Wednesday, July 31, 2019

National security Essay

After the occurrence of the terrorist attacks on September 11, 2001, President George W. Bush signed a law, the PATRIOT Act. The PATRIOT Act made it easier for the law enforcement officials to use certain techniques such as wiretapping and other surveillance technologies to aid in the war against terrorism. The reason why this topic needs to be addressed is located in the following quote: â€Å"The probability that people are terrorists given that NSA’s system of surveillance identifies them as terrorists is only p=0.2308, which is far from one and well below flipping a coin. NSA’s [National Security Agency’s] domestic monitoring of everyone’s email and phone calls is useless for finding terrorists†(Rudmin, Alston P29). Many people argue that the government has gone too far with allowing violations of the Bill of Rights in the name of protecting the country from terrorists. Although some people argue that the government should use all means to fight against terrorism, the government should not be engaged in the surveillance of their citizens in the interests of national security because people expect privacy in their communications, travel and personal records and activities. Some people argue that the government should use all means to fight against terrorism. Alexander Hamilton, one of our nation’s founding fathers, believed that the government needed to have a free hand in protecting the people. â€Å"The power to protect the nation ought to exist without limitation, it is impossible to foresee or define the extend and variety of national exigencies, or the correspondent extent and variety of the means which may be necessary to satisfy them† (Yoo P7). Hamilton believed that the presidents power to protect the nation as commander in chief should not be limited. Many people and even parts of the government have adopted a slogan meant to ease worries over surveillance. â€Å"If you’ve got nothing to hide, you’ve got nothing to fear† (Solove P4). The intent of this is that you should not be afraid of the government examining every aspect of your life if you have done nothing wrong in the first place. The arguments present ed to support unlimited government powers of surveillance lend themselves to the end justifying any means. Many believe the best way to fight terrorism is to monitor everything passing through communications channels regardless of the source or destination. â€Å"The best way to find an al Qaeda operative is to look at all email, text and phone traffic between Afghanistan and Pakistan and the U.S. This might involve the filtering of innocent traffic, just as roadblocks and airport screenings do† (Yoo P5). In 2008, The United States Senate determined to do just that. The Protect America Act (PAA) expanded upon the FISA Act of 1978 (Federal Intelligence Surveillance Act) to allow more flexibility in monitoring internal communication for intelligence purposes. The Protect America Act substantially changes the intent and protections included in the original FISA Act. â€Å"The FISA Act was originally passed to prevent abuse, not allow for more of it†¦ conclusion that the Protect America Act is intended to reduce the ability of the original FISA legislation to preclude abuse† (Alston P35). The PAA allows for monitoring of communications without judicial warrant within the United States. The PAA also allows government agencies to compel telecommunications companies to provide access and information while at the same time protecting them from prosecution for violating privacy laws. â€Å"Failure to obey an order of the FISA Court may be punished as a contempt of court† (Alston P11). â€Å"The Act compels an action and simultaneously removes all responsibility for that action† (Alston P13). The FISA Court is not a judicial court, and meets in secrecy. Communications within the United States can now be monitored at the direction of a secret court without oversight from judicial courts and without recourse from those being monitored. Since the government wanted to inhibit the ability of terrorists to attack using commercial aircraft, the Transportation Safety Administration (TSA) added new airport security measures. The terrorist attacks resulted in many cases of racial and ethnic profiling. The victims of these accusations were mostly of a Middle Eastern descent. These people were subject to searches and interrogations, often without probable cause (ProQuest P1). In order to avoid claims of profiling, airport security checks include whole-body imagers, full pat-downs, and other screening measures for all travelers. Some of these measures violate the right to be secure in our person, while not necessarily improving safety. â€Å"Yet screeners routinely fail to discern the guns, knives, and other contraband their monitors show†¦ the distractions of whole-body imaging are considerably greater than anything in the average carry-on† (Akers P3). These new security measures do not inherently make our transportation more secure, and the distractions caused by some may actually make them less secure. In addition, these systems themselves may not be secure or exactly what they are represented to be. â€Å"The TSA has long denied that its gadgets retain the pictures they snap of us†¦ ‘have zero storage capability’, so the images cannot be stored transmitted or printed†¦Ã¢â‚¬  (Kudwa). â€Å"We know from the website of one of the vendors that these machines can indeed store images† (Rotenberg). Indeed, images from these systems were subsequently published on the Internet, leading many to question the honesty of the TSA representatives and their vendors. While the government does indeed need to be able to protect the nation, they should do so without violating constitutional rights. Amendment 4 of the Constitution provides that, â€Å"The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, an no warrants issued, but upon probable cause, supported by oath or affirmation, and particularly describing the place to be searched, and the persons or things to be s eized† (US Constitution, A4). This basic guaranteed right is violated by intelligence monitoring of personal communications of citizens within the United States borders without a warrant. The PATRIOT Act also allows for search and seizure of private records without a judicial warrant under specific rules. â€Å"An FBI agent came to my office and handed me a letter. It demanded that I turn over information about one of my clients and forbade me from telling ‘any person’ that the government had approached me†¦ National security letters are issued by the FBI, not a judge, to obtain information† (Merrill P1-2). â€Å"This information is especially important since internal Justice Department investigations have found widespread violations of NSL rules by the FBI† (Merrill P7). This statement reveals that governmental agencies are pursuing private, protected information without obtaining a judicial warrant, hiding their actions behind gag orders with threats of imprisonment, and violatin g PATRIOT Act provisions for National Security Letters. The books Matched and Crossed, by Ally Condie, in many ways mirror what is happening in our country today with the use of surveillance of citizens by government. In the books, all personal communication, spoken or written, is monitored by Officials. These Officials are responsible for monitoring the morals and directing the future of their society. These Officials are similar to the many government agencies using surveillance to monitor the daily lives of citizens for â€Å"counter-terrorist† purposes. Every facet of daily life is monitored by the Officials and perceived wrongdoing subjects a citizen to social status change and removal from society. In America today, anyone can be searched without probable cause, and to be even suspected as a terrorist or sympathizer can result in imprisonment. In an even greater invasion of privacy, the Officials in the books monitor the very dreams of their citizens. We can only hope medical technology does not grant this capability to our government. Although some people argue that the government should fight terrorism with all methods, the government should not be violating the Bill of Rights. Government agencies, mostly working in secret and immune from warrants and judicial review, have been granted the ability to violate rights of citizens guaranteed by the Constitution in order to ensure our safety. â€Å"Those who would give up Essential Liberty to purchase a little Temporary Safety, deserve neither Liberty nor Safety† (Benjamin Franklin). United States citizens do not need to relinquish our freedom or rights for safety against terrorists. â€Å"Perhaps the best way to ensure that the act remains faithful to fundamental American values is to insist on greater transparency and oversight† (Sales P17). The government should work to protect us from terrorists and other threats, but can do so without violating the rights of citizens granted by the Constitution. Works Cited Akers, Becky. â€Å"Whole-Body Imaging: Intrusion Without Security.† Freeman Vol. 60, No. 4 May 2010: n. pag. SIRS Issues Researcher. Web. 5 Dec. 2011. . Condie, Ally. Crossed. New York: Dutton Books, 2011. Print. – – -. Matched. New York: Dutton Books, 2010. Print. Merrill, Nicholas. â€Å"The Patriot Act’s War on Free Speech.† Washington Post 26 Oct. 2011: A. 19. SIRS Issues Researcher. Web. 5 Dec. 2011. ProQuest Staff. â€Å"At Issue: National Security and Privacy.† ProQuest LLC. SIRS Issues Researcher, 2011. Web. 5 Dec. 2011. . Sales, Nathan A. â€Å"The Patriot Act Isn’t Broken.† Christian Science Monitor 6 Mar. 2009: n. pag. SIRS Issues Researcher. Web. 5 Dec. 2011. . Solove, Daniel J. â€Å"Why Privasy Metter Even if You Have ‘Nothing to Hide.’† Chronicle of Higher Education 15 May 2011: n. pag. SIRS Issues Researcher. Web. 5 Dec. 2011. Yoo, John. â€Å"Why We Endorsed Warrantless Wiretraps.† Wall Street Journal 16 July 2009: A. 13. SIRS Issues Researcher. Web. 5 Dec. 2011. .

