Saturday, November 23, 2019

Aldis Micro environment

Aldis Micro environment Introduction Aldi is a German Based multinational company that operates in the discounted stores sector. Having started its operations back in the year 1946, the company has grown to the extent that it controls 8078 stores around the world today. The company entered the United Kingdom in 1990 with the opening of a single store. As of today, the company has managed to open four hundred stores across the United Kingdom.Advertising We will write a custom report sample on Aldi’s Micro environment specifically for you for only $16.05 $11/page Learn More This growth has put the company amongst one of the most competitive companies in the Hypermarkets, Supermarkets and Superstores sector in the United Kingdom. In the United Kingdom, the company operates within a competitive micro environment. This implies that there are a substantial number of stakeholders in the sector in which Aldi operates (International Markets Bureau 2011). This paper explores the inter nal and external environment in which Aldi operates in the United Kingdom. The paper begins by examining the key stakeholders of the company. This is followed by a Porter’s five forces analysis, which helps to capture the macro environment in which the company operates. The paper ends by drawing recommendations from the findings, which can be used by Aldi to gain a competitive position in the United Kingdom. Key Stakeholder Groups in Aldi’s Micro Environment The government and regulators Each stakeholder plays a given role in as far as the influence of operation for companies is concerned. The government plays a greater role in setting the business environment. It influences the operation of a given company from the macro and even narrows down to shape the micro environment (Fassin 2009). The UK government, especially the ministry of trade ensures that comprehensive trade policies are in place in order to steer the operation of business companies. The government ensure s that the operational environment is fair for all the companies operating in the HSS. The retail laws are set by the government. Also, the government ensures that labour laws are effectively developed. The social and environmental policy matters are also coordinated by the government. The government does not have needs per se, but helps in setting standards that are required for effective business operation (International Markets Bureau 2011). Customers The other critical stakeholders in the micro environment are the customers (Fassin 2009). Research has pointed out that customers are the most valid stakeholders by any company, including Aldi. The reason behind this is that customers are the main sources of competitive advantage by virtue of their shopping trends and habits.Advertising Looking for report on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More The growth of Aldi is associated with its ability to prov ide diverse services, which have enabled them to gain a substantial number of customers over time. Customers have their expectations of the company. Customers have been demanding for services at discounted prices. This enables the customers to attain goods at lesser costs. This is because of the higher cost of living that has been brought about by the recent tough economic conditions in the country and the world at large (NFU n.d). Suppliers Suppliers are vital for companies that deal with the marketing of a wide range of products. Aldi offers a wide range of products. This is one of the positioning factors for the company. The relevance of the suppliers to the company is to ensure sustainable supply of goods to the company (Fassin 2009). Aldi gets its supplies from different manufacturers and processors. In order to ensure that it maintains its relationship with its customers, a company has to ensure that it maintains a stable relationship with its suppliers so that they can keep s upplying quality products. Through the maintenance of a working relationship with their suppliers, the company is able to get a constant supply of products and services. The main need for suppliers is to ensure that they secure a relationship with the company so that they can maintain the company as one of their chains where they make their supplies. Employees According to Fassin (2009), employees are the immediate stakeholders in the company. When it comes to the issue of employees, Aldi focuses on two things: The maintenance of their employees through deployment of best practices in human resource management and the outsourcing of high quality employees from the lumber industry in the United Kingdom. As mentioned earlier, Aldi operates four hundred stores in the United Kingdom. This points out that the company has a substantial amount of employees in the country. The company has attained most of its managerial employees from the Universities in the United Kingdom. The employees ne ed to be maintained by the company through a better pay and other practices of performance management (NFU n.d).Advertising We will write a custom report sample on Aldi’s Micro environment specifically for you for only $16.05 $11/page Learn More Communities Communities are another critical group of stakeholders in the company. The company draws its customers from the communities in areas where it has set its retail stores. It is argued that the only way through which a company can establish positive relationships and attachment to the community is by employing best practices in corporate social responsibility (Fassin 2009). These entail the support of activities and functions within the community. It also involves engagement in sustainable management and environmental conservation. These practices make the communities to be drawn near the company. Aldi has a policy on corporate social responsibility, which helps it to establish and sustain relationsh ips with the communities in the UK (NFU n.d). Porter’s Five Forces Analysis of Aldi in the UK’s HSS Sector The HSS sector is comprised of a substantial number of operators, thereby making the sector to be quite competitive. This implies that any company that aims at attaining a competitive position in the sector has to make efforts to understand the factors of competitiveness in the sector. Though still faced with challenges that impede its competitiveness in the UK HSS sector, Aldi has been active in the sector and has managed to gain a substantive amount of customers due its mastery of the macro environment and the subsequent adoption of competitive practices. Threat of new competition One thing that is feared by business companies, yet the most critical determiner for their performance is competition. Firms are required to keep monitoring and assessing the developments in the industry in which they operate to gain knowledge on how to adjust their activities in the m arket. This ensures competitiveness in the market (Draganska Klapper 2007). The HSS in the UK retail industry is comprised of a number of companies that have operated in the industry for a relatively longer period of time. Such companies include Tesco, Sainsbury, Morrissonswhereas and Asda (Hall 2011). Aldi is not considered as a new entrant in the HSS of the UK since it has operated in the UK for more than 20 years. The company has gained competitiveness in the industry through a strategic move, which made it venture into discount retailing. However, it has been noted that a substantial number of companies are opting to invest in the discount retailing in the future because of the developments in the current market (Brown 2013). This calls for Aldi to adjust its activities by making adjustments to the offers made to its customers.Advertising Looking for report on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More This is the best way through which the company can maintain its customers. The advantage for Aldi is that it has already operated in the discounted retailing for an extended period of time, thereby attracting a substantial number of customers. Threat of substitute products or services When there are numerous companies operating in an industry, substitute products or services are used as differential factors for companies in the market (Lusch, Vargo O’Brien 2007). The HSS industry in the UK has a high number of players who provide varied services to their customers. When a company uses the feature well, it easily gains a competitive advantage over other companies in the market. Aldi provides a wide range of products and services to its customers, for instance the weekly price offers and the special buy deals. This enables the company to attract a wide range of customers in the UK retail market (International Markets Bureau 2011). Bargaining power of customers The customers pu rchase the products and services of firms, thereby enabling firms to sustain their operations in the market. The purchasing behaviour of customers is shaped by a number of factors. Among these factors are the economic conditions and the offers that are made on purchases by the company. Brown (2013) observed that the current economic conditions in the world raised the conditions of living, forcing customers to cut down their expenditure on goods and services. This means that the bargaining power of customers is low, and they prefer to purchase from retailers who help them save. Therefore, the offers on the prices of goods and services favour a substantial number of buyers. This is what has enhanced the performance of Aldi in the recent years of operation in the UK HSS sector (Hall 2011). Bargaining power of suppliers Grewal and Levy (2009) observed that each company seeks for suppliers who can ensure it gets quality products at competitive prices in order to draw profits from the sup plies. Aldi offers its customers a wide range of products. This implies that the company has a large number of suppliers from which it gets the products. The prices that are offered to the suppliers by the company are drawn from the industry since the company has to ensure that its customers get the goods at affordable prices. Therefore, Aldi has developed strong links with a number of suppliers, who offers them supplies at discounted prices. This in turn enables the company to extend the discounts to their customers, which boosts their sales. In turn, this enables the company to get more supplies and benefit the suppliers (International Markets Bureau 2011). Intensity of competitive rivalry The intensity of competition in an industry is dictated by the number of active players in the industry and the nature of service offing to the customers by the players. The UK HSS has a number of well established companies like Sainsbury, Morrissonswhereas, Asda and Tesco. These companies are c onsidered as the main competitors for Aldi in the sector (Hall 2011). Their higher level of competitiveness resonates from the fact that they have been in operation in the country longer and have well expanded retail stores when compared to Aldi. However, Aldi has been strategic, a factor that enables the compact to ease the competitive pressures from the giant companies in the sector. Aldi has managed to ease the competitive pressure by fully venturing into discount retailing. As of today, it is argued that Aldi is one of the leading companies in discounted retailing in the UK. The discount retailers have continued to mount pressure on large supermarkets across the UK (International Markets Bureau 2011). Conclusion and recommendations According to the findings of this paper, Aldi is one of the most competitive companies in the UK retailing industry. The company has managed to gain competitiveness through the deployment of a number of strategic moves, such as venturing into discount ed retailing and higher diversification of the number and types of products. Therefore, the company has a high likelihood of continuing performing remarkably in the UK. This can be done through a number of practices. Aldi needs to increase the diversity in its service offering in order to capture the diverse groups of customers in the UK. The number of discounted offers ought to be extended so that they can favour buyers from the middle class, as well as those from the high class. At the same time, there is need for the company to start venturing into other sectors of the UK retail industry. This can be attained through research in order to enable the company to identify the best way to diversify its operating segments. Future prospects point to the fact that customers prefer discounting as a way of saving. Therefore, Aldi can enhance its competitiveness by opening more discounted stores across the entire UK. Presentation Speech In this paper, I present a clear picture of the comp etitive position of Aldi by putting the company within the perspective of the HSS industry in the UK. The three issues in areas of analysis of the company that I have focused on are: The stakeholder analysis, the Porter’s five force analysis and the recommendations. The stakeholder analysis has focused on five main stakeholders. These are: The government and regulators, suppliers, customers, employees, and the communities. The five forces analysis has explored the key areas of competitiveness of the company in the UK retail industry. From the discussion, I have derived three main recommendations for the company. Reference List Brown, J 2013, ‘Every Lidl helps: bargain hunters flock to German masters of no-frills shopping’, The Independent, independent.co.uk/news/business/news/every-Aldi-helps-bargain-hunters-flock-to-german-masters-of-nofrills-shopping-7888984.html Draganska, M Klapper, D 2007, ‘Retail environment and manufacturer competitive intensityâ₠¬â„¢, Journal of Retailing, vol. 83 no. 2, pp. 183-198. Fassin, Y 2009, ‘The stakeholder model refined’, Journal of Business Ethics, vol. 84 no. 1, pp. 113-135. Grewal, D Levy, M 2009,’ Emerging issues in retailing research’, Journal of Retailing, vol. 85 no. 4, pp. 522-526. Hall, J 2011, ‘Aldi and Lidl increase market shares as shoppers cut back’, The Telegraph, telegraph.co.uk/finance/newsbysector/retailandconsumer/8296774/Aldi-and-Lidl-increase-market-shares-as-shoppers-cut-back.html International Markets Bureau 2011, The United Kingdom: A sophisticated retail sector, ats-sea.agr.gc.ca/eur/5735-eng.htm Lusch, RF, Vargo, SL O’Brien, M 2007, Competing through service: Insights from service-dominant logic, Journal of Retailing, vol. 83 no. 1, pp. 5–18. NFU n.d, Review of grocery retailer CSR policies, https://www.google.com/url?sa=trct=jq=esrc=ssource=webcd=10cad=rjaved=0CHsQFjAJurl=http%3A%2F%2Fwww.nfuonline.com%2FOur-work%2FF ood-chain%2FNews%2FNFU-Supermarkets-CSR-report-28-6-12%2Fei=WPAIUePTNIHTtAbDioDgAwusg=AFQjCNHyaeMIz0hL-7px0Anow06OnGTvmAbvm=bv.41642243,d.Yms

