Uniform Policy should be abolished in Asian High Schools

Solitary Happiness Flow free essay sample

Proposal: In all parts of the territories of social and single satisfaction the objective is to sift through joy. Acting naturally adequate ought to never to be mistaken for a forlorn climate, and social will require a group of people for achieving something great. There are two rejections to accomplishing satisfaction through singular responsibility and social commitment. The limits of both ought to be kept with some restraint mode. Bliss is acquired, through profound idea, and difficult work sifting through what one truly desires. Some singular, social bliss can be dangerous to the psychological condition if not utilized with discretion and parity. Presentation: The bona fide relationship of the two sorts of satisfaction, social, lone from various viewpoints. Each of these is chosen relying upon the safe place, feeling, and the satisfaction of joys one get while scanning for joy. Joy is a psychological condition of prosperity which is centered around individuals, things, and practices that will motivate one of every a positive way. We will compose a custom article test on Lone Happiness Flow or on the other hand any comparable point explicitly for you Don't WasteYour Time Recruit WRITER Just 13.90/page Living ones whole life scanning for this mysterious sensation just to acknowledge there will never be fulfillment from discovering it. The reason of the two hypotheses is one works and different works as per which you decided to acquire it from. Blueprint: A. The main type of bliss is lone and the consequences for an individual encountering isolation with their own duty to joy. 1. The risk in single satisfaction 2. Being in charge of your time, and making your bliss the middle point. 3. Having isolation in the solace capacity of one’s own organization. B. Discovering joy with individuals, and sharing beneficial encounters in a social situation. 1. The indoor regulator of joy managed in the public eye. 2. Connections between two individuals. 3. Picking what sort of satisfaction that will fulfill your longing. End: The social and the single is both equally expected to arrive at a definitive height of effectively encountering bliss. Without a harmony between the two how could your objectives of joy be completely learned. The feelings become a condition that is acclimated with chances to start a glad inclination. The triggers are edified by a warm sentiment of a specific need to need a greater amount of the sensation just to locate an unlimited pit. Most will spend a lifetime of seeking after an objective of discovering bliss constraining the craving of needing more. When the inclination is in overdrive there is a steady need of expecting to discover more bliss on a more elevated level. The addictive conduct will place the perspective in a hazardous shaky perspective about how much joy is sufficient. There are measurements that many want to be altogether alone to encounter satisfaction. The parity of singular, and social joy must be done with some restraint equitably convey. Satisfaction isn’t found in individuals, material things, it’s found inside your heart. Joy isn't elusive just in the event that you search inside yourself it was there constantly.

5 Ways to Write a Good Thesis Statement

5 Ways to Write a Good Thesis Statement When You Write a Good Thesis Statement, You Build a Great Argument When You Write a Good Thesis Statement, You Build a Great Argument One of the hardest parts about writing a paper is coming up with a great thesis statement. This is the central component of your paper, and it can make or break your grade. To write a good thesis statement, you need to be able to construct an argument that will prove a point throughout your paper. It has to be something you can build on, but specific enough that you can narrow down to a focus. There are many ways you can write a thesis. Here are 5 of the most reliable methods to craft a successful paper and impress your professors. 1. Ask Questions One easy way to write a thesis statement is to start asking questions about your subject. These questions should spark some curiosity about something to do with the topic, and prompt you to find the answers. For example, if you’re writing a paper about World War II, you could ask yourself one of the following questions: ?Why was the war so significant to American history? ?What were the economic, social, and political impacts of the war on either the Allies or the Axis powers? ?What are some of the important developments that came out of the war that went on to change the way society functioned in a specific country? You may have to narrow your questions down to form an argument, but it’s a great way to peak your own interest about the topic and dig deeper for more information. 2. Tailor Your Thesis to the Type of Paper You Are Writing Every type of paper is different and has a different type of thesis statement to go along with it. Some papers will need a specific, broken down statement that outlines 2 or 3 main arguments to be made within the content. Others will require a brief explanation of how the paper will be organized. For example, the thesis for an argumentative essay will have a different structure than one you write for a comparative essay. Knowing this information will help you figure out how to write down your points and bring them together to form a concise 1-2 sentence thesis for your paper. 3. Read Through Your Sources and Develop an Opinion If you’re ready to sit down and write your paper, chances are you’ve already found at least some of the sources you are going to use. Read them ahead of time and see what those authors are saying. Do you agree with their opinions? Write your ideas and thoughts down about each article you read and see if there are any trends, patterns, or frequent occurrences there. 4. Make a Mind Map Sometimes it takes a bit of visual representation to really narrow down what you’re trying to say. Make a mind map about your topic and write down everything that comes to your mind that relates to your topic, even in the slightest way. Once you’re finished, you should have a great word cloud with many keywords that stand out to you. Take some of those terms and do a little bit of research to see what’s out there. Chances are, your arguments will come to you in no time. 5. Pick a Side The answer to your problems could be as simple as taking a side to an argument about a topic. Start with something broad, and then narrow in on a more specific argument within the scope of that theme. Weigh the arguments on both sides to figure out which one you agree with more, but don’t forget to account for the opposition within your paper. If You Can’t Think of a Thesis, Get Professional Help Our writers at Homework Help Global know how to write a good thesis statement. They are experts in their fields, having written a variety of papers and essays throughout their academic and professional careers. We provide thesis and outline services that you can build on, or we can write you a custom essay and take all of the work off your hands. Order now to get a quote and see the amazing thesis statement our professional writers will come up with for you! References: Center for Writing Studies. (n.d.) Writers workshop: Writer resources. The University of Illinois. Retrieved from . Nordquist, R. (2017). How to write a good thesis statement. ThoughtCo. Retrieved from thesis-statement-composition-1692466. Tardiff, E. Brizee, A. (2014). Tips and examples for writing thesis statements. Purdue Online Writing Lab. Retrieved from . 5 Ways to Write a Good Thesis Statement When You Write a Good Thesis Statement, You Build a Great Argument When You Write a Good Thesis Statement, You Build a Great Argument One of the hardest parts about writing a paper is coming up with a great thesis statement. This is the central component of your paper, and it can make or break your grade. To write a good thesis statement, you need to be able to construct an argument that will prove a point throughout your paper. It has to be something you can build on, but specific enough that you can narrow down to a focus. There are many ways you can write a thesis. Here are 5 of the most reliable methods to craft a successful paper and impress your professors. 1. Ask Questions One easy way to write a thesis statement is to start asking questions about your subject. These questions should spark some curiosity about something to do with the topic, and prompt you to find the answers. For example, if you’re writing a paper about World War II, you could ask yourself one of the following questions: ?Why was the war so significant to American history? ?What were the economic, social, and political impacts of the war on either the Allies or the Axis powers? ?What are some of the important developments that came out of the war that went on to change the way society functioned in a specific country? You may have to narrow your questions down to form an argument, but it’s a great way to peak your own interest about the topic and dig deeper for more information. 2. Tailor Your Thesis Statement to the Type of Paper You Are Writing Every type of paper is different and has a different type of thesis statement to go along with it. Some papers will need a specific, broken down statement that outlines 2 or 3 main arguments to be made within the content. Others will require a brief explanation of how the paper will be organized. For example, the thesis for an argumentative essay will have a different structure than one you write for a comparative essay. Knowing this information will help you figure out how to write down your points and bring them together to form a concise 1-2 sentence thesis for your paper. 3. Read Through Your Sources and Develop an Opinion If you’re ready to sit down and write your paper, chances are you’ve already found at least some of the sources you are going to use. Read them ahead of time and see what those authors are saying. Do you agree with their opinions? Write your ideas and thoughts down about each article you read and see if there are any trends, patterns, or frequent occurrences there. 4. Make a Mind Map Sometimes it takes a bit of visual representation to really narrow down what you’re trying to say. Make a mind map about your topic and write down everything that comes to your mind that relates to your topic, even in the slightest way. Once you’re finished, you should have a great word cloud with many keywords that stand out to you. Take some of those terms and do a little bit of research to see what’s out there. Chances are, your arguments will come to you in no time. 5. Pick a Side The answer to your problems could be as simple as taking a side to an argument about a topic. Start with something broad, and then narrow in on a more specific argument within the scope of that theme. Weigh the arguments on both sides to figure out which one you agree with more, but don’t forget to account for the opposition within your paper. If You Can’t Think of a Thesis Statement, Get Professional Help Our writers at Homework Help Global know how to write a good thesis statement. They are experts in their fields, having written a variety of papers and essays throughout their academic and professional careers. We provide thesis and outline services that you can build on, or we can write you a custom essay and take all of the work off your hands. Order now to get a quote and see the amazing thesis statement our professional writers will come up with for you! References: Center for Writing Studies. (n.d.) Writers workshop: Writer resources. The University of Illinois. Retrieved from . Nordquist, R. (2017). How to write a good thesis statement. ThoughtCo. Retrieved from thesis-statement-composition-1692466. Tardiff, E. Brizee, A. (2014). Tips and examples for writing thesis statements. Purdue Online Writing Lab. Retrieved from .