Tuesday, July 30, 2019

Love after all Essay

In William Shakespeare’s â€Å"Hamlet†, Ophelia, the daughter of the King’s councilor is not allowed to love prince Hamlet. Princes are not free to marry ladies of the court and both Ophelia’s brother and father would not allow her to love him. She followed her father’s instruction and did not pursue a relationship with Hamlet. Ophelia must not love Hamlet, and she shows no obvious affection toward him, therefore she does not love him. Contrary to these facts, when the text is analyzed, there are strands of evidence that suggest that she does love Hamlet and is tortures by her inability to express these feelings. In Act 1 Scene 3, Laertes advises his sister on the subject of Hamlet to â€Å"Think it no more†. Hamlet cannot love Ophelia because, as Laertes knows â€Å"His greatness weigh’d, his will is not his own; For he himself is subject to his birth: / He may not, as unvalued persons do, Carve for himself; for on his choice depends The safety and health of this whole state†. Hamlet cannot be involved with Ophelia due to his position. On a more personal level of advice, Laertes had advised â€Å"Fear it, Ophelia, fear it, my dear sister, And keep you in the rear of your affection†. Her father also advised her to stay away from him. He instructed â€Å"Do not believe his vows; for they are brokers, Not of that dye which their investments show. I would not, in plain terms, from this time forth, Have you so slander any moment leisure, As to give words or talk with the Lord Hamlet†. Having been instructed all her life to obey her father, Ophelia will follow his advice for the rest of her life, ignoring Hamlet’s love and returning his letters. She was very passive, and just follower her father’s commands. It would seem at this point as if Ophelia is ready to give up any chance for love with Hamlet. Earlier in the play it had been unclear if there had been a relationship between them. When the King and Polonius are eavesdropping on Hamlet and Ophelia, she had some â€Å"remembrances† of his that she had wanted to give him back. The remembrances would mean that there was a past between them in which they had exchanged tokens. In his so-called â€Å"insane† state, Hamlet denied ever giving her the tokens. Had they been unimportant to her, she would not have reacted as she did. She tells him that he knows he sent them â€Å"And, with them, words of so sweet breath composed As made the things more rich. † It would appear as if she truly wants him to remember the tokens of the times that they had. She described the letters as if she had loved getting them, as if she thought they were sweet. As he starts to rave and say cruel things, such as that he did not love her, she cried out for the sweet heavenly powers to save and restore him. Although he was insane and she was not supposed to love him, a very short period of time reveals that she cherishes their past and wishes for him to return to his previous state. As Ophelia wondered to herself after he left about â€Å"what a noble mind is here o’erthrown†, we see how she thinks highly of him and she regrets what has befallen him. After Polonius is killed by Hamlet, Ophelia begins to act insane, singing and dancing. Her songs may seem like nonsense or just random ravings, but upon close inspection, there are messages in her words. When she started singing â€Å"To-morrow is Saint Valentine’s day, All in the morning betime, And I a maid at your window, To be your Valentine. Then up he rose, and donn’d his clothes, And dupp’d the chamber-door; Let in the maid, that out a maid. Never departed more. † Valentines is the day of love, she was at the window, hoping to be â€Å"his† valentine. In the morning, the door that let a maid in would never let out a maid again. There are a few interpretations of this. She is a maid, or a love, that will not leave his heart. She could be stuck in his heart, seeing as the maids never departed again. She is singing about love and a man opening a door on Valentine’s Day. Any underlying messages in her songs are all similar. One is about true love, one is about a death, and another one contains a section that goes â€Å"before you tumbled me, You promised me to wed. † All of these songs support that Ophelia is deeply in love with Hamlet. Whether or not he actually promised to marry her, she brought it up, perhaps from a previous experience with him, perhaps from subconscious desire. Whether or not she is insane, she is expressing emotions about love, being trapped in love, the death of a love, and a promise of love. The conclusion that she must love him can be drawn. Her admiration, her caring for him, and her sweet words about his tokens are not those of someone who has no feelings for him. She is confused because of the contrast between her feelings and her family’s instructions. Having been taught to follow her orders, she is acting as if Hamlet means nothing to her. When paying close attention to her, we can find many indications that there was love and still is. After her father was killed, she was singing more about love than about things that could relate to her father. Rather than see how she is not allowed to love him and does not show any love, how she feels is easily visible through her words and actions. She did love Hamlet before she committed suicide, it was just forbidden, which did not stop it from leaking out.

Monday, July 29, 2019

Abortion Clinics Should Not be Closed in the U.S.

In 1973, the Supreme Court’s decision made it possible for women to get safe, legal abortions from well-trained medical surgeons, and therefore led to dramatic decreases in pregnancy-related injury and death (abortion). Now there is a new proposal to close abortion clinics. This proposal takes away the privacy rights of American women that are guaranteed by our Constitution. By closing abortion clinics the government is not only taking away women’s rights, but is also punishing those whom want to exercise their right of a pro-choice woman. Plagiarism Detection >Abortion clinics allow thousands of women every year to have abortions. Having the abortion should be woman’s personal choice. By closing these clinics, there will be no providers to perform the operation, so the choice has already been made for them. Closing the clinics will increase the barriers of having an abortion. When there are too many obstacles, the right to make their own choice is taken away fro m them. In 1973 the American Supreme Court ruled that Americans’ right to privacy included: the right of a woman to decide whether to have children, and the right of a woman and her doctor to make that decision without state interference (abortion). The Constitution says we have a right to privacy, so taking away a woman’s chance to make decisions about her own body violates that right.The American Civil Liberties Union defends the Constitution and peoples’ rights.ACLU has protected the rights of abortion for women, and in recent years has argued mayor cases opposing restrictions that deny woman access to reproductive health care (ACLU). Policy 263 states: The ACLU holds that every woman, as a matter of her right to the enjoyment of life, liberty, and privacy, should be free to determine whether and when to bear children.(The American Civil Liberties Union)The closure of abortion clinics will be done with the purpose to reduce the number of abortions. This raise s the question whether this will be an effective method or not. Before 1973 abortions were illegal yet the number of women who sought abortions did not decrease (abortion). Before 1973 many thousands of women died or suffered serious medical problems after attempting to perform their own abortions, or going to untrained doctors who performed cheap abortions with uncivilized methods or in unsanitary conditions (The Abortion Law Homepage.). If clinics are closed, women will still continue to attempt, and succeed, in ending unwanted pregnancies just like before 1973. Women will risk their health and possibly even their lives. By keeping these abortions clinics open it ensures a higher probability that the women who do have abortions will be in a safe, sanitary environment, and therefore injuries will be fewer in number.If clinics are shut, the waiting lists of abortion clinics in other countries will be much longer. Women will have to wait longer to get an abortion, and will be treated later in their pregnancy which is much more dangerous for the pregnant women.Pro-life activists claim that the unborn baby is alive and has feelings when the heart begins beating. But, the heartbeat begins between the eighteenth and twenty-fifth day (Fetus). They also say that women who have abortions are murderers. This problem could be solved by keeping abortion clinics open, because then the woman can be treated before the twenty fifth day when the fetus is not yet a living baby. She will not have to wait because of long waiting lists, but instead will have the abortion as soon as possible with as less psychological pain.If a woman has to travel to another country to have a legal abortion, she will have to pay more money. She will now not only have to pay for the abortion itself, but also the traveling costs and that does not include the psychological costs as well. Not all people can afford these costs. So by keeping clinics open more women will have the chance to exercise thei r right and have their desired abortion. If a working woman or student suddenly has to leave the country, this means she will have to think of excuses and lies for an explanation. This is not fair to the woman, she should not have to explain herself to anyone, it is her body and therefore she can do what she wants, she does not need other people’s consult.Abortion clinics are not a butcher’s place where young babies are murdered. They provide a choice for women whether or not to bring a child into this world.What is worse: taking away the life of an unborn child that is not even aware of life itself yet, or a mother bringing an unwanted child into this world, knowing that she will not be able to take care of it, and that her child will have to suffer from the poor circumstances in which she lives. As of now the woman has the ability to make that choice and save the child from poor, possibly abusive or hate filled environment. Personally I feel that living in a circumst ance such as abuse is worse than the abortion of the fetus. Rape victims should also be able to have an abortion because they know that if they were to keep the child, they would cringe when she thought about whom contributed to the other half of the child. The offspring will be a painful reminder to the rape victim. She did not choose to take the responsibility of a child and therefore should not have to pay the consequences. A woman who cannot love her child has no right to have a baby in the first place.One option for women who are not able to take care of their baby is adoption. Yet she will have to carry the baby for nine months and then give it up. Not all women are able to do this physically or psychologically. After the pregnancy she will have to hope that their baby will find a good and loving home. And this is not always the case. The child will possibly have to suffer from living in orphanages waiting to get adopted. Adoption can not always be seen as a good solution to u nwanted pregnancies.The advantage of closing abortion clinics could be that woman will be forced to take the responsibility over their baby, and give their unborn child the right to life. But it can not be seen as something entirely positive. The mother will always regard the child as a mistake and will never love it the way she would have if she had wanted to keep the child. Getting an abortion does not always mean that the woman is only thinking of herself, she also thinks on behalf of her baby. Abortion clinics do not make the choice easier, nor do they force the woman into the surgery. People who are against abortion having the choice not to have one. It is not fair to take away the choice of people who do want one.List of works consulted: Â  Abortion. Encarta Encyclopedia 1999. 1999 ed.ACLU. Encarta Encyclopedia 1999. 1999 ed.Fetus. Encarta Encyclopedia 1999. 1999 ed. Plagiarism Detection >The Abortion Law Homepage. Abortion Law Homepage. 24 November 1996. (11 March 2000). htt p://members.aol.com/abtrbng/index.htmThe American Civil Liberties Union. Abortion Clinic Access Law. 1997. (11 March 2000). http://www.aclu.org/library/aaabort.html

Sunday, July 28, 2019

Supreme Court Week 6 #12 Essay Example | Topics and Well Written Essays - 250 words

Supreme Court Week 6 #12 - Essay Example If precedence has been established, the Court is unlikely to change precedence. This is not to say that this never happens. Precedence is sometimes overturned as the make-up of the court changes and the interpretation of the Constitution changes over the years. The next idea is that of the judicial conference. This is an even t when all of the Federal justices get together and talk about things. The conference was established in 1922 and is made up of the Chief Justices of the Supreme Court and a justice from each of the circuit courts. The purpose of this conference is to establish rules that Federal justices are to follow. The rules are largely procedural, but they can affect which cases the Supreme Court hears. A final way to filter cases is by looking back at the published opinions of Supreme Court justices and other federal judges. An opinion gives insight into why a judge ruled the way she did. This can be used to justify bringing a case to the Supreme Court if the opinion shows the ruling to be very narrow or biased in some

Effective Working Teams Essay Example | Topics and Well Written Essays - 250 words - 2

Effective Working Teams - Essay Example Brilliance in communication is an ingredient in influencing others as one stands a better chance to present and defend their line of thought, hence convincing others to adopt it as a superior option to theirs. On the same note, persons willing to assume any responsibility and with the ability to make decisions and solve problems more aggressively do dominate others in working teams. Such persons do embrace more leadership roles compared to those who do not possess the skills. Therefore, personal skills are critical in influencing others effectively in teamwork roles. In an organization, for any group to qualify as a team, there are certain basic qualifications required. Plunkett, Allen, and Attner explain the most important qualification for the development of a common objective for such a group to qualify as a team. Despite the roles of each member of the team, all team players have to work towards a common, shared goal, which is the common objective. Secondly, there has to be regular interaction and coordination between members of the group for it to qualify as a team. Therefore, an effective team has to have all its members sharing and committed to a common goal. Furthermore, there has to be deeply rooted trust among members, with each member enjoying the freedom of expression in addition to participating in any role played by the team. Importantly, in teamwork, major decisions have to be made through consensus after evaluating the presented opinions. Problems in effective teams have to be solved based on their causes to develop lasting soluti ons.