Thursday, November 21, 2019

Visual Arts Manet Research Paper Example | Topics and Well Written Essays - 2000 words

Visual Arts Manet - Research Paper Example We are then going to look at the difference in thinking between the artist and the public opinion. We are finally going to conclude by airing opinions, on whose thinking creates an insight to the human population (Sturken & Cartwright, 2008). As I had mentioned, we shall start by analyzing Manete’s work, of 1862-3. Le dejeuner sur l'herbeis is one of the initial artistic wok that Manet ever did. He made this painting in 1862-3. It generated substantial debate amongst many young painters, who desired to create impressionism in art. Together with Olympia, they marked the genesis of modern art. In English, this piece of art means the luncheon on the grass. It is a sketch like art, which comprises of two men and one woman. The men are well groomed in black coats and superb pairs of trouser. On the other hand, the lady is entirely nude. On the other end, there is another woman seem to be washing something in a river. The whole setting is in the wild. The three (i.e. the two men and the naked lady) appear to be discussing something. The lady is more aligned to the man on her right side, and his legs are crossing under hers. There is a basket of fruits, and some snacks by their side. The food stuff is in a disorganized ma nner, which is suggestive that they have already dealt with it, though there are some remainders. This piece of art was out rightly rejected in 1863, at the Paris salon (Herbert,1991). After the rejection, it was exhibited at â€Å"salon of the rejected† later in the same year. Emperor Napoleon instigated this salon, after the rejection of more than 4,000 paintings, during that year’s salon. Another thing that led to its rejection is the fact that it had a sketch-like handling and innovation. This piece of art reveals that Manet had studied previous arts. This is evident through the fact that the main figures in this art were similar to those of Judgment of Paris. Judgment Paris is an engraving by Raimondi’s. It was made in c.1515 and was grounded on Raphael’s drawing. He also seems to have borrowed a leave from the tempest. The tempest was developed in c.1510. He also seems to have taken some idea from the pastrol concert. In the pastrol concert, two fully groomed men, and a nude woman, seated on some grass while making some music. All the artistic wo rks we have mentioned above seem to be carrying some vital cultural information. For instance, there is the common message of gender, and gender role in portrayed in them. They portray the role of a woman in the traditional, western society. The woman is portrayed as the minor, while men are portrayed as senior. This is shown through the act of drawing the women naked, while the men are fully groomed. The roles of a woman are also portrayed in Manet’s oil painting, whereby the woman is doing some washing, while the men and the other naked woman, are just seated down. In addition, it seems to pet ray the traditional western culture, and their way of living, and entertainment. For instance, they would go out into the natural world; in this case the forest, where they would have their meals/snacks. For instance, in the pastrol concert, the characters enjoy playing music, while seated on the grass. Apparently, in their culture, it was a form of entertainment to see naked women. F antasy rape â€Å", is a recent (2007) advertisement, which triggered a pronounced debate amongst many people. It is a print advertisement, wh

Wednesday, November 20, 2019

Westboro Baptist Church or Current Controversial Topic Essay

Westboro Baptist Church or Current Controversial Topic - Essay Example Later, in his testimony during the court case about the WBC’s deplorable actions—actions that should be stopped by community action and by legislation—Snyder stated, â€Å""They turned this funeral into a media circus and they wanted to hurt my family. They wanted their message heard and they didn't care who they stepped over. My son should have been buried with dignity, not with a bunch of clowns outside† (â€Å"Father† n.p.). The Westboro Baptist Church, located in Topeka, Kansas, has been protesting at funerals since 1991. As of 2009, they claim to have participated in over 41,000 protests in over 650 cities, and spend an average of $250,000 a year on picketing. They travel all over the U.S. to picket the funerals of anyone associated with gay people. For example, they picketed at the 1998 funeral of murder victim Matthew Shepherd and the 2010 funeral of Elizabeth Edwards because she supported gay people (Borger n.p.). The WBC also protests at funerals of slain military personnel like Snyder’s.Why would the WBC participate in such activities—activities that even Fox News commentator Bill O’Reilly calls â€Å"evil and despicable† (Cohen n.p.)? ... They picket at funerals to express their views, and to get the word out about their opposition to gay rights, the Catholic Church, Jews, and other topics. They believe that anyone who is opposed to their way of seeing things is going to hell, and they feel compelled to make sure that people know this. Several weeks after Matthew Snyder’s funeral, for example, the WBC denounced Snyder’s family for raising their son Catholic. There have been many responses to their actions. One of these is through the courts, which is what the Snyder family did. Later in 2007, they sued Fred Phelps, the Westboro Baptist Church, and two of Phelps’ daughters on several legal grounds, including defamation and invasion of privacy. The suit claimed that Phelps’ religious views did not expose the Snyders to public hatred or scorn. The WBC’s main defense, in addition to exercising their constitutional right to free speech and free assembly, was that they had complied with al l local ordinances regarding picketing and had obeyed all police instructions. The picket occurred 1000 feet from the funeral site, in a location cordoned off by the police, and could neither be seen or heard by the funeral participants. The judge, in his instructions to the jury, said that they needed to decide â€Å"whether the defendant's actions would be highly offensive to a reasonable person, whether they were extreme and outrageous and whether these actions were so offensive and shocking as to not be entitled to First Amendment protection† (Donaldson-Evans n.p.). This is the crux of the argument against the WBC, and perhaps explains the outcome of the case: the jury awarded Albert Snyder almost $3 million in punitive damages for invasion

Sunday, November 17, 2019

Registrar Sample Letter to Student Essay Example for Free

Registrar Sample Letter to Student Essay FOR INFORMATION ONLY ACCUMULATED FAILING GRADES Faculty: This letter is being sent to you on behalf of the Dean of your Faculty. This notice carries no academic penalty. A review of your UVic undergraduate records shows that you had accumulated five (5) or more failing grades over the course of your undergraduate studies at UVic (you may not have been assigned a failing grade in the current session). As your sessional gpa is adversely affected by any failing grades and as a low sessional gpa may cause you to become ineligible to continue your studies and be asked to withdraw from UVic (please see the sections under STANDING and WITHDRAWAL in the University Calendar) this letter is being sent to you for information only to help you avoid these possibilities. Please consider the following suggestions: 1. Choose your courses carefully 2. Avoid overloading yourself: be aware of your personal time commitment 3. Monitor your academic progress carefully on an on-going basis, being mindful of academic drop deadlines 4. Check with your department Undergraduate Advisor about course selection or to see if supplementary tutoring is available for particular problem courses 5. Talk with a Faculty Academic Advisor or the Assistant Dean to review your program/degree selection if necessary. 6. Consult Counselling Services if you require assistance with your study skills Best wishes for success in your future studies. Undergraduate Records University of Victoria FW

