Acquisition is a High Risky Strategy Essay Example for Free

Acquisition is a High Risky Strategy Essay In the literature, several motives for takeovers have been identified. One is the desire for synergy. That is, similarities or complementarities between the acquiring and target firms are expected to result in the combined value of the enterprises exceeding their worth as separate firms (Collis and Montgomery, 1998). A second motive involves the expectation that acquirers can extract value because target companies have been managed inefficiently (Varaiya, 1987). A third motive is attributed to managerial hubris the notion that senior executives, in overestimating their own abilities, acquire companies they believe could be managed more profitably under their control. Agency theory motive is the anticipation that firm expansion will positively impact the compensation of top managers since there tends to be a direct relation between firm size and executive pay. Contemporary specialists contend that managerial ownership incentives may be expected to have divergent impacts on corporate strategy and firm value. This premise has been recognized in previous studies. For instance, Stulz (1988) has examined the ownership of managers of target companies and has proposed that the relationship between that ownership and the value of target firms may initially be positive and then subsequently become negative with rising insider ownership. Moreover, Shivdasani (1993) empirically shows that the relationship of the ownership structure of target companies with the value of hostile bids is not uniformly positive. McConnell and Servaes (1990) have likewise analyzed the relationship of equity ownership among corporate insiders and Tobins q. Their results demonstrate a non-monotonic relation between Tobins q and insider equity stakes. Wright et al. (1996: 451) have shown a non-linear relationship between insider ownership and corporate strategy related to firm risk taking. Ownership Incentives and Changes in Company Risk Motivating Acquisitions An agency-theoretic motive for acquisitions has been used to explain managerial preferences for risk-reducing corporate strategies (Wright et al., 1996). The implication is that both principals and agents prefer acquiring target companies with higher rather than lower returns. In that, shareholders and managers have congruent interests. The interests, however, diverge in terms of risk considerations associated with acquisitions. Because shareholders possess diversified portfolios, they may only be concerned with systematic risk and be indifferent to the total variance of returns associated with a takeover. Senior managers may alternatively prefer risk-reducing corporate strategies, unless they are granted ownership incentives. That is because they can not diversify their human capital invested in the firm. In the literature, it has been argued that agency costs may be reduced as managerial ownership incentives rise. The reason is that, as ownership incentives rise, the financial interests of insiders and shareholders will begin to converge. Analysts conjecture, however, that such incentives may not consistently provide senior executives the motivation to lessen the agency costs associated with an acquisition strategy. Inherent is the presumption that the nature of executive wealth portfolios will differently influence their attitudes toward corporate strategy. The personal wealth portfolios of top managers are comprised of their ownership of shares/options in the firm, the income produced from their employment, and assets unrelated to the firm. Presumably, as senior executives increase their equity stakes in the enterprise, their personal wealth portfolios become correspondingly less diversified. Although stockholders can diversify their wealth portfolios, top executives have less flexibility if they own substantial shares in the firms they manage. Hence, if a significant portion of managers wealth is concentrated in one investment, then they may find it prudent to diversify their firms via risk-reducing acquisitions. In the related literature, however, takeovers and risk taking have been approached differently from the described approach. Amihud and Lev (1999) have contended that insiders employment income is significantly related to the firms performance. Thus, managers are confronted with risks associated with their income if the maintenance of that income is dependent on achieving predetermined performance targets. Reasonably, in the event of either corporate underperformance or firm failure, CEOs not only may lose their current employment income but also may seriously suffer in the managerial labor market, since their future earnings potential with other enterprises may be lowered. Hence, the risk of executives employment income is impacted by the firms risk. The ramification of Amihud and Levs (1999) contentions is that top managers will tend to lower firm risk, and therefore their own employment risk, by acquiring companies that contribute to stabilizing of the firms income, even if shareho lder wealth is adversely affected. Consistent with the implications of Amihud and Levs arguments, Agrawal