Saturday, July 27, 2019

Mergers and Acquisitions as a Strategic Mean of Creating Value and Essay

Mergers and Acquisitions as a Strategic Mean of Creating Value and Maximizing Shareholder Wealth - Essay Example An Overview of Mergers and Acquisitions DePamphilis (2008 pp-04-06) defined mergers and acquisitions as a part of corporate and management strategies dealing with the buying, selling and combining of different organsiations having similar business activities or activities that can support the present and future growth and development in a systematic manner. Over the years, the distinction between mergers and acquisitions has become quite blurred in respect to economic outcomes but continues to attract organisations (Cartwright, Schoenberg, (2006 pp. 11-14). Studies have shown that 50% of acquisitions have been unsuccessful considering the complex process and different dimensions associated with the actual outcomes (Straub, 2007). Lazonick, O'Sullivan, (2008 pp-24-27) stated that the rationale behind mergers and acquisitions is based on the thought that two companies together can be more valuable and robust compared to two different companies. Moreover, mergers and acquisitions help i n attaining cost efficiency by sharing operational and functional costs along with thriving to achieve greater market share and efficiency in a planned way (Harwood, 2006 pp- 24-35) Relevant Theories Mergers and acquisitions can be linked with various relevant theories. ... behave and operate in a manner that leads to the creation of an identity that helps in the growth and development (Postmes, Branscombe, 2010 pp- 11-23). Mergers and acquisitions help in creating new identity for smaller organisations while helping in revamping the identity of large organsiations (Akerlof, Kranton.2010 pp- 04-11) Role Conflict Theory is based on the perception that individuals and organsiations experience role conflict by finding themselves pulled in various directions as per the status held by them (Tang, Chang, 2010 pp-13-21). Hitt, et al, (2009 pp-12-23) stated that mergers and acquisitions help in creating synergies between organisations that in turn help in enhancing the worth and value of organsiations. However, Straub (2007 pp-03-11) stated that value creation and wealth maximisation is dependent on the nature and relationships of organsiations. It can be said that both views are directed towards a positive relationship creating synergy and wealth maximisation but dependent on internal and external factors. Value destroying theory states that mergers and acquisitions fail because firms fail to address informational constraints and focus too much on private utility function that affects the overall value creation process of organsiations (Malmendier, Tate, 2005 pp- 24-32). Straub (2007 pp -23-45) also agreed to this statement and stated that mergers and acquisitions require proper assessment of internal and external factors to create value in the business environment. All these theories can be associated with other relevant theories such as SWOT, PESTEL, and Game Theory. Armstrong (2006 pp-24-34) stated that SWOT analysis is based on analysing the strengths, weaknesses, opportunities and threats of individuals and organsiations. Strengths and

Friday, July 26, 2019

The application paper Term Example | Topics and Well Written Essays - 3000 words

The application - Term Paper Example Initially, extremely excited and optimistic, Jason was momentarily awfully despondent. He could not remember the last time he had encountered such a communication crisis in a company, and was at a loss on how to even initiate solving this mess of a situation. Equipped with more than fifteen years of experience as an international crisis communications consultant, and having a doctorate of philosophy in communication, he always prided himself on dealing with the intra-company issues swiftly and proficiently. Maybe it was the semantic noise (2) in the form of confusing vocabulary and mixed phrases used by the lower staff, or the inflexibility of the thought process (3) of the higher managements in the form of tunnel vision, Jason was hitting hard walls wherever he goes. When Jason’s company was approached by the Targeta Inc., a retail giant in States, they thought that it will be just like any other acquisition case. Targeta had recently acquired a small Quebec based clothing co mpany Simmona Inc., and was having problems with synergizing cultures, and internal and external communications. Jason further deduced that Targeta was probably going through an information management crisis (4) in the new market, and needed an advisor to figure out ways to ingratiate in the local market. Simmona, an almost two hundred years old company, operated seven big stores in the province of Quebec, Canada. Their main suppliers were local emerging and already established French designers; not even a single product in the stores was imported from outside of the Quebec. Their biggest location was within the Montreal downtown, with a huge store on the ground floor, and headquarters on the upper levels. The local French Quebecois community had a huge symbolic interaction (5) with these stores, and considered them as a part of their heritage. The firm’s logo was a maple leaf, which is also the national Canadian symbol. At each store, Simmona employed a manager, an assistant manager, and twenty other staff people. Along with these 154 people, forty five more people worked at the head office, which included the CEO John Simmona, and ten other senior officials. Post acquisition, all of the senior management at the head office was changed, most of them appointed from within States. However, Targeta decided to keep all the store officials, including the store managers, and assistant managers. Ever since the new management took over, the profits have sharply declined, thus resulting in James arrival to sort out the problems and present a plan of action (6). To begin with, Jason immediately went on to conduct written surveys, and verbal interviews of the store employees. His surveys mostly consisted of binary questions (7), with yes/no answers, and were regarding interactions with previous owners, views about the new management, and other related issues. Along with this, he also questioned local friends and other acquaintances, to get to know what general po pulation thought about this acquisition. He also went to the neighborhood library and read all the available six month old newspapers, focusing mostly on the business sections. He wanted to get as much information as possible regarding events surrounding this acquirement. He did realize that before this acquisition, there was a mystification (8) attached to these stores. Simmona family,

Thursday, July 25, 2019

The Internal Control over Cash Payments Assignment - 1

The Internal Control over Cash Payments - Assignment Example No supervisor reviews the purchasing agent’s work† (The case study A, n.d.). In this case, the missing internal control characteristic is the proper approvals of the purchasing activities. The possible problem of the firm is a failure on the part of the purchasing department of the company to supervise and properly approve the company’s purchases. The reason is that the purchasing agent bears the responsibility of approving the invoices and signing the checks without any supervision. This problem can be solved if the purchasing department assumes its supervisory responsibility for the purchasing activities of the company. â€Å"Rachel Williams owns an architectural firm. Williams’ staff consists of 19 professional architects, and Williams manages the office. Often, Williams’ work requires her to travel to meet with clients. During the past six months, Williams has observed that when she returns from a business trip, the architecture jobs in the office have not progressed satisfactorily. Williams learns that when she is away, two of her senior architects take over office management and neglect their regular duties. One employee could manage the office† (The case study B, n.d.). In this case, the missing internal control characteristic is lack of separation of duties. The possible problem of the firm is a failure on the part of the top management (Rachel Williams, the owner of the firm) to distinguish the duties of the two senior architects, especially in her absence. The possible solution to the problem lies in making one of the senior architects an assistant manager. This way, imp ortant tasks will be performed both in the presence and the absence of the manager. â€Å"Mike Dolan has been an employee of the City of Southport for many years. Because the city is small, Dolan performs all accounting duties, in addition to opening the mail, preparing the bank deposit, and preparing the bank reconciliation†.

Wednesday, July 24, 2019

Traveled to Las vegas Essay Example | Topics and Well Written Essays - 250 words

Traveled to Las vegas - Essay Example It was really a good driving experience on a Chevrolet. The Fremont Street is a good night attraction for visitors with casinos and LED lights adding to the overall beauty of the area. On the third day of my trip, I went to The Fountains at Bellagio. One thing that I noticed at this place was the presence of a large number of people from different parts of world. It is a widely spread manmade lake with a lot of fountains that are so attractive that a person with a passion for photography cannot stop taking photographs until the whole picture storage limit of the camera ends. In addition, during night times, this place becomes even more beautiful when lights from high rise buildings cover the area like shining starts. On the last two days of my trip, I visited the Hoover Dam which is considered to be one of the seven industrial wonders of the world. I also took photos of the dam and the accompanying areas. Some more places that I really liked in Las Vegas included the Caesers Palace, Red Rock Canyon, and Mirage Volcanos. All of these places were very attractive and perfectly managed. Summing it up, I would say that my trip to Las Vegas was the most exciting and memorable travel experience of life which I will never forget in my whole

Tuesday, July 23, 2019

Mid Term Exam, Ethics 1 Essay Example | Topics and Well Written Essays - 500 words

Mid Term Exam, Ethics 1 - Essay Example This is the main feature of the ethical theories of Immanuel Kant. The most famous ethical theory of Kant is Categorical Imperative. This theory calls for evaluation of one’s action according to certain rules and guidelines or maxims. The main elements of the theory include universality which calls for acting in a manner which will not hurt or displease the acting person if the same act is made a universal law. Any action, under Kant’s ethical theory, should be judged not on the basis of consequences it brings but on the basis of the nature of the action. For example, Kant would not allow a person to lie even if this action results in collective good of the society because lying is not an ethical behavior itself. This is the main feature of Kant’s ethical theory. Focus on principles and guidelines are also important part of Kant’s ethical theory. An action is principally good or bad and consequences or other elements have nothing to do with the rightness and wrongness of any action. The principle on which the action is carried out is the main focus of evaluation in Kant’s ethical theory. Kant’s ethical theory differs from other important ethical theories because it focuses on actions and treats an action as an end in itself. The act is important for Kant and not its consequences. This is the main difference between the ethical approach of Kant and other ethical theories. The ethical theories of Kant can be applied to modern policing practices. There are many ways in which modern police can improve its practices based on Kant’s ethical theories. Kant stressed on treating actions as an end in itself and not just as means. Police can also apply this theory to its practice by following due process. Sometimes police can be tempted to break the law and focus on the consequences of their actions. This is how modern policing practices can learn from Kant’s ethical theories. Police should also act in a way according to the guidelines which if

Hamlet Essay Example for Free

Hamlet Essay â€Å"Hamlet† is one of the masterpieces of Shakespeare, in which he cleverly weaves a plot high in drama and reflecting positive and negative human emotions through his wonderful and intriguing characters. A chance encounter with the Captain of the Norwegian army sets about a thought process in the mind of Hamlet. The sixth and final soliloquy in Act 4, Scene 4 of the play is a high point in the play and it throws light on Hamlet’s emotional conflicts and his opinions on human sensibilities. When the captain of the Norwegian army tells Hamlet that Fortinbras is leading an army to fight over a â€Å"little patch of land†, Hamlet gets into a reflective mood and ponders on human emotions. He is surprised that people could go to war over such trivial matters while he had a much serious issue to fight for. He convinces himself that he stands more to gain by taking revenge on Claudius. He blames himself for the delay in avenging the death of his father and ponders if his â€Å"dull revenge† was probably the reason for the procrastination. He also regrets the fact that even though he had â€Å"all occasions† in the past to execute his plans, he had failed to do so. The soliloquy also reflects upon the resentment that Hamlet harbors towards his mother, Gertrude. He despises her and wants to punish her but is unable to do so, since it is against his nature to hurt his own mother. But he decides to punish her through his words and not through his actions. â€Å"speak daggers to her, but use none†(1328)  The soliloquy serves as an important turning point in the plot because Hamlet embarks on an action plan to avenge his father’s death. After the encounter with Fortinbras, he is more determined than ever to execute his plans. He vows to be more aggressive and shrewd. He tells himself, â€Å"O, from this time forth, my thoughts be bloody, or be nothing worth† (1342). Thus, this soliloquy reflects the sensitive nature of Prince Hamlet and his change of mind.