Friday, November 15, 2019

Dividend Payout Decision Making Process

Dividend Payout Decision Making Process CHAPTER ONE INTRODUCTION Background: Dividend policy is an important component of the corporate financial management policy. It is a policy used by the firm to decide as to how much cash it should reinvest in its business through expansion or share repurchases and how much to pay out to its shareholders in dividends. Dividend is a payment or return made by the firm to the shareholders, (owners of the company) out of its earnings in the form of cash. For a long time, the subject of corporate dividend policy has captivated the interests of many academicians and researchers, resulting in the emergence of a number of theoretical explanations for dividend policy. For the investors, dividend serve as an important indicator of the strength and future prosperity of the business, thereby companies try to maintain a stable dividend because if they reduce their dividend payments, investors may suspect that the company is facing a cash flow problem. Investors prefer steady growth of dividends every year and are reluctant to investm ent to companies with fluctuating dividend policy. Over time, there has been a substantial increase in the number of factors identified in the literature as being important to be considered in making dividend decisions. Thus, extensive studies have been done to find out various factors affecting dividend payout ratio of a firm. However, there is no single explanation that can capture the puzzling reality of corporate dividend behavior. Ocean deep judgment is involved by decision makers to resolve this issue of dividend behavior. The decision of companies to retain or pay out the earnings in form of dividends is important for the maximization of the value of the firm (Oyejide, 1976). Therefore, companies should set a constructive target dividend payout ratio, where it pays dividends to its shareholders and at the same time maintains sufficient retained earnings as to avoid having raise funds by borrowing money. A tough challenge was faced by financial practitioners and many academics, when Miller and Modigliani (MM) (1961) came with a proposition that, given perfect capital markets, the dividend decision does not affect the firm value and is, therefore, irrelevant. This proposition was greeted with surprise because at that time it was universally acknowledged by both theorists and corporate managers that the firm can enhance its business value by providing for a more generous dividend policy and that a properly managed dividend policy had an impact on share prices and shareholder wealth. Since the MM study, many researchers have relaxed the assumption of perfect capital markets and stated theories about how managers should formulate dividend policy decisions. Problem Statement: Dividend policy has attracted a substantial amount of research by many researchers and theorists, who have provided theoretical as well as empirical observations, into the dividend puzzle (Black, 1976). Even though researchers and theorists have extended their studies in context to dividend decisions, the issue as to why corporations distribute a portion of their earnings as dividends is not yet resolved. The issue of dividend policy has stimulated much debate among financial analysts since Lintners (1956) seminal work. He measured major changes in earnings as the key determinant of the companies dividend decisions. There are many factors that affect dividend decisions of a firm as it is very difficult to lay down an optimum dividend policy which would maximize the long-run wealth of the shareholders resulting into increase or decrease of the firms value, but the primary indicator of the firms capacity to pay dividends has been Profits. Miller and Modigliani (1961), DeAngelo and DeAngelo (2006) gave their proposition on the dividend irrelevance, but the argument made by them was on assumptions that werent practical and in fact, the dividend payout decision does affect the shareholders value. The study focuses on identifying various determinants of dividend payout and whether these factors influence the dividend payout decision. Research Objective: There are many theories in the corporate finance literature addressing the dividend issue. The purpose of study is to understand the factors influencing the dividend decision of companies. The specific objectives of this study are: To analyze the financials of the company, to draw a framework of factors such as Retained earnings, Age of the company, Debt to Equity, Cash, Net income, Earnings per share etc. responsible for dividend declaration. To understand the criticality of a companys profitability (in terms of Earnings per share) component in declaration of dividends. To measure each factor individually on how it affects the dividend decision. Research Questions: RQ1. What is the relation between dividend payout and firms debt? RQ2. What is the relation between dividend payout and Profitability? RQ3. What is the relation between dividend payout and liquidity? RQ4. What is the relation between dividend payout and Retained Earnings? RQ5. What is the relation between dividend payout and Net Income? Contribution of the Study: Dividend decision is an important financial decision made by firms, managers, and investors. This study aims to contribute to the corporate finance literature, by looking at the Dividend puzzle. An attempt is made to make a valuable contribution in two major ways: Theoretical and Empirical approach is taken to provide a comprehensive view on the subject. The empirical Approach taken in this study will definitely leave some promising future ideas. The empirical findings and conclusions contained in this study can be used by financial managers to inform dividend decisions. Limitations of Study: The areas of concern to investigate in this study are extensive. Due to the Time constraint and accessibility of data, the research will be limited to the following: The period of study is only three years 2006 to 2008. The research has considered only those firms who pay dividends. The study is focused only on firms trading on the New York Stock Exchange. Structure of the Paper: The remaining chapters will be organized as follows: Chapter Two: Literature Review This chapter discusses the different theories laid down in context to dividend policy and explains the relationship between dividend payout and its determinants as concluded by the study of different researchers and theorists. Chapter Three: Research Methodology This chapter explains the research hypothesis and gives a descriptive study of the techniques and the model used for data analysis. The application of the statistical tests used are explained thoroughly. Chapter four: Data Analysis and Findings To address the research questions, results obtained from the regression analysis will be evaluated and discussed in this chapter. Chapter five: Recommendations and Conclusion. This chapter Concludes the entire study and provides recommendations based on the findings and analysis done in the previous chapter and recommendations for future research. CHAPTER TWO LITERATURE REVIEW Dividend remains one of the greatest enigmas of modern finance. Corporate dividend policy is an important decision area in the field of financial management hence there is an extensive literature devoted to the subject. Dividends are defined as the distribution of earnings (present or past) in real assets among the shareholders of the firm in proportion to their ownership. Dividend policy refers to managements long-term decision on how to utilize cash flows from business activities-that is, how much to plow back into the business, and how much to return to shareholders (Khan and Jain, 2005). Lintner (1956) conducted a notable study on dividend distributions, his was the first empirical study of dividend policy through his interview with managers of 28 selected companies, he stated that most companies have clear cut target payout ratios and that managers concern themselves with change in the existing dividend payout rather than the amount of the newly established payout. He also states that, Dividend policy is set first and other policies are then adjusted and the market reacts positively to dividend increase announcements and negatively to announcements of dividend decreases. He measured major changes in earnings as the key determinant of the companies dividend decisions. Lintners study was expanded by Farrelly et al. (1988), who, mailed a questionnaire to 562 firms listed on the New York Stock Exchange and concluded that managers accept dividend policy to be relevant and important. Lintners view was also supported by the study results of Fama and Babiak (1968) and Fama (1974) who suggested that managers prefer a stable dividend policy, and are hesitant to increase dividends to a level that cannot be supported. Fama and Babiaks (1968) study also concludes that Net income appears to explain the dividend change decision better than a cash flow measure. The study by Adaoglu (2000), Amidu and Abor (2006) and Belans et al (2007) stated that net income shows positive and significant association with the dividend payout, therefore indicating that, the firms with the positive earnings pay more dividends. Merton Miller and Franco Modigliani (1961) made a proposition that the value of a firm is not affected by its dividend policy. Dividend policy is a way of dividing up operating cash flows among investors or just a financial decision. Financial theorists Martin, Petty, Keown, and Scott, 1991 supported this theory of irrelevance. Miller and Modiglianis conclusion on the irrelevance of dividend policy presented a tough challenge to the conventional wisdom of time up to that point, it was universally acknowledged by both theorists and corporate managers that the firm can enhance its business value by providing for a more generous dividend policy as investors seem to prefer dividends over capital gains (JM Samuels, FM.Wilkes and R.E Brayshaw). Benartzi et al. (1997) conducted an extensive study and concluded that Lintners model of dividends remains the finest description of the dividend setting process available. Baker et al. (2001) conducted a survey on 630 NASDAQ-listed firms and analyzed the responses from 188 CFOs about the importance of 22 different factors that influence their dividend policy, they found that the dividend decisions made by managers were consistent with Lintners (1956) survey results and model. Their results also suggest that managers pay particular attention to the dividend policy of the firm because the dividend decision can affect firm value and, in turn, the wealth of stockholders, thus dividend policy requires serious attention by the management. E.F Fama and K.R French (2001) investigated the characteristics of companies paying dividends and concluded that the top most characteristics that affect the decision to pay dividends are Firm size, Profitability, and Investment opportunities. They studied dividend payment in the United States and found that the proportion of dividend payers declined sharply from 66% in 1978 to 20.8% in 1999, and that only about a fifth of public companies paid dividends. Growth companies such as Microsoft, Cisco and Sun Microsystems were found to be non-dividend payers. They also explained that the probability that a firm would pay dividends was positively related to profitability and size and negatively related to growth. Their research concluded that larger firms are more profitable and are more likely to pay dividends, than firms with more investment opportunities. The relationship between firm size and dividend policy was studied by Jennifer J. Gaver and Kenneth M. Gaver (1993). They suggested t hat A firms dividend yield is inversely related to the extent of its growth opportunities. The inference here is that as cash flow increases, the coefficient of dividend decreases, indicating that smaller firms that have greater investment opportunities thus they tend not to make dividend payment while larger firms tend to have proactive dividends policy. Ho, H. (2003) undertook a comparative study of dividend policies in Japan and Australia. Their study revealed that dividend policies in Australia and Japan are affected by different financial factors. Dividend policies are affected positively by size in Australia and liquidity in Japan. Naceur et al (2006) examined the dividend policy of 48 firms listed on the Tunisian Stock Exchange during the period 1996-2002. His research indicated that highly profitable firms with more stable earnings could afford larger free cash flows and thus paid larger dividends. Li and Lie (2006) reported that large and profitable firms are more likely to raise their dividends if the past dividend yield, debt ratio, cash ratio are low. A study was conducted by Norhayati Mohamed, Wee Shu Hui, Mormah Hj.Omar, and Rashidah Abdul Rahman on Malaysian companies over a 3 year period from 2003-2005. The sample was taken from the top 200 companies listed on the main board of Bursa Malaysia based on market capitaliza tion as at 31December 2005. Their study concluded that bigger firms pay higher dividends. For the purpose of finding out how companies arrive at their dividend decisions, many researchers and theorists have proposed several dividend theories. Gordon and Walter (1963) presented the Bird in Hand theory which suggested that to minimize risk the investors always prefer cash in hand rather than future promise of capital gain. This theory asserts that investors value dividends and high payout firms. As said by John D. Rockefeller (an American industrialist) The one thing that gives me contentment is to see my dividend coming in. For companies to communicate financial well-being and shareholder value the easiest way is to say the dividend check is in the mail. The bird-in-hand theory (a pre-Miller-Modigliani theory) asserts that dividends are valued differently to capital gains in a world of information asymmetry where due to uncertainty of future cash flow, investors will often tend to prefer dividends to retained earnings. As a result the value of the firm would be increased a s a higher payout ratio will reduce the required rate of return (see, for example Gordon, 1959). This argument has not received any strong empirical support. Dividends, paid by companies to shareholders from earnings, serve as an important indicator of the strength and future prosperity of the business. This explanation is known as signaling hypothesis. Signaling is an example factor for the relevance of dividends to the value of the firm. It is based on the idea of information asymmetry between managers and investors, where managers have private information about the firm that is not available to the outsiders. This theory is supported by models put forward by Miller and Rock (1985), Bhattacharya (1979), John and Williams (1985). They stated that dividends can be used as a signaling device to influence share price. The share price reacts favorably when an announcement of dividend increase is made. Few researchers found limited support for the signaling hypothesis (see Gonedes, 1978 , Watts, 1973) and there are other researchers, who supported the hypothesis, for example, in Michaely, Nissim and Ziv (2001), Pettit (1972) and Bali (2003). The tax-preference theory assumes that the market valuation of a firms stocks is increased when the dividend payout ratios is low which in turn lowers the required rate of return. Because of the relative tax liability of dividends compared to capital gains, investors need a large amount of before-tax risk adjusted return on stocks with higher dividend yields (Brennan, 1970). On one side studies by Lichtenberger and Ramaswamy (1979), Poterba and Summers, (1984), and Barclay (1987) have presented