The Supreme Court and Civil Rights Essay - 991 Words

Declared in the U.S. Constitution every American or should it be person, is guaranteed civil rights. Civil rights did not just consist of â€Å"freedom of speech and assembly,† but as well as â€Å"the right to vote, the right to equal protection under the law, and procedural guarantees in criminal and civil rights,† (Dawood). It was not until 1791, that the Bill of Rights was appended to the constitution, which helped clarify these rights to citizens. â€Å"Rights were eventually applied against actions of the state governments in a series of cases decide by the Supreme Court,† Dawood stated. In previous years (1790-1803), the Supreme Court had little say in decisions being made by government. As time went on the Supreme Court took on more†¦show more content†¦The only way any men were to be exempted from this clause was if his father or grandfather were to have voted previous to 1867. Being that African Americans’ ancestors were slaves, they wer e not able to be exempted thus they had to pass the tests, pay the tax, and pass any other requirements thrown at them. It was not until June 21, 1915 that the court declared it unlawful, leaving way for African Americans to vote. Another win for African Americans was in 1954, with the case of Brown v. Board of Education of Topeka, Kansas, where the Supreme Court called segregation unconstitutional and consequently banned it. This was only the ending of a 16 year struggle for the ruling out of segregation. The abolishment of segregation in public schools did not rely exclusively on this case, but as well as on other cases which contributed to this ban. The case of Brown v. Board of Education was said to have been divided into two cases known as Brown I and Brown II. The Brown I case, was the 1954 abolishment of segregation, in 1955 Brown II, â€Å"held local school districts responsible for implementing Brown I and ordered them to desegregate schools ‘with all deliberate spee d,’† (Unger). In previous years before the Brown cases, the National Association for the Advancement of Color People (NAACP), were accountable for the pro anti-segregation cases against school boards inShow MoreRelatedCivil Rights, Violation, Law, Race, And The Supreme Court Case901 Words   |  4 PagesIntroduction When it comes to court cases, every case that is heard in court is heard for one reason or another. Some are disputes between two people, some are because of injury or murder and then you have some like this, is the result of racism. In this body of work, the Supreme Court Case surrounding Shelley v. Kraemer would be outlined. In addition to the outline of the case, the violations that took place will be determined and explained as well as the penalties associated with thisRead More The Role of the Supreme Court in the Civil Rights Movement Essay example1969 Words   |  8 PagesThe Supreme Court was important in both suppressing and aiding the Civil Rights Movement. However, decisions taken by the President, the continued white opposition and improvements in media communications also had an effect. Although all were important, the Civil Rights movement alone would have reached the same end without the help of the Supreme Court, and the devotion of its many members and leaders is the major factor in advancing Civil Rights. The Supreme Court is perhaps most well knownRead MoreThe Voting Rights Act Of 1965947 Words   |  4 PagesThe Supreme Court rulings led to a number of acts which helped the civil rights movement attain its goals. The first example is the Voting Rights Act of 1965. On January 23rd, 1964, the 24th amendment stopped the poll tax, which initially had been introduced in eleven southern states after reconstruction to make it difficult for poor blacks to vote. On August 10th, 1965, Congress passed the Voting Rights Act, making it easier for Southern blacks to register to vote. Anything that could limit theRead MoreExamining the View that the Supreme Court is an Effective Protector of Civil Liberties1041 Words   |  5 PagesExamining the View that the Supreme Court is an Effective Protector of Civil Liberties In 1789, the founders of the Constitution set out the power of the Supreme Court in Article III section 2, and, arguably, in the Supremacy clause in Article 6. These clauses gave the Supreme Court the power to protect the Constitution, and by doing so, the power to protect civil liberties. The strength of the Supreme Court is essential in protecting civil liberties that are protectedRead MoreCivil Rights Vs. Civil Liberties901 Words   |  4 PagesSeptember 2017 Civil Rights vs. Civil Liberties In America, today there is a lot of controversy over human’s rights. This is not true of just today, however, this fight for people s rights has been going on for ages. There are two basic types of rights. 2 There are Civil Rights and there are Civil Liberties. Civil Liberties are a broader topic, such as the right to vote or the right to bear arms, they can be directly from the Bill of Rights or the Constitution. While Civil Rights are more specificRead MoreCivil Rights And Civil Liberties1009 Words   |  5 Pages29 September 2017 Civil Liberties are basic freedoms and rights that are guaranteed to us by the government through the Constitution, Bill of Rights, and the Federal Law (â€Å"Civil Rights vs. Civil Liberties.†). Whether they are freedom of speech or a right to an attorney, these basic rights are a right to all of us. 1 Civil rights are the basic rights to be free from unequal treatment based on certain protected characteristics (race, gende r, disability, etc.) (â€Å"Civil Rights vs. Civil Liberties.†). WhetherRead MoreDirectives And Regulations Are Forms Of Secondary Eu Legislation1262 Words   |  6 Pageslike a national law without modifications (OU, 2017a, 2.2). b) The laws of human rights protects individuals from torture, slavery, unlawful punishment and arbitrary detention. Furthermore they make sure that people are treated equally under the laws. An example is the European Convention of Human Rights (ECHR). The convention has three categories of rights, absolute, qualified and limited (OU, 2017b, 2). Absolute rights cannot be legally breached under any circumstances. For example Article 4 of theRead MoreBrown Vs. Board Of Education1143 Words   |  5 Pageswas a landmark Supreme Court Case that overturned the separate but equal ideology established by the earlier Supreme Court Case Plessy vs. Ferguson (1896). The Plessy vs. Ferguson court case had a profound affect on the social interaction of racial groups in the late 19th to early 20th century causing tension between the two most prominent races within the United States, the Caucasians and the African Americans, which included Hispanics and other non-white citizens. The Supreme Court Case Brown vsRead MoreCivil Liberties And The Civil Rights902 Words   |  4 Pagescountry. This is where our civil sequences: Liberties and Rights, keep our country intact. 1 Both Civil Liberties and Rights are granted and defined in the Constitution. We must continue enforcing our civil sequences to maintain order for ourselves, our states, our government, and our nation. Civil Liberties focus on our basic freedoms as Americans and Civil Rights are concerned with rights regarding the treatment of an individual. 2 Definitely a Civil Liberty is ‘the basic right to be free from unequalRead MoreThe Brown Decision : A Catalyst For Change Or A Strategic Misstep?1157 Words   |  5 PagesDecision: A Catalyst for Change or a Strategic Misstep? Emily Gerard The Courts Public Policy Dr. Kevin Scott 13 July 2015 In The Hollow Hope, Gerald N. Rosenberg presents a thorough and incisive argument that the Supreme Court is constrained in its ability to affect change in public policy. To prove this point he argues that, â€Å"Before Congress and the executive branch acted, courts had virtually no direct effect on ending discrimination in the key fields of education

Application Of Electronic Commerce ( E Commerce ) On Small...

UNIVERSITY OF CANBERRA COLLEGE Academic Writing and Research Skills (8733) Semester 2, 2014 Student Name : Oka Mardian Student ID : u3105425 Assessment Name : Essay Plan Date : 13 October 2014 Word Account : Implementation of electronic commerce (e-commerce) on Small Medium Enterprise (SME) In this globalization era, new businesses are emerging and developing very rapidly where competition between businesses are becoming more aggressive. This situation may impact on small business or familiar with small and medium enterprise (SME). In order to survive and stay competitive, SMEs implements a vary of approaches or strategies, such as by adopting internet-based or web based (e-commerce) in their business. Many studies argued that e-commerce is very useful for SME in order to face the competitive challenges in the global market. E-commerce is believed can influence performance. However, to adopt this application there are several obstacle that is faced by SMEs. Therefore, this essay would like to discuss how e-commerce provide benefit to SMEs and what the obstacles faced by SME in order to adopt this technology. SME is a small business, which is differs with big companies. The definition of SME in one country may be different between other countries. Each country has its own consideration to classify a business as SME. Gilaninia, Danesh, Amiri, Mousavian and Eskandarpour (2011) mentioned that the criteria of business that can be categorized as SME,Show MoreRelatedImplementation Of Electronic Commerce ( E Commerce ) On Small Medium Enterprise ( Sme )1292 Words   |  6 PagesImplementation of electronic commerce (e-commerce) on Small Medium Enterprise (SME) In this globalization era, new businesses are emerging and developing very rapidly where competition between businesses is becoming more aggressive. Raymond, Bergeron and Blili (2005) mentioned that todays’ market is more effective and efficient since the use of technology that has eliminated distance and time. This situation may impact on small business or known as Small and Medium Enterprise (SME) to compete withRead MoreSkills, Logistical Infrastructure, And Production1107 Words   |  5 Pagesskills, logistical infrastructure, and production. SMEs lack in time and skills to implement application to conduct electronic business. Suppliers, employers and customers need to be trained and educated for which many small businesses lack in time and financial capabilities. Dramatic increase in business can also be a threat to SME who cannot satisfy new customer demands. Face-to-face business between suppliers and customers is considered as the strong way of doing business by means of trust soRead MoreE Commerce And E Business Essay1437 Words   |  6 Pagesregarding business-to-business (B2B) e-commerce and business-to-consumer (B2C) e-commerce, because many people are purchasing travel products and services on the Internet (Casalo, Flavian, Guinaliu, 2010). Travel agencies should adopt e-commerce technology into business models to increase competitive advantages and to boost marketing activities (Abou-Shouk et al., 2013). Information and communications technology (ICT) and E-Commerce and E-Business applications have a large impact on businessesRead MoreE-Commerce Maturity Model (Compariosn of Four Models)4839 Words   |  20 PagesContents Introduction 2 Wrycza et al. s Research (2007) 3 Rao et al. s research (2003) 5 Prananto et al. s research (2004) 7 Alonso Mendo and Fitzgerald s research (2005) 9 The usefulness of using E-Commerce Maturity Model (ECMM) 11 Conclusion 14 Reference 14 Introduction In today s economy, organisations try to gain strategic and operational advantages over other competitors in their industry because of the rapid advance of technology and globalisation. CompaniesRead MoreE Commerce And Its Impact On Waste Management765 Words   |  4 Pagesready to embrace e-commerce as it could lead to serious security, legal and financial problems. Back in early 2000s those hurdles of e-commerce limited the confidence of companies in terms of Internet-based business integration (Prasad et al., 2000). The research by Quayle (2002) revealed that small and medium enterprises (SMEs) in the UK would generally focus on waste management rather than adopting e-commerce. Moreover, some critics even predicted an imminent collapse of e-commerce (Wallace, 2000)Read MoreSkills and Learning Statement2152 Words   |  9 PagesAt present, the general trend of development of e-commerce enterprise organizational structure model specific performance of the grounds of the change of the traditional pyramid-shaped hierarchical organizational model to an open network structure. The design of the organizational structure of the e-commerce businesses related to the factors of management concepts, economic systems, management systems and other aspects of the reorganization enterprise in order to thoroughly change the traditional hierarchyRead MoreOnline Ordering System : A Project Proposal Essay2453 Words   |  10 Pagestopic as this research and contribute knowledge on how to make an online ordering system. Chapter II. Review of related literature and studies I.Related Literature Foreign Literature The extension of technology that integrates the electronic media in the buying and the selling process is known as the Ecommerce. Elton (2012) mentioned that the ecommerce website has deflated the dissimilarity of the world. Running an online business is much better than openingRead MoreImpact of E-Commerce in India5599 Words   |  23 PagesENABLING E-COMMERCE IN INDIA Amarjit Singh Department of Computer Science, HP University Shimla, India aj_singh_6@yahoo.co.uk M.P.Thapliyal Department of Computer Science,HNB Garhwal University, Srinagar(Garhwal), Uttaranchal, India mathuraprasad1@rediffmail.com M.M.S.Rauthan Department of Computer Science,HNB Garhwal University, Srinagar(Garhwal), Uttaranchal, India mms_rauthan@yahoo.com D.K.Joshi Department of Computer Science, Amravati university, Amravati (Maharashtra), India Dine_joshi@rediffmailRead MoreBenifits of E-Business and Barriers5124 Words   |  21 PagesBarriers of e-Business Technology Adoption by SME suppliers Ali Abu Abid1, Md Mahbubur Rahim2, and Helana Scheepers3 1 2 faculty of Computer Sciences, Abha, Saudi Arabia Caulfield School of IT, Monash University, Australia 3 Swinburne University of Technology, Australia ____________________________________________________________ _____________________ Abstract E-business technologies present unique opportunities and challenges for businesses, and Small Medium Enterprises (SMEs) are noRead MoreThe SWOT Analysis of e-Commerce3288 Words   |  13 PagesTHE SWOT ANALYSIS OF E-COMMERCE 1.0: INTRODUCTION The sophisticated of technology in day by day is rapidly arising without us realize. Many people nowadays are excited to explore the application was provided into gadget such as mobile smartphone, tablet, Ipad, etc. Through this gadget most of people make this medium as a platform to do e-commerce business. To conduct e-commerce business on internet are now more easier and faster, has a few of medium from application that included in gadget can