Monday, July 22, 2019

Analytical Description of Players in Hamlet Essay Example for Free

Analytical Description of Players in Hamlet Essay The significance of the players exceeds the sole purpose of entertainment, as each possesses the power to unveil the occulted guilt (3.2.75) and conscience of the King. Hamlet assumes the responsibility to advise these players with precise and adequate direction so that a whirlwind of passion (6) may not effectively separate Claudius from personally identifying with the play. Hamlets enthusiastic approach toward direction may be so that he encourages the players to suit the action to the word, the word to the/ action, with this special observance, that you oerstep not/ the modesty of nature (16-18). However, this exercise of caution may justify Hamlets too often delayed attempt toward the action of avenging his fathers murder. His direction confines him to the overflow of words as he experiences imprisonment within the truth of his own identity. Hamlet grants himself the opportunity to momentarily direct himself, yet it remains unknown as to whether he directs a representation of truth or a falsity. He exemplifies madness so well, as the sight of a damned ghost (77) insanely induces his imagination and comfortably transforms his identity to one of lunacy. This role he acquires is one he portrays so explicitly well as an actor that he easily utilizes it as the foundation for his players. He instructs the players: Nor do not saw the air too much with your hand, Thus, but use all gently, for in the very torrent, tempest, And, as I may say, whirlwind of passion, you must acquire And beget a temperance that may give it smoothness. (4-7) Abstinence from overly dramatizing the actions of the play may be reflective of Hamlets character prior to his escape from true self: a once-lived life of normalcy focused more wholly on smoothness (7) rather than an uncontrolled torrent, tempest, / whirlwind of passion (5-6). Hamlets direction of the players claims victory as Claudius abruptly arises and exclaims, Give me some light. Away (254)! Horatios observation of the Kings reaction confirms his guilt-inflamed conscience as he was forced to witness the reenactment of his brothers murder. Hamlet, relieved, reveals, Ill take the ghosts word for a thousand/ pound (271-272). The ghost is officially trustworthy as the Kings reaction encourages Hamlet to journey further toward his mission of avenging the death of his father. Any form of immediate action is ignored when Hamlet wrestles Polonius with false visions of psychosis as he inquires, Do you see yonder cloud thats almost in shape of a / camel (355-356)? Hamlets separation from action invites a sense of fear that intensifies his madness and entangles his entire self in nothing more than the mere use of words. It is his words that camouflage the notion that his own conscience may be afflicted with an overpowering sense of guilt. Even though Hamlets accurate direction of the players did celebrate success as it illustrated the guilt of the Kings conscience, Hamlets identity remains in crisis as he continues to revel in his words. His speech reveals his craving for action: Tis now the very witching time of night, When churchyards yawn and hell itself (breathes) out Contagion to this world. Now could I drink hot blood, And do such (bitter business as the) day Would quake to look on. (367-371) The claim that he is prepared to engage in necessary action remains solely a claim as Hamlets burden of self-loathing dominates his internal struggle. He may fear the truth of his identity, as he is horrified by the realism included in the players precise portrayal of his own life in actuality.