empirical evidence in support of the tax effect argument and on the other side Black and Scholes (1974), Miller and Scholes (1982), and Morgan and Thomas (1998) have either opposed such findings or provided completely different explanations. The study by Masulis and Trueman (1988) model dividend payments in form of cash as products of deferred dividend costs. Their model predicts that investors with differing tax liabilities will not be uniform in their ideal firm dividend policy. As the tax l iability on dividends increases (decreases), the dividend payment decreases (increases) while earnings reinvestment increases (decreases). According to Farrar and Selwyn (1967), in a partial equilibrium framework, individual investors choose the amount of personal and corporate leverage and also whether to receive corporate distributions as dividends or capital gains. Barclay (1987) has presented empirical evidence I support of the tax effect argument. Others, including Black and Scholes (1982), have opposed such findings or provided different explanations. Farrar and Selwyns model (1967) made an assumption that investors tend to increase their after tax income to the maximum. According to this model corporate earnings should be distributed by share repurchase rather than the use of dividends. Brennan (1970) has extended Farrar and Selwyns model into a general equilibrium framework. Under this, the expected usefulness of wealth as a system of barter is maximized. Despite being more robust both the models are similar as regards to their predictions. According to Auerbachs (1979) discrete-time, infinite-horizon model, the wealth of shareholders is maximized by the shareholders themselves and not by firm market value. If there does, infact, exist a difference between capital gains and dividends tax; firm market value maximization is no longer determined by wealth maximization. He states that the continued undervaluation of corporate capital leads to dividend distributions. The clientele effects hypothesis is another related theory. According to this theory the investors may be attracted to the types of stocks that fall in with their consumption/savings preferences. That is, investors (or clienteles) in high tax brackets may prefer non-dividend or low-dividend paying stocks if dividend income is taxed at a higher rate than capital gains. Also, certain clienteles may be created with the presence of transaction costs. There are several empirical studies on the clientele effects hypothesis but the findings are mixed. Studies by Pettit (1977), Scholz (1992), and Dhaliwal, Erickson and Trezevant (1999) presented evidence consistent with the existence of clientele effects hypothesis whereas studies by Lewellen et al. (1978), Richardson, Sefcik and Thomason (1986), Abrutyn and Turner (1990), found weak or contrary evidence. There is an assumption that the managers do not always take steps which would lead to maximizing an investors wealth. This gives rise to another favorable argument for hefty dividend payouts which shifts the reinvestment decision back on the owners. The main hitch would be the agency conflict (conflict between the principal and the agent) arising as a result of separate ownership and control. Therefore, a manager is expected to move the surplus funds from the high retained earnings into projects which are not feasible. This would be mainly due to his ill intention or his in competency. Thus, generous dividend payouts increase a firms value as it reduces the managements access to free cash flows and hence, controlling the problem of over investment. There are many more agency theories explaining how dividends can increase the value of a firm. One of them was by Easterbrook (1984); he proposed that dividend payments reduce agency problems in contrast to the transaction cost theory which is of the view that dividend payments reduce the value as it forces to raise costly finances from outside sources. His idea is that if the dividends are not paid, there is a problem of collective action that tends to lead to hap-hazard management of the firm. So, dividend payouts and raising external finance would attract auditory and regulatory measures by financial intermediaries like investment banks, respective stock exchange regulators and the potential investors as well. All this monitoring would lead to considerable reduction of agency costs and appreciate the market value of t he firm. Moreover, as defined by Jenson and Meckling (1976), Agency costs=monitoring costs+ bonding, costs+ residual loss i.e. sum of agency cost of equity and agency cost of debt. Hence, Easterbrook (1984) noted that dividend payments and raising new debt and its contract negotiations would reduce potential for wealth transfer. The realization for potential agency costs linked with separation of management and shareholders is not new. Adam Smith (1937) proposed that management of earlier companies is wayward. This problem was highly witnessed during at the time of British East Indian Companies and tracking managers was a failure due to inefficiencies and high costs of shareholder monitoring (Kindleberger, 1984). Scott (1912) and Carlos (1922) differ with this view point. They agree that although some fraud existed in the corporations, many of the activities of the managers were in line with those of the shareholders interests. An opportune and intelligent manager should always invest the surplus cash available into those opportunities which are well researched to be in the best interest of the shareholders. Berle and Means (1932) was the first to discover the insufficient utilization of funds which are surplus after other investment opportunities taken by the management. This thought was further promoted by Jensens (1986) free cash flow hypothesis. This hypothesis combined market information asymmetries with the agency theory. The surplus funds left after all the valuable projects are largely responsible for creation of the conflict of interest between the management and the shareholders. Payment of dividends and interest on other debt instruments reduce the cash flow with the management to invest in marginal net present value projects and for other perquisite consumptions. Therefore, the dividend theory is better explained by the combination of both the agency and the signaling theory rather than by any o ne of these alone. On the other hand, the free cash flow hypothesis rationalizes the corporate takeover frenzy of the 1980s Myers (1987 and 1990) rather than providing a clear and comprehensive dividend policy. The study by Baker et al. (2007) reports, that firms paying dividend in Canada are significantly larger and more profitable, having greater cash flows, ownership structure and some growth opportunities. The cash flow hypothesis proposes that insiders to a firm have more information about future cash flow than the outsiders, and they have incentivized motives to leak this to outsiders. Lang and Litzenberger (1989) check the cash flow signaling and free cash flow explanations of the effect of dividend declarations on the stock prices. This difference between permanent and temporary changes is also explored in Brook, Charlton, and Hendershott (1998). However, this study is based on the hypothesis that dividend changes contain cash flow information rather than information about earnings. This is the cash flow signaling hypothesis proposing that dividend changes signal expected cash flows changes. The dividend decisions are affected by a number of factors; many researchers have contributed in determining which determinant of dividend payout is the most significant in contributing to dividend decisions. It is said that the primary indicator of the firms capacity to pay dividends has been Profits. According to Lintner (1956) the dividend payment pattern of a firm is influenced by the current year earnings and previous year dividends. Pruitt and Gitmans (1991) survey of financial managers of 1000 largest U.S companies about the interplay among the investment and dividend decisions in their firms reported that, current and past year profits are essential factors influencing dividend payments. The conclusion derived from Baker and Powells (2000) survey of NYSE-listed firms is that the major determinant is the anticipated level of future earnings and continuity of past dividends. The study of Aivazian, Booth, and Cleary (2003) concludes that profitability and return on equity positi vely correlate with the size of the dividend payout ratio. The study by Lv Chang-jiang and Wang Ke-min (1999) on 316 listed companies in China that paid cash dividends during 1997 and 1998 by using modified Lintner dividend model, suggested that the dividend payout ratio is due to the firms current earning level. Other researchers like Chen Guo-Hui and Zhao Chun-guang (2000), Liu Shu-lian and Hu Yan-hong (2003) also concluded their research on the above stated understanding about dividend policy of listed companies in China. A survey done by Baker, Farrelly, and Edelman (1985) and Farrelly, Baker, and Edelman (1986) on 562 New York Stock Exchange (NYSE) firms with normal kinds of dividend polices in 1983 suggested that the major determinants of dividend payments were the anticipated level of future earnings and the pattern of past dividends. DeAngelo et al. (2004) findings suggest that earnings do have some impact on dividend payment. He stated that the high/increasing dividend concentration may be the result of high/increasing earnings concentration. Goergen et al. (2005) study on 221 German firms shows that net earnings were the key determinants of dividend changes. Baker and Smith (2006) examined 309 sample firms exhibiting behavior consistent with a residual dividend policy and their matched counterparts to understand how they set their dividend policies. Their study showed that for the matched firms, the pattern of past dividends and desire to maintain a long-term dividend payout ratio elicit the highest level of agreement from respondents. The study by Ferris et al. (2006) found mixed results for the relation between a firms earnings and its ability to pay dividends. Kao and Wu (1994) used a time series regression analysis of 454 firms over the period of 1965 to1986, and showed that there was a positive relationshi p between unexpected dividends and earnings. Carroll (1995) used quarterly data of 854 firms over the period of 1975 to 1984, and examined whether quarterly dividend changes predicted future earnings. He found a significant positive relationship. Liquidity is also an important determinant of dividend payouts. A poor liquidity position would generate fewer dividends due to shortage of cash. Alli et.al (1993), reveal that dividend payments depend more on cash flows, which reflect the companys ability to pay dividends, than on current earnings, which are less heavily influenced by accounting practices. They claim current earnings do no really reflect the firms ability to pay dividends. A firm without the cash flow back up cannot choose to have a high dividend payout as it will ultimately have to either reduce its investment plans or turn to investors for additional debt. The study by Brook, Charlton and Hendershott (1998) states that, Firms expecting large permanent cash flow increases tend to increase their dividend. Managers do not increase dividends until they are positive that sufficient cash will flow in to pay them (Brealey-Myers-2002). Myers and Bacons (2001) study shows a negative relationship between the liquid ratio and dividend payout. For companies to enable them to enhance their dividend paying capacity, and thus, to generate higher dividend paying capacity, it is necessary to retain their earnings to finance investment in fixed assets. The study by Belans et al (2007) states that the relationship between the firms liquidity and dividend is positive which explains that firms with more market liquidity pay more dividends. Reddy (2006), Amidu and Abor (2006) find opposite evidence. Lintner (1956) posited that the level of retained earnings is a dividend decision by- product. Adaoglu (2000) study shows that the firms listed on Istanbul Stock Exchange follow unstable cash dividend policy and the main factor for determining the amount of dividend is earning of the firms. The same conclusion was drawn by Omet (2004) in case of firms listed on Amman Securities Market and he further states that the tax imposition on dividend does not have the significant impact on the dividend behavior of the listed firms. The study by Mick and Bacon (2003) concludes that future earnings are the most influential variable and that the past dividend patterns as well as current and expected levels are empirically relevant in explaining the dividend decision. Empirical support for Lintners findings, that dividends were indeed a function of current and past profit levels and were negatively correlated with the change in sales was found by Darling (1957), Fama and Babiak (1968). Benchman a nd Raaballe (2007) discovered that the propensity to pay out dividends is positively correlated to retained earnings. Also, the study by Denis and Osobov (2006) states that retained earnings are a significant dividend characteristic for non- US firms including UK, German, and French firms. One of the motives for dividend policy decision is maintaining a moderate share price as poor stock price performance mostly conveys negative information about firms reputation. An empirical research took by Zhao Chun-guang and Zhang Xue-li et al (2001) on all A shares listed companies listed in Shenzhen and Shanghai Stock Exchange, states that the more cash dividends is paid when the stock prices are high. Chen Guo-Hui and Zhao Chun-guang (2000) undertook a research on all A shares listed before 1996 and paid dividend into share capital in 1997 as their sampling, and employed single-factor analysis, multifactor regression analysis to analyze the data. Their research showed a positive stock price reaction to the cash dividend, stock dividend policy. Myers and Bacon (2001) discussed that the debt to equity ratio was positively correlated to the dividend yield. Therefore firms with relatively more investment opportunities would tend to be more geared and vice versa (Ross, 2000). The study by Hu and Liu, (2005) declares that there is a positive correlation between the cash dividend the companies pay and their current earnings, and a inverse relationship between the debt to total assets and dividends. Green et al. (1993) questioned the irrelevance argument and investigated the relationship between the dividends and investment and financing decisions. Their study showed that dividend payout levels are decided along with investment and financing decisions. The study results however do not support the views of Miller and Modigliani (1961). Partington (1983) declared that firms motives for paying dividends and extent to which dividends are decided are independent of investment policy. The study by Higgins (1981) declares a direct link between growths and financing needs, rapidly growing firms have external financing needs because working capital needs normally exceed the incremental cash flows from new sales. Higgins (1972) suggests that payout ratios are negatively related to firms need top fund finance growth opportunities. Other researchers like Rozeff (1982), Lloyd et al. (1985) and Collins et al. (1996) all show significantly negative relationship between historical sales growth and dividend payout whereas D, Souza (1999) however shows a positive but insignificant relationship in the case of growth and negative but insignificant relationship in case of market to book value. Jenson and Meckling (1976) find a strong relationship between dividends and investment opportunities. They explain, in some circumstances where firms have relative uptight