Assignment Week 6 Sleep Deprivation, Disorders, and Drugs Free Essays

Any of us if not more than some have experienced some difficulty sleeping. This can happen because of a number of things: We worry about some sort of troubling thing to come or one that has passed, or there is the all too famous insomnia, which gets the best of us from time to time. There are many times in my life that I have had trouble sleeping, whether it was from one of my three children being sick, my husband being sick, me being sick, or my mind just running from here to there which happens quite frequently. We will write a custom essay sample on Assignment Week 6: Sleep Deprivation, Disorders, and Drugs or any similar topic only for you Order Now The last time I recall that I had not gotten enough sleep would have been when my middle child had to have oral surgery. I don’t really know if it was because she was going under and she hadn’t been before, if it was the fact that my little girl was going to have surgery for the first time. I tried for several hours to fall asleep, but my mind would not stay still. I finally decided to get up and try to doze off to the television, after that did not work I made some coffee and worked on my assignment. When it was time to get up my husband and my little girl I was exhausted, as if I was at work all day. I drove us to where we needed to go with no problem, but as we sat in the waiting room I dozed off for a few hours. As I woke it felt as if I had not slept as all, I was still exhausted. After the surgery was over and the care plan for her was set we left for home. I had got a huge cup of coffee from a convenience store, as I drank it I felt more tired. I slept for about 30 minutes on the way home, and when I got there I felt so awake. However, as I went in and settled down for a little bit, I felt more tired than I ever had. Unfortunately though I needed to take care of my other two children, which was a very hard task at hand, even with the help of their father. I was finally able to get to sleep that night however it was a rough start to the next day. When I am unable to get to sleep I tend to sleep more than normal, and as I wake I am dragging all day and feel as I need more sleep. As I read chapter 14 Sleep, Dreaming, and Circadian Rhythms, I am better understanding of why my body reacts the way it does if I get too much sleep or not enough sleep. When reading about the recuperation theories of sleep it made a lot of sense to me. I believe it is reasonable that we need to sleep in order for our bodies to revitalize its self, and that at some point if we were to develop a total sleep deprivation it could result in one’s death. We do know that we are in need of some sleep, however, we are still uncertain about how much sleep we much have. It is also know that many years ago people slept much more and today a person usually sleeps anywhere from seven to nine hours of sleep. According to the circadian theories of sleep, we possess an internal timing mechanism, called a circadian clock. I fully support the belief that we are programmed or have developed a habit of sleeping at night. I believe that we choose to rest and relax not only for our health, but also because we like it so much. I believe that we experience Microsleep from time to time as well. Mucrosleeps are short periods of sleep when we shut our eyes for a few seconds either while sitting or standing. I remember while I was working I had stayed up all night, when I went to work I was completely exhausted. I had to get something out of the walk in cooler, since it was a hot day out I sat on a crate and I dozed off for just a second, and ended up jerking awake. We do not know exactly how much sleep a human should sleep and exactly why it is necessary to need sleep. There are many types of sleep disorders, one in particular would be insomnia. There is insomnia that involves disorders of getting to sleep and staying asleep and hypersomnia, which includes disorders of sleeping too much. Causes that can influence insomnia are, for example, if a person is experiencing physical pain. This could influence a person when falling asleep or staying asleep. There are drugs (hypnotics) that can help a person to fall and stay asleep but they have negative effects. Prescribing benzodiazepines, like valium, have side effects as a person can develop a tolerance and might have to increase the dose of that specific drug. In addition, they are also addictive. Another insomnia disorder is called sleep apnea. A person with this disorder stops breathing during sleep, which makes him or her wake up and then go right away to sleep. This disorder is very common in older or overweight people. There is also nocturnal myoclonus (a body twitches and keeps a person awake) and restless legs syndrome. In hypersomnia, narcolepsy is the most well-known disorder. A person with this disorder complains about daytime sleepiness and falls asleep almost anywhere. Another symptom of narcolepsy is cataplexy, in which a person can lose muscle tone while being awake. This can make a person sit down suddenly or in the extreme, cause a person to drop down to the ground. Then there is sleep paralysis (unable to move when going to sleep or awakening) and hypnagogic hallucinations (dreaming while being awake). There are drugs such as stimulants and tricyclic antidepressants that might help; however, they are very addictive and can have side effects like not wanting to eat. There is also the hormone melatonin, a natural hormone produced in the brain, which is also manufactured commercially and is associated with sleeping, but the studies are still inconsistent and debatable. (Pinel, 2011) As we know we need some sort of sleep to function normally or on a normal basis, without it we could face some pretty severe consequences. If there are problems they make medication that can help with those problems, which will allow us to sleep. How to cite Assignment Week 6: Sleep Deprivation, Disorders, and Drugs, Essay examples

My Corolla free essay sample

My Corolla My Corolla I drive a Toyota Corolla. It is a small red car with little wheels and a tiny engine and the efficiency one would expect from Japan’s premier auto manufacturer. I’m pretty sure it could circumnavigate the globe without ever needing to stop to fill its 10-gallon fuel tank. An iconic car to fall in love with driving, epitomizing the American idea of happiness manifesting itself in the form of horsepower and steel and exhaust and mufflers and raw torque? Not really. An amazing vehicle? Yes. Then again, what do I know about cars? I probably like it because when I say the phrase â€Å"my Corolla,† I always kind of think it to the tune of â€Å"My Sharona.† Well, that’s a little awkward. Unfortunately, on one particular day, I was not behind the wheel of my Corolla. It was a bright and clear day. I was with my father, and I was at the helm of the aircraft-carrier size of American ingenuity that is the Chevy Uplander. We will write a custom essay sample on My Corolla or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page We were leaving the town of Ithaca, New York, after a weekend of visiting Ithaca College, a school I had been considering as a viable option for my higher education. Ithaca College sleeps high above its similarly named town on a hill, overlooking Lake Cayuga. It provides for some very nice vantage points. The entire area surrounding the town is rolling hills squiggled with highways and streams. It was early spring, and the deep New York snow had not entirely melted everywhere, but on this cool and sunny day, the branches of trees began to show their buds to the world, carefully revealing their delicate green slices to the meet the moist and cool air, like bejeweled rings on the hands of a knotty, knobby, wooden elderly woman. Fog was rising off of the many lakes of the area, giving a ghoulish mask to the sun that would roll in and out of its cloud cover. Everything was dead from the winter. Today’s forecast: fifty-five degrees and sunny. Everything was about to come alive again. My father and I didn’t speak much on the way home. He probably thought I was mad or a moody teenager or something. In reality, I was doing a lot of thinking. There was a lot to think about. Driving down the highway in a Chevy Uplander, my father stoking the coal-burning furnace to power the immense machine as I manned the helm, the car’s iron, square wheels crushed the smaller vehicles on the road. I prayed for mercy upon the poor souls around me as I navigated in and out of lanes, fiddling with the cruise control. Maybe it was the additional thirty-eight tons of steel, the enormous nose, the driver’s seat perched high above the road deck, or the impossibly uncomfortable upholstery, but everything just seemed unnecessarily difficult about this driving experience when compared to my Toyota Corolla. My interaction with this automobile seemed less symbiotic and more chaotic. During my brief scouting expedition to Ithaca College, I had a problem. A really big problem. This seemed like the college for me. Over the past few months, people had been constantly asking me what college I was going to and what I wanted to do when I got there. To be completely honest, there was no more frustrating topic to discuss. I honestly did not know, and I was getting tired of not knowing. â€Å"You’ll know. It will just feel right,† they would always say to me when we were done talking. So, everything should have been solved when I saw Ithaca, right? Earlier that semester, I had visited Asbury College, a small Christian school near Lexington, Kentucky, and I had a very similar feeling. The questioning persisted, as always. It grew more and more infuriating. I was frustrated with myself. Why couldn’t I pick? Why didn’t I know where I wanted to go to college? Why didn’t I know what would make me happy? Up until this point in my life, I had known almost every answer. School was easy: study, learn facts, answer questions, accomplish mission. Unfortunately, there was no study guide now. About halfway home from Ithaca, my father and I stopped to eat lunch. Pulling into a parking spot, I greatly underestimated the turning radius of Chevy’s magnificent crossover SUV-Minivan. I wound up about six feet to the left of the parking spot I had intended to pull into. â€Å"I hate this car. I miss my Corolla.† â€Å"There’s nothing wrong with it. It’s just different,† he said to me. One of my shortcomings when it comes to highway voyages is my lackluster skill in navigation. I need someone to tell me where to exit, even if I wrote the directions myself. I think it might be a byproduct of my perfectionist nature. I never want to make a mistake. I always want to know exactly where I’m going. I’m sure it’s easy to imagine my panic as I approached a confusing road sign. I’m pretty sure the transit authority of the state of Ohio actually accidentally hung up one of those games from Highlights, the Children’s magazine, where you try and follow an arrow through a mess of other arrows to guide the cheetah cub to its mother. No joke. â€Å"Dad,† I said panicked, as onramps and exits began to creep ever closer, â€Å"What do I do?† â€Å"Take the express lane.† â€Å"Thanks.† I got onto the express lane, but I noticed something about it. As it snaked across the Columbus area, in and out of dozens and dozens of orange construction pylons, sometimes squeezing traffic to a single lane, it never strayed far from the main highway from which I had just exited. Effectively, I could have stayed there much longer, with the same result. Perhaps I’m rambling, now. â€Å"Brevity is the soul of wit.† There was more than one way home from Ithaca, New York.

The Four Surviving Maya Codices

The Four Surviving Maya Codices The Maya - a powerful pre-Colombian civilization who reached their cultural zenith around 600-800 A.D. before falling into steep decline - were literate and had books, written in a complex language including pictograms, glyphs, and phonetic representations. A Maya book is referred to as a codex (plural: codices). The codices were painted onto a paper made of bark from the fig tree and folded out like an accordion. Unfortunately, zealous Spanish priests destroyed most of these codices during the conquest and colonial era and today only four examples survive. The four surviving Maya codices mostly contain information about Maya astronomy, astrology, religion, rituals, and Gods. All four of the Maya books were created after the downfall of the Maya civilization, proving that some vestiges of culture remained after the great city-states of the Maya Classic Period were abandoned. The Dresden Codex The most complete of the surviving Maya codices, the Dresden Codex came to the Royal Library in Dresden in 1739 after being purchased from a private collector in Vienna. It was drawn by no fewer than eight different scribes and it is believed that it was created sometime between 1000 and 1200 A.D. during the Postclassic Maya period. This  codex deals primarily with astronomy: days, calendars, good days for rituals, planting, prophecies, etc. There is also a part which deals with sickness and medicine. There are also some astronomical charts plotting the movements of the Sun and Venus. The Paris Codex The Paris Codex, discovered in 1859 in a dusty corner of the Paris library, is not a complete codex, but fragments of eleven double-sided pages. It is believed to date from the late Classic or Postclassic era of Maya history. There is much information in the codex: it is about Maya ceremonies, astronomy (including constellations), dates, historical information and descriptions of Maya Gods and spirits. The Madrid Codex For some reason, the Madrid Codex was separated into two parts after it reached Europe, and for a while was considered two different codices: it was put back together in 1888. Relatively poorly drawn, the codex is probably from the late Postclassic Period (circa 1400 A.D.) but may be from even later. As many as nine different scribes worked on the document. It is mostly about astronomy, astrology, and divination. It is of great interest to historians, as it contains information on Maya Gods and the rituals associated with the Maya New Year. There is some information about the different days of the year and the Gods associated with each. There is also a section on basic Maya activities such as hunting and making pottery. The Grolier Codex Not discovered until 1965, the Grolier Codex consists of eleven battered pages of what was likely once a larger book. Like the others, it deals with astrology, specifically Venus and its movements. Its authenticity has been questioned, but most experts seem to think it’s genuine. Sources Archaeology.org: Redating the Madrid Codex, by Angela M.H. Schuster, 1999. McKillop, Heather. The Ancient Maya: New Perspectives. New York: Norton, 2004.