Sunday, July 21, 2019

Theories of Merger and Takeover Waves

Theories of Merger and Takeover Waves Merger Wave The American economy experienced two great takeover waves in the postwar period, first in the 1960s and the second in the 1980s. Both waves had a deep affect on the structure of corporate America. The main trend in the 60s was diversification and conglomeration. In contrast the 1980s takeover reversed the previous process and brought US corporations back to specialization. In this respects, the last thirty years were a roundtrip for corporate America. This paper is an overview of the salient features of the two takeover waves. 1.1 The 1960s Conglomerate Merger Wave The merger wave of the 1960s was the major since the turn of the century (Stigler, 1968). A typical characteristic of the 1960s transaction was a friendly acquisition, frequently for stock, of a smaller private or public firm which was outside the acquiring firms main line of business. During this period unrelated diversification was widespread among the large companies. Rumelt (1974) has reported that the fraction of single business companies in the Fortune 500 decreased from 22.8% in 1959 to 14.8% in 1969. Further, the portion of conglomerates with no dominant businesses increased to 18.7% from 7.3%. There was also a considerable move to diversification among companies that retained their core business. The driving force behind the 1960s wave was high valuations of company stocks and large corporate cash flows. However the management was unwilling to pay out the high cash flows as dividends, and on the other hand able to issue equity at attractive terms therefore, turned their atte ntion to acquisitions (Donaldsoni. 1984).Dividends were considered as a complete waste, and acquisitions as a very attractive way to conserve corporate wealth. There are two sets of arguments used to explain why companies diversify. The first set argues that firms diversify to increase shareholder wealth. A number of authors have discussed different aspects of diversification that can potentially raise shareholder wealth. Williamson (1970), suggest that firms diversify to beat imperfections in external capital markets. Through diversification, managers create internal capital markets, which are less prone to asymmetric information problems. Lewellen (1971), argues that conglomerates can carry on higher levels of debt since corporate diversification reduces earnings variability. if conglomerate firms are more valuable than companies operating in a single industry If the tax shields of debt increase. Shleifer and Vishny (1992), state that conglomerates may have a higher debt capacity since they can sell assets in those industries that suffer the least from liquidity problems in bad states of the world. Finally, Teece (1980) argues that divers ification leads to economics of scale. The second set of arguments states diversification as a product of the agency problems between shareholder and managers. Amihud and Lev (1981) argue that managers follow a diversification strategy to protect the value of their human capital. However, Jensen (1986) suggests that companies diversify to increase the private benefits of managers. Similarly, Shleifer and Vishny (1989) suggest that managers diversify because they are better at managing assets in other industries. Thus, diversifying will make skills more indispensable to the firm. 1.2 The 1980s Merger Wave Form a longer historical perspective, Golbe and White (1988) presented time series evidence of U.S. takeover activity from the late 1800s to the mid-1980s. Their findings have suggested that takeover activity above 2 to 3 percent of GDP is unusual. However, the greatest level of merger activity occurred around 1980s, at roughly 10 percent of GNP. By this measure, takeover activity in the 1980s is historically high. The size of the average target in the 1980s had increased extremely from the modest level of the 60s. By 1989 28%, of Fortune 500 companies were acquired and many transactions, particularly the large ones, were hostile. Further the medium of exchange in takeovers was cash rather than stock, they were characterized by heavy use of leverage. Firms were purchased by other firms by leveraged takeovers by borrowing rather than by issuing new stock or using solely cash on hand. Other firms restructured themselves, borrowing to repurchase their own shares. The 80s was also characterized by latest forms of control changes, which included bustup takeovers. Bustup takeovers involved the sell off of a substantial fraction of the targets assets to other firms. (Bhagat, Shleifer, and Vishny, 1990; Kaplan, 1997). 2 Merger Motives The following sections will explain the motive behind the two merger waves. 2.1 Managerial Motives Agency theory predicts that unless managers are strictly monitored by large block of shareholders they will certainly act out of self-interest. Amihud and Lev (1981) have provided proof that unless closely monitored by large block shareholders managers will attempt to reduce their employment risk through diversification. Lane et al.(1998) in this study have reexamined Amihud and Lev findings about agency theory Using a sample of 309 US firms that diversified between 1962 1970, from the Federal Trade Commission (FTC) Statistical Report on Mergers and Acquisitions (1976). This study falls in the third broad category[1] of agency studies. However this analysis only examines the strategic behaviors of managers when they are not under siege and are also not in a situation, in which their interests are clearly in conflict with those of shareholders. Specifically, firms without large block shareholders are expected to engage in more unrelated acquisitions and show higher levels of diversif ication than firms with large block shareholders (Jensen and Meckling (1976)) Using Multiple Regression, the study found no evidence for the standard agency theory predictions that management controlled firms are linked with strategically lower levels of diversification and lower levels of returns than are firms with large block shareholders. It was found that Ownership structure and diversification are largely independent constructs. Thus, managers may be are worthy of more trust and autonomy than what the agency theorists have prearranged for them. Rather than seeking to restrict managerial discretion through extreme oversight, a more balanced approach by principals is needed. Some safeguards are essential as conflicts of interests between managers and shareholders do arise in certain situations, therefore, the assumption that such conflicts dominate the day-to-day management is not realistic. Matsusaka,(1993) takes a deep look at the astonishingly high pre-merger profit rates of target companies during the conglomerate merger wave. The main goal of the study is to assess how important was managerial discipline as a takeover motive. The analysis uses an extensive data set of 806 manufacturing sector acquisitions that took place in 1968, 1971 and 1974. The sample was collected from New York Stock Exchange listing statements. Sample of 609 observations was taken from 1968, 117 from 1971, and 129 from 1974. The results did not differ in any vital way by year, so observations from the three periods were pooled. Because antitrust enforcement was strict in the late 1960s and early 1970s, it was safely assumed that the sample mergers were not motivated to increase market power Ravenscraft and Scherer (1987). This allowed the investigation to focus on a narrow set of merger motives. Profitability[2] throughout the study was measured as a rate of return on assets. The theory identified two basic characteristics of mergers motivated to discipline target management. First it wsa observed that the target was underperforming its industry and the only reason to discipline the managers was that they were not maximizing profit. It could be because of incompetence that they were pursuing their own objectives. The second, the target company had publicly traded stock and the only posibility to discipline management was by electing an appropriate board of directors. In this situation a takeover was necessary to effect a change as the diffused stock ownership resulted in free-rider problems. Owners can remove bad managers of privately owned firms, as they are closely held. The problem occurs in large publicly traded firms with diffuse ownership. The statistical results revealed that both public and private targets had extremely high profit rates prior to acquisition compared to their size classes and industries. Therefore, takeovers were not motivated to discipline target managers during the conglomerate merger wave. The second finding of the study is that public targets were not as particularly profitable as private targets. It was also found that the largest public targets had the lowest profit rates. A credible interpretation of the evidence is that managerial discipline may have been significant for just a small set of acquisitions that involved large publicly-traded targets. Matsusaka (1993) leaves the bigger question unexplained. Why buyers time and again sought high profit targets during the merger wave. There is a simple clarification, that high quality assets are generally favored to low quality assets, as high quality assets are more expensive. In addition to explaining why firms seek high-profit targets, an asset complementarity theory implies that firms tend to divest their low-profit divisions Palmer and Barber (2001) have determined the factors that led large firms to participate in the1960s wave. The theoretical approach, of the study conceptualizes corporate elites (managers and directors) as actors. However it is assumed that these actors have interests which have arisen from positions held in organizational and institutional environments, and from multidimensional social class structure. Often Acquisitions are deviant and innovative ways by which corporate these elites can increase their status and wealth. Corporate elite diversify to the extent that their place in the class structure provides them with the capacity and interest to augment their wealth and status in this way. The authors have examined how the firms top directors and managers class position influenced its tendency to employ diversification in the 1 960s. More specifically the following arguments on social status[3] have been tested empirically. Firstly, Firms run by top managers who attended an exclusi ve secondary school or whose family was listed in a metropolitan social register were less likely than other firms to complete diversifying acquisitions in the 1960s. Secondly, Firms run by top managers who were Jewish were more likely than other firms to complete diversifying acquisitions in the 1 960s. Thirdly, Firms run by top managers situated in the South or west were more likely than other firms to complete diversifying acquisitions in the 1960s. The study selected a sample of the largest 461 publicly traded U.S. industrial corporations from the Federal Trade Commissions Statistical Report on Mergers and Acquisitions (1976), between January 1, 1963, and December 31, 1968. This particular time period was chosen because as the merger wave took off at the end of 1962 and crested in 1968. The results of the study were found through count and binary regression models. The findings of the study are consistent with that of Zeitlin (1974). According to him top managers capacities and interests are shaped by their social class position. Corporate elite members differ in their social class position. It is this variation that influences the behavior of the firms they command. The results indicate that social club memberships and upper-class background influenced a firms propensity to complete diversifying acquisitions in the 1960s. Network embeddedness and status influenced acquisition likelihood in opposite directions. Corporations that were run by chief executives who were central in social networks but marginal with respect to status were more likely than other firms to complete diversifying acquisitions in the 1960s. Therefore, individuals with high status had small interest in adopting innovation. Corporate elites can inhibit the spread of an innovation when it threatens their interests. As observed by Hayes and Taussig (1967), One must never under estimate the moral suasion that the business and financial communities can bring to bear on those who engage in practices of which they disapprove. In this respect, the analysis provides additional evidence that intraclass conflict shaped corporate behavior during the 1960s merger wave. It seemed that in the 1960s, it was not concentrated ownership but, ownership in the hands of capitalist families that reduced a firms tendency to complete diversifying acquisitions. Further, as predicted by agency theory , concentrated ownership would lower acquisition rates most when in the hands of the CEO or other top managers, as opposed to outsiders, However it was found the reverse to be the case. Overall, there was very little support for any of the agency theory in the 1960s merger wave. Further, the results provided no support for several of the class-theory hypotheses. Firms headquartered in the South or West run or by Jewish CEOs did not have a greater propensity to complete diversifying acquisitions during the 1960s. The process of diversification of American firms reached its height during the merger wave of the late 1960s. Matsusaka(1993)evaluated the 1960s merger wave. In an attempt to do so the author has proposed a number of explanations that drove managers to diversify during the conglomerate merger wave. There are reasons to suspect that managers may have pursued a diversification strategy even when it impaired the shareholder. They may have entered new lines of business to protect their organization-specific human capital or establish themselves. On the other hand, they may have been pursuing size as an end and because of strict antitrust opposition to horizontal and vertical mergers they had to expand by buying into unrelated industries. The study has evaluated whether manager were diversifying for their own advantage or in the interest of shareholders returns .To do so the author inspected the effect of diversification on the value of his firms equity. Thus, if the value of a firm declined upon announcement of an acquisition, then its management was not acting to maximize shareholder wealth. One explanation for conglomeration stated in the study, stems from Managerial-Discipline theory. Firstly, Firms were taken over to discipline or replace their bad managers ie â€Å"Managerial-Discipline. Secondly, Managerial Synergy theory states that the bidder management wanted to work with target management, not replace it. In this case the acquirer management believed that the target management would complement to their skills. Therefore firm that had Managerial-discipline problem were likely to have had low profits, and on the other hand managerial-synergy targets were likely to have had high profits. Another explanation is that buyers were motivated by earnings-per- share (EPS) manipulation. This explanation states that conglomerates have a high price-earnings ratio (P/E). [4] Therefore the bidder management was bootstrapping, by buying firms with low P/Es. Construction of the dataset began with a list of mergers from the sample of 1968, 1971 and 1974 .The sample was identified from the takeovers from New York Stock Exchange listing statements and the results were presented through regression. The announcement-period return to the bidders shareholders was measured through dollar return, [5] .Regression of the dollar-return measure found that the return to a diversification acquisition was significantly positive. On average their shareholders enjoyed an $11.0 million value increase in value when bidders made a diversification acquisition,. This rejects the hypothesis that diversification hurt shareholders and is thus