disposable Dividend Payout Decision Making Process Dividend Payout Decision Making Process CHAPTER ONE INTRODUCTION Background: Dividend policy is an important component of the corporate financial management policy. It is a policy used by the firm to decide as to how much cash it should reinvest in its business through expansion or share repurchases and how much to pay out to its shareholders in dividends. Dividend is a payment or return made by the firm to the shareholders, (owners of the company) out of its earnings in the form of cash. For a long time, the subject of corporate dividend policy has captivated the interests of many academicians and researchers, resulting in the emergence of a number of theoretical explanations for dividend policy. For the investors, dividend serve as an important indicator of the strength and future prosperity of the business, thereby companies try to maintain a stable dividend because if they reduce their dividend payments, investors may suspect that the company is facing a cash flow problem. Investors prefer steady growth of dividends every year and are reluctant to investm ent to companies with fluctuating dividend policy. Over time, there has been a substantial increase in the number of factors identified in the literature as being important to be considered in making dividend decisions. Thus, extensive studies have been done to find out various factors affecting dividend payout ratio of a firm. However, there is no single explanation that can capture the puzzling reality of corporate dividend behavior. Ocean deep judgment is involved by decision makers to resolve this issue of dividend behavior. The decision of companies to retain or pay out the earnings in form of dividends is important for the maximization of the value of the firm (Oyejide, 1976). Therefore, companies should set a constructive target dividend payout ratio, where it pays dividends to its shareholders and at the same time maintains sufficient retained earnings as to avoid having raise funds by borrowing money. A tough challenge was faced by financial practitioners and many academics, when Miller and Modigliani (MM) (1961) came with a proposition that, given perfect capital markets, the dividend decision does not affect the firm value and is, therefore, irrelevant. This proposition was greeted with surprise because at that time it was universally acknowledged by both theorists and corporate managers that the firm can enhance its business value by providing for a more generous dividend policy and that a properly managed dividend policy had an impact on share prices and shareholder wealth. Since the MM study, many researchers have relaxed the assumption of perfect capital markets and stated theories about how managers should formulate dividend policy decisions. Problem Statement: Dividend policy has attracted a substantial amount of research by many researchers and theorists, who have provided theoretical as well as empirical observations, into the dividend puzzle (Black, 1976). Even though researchers and theorists have extended their studies in context to dividend decisions, the issue as to why corporations distribute a portion of their earnings as dividends is not yet resolved. The issue of dividend policy has stimulated much debate among financial analysts since Lintners (1956) seminal work. He measured major changes in earnings as the key determinant of the companies dividend decisions. There are many factors that affect dividend decisions of a firm as it is very difficult to lay down an optimum dividend policy which would maximize the long-run wealth of the shareholders resulting into increase or decrease of the firms value, but the primary indicator of the firms capacity to pay dividends has been Profits. Miller and Modigliani (1961), DeAngelo and DeAngelo (2006) gave their proposition on the dividend irrelevance, but the argument made by them was on assumptions that werent practical and in fact, the dividend payout decision does affect the shareholders value. The study focuses on identifying various determinants of dividend payout and whether these factors influence the dividend payout decision. Research Objective: There are many theories in the corporate finance literature addressing the dividend issue. The purpose of study is to understand the factors influencing the dividend decision of companies. The specific objectives of this study are: To analyze the financials of the company, to draw a framework of factors such as Retained earnings, Age of the company, Debt to Equity, Cash, Net income, Earnings per share etc. responsible for dividend declaration. To understand the criticality of a companys profitability (in terms of Earnings per share) component in declaration of dividends. To measure each factor individually on how it affects the dividend decision. Research Questions: RQ1. What is the relation between dividend payout and firms debt? RQ2. What is the relation between dividend payout and Profitability? RQ3. What is the relation between dividend payout and liquidity? RQ4. What is the relation between dividend payout and Retained Earnings? RQ5. What is the relation between dividend payout and Net Income? Contribution of the Study: Dividend decision is an important financial decision made by firms, managers, and investors. This study aims to contribute to the corporate finance literature, by looking at the Dividend puzzle. An attempt is made to make a valuable contribution in two major ways: Theoretical and Empirical approach is taken to provide a comprehensive view on the subject. The empirical Approach taken in this study will definitely leave some promising future ideas. The empirical findings and conclusions contained in this study can be used by financial managers to inform dividend decisions. Limitations of Study: The areas of concern to investigate in this study are extensive. Due to the Time constraint and accessibility of data, the research will be limited to the following: The period of study is only three years 2006 to 2008. The research has considered only those firms who pay dividends. The study is focused only on firms trading on the New York Stock Exchange. Structure of the Paper: The remaining chapters will be organized as follows: Chapter Two: Literature Review This chapter discusses the different theories laid down in context to dividend policy and explains the relationship between dividend payout and its determinants as concluded by the study of different researchers and theorists. Chapter Three: Research Methodology This chapter explains the research hypothesis and gives a descriptive study of the techniques and the model used for data analysis. The application of the statistical tests used are explained thoroughly. Chapter four: Data Analysis and Findings To address the research questions, results obtained from the regression analysis will be evaluated and discussed in this chapter. Chapter five: Recommendations and Conclusion. This chapter Concludes the entire study and provides recommendations based on the findings and analysis done in the previous chapter and recommendations for future research. CHAPTER TWO LITERATURE REVIEW Dividend remains one of the greatest enigmas of modern finance. Corporate dividend policy is an important decision area in the field of financial management hence there is an extensive literature devoted to the subject. Dividends are defined as the distribution of earnings (present or past) in real assets among the shareholders of the firm in proportion to their ownership. Dividend policy refers to managements long-term decision on how to utilize cash flows from business activities-that is, how much to plow back into the business, and how much to return to shareholders (Khan and Jain, 2005). Lintner (1956) conducted a notable study on dividend distributions, his was the first empirical study of dividend policy through his interview with managers of 28 selected companies, he stated that most companies have clear cut target payout ratios and that managers concern themselves with change in the existing dividend payout rather than the amount of the newly established payout. He also states that, Dividend policy is set first and other policies are then adjusted and the market reacts positively to dividend increase announcements and negatively to announcements of dividend decreases. He measured major changes in earnings as the key determinant of the companies dividend decisions. Lintners study was expanded by Farrelly et al. (1988), who, mailed a questionnaire to 562 firms listed on the New York Stock Exchange and concluded that managers accept dividend policy to be relevant and important. Lintners view was also supported by the study results of Fama and Babiak (1968) and Fama (1974) who suggested that managers prefer a stable dividend policy, and are hesitant to increase dividends to a level that cannot be supported. Fama and Babiaks (1968) study also concludes that Net income appears to explain the dividend change decision better than a cash flow measure. The study by Adaoglu (2000), Amidu and Abor (2006) and Belans et al (2007) stated that net income shows positive and significant association with the dividend payout, therefore indicating that, the firms with the positive earnings pay more dividends. Merton Miller and Franco Modigliani (1961) made a proposition that the value of a firm is not affected by its dividend policy. Dividend policy is a way of dividing up operating cash flows among investors or just a financial decision. Financial theorists Martin, Petty, Keown, and Scott, 1991 supported this theory of irrelevance. Miller and Modiglianis conclusion on the irrelevance of dividend policy presented a tough challenge to the conventional wisdom of time up to that point, it was universally acknowledged by both theorists and corporate managers that the firm can enhance its business value by providing for a more generous dividend policy as investors seem to prefer dividends over capital gains (JM Samuels, FM.Wilkes and R.E Brayshaw). Benartzi et al. (1997) conducted an extensive study and concluded that Lintners model of dividends remains the finest description of the dividend setting process available. Baker et al. (2001) conducted a survey on 630 NASDAQ-listed firms and analyzed the responses from 188 CFOs about the importance of 22 different factors that influence their dividend policy, they found that the dividend decisions made by managers were consistent with Lintners (1956) survey results and model. Their results also suggest that managers pay particular attention to the dividend policy of the firm because the dividend decision can affect firm value and, in turn, the wealth of stockholders, thus dividend policy requires serious attention by the management. E.F Fama and K.R French (2001) investigated the characteristics of companies paying dividends and concluded that the top most characteristics that affect the decision to pay dividends are Firm size, Profitability, and Investment opportunities. They studied dividend payment in the United States and found that the proportion of dividend payers declined sharply from 66% in 1978 to 20.8% in 1999, and that only about a fifth of public companies paid dividends. Growth companies such as Microsoft, Cisco and Sun Microsystems were found to be non-dividend payers. They also explained that the probability that a firm would pay dividends was positively related to profitability and size and negatively related to growth. Their research concluded that larger firms are more profitable and are more likely to pay dividends, than firms with more investment opportunities. The relationship between firm size and dividend policy was studied by Jennifer J. Gaver and Kenneth M. Gaver (1993). They suggested t hat A firms dividend yield is inversely related to the extent of its growth opportunities. The inference here is that as cash flow increases, the coefficient of dividend decreases, indicating that smaller firms that have greater investment opportunities thus they tend not to make dividend payment while larger firms tend to have proactive dividends policy. Ho, H. (2003) undertook a comparative study of dividend policies in Japan and Australia. Their study revealed that dividend policies in Australia and Japan are affected by different financial factors. Dividend policies are affected positively by size in Australia and liquidity in Japan. Naceur et al (2006) examined the dividend policy of 48 firms listed on the Tunisian Stock Exchange during the period 1996-2002. His research indicated that highly profitable firms with more stable earnings could afford larger free cash flows and thus paid larger dividends. Li and Lie (2006) reported that large and profitable firms are more likely to raise their dividends if the past dividend yield, debt ratio, cash ratio are low. A study was conducted by Norhayati Mohamed, Wee Shu Hui, Mormah Hj.Omar, and Rashidah Abdul Rahman on Malaysian companies over a 3 year period from 2003-2005. The sample was taken from the top 200 companies listed on the main board of Bursa Malaysia based on market capitaliza tion as at 31December 2005. Their study concluded that bigger firms pay higher dividends. For the purpose of finding out how companies arrive at their dividend decisions, many researchers and theorists have proposed several dividend theories. Gordon and Walter (1963) presented the Bird in Hand theory which suggested that to minimize risk the investors always prefer cash in hand rather than future promise of capital gain. This theory asserts that investors value dividends and high payout firms. As said by John D. Rockefeller (an American industrialist) The one thing that gives me contentment is to see my dividend coming in. For companies to communicate financial well-being and shareholder value the easiest way is to say the dividend check is in the mail. The bird-in-hand theory (a pre-Miller-Modigliani theory) asserts that dividends are valued differently to capital gains in a world of information asymmetry where due to uncertainty of future cash flow, investors will often tend to prefer dividends to retained earnings. As a result the value of the firm would be increased a s a higher payout ratio will reduce the required rate of return (see, for example Gordon, 1959). This argument has not received any strong empirical support. Dividends, paid by companies to shareholders from earnings, serve as an important indicator of the strength and future prosperity of the business. This explanation is known as signaling hypothesis. Signaling is an example factor for the relevance of dividends to the value of the firm. It is based on the idea of information asymmetry between managers and investors, where managers have private information about the firm that is not available to the outsiders. This theory is supported by models put forward by Miller and Rock (1985), Bhattacharya (1979), John and Williams (1985). They stated that dividends can be used as a signaling device to influence share price. The share price reacts favorably when an announcement of dividend increase is made. Few researchers found limited support for the signaling hypothesis (see Gonedes, 1978 , Watts, 1973) and there are other researchers, who supported the hypothesis, for example, in Michaely, Nissim and Ziv (2001), Pettit (1972) and Bali (2003). The tax-preference theory assumes that the market valuation of a firms stocks is increased when the dividend payout ratios is low which in turn lowers the required rate of return. Because of the relative tax liability of dividends compared to capital gains, investors need a large amount of before-tax risk adjusted return on stocks with higher dividend yields (Brennan, 1970). On one side studies by Lichtenberger and Ramaswamy (1979), Poterba and Summers, (1984), and Barclay (1987) have presented empirical evidence