and Mandelker (1987) have similarly suggested that managers with negligible ownership stakes may adopt risk-reducing corporate strategies because such strategies may well serve their own personal interests. With ownership incentives, however, managers may be more likely to acquire risk-enhancing target companies, in line with the requirement of wealth maximization for shareholders. The notion that at negligible managerial ownership levels, detrimental risk-reducing acquisition strategies may be emphasized, but with increasing ownership incentive levels, beneficial risk-enhancing acquisitions may be more prevalent is also suggested in other works (Grossman and Hoskisson, 1998). The conclusion of these investigations is that the relationship between insider ownership and risk enhancing, worthy corporate acquisitions is linear and positive. Some experts assert that CEOs personal wealth concentration will induce senior managers to undertake risk-reducing firm strategies. Portfolio theorys expectation suggests that investors or owner-managers may desire to diversify their personal wealth portfolios. For instance, Markowitz (1952: 89) has asserted that investors may wish to diversify across industries because firms in different industries. . . have lower covariances than firms within an industry. Moreover, as argued by Sharpe (1964: 441), diversification enables the investor to escape all but the risk resulting from swings in economic activity. Consequently, managers with substantial equity investments in the firm may diversify the firm via risk-reducing acquisitions in order to diversify their own personal wealth portfolios. Because they may be especially concerned with risk-reducing acquisitions, however, their corporate strategies may not enhance firm value through takeovers, although managerial intention may be to boos t corporate value. The above discussion is compatible with complementary arguments that suggest that insiders may acquire non-value-maximizing target companies although their intentions may be to enhance returns to shareholders. For instance, according to the synergy view, while takeovers may be motivated by an ex-ante concern for increasing corporate value, many such acquisitions are not associated with an increase in firm value. Alternatively, according to the hubris hypothesis, even though insiders may intend to acquire targets that they believe could be managed more profitably under their control, such acquisitions are not ordinarily related to higher profitability. If acquisitions which are undertaken primarily with insider expectations that they will financially benefit owners do not realize higher performance, then those acquisitions which are primarily motivated by a risk-reducing desire may likewise not be associated with beneficial outcomes for owners. Additionally, it can be argued that shareholders can more efficiently diversify their own portfolios, making it unnecessary for managers to diversify the firm in order to achieve portfolio diversification for shareholders. Risk Associated with HRM practices in International Acquisitions There are a number of reasons why the HRM policies and practices of multinational corporations (MNCs) and cross-border acquisitions are likely to be different from those found in domestic firms (Dowling, Schuler and Welch, 1993). For one, the difference in geographical spread means that acquisitions must normally engage in a number of HR activities that are not needed in domestic firms such as providing relocation and orientation assistance to expatriates, administering international job rotation programmes, and dealing with international union activity. Second, as Dowling (1988) points out, the personnel policies and practices of MNCs are likely to be more complex and diverse. For instance, complex salary and income taxation issues are likely to arise in acquisitions because their pay policies and practices have to be administered to many different groups of subsidiaries and employees, located in different countries. Managing this diversity may generate a number of co-ordination and communication problems that do not arise in domestic firms. In recognition of these difficulties, most large international companies retain the services of a major accounting firm to ensure there is no tax incentive or disincentive associated with a particular international assignment. Finally, there are more stakeholders that influence the HRM policies and practices of international firms than those of domestic firms. The major stakeholders in private organizations are the shareholders and the employees. But one could also think of unions, consumer organizations and other pressure groups. These pressure groups also exist in domestic firms, but they often put more pressure on foreign than on local companies. This probably means that international companies need to be more risk averse and concerned with the social and political environment than domestic firms. Acquisitions and HRM Practices: Evidence from Japan, the US, and Europe In contemporary context, international human resource management faces important challenges, and this trend characterizes many Japanese, US and European acquisitions.   