Did Rapid Expansion Cause Icelandic Banks To Fail - Free Essay Example

Sample details Pages: 15 Words: 4397 Downloads: 6 Date added: 2017/06/26 Category Statistics Essay Did you like this example? Are banks just too big to fail? In October 2008, as the impact of the global financial crisis, three largest commercial banks in Iceland, namely Glitnir, Landsbanki and Kaupthing successively placed into receivership by the government (Lyall, 2008), and forced to seek the International Monetary Fund bailout. However, the three banks represented 85% of total assets in the countryà ¢Ã¢â€š ¬Ã¢â€ž ¢s banking system, along with the overseas assets, that was too big to rescue. As the consequences, the whole nation economic were sucked with banks into the whirlpool and the government has declared national bankruptcy later on. Don’t waste time! Our writers will create an original "Did Rapid Expansion Cause Icelandic Banks To Fail" essay for you Create order However, it does not end; the citizens blamed government in the way of handling the crisis, followed by unprecedented wave of public protest. As the result, in January 2009 the government was forced to resign (Stringer, 2009). Up until the banking crisis, the three banks combined debt is six times the nationà ¢Ã¢â€š ¬Ã¢â€ž ¢s GDP of  £35billion which the amount is equal to  £116,000 owed to every single citizen in Iceland (Dailymail, 2008). It would be the one of the worse collapse in financial history. With the population of 300,000, the banks deeply involved in global financial activities before downturn, it brings the nation into bankruptcy. After the bankruptcy was announced, it has affected 420,000 British and Dutch customers, and bank assets which are frozen held by hospitals, police station, council and universities (Brogger, 2008). The bank collapse seems unreal. Everybody panicked when the Kroner dropped 58% by the end of November 2008 and inflation hit 19% by January 2009 (Onaran, 2011). The failure has bought down the government and ruined the jobs opportunity. 1.1.1 OVERVIEW OF ICELANDIC BANKING SECTOR Iceland is said to be the smallest economy in the world that have its own currency and an adjustable exchange rate (Articlesbase, 2007). Icelanders were one of the citizens that enjoy a very high standard of living in the world. Its capita income, education, health care and life expectancy was rated as third highest in the world. (Lesova, Telegraph, 2008). GDP per capita was ranked 5th in the world in 2006 (go-to-iceland.com, 2006). The nation main activities are fishery and metals exports besides banking sector. In 1990à ¢Ã¢â€š ¬Ã¢â€ž ¢s, Iceland decided to follow other small countries such as Switzerland and Luxembourg to develop their economic future in banking sector. Due to the government policies and deregulation in banking sector, in 2001, the banking mushroomed as a result of low interest rates and cheap money pumped by US Federal Reserve. Iceland expands their banks financial position almost eleven times their GDP amounted to $209billion (Onaran, 2011). Oddsson (cited in Onaran, 2011) noted the countryà ¢Ã¢â€š ¬Ã¢â€ž ¢s top three largest banks had created thousands of well-paid workers and handling most of the highest trade individuals and companies. 1.2 RESEARCH OBJECTIVES The fall of Icelandic three major banks in October 2008 was very rare, first time indeed, in financial history. Jensen (cited in Mail Online, 2008) pointed the effect of banking collapsed in Iceland has been way different than other country where it further cause the whole nation suffered in the crisis. This study investigated the perceived causes that led to the bankruptcy of Icelandic banks by setting the objectives as follow. To investigate whether the failure of Icelandic banks due to rapid expansion. To investigate whether the failure of Icelandic banks due to highly leveraged. To investigate whether the failure of Icelandic banks due to fraud. 1.3 RESEARCH QUESTIONS 1. Did rapid expansion cause Icelandic banks to fail? 2. Did leverage cause Icelandic banks to fail? 3. Did fraud cause Icelandic banks to fail? 1.4 SCOPE OF STUDY The study target on the three largest banks in Iceland, Kaupthing, Landsbanki, and Glitnir, which represent 85% of total assets in the countryà ¢Ã¢â€š ¬Ã¢â€ž ¢s banking sector. Also focus on the factors that cause them failed. They are rapid expansion, leverage, and fraud. Besides, the recent global financial crisis was part of the study as well, which believed has bring significant impact on Iceland banking system. 1.5 SIGNIFICANCE OF STUDY Bank failure has a huge adverse effect on the economy and so the stability of banks is very significant. The collapse of the Icelandic banking system is the single biggest mistakes suffered by any country and the most comprehensive in the banking crisis history apart from the Lehman Brothers, in the recent financial crisis (Waibel, 2010). The total debts of the Icelandic banks are way too huge for the government to repay. The collapse of the three major banks in Iceland is the main driver which led to the nation bankrupts. This study is beneficial to identify the factors that can be avoided in assisting financial sector, academic sector and public for a better economy. Learning what went wrong is vital to strengthen the stability of economy. It can be realized that, Iceland case has greatly reported by newspapers and articles all around the world. Hence made many countries concern the possibility of their nation going bankrupt, they started to put more afford into banking sector in o rder to avoid such incident replay in their country. 