accounting tool but it also provides some(prenominal) tools that can enhance organizational performance management. In other words, ABM system provides other information as well (the product mix, customer services, line of business and capital investment) that would be able to help an organization in its future development and improvement. For instance, an organization knows how to serve customer better by looking into information provided in customer services activity.ABM also provides a better understanding of cost driver. It is a factor that affects the costs associated with an activity. Managers check activity- based management system to the operational activity in order to determine the cost to perform an activity and the cost associated with not performing the activity. Through this activity cost drivers, it seeks to provide an extensive view on the actual costs of an activity. For instances, we can see in the Mason & Cox. In Mason & Cox, they feel that it is expensive to implement the activity-based costing system because it is more complex and expensive to maintain. Nevertheless, ABM seems to be more helpful to them in term of improving the company profitability. For example, prudence had been achieved by targeting non-value-added activities.Their real cost driver had been identified so that manager may know what to eliminate. The shed in the price of the high-volume lines had met with customer approval. Furthermore, ABM enables company to monitor and improve quality and delivery customer value by tracking cost driver. The new approach provided timely information about factors that were chief(prenominal) to customers and fac tors that employees could control. There was no doubt that ABM had helped Mason & Cox to improve both profitability and customer value. Besides that, in Blue Cross and Blue Shield of Florida (BCBSF) needs more sophisticated cost information to make better decision in order to compete in the nature of the health care insurance industry and the need to manage the cost of operation like ways toallocate administrative cost to the products and services. Hence, BCBSF decided to implement ABM system.ABM helps manager to examine the analysis of value added cost and non-value added costs. A value added cost is the cost of an activity that cannot be eliminated without affecting a products value to the customer. Some value added costs are always necessary, as long as the activities that drive such cost are performed efficiently and effectively. For instances, we can truly understand this concept in the Carpenter Company. The senior vice president of sales and merchandising said that roost fa ll into two distinct segments, the commodity part of the business and value-added line. For the commodity part of the business- consists of polyester-filled stays which are a normal pillow.Besides that, the value-added line, which features technology-driven fibers and fabrics designed to enhance sleep. As we can see, Carpenter Company had produced variety function of pillow like muscle stress and pain relieve pillow as well as pillow which reduce unnatural awakenings. Today, consumers are better educated about the benefits of various sleep surfaces and they recognize that the exercise of pillow can play in quality sleep. Although the price for a pillow which features technology-driven fibers and fabrics designed will be expensive but it can help consumer to have a quality sleep. Thus, consumers will not mind to pay more to improve a quality sleep. As a result, we can see that the value-added line may help company to gain profit.In contrast, a non-value added cost is the cost of an activity that cannot be eliminated without diminishing the value. Non-value added cost activities are assumed to be unnecessary as a result it always be minimized like storing and handling inventories transportation of raw material or partially finished products. If this non-value added costs materializeed, company may reduce or eliminate it by careful redesign of the operational process. As we can see how Taipei Fubon depository financial institution deals with those non-value added costs in this mature and complex market. Taipei Fubon Bank needs to accurately determine profit and loss data by customer and customer group so that it could help bank to reduce operating costs and increase profit while maintaining it quality of service. Hence, the bank had developed a customer profitabilitymanagement (CPM) system that provide thorough information regarding cardholder spending pattern and profitability to build highly targeted marketing and retention program.This system did helped ban k to reduce cost by updating timely management report, thus speeding marketing strategy adjustment decision. However, they wanted more information regarding a detailed analysis such as the profitability by card type at the individual customer level. As a result, they entered into the new CPM system by performing an in-depth analysis at the transaction level. The new CPM system contributes to division-wide productivity by means of the delivery of as-needed reporting to the user custom portal. The reporting may include customer spending habits, customer ranking by demographic criteria or the profitability of co-branded card by service channel. After using this system, Taipei Fubon Bank has significantly improving division profitability and now they can make more faster and accurate decision.In Dow Chemical Company (DCC) which produces chemicals and plastics implement ABM to identify the activities they perform, eliminate non-value-added activities, determine cost drivers, set activit y price to charge users and benchmark these price to ensure that they are competitive. season ABM has brought benefits to DCC but also brought umpteen challenges to them. For instances, DCC feels that it is difficult to capture cost driver information without creating supererogatory work. As the activity analysis became more and more detailed, DCC had to justify the complexities in obtaining and processing activity information. last the company decided that should not break activities down to task level, otherwise the resultant activities were too small and numerous.By comparing with the traditional system, ABM system is more costly. Implementation of ABM system requires many resources such as human resources and time consuming. Different activities require different resources. Data that concerns on major activities must be measured, collected and entered into system. As we can see that Scottish National Blood transfusion Service (SNBTS) feels that ABM system is a timely and co stly system. By using ABM system, they need to implement a thorough mapping of all processes, drill down and filtering of