From the critical point of view, Japanese companies experience more problems associated with international human resource management than companies from the US and Europe (Shibuya, 2000). Lack of home-country personnel sufficient international manage ­ment skills has been widely recognized in literature as the most difficult problem facing Japanese compa ­nies and simultaneously one of the most significant of US and European acquisitions as well. The statement implies that cultivating such skills is difficult and that they are relatively rare among businessmen in any country. Japanese companies may be particularly prone to this problem due to their heavy use of home-country nationals in overseas management positions. European and Japanese acquisitions also experience the lack of home country personnel who want to work abroad, while it is less of an impediment for the US companies. In the US acquisitions expatriates often experience reentry difficulties (e.g., career disruption) when re ­turning to the home country: This problem was the one most often cited by US firms.   Today Japanese corporations report the relatively lower incidence of expatriate reentry diffi ­culties, and it is surprising given the vivid accounts of such problems at Japanese firms by White (1988) and Umezawa (1990). However, the more active role of the Japanese person ­nel department in coordinating career paths, the tradition of semi ­annual musical-chair-like personnel shuffles (jinji idoh), and the continu ­ing efforts of Japanese stationed overseas to maintain close contact with headquarters might underlie the lower level of difficulties in this area for Japanese firms (Inohara, 2001). In contrast, the decentralized structures of many US and European firms may serve to isolate expatriates from their home-country headquarters, making reentry more problematic. Also, recent downsiz ­ing at US and European firms may reduce the number of appropriate management positions for expatriates to return to, or may sever expatri ­ates relationships with colleagues and mentors at headquarters. Furthermore, within the context of the lifetime employment system, individ ­ual Japanese employees have little to gain by voicing reentry concerns to personnel managers. In turn, personnel managers need not pay a great deal of attention to reentry problems because they will usually not result in a resignation. In western firms, reentry problems need to be taken more seriously by personnel managers because they frequently result in the loss of a valued employee. A further possible explanation for the higher incidence of expatriate reentry problems in western multinationals is the greater tendency of those companies to implement a policy of transferring local nationals to headquarters or other international operations. Under such a policy, the definition of expatriate expands beyond home-country nationals to en ­compass local nationals who transfer outside their home countries. It may even be that local nationals who return to a local operation after working at headquarters or other international operations may have their own special varieties of reentry problems. Literature on international human resource practices in Japan, the US and Europe suggest that the major strategic difficulty for the MNCs is to attract high-caliber local nationals to work for the company. In general, acquisitions may face greater challenges in hiring high-caliber local employees than do domestic firms due to lack of name recognition and fewer relationships with educators or others who might recommend candidates. However, researchers suggest that this issue is significantly more difficult for Japanese than for US and European multinationals. When asked to describe problems encoun ­tered in establishing their US affiliates, 39.5% of the respondents to a Japan Society survey cited finding qualified American managers to work in the affiliate and 30.8% cited hiring a qualified workforce (Bob ; SRI, 2001). Similarly, a survey of Japanese companies operating in the US conducted by a human resource consulting firm found that 35% felt recruiting personnel to be very difficult or extremely difficult, and 56% felt it to be difficult (The Wyatt Company, 1999). In addition to mentioned problem, Japanese acquisition encounter high local employee turnover, which is significantly more prob ­lematic for them due to the near-total absence of turnover to which they are accustomed in Japan. The US, European and Japanese companies admit very rarely that they encounter local legal challenges to their personnel policies. However, in regard to Japanese acquisitions large   amount of press coverage has been given to lawsuits against Japanese companies in the United States and a Japanese Ministry of Labor Survey in which 57% of the 331 respondents indicated that they were facing potential equal employ ­ment opportunity-related lawsuits in the United States (Shibuya, 2000). Conclusion This research investigates whether corporate acquisitions with shared technological resources or participation in similar product markets realize superior economic returns in comparison with unrelated acquisitions. The