1.6 THE ORGANISATION OF RESEARCH Chapter 1 is the introductory chapter where the objectives and importance of this study were raised to form a rationale behind the study. This chapter includes the background of three Icelandic banks, research questions, scope and significance of study. Chapter 2 analyzes on factors and analyzes on various theories on some of the factors that caused banks collapse. Factors will consist of rapid expansion, leverage and fraud. Chapter 3 is the research methodology which stated the methods that were used to carry out this study. This chapter included data collection, research design and theoretical framework. Chapter 4 is where empirical findings and case studies were gathered. Chapter 5 is where conclusions of this study were made. Besides, limitations of study and recommendations were also included in this chapter. CHAPTER 2 LITERATURE REVIEW 2.1 RAPID EXPANSION CAUSES BANK FAILURE Rapid expansion interprets as unusual growing rate, usually found in frequent transaction and excessive trading volumes in short period. In reality, business expansion is seen favourable in layman, as it likely to bring more profits into the business. However, looking back to history, it has shown that many companies filed bankruptcy as a result of uncontrolled growing rate. Financial journalists advice donà ¢Ã¢â€š ¬Ã¢â€ž ¢t go aggressive, otherwise the business would expose to liquidity risk which leads to insolvency. In fact, donà ¢Ã¢â€š ¬Ã¢â€ž ¢t we know the principle of too much water drowned the miller? The answer probably will be yes, we do know it well, most of the people are aware of the latency risk, but the reality is people always gone mad with the attractive outcome. Adams (2001) stressed ità ¢Ã¢â€š ¬Ã¢â€ž ¢s good to grow the business, but never ever set growth as the main objective of the business, as it can lead to failure. Generally, business expansion can be classified into two fields, namely internal growing and external growing. It is important to distinguish them especially in banking system. The internal growth of banks mainly refer to the organic growth itself, also the bank intention to issues more loans and thereby increases its loan portfolio. On the other hand, external growth comes from the form of buying assets, or acquisitions, joint venture, often within the same industry which has similar characteristic. Bank is passionate in increasing its lending portfolio. Lending is said to be the effective way for bank to expand its business. By lending out money, bank can earn higher interests through loan issued, thereby generate more income. Agricultural Bank of China (ABC) has reported high profit growth, backed by rapid lending expansion that has driven them into stock market listing. Its net profit has boom 13% to $49.7billion in 2009. Besides, its total assets amounted to 8.6trillion Yuan, evolved into the nation top bank. (cited in Wang, 2009). In addition, a research did in Lebanese banking sector shows its lending activity posting 23.1% growth to $34.9billion in 2010. It was said that the nationà ¢Ã¢â€š ¬Ã¢â€ž ¢s banking sector displayed a favourable performance with strong bank lending that can boost the declining inflows. (The Daily Star, 2011). A research conducted by Jayaratne and Strahan (1996) has proved that the bank lending in the United States contributes to the economic growth. Nevertheless, they pointed out that banks must be responsible to the loans issued. Blindly increased the volume of bank lending will bring negative impacts such as bankruptcy and should be discouraged. Regarding to this, some researchers has pointed out the fuse of recent recession was linked back to the banking deregulation since 1980à ¢Ã¢â€š ¬Ã¢â€ž ¢s. The banking sector in the United States has gone through substantial deregulation. Most of the restrictions have been loosen, such as qualification for getting bank loans, limits of the bank transaction have been almost ignored and etc (Strahan, 2003). In fact, there are many researches has been carried out as regard to the banking sector deregulation issue. The researchers often argue whether deregulation in the banking sector, especially those fast growing bank has affected the quality of the lending. As a result for banking deregulation, it created more competition in the sector. Keeley (cited in Carletti, 2005) found out the low margins of banks is the reason that encourage them to put themselves into higher risk in order to improve the profitability. However, higher risk will exposed them to higher chance of failure. Excessiv e internal growth will lead to lack of management and supervision; hence deteriorate the quality of the loans. A bad loan will make default to be easier (Report of the Special Investigation Commission, 2010). Generally, a loan that is not making income anymore to the lender is classified as non-performing loan in banking term. It is a default loan and can be defined as bad debts in the business (Charles, 2010). Non-performing loan is recorded as a loss in bankà ¢Ã¢â€š ¬Ã¢â€ž ¢s income statement, and normally will cause the bank to distress when there is a large amount incurred, especially encounter crisis. For instance, before the US housing bubble burst in 2006, prices went up drastically which prompted a lot people, especially household and growing firms to borrow money from bank into real estate investment purpose. Due to the high demand, bank see it as an opportunity of earning more profits, it induced them to borrowed more money from outsiders and depositors, in turn issue loans to the people. Bank earns higher interest in this process. In practice, depositors are the bankà ¢Ã¢â€š ¬Ã¢â€ž ¢s creditors (Daily Champion, 2001). However, the large amounts of lending is likely