The Meaning of s.t. or Subject To in Economics

The Meaning of s.t. or Subject To in Economics In economics, the letters s.t. are used as an abbreviation for the phrases subject to or such that in an equation. The letters s.t. proceed important constraints that the functions must follow. The letters s.t. are generally involved in stating relationships between economic functions using the mathematical functions themselves rather than articulating the same in prose. For example, one a common usage of s.t. in economics may appear  as follows: maxx f(x) s.t. g(x)0 The above expression, when stated in or translated into words, would read: The value of f(x) that is greatest among all those for which the argument x satisfies the constraint that g(x)0. In this example, f() and g() are fixed, possibly known, real-valued functions of x. The Relevance of s.t. in Economics The relevance of the use of the letters s.t. to mean subject to or such that in the study of economics stems from the importance of mathematics and mathematical equations. Economists are generally interested in discovering and examining different types of economic relationships and these relationships can be expressed through functions and mathematical equations. An economic function attempts to define observed relationships in mathematical terms. The function, then, is the mathematical description of the economic relationship in question and the equation is one way of looking at the relationship between concepts, which become the variables of the equation. The variables represent the concepts or items in a relationship that can be quantified, or represented by a number. For instance, two common variables in economic equations are  p  and  q, which generally refer to the price variable and quantity variable respectively. Economic functions  try to explain or describe one of the variables in terms of the other, thus describing one aspect of their relationship to one another. By describing these relationships through mathematics, they become quantifiable and, perhaps most importantly, testable. Though at times, economists prefer to use words to describe economic relationships or behaviors, mathematics has provided the basis for advanced economic theory and even the computer modeling that some modern economists now rely upon in their research. So the  abbreviation s.t. simply provides short-hand for the writing of these equations in place of the written or spoken word to describe the mathematical relationships.

Business data analysis Essay Example | Topics and Well Written Essays - 1000 words

Business data analysis - Essay Example They try to elaborate the rate at which the stock values are found to be varying over time. Seasonal variations Seasonal variations have very important implications for the policies which define the functioning of a company. Rise and fall in stock prices often classify the boom and recessive periods of a company respectively. When stock prices rise, the companies generally are found to increase their employee wages and hire more employees as the production rises. They are generally predicted through figuring out the differences between the predicted trend line and the actual observations, for each individual period. Averaging over the differences throughout an entire year leads to the calculation of seasonal variations for each month in any year (Hargreaves, 1994, p. 154). Stock prices for Deutsche Bank are estimated to be reaching a peak during the fourth month of every year while it faces a recession during the tenth month of every year. Hence, the company might be regarded to be u ndergoing a period of boom during the second quarter of every year and a depression during the fourth quarter. However, when these seasonal variation statistics are compared with the actual monthly differences in the trend calculations and actual observations, the readings were found to be much different. The following graph depicts the comparative readings of differences between actual and trend observations. ... On the other hand, recession is actually experienced during the beginning of second quarter as against the seasonal variations calculated. However, it is not repeated for each and every year, as is found for the year 2002. In the year 2002, the actual seasonal variations are found to be coinciding with the calculated ones even though the readings do not match each other. The only factor which seems to correspond with each other is the direction of trend. If actual stock price values are being counted for, as the diagram alongside depicts, it would show that the correspondence between actual trend and estimated one is rarely found for the span of 10 years. In fact, the diagram suggests the absence of any hard-core seasonal fluctuation as such. The actual detrended line indicates the period between 2002 and 2004 as well as that between 2009 and 2010 to be under recession while that between 2006 and 2008 to be a period of boom. On the other hand, seasonal variation statistics show that regular cycle of booms and recessions are found to characterise every year. However, a point to be taken a note of in this regard is that even when the company, i.e., Deutsche Bank undergoes a whole period of boom or recession as such, there exists small fluctuations during the same. Hence, predictions about seasonal variations are likely to match during some years. Even when a company is experiencing a period of boom or recession, there could be ups and downs in business which symbolise seasonal variations, which actually is a short run phenomenon. However, there might also be another reason behind the lack of compatibility between the estimated trends and the actual adjusted closing price of the stocks of Deutsche Bank. As the diagram produced

Classical Music Essay Example | Topics and Well Written Essays - 750 words

Classical Music - Essay Example The Enlightenment Period is characteristic of its close association to the major changes that took place in the arts. It was this period during which balance, order and structure was infused into the arts. Composers were highly impressed and gradually aspired to maintain a perfect order and balance in their music. The Classical Period (1750 - 1820) (Music History) saw artists and musicians slowly wean away from the richly bottom and styles of the Baroque period and adapted a new style that was uncluttered which catered to the realm of elegant music that was made up of a simple but systematic form and structure with good melody and perfect harmony. The music in the Classical period was filled with a lot of emotion and feelings in addition to being lighter and more personal instead of intellectual. This style was a great attraction to the composers of that time who imbibed the Classical music style which possessed greater clarity, depth in addition to simpler structures and formal mode ls. A good example of such a composition was Mozart's creation of the 'Comic Opera' which became very popular during the Classical period. During the period of the Renaissance music took a lot of liberty in making use of the musical form. During the 1300s French and secular music was quite popular. In 1330 An Italian school of music was developed in areas such as Verona, Padua and Florence etc. with composers improvised lyrics to the accompaniment of instruments such as the viola and lute. In course of time such experimentation led to a new development of contrapuntal music. (The Columbia Encyclopedia, Sixth Edition) As humanism spread far and wide, gradually sacred music broke away from the confines of the Papacy which gave birth to a new school of composers who mastered the art of polyphony after having been trained in the Netherlands. Mozart's Contribution to Classical Music It was during the Classical Period that the great composer Wolfgang Amadeus Mozart (Harold C. Schonberg. W. W. Norton, 1997) lived. His father Leopold Mozart (1719 - 1787) who was a great violinist at the court of the Archbishop of Salzburg greatly encouraged his son by enhancing his musical skills. Mozart visit child prodigy who achieved much from a very young age. He was a genius par excel lance who dazzled his audiences. In 1782 Mozart composed the 'Singspiel Die Entfhrung aus dem Serail (The Abduction from the Seraglio), (Jan Swafford, 1992) and thereafter was no turning back as Mozart composed one masterpiece after another in different forms and genres. In fact he is on the composer to have created undisputed masterpieces that belonged to every musical genre of his times. Mozart's 'serenades, divertimenti and dance' written for the nobility became synonymous with the "Classical "age of elegance," His Serenade in G major, which the composer called Eine kleine Nachtmusik (Jan Swafford, 1992) which means 'A little night music', was the highlighted as his best. Mozart's contribution to music during the Enlightenment Period cannot be explained when considering its depth and vastness. He was a regular at the court of Emperor Joseph II (1741-1790) in Vienna where much of his greatest music was the victim. Some of His greatest works include

Essay --

In modern society, the advanced technology sets a trap for people, especially for students. Therefore, students go to the trouble of calling and texting over and over again, which dose does much harm to students' physical and mental health. As for study, students spend so much time in calling or texting that they waste a lot of time that should be spent on study. On the other hand, taking cellphone with you all the time is bad for your body health. So, as students, you should not take cellphones at to school. First of allï ¼Å' playing with cellphones really makes students waste a lot of time. Now, many students lower their heads, staring at the screen of cellphone and texting. Usually, if students take cellphones at to school, they are not old enough to control themselves and can not help using phone, even get the habit of living with cellphones. Over time, they will be increasingly dependent on mobile phones. Then, they are calling or texting, all the time but not communicating with their friends classmates or teachers face to face, which has a bad influence on students' study. According to study, Japanese students always get higher grades than other countries. The reason is that Japanese teachers and students spend much time together--the usual year is about 40 days longer than in other countries. (Glenn Zorpette. n.d.) But, now, students spend less and less time in sharing ideas and thoughts with classmates and teachers, which makes their study terrible. What's more, th ere are lots of violent games that attracts students a lot. And they are addicted to games and even imitate characters in games. As a result, they become violent or fierce, which could have a bad effect on students' mental health badly. In t... ... become more and more terrible and your brain can be influenced badly. What’s more, most cellphones have high radiation which must do much harm to your body.(The Harm of Phones’ Radiationï ¼â€° Students usually use cellphones on the bed and do not take then them away before sleeping, just putting it closed to your head. Then, the radiation influences your brain little by little. Maybe when you notice that, there is something terrible happening. Therefore, we should know the disadvantages of taking cellphones, and leave them at home. All in all, as for students, the most important thing is study but not using cellphones. I believe that we students can lead a colorful school life without cellphones. We just spend more time study or other activities to spread our horizon. So, we students should not take cellphones at school but put our heart into meaningful things.