rationale for superior economic performance in related acquisitions derives from the synergies that are expected through a combination of supplementary or complementary resources. It is clear from the results of this research that acquired firms in related acquisitions have higher returns than acquired firms in unrelated acqui ­sitions. This implies that the related acquired firm benefits more from the acquirer than the unrelated acquired firm. The higher returns for the related acquired firms suggest that the combination with the acquirer’s resources has higher value implications than the combination of two unrelated firms. This is supported by the higher total wealth gains which were observed in related acquisitions. I did however, in the case of acquiring firms, find that the abnormal returns directly attributable to the acquisition transaction are not significant. There are reasons to believe that the announcement effects of the transaction on the returns to acquirers are less easily detected than for target firms. First, an acquisition by a firm affects only part of its businesses, while affecting all the assets (in control-oriented acqui ­sitions) of the target firm. Thus the measurability of effects on acquirers is attenuated. Second, if an acquisition is one event in a series of implicit moves constituting a diversification program, its individual effect as a market signal would be mitigated. It is also likely that the theoretical argument which postulates that related acquisitions create wealth for acquirers may be underspecified. Relatedness is often multifaceted, suggesting that the resources of the target firm may be of value to many firms, thus increasing the relative bargaining power of the target vis-a-vis the potential buyers. Even in the absence of explicit competition for the target (multiple bidding), the premiums paid for control are a substantial fraction of the total gains available from the transaction. For managers, some implications from the research can be offered. First, it seems quite clear from the data that a firm seeking to be acquired will realize higher returns if it is sold to a related than an unrelated firm. This counsel is consistent with the view that the market recognizes synergistic combinations and values them accordingly. Second, managers in acquiring firms may be advised to scrutinize carefully the expected gains in related and unrelated acquisitions. For managers the issue of concern is not whether or not a given kind of acquisition creates a significant total amount of wealth, but what percentage of that wealth they can expect to accrue to their firms. Thus, although acquisitions involving related technologies or product market yield higher total gains, pricing mechanisms in the market for corporate acquisitions reflect the gains primarily on the target company. Interpreting these results conservatively, one may offer the argument that expected gains for acquiring firms are competed away in the bidding process, with stockholders of target firms obtaining high proportions of the gains. On a pragmatic level this research underscores the need to combine what may be called the theoretical with the practical. In the case of acquisitions, pragmatic issues like implicit and explicit competition for a target firm alter the theoretical expectations of gains from an acquisition transaction. Further efforts to clarify these issues theoretically and empirically will increase our understanding of these important phenomena. Bibliography Sharpe WF. 1964. Capital asset prices: a theory of market equilibrium under conditions of risk. Journal of Finance 19: 425-442 Markowitz H. 1952. Portfolio selections. Journal of Finance 7: 77-91 Grossman W, Hoskisson R. 1998. CEO pay at the crossroads of Wall Street and Main: toward the strategic design of executive compensation. Academy of Management Executive 12: 43-57 Amihud Y, Lev B. 1999. Does corporate ownership structure affect its strategy towards diversification? Strategic Management Journal 20(11): 1063-1069 Agrawal A, Mandelker G. 1987. Managerial incentives and corporate investment and financing decisions. Journal of Finance 42: 823-837 Wright P, Ferris S, Sarin A, Awasthi V. 1996. The impact of corporate insider, blockholder, and institutional equity ownership on firm risk-taking. Academy of Management Journal 39: 441-463 McConnell JJ, Servaes H. 1990. Additional evidence on equity ownership and corporate value. Journal of Financial Economics 27: 595-612. Shivdasani A. 1993. Board composition, ownership structure, and hostile takeovers. Journal of Accounting and Economics 16: 167-198 Stulz RM. 1988. Managerial control of voting rights: financing policies and the market for corporate control. Journal of Financial Economics 20: 25-54 Varaiya N. 1987. Determinants of premiums in acquisition transactions. Managerial and Decision Economics 14: 175-184 Collis D, Montgomery C. 1998. Creating corporate advantage. Harvard Business Review 76(3): 71-83 White, M. 1988. The Japanese overseas: Can they go home again? New York: The Free Press. Bob, D., ; SRI International. 2001. Japanese companies in American communities. New York: The Japan Society.