in support of the tax effect argument and on the other side Black and Scholes (1974), Miller and Scholes (1982), and Morgan and Thomas (1998) have either opposed such findings or provided completely different explanations. The study by Masulis and Trueman (1988) model dividend payments in form of cash as products of deferred dividend costs. Their model predicts that investors with differing tax liabilities will not be uniform in their ideal firm dividend policy. As the tax l iability on dividends increases (decreases), the dividend payment decreases (increases) while earnings reinvestment increases (decreases). According to Farrar and Selwyn (1967), in a partial equilibrium framework, individual investors choose the amount of personal and corporate leverage and also whether to receive corporate distributions as dividends or capital gains. Barclay (1987) has presented empirical evidence I support of the tax effect argument. Others, including Black and Scholes (1982), have opposed such findings or provided different explanations. Farrar and Selwyns model (1967) made an assumption that investors tend to increase their after tax income to the maximum. According to this model corporate earnings should be distributed by share repurchase rather than the use of dividends. Brennan (1970) has extended Farrar and Selwyns model into a general equilibrium framework. Under this, the expected usefulness of wealth as a system of barter is maximized. Despite being more robust both the models are similar as regards to their predictions. According to Auerbachs (1979) discrete-time, infinite-horizon model, the wealth of shareholders is maximized by the shareholders themselves and not by firm market value. If there does, infact, exist a difference between capital gains and dividends tax; firm market value maximization is no longer determined by wealth maximization. He states that the continued undervaluation of corporate capital leads to dividend distributions. The clientele effects hypothesis is another related theory. According to this theory the investors may be attracted to the types of stocks that fall in with their consumption/savings preferences. That is, investors (or clienteles) in high tax brackets may prefer non-dividend or low-dividend paying stocks if dividend income is taxed at a higher rate than capital gains. Also, certain clienteles may be created with the presence of transaction costs. There are several empirical studies on the clientele effects hypothesis but the findings are mixed. Studies by Pettit (1977), Scholz (1992), and Dhaliwal, Erickson and Trezevant (1999) presented evidence consistent with the existence of clientele effects hypothesis whereas studies by Lewellen et al. (1978), Richardson, Sefcik and Thomason (1986), Abrutyn and Turner (1990), found weak or contrary evidence. There is an assumption that the managers do not always take steps which would lead to maximizing an investors wealth. This gives rise to another favorable argument for hefty dividend payouts which shifts the reinvestment decision back on the owners. The main hitch would be the agency conflict (conflict between the principal and the agent) arising as a result of separate ownership and control. Therefore, a manager is expected to move the surplus funds from the high retained earnings into projects which are not feasible. This would be mainly due to his ill intention or his in competency. Thus, generous dividend payouts increase a firms value as it reduces the managements access to free cash flows and hence, controlling the problem of over investment. There are many more agency theories explaining how dividends can increase the value of a firm. One of them was by Easterbrook (1984); he proposed that dividend payments reduce agency problems in contrast to the transaction cost theory which is of the view that dividend payments reduce the value as it forces to raise costly finances from outside sources. His idea is that if the dividends are not paid, there is a problem of collective action that tends to lead to hap-hazard management of the firm. So, dividend payouts and raising external finance would attract auditory and regulatory measures by financial intermediaries like investment banks, respective stock exchange regulators and the potential investors as well. All this monitoring would lead to considerable reduction of agency costs and appreciate the market value of t he firm. Moreover, as defined by Jenson and Meckling (1976), Agency costs=monitoring costs+ bonding, costs+ residual loss i.e. sum of agency cost of equity and agency cost of debt. Hence, Easterbrook (1984) noted that dividend payments and raising new debt and its contract negotiations would reduce potential for wealth transfer. The realization for potential agency costs linked with separation of management and shareholders is not new. Adam Smith (1937) proposed that management of earlier companies is wayward. This problem was highly witnessed during at the time of British East Indian Companies and tracking managers was a failure due to inefficiencies and high costs of shareholder monitoring (Kindleberger, 1984). Scott (1912) and Carlos (1922) differ with this view point. They agree that although some fraud existed in the corporations, many of the activities of the managers were in line with those of the shareholders interests. An opportune and intelligent manager should always invest the surplus cash available into those opportunities which are well researched to be in the best interest of the shareholders. Berle and Means (1932) was the first to discover the insufficient utilization of funds which are surplus after other investment opportunities taken by the management. This thought was further promoted by Jensens (1986) free cash flow hypothesis. This hypothesis combined market information asymmetries with the agency theory. The surplus funds left after all the valuable projects are largely responsible for creation of the conflict of interest between the management and the shareholders. Payment of dividends and interest on other debt instruments reduce the cash flow with the management to invest in marginal net present value projects and for other perquisite consumptions. Therefore, the dividend theory is better explained by the combination of both the agency and the signaling theory rather than by any o ne of these alone. On the other hand, the free cash flow hypothesis rationalizes the corporate takeover frenzy of the 1980s Myers (1987 and 1990) rather than providing a clear and comprehensive dividend policy. The study by Baker et al. (2007) reports, that firms paying dividend in Canada are significantly larger and more profitable, having greater cash flows, ownership structure and some growth opportunities. The cash flow hypothesis proposes that insiders to a firm have more information about future cash flow than the outsiders, and they have incentivized motives to leak this to outsiders. Lang and Litzenberger (1989) check the cash flow signaling and free cash flow explanations of the effect of dividend declarations on the stock prices. This difference between permanent and temporary changes is also explored in Brook, Charlton, and Hendershott (1998). However, this study is based on the hypothesis that dividend changes contain cash flow information rather than information about earnings. This is the cash flow signaling hypothesis proposing that dividend changes signal expected cash flows changes. The dividend decisions are affected by a number of factors; many researchers have contributed in determining which determinant of dividend payout is the most significant in contributing to dividend decisions. It is said that the primary indicator of the firms capacity to pay dividends has been Profits. According to Lintner (1956) the dividend payment pattern of a firm is influenced by the current year earnings and previous year dividends. Pruitt and Gitmans (1991) survey of financial managers of 1000 largest U.S companies about the interplay among the investment and dividend decisions in their firms reported that, current and past year profits are essential factors influencing dividend payments. The conclusion derived from Baker and Powells (2000) survey of NYSE-listed firms is that the major determinant is the anticipated level of future earnings and continuity of past dividends. The study of Aivazian, Booth, and Cleary (2003) concludes that profitability and return on equity positi vely correlate with the size of the dividend payout ratio. The study by Lv Chang-jiang and Wang Ke-min (1999) on 316 listed companies in China that paid cash dividends during 1997 and 1998 by using modified Lintner dividend model, suggested that the dividend payout ratio is due to the firms current earning level. Other researchers like Chen Guo-Hui and Zhao Chun-guang (2000), Liu Shu-lian and Hu Yan-hong (2003) also concluded their research on the above stated understanding about dividend policy of listed companies in China. A survey done by Baker, Farrelly, and Edelman (1985) and Farrelly, Baker, and Edelman (1986) on 562 New York Stock Exchange (NYSE) firms with normal kinds of dividend polices in 1983 suggested that the major determinants of dividend payments were the anticipated level of future earnings and the pattern of past dividends. DeAngelo et al. (2004) findings suggest that earnings do have some impact on dividend payment. He stated that the high/increasing dividend concentration may be the result of high/increasing earnings concentration. Goergen et al. (2005) study on 221 German firms shows that net earnings were the key determinants of dividend changes. Baker and Smith (2006) examined 309 sample firms exhibiting behavior consistent with a residual dividend policy and their matched counterparts to understand how they set their dividend policies. Their study showed that for the matched firms, the pattern of past dividends and desire to maintain a long-term dividend payout ratio elicit the highest level of agreement from respondents. The study by Ferris et al. (2006) found mixed results for the relation between a firms earnings and its ability to pay dividends. Kao and Wu (1994) used a time series regression analysis of 454 firms over the period of 1965 to1986, and showed that there was a positive relationshi p between unexpected dividends and earnings. Carroll (1995) used quarterly data of 854 firms over the period of 1975 to 1984, and examined whether quarterly dividend changes predicted future earnings. He found a significant positive relationship. Liquidity is also an important determinant of dividend payouts. A poor liquidity position would generate fewer dividends due to shortage of cash. Alli et.al (1993), reveal that dividend payments depend more on cash flows, which reflect the companys ability to pay dividends, than on current earnings, which are less heavily influenced by accounting practices. They claim current earnings do no really reflect the firms ability to pay dividends. A firm without the cash flow back up cannot choose to have a high dividend payout as it will ultimately have to either reduce its investment plans or turn to investors for additional debt. The study by Brook, Charlton and Hendershott (1998) states that, Firms expecting large permanent cash flow increases tend to increase their dividend. Managers do not increase dividends until they are positive that sufficient cash will flow in to pay them (Brealey-Myers-2002). Myers and Bacons (2001) study shows a negative relationship between the liquid ratio and dividend payout. For companies to enable them to enhance their dividend paying capacity, and thus, to generate higher dividend paying capacity, it is necessary to retain their earnings to finance investment in fixed assets. The study by Belans et al (2007) states that the relationship between the firms liquidity and dividend is positive which explains that firms with more market liquidity pay more dividends. Reddy (2006), Amidu and Abor (2006) find opposite evidence. Lintner (1956) posited that the level of retained earnings is a dividend decision by- product. Adaoglu (2000) study shows that the firms listed on Istanbul Stock Exchange follow unstable cash dividend policy and the main factor for determining the amount of dividend is earning of the firms. The same conclusion was drawn by Omet (2004) in case of firms listed on Amman Securities Market and he further states that the tax imposition on dividend does not have the significant impact on the dividend behavior of the listed firms. The study by Mick and Bacon (2003) concludes that future earnings are the most influential variable and that the past dividend patterns as well as current and expected levels are empirically relevant in explaining the dividend decision. Empirical support for Lintners findings, that dividends were indeed a function of current and past profit levels and were negatively correlated with the change in sales was found by Darling (1957), Fama and Babiak (1968). Benchman a nd Raaballe (2007) discovered that the propensity to pay out dividends is positively correlated to retained earnings. Also, the study by Denis and Osobov (2006) states that retained earnings are a significant dividend characteristic for non- US firms including UK, German, and French firms. One of the motives for dividend policy decision is maintaining a moderate share price as poor stock price performance mostly conveys negative information about firms reputation. An empirical research took by Zhao Chun-guang and Zhang Xue-li et al (2001) on all A shares listed companies listed in Shenzhen and Shanghai Stock Exchange, states that the more cash dividends is paid when the stock prices are high. Chen Guo-Hui and Zhao Chun-guang (2000) undertook a research on all A shares listed before 1996 and paid dividend into share capital in 1997 as their sampling, and employed single-factor analysis, multifactor regression analysis to analyze the data. Their research showed a positive stock price reaction to the cash dividend, stock dividend policy. Myers and Bacon (2001) discussed that the debt to equity ratio was positively correlated to the dividend yield. Therefore firms with relatively more investment opportunities would tend to be more geared and vice versa (Ross, 2000). The study by Hu and Liu, (2005) declares that there is a positive correlation between the cash dividend the companies pay and their current earnings, and a inverse relationship between the debt to total assets and dividends. Green et al. (1993) questioned the irrelevance argument and investigated the relationship between the dividends and investment and financing decisions. Their study showed that dividend payout levels are decided along with investment and financing decisions. The study results however do not support the views of Miller and Modigliani (1961). Partington (1983) declared that firms motives for paying dividends and extent to which dividends are decided are independent of investment policy. The study by Higgins (1981) declares a direct link between growths and financing needs, rapidly growing firms have external financing needs because working capital needs normally exceed the incremental cash flows from new sales. Higgins (1972) suggests that payout ratios are negatively related to firms need top fund finance growth opportunities. Other researchers like Rozeff (1982), Lloyd et al. (1985) and Collins et al. (1996) all show significantly negative relationship between historical sales growth and dividend payout whereas D, Souza (1999) however shows a positive but insignificant relationship in the case of growth and negative but insignificant relationship in case of market to book value. Jenson and Meckling (1976) find a strong relationship between dividends and investment opportunities. They explain, in some circumstances where firms have relative uptight disposable