Financial Reporting Quality: Red Flags and Accounting Warning Signs

Financial Reporting Quality and Investment Efficiency Rodrigo S. Verdi The Wharton School University of Pennsylvania 1303 Steinberg Hall-Dietrich Hall Philadelphia, PA 19104 Email: [email  protected] upenn. edu Phone: (215) 898-7783 Abstract This paper studies the relation between financial reporting quality and investment efficiency on a sample of 49,543 firm-year observations between 1980 and 2003. Financial reporting quality has been posited to improve investment efficiency, but there has been little empirical evidence supporting this claim to date. Consistent with this claim, I find that proxies for financial reporting quality are negatively associated with both firm underinvestment and overinvestment. Further, financial reporting quality is more strongly associated with underinvestment for firms facing financing constraints and with overinvestment for firms with large cash balances, which suggests that financial reporting quality mitigates information asymmetries arising from adverse selection problems and agency conflicts. Finally, the relation between financial reporting quality and investment efficiency is stronger for firms with low quality information environments. Overall, this paper has implications for research examining the determinants of investment efficiency and the economic consequences of enhanced financial reporting. Current Version: February 14, 2006 _____________________________________________ I thank members of my dissertation committee: John Core, Gary Gorton, Christian Leuz, Scott Richardson, and Catherine Schrand (Chair) for their guidance on this paper. I appreciate comments from Patrick Beatty, Jennifer Blouin, Brian Bushee, Gavin Cassar, Francesca Franco, Wayne Guay, Luzi Hail, Bob Holthausen, Rick Lambert, Frank Moers, Jeffrey Ng, Tjomme Rusticus, Irem Tuna, Ro Verrecchia, Missaka Warusawitharana, Sarah Zechman, Zili Zhuang, and seminar participants at the Wharton School. I also gratefully acknowledge the financial support from the Wharton School and from the Deloitte Foundation. Any errors are my own. Financial Reporting Quality and Investment Efficiency . Introduction This paper studies the relation between financial reporting quality and investment efficiency. Recent papers (e. g. , Healy and Palepu, 2001; Bushman and Smith, 2001; Lambert, Leuz, and Verrecchia, 2005) suggest that enhanced financial reporting can have important economic implications such as increased investment efficiency. However, despite solid theoretical support for such a relation, there is little empirical evidence supporting these claims. I hypothesize that financial reporting quality can improve investment efficiency by reducing information asymmetry in two ways: (1) it reduces the information asymmetry between the firm and investors and thus lowers the firm’s cost of raising funds; and (2) it reduces information asymmetry between investors and the manager and thus lowers the shareholders’ cost of monitoring managers and improves project selection. The two key constructs in the analysis are investment efficiency and financial reporting quality. I conceptually define a firm as investing efficiently if it undertakes all and only projects with positive net present value (NPV) under the scenario of no market frictions such as adverse selection or agency costs. Thus inefficient investment includes passing up investment opportunities that would have positive NPV in the absence of adverse selection (underinvestment). Likewise, inefficient investment includes undertaking projects with negative NPV (overinvestment). I measure investment efficiency as deviations from expected investment using a parsimonious investment model which predicts expected investment as a function of growth opportunities (Tobin, 1982). Thus, both underinvestment (negative deviations from expected investment) and 1 overinvestment (positive deviations from expected investment) are considered inefficient investment. I conceptually define financial reporting quality as the precision with which financial reporting conveys information about the firm’s operations, in particular its expected cash flows, in order to inform equity investors. As described in the FASB Statement of Financial Accounting Concepts No. 1, financial reporting should â€Å"†¦provide information that is useful to present and potential investors in making rational investment decisions†¦Ã¢â‚¬  (par. 34) and â€Å"†¦provide information to help present and potential investors in assessing the amounts, timing, and uncertainty of prospective cash receipts†¦ † (par. 37). Further, expected cash flows is a key input to firm capital budgeting, which is particularly important in the context of this paper which studies financial reporting implications for corporate investment. I proxy for financial reporting quality using measures of accruals quality based on the idea that accruals improve the informativeness of earnings by smoothing out transitory fluctuations in cash flows (Dechow and Dichev, 2002; McNichols, 2002). The use of accruals quality relies upon the fact that accruals are estimates of future cash flows and earnings will be more representative of future cash flows when there is lower estimation error embedded in the accruals process. I study the relation between financial reporting quality and investment efficiency on a sample of 49,543 firm-year observations during the sample period of 1980 to 2003. The analysis yields three key findings. First, the proxies for financial reporting quality are negatively associated with both firm underinvestment and overinvestment. This result extends research in Wang (2003) who predicts and finds a positive relation between 2 capital allocation efficiency and three earnings attributes (value-relevance, persistence, and precision) without making the distinction between under- and overinvestment. Second, cross-sectional tests indicate that the impact of financial reporting quality on investment efficiency is due to the alleviation of adverse selection and agency costs. For instance, financial reporting quality is more strongly negatively associated with underinvestment for firms facing financing constraints. This result suggests that, for this type of firm, financial reporting quality improves investment efficiency by lowering its cost of raising funds. Likewise, financial reporting quality is more strongly negatively associated with overinvestment for firms with large cash balances. This result suggests that financial reporting quality improves investment efficiency for these firms by lowering shareholders’ cost of monitoring managers and improving project selection. Finally, I predict that the relation between financial reporting quality and investment efficiency is stronger for firms with poor information environments. Financial reports are just one source of information to investors, and investors are more likely to rely on financial accounting information to infer the economic conditions of the firm’s operations for companies with otherwise weak information environments. I proxy for the information environment using the number of analysts following a firm as an ex-ante measure for the amount of publicly available information about the firm, and bid-ask spreads as an ex-post measure of the information asymmetry between the firm and investors (e. g. , Amihud and Mendelson, 1986; Roulstone, 2003). Consistent with the prediction, the relation between financial reporting quality and investment efficiency is stronger for firms with low analyst following and for firms with high bid-ask spreads. These results suggest that financial reporting quality can affect investment efficiency directly in addition to the link through price informativeness documented in Durnev, Morck, and Yeung (2004). In addition, the findings using analyst following are consistent with Botosan (1997) who finds that greater disclosure is associated with lower cost of capital for firms with low analyst following. Although my results suggest that firms with higher financial reporting qual ity are associated with more efficient investment, one cannot conclude from this paper that increasing financial reporting quality would necessarily translate into higher investor welfare. Enhanced financial reporting may improve investment efficiency by reducing information asymmetry. However, firms must weigh this benefit against the costs (e. g. , proprietary costs) and against alternative ways to reduce information asymmetry such as courting more analysts. Further, it may even be impossible for some firms to increase financial reporting quality given the limitations imposed by GAAP. Nonetheless, this paper contributes to literature on the economic consequences of enhanced financial reporting by showing that financial reporting quality can be associated with more fficient investment. The remainder of the paper proceeds as follows. Section 2 develops the hypotheses and Section 3 describes the measurement of investment efficiency and financial reporting quality. Section 4 presents the results. Section 5 offers some sensitivity analysis and Section 6 concludes. 2. Hypothesis development In this section I first review the determinants of investment efficiency. Then I di scuss how financial reporting quality can affect investment efficiency. Finally, I develop predictions on the relation between financial reporting quality and investment efficiency, and the channels through which this relation is expected to take place. Figure 1 describes these links. 2. 1. Determinants of investment efficiency There exist at least two determinants of investment efficiency. First, a firm needs to raise capital in order to finance its investment opportunities. In a perfect market, all projects with positive net present values should be funded; however, a large literature in finance has shown that firms face financing constraints that limit managers’ ability to finance potential projects (Hubbard, 1998). One conclusion of this literature is that a firm facing financing constraints will pass up positive NPV projects due to large costs of raising capital, resulting in underinvestment (Arrow 1 in Figure 1). Second, even if the firm decides to raise capital, there is no guarantee that the correct investments are implemented. For instance, managers could choose to invest inefficiently by making bad project selections, consuming perquisites, or even by expropriating existing resources. Most of the literature in this area predicts that poor project selection leads the firm to overinvest (Stein, 2003), but there are also a few papers which predict the firm could underinvest (e. g. , Bertrand and Mullainathan, 2003). These links are presented respectively by Arrows 2A and 2B in Figure 1. Information asymmetry can affect the cost of raising funds and project selection. For instance, information asymmetry between the firm and investors (commonly referred as an adverse selection problem) is an important driver of a firm’s cost of raising the capital required to finance its investment opportunities Arrow 3 in Figure 1). Myers and Majluf (1984) develop a model in which information asymmetry between the firm and investors gives rise to firm underinvestment. They show that when managers act in favor 5 of existing shareholders and the firm needs to raise funds to finance an existing positive NPV project, managers may refuse to raise funds at a discounted price even if that means passing up good investment opportunities. Also, information asymmetry can prevent efficient investment because of the differential degree of information between managers and shareholders (commonly referred as a principal-agent conflict). Since managers maximize their personal welfare, they can choose investment opportunities that are not in the best interest of shareholders (Berle and Means, 1932; Jensen and Meckling, 1976). The exact reason why managers inefficiently invest shareholders’ capital varies across different models, but it includes perquisite consumption (Jensen, 1986, 1993), career concerns (Holmstrom, 1999), and preference for a â€Å"quiet life† (Bertrand and Mullainathan, 2003), among others. More importantly, the predicted relation is that agency problems can affect investment efficiency due to poor project selection (Arrow 4A in Figure 1) and can increase the cost of raising funds if investors anticipate that managers could expropriate funded resources (Arrow 4B in Figure 1) (Lambert, Leuz, and Verrecchia, 2005). In sum, the discussion above suggests that information asymmetries between the firm and investors and between the principal and the agent can prevent efficient investment. In the next section, I discuss how financial reporting quality can enhance investment efficiency by mitigating these information asymmetries. . 2. Role of financial reporting Financial reporting quality can be associated with investment efficiency in at least two ways. First, it is commonly argued that financial reporting mitigates adverse selection costs (Arrow 5 in Figure 1) by reducing the information asymmetry between the 6 firm and investors, and among investors (Verrecchia, 2001). For i nstance, Leuz and Verrecchia (2000) find that a commitment to more disclosure reduces such information asymmetries and increases firm liquidity. On the other hand, the existence of information asymmetry between the firm and investors could lead suppliers of capital to discount the stock price and to increase the cost of raising capital because investors would infer that firms raising money is of a bad type (Myers and Majluf, 1984). Thus, if financial reporting quality reduces adverse selection costs, it can improve investment efficiency by reducing the costs of external financing and, as discussed in more detail below, the potential for financial reporting quality to improve investment efficiency is greatest in firms facing financing constraints. Second, a large literature in accounting suggests that financial reporting plays a critical role in mitigating agency problems. For instance, financial accounting information is commonly used as a direct input into compensation contracts (Lambert, 2001) and is an important source of information used by shareholders to monitor managers (Bushman and Smith, 2001). Further, financial accounting information contributes to the monitoring role of stock markets as an important source of firmspecific information (e. g. Holmstrom and Tirole, 1993; Bushman and Indjejikian, 1993; Kanodia and Lee, 1998). Thus, if financial reporting quality reduces agency problems (Arrow 6 in Figure 1), it can then improve investment efficiency by increasing shareholder ability to monitor managers and thus improve project selection and reduce financing costs. 1 2. 3. Predictions For example, Bens and Monahan (2004) find a positive association between AIMR disclosure ratings and the excess value of diversification as defined by Berger and Ofek (1995). They conclude that disclosure plays a monitoring role in mitigating management’s investment decisions. 