An Analysis of the First Paragraph of O’Connor’s The Artificial Nigger

An Analysis of the First Paragraph of O’Connor’s The Artificial Nigger ?In â€Å"The Artificial Nigger,† Flannery O’Connor commingles characteristic Christian imagery with themes evocative of her Southern setting. In this essay, a close reading of the first paragraph of this story elucidates the subtle ways in which O’Connor sets up these basic themes of redemption and forgiveness. An additional paragraph will examine the ramifications of this reading on the intertwined racial aspects of the story, which are connected by a common theme of master/servant imagery, which is integral to the first paragraph. In this story, the key character is named Mr. Head, which immediately signals to the reader that this character is suggestive of rationality and perhaps especially pride (as in the expression â€Å"having a big head†). This is appropriate given that Mr. Head’s change throughout the story will emphatically revolve around his spiritual and Christian-oriented awareness of the plight of man and the problem of pridefulness. Mr. Head â€Å"awakens† (indeed, the whole story regards his awakening) in the night to a room â€Å"full of moonlight.† From the very beginning, elements of light and dark are vying in the story’s background, and in this case, it is a light that shines through the darkness. O’Connor, through the uses of dashes, alerts the reader to the moonlight being â€Å"the color of silver,† the first of many silver/gray references throughout the story. It is hard not to equate this references to the thirty pieces of silver that Judas received for betraying Jesus. Such a reference is consistent with the story’s themes of betrayal and forgiveness (even though Mr. Head’s denial of his grandson Nelson is perhaps more reminiscent of Pete... ...nship between blacks and whites exist without such interchangeability. Such a reading suggests that African Americans are often the vehicle through which Southerners experience powerful lessons of hatred (as in Nelson’s first experience with the black man on the train), pride (when Nelson witnesses his grandfather’s witty rejoinder to the stuffy black waiter), sexuality (Nelson’s run-in with the black temptress in the Atlanta ghetto), and even redemption (as they witness the statue in the story’s penultimate moment). No matter that Nelson has only recently learned what a â€Å"nigger† is, never mind that the statue itself is plaster and one eye is â€Å"entirely white† – the overturning of the master/servant relationship is only possible when firmly on the white side of the segregated line; this reality ensures that all the â€Å"niggers† in this story remain â€Å"artificial.†

Criminal Justice Process Essay

Juveniles are not extended the right to a jury of their peers. What is the most significant reason why this right is not extended to juveniles? Please explain in detail why you chose that particular reason. I do not think that there is only one significant reason as to why juveniles are not extended the right to a jury of their peers. I think that one of the multiple reasons for this right not being extended is because a jury has to be able to be responsible enough to actually show up, they have to be able to convict or not convict based on evidence beyond a reasonable doubt and be able to disregard any evidence or statements when a judge asks them to. I do not think that most juveniles are mentally, nor emotionally equipped to do deal with the responsibilities of being a part of a jury. Most juveniles are still immature and when someone’s life is at stake and their freedom can be taken away I do not think that having a â€Å"child† decide their fate is appropriate. Why do you believe that there are differences between the adult justice system and the juvenile justice system? Please explain in detail why you believe as you do? I believe there are differences between the adult justice system and the juvenile justice system because of the differences in age, experiences, knowledge, and maturity. The juvenile justice system focuses on the rehabilitation of the juvenile, whereas the adult justice system’s goal is to punish and obtain retribution for the crime(s) committed. Juvenile offenders are given sentences that seek to rehabilitate rather than punish. Some of the treatment options offered could include counseling and placement in juvenile institutions that were also created to help restore them. Adult offenders are given harsh sentences. The sentences given can include a fine and or incarceration in jail or prison. All of the sentences given are solely based on punishing the offender. The adult court system is primarily concerned with the offender paying for the damage that they have done to society and the courts isn’t interested in rehabilitating or trying to change the behavior of the offender. After reviewing this entire building in CJ Interactive, describe ways that you can use this interactive tool to improve your learning of criminal justice concepts. Describe in detail the ways you can use this tool to further your criminal justice education, identifying at least three specific ways you would use this tool. After reviewing the entire building in CJ Interactive, I was able to see how this tool will help my learning of criminal justice concepts. I am a visual and auditory learner and both of my learning styles are incorporated in the CJ Interactive tool. I was able to get a better understanding of many of the topics that we have discussed in class thus far. For example through this too I was able to get a better understanding of the differences between the adult and juvenile court systems as well as how crime is defined and measured. I will be able to use this tool as another way of learning and understanding the criminal justice system by using the glossary to learn the terms used to explain the criminal justice system and its process. I will also be able to use this tool to learn and understand the criminal justice system by utilizing the different ways information is given is given in CJ Interactive for example there are 14 buildings located in this learning tool and each building represents a different topic in criminal justice and gives us students access to different learning modules, myths and issues, simulation activities, homework and review, and glossary terms associated with each particular topic. I can see myself utilizing all of these resources as a way to better understand the criminal justice system, my assignments that I have to complete in class, and for me to just use to gain as much knowledge as I can about the different topics in criminal justice throughout my college career at Colorado Technical University.