inconsistent with the idea that diversification was driven by managerial objectives. On the other hand, bidders who made related acquisitions cost their shareholders $6.4 million on average. Thus, the hypothesis that the markets reaction was the same to related acquisitions and diversification is rejected, suggesting that there was a market premium to diversification. Using descriptive statistical summaries it was found that both diversifying and horizontal buyers preferred to buy firms that were profitable. For both type of acquisitions the average operating profit was more than 5% in excess of the targets industry average. Therefore fame of high-profit targets argues against the importance of a managerial-discipline motive for both types of acquisition and in favor of a managerial-synergy motive. This is because Managerial-discipline takeovers should have been directed at low-profit firms, whose profitability needed improved. The motive was Managerial-synergy as the targets were takeovers were high- profit firms, this is because synergy-motivated managers were looking for good partners Matsusaka(1993). Another factor linked to the managerial theories is whether or not the targets management was retained.Top management is said to have been retained if it meet the following criteria. Firstly It was reported in the Wall Street Journal that the acquired firms management would continue to operate under the new management. Secondly, it was indicated in the buyers listing statement that the targets management would be retained. Lastly, when the merger took place at least one of the top three executives of the target firm was still managing the firm three years later from when the merger took place. According to the above mentioned definitions, 61.8% of the managers in the sample were retained and only 3.5% of the acquisitions fell in the Replaced category. The main finding is that buyers earned significantly positive announcement-period returns during the conglomerate merger wave when they made diversifying acquisitions. The hypothesis that conglomerates were driven by empire building or some other managerial objective can be rejected because such explanations imply value decreases to unrelated acquisitions. Another explanation of the conglomerate merger wave is that mergers were driven by an accounting trick rather than expected efficiencies. Therefore, investors watched EPS; when the EPS went up they bid up the price of the stock. According to this argument, Conglomerates, tended to buy companies with lower P/E ratios than their own in order to increase their EPS and boost their stock prices. There was no evidence that firms earned positive returns which inflated EPS in this way. The study indicated that early conglomerators earned significantly positive returns simply because they were first. They may have gained some rents to organizational innovation. Possibly the men who built the first conglomerates had a unique talent for diversification, which the market rewarded. Hubbard, Palia (1999), have examined the likelihood that internal capital markets were formed to alleviate the information costs associated with the less well-developed external capital markets of the time; that is, whether they were expected to create value by the external capital markets in the 1960s.In this paper, the authors have inspected a form of cross-subsidization that occurs when a financially unconstrained bidding firm takes over a financially constrained target firm and as a result forms an internal capital market.The study examined whether the external capital markets expected that the formation of internal capital markets in the 1960s were value-maximizing for the bidding firm. However, existing research has argued that internal capital markets can be value-enhancing. As argued by Geneen(1997), the financing and budgeting expertise that a firm possesses is not necessarily related to its degree of diversification. Accordingly, the internal capital market hypothesis for all acquisitions is tested. The study also tests the bootstrapping explanation for conglomeration in the 1960s, which takes place when firms with a high price-earnings ratio (P/E) took over low P/E target firms and fooled the stock market with an increased combined earnings-per-share. In the 1960s, external capital markets were less developed in terms of company-specific information production than in later years. The authors have classified company-specific information into two general categories. Firstly, production information; and secondly, financing and budgeting expertise. However, in this study information-intensive activities were introduced. This was because; it assists the manager to internally allocate capital across divisions of a diversified firm. It was suggested that diversified firms were perceived by the external capital markets to have an informational advantage, because external capital markets were less well developed at that time. Comparing it to the current decade, there was less access by the public to computers, data- bases, analyst reports, and other sources of company-specific information. Not only this there was less large institutional money managers and the market for risky debt was illiquid. The authors selected a sample of 392 acquisitions that occurred during the period from 1961 through 1970. Diversifying acquisitions were defined as those in which the bidder and target do not share any two- digit SIC code Matsusaka(1993), and related acquisitions as those in which they do share a two-digit SIC code. Further the Wall Street Journal was used for announcement date as the event date. Four measures of abnormal returns to the conglomerate bidding firm were calculated. These measures are as follows. Firstly, the usual percentage returns or the cumulative abnormal returns from five days before to five days after the event date. Secondly the percentage returns until date of last revision or the cumulative abnormal returns from five days before to five days after the date of the last revision (Lang et al. (1991)). Thirdly, the dollar returns or the percentage return times the market value of the bidder six days before the announcement (Malatesta(1983); Matsusaka(1993)). Lastly , the investment return defined as the change in the value of the bidder divided by the purchase price (Morck et al. (1990)). Tobins r ratio[6] is used as a proxy for a firms capital market opportunities. The evidence from these measures is mixed. Positive abnormal returns for all four measures were shown for related acquisitions. On the other hand, two of the four measures had shown statically significant positive abnormal returns for diversifying acquisitions in. Not only that diversifying acquisitions do not significantly earn less than related acquisitions in two of the four measures. Thus, evidence suggests, the capital markets believed acquisitions to be generally good for bidder shareholders during the 1960s. More significantly, it was found that when financially unconstrained buyers acquired constrained target firms, highest bidder returns were earned. Further, bidders generally retain target management, signifying that management may have provided company- specific operational information and the bidder on his part also provided capital budgeting expertise. Therefore, external capital markets expected information benefits from the formation of the internal capital markets. The study found no evidence in support of the bootstrapping hypothesis, as the coefficient on the dummy variable[7] was not statistically different from zero. This result is consistent with Matsusaka, (1993), who also finds no evidence for bootstrapping.Therefore, firms merged to form their own internal capital markets as there was a deficiency of well-developed external capital markets in the 1960s. Some firms apparently had an information advantage over the external capital markets and were expected to produce value in an internal capital market. In the 1960s diversified acquisitions were rewarded by financial markets, the informational advantage that acquiring firms appeared to possess was likely to be in the capital budgeting, allocation process and operational aspects of each division. Bidder firms generally retained the target management as it would facilitate them running the operational part of each target firm. The Motives discussed in the above mentioned articles are appealing; however evidence from the stock market suggests that shareholders preferred their firms to diversify. Using a data set from the 60s and early 70s, Matsusaka (1993) reported that, when the company announced an unrelated acquisition, the stock price of the bidder increased on average of $8 million. However, on the announcement of a related acquisition, the bidding firms stock price fell by $4 million. The difference between the two returns is quite significant. Thus it appears that investors fully believed that unrelated acquisitions benefited their firms relative to the alternatives. Thus the managers just did what the stock market told them to do that is to diversify. Evidence from 1980s stock market suggested that shareholders, again, liked what was happening. Shleifer, and Vishny (1992) found that in the 1980s, stock prices of the bidding firms rose when they bought other firms in the same industry, and fell with unrelated diversification. It is clear that the market disapproved unrelated diversification. Therefore it does not astonish that, in light of such market reception, managers stopped diversifying and did what the stock market directed them to do. 2.2 Legal Motives Matsusaka (1996) investigated whether the antitrust enforcement of the 1960s led firms to take on the diversification goal, by preventing them from expanding within their own core industries. If correct, diversification should have occurred more less frequently when small firms merged than when large firms merged since small mergers were less likely to have attracted antitrust attention. Further the author examined the diversification patterns in the United Kingdom, Canada, Germany, and France in the late 1960s and early 1970s, where none of these countries had legal restrictions on horizontal growth similar to those in the Unites States. The US Clayton Antitrust Act was the antitrust legislation in the postwar period (1950 Celler-Kefauver amendment to Section 7). The act, prohibited mergers that would substantially lessen competition, or tend to create a monopoly. This new law was used by the antitrust authorities and the courts to limit the number of mergers between vertically related and firms in the same lines of business. The strictness of the antitrust environment in 1968 is illustrated by the observation that in the earlier 12 years, all antitrust cases that reached the Supreme Court had been resolved in support of the government. The study indicates the following two implications. Firstly, large horizontal mergers were more liable to have been challenged on antitrust grounds than small horizontal mergers. Secondly mergers between unrelated firms were unlikely to have been blocked, regardless of size. Firms diversified in 1960s, since antitrust authorities prevented them from expanding in their home industries. Later when antitrust policy became less rigid in the 1980s, firms expanded horizontally, leading them to refocus on their core business. Stigler (1966) was perhaps the first to present evidence on the antitrust hypothesis, concluding that, the 1950 Merger Act has had a strongly adverse effect on horizontal mergers by large companies. The author selected a sample of 549 mergers (that took place in 1968) from the New York Stock Exchange. Results of the study were reported through Logit regressions .It was found that bidders were as likely to have entered new industries when they made small acquisitions as when they made large acquisitions, and small buyers were as likely to have diversified as large buyers. Further the total number of diversification acquisitions concerning small companies was high.Though, according to the antitrust hypothesis; diversification should have been widespread primarily in large mergers where same industry acquisitions were prohibited by tough antitrust enforcement. Secondly assembled international evidence indicated that diversification took place in many industrialized nations in the 1960s and 1970s, although restrictions against horizontal combinations were unique to the United States. Yet, most other industrialized Western nations[8] experienced diversification merger waves and general movements toward diversification in their largest companies (Chandler (1991)).Thus most of the evidence, is not consistent with the antitrust hypothesis, signifying that other explanations for corporate diversification should be emphasized not the anti trust hypothesis. Scholes and Wolfson (1990) state, that the changes in U.S. tax laws[9] in the 1980s had obvious affect on the desirability of mergers and acquisitions. However such transactions were not only motivated by tax factors but also non tax factors[10]. Tax laws can have number of affects on mergers and acquisitions , which can include the following capital losses, presence of tax-attribute carry forwards such as net operating losses , investment tax credits, and foreign tax credits, among others, that might be cashed in more quickly and more fully by way of a merger; the desire to step up the tax basis of assets for depreciation purposes to their fair market value; the desire to sell assets to permit a change in the depreciation schedule to one that is more highly accelerated. The authors in this study have examined the effect of changes in tax laws passed in 1980s on merger and acquisition activity in the United States. The authors selected the annual values of mergers and acquisitions from 1968 through 1987 in nominal dollars. The data source for nominal values was W. T. Grimm and Company for 1968-85 and Mergers Acquisitions (1987-88, rev. quarterly) for 1986 and 1987. Using time series analysis it was found that the dollar volume of merger activity between 1980-1981 increased from $44.35 billion to $82.62 billion (86%) in nominal terms. The percentage increase was approximately twice as large as the next largest percentage increase in annual merger and acquisition activity over the 1970-86 periods. There was spectacular increase in merger activity that began with the passage of the Economic Recovery Tax Act of 1981, however this was not the only merger wave that occurred in that time frame. Unusual merger activity was also witnessed in the 1960s. The termination of 1960s wave was accompanied by quite a few regulatory events that depressed such transactions. Firstly, the Williams Amendments had en larged the cost and difficulty of effecting tender offers. Secondly the issuance of Accounting Principles Board Opinions 16 and 17, forced many acquiring firms to boost depreciation expense, goodwill amortization and cost of goods sold. Thirdly the Tax Reform Act of 1969, made transferability of tax attributes (net-operating-loss carry forwards) more restrained. Therefore there was a sudden decline in merger activity from the peak in 1968. Relative to the tax benefits when the non tax benefits of the transaction were small, current management were the most efficient purchasers, as they had an advantage along the hidden information dimension. Therefore 1981 act had increased the incidence of cases in which non tax benefits were less than the common tax benefits of mergers and acquisitions. As a result, there was an increase in the number of transactions involving management buyouts. The annual dollar value of unit management buyouts between 1978-80 increased by a factor of 3, and by a factor in excess of 20 for the period 1981-86. The antitrust proposition mentioned above is appealing as one of the most important reason for diversification, during the 60s and 70s, which simply disallowed mergers of firms in the same industry, regardless of the effects of these mergers o Theories of Merger and Takeover Waves Theories of Merger and Takeover Waves Merger Wave The American economy experienced two great takeover waves in the postwar period, first in the 1960s and the second in the 1980s. Both waves had a deep affect on the structure of corporate America. The main trend in the 60s was diversification and conglomeration. In contrast the 1980s takeover reversed the previous process and brought US corporations back to specialization. In this respects, the last thirty years were a roundtrip for corporate America. This paper is an overview of the salient features of the two takeover waves. 