1 7 Based on the discussion above that financial reporting affects both adverse selection and agency conflicts, I predict an average negative relation between financial reporting quality and both underinvestment and overinvestment. These links complement research in Bushman, Piotroski, and Smith (2005), which studies the relation between country measures of timely loss recognition and the country propensity to liquidate bad projects (i. e. , itigate overinvestment), and in Wang (2003) which explores the relation between capital allocation efficiency and accounting information quality for a sample of US firms, without making a distinction between under- and overinvestment. 2 H1: Financial reporting quality is negatively associated with underinvestment. H2: Financial reporting quality is negatively associated with overinvestment. In addition to investigating the average relatio n between financial reporting quality and investment efficiency, I also investigate the mechanisms through which financial reporting quality can affect investment efficiency using cross-sectional analysis. First, I predict that the relation between financial reporting quality and firm underinvestment is stronger for firms facing financing constraints. By definition, constrained firms are those for which the ability to raise funds is the most likely impediment to efficient investment, and for these firms, financial reporting quality is especially important in mitigating adverse selection costs. H3: The relation between financial reporting quality and underinvestment is stronger for financing constrained firms. 2 One concern with Hypotheses 1 and 2 is that causality goes the other way. For instance, poorly performing managers could be investing inefficiently and thus choose to report low quality financial information in order to hide their bad performance (e. g. , Leuz, Nanda, and Wysocki, 2003). I discuss the empirical tests used to address this alternative hypothesis in Section 4. 8 Second, I predict that the relation between financial reporting quality and firm overinvestment is stronger for firms with large cash balances and free cash flows. Managers of firms with large cash balances and free cash flows have more opportunity to engage in value destroying investment activities (e. g. , Jensen, 1986; Blanchard, Lopezde-Silanes, and Shleifer, 1994; Harford, 1999; Opler et al. , 1999; Richardson, 2006). Consequently, financial reporting quality can play a more important monitoring role in mitigating agency problems for these firms. H4: The relation between financial reporting quality and overinvestment is stronger for firms holding large cash balances and free cash flows. Third, I study the complementary and substitute relation between financial reporting quality and a firm’s information environment, and how it affects investment efficiency. Financial reporting quality is just one source of information about the firm’s operations used by investors. For instance, investors in firms followed by a large number of analysts or firms with informative stock prices may be less dependent on financial reports when other elements of the firm’s information environment are of high quality. Thus I hypothesize that financial reporting quality is more important in improving investment efficiency when the amount of information publicly available about the firm is low. 3 H5: The relation between financial reporting quality and investment efficiency is stronger for firms with relatively poor information environments. 3. Empirical work 3. 1. Proxies for investment efficiency One concern with Hypothesis 5 is that financial reporting quality and the firm’s information environment are likely to be correlated. Indeed, Verdi (2005) shows that the firm information environment can be aggregated in accounting-based and market-based correlated constructs. Hypothesis 5 implicitly assumes away this correlation by investigating the effect of financial reporting quality on investment efficiency holding the market-based information environment constant. 3 9 In order to construct measures of investment efficiency, I first estimate a model that predicts firm investment levels and then use residuals from this model as a proxy for inefficient investment. The data are from the Compustat Annual file during the years 1980 to 2003. Total new Investment in a given firm-year is the sum of capital expenditures (item 128), R&D expenditures (item 46), and acquisitions (item 129) minus sales of PPE (item 107) and depreciation and amortization (item 125) multiplied by 100 and scaled by average total assets (item 6), following Richardson (2006). This measure uses an accounting-based framework to estimate new investment as the difference between total investment and investment required for maintenance of assets in place. In the sensitivity section I also discuss the robustness of the results to the use of only capital expenditures as an alternative proxy for investment that is frequently used in the literature (e. g. , Hubbard, 1998). I estimate a parsimonious model for investment demand as a function of growth opportunities measured by Tobin’s Q (Tobin, 1982). This model is based on the argument that growth opportunities should explain corporate investment when markets are perfect (Hubbard, 1998). Investmenti,t = ? 0 j,t + ? 1 j,t * Qi,t-1 + ? i,t (1) I estimate the model cross-sectionally for all industries with at least 20 observations in a given year based on the Fama and French (1997) 48-industry classification. Q is calculated as the ratio of the market value of total assets (defined as 4 A large finance literature uses investment cash flow sensitivities as a proxy for inefficient investment (or market frictions). I do not use this approach for two reasons: First, traditional papers measure cash flow without making the distinction between cash flows and accruals, and Bushman, Smith, and Zhang (2005) illustrate the sensitivity of the results to the appropriate measurement of operating cash flows. Second, positive investment cash flow sensitivities could mean both financing constraints and/or agency problems which makes it impossible to test the cross-sectional hypotheses of the paper (Hypotheses 3 to 5). 10 otal assets (item 6) plus the product of stock price (item 199) and the number of common shares outstanding (item 199) minus the book value of equity (item 60)) to book value of total assets (item 6) at the start of the fiscal year. The sample consists of 98,675 firm-year observations with available data to estimate Investment and Q during the sample period of 1980 to 2003. Consistent with previous literature, financial firms (i. e. , SIC codes in the 6000 and 6999 range) are excluded becaus e of the different nature of investment for these firms. In order to mitigate the influence of outliers I winsorize all variables at the 1% and 99% levels by year. 5 Table 1 presents the results from the investment model in Equation 1. Panel A offers descriptive statistics for Investment and Q. The mean (median) firm in the sample invests 7. 26% (3. 84%) of total assets per year and has an average (median) Q equal to 1. 90 (1. 32), consistent with related literature (e. g. , Richardson, 2006; Almeida, Campello, and Weisbach, 2004). Panel B presents mean and median values of the estimated industry coefficients on Q, the average R-square, and the number of significant positive coefficients for each year. In all years the mean and median coefficients are positive and relatively stable during the sample period. The mean R-square ranges from 6% in 1997 to 14% in 1991. 6 Finally, in each year, more than half of the industry coefficients on Q are positive and statistically different from zero at a five percent significance level. 7 The model in Equation 1 includes an intercept which imposes that for each industry-year the mean firm will have a zero residual. In untabulated analysis, I re-estimate the model adding the intercept back to the residual so that it allows industry-years to have a non-zero mean (for example, industries that overinvest or periods with large economic growth). The results are robust (in general even stronger) to this test. 6 Note that the reported R-squares measure only the within industry-year variation because the model is estimated separately for each industry-year. An equivalent approach in which the model is estimated across all industry-years with separate intercepts and coefficients for each industry-year leads to an R-square of 23. 5%, suggesting that the overall explanatory power of the model is larger than that reported in Table 1. 7 A current ongoing debate in the finance literature is the implications for measurement error in the estimation of Q (Erickson and Whited, 2000; Gomes, 2001; Alti, 2003). Since the subsequent analysis hinges on the investment model in Equation 1, I perform two sensitivity tests: First, I include past returns in 5 1 I measure investment efficiency using the residuals from the model in Equation 1. Overinvestment is the positive residuals of the investment model and Underinvestment is the negative residuals of the investment model multiplied by negative one, such that both measures are decreasing in investment efficiency. In untabulated analysis, I repeat all tests after excluding firms with the smallest 10% and 20% investment residuals because these firms are more likely to be affected by measurement error in the investment model (i. e. , misclassified as overinvesting or underinvesting firms). The results for these analyses are similar to those reported below. Table 1 – Panel C presents descriptive statistics for Investment Residual, Overinvestment and Underinvestment. By construction, Investment Residual has a mean value of zero; ranging from -64. 46% to 80. 43%. There are 39,107 (59,568) firms classified as overinvesting (underinvesting) firms. The mean (median) value is 9. 73% (5. 63%) for Overinvestment and 6. 39% (4. 71%) for Underinvestment. These results show that the residuals from the investment model are more frequently negative, although in smaller magnitude. Panel D presents Pearson correlations between the measures of investment efficiency and firm characteristics. Investment Residual is uncorrelated with firm size (measured as the log of total assets (item 6) at the start of the fiscal year) and slightly negatively correlated with return volatility (measured as the standard deviation of daily returns during the prior fiscal year). However, when the residuals are separated into Overinvestment and Underinvestment, I find that these variables are negatively correlated with size and positively correlated with return volatility and Q (the magnitude of the he investment model to capture growth opportunities not reflected in Q (Lamont, 2000; Richardson, 2006); and second, I exclude all industry-year observations in which the estimated coefficient on Q is not positive and significant. The subsequent results are not sensitive to these tests. 12 correlations range from 0. 18 to 0. 32). These results suggest either that: (1) small firms, with mor e growth opportunities and volatile operations, have more inefficient investment; or (2) the investment model is a poor fit for these firms. In any case, it highlights the importance to control for these firm characteristics in the subsequent analysis. In order to better understand the properties of the residuals from the investment model I perform analyses testing the persistence of investment efficiency over time. First, I find that 40% (48%) of the firms in the top (bottom) Investment Residual quintile in a given year remain in the top (bottom) quintile in the following year, and 27% (36%) remain three years later (Panel E). In addition, one lag of Investment Residual in an autoregressive model explains 16% of current Investment Residual (untabulated). The inclusion of higher orders of past residuals has a small contribution in explanatory power (R-square of only 18% if five lags are included in the model). These analyses suggest that residuals of the investment model are not random, which seems to support the view that they capture a firm investment characteristic. However, I cannot rule out the explanation that the persistence in the residuals is a function of an omitted correlated variable in the investment model. . 2. Proxies for financial reporting quality The conceptual definition of financial reporting quality used in this paper is the accuracy with which financial reporting conveys information about the firm’s operations, in particular its expected cash flows, in order to inform investors in terms of equity investment decisions. This definition is consistent with the FASB – SFAC No. 1 which states that one objective of financial reporting is to inform present and potential investors 13 in making rational investment decisions and in assessing the expected firm cash flows. I proxy for financial reporting quality using measures of accruals quality derived in prior work (Dechow and Dichev, 2002; McNichols, 2002) based on the idea that accruals are estimates of future cash flows, and earnings will be more representative of future cash flows when there is lower estimation error embedded in the accruals process (McNichols, 2002). 8 I estimate discretionary accruals using the Dechow and Dichev (2002) model augmented by the fundamental variables in the Jones (1991) model as suggested by McNichols (2002). The model is a regression of working capital ccruals on lagged, current, and future cash flows plus the change in revenue and PPE. All variables are scaled by average total assets. Accrualsi,t = ? + ? 1*CashFlowi,t-1 + ? 2*CashFlowi,t + ? 3*CashFlowi,t+1 + ? 4*? Revenuei,t + ? 5*PPEi,t + ? i,t. (2) where Accruals = (? CA – ? Cash) – (? CL – ? STD) – Dep, ? CA = Change in current assets (item 4), ? Cash = Change in cash/cash equival ents (item 1), ? CL = Change in current liabilities (item 5), ? STD = Change in short-term debt (item 34), Dep = Depreciation and amortization expense (item 14), CashFlow = Net income before extraordinary items (item 18) minus Accruals ? Revenue = Change in revenue (item 12), and PPE = Gross property, plant, and equipment (item 7). All variables are deflated by average total assets (item 6). Following Francis et al. (2005), I estimate the model in Equation 2 crosssectionally for each industry with at least 20 observations in a given year based on the Fama and French (1997) 48-industry classification. AccrualsQuality at year t is the 8 I discuss the sensitivity of the results to the use of alternative measures of accruals quality and other attributes of earnings in Section 5. 