all relevant activities, the recognition of costdriver and others are enormous challenges. Thus, this may cause the company to take up much time and resources because this company consists of over 1100 staffs. Furthermore, everyone may have different point of view and searching for different data therefore they need times to eliminate and collect the right data into the right activities. chimerical data collection and allocation may result to setbacks during the implementation stages and may jeopardize the whole project. misinterpretation might also glide by in ABM system. This is because most of the information is interrelated and ambiguous. For instance, cost assign to material, products and customer may be relevant and cause the manager to overlook some information. This causes misinterpretation happen and link to the wrong decision making. Wrong decision making may cause some issues happen in the operation such as production delay, over-production and wrong shipping.Reports by using ABM system are suitable for internal users only and cannot report to external users. This is because ABM system has limitations since it does not adjust to generally accepted accounting principles (G.A.A.P). Stakeholder might not be able to understand the reports on ABM system and therefore, ABM system is only restricted for internal use.CONCLUSIONPreviously, company usually apply traditional accounting system to manage the companys operational activity but this system does not provide more detailed information that needed in this competitive environment. Therefore, managers require better information by developing activity-based management. This approach allow everyone in the organization understand where costs are being incurred, why are they being incurred and how these activities contribute to a higher value added to customers. Moreover, ABC explores to identify activities that can be eliminated or improved. In additional to that, communications will improve and changes are easier to make if company conducts the activity-based approach.In addition to the above purpose, we feel that ABM system may be useful for a company. This is because it not only focuses on the product of a company but also the services and customers of a company. Besides that, it also help company to find out the cause of a problem, action plan for future development as well as evaluation of managers or departments present performance. In addition to that, it also helps company utilize true cost data which generated through ABC for further improvement in business profitability in the long run.ABM in best practice firm lies at the heart of the decision-support process. Integrating ABM within the total information and management control system of the organization can lead to quantum improvements. Therefore, an organization needs to understand and address the common pitfalls and barriers to advantage at every stage of implementation. Besides, the ABM system should include and draw on the insights of the people who use it no matter during planning, activity analysis or other so that the implementation will conquest when the people use the system. Organization should tailor to the unique strategy, structure, capabilities, and needs of the firm so that the implementation will be succeeded. This is because ABM will not look the same in every organization although it is a universally useful concept.Finally, we have an in-depth understanding of ABM during the process of working out this assignment and we demonstrate out that activity-based approach has more advantages than disadvantages. We have learned many things like time management and how to get along with our group members. Although we spent much time for discussing the lessons and recommendations, we didnt have any argument during our discussion and everything went on smoothly.BIBLIO GRAPHY_Advantages, Disadvantages and Limitations of Accounting Based Costing (ABC) System_. (n.d.). Accounting For Management. Retrieved March 9, 2013, from http//accounting4management.com/limitations_of_activity_based_costing.htmBusiness Dictionary.com. (n.d.). Retrieved February 1, 2013, from http//www.businessdictionary.com/definition/activity-based-management- ABM.htmlCardos,I.R., & Pete,S. (2011). _Activity-based Costing (ABC) and activity-based management (ABM) implementation Is this the solution for organizations to gain profitability?._ Retrieved March 9,2013, from http//www.revecon.ro/articles/2011-1/2011-1-9.pdfCIMA. (2001). Techinical Briefing. _Activity-based management An overview_. Retrieved March 10, 2013, from http//www.cimaglobal.com/Documents/ImportedDocuments/ ABM_techrpt_0401.pdfDrury, C. 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Twitter Essay Example | Topics and Well Written Essays - 500 words

Twitter - Essay usageTwitter emerged as a side project for a number of board members at the blogging and podcasting follow Odeo. The original inventors included Jack Dorsey, Noah Glass, Evan Williams, and Biz Stone. The original name for the project was twttr. The first product recitation functioned within the Odeo Company, with the full version finishing development a number of months later (The real history, 2011) . by and by the product was completed the original Twitter founders created Obvious Corporation and through investor funds purchased Odeo and all of its ac phonering assets. In April 2007 Twitter spinoff from Odeo and became its own attach to. In terms of popularity the high society gained perhaps its greatest boost at the Interactive portion of the South by Southwest festival at this festival user-ship expanded from 20,000 to 60,000 (Picard, 2011). at that place were a number of early development elements that occurred throughout the products orientation. In large ruin the structural dimensions of the product accommodate outrideed the same since its 2006 incarnation. Many of the early development elements occurred in terms of the companys management and organizational structure. In 2007 co-founder Noah Glass was fired (The real history, 2011). In 2008 Williams assumed company leadership in terms of becoming the chief executive officer and Jack Dorsey became chairman of the board. Williams would remain in this capacity until 2010 when Dick Costolo would assume the position. 2010 also witnessed a slight change in the company logo.Twitter has experimented with a number of modern development changes in the last two years. Perhaps or so prominent among these is the inclusion of a trending sidebar that indicates the most popularly tweeted topics (A visual history, 2011). Twitter has implemented this work as a means of advertising as specific companies are given the opportunity to have their subject of choice featured as a