1.1 The 1960s Conglomerate Merger Wave The merger wave of the 1960s was the major since the turn of the century (Stigler, 1968). A typical characteristic of the 1960s transaction was a friendly acquisition, frequently for stock, of a smaller private or public firm which was outside the acquiring firms main line of business. During this period unrelated diversification was widespread among the large companies. Rumelt (1974) has reported that the fraction of single business companies in the Fortune 500 decreased from 22.8% in 1959 to 14.8% in 1969. Further, the portion of conglomerates with no dominant businesses increased to 18.7% from 7.3%. There was also a considerable move to diversification among companies that retained their core business. The driving force behind the 1960s wave was high valuations of company stocks and large corporate cash flows. However the management was unwilling to pay out the high cash flows as dividends, and on the other hand able to issue equity at attractive terms therefore, turned their atte ntion to acquisitions (Donaldsoni. 1984).Dividends were considered as a complete waste, and acquisitions as a very attractive way to conserve corporate wealth. There are two sets of arguments used to explain why companies diversify. The first set argues that firms diversify to increase shareholder wealth. A number of authors have discussed different aspects of diversification that can potentially raise shareholder wealth. Williamson (1970), suggest that firms diversify to beat imperfections in external capital markets. Through diversification, managers create internal capital markets, which are less prone to asymmetric information problems. Lewellen (1971), argues that conglomerates can carry on higher levels of debt since corporate diversification reduces earnings variability. if conglomerate firms are more valuable than companies operating in a single industry If the tax shields of debt increase. Shleifer and Vishny (1992), state that conglomerates may have a higher debt capacity since they can sell assets in those industries that suffer the least from liquidity problems in bad states of the world. Finally, Teece (1980) argues that divers ification leads to economics of scale. The second set of arguments states diversification as a product of the agency problems between shareholder and managers. Amihud and Lev (1981) argue that managers follow a diversification strategy to protect the value of their human capital. However, Jensen (1986) suggests that companies diversify to increase the private benefits of managers. Similarly, Shleifer and Vishny (1989) suggest that managers diversify because they are better at managing assets in other industries. Thus, diversifying will make skills more indispensable to the firm. 1.2 The 1980s Merger Wave Form a longer historical perspective, Golbe and White (1988) presented time series evidence of U.S. takeover activity from the late 1800s to the mid-1980s. Their findings have suggested that takeover activity above 2 to 3 percent of GDP is unusual. However, the greatest level of merger activity occurred around 1980s, at roughly 10 percent of GNP. By this measure, takeover activity in the 1980s is historically high. The size of the average target in the 1980s had increased extremely from the modest level of the 60s. By 1989 28%, of Fortune 500 companies were acquired and many transactions, particularly the large ones, were hostile. Further the medium of exchange in takeovers was cash rather than stock, they were characterized by heavy use of leverage. Firms were purchased by other firms by leveraged takeovers by borrowing rather than by issuing new stock or using solely cash on hand. Other firms restructured themselves, borrowing to repurchase their own shares. The 80s was also characterized by latest forms of control changes, which included bustup takeovers. Bustup takeovers involved the sell off of a substantial fraction of the targets assets to other firms. (Bhagat, Shleifer, and Vishny, 1990; Kaplan, 1997). 2 Merger Motives The following sections will explain the motive behind the two merger waves. 2.1 Managerial Motives Agency theory predicts that unless managers are strictly monitored by large block of shareholders they will certainly act out of self-interest. Amihud and Lev (1981) have provided proof that unless closely monitored by large block shareholders managers will attempt to reduce their employment risk through diversification. Lane et al.(1998) in this study have reexamined Amihud and Lev findings about agency theory Using a sample of 309 US firms that diversified between 1962 1970, from the Federal Trade Commission (FTC) Statistical Report on Mergers and Acquisitions (1976). This study falls in the third broad category[1] of agency studies. However this analysis only examines the strategic behaviors of managers when they are not under siege and are also not in a situation, in which their interests are clearly in conflict with those of shareholders. Specifically, firms without large block shareholders are expected to engage in more unrelated acquisitions and show higher levels of diversif ication than firms with large block shareholders (Jensen and Meckling (1976)) Using Multiple Regression, the study found no evidence for the standard agency theory predictions that management controlled firms are linked with strategically lower levels of diversification and lower levels of returns than are firms with large block shareholders. It was found that Ownership structure and diversification are largely independent constructs. Thus, managers may be are worthy of more trust and autonomy than what the agency theorists have prearranged for them. Rather than seeking to restrict managerial discretion through extreme oversight, a more balanced approach by principals is needed. Some safeguards are essential as conflicts of interests between managers and shareholders do arise in certain situations, therefore, the assumption that such conflicts dominate the day-to-day management is not realistic. Matsusaka,(1993) takes a deep look at the astonishingly high pre-merger profit rates of target companies during the conglomerate merger wave. The main goal of the study is to assess how important was managerial discipline as a takeover motive. The analysis uses an extensive data set of 806 manufacturing sector acquisitions that took place in 1968, 1971 and 1974. The sample was collected from New York Stock Exchange listing statements. Sample of 609 observations was taken from 1968, 117 from 1971, and 129 from 1974. The results did not differ in any vital way by year, so observations from the three periods were pooled. Because antitrust enforcement was strict in the late 1960s and early 1970s, it was safely assumed that the sample mergers were not motivated to increase market power Ravenscraft and Scherer (1987). This allowed the investigation to focus on a narrow set of merger motives. Profitability[2] throughout the study was measured as a rate of return on assets. The theory identified two basic characteristics of mergers motivated to discipline target management. First it wsa observed that the target was underperforming its industry and the only reason to discipline the managers was that they were not maximizing profit. It could be because of incompetence that they were pursuing their own objectives. The second, the target company had publicly traded stock and the only posibility to discipline management was by electing an appropriate board of directors. In this situation a takeover was necessary to effect a change as the diffused stock ownership resulted in free-rider problems. Owners can remove bad managers of privately owned firms, as they are closely held. The problem occurs in large publicly traded firms with diffuse ownership. The statistical results revealed that both public and private targets had extremely high profit rates prior to acquisition compared to their size classes and industries. Therefore, takeovers were not motivated to discipline target managers during the conglomerate merger wave. The second finding of the study is that public targets were not as particularly profitable as private targets. It was also found that the largest public targets had the lowest profit rates. A credible interpretation of the evidence is that managerial discipline may have been significant for just a small set of acquisitions that involved large publicly-traded targets. Matsusaka (1993) leaves the bigger question unexplained. Why buyers time and again sought high profit targets during the merger wave. There is a simple clarification, that high quality assets are generally favored to low quality assets, as high quality assets are more expensive. In addition to explaining why firms seek high-profit targets, an asset complementarity theory implies that firms tend to divest their low-profit divisions Palmer and Barber (2001) have determined the factors that led large firms to participate in the1960s wave. The theoretical approach, of the study conceptualizes corporate elites (managers and directors) as actors. However it is assumed that these actors have interests which have arisen from positions held in organizational and institutional environments, and from multidimensional social class structure. Often Acquisitions are deviant and innovative ways by which corporate these elites can increase their status and wealth. Corporate elite diversify to the extent that their place in the class structure provides them with the capacity and interest to augment their wealth and status in this way. The authors have examined how the firms top directors and managers class position influenced its tendency to employ diversification in the 1 960s. More specifically the following arguments on social status[3] have been tested empirically. Firstly, Firms run by top managers who attended an exclusi ve secondary school or whose family was listed in a metropolitan social register were less likely than other firms to complete diversifying acquisitions in the 1960s. Secondly, Firms run by top managers who were Jewish were more likely than other firms to complete diversifying acquisitions in the 1 960s. Thirdly, Firms run by top managers situated in the South or west were more likely than other firms to complete diversifying acquisitions in the 1960s. The study selected a sample of the largest 461 publicly traded U.S. industrial corporations from the Federal Trade Commissions Statistical Report on Mergers and Acquisitions (1976), between January 1, 1963, and December 31, 1968. This particular time period was chosen because as the merger wave took off at the end of 1962 and crested in 1968. The results of the study were found through count and binary regression models. The findings of the study are consistent with that of Zeitlin (1974). According to him top managers capacities and interests are shaped by their social class position. Corporate elite members differ in their social class position. It is this variation that influences the behavior of the firms they command. The results indicate that social club memberships and upper-class background influenced a firms propensity to complete diversifying acquisitions in the 1960s. Network embeddedness and status influenced acquisition likelihood in opposite directions. Corporations that were run by chief executives who were central in social networks but marginal with respect to status were more likely than other firms to complete diversifying acquisitions in the 1960s. Therefore, individuals with high status had small interest in adopting innovation. Corporate elites can inhibit the spread of an innovation when it threatens their interests. As observed by Hayes and Taussig (1967), One must never under estimate the moral suasion that the business and financial communities can bring to bear on those who engage in practices of which they disapprove. In this respect, the analysis provides additional evidence that intraclass conflict shaped corporate behavior during the 1960s merger wave. It seemed that in the 1960s, it was not concentrated ownership but, ownership in the hands of capitalist families that reduced a firms tendency to complete diversifying acquisitions. Further, as predicted by agency theory , concentrated ownership would lower acquisition rates most when in the hands of the CEO or other top managers, as opposed to outsiders, However it was found the reverse to be the case. Overall, there was very little support for any of the agency theory in the 1960s merger wave. Further, the results provided no support for several of the class-theory hypotheses. Firms headquartered in the South or West run or by Jewish CEOs did not have a greater propensity to complete diversifying acquisitions during the 1960s. The process of diversification of American firms reached its height during the merger wave of the late 1960s. Matsusaka(1993)evaluated the 1960s merger wave. In an attempt to do so the author has proposed a number of explanations that drove managers to diversify during the conglomerate merger wave. There are reasons to suspect that managers may have pursued a diversification strategy even when it impaired the shareholder. They may have entered new lines of business to protect their organization-specific human capital or establish themselves. On the other hand, they may have been pursuing size as an end and because of strict antitrust opposition to horizontal and vertical mergers they had to expand by buying into unrelated industries. The study has evaluated whether manager were diversifying for their own advantage or in the interest of shareholders returns .To do so the author inspected the effect of diversification on the value of his firms equity. Thus, if the value of a firm declined upon announcement of an acquisition, then its management was not acting to maximize shareholder wealth. One explanation for conglomeration stated in the study, stems from Managerial-Discipline theory. Firstly, Firms were taken over to discipline or replace their bad managers ie â€Å"Managerial-Discipline. Secondly, Managerial Synergy theory states that the bidder management wanted to work with target management, not replace it. In this case the acquirer management believed that the target management would complement to their skills. Therefore firm that had Managerial-discipline problem were likely to have had low profits, and on the other hand managerial-synergy targets were likely to have had high profits. Another explanation is that buyers were motivated by earnings-per- share (EPS) manipulation. This explanation states that conglomerates have a high price-earnings ratio (P/E). [4] Therefore the bidder management was bootstrapping, by buying firms with low P/Es. Construction of the dataset began with a list of mergers from the sample of 1968, 1971 and 1974 .The sample was identified from the takeovers from New York Stock Exchange listing statements and the results were presented through regression. The announcement-period return to the bidders shareholders was measured through dollar return, [5] .Regression of the dollar-return measure found that the return to a diversification acquisition was significantly positive. On average their shareholders enjoyed an $11.0 million value increase in value when bidders made a diversification acquisition,. This rejects the hypothesis that diversification hurt shareholders and is thus inconsistent