4 standard deviation of the firm-level residuals from Equation 2 during the years t-5 to t-1, assuring that all explanatory variables are measured before period t for the computation of AccrualsQuality in that year. I multiply AccrualsQuality by negative one so that this variable becomes increasing in financial reporting quality. As discussed in Dechow and Dichev (2002) and McNichols (2002), the estimation of AccrualsQuality captures the absolute variation in the residuals of Equation 2 rather than the variation relative to a benchmark. One concern with this approach is that AccrualsQuality may be capturing some underlying degree of volatility in the business, and the results in Table 1 show that investment efficiency is negatively correlated with firm uncertainty. Thus, I follow the suggestion in McNichols (2002) and create a relative measure of accruals quality. In particular, I measure AccrualsQualityRel as the ratio of the standard deviation of the residuals from Equation 2 during the years t-5 to t-1 to the standard deviation of total accruals during the years t-5 to t-1 multiplied by negative one. This measure captures the relative variance of the estimation errors in accruals compared to the total variance. I show below that this measure is only slightly correlated with firm size and cash flow volatility, mitigating the concern that the proxies for financial reporting quality are associated with investment efficiency because of the spurious effect of firm uncertainty. 4. Results To investigate hypotheses 1 and 2, I first present preliminary analysis on the univariate relation between the measures of investment efficiency and financial reporting quality. Table 2 – Panel A presents descriptive statistics for a smaller sample than reported in Table 1 due to data availability for AccrualsQuality and AccrualsQualityRel. 15 The sample consists of 49,543 firm-year observations and all variables are winsorized at the 1% and 99% levels by year. In this sample, there are 19,473 (30,070) firms classified as overinvesting (underinvesting) firms. The mean (median) value for Overinvestment is 7. 81% (4. 45%) and for Underinvestment is 5. 37% (4. 09%). The magnitudes are smaller than reported in Table 1 because the data required to estimate AccrualsQuality and AccrualsQualityRel bias the sample toward larger firms. Among the financial reporting quality proxies, the mean (median) firm in the sample has an AccrualsQuality of -0. 04 (0. 03) and an AccrualsQualityRel of -0. 74 (-0. 64). Finally, I include descriptive statistics on firm size, cash flow volatility, and Tobin Q because these firm characteristics are shown to be associated with investment efficiency in Table 1. The distribution of Q is slightly changed (as compared to Table 1) to a mean (median) Q of 1. 63 (1. 23) again reflecting the sample bias toward larger firms. Panel B presents Pearson (Spearman) correlations above (below) the main diagonal for the variables in Panel A. By construction, Overinvestment and Underinvestment cannot be correlated because each firm-year observation can only be in one group. Most importantly, Overinvestment is negatively correlated with Acc rualsQuality (Pearson correlation equals -0. 19) and with AccrualsQualityRel (Pearson correlation equals -0. 8); the same is true for Underinvestment (Pearson correlations equal -0. 22 and -0. 10 respectively). These results present preliminary evidence for the relation between financial reporting quality and investment efficiency in hypotheses 1 and 2. Finally, as in Dechow and Dichev (2002), AccrualsQuality is highly correlated In Table 1, I use return volatility instead of cash flow volatility to avoid imposing the five-year data requirement for the estimation of cash flow volatility. However, this data is required to estimate AccrualsQuality and does not impose any sample bias at this stage of the analysis. I use cash flow volatility in the remainder of the paper because AccrualsQuality is highly correlated with cash flow volatility as discussed by Dechow and Dichev (2002). However, the results are not sensitive to this choice. 9 16 with Size (Pearson correlation equals 0. 42) and with CashFlowVol (Pearson correlation equals -0. 66). However, note that AccrualsQualityRel is much less correlated with these variables (correlations of -0. 08 and 0. 04 with size and cash flow volatility respectively), supporting the argument that this variable is uncorrelated with firm uncertainty. 0 Table 3 presents the multiple regressions. The estimated model is a regression of investment efficiency on financial reporting quality, firm characteristics, and industry (based on the Fama and French (1997) 48-industry classification) and year fixed effects. The dependent variable is Underinvestment in the first two columns and Overinvestment in the remaining columns. All standard errors are clustered by firm using the HuberWhite procedure. 11 As predicted in hypothesis 1, Underinvestment is negatively related to AccrualsQuality and AccrualsQualityRel (both coefficients are significant at 1% level). The estimated coefficients are also negative and significant for Overinvestment, supporting the prediction in hypothesis 2. The estimated coefficients suggest that increasing AccrualsQuality (AccrualsQualityRel) by one standard deviation is associated with a reduction on Underinvestment of 0. 21% (0. 11%) and on Overinvestment of 0. 31% (0. 22%). Given that the mean values for Underinvestment and Overinvestment in Table 2 are 5. 73% and 7. 81%, these changes average between 1% and 5%, suggesting that the economic significance of the effect is moderate. One alternative explanation for the results in Table 3 is that causality goes the other way. For instance, suppose that poorly performing managers are more likely to The signs of the correlations between AccrualsQuality and size and cash flow volatility are the opposite of the ones presented in Dechow and Dichev (2002) because I multiply AccrualsQuality by negative one so that this variable is increasing in reporting quality. 11 Petersen (2005) suggests two methods to correct for both cross-sectional and time-series dependence in the data: the Huber-White procedure and adjusted Fama-MacBeth. Since, neither method is perfect, I repeat all subsequent analysis using Fama-MacBeth (1973) estimators adjusting for time-series dependence. The results lead to the same inferences as reported in the text. 10 17 invest inefficiently and also choose to report low quality financial information in order to hide their bad performance (e. g. , Leuz, Nanda, and Wysocki, 2003). Then one could spuriously find a positive association between financial reporting quality and investment efficiency. In order to address this concern, I perform two tests. First, I repeat the analysis using the financial reporting quality proxies lagged by two periods (the variables in the model are already lagged by one period). Second, I explicitly control for past investment efficiency in the model. The intuition behind this test is that if past investment efficiency drives financial reporting quality then there should be no relation between financial reporting quality and future investment efficiency after controlling for past investment efficiency. Table 4 – Panel A presents the results of the two sensitivity analyses when Underinvestment is used as the dependent variable. When AccrualsQuality and AccrualsQualityRel (Columns I and II) are lagged by two periods, the inferences are unchanged. The estimated coefficients are statistically negative at conventional levels. In Columns III and IV, I include past Underinvestment in the model. In this case, the estimated coefficient on AccrualsQuality is still negative and significant, while the coefficient on AccrualsQualityRel is negative but only marginally significant (two-sided p-value of 0. 14). Table 4 – Panel B repeats the analysis for Overinvestment. Again, all the inferences are unchanged since the estimated coefficients on AccrualsQuality and AccrualsQualityRel are statistically negative in all models. Overall, the results in Tables 3 and 4 support hypotheses 1 and 2 that financial reporting quality is negatively associated with both underinvestment and overinvestment, 18 consistent with the argument that financial reporting mitigates both adverse selection and agency costs. 4. 1. Cross-sectional Partitions In this section, I discuss the empirical approach used to test hypotheses 3, 4, and 5. These hypotheses involve cross-sectional predictions about the relation between financial reporting quality and investment efficiency across sub-groups of the sample. Thus, I estimate separate coefficients for these sub-groups as described in the model below: (Investment Inefficiency) i,t = ? 0 + ? 1* Partition i,t-1 + ? 2* ReportingQuality i,t-1 + ? 3* ReportingQuality* Partition i,t-1 + ? 4* Controls i,t-1 ? ? t * Year t + ? ? j * Industry j + ? it. where Investment Inefficiency is either Underinvestment or (3) Overinvestment, ReportingQuality is either AccrualsQuality or AccrualsQualityRel. Partition is coded as an indicator variable based on measures of financing constraints, excess cash, or information environment described below (results are similar if the Partition is used as a continuous or ranked (deciles) variable). The partitioning variables are defined such that a negative coefficient on the interaction term (? 3) implies that the relation between financial reporting quality and inefficient investment is stronger for firms in the subgroup of interest (e. g. , financially constrained firms). As additional analysis, I test the null hypothesis that the sum of the coefficients ? and ? 3 is equal to zero in order to test whether the relation between financial reporting quality and investment efficiency is at least present in the sub-group of interest. 12 12 Hypotheses 3 to 5 are also important in mitigating the concern that an omitted correlated variable could be driving the positive association between financial reporting quality and investment efficiency. For inst ance, if managers choose better (worse) investment projects and report more (less) informative financial accounting information when they know more (less) about growth opportunities and expected cash flows, 9 4. 1. 1. Financing Constraints In this section, I investigate hypothesis 3 which predicts that the relation between financial reporting quality and Underinvestment is stronger for financing constrained firms because these firms are, by definition, limited in their ability to raise funds. I follow the approach in Hubbard (1998) to classify firms into financially constrained and unconstrained categories. In particular, I use five different criteria because of the lack of consensus about which approach provides the best classification (Almeida, Campello, and Weisbach, 2004). First, I classify firms into Payout Constrained if the firm is in the bottom three quartiles in terms of total payout in a given year and unconstrained otherwise. I measure total payout as the sum of dividends and share repurchases deflated by year-end market capitalization using the method described in Boudoukh et al. (2005). Second, I classify firms into Age Constrained if the firm is in the bottom three quartiles of firm age in a given year (and unconstrained otherwise) based on the argument that young firms are more likely to face financing constraints. Age is measured as the difference in years since the first year the firm appears in the CRSP database. Third, I classify firms into Size Constrained if the firm is in the bottom three quartiles of total assets in a given year and unconstrained otherwise. Fourth, I measure Rating Constrained if the firm has long-term debt outstanding (item 9) but does not have public debt rated by S&P (item 280) and unconstrained otherwise. Finally, I construct the KZ Index following the approach in Kaplan and Zingales (1997) and classify a firm as KZ Index Constrained hen a positive relation between financial reporting quality and investment efficiency could just be a reflection of the quality of the manager’s information set and might not be related to financial reporting quality. However, this alternative hypothesis would not predict the relation between financial reporting quality and investment efficiency to be dependent on financing constraints, cash balances, or the existing information environment. Thus, if such interactions exist, then it would strengthen the result that financial reporting quality per se is associated with investment efficiency. 0 if the firm is in the top three quartiles of the KZ Index in a given year and unconstrained otherwise. 13 Untabulated analysis show that the first four classifications are positively correlated (Pearson correlations ranging from 0. 11 to 0. 45) but the KZ Index classification is not correlated with the remaining criteria (Pearson correlations ranging from -0. 01 to 0. 11), consistent with previous research (e. g. , Almeida, Campello, and Weisbach, 2004). 14 Further, all financing constraint proxies are positively correlated with Underinvestment (Pearson correlations range from 0. 1 to 0. 14). Table 5 presents the results related to hypothesis 3. All models include the control variables size, cash flow volatility, Q, and industry and year fixed effects as before but the coefficient estimates on these variables are not t abulated for brevity. The estimated coefficients on the control variables are similar to those reported in Table 3. The results are separated for AccrualsQuality and for AccrualsQualityRel. For AccrualsQuality, the estimated coefficients on the main effect (third column labeled ‘Reporting Quality’) are all egative with only one statistically significant coefficient. These results indicate that, for a sample of unconstrained firms, the relation between AccrualsQuality and Underinvestment is basically not significant. The estimated coefficients on the interaction terms, however, are negative in four out of five cases and significant in two. Further, the F-test rejects the hypothesis of no relation between AccrualsQuality and Underinvestment in almost all cases for the sample of financially constrained firms. The only exception is 3 The KZ Index is calculated using the following formula: KZ Index = -1. 002 * CashFlow + 0. 283 * Q + 3. 139 * Leverage – 39. 368 * Divi dends – 1. 315 * Cash. For more details see Almeida, Campello, and Weisbach (2004, p. 1790). 14 Principal component analysis on the five financing constraints proxies yields two factors. The first factor explains 40% of the variation and loads on all proxies but the KZ Index. The second factor explains another 20% of the variation in the data and loads on the Payout and the KZ Index measures. 1 when the KZ Index is used as the criteria for financing constraint classification. 15 When AccrualsQualityRel is used as the financial reporting quality proxy, the results are largely the same. In terms of economic significance, increasing AccrualsQuality (AccrualsQualityRel) by one standard deviation is associated with a reduction in Underinvestment of 0. 26% (0. 16%) for firms classified as Rating Constrained and 0. 08% (0. 06%) for unconstrained firms (compared to 0. 21% (0. 11%) for the full sample as discussed above). Overall, the results present marginal support for hypothesis 3 that the relation between financial reporting quality and Underinvestment is stronger for financing constrained firms. 4. 1. 