to cause non-performing loan outburst during crisis, which cause the bank unable to collect back its debt and refinance to its creditor. The situation gets worse when the banks suffer bank run (sudden withdrawal by depositors). In this case, the banks have to declared insolvency. An empirical study by Hou (n.d) has showed high level of non-performing loan that caused by over lending is the root that cause of bank collapse. He added non-performing loans caused by over lending can cause the economic bogged down. Furthermore, an investigation on loan growth and the riskiness conducted by Norden and Weber (2010) on 16,000 banks over 16 countries in year 1997 to 2007 has shown loan growth is an important factor of the banks risks. In China, the government punished some banks for their over lending transactions (Dealbook, 2010). On the other hand, the contributions of external growth shall be highlighted. In fact, the structure of external growth is much obvious and simple than internal growth, which is in the form of merger and acquisition. Yet, it is widely adopted and deemed as more efficient in achieving the business objectives than the former (Highbeam, 1997). One of the advantages is that it can help the business to realize maximum growth potential at the right pace, given that the internal growth pattern is limited or meet other constraints. However, it was said that the external growth has to be monitor closely to ensure the objectives of the banks is followed (Maughan, 2011). Hunger and Wheelen (cited in Grashaw, 2010) noted that most of the research concluded that the company growing through external growth does not perform financially well. Instead, company which depend on internal growth tend to present better financial position. This is due to mistimed or misjudged created during the takeover process. Generally, the risk associated with acquisitions is that too high a price is paid for the acquired asset. The situation gets worse when the crisis hits. For instance, the bank is paying big amount to acquire others assets during housing bubble period, this eventually cause them suffer a big losses when the price level has drops. This can be explained in the way that the income generated from its new assets is not equivalent to what had paid. In other word too high the price paid (Ngfl, 2007). In addition, the business has to find more sources to finance its new assets operations during this critical moment, which is seen as the main driver of running off the working capital. This is significant especially in the banking sector as it can cause chain effect which will eventually lead to liquidity distress. Recent studies have established that if merger and acquisitions in banks if allowed in a controlled manner would significantly reduce the bankruptcy risk of the merged entity (Scribd, n.d.). 2.2 LEVERAGE CAUSES BANK FAILURE Leverageà ¢Ã¢â€š ¬Ã¢â€ž ¢s root word à ¢Ã¢â€š ¬Ã…“leverà ¢Ã¢â€š ¬? is the French word which means to raise or to enhance. In finance term, it is an action or technique of raising capital to the existing business by borrowing. An entity that is engaged in borrowing money to finance the business is said to be leveraged. Typically, there are two ways of financing sources for a business to form its capital structure, through debt financing or equity financing. Most often, leveraging involves the issuances of financial instruments such as bonds, notes, debentures and preference shares. In exchange for lending money, the buyer (bonds holder) becomes the creditors to that particular entity (Raymond, 2011). They are entitled to receive interest until their loan redeemed. According to McLaney (2006), short term debt financing usually used to meet operating or regulatory requirements, the repayment due within five years time. While long term debt usually used by company to finance its long term project, due after five years. On the other hand, equity financing refer to the exchange of money to the business ownership particular in ordinary shares. This type of financing does not involve debt, the buyer (shareholders) will received dividend as the return when the business is making profits. However, this financing method is not likely to be used by most of the business entity, consider the issuance of new shares to new investors may dilute the ownership interest and reduction of controlling on the business ownership (Toolkit, 2011; Finance Website, 2009). Whatà ¢Ã¢â€š ¬Ã¢â€ž ¢s more, it is a demanding procedure for an entity to issue shares, time and the expenses incurred are relatively high. Therefore most of the companies nowadays prefer debt financing source rather than equity financing. Baker and Powell (2005) said managers prefer issuing debt securities rather than new shares when seeking for external financing sources. This is because debt financing leads to the increase of company value, while equi ty financing on the contrary, will cause the company value drops. Traditionally, debt is a liability and deemed as something that is unfavourable to an entity which should be avoided. However, debt is seen favourable when being used properly. This was supported by CPA Thomas Emmerling, he said debt is always better than any other form of financing when comes to the cost of capital (cited in Franczyk, 2005). Rao (1989) in his book pointed out various advantages of debt financing to the business particular in: Interest payment on borrowing is regards as tax deductible Undilution of shareholding control Relatively low cost to issue debt than equity Function as business catalyst, boost business income Besides that, it benefits the entity by leverage little amount of debt which could