with the idea that diversification was driven by managerial objectives. On the other hand, bidders who made related acquisitions cost their shareholders $6.4 million on average. Thus, the hypothesis that the markets reaction was the same to related acquisitions and diversification is rejected, suggesting that there was a market premium to diversification. Using descriptive statistical summaries it was found that both diversifying and horizontal buyers preferred to buy firms that were profitable. For both type of acquisitions the average operating profit was more than 5% in excess of the targets industry average. Therefore fame of high-profit targets argues against the importance of a managerial-discipline motive for both types of acquisition and in favor of a managerial-synergy motive. This is because Managerial-discipline takeovers should have been directed at low-profit firms, whose profitability needed improved. The motive was Managerial-synergy as the targets were takeovers were high- profit firms, this is because synergy-motivated managers were looking for good partners Matsusaka(1993). Another factor linked to the managerial theories is whether or not the targets management was retained.Top management is said to have been retained if it meet the following criteria. Firstly It was reported in the Wall Street Journal that the acquired firms management would continue to operate under the new management. Secondly, it was indicated in the buyers listing statement that the targets management would be retained. Lastly, when the merger took place at least one of the top three executives of the target firm was still managing the firm three years later from when the merger took place. According to the above mentioned definitions, 61.8% of the managers in the sample were retained and only 3.5% of the acquisitions fell in the Replaced category. The main finding is that buyers earned significantly positive announcement-period returns during the conglomerate merger wave when they made diversifying acquisitions. The hypothesis that conglomerates were driven by empire building or some other managerial objective can be rejected because such explanations imply value decreases to unrelated acquisitions. Another explanation of the conglomerate merger wave is that mergers were driven by an accounting trick rather than expected efficiencies. Therefore, investors watched EPS; when the EPS went up they bid up the price of the stock. According to this argument, Conglomerates, tended to buy companies with lower P/E ratios than their own in order to increase their EPS and boost their stock prices. There was no evidence that firms earned positive returns which inflated EPS in this way. The study indicated that early conglomerators earned significantly positive returns simply because they were first. They may have gained some rents to organizational innovation. Possibly the men who built the first conglomerates had a unique talent for diversification, which the market rewarded. Hubbard, Palia (1999), have examined the likelihood that internal capital markets were formed to alleviate the information costs associated with the less well-developed external capital markets of the time; that is, whether they were expected to create value by the external capital markets in the 1960s.In this paper, the authors have inspected a form of cross-subsidization that occurs when a financially unconstrained bidding firm takes over a financially constrained target firm and as a result forms an internal capital market.The study examined whether the external capital markets expected that the formation of internal capital markets in the 1960s were value-maximizing for the bidding firm. However, existing research has argued that internal capital markets can be value-enhancing. As argued by Geneen(1997), the financing and budgeting expertise that a firm possesses is not necessarily related to its degree of diversification. Accordingly, the internal capital market hypothesis for all acquisitions is tested. The study also tests the bootstrapping explanation for conglomeration in the 1960s, which takes place when firms with a high price-earnings ratio (P/E) took over low P/E target firms and fooled the stock market with an increased combined earnings-per-share. In the 1960s, external capital markets were less developed in terms of company-specific information production than in later years. The authors have classified company-specific information into two general categories. Firstly, production information; and secondly, financing and budgeting expertise. However, in this study information-intensive activities were introduced. This was because; it assists the manager to internally allocate capital across divisions of a diversified firm. It was suggested that diversified firms were perceived by the external capital markets to have an informational advantage, because external capital markets were less well developed at that time. Comparing it to the current decade, there was less access by the public to computers, data- bases, analyst reports, and other sources of company-specific information. Not only this there was less large institutional money managers and the market for risky debt was illiquid. The authors selected a sample of 392 acquisitions that occurred during the period from 1961 through 1970. Diversifying acquisitions were defined as those in which the bidder and target do not share any two- digit SIC code Matsusaka(1993), and related acquisitions as those in which they do share a two-digit SIC code. Further the Wall Street Journal was used for announcement date as the event date. Four measures of abnormal returns to the conglomerate bidding firm were calculated. These measures are as follows. Firstly, the usual percentage returns or the cumulative abnormal returns from five days before to five days after the event date. Secondly the percentage returns until date of last revision or the cumulative abnormal returns from five days before to five days after the date of the last revision (Lang et al. (1991)). Thirdly, the dollar returns or the percentage return times the market value of the bidder six days before the announcement (Malatesta(1983); Matsusaka(1993)). Lastly , the investment return defined as the change in the value of the bidder divided by the purchase price (Morck et al. (1990)). Tobins r ratio[6] is used as a proxy for a firms capital market opportunities. The evidence from these measures is mixed. Positive abnormal returns for all four measures were shown for related acquisitions. On the other hand, two of the four measures had shown statically significant positive abnormal returns for diversifying acquisitions in. Not only that diversifying acquisitions do not significantly earn less than related acquisitions in two of the four measures. Thus, evidence suggests, the capital markets believed acquisitions to be generally good for bidder shareholders during the 1960s. More significantly, it was found that when financially unconstrained buyers acquired constrained target firms, highest bidder returns were earned. Further, bidders generally retain target management, signifying that management may have provided company- specific operational information and the bidder on his part also provided capital budgeting expertise. Therefore, external capital markets expected information benefits from the formation of the internal capital markets. The study found no evidence in support of the bootstrapping hypothesis, as the coefficient on the dummy variable[7] was not statistically different from zero. This result is consistent with Matsusaka, (1993), who also finds no evidence for bootstrapping.Therefore, firms merged to form their own internal capital markets as there was a deficiency of well-developed external capital markets in the 1960s. Some firms apparently had an information advantage over the external capital markets and were expected to produce value in an internal capital market. In the 1960s diversified acquisitions were rewarded by financial markets, the informational advantage that acquiring firms appeared to possess was likely to be in the capital budgeting, allocation process and operational aspects of each division. Bidder firms generally retained the target management as it would facilitate them running the operational part of each target firm. The Motives discussed in the above mentioned articles are appealing; however evidence from the stock market suggests that shareholders preferred their firms to diversify. Using a data set from the 60s and early 70s, Matsusaka (1993) reported that, when the company announced an unrelated acquisition, the stock price of the bidder increased on average of $8 million. However, on the announcement of a related acquisition, the bidding firms stock price fell by $4 million. The difference between the two returns is quite significant. Thus it appears that investors fully believed that unrelated acquisitions benefited their firms relative to the alternatives. Thus the managers just did what the stock market told them to do that is to diversify. Evidence from 1980s stock market suggested that shareholders, again, liked what was happening. Shleifer, and Vishny (1992) found that in the 1980s, stock prices of the bidding firms rose when they bought other firms in the same industry, and fell with unrelated diversification. It is clear that the market disapproved unrelated diversification. Therefore it does not astonish that, in light of such market reception, managers stopped diversifying and did what the stock market directed them to do. 2.2 Legal Motives Matsusaka (1996) investigated whether the antitrust enforcement of the 1960s led firms to take on the diversification goal, by preventing them from expanding within their own core industries. If correct, diversification should have occurred more less frequently when small firms merged than when large firms merged since small mergers were less likely to have attracted antitrust attention. Further the author examined the diversification patterns in the United Kingdom, Canada, Germany, and France in the late 1960s and early 1970s, where none of these countries had legal restrictions on horizontal growth similar to those in the Unites States. The US Clayton Antitrust Act was the antitrust legislation in the postwar period (1950 Celler-Kefauver amendment to Section 7). The act, prohibited mergers that would substantially lessen competition, or tend to create a monopoly. This new law was used by the antitrust authorities and the courts to limit the number of mergers between vertically related and firms in the same lines of business. The strictness of the antitrust environment in 1968 is illustrated by the observation that in the earlier 12 years, all antitrust cases that reached the Supreme Court had been resolved in support of the government. The study indicates the following two implications. Firstly, large horizontal mergers were more liable to have been challenged on antitrust grounds than small horizontal mergers. Secondly mergers between unrelated firms were unlikely to have been blocked, regardless of size. Firms diversified in 1960s, since antitrust authorities prevented them from expanding in their home industries. Later when antitrust policy became less rigid in the 1980s, firms expanded horizontally, leading them to refocus on their core business. Stigler (1966) was perhaps the first to present evidence on the antitrust hypothesis, concluding that, the 1950 Merger Act has had a strongly adverse effect on horizontal mergers by large companies. The author selected a sample of 549 mergers (that took place in 1968) from the New York Stock Exchange. Results of the study were reported through Logit regressions .It was found that bidders were as likely to have entered new industries when they made small acquisitions as when they made large acquisitions, and small buyers were as likely to have diversified as large buyers. Further the total number of diversification acquisitions concerning small companies was high.Though, according to the antitrust hypothesis; diversification should have been widespread primarily in large mergers where same industry acquisitions were prohibited by tough antitrust enforcement. Secondly assembled international evidence indicated that diversification took place in many industrialized nations in the 1960s and 1970s, although restrictions against horizontal combinations were unique to the United States. Yet, most other industrialized Western nations[8] experienced diversification merger waves and general movements toward diversification in their largest companies (Chandler (1991)).Thus most of the evidence, is not consistent with the antitrust hypothesis, signifying that other explanations for corporate diversification should be emphasized not the anti trust hypothesis. Scholes and Wolfson (1990) state, that the changes in U.S. tax laws[9] in the 1980s had obvious affect on the desirability of mergers and acquisitions. However such transactions were not only motivated by tax factors but also non tax factors[10]. Tax laws can have number of affects on mergers and acquisitions , which can include the following capital losses, presence of tax-attribute carry forwards such as net operating losses , investment tax credits, and foreign tax credits, among others, that might be cashed in more quickly and more fully by way of a merger; the desire to step up the tax basis of assets for depreciation purposes to their fair market value; the desire to sell assets to permit a change in the depreciation schedule to one that is more highly accelerated. The authors in this study have examined the effect of changes in tax laws passed in 1980s on merger and acquisition activity in the United States. The authors selected the annual values of mergers and acquisitions from 1968 through 1987 in nominal dollars. The data source for nominal values was W. T. Grimm and Company for 1968-85 and Mergers Acquisitions (1987-88, rev. quarterly) for 1986 and 1987. Using time series analysis it was found that the dollar volume of merger activity between 1980-1981 increased from $44.35 billion to $82.62 billion (86%) in nominal terms. The percentage increase was approximately twice as large as the next largest percentage increase in annual merger and acquisition activity over the 1970-86 periods. There was spectacular increase in merger activity that began with the passage of the Economic Recovery Tax Act of 1981, however this was not the only merger wave that occurred in that time frame. Unusual merger activity was also witnessed in the 1960s. The termination of 1960s wave was accompanied by quite a few regulatory events that depressed such transactions. Firstly, the Williams Amendments had en larged the cost and difficulty of effecting tender offers. Secondly the issuance of Accounting Principles Board Opinions 16 and 17, forced many acquiring firms to boost depreciation expense, goodwill amortization and cost of goods sold. Thirdly the Tax Reform Act of 1969, made transferability of tax attributes (net-operating-loss carry forwards) more restrained. Therefore there was a sudden decline in merger activity from the peak in 1968. Relative to the tax benefits when the non tax benefits of the transaction were small, current management were the most efficient purchasers, as they had an advantage along the hidden information dimension. Therefore 1981 act had increased the incidence of cases in which non tax benefits were less than the common tax benefits of mergers and acquisitions. As a result, there was an increase in the number of transactions involving management buyouts. The annual dollar value of unit management buyouts between 1978-80 increased by a factor of 3, and by a factor in excess of 20 for the period 1981-86. The antitrust proposition mentioned above is appealing as one of the most important reason for diversification, during the 60s and 70s, which simply disallowed mergers of firms in the same industry, regardless of the effects of these mergers o