2. Cash Balances In this section, I investigate hypothesis 4 which predicts that the relation between financial reporting quality and Overinvestment is stronger for firms with large cash balances and free cash flows because these firms are more likely to overspend existing resources (Jensen, 1986). I use two criteria to classify firms based on cash holdings and one proxy for free cash flow. First, I create an indicator variable, High Cash, coded as ‘1’ if the firm is above the median in the distribution of cash balances deflated by total assets in a given year and ‘0’ otherwise. Second, I follow the approach in Opler et al. (1999) who predict cash balances as a function of firms’ characteristics, and use residuals from this model as a proxy for excess cash. Opler et al. show that firms hold more cash in the presence of growth opportunities and firm uncertainty, and less cash when they are forced to payout interest obligations and have more access to financing (proxied by leverage and size). Thus, I estimate annual regressions of cash balances (item 1) deflated by total 15 The inconsistent result using the KZ Index is consistent with prior work in the finance literature (e. g. , Almeida, Campello, and Weisbach, 2004; Almeida and Campello, 2005) which finds opposite results when this variable is used as a proxy for financing constraints. 22 assets (item 6) on firm size, leverage, Q, and cash flow volatility. Leverage is measured as the sum of the book value of short term (item 34) and long term debt (item 9) deflated by the book value of equity (item 60) and the remaining variables are the same as described above. The explanatory power of the models ranges from 16% in 1986 to 42% in 2003. I create an indicator variable, Excess Cash, coded as ‘1’ if the firm has a positive residual from the model predicting cash balances, and ‘0’ otherwise. Finally, following Richardson (2006), Free Cash Flow is equal to cash flow from operations plus R&D expenses minus depreciation and the predicted investment for the firm as estimated in Table 1. Free Cash Flow is recoded as an indicator variable coded as ‘1’ if the computation of free cash flow is positive and ‘0’ otherwise. Table 6 presents the results related to hypothesis 4. As before, all models include the control variables size, cash flow volatility, Q, and industry and year fixed effects (estimates not tabulated). The first set of results presents estimated coefficients for AccrualsQuality and the second reports coefficients for AccrualsQualityRel. The results show that the estimated coefficients on the main effect of financial reporting quality are negative but not significant in all six models (three models for AccrualsQuality and three for AccrualsQualityRel). The estimated coefficients on the interaction term, on the other hand, are negative in all cases and significant in three out of six cases, and the F-test rejects the hypothesis of no relation in all cases. In terms of economic significance, increasing AccrualsQuality (AccrualsQualityRel) by one standard deviation is associated with a reduction on Overinvestment of 0. 41% (0. 35%) for firms classified as High Cash and 0. 06% (0. 06%) for firms with low cash (compared to 0. 31% (0. 22%) for the full sample as discussed above). Overall, the results support hypothesis 4 by showing that the 23 relation between financial reporting quality and Overinvestment is stronger for firms with large and excessive cash balances but the results are not statistically significant for firms generating free cash flows. This support the hypothesis that financial reporting quality reduces firm overinvestment by lowering shareholder’s cost of monitoring managers and thus limiting managers’ ability to undertake inefficient investment projects. 4. 1. 3. Information Environment In this section, I investigate hypothesis 5 which predicts that the relation between financial reporting quality and investment efficiency is stronger for firms with poor information environments because investors of these firms are more likely to rely on financial accounting information to infer the economic conditions of the firm’s operations. I use two proxies for the firm information environment: the number of analysts following the firm and the bid-ask spread. I use the number of analysts following a firm as a proxy for the amount of publicly available information about the firm. Analysts are an important source of information for investors; they issue forecasts, reports about individual companies, and stock recommendations. Roulstone (2003) examines the role of analysts in improving market liquidity and finds that analysts provide public information that reduces information asymmetries between firms and market participants. I collect data on analyst following from IBES and measure the number of analysts following the firm as the maximum number of analysts forecasting annual earnings for a firm during the fiscal year t. If the firm is not followed by IBES I assume that the number of analysts following the firm is zero. I consider a firm as Low Analyst if the firm is in the bottom three quartiles in a given year (coded as ‘1’ and ‘0’ otherwise). 24 The second proxy for a firm’s information environment is the bid-ask spread. See Amihud and Mendelson (1986) and Roulstone (2003) among others for discussions of spreads as a proxy for the information asymmetry between the firm and investors. I collect intraday trade data to compute bid-ask spread from the Trades and Quotes database (TAQ) and from the Institute for the Study of Security Markets database (ISSM). The TAQ database includes trades and quotes starting in 1993, and the ISSM database contains intraday data for NYSE/AMEX firms from 1983 to 1992 and for NASDAQ firms from 1987 to 1992. I measure quoted bid-ask spread as the ask price minus the bid price divided by the average of the bid and ask prices. The bid-ask spread is averaged across all transactions during the day for each firm, then daily mean bid-ask spreads are averaged during the month t. Finally I compute bid-ask spread as the average of the monthly bid-ask spreads during the fiscal year t. I consider a firm as High Spread if the firm is in the top three quartiles in a given year (coded as ‘1’ and ‘0’ otherwise). Table 7 presents the results related to hypothesis 5. As before, all models include the control variables (estimates are untabulated). The table is divided into Underinvestment and Overinvestment results. The first set of results presents estimated coefficients for AccrualsQuality and the second reports coefficients for AccrualsQualityRel. When bid-ask spread is used as the partitioning variable, I find that none of the coefficients on the main effect of financial reporting quality are significant, and three out of four coefficients on the interaction term are significant. The only exception is the coefficient on the interaction between High Spread and AccrualsQualityRel for Underinvestment. Further, in three out of four cases the F-test rejects the hypothesis of no effect of financial reporting quality on investment efficiency 25 for the sample of firms with High Spread. As for Low Analyst, the results on the estimated coefficients on the interaction terms are weaker; only one coefficient is statistically negative. Still, in three out of four models the F-test rejects the hypothesis of no relation for the sample of firms with Low Analyst. Overall, the results provide weak support for the hypothesis that the effect of financial reporting on investment efficiency is more important when the firm information environment is of low quality. 16 5. Sensitivity Analysis In this section I discuss some robustness tests to the analysis presented in the paper. First, I study the sensitivity of the results to inclusion of omitted control variables using firm fixed-effect estimation. The advantage of this approach is that it controls for all time-invariant unobservable firm characteristics. However, since the estimation of AccrualsQuality and AccrualsQualityRel is done using five years of data, the within-firm variation is small, which makes the fixed-effect estimation very conservative. The analysis is done for all firms with at least five, ten, or fifteen years of data in order to increase the within firm variation (sample sizes of 43,739, 33,454, and 24,420 firm-year observations respectively). Untabulated analyses show that the results in Hypotheses 1 and 4 are mostly robust to the firm fixed-effect estimation. Results of Hypotheses 2 and 3 are weaker (coefficients are of the same sign but in most cases not significant at conventional levels) and, in the case of Hypothesis 5, the results are similar (weaker) when Underinvestment (Overinvestment) is used as the dependent variable. I also performed tests using a 2Ãâ€"2 classification based on the firm’s financial reporting quality and information environment (sorted independently as a low/high). Either high financial reporting quality or high information environment is sufficient to mitigate Underinvestment but only financial reporting quality is sufficient to mitigate Overinvestment, suggesting a substitute relation between financial reporting quality and the firm information environment in improving investment efficiency. 16 26 Second, I investigate the sensitivity of the results to the use of alternative measures of accruals quality such as the non-linear discretionary accruals model in Ball and Shivakumar (2005) and the accrual quality measures developed by Wysocki (2006). The key innovation in Wysocki’s (2006) measures is to remove the smoothness effect of accruals in the Dechow and Dichev (2002) model. Results using the Ball and Shivakumar (2005) model are very similar to those reported on the paper. The use of Wysocki’s measure, on the other hand, leads to similar results for hypotheses 1, 2, and 5 but insignificant results for hypotheses 3 and 4. As discussed in more detail below, these results are not surprising given that Wysocki’s (2006) measure excludes the smoothness component of accruals, and smoothness is positively associated with investment efficiency. In addition, I investigate the sensitivity of the results to the use of alternative attributes of earnings as proxies for financial reporting quality. Accruals quality represents one dimension of financial reporting quality but other dimensions of earnings have also been used as a proxy for financial reporting quality (Francis et al. , 2004). These attributes of earnings would not necessarily affect investment efficiency in the same way. For instance, one could argue Timeliness and Conservatism are more important in conveying information about bad firm’s economic states, thus improving Overinvestment but may not be associated with Underinvestment. Nevertheless, it is useful to see how these measures are related and the respective association with investment efficiency (Verdi, 2005). Francis et al. (2004) identify six earnings attributes (other than AccrualsQuality) previously used in accounting research to characterize desirable features of earnings. The six attributes are: Persistence, Predictability, Smoothness, 27 ValueRelevance, Timeliness, and Conservatism. I also include a measure of price informativeness as used by Durnev, Morck, and Yeung (2004). When Underinvestment is used as the dependent variable (Hypotheses 1 and 3), I find consistent results using Persistence, Predictability, and Smoothness but insignificant results for the remaining variables (with the exception of Informativeness in which the relation is positive and significant, against the prediction). The analysis using Overinvestment (Hypotheses 2 and 4) yield weaker results since only the estimated coefficients on Smoothness and Informativeness are negative and significant in the expected direction. The remaining coefficients are either insignificantly negative or positive in the case of Persistence. Overall the results provide marginal support for the relation between other dimensions of earnings and Underinvestment, and weak support for Overinvestment. The finding that Smoothness is negatively associated with both Underinvestment and Overinvestment explains the weaker results using Wysocki’s measure of accruals quality given that this measure excludes the smoothness component in the accruals quality measure developed by Dechow and Dichev (2002). In the third sensitivity test, I repeat the analysis using capital expenditures (deflated by average total assets) as a measure of investment in order to make the results more comparable with the extant finance literature. In addition, the investment measure used in the paper includes only cash acquisitions and ignores stock acquisitions which constitute the majority of M&A transactions. Untabulated analyses using CAPEX show that the results in Hypothesis 1, 3, and 5 are similar to those reported. Results in Hypothesis 2 are consistent but weaker when AccrualsQuality is used as the proxy for 28 inancial reporting quality. Finally, results are inconsistent with Hypothesis 4 (estimated coefficients on the interaction terms are mostly insignificant). Finally, I include goodwill (item 204) in the discretionary accruals model. As discussed in Jones (1991), PPE is included in the model to capture the normal level of depreciation, and using the same logic, goodwill would capture the normal level of amortization in accruals. This inclusion is justified because the measure of investment includes acquisitions. Goodwill is only available from Compustat starting in 1988 which is why it is excluded in the main tests. In untabulated analysis I find little impact on the discretionary accruals model (the Pearson correlation between discretionary accruals including and excluding goodwill is 0. 99), and the results presented in the paper are unchanged if I restrict the sample to post 1988 and include goodwill in the discretionary accruals model. 6. Summary and conclusion Despite recent claims that financial reporting quality can have economic implications for investment efficiency, there is little evidence on this relation empirically. This paper studies the relation between financial reporting quality and investment efficiency. The analysis is done on a sample of 49,543 firm-year observations during the sample period of 1980 to 2003. I find that proxies for financial reporting quality, namely measures of accruals quality, are negatively associated with both firm underinvestment and overinvestment. The relation between financial reporting quality and underinvestment is stronger for firms facing financing constraints, consistent with the argument that financial accounting information can reduce the information asymmetry between the firm and investors, and 29 thus lower the firm’s cost of raising funds. Likewise, the relation between financial reporting quality and overinvestment is stronger for firms with large cash balances, which suggests that financial reporting quality can reduce the information asymmetry between the principal and the agent and thus lower shareholders’ cost of monitoring managers and improving project selection. Finally, I find that the relation between financial reporting quality and investment efficiency is stronger for firms with low quality information environments. Overall, this paper contributes to the extant accounting literature that investigates the economic implications of enhanced financial reporting. 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