eventually bring them more income (Rich Credit Debt Loan, 2011). Hence, the objective of the leverage is met, and that we call it positive leverage. Waggoner (2008) argues that the impact of leverage has to be understood. Leverage can provide an incentive to generate income. Therefore leverage, more specifically debts that applied is not necessarily bringing harm to the business. Besides of generating more income, debt leverage can also used to increase the entity net worth or cash flow. John Waskin, CEO of American Credit Counsellors said Good debt produces cash flow, and bad debt doesnt. He stressed on the using of debt leverage facility could create a lot of benefits to the business (Billion Dollar Income, 2010; Getlen, 2008). Hutchinson (2008) said leverage financing method become widespread in the banking sector. He explains the more assets they control, the more return they can earn. In banking sector, debt leverage is a common technique when they engage in daily activities. For example, In order to multiply the income and capacity of lending, they will issue bonds to raise its capital by borrow more money from other financial institutions and lend it to other parties by charging at higher interest rate (EMAC Committee Members, 2010). Debt leverage is a favourable tool presuming there is no default exists in the whole process, and bank has collected back all loan issued, along with the interest imposed. Leverage contains high risk when the obligation is default. When bank is unable to collect back the money and they have to suffer the loss thereby no payment will be made to its creditors, especially when the bonds are due. For instance, this situation has reflected in recent housing bubble in US where the bank used depositors fund to lend it out to parties in real estate investment. When the housing price drops (biggest drop was 32.7% in year 2008) (Mantell, 2008) and the debtor does not payback the debt, the bank will lost all of its deposits and declare insolvency (Kalid, 2008). Apart from that, Murray (2011), argue that appropriate volume of leverage is allowable and can be use to increase the rate of return. However, if the business has excessive amount of borrowing (overleveraged), it may has difficulties to finance the debts when it is due. A bank will be vulnerable when the level of borrowing hits certain level. Besides that, Peavler (2011) emphasized that the firm is running the risk of filling into bankruptcy each time they use debt financing. The higher level of debt financing, the higher chance the firm will bankrupt. Glantz (2003) proposed the use of debt to equity ratio (leverage ratio) to identify the risk of a company. The formula is given as follow. Leverage ratio = Debts Equity The definition of leverage ratio is that, the higher the leverage ratio means the company is using more debt financing source, vice versa. For example, if an institution has $10million in debt and $2million in equity, it is said to have a leverage ratio of 5.0. Thus, leverage ratio tends to indicate the level of the debt financing in a company. Fisher suggests the 2-to-1 of assets to liabilities ratio rule should be imposed by company when come to financing decision, more than that could bring the company to fail (cited in Franczyk, 2005). However, this was objected by Franczyk, claiming that there is no fixed rule on the leverage amount; it has to depend on the nature of the company (Franczyk, 2005; Yahoo Finance, 2011). His statement was supported by other researcher, complex entity such as financial institutions and bank doesnà ¢Ã¢â€š ¬Ã¢â€ž ¢t have standard ratio in leverage. Maudlin (2009) illustrated with some of the Europe banks especially in Greece, Italy, Spain, Portugal, Ireland and Britain were reportedly hit leverage ratio at 50:1 and yet they still surviving. He further pointed out these banks were heavily involved into Eastern European projects which currently faced financial difficulties and plummeted local currencies. EU Commission has growing concern on the ability of these banks to payback the debt. Generally speaking, debt leverage is favourable to business, but it is advised do not overleveraged. It is essential for business to use a balance between the combination of debt and equity financing (Biztrademarket, 2009). Regarding to this, McLaney (2006), proposed the traditional view of capital structure, where it indicates the effect of borrowing on Weighted Average Cost of Capital (WACC). WACC is an expression of a cost which is used to see whether the intended investment is worthwhile to undertake or not. The lower the WACC, the lesser risk the company bear (Chryanthou, 2008). Figure A: Traditional view of the effect of borrowing on WACC The traditional view of capital structure states that at the initial stage of company borrowing (gearing (UK) or leverage (US)), the advantages of cheap cost of debt and tax advantage will cause WACC to fall (Favourable). However, as the gearing increases, shareholder will demand for higher return for higher risk they bear (i.e., cost of equity rises). At the same time cost of debt also rises because the chances of company defaulting on debt are higher. Therefore, WACC will increase (Unfavourable) and a U curve is created. Based on Figure A, the result is that, a minimum WACC is identified and that is the point of optimal gearing/leveraging level. The design of this structure tends to give the indication on how much leveraging level should be taken, also, in the attempt to reduce the business risk to the lowest possible point. 