Definition and Examples of Exonyms and Endonyms

An exonym is a place name  that isnt used by the people who live in that place but that is used by others. Also spelled  xenonym. Paul Woodman has defined exonym as a toponym bestowed from the outside, and in a language from the outside (in Exonyms and the International Standardisation of Geographical Names, 2007).  For example, Warsaw is the English exonym for  the capital of Poland, which the Polish people call  Warszawa.  Vienna is the English exonym for the German and Austrian Wien. In contrast,  a  locally used toponym—that is, a  name used by a group of people to refer to themselves or  their region (as opposed to a name given to them by others)—is called an endonym (or  autonym).  For example,  Kà ¶ln  is a German endonym while  Cologne  is the English  exonym  for  Kà ¶ln. Commentary Europes second-longest river is the Danube--the English exonym for  Donau (in German), Dunaj (in Slovak), and Duna (in Hungarian).Berber  derives from the ultimate exonym  (i.e. a name given by outsiders): the Greek word barbaroi, which mimicked the foreignness of a language by  rendering it as something akin to blah-blah. From it, we get barbarian, as well as Barbary (as in Barbary Coast, Barbary  Pirates, and Barbary apes). In current usage, many exonyms can be considered insensitive (Gypsy, Lapp, Hottentot) and preference is given to the endonym (Roma, Saami, Khoi-San).(Frank Jacobs, All Hail Azawad. The New York Times, April 10, 2012)  [T]he English language exonym Mecca has been shown to be unacceptable to many Arab experts, who are uncomfortable with any alteration to the toponym of the holy place Makkah.(Paul Woodman, Exonyms: A Structural Classification and a Fresh Approach, in Exonyms and the International Standardisation of Geographical Names, ed. by Adami Jorda n, et al. LIT Verlag, 2007) Reasons for the Existence of Exonyms - There are three main reasons for the existence of exonyms. The first is historical. In many cases, explorers, unaware of existing place names, or colonizers and military conquerors unmindful of them, gave names in their own languages to geographical features having native names...The second reason for exonyms stems from problems of pronunciation...There is a third reason. If a geographical feature extends over more than one country it may have a different name in each. (Naftali Kadmon, Toponymy—Theory, and Practice of Geographical Names, in Basic Cartography for Students and Technicians, ed. by R. W. Anson, et al. Butterworth-Heinemann, 1996)-  English uses relatively few exonyms for European cities, especially ones it has come up with on its own ( not borrowed); this may be explained by geographic isolation. This could also explain the low number of exonyms that other languages use for English cities. (Jarno Raukko, A Linguistic Classification of Eponyms, in Exonyms, ed. by Adami Jordan, et al. 2007) Toponyms, Endonyms, and Exonyms - For a  toponym  to be defined as an  exonym, there must exist a minimum degree of difference between it and the corresponding  endonym... The omission of diacritical marks usually does not turn an endonym into an exonym: Sao Paulo (for Sà £o Paulo); Malaga (for Mà ¡laga) or Amman (for Ê ¿AmmÄ n) are not considered exonyms. (United Nations Group of Experts on Geographical Names,  Manual for the National Standardization of Geographical Names. United Nations Publications, 2006)- If an important topographic feature is located or contained entirely within a single country, most good world atlases and maps print the  endonym  as the primary name, with the translation or conversion into the language of the atlas either in brackets or in smaller type. If a feature transcends political boundaries, and especially if it carries different names in the different countries, or if it lies outside the territorial waters of any one country—exonymisation or translation into the target language of the atlas or map is almost always resorted to. (Naftali Kadmon, Toponymy—Theory, and Practice of Geographical Names, in  Basic Cartography for Students and Technicians, edited by R. W. Anson, et al. Butterworth-Heinemann, 1996) Further Reading Name That  -nymNationality WordOnomasticsProper Name