Tuesday, November 12, 2019

Negative effects of homeschooling Essay

An average day in the life of a 10 year old consists of waking up, eating breakfast, and going to school followed by coming home to their loving families at the end of the day. Would this routine seem complete without going to school involved? In some cases children are not sent to a public school, but taught at home by one of their parents or both. Without being sent to mingle with peers, the child most defiantly misses out on important skills and lessons one can only learn while interacting with other people their age. Crucial life lessons, social skills, and specific aspects of education can be missed out on as a home schooled child. An important aspect to remember if considering home schooling as an option is that the most successful parents who home school are school teachers and not stay at home moms. Even in this situation there is no way that a one person teaching system could even begin to compare to the wisdom, intelligence and experience one can get in a high school setting. Without the variety of influences from teachers there are a few gaps left in a child’s education. With only one influence, they will not have a broad view of the world due to the fact that anything they’ve ever learned of heard an opinion of is from one person. Isn’t education all about learning about all sorts of the view points out there in the real world? In most cases parents may home school their child in order to protect them from the horrible world of peer pressure and bad influences. Although a parent with a child nearing the schooling age would probably think this is a wonderful idea. They most likely do not realize that this is thinking short-term and not considering the long-term negative effects missing out on these experiences may be to a child. In a classroom children learn to follow orders from one who is in charge; sitting quietly and doing what their told is very important in ones life. Out on the playground they learn how to socialize with others their age and begin building sturdy friendships with others who share the same interests. The idea of staying at home learning by themselves is obviously not providing a child with any kind of social situation once so ever. Naturally not all school experiences are fun. It is a giving that in a public school there will be taunting and other unfortunate behavior from other kids. Learning on their own how to deal with  these experiences is extremely important in the grown up world. Without knowing how to cope with emotions and never experiencing the real world it could be extremely difficult learning how to handle other people. Going to college and getting a job would be made more difficult then it has to be. Among all the choices one can make for their kids, why would a parent chose to deprive them of important life skills and a quality education? The idea of â€Å"going to school† is a relevant building block in any person’s life. Not being at school learning with peers is missing out on very important aspects of childhood. Getting familiar with the ideas of how the world works is necessary to having a successful life. Schools are like a little community for children where they grow, learn and adapt to the many challenges life may put ahead of them.

Sunday, November 10, 2019

Referring to at Least Two Sources of Data, Critically Discuss How Crime Is Measured in Britain and Explain Why the Statistics Do Not Provide Us with a Full Picture of How Much Crime There Actually Is.