2.3 FRAUD CAUSES BANK FAILURE A series of financial fraud in the past has shaken the confidence in financial market. Fraud had been remains high and is one the leading cause of bank failures. How could fraud unnoticed at the first place? Appearances can be deceiving until ità ¢Ã¢â€š ¬Ã¢â€ž ¢s too late to reverse the situation. Some financial fraud contains signs yet investors and shareholders fail to observe the warning shown. Good judgement derive from experience, experience derive from poor judgement. An understanding on financial fraud is to look back at the history of fraud incident and successfully overcome the mistakes done. Financial fraud is a crime. The National Criminal Intelligence Service (NCIS) says more than 70 percent of doubtful transactions reported are contributed by banks (Murray-West, 2004). Those convicted with fraud will always walk away richer even though fraud has failed in the bank. Wilson (1999) noted financial scandal could happen again due to its temptation of attractive rewards to pe ople. There is an increase of financial fraud in US, UK and Asia. If fraud comes to rule the system, it will ruin the business. Ade and Wole (cited in Socyberty, 2008) stated that fraud is a virus spread from banking that might harm other sector. However, it received little attention they said. Investigation on fraud activities is important as the lesson of the consequences from dishonest actions can make aware to businessman, politician and regulators. Recognizing on types of fraud in the bank is important to sustain them in the long run. The few common type of fraud is insider lending, asset misappropriation, false accounting, bribery and corruption. Growing complexity of the bank has made way for fraud to be committed by any groups in the bank. For example, companyà ¢Ã¢â€š ¬Ã¢â€ž ¢s management, companyà ¢Ã¢â€š ¬Ã¢â€ž ¢s employees, third parties and customers may have involved on it. Insider fraudster is a serious threat to the bank in the words of a representative from Serious Fraud Office (Murray-West, 2004). Furthermore, Cull (2011) argues that lending to bank insiders is the main cause that leads to non-performing loan occurred. She pointed out bank prefer to make loans to their close associated or own shareholder which easier for them to monitor. But on the other hand, this allow insider borrower to transfer out money illegally when the credit crisis take place. At this point, the insiders have taken the opportunity to made loans and default it later on in order to sustain their own business organization. Many cases of financial fraud have involved individuals that outstanding perform in job. They are capable to transfer out large sums of amount from the bank. Ironically, the outstanding performing staffs that bring the most profit to the bank required the most observation. Palmer (cited in Murray-West, 2004) stated individual that has engaged in fraudulent transaction are those who greatly preferred due to higher ability to earn money for bank. Black (cited in Galbrait, 2010) stated financial fraud is likely to happen when you can be in charge of the bank. Given the authority to manage the bank, it is always easy to involve their self in fraud. Heineman (cited in Brigham and Linssen, 2008) stated CEOs are the individual that are responsible that contributed the fraud in Enron and WorldCom. Someone that is performing great will less likely to be question by public, other executives in the bank or shareholders. The management is clueless on how are those CEOs control the entity. They f ailed on handling accounting, finance, risk, legal, human resources, operational and boards. Other than CEO, individual such as Nick Leeson has brought down Barings Bank with fraudulent activities when top management did not question his activities in the bank (Pressman, 1988). Nick Leeson hides errors and losses in the hopes that luck may reverse while speculate the fake account to earn money with foreign currency. Asset misappropriation is the common and easiest to occur. An asset misappropriation includes payroll fraud, check forgery, theft of money and services. Statistics show that asset misappropriation made up to 91% but the least expensive fraud (Coenen, 2008). The founder of Independent Insurance and two of its executives has bought down Britainà ¢Ã¢â€š ¬Ã¢â€ž ¢s largest insurance companies. They were involved in off-balance sheet accounting which is keeping information on contracts away from the main system. False accounting has been very common that cause institution failures over the years. False accounting is often done by overstating or understating profit or liabilities to show a stable balance sheet. This is done to attract customers and investors. Palmer (2004) noted banks uncover questionable transactions in order to maintain their reputation on outsiders view. There is no incentive for bank to reveal the real information to customers and investors. The manipulation of financial statement can enhance the bankà ¢Ã¢â€š ¬Ã¢â€ž ¢s earning by making it more appealing and create more financial opportunities. Sarbanes (cited in Brigham Linssen, 2008) said public companies with good reputation are convicted into fraudulent practice to exaggerate profit and rise up stock prices with their auditors. However, the cost of false accounting is large and widespread. Matthew Piper lost  £60million in Morgan Stanley, one the largest investment bank when he overstated the profit. (Power, Edwards and Bloxham, 2008). Bribery and corruption include investment scheme fraud, bribes to influence decision-making, and manipulation of contracts. It is reported that bribery and corruption is cost more than asset manipulation. Two SFO were bribed  £800,000 to ensure loans of  £13m are successfully deal the owner of Facia (Murray-West, 2004).

Essay Film For Free - Free Essay Example

Sample details Pages: 10 Words: 2884 Downloads: 10 Date added: 2017/09/11 Category Cinematographic Art Essay Type Research paper Tags: Violence Essay Did you like this example? American through Film. Paper about the American Gangster and How His Portrayal Reflects the Issues of the Time Introduction Even though movies and films are good source of entertainment for many Americans, it is evident that most movies are produced based on the chronological events and the situations that the generations are facing. The writers of specific movies try to give and address the chronological accounts of events and situations at a particular time. Even though the stories and that actions may sometimes be characterized by exaggerations the deeper accounts of real happening and situations in the society remains upheld in the theme of the movies. By critically analyzing the movies, it is very possible to clearly understand the surrounding environment when the movie was created and the personal opinion of the producers on the situations American gangster despite being one of the famous movies in America holds an important account of events in American socie ty. Generally, gangster movies give an account of world in conflict with the legitimate society. For many years, gangsters have been viewed differently. Others have to the negative side of events viewed gangsters as deviant individuals coming up together with intentions to cause havoc in the lives of other members of the society. On the other hand, other people have had a positive view of gangsters as a way of living and addressing the challenges that a particular group of people are facing. The prohibition in the early 1920 led to the emergence of a new era of gangs who created criminal empires who created cartels for supplying illegal drugs and alcohol. The films of the 1930 gave a picture of criminal minded individuals willing to go the furthest level possible to create their world of criminal operations in order to acquire material possessions and power. The film glorified the genuine of the individuals who were willing to adopt the system that was controlled by corrupt busi nesspersons and government officials. Public enemy of 191 is an excellent example of early   Ã‚  gangster films in 1931.The public enemy gives an account of prohibition gangster from childhood through murderous, bootlegging adulthood and sudden sobering downfall. The film based on a 300 page draft of unpublished novel titled â€Å"beer and blood† written by two former street gangsters john Bright and Kubec Glasmon. Bright and Glasmon were Bright witnesses of gang rivalry in Chicago and witnessed series of Al Capones murderous actions. During this time, the stock market had crushed and people were struggling in the best way possible to meet their daily needs and make ends meet. The national unemployment levels skyrocketed and it was very difficult to root for protagonists who did whatever it takes to make their survival possible. During the great depression, denoting gangsters as heroes symbolized the decay of American societies as well as the paranoia that the traditiona l values would not survive the economic crisis. In various ways, the public enemy clearly expresses the psyche of the America, which rejects the qualities, and the demands of the modern life .gangster films are socially antagonistic traditions directed to lower class and socially marginalized groups in America. In the 1933, National committee for study of social values published their findings that gangster movies gave convicted criminals their early education .Increased censorship in the 1930s   almost resulted to the departure   of the gangster film, they did not disappear but however changed considerably after 1935. â€Å"Hollywood movie production system was not very certain on how to present gangster in the light of the hays office moratorium on the gangster movies.†   Gangsters began converting to good people. Many Americans identified with the film in various ways. Life had become very difficult for many Americans   Ã‚  especially the minority groups during this time. Many Americans had resulted to gangs as surviving means. The worst was that despite joining and the emergence of gangs in America, there was competition among the gangs often resulting to gang rivalry. The most powerful gang would survive. The director of the film in his mind giving a chronological account of a gangster who rises to power but then drastically ends in despair wanted to give the audience the picture that despite how you thrive to power through gangs , the government will always bring you down High sierra   Ã‚  presents a bridge from the classic gangster to the alienated protagonists. The film is acknowledged as one of the gangster pictures for the style and moral complexities. The film was created in the early 1940. The film marks the waning of the 30s gangster’s protagonists in the forties as the film begins. In the late 1940s and the early 1950s, high sierra romanticizes the classical gangsters the classical gangster of the previ ous decades. He lives by code and still has an honor and integrity in the society. High sierra was the last major film made before the Pearl Harbor attack that brought the United States to the light of World War II. The post-World War II introduce a new era of gangsters. The film gives chronological accounts of the influence of greed and corruption. During this time in America, outlawed heroes and larger than life lawmen appeared and were being looked by the public in response to certain situations. Such situations included unjust government regulations, concentration of wealth on the hand of the particular few and widespread poverty. During the great depression, United States witnessed unjust government regulations while wealth concentrated on few individuals while the larger populations languished in poverty. In the early years of depression, the government imposed a ban on alcohol in what was known as prohibition years. At the same time, very small percentage of American population controlled a large portion of wealth in America. Due to extreme depression, many middle class families succumbed to extreme poverty for the first times in their entire lives. On the side of the workers, early ages of depression brought with it desperation and conflicts .various riots and unemployment protests arose. At the beginning, the government seemed incapable to solve