SCS1007 ESSAY Referring to at least two sources of data, critically discuss how crime is measured in Britain and explain why the statistics do not provide us with a full picture of how much crime there actually is. If one were to ask how much crime there is in Britain, the judgement could differ depending on whom you were asking or their judgement on what they actually class as criminal behaviour. Society is ambivalent towards crime, which skews the analysis over the level of criminal activity in Britain.Maguire describes the area of crime numbers or trends as one of ‘shifting sands’ (Maguire 2002, p,322) in terms of the developments and creations in criminological process and thought which happens day to day. He also argues that finding the true level of crime bears very little significance in the study of criminology, but what bears greater significance is the critical approach by which the data is analysed.Nevertheless, there are official police-generated crime statis tics in Britain, made up of reported and recorded crimes, which still, to this day impact on how politicians and journalists view the government’s effectiveness in dealing with crime. The Official Crime Statistics in England are published annually and allow various sectors of society such as the media, politicians and the general public to assess the extent and the trends in criminal activity.These published tables of national crime statistics named ‘Criminal Statistics, England and Wales’ were first compiled in 1857 and were based on annual returns from the courts and the police which were then aggregated by government statisticians (Maguire 2002). Crimes recorded in police statistics are defined by the ‘Notifiable Offence List’ (ONS: Data sources – further information). This follows technological advances in recent times, which have grown the net number of police-recorded crimes, such as ‘common assaults’. Many minor crimes have been upgraded and are now regarded as ‘notifiable offences’ (Maguire 2002).However, there are significant shortcomings with the police-generated crime statistics, such as the fact that certain crimes are not included in this list, referred to by the ONS as ‘non-notifiable’ crimes. These crimes often include anti-social behaviour or minor crimes such as drunkenness, littering or begging. Whilst there is criminal activity occurring in Britain which does not come to police notice, and therefore is not recorded (discussed in detail later in this paper), there are crimes which the police are aware of, but use a great deal of discretion as to whether or not these crimes are recorded (Maguire 2002).The public are responsible for notifying around eighty per cent of recorded crimes to the police (McCabe and Sutcliffe 1978), however, the latter have the responsibility for deciding which crimes to deal with and which to ignore. Often they can regard some crimes as to o trivial or they dispute the legitimacy of others, which can lead to unreliable data. Moore, Aiken and Chapman (2000) see the police as filters, only recording some of the crimes reported to them. Furthermore, there are certain types of crime that are excluded totally from these statistics, seriously altering the extent to which the data can be classed as comprehensive.The term ‘notifiable’ offence essentially refers to one, which can be tried by the Crown Court. This leaves ‘summary offences’ (those which can only be tried in a Magistrate’s Court) excluded from the data (Maguire 2002). In addition to this, crimes which are not regarded as the responsibility of the Home Office, such as those recorded by the British Transport Police, Ministry of Defence Police, and UK Atomic Energy Authority Police (who between them record some 80,000 notifiable offences annually) (Kershaw et al . 2001, p91) are also excluded from ‘official crime figures. †™A further limitation with police recorded crime data is caused by the unpredictable fluctuations with the remaining 20 per cent of crimes which the police themselves discover, either through observation, patrols or through confessions by those arrested. This could be due to increased arrests from planned operations targeted against a certain type of crime. For example, following the London riots in 2011, many people were arrested due to the police focusing their resource and effort on finding the offenders. Similarly, at pop festivals many drug users have been found and arrested.On the other hand, numbers of recorded crimes may fall if police interest in a particular type of crime is withdrawn. This could be for a number of reasons such as in the late 1950’s and early 1960’s when the legalisation of homosexuality was imminent. At this time the police regularly ignored ‘indecency between males’ which resulted in a fall of recorded offences to half the le vel previously regarded as normal (Walker 1971). In criminology, the term ‘the dark figure of crime’ is often used to refer to the crimes that are not reported and therefore not recorded in official statistics.In theory, the ‘dark figure’ consists of offences brought to the justice system but not registered in judicial sources (perhaps because they were settled outside of the court), undiscovered offences or offences where the victim has chosen not to reveal details (Johnson and Monkkonen 1996). This loophole seriously alters the accuracy of the criminal justice disciplinary system. The underlying reasoning for certain crimes not being reported are based on people’s own judgement of the seriousness of the crime, police power, police diplomacy or simply because people see it as an inconvenience.It could be argued that if people don’t believe the reporting of their crime to be serious enough, then the justice system is not as accessible and tran sparent as it should be. This argument widens the issue of the dark figure of crime from a statistical one to an underlying and historical error creating much scope for debate. The police system is in place for the safety of citizens, but if citizens don’t feel the use of the justice system is necessary in certain instances, then what is the point in the justice system being in place for certain crimes?Furthermore, this hinders the reliability of criminologists’ theories where a legalistic stance is taken in the definition of crime. A secondary measure of crime in Britain, regarded by Maguire as a â€Å"directly comparable rival to the police-generated crime statistics† (Maguire 2002) is the British Crime Survey (BCS), now named the Crime Survey for England and Wales (CSEW) to reflect its geographical coverage. This measure attempts to combat the inaccuracy of the ‘dark figure of crime’ referred to above.The CSEW was first conducted in 1892 and is a n annual survey rather than a list of statistics. When the survey was first conducted, there were 11 million crimes reported; however, official statistics recorded by the police only counted less than three million (Hough and Mayhew 1983)– this gap is first hand evidence of the ‘dark figure of crime. ’ Forty six thousand households (ONS: Data sources – further information) were questioned in the year ending June 2012, with the CSEW focusing more on qualitative data rather than the quantitative data used in official statistics.The CSEW picks up on crime that doesn’t surface in official statistics, with households asked about their own personal experiences of crime in the past twelve months as well as taking into account any non-response bias. The measure has a consistent methodology and the results are not skewed by a percentage of the population failing to report their crime. The measure suggests the true level of crime to be twice the official crim e rate due to the proportion of people who admit to being victims or offenders of crime in a face-to-face interview, but do not report this to the police.Although the CSEW does now include a section on domestic violence, an area previously missed off the national figures, (particularly when victims are scared of their offenders) the real rate of crime is still substantially under-estimated. Corporate or workplace crime, homicide, drug possession or crimes against people under the age of 16 are still not included in the CSEW figures. In today’s society, this is a major drawback to the CSEW as corporate crime is growing in our increasingly globalised economy whilst crimes against children appear to be remaining constant with no breakthrough on prevention.In 2011, of the police recorded crime statistics on sexual abuse against children, it was found that 1 in 10 children (9. 4%) aged between eleven and seventeen years old had experienced sexual abuse (NSPCC 31/12/12). Some progr ess appears to have been made in the area of corporate crime following a recommendation contained in the National Statisticians’ Review of Crime Statistics (National Statistician, 2011 18/12/12) – there is now a survey of commercial victimisation which aims to provide statistics on corporate crime in the economy over the next three years and is planned to be incorporated into future quarterly releases in 2013.However, other drawbacks associated with the CSEW include the time lag on information collection – the survey records data from people’s experience 12 months prior. This is in comparison to police recorded crime in which the data is clearly more immediate. Furthermore, the CSEW is vulnerable to sampling errors and variation in results. One person may feel comfortable enough to admit criminal activity to one interviewer, but not to another. Therefore the reliability of the data can be challenged.When comparing both the CSEW and police recorded crime i n official statistics the most recent data from the Office of National Statistics can be analysed. The CSEW, based on interviews in the year ending June 2012, reveals a â€Å"statistically significant decrease of 6 per cent in the overall level of CSEW crime compared with the previous year’s survey (ONS: Overall level of crime 18/12/12). † Similarly, â€Å"the overall level of notifiable crime recorded by the police decreased by 6 per cent in the year ending June 2012, compared with the previous year (ONS: Overall level of crime 18/12/12). Nevertheless, whilst the CSEW estimates just over 9. 1 million incidents of crime for the year ending June 2012, the official figures only record 3. 9 million offences. This is heavily based on the ‘dark figure of crime’ – that proportion of crime in Britain which goes unnoticed by the police. In 2002, the CSEW (then named BCS) calculated that â€Å"40 per cent of crimes known to victims and reported to the poli ce do not end up in official statistics (Kershaw et al 2001, p992). It is evident that, whilst the CSEW does reveal a higher level of criminal activity in Britain, a majority of the crimes can regarded as not serious enough to be included in official statistics, and therefore should not alarm the population. Although the legalistic position attempts to simplify the scale of debate surrounding what crime actually is, stating ‘the most precise and least ambiguous definition of crime is that which defines it as behaviour which is prohibited by the criminal code’ Coleman (2000), this however creates a question on what is actually being regarded as illegal behaviour and ‘prohibited by the criminal code’.Analysing the methods used in Britain to measure crime establishes the fact that criminal statistics are a social construction, based not on a set of legal definitions and laws, which can be transferred between social groups and times, but on a product of social processes. The process of attrition between an act, regarded as criminal, to the same act being punished contains a number of stages that blur the answer to the question ‘How much crime is there in Britain? It appears that the term ‘official crime figures’ is somewhat paradoxical in the fact that if society is basing its justified opinion on these ‘official’ figures, then it must take into account several exclusions in order to get a more comprehensive perspective on what the data is actually showing. Although the figures summarise the most serious crimes in Britain they do not show the total picture.In this day and age more emphasis needs to be placed on the responsibility of the criminal justice system and the link back to the definition of criminals in the first place. In particular, if crime is viewed from a labelling perspective, then the role that the legal system plays in the creation of crime is of great significance when measuring the true le vel of criminal activity in Britain.In addition, consideration needs to be given to future prevention of crime and the measurement of how effective society is at removing or reducing certain categories of crime. In closing, I would argue that when answering the question ‘how much crime is there in Britain? ’ it would be naive to base any argument upon these official crime figures as they are simply ‘indices of organisational processes’ Kitsuse and Cicourel (1963).