many problems that affected the lives of ordinary middle class citizens. In the middle of great depression, challenges with economic difficulties and desperations, American societies needed heroes to outsmart the government ban on alcohol. To respond to this call, ethically organized gangs in the ghettos, which were associated with criminal activities, organized themselves and began to supply the drugs. The organized gangs became powerful and by the middle 0f 1930s and early 1940s, the outlaws in the Midwest began robbing banks. The role of the federal government during this time was not only to de al with economic programs but also to enforce laws. The violent occurrences such as gangs’ rivalry, food riots in the streets of America were the hallmarks of the great depression. The film high sierra psyched many Americans in various ways. On the surface of the film, high sierra seems like a straightforward crime Humphrey Bogart is Roy Earle, a tough criminal trying to pull one last job. In the deeper sense, the film high sierra is about a man’s failure to redeem himself and eventual acceptance of tragic destiny. The film depicts the cruel unforgiving nature of the society. The tough guy faà §ade is something that Roy Earle develops as a result of the cruel harsh conditions around him and in this sense he represented many of the American men who have found themselves into criminal platforms simply due to the harsh environmental situations trying to provide a cold and lathery exterior   Ã‚  to guard themselves from the pains and hart breaks of daily life challe nges. Roy’s weaknesses here represent weakness of all men. His weakness is the desire to love and be loved in return even though Bogey   has   the sharp and sultry Ida Lupino he still wants Velma   the virgin , the innocent whom   he can truly start   a new life The movie has a wonderful feel. Roy seemed headed to emotional if not literal death and the joy relies in watching him trying to change his fate. Crime and gangster films are created along the sinister actions of criminals and gangsters, they include; bank robbers, underworld figures and hoodlums operating against the law, stealing and killing their ways through life. A new type of crime thriller In the 1940s emerged, very dark and cynical. Criminal and gangster films fall under the category of post-world war film noir due to the similarities. Crime stories of this kind often give a life account of crime figure or crime victims. They further glorify the rise and fall of   Ã‚  particular criminal of ga ngster in personal power struggle with the society and the law by giving an account of the rise and fall of a gangster. The forces of evil. During this time cold war was intensifying. Various events had plunged America and Britain into cold war with there was the fall of Czechoslovakia and berlin crisis. Communism is regarded as the real enemy and counterfeiters and smugglers were aiding the real public enemies. The film presents a statement about ones needs to preserve or regain personal integrity. Finding a balance between free speech and being labeled. The film was an exposes on the number rackets but censorship prevented the film from showing how the racket worked. Twenty minutes footage was cut before the film release. The number rackets fed on the nickel and dimes of the little people. Illegal clandestine â€Å"banks† operated the racket and were scattered throughout the big cities. In the film, Hollywood production code prohibited glamorizing the gangster legend Two bothers Joe and Leo are great criminals but Leo’s lack of ambitions really frustrate Joe. Leo seems not ready to join the larger outfits, he has certain degree of respect for the little people and eventually meets his death .On realizing the murder of his brother, Joe decides to seek revenge. In this case, the film highlights the struggle between the little guy and the soulless big business that is taking over. The film creators were questioned about their beliefs. The producer John Garfield appeared before the committee in 1951 .it was an experience that took its toll on his health. He died the following year. The director Abraham Polonsky was blacklisted and did not direct another movie for twenty years Forces of evil presents a world hooked in corruption. Director Martin Scorsese refers to the film as his own gangster dramas seminal influence.   The movie star John Garfield is a corrupt lawyer whose face represents moral conflict Garfield is a Wall Street lawye r who is selfish   and grew up on the streets. He is a product of Bronx street gangs but has had the opportunity and chance to rise to the place of undeniable importance.   Garfield’s â€Å"office in the clouds† was a result of criminal mob that practically use him as their brains in a plot to gain control of the city’s smalltime illegal gambling trade. Fixing the July 4 gambling racket so that the popular bet of 776 comes the winner. Joe and Ben Tucker plan to drive all the minor numbers racketeers out of business when they are in capable of paying out winning bets Abraham Polonsky bitterly compares between the money-oriented corruptions undertaken by lawyers such as Joe with more explicit graft of mobsters like Tucker. both of them refers to people who are not include in their   scam as â€Å"suckers† and casual dismissal of ordinary people is seen   in the film’s opening overhead shot of pedestrians Joe’s single attempt to reach out to the little man fails and results in jeopardizing the entire plan. Joe’s older brother who is sick operates a minor racket and Joe is determined to bring him into scheme of Tucker before his office is whipped out with the rest of the small change money rackets. Leo on the other hand has nothing to do with the scheme. The two brothers draw a line on the sand that leads to bloody battle between the two brothers finally leading to disastrous bloody consequences According to Polansky, the film was an examination of the sick souls of the modern man living within the political system. Capitalism cause major rifts between individuals in the human society. The capitalist system drives people into corruption in order to stay alive. The forces of evil is American business symbolized by Wall Street. Leo’s conversation with his wife stress the point â€Å"I have been business man all my life and honest. I do not know what business is† Leo. â€Å"Well you have a garage, you had a real estate business† Sylvia â€Å"†¦. real estate business. Living from mortgage, stealing credit like a thief and the garage-that was a business. Three cents over charging on every gallon of gas, two cents for the chauffer and a penny for me. Penny for one thief an two cents for the other† Leo. It did not matter whether the business was small or big they were all corrupt. Doris is an example of that. At first, she is innocent and resists Joe’s advances. He becomes greatly impatient and tries his best to demean her. deep down her she have the same desires   and it only takes a little pushing   for those desires to surface   and she breaks out of the shell. The telephone in the film plays a symbolic meaning. It represents the connection between different worlds. These worlds can communicate with each other. The film has very little actions and departs from the typical shoot them up gangsters. It shows the connections b etween business and politics, business and crime. During this period, various events had plunged Britain and United States into cold war with Russia. Stalin had ensured that the communist governments had come to power in all the countries of Eastern Europe by â€Å"salami statisticsâ€Å". Russia said that Winston Churchill had declared war on them. In February 1947, President Truman began paying for the soldiers fighting to prevent Greece from turning to communist nation. In March 1947, he clearly said that it was barely American responsibly to contain communism. American general George marshal convinced the congress to aid the fight to stop Europe from turning into communism by giving 17 billion dollars. When communists took power in Czechoslovakia, Stalin responded by setting up conform. Tension was growing between America and Russia even at the Yalta conference. The conference seemed successful, on the surface, but afterwards, Churchill wrote to Roosevelt that Soviet Union was becoming a threat to the free world In July 1945 during the Potsdam conference, arguments openly emerged. Stalin had arrested the non-communist polish leaders. America on the other hand knew that President Truman was very determined to resist Russians. In 1947, Stalin made sure that communist governments came to power in all countries in Eastern Europe. Russia took control over Albania, Bulgaria, Poland, Hungary, Romania and East Germany.   On witnessing the Russian expansion, President Winston Churchill gave a speech on which he said that the countries of Eastern Europe should cut off by an iron curtain -were subjects to Soviet influence, totalitarianism and governments. The Russian response on the other hand was that Winston had staged war against them. It was certain that there was a great rift between Russia and America. By the time the film forces of evil was produced, there was increased tension between communist Russia and he capitalist America. During the earl y 1940s, American psyche was dominated by the total war effort and all the contradictory feelings that come along with war times. The film evil forces contained classic noir crimes and moral ambiguity, were marked by its stylistic stark shadows, and sense of claustrophobia- a mod that echoed the darker side of America at war. Many people identified with the film. Many people at this time with the expanding battle between communism and capitalism wanted to hold on their beliefs. On the other hand, America had just come out of the great depression and people were beginning to enjoy increased wages.   With the expanding capitalism. Many people who had come from poor background embarked on wealth accumulation. The strategy of accumulating wealth involved competition among people. Corruption was one of the major characteristics of capitalization of wealth in capitalistic states. On the other hand, the heated arguments between the capitalistic America and the socialistic Russia had c reated an intense enmity in the hearts of many Americans. In conclusion, gangster films give chronological accounts of particular people who through violence and illegal ways maneuver their ways in life. Crime stories of this kind often give a life account of crime figure or crime victims. They further glorify the rise and fall of   Ã‚  particular criminal of gangster in personal power struggle with the society and the law by giving an account of the rise and fall of a gangster. References Mason, Fran. American gangster cinema; from â€Å"little Ceaser† to â€Å"pulp fiction† Basingstoke, Palgrave, Macmillan, 2002 Minntz, Steven and Randy Roberts. Hollywood’s America; twentieth century America through film. Chichester; Willey Backel, 2010. Munby, Jonathan. Public enemies, Public heroes: Screening the gangster from little   Ceaser to touch the evil. Chicago, University of Chicago press,2009 ebook library. Rafter, Nicole Hahn. Shots in the mirror: crime films and society. New York: Oxford University press, 2006. Roso, Eugene. Born to lose: the gangster film in America. New York, Oxford university press, 1978. Shadoian, Jack. Dreams dead ends: the American gangster film. Oxford. Oxford University Press, 2003. Don’t waste time! 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Managing AIDS Free Essays

Introduction In the situation with Frank Deloisio, a middle manager who had AIDS, Jean Langone Smith had one of the greatest tests of her career. She was encountered a case of the type which so many managers can come across, as one in every 250 Americans has been diagnosed with the plague of the twentieth century, yet the situation is so delicate that few books can help a person in managing position to sort out the ethical issues that relate to it. Managing AIDS: Issues To Confront In a sense, managing a person diagnosed with AIDS is similar to managing any other person who has been diagnosed with a different terminal illness like cancer or tuberculosis in the final stages. We will write a custom essay sample on Managing AIDS or any similar topic only for you Order Now However, AIDS is a special social phenomenon due to the stigma associated with this contagious disease. It has come to symbolize the bohemian lifestyle of the homosexuals and prostitutes, and many people feel that a person is to blame for having incurred such a condition. Besides, despite the medical professionals’ assurances, there are still fears that a person with this condition may infect somebody in the environment, which makes the removal of such a person from the group desirable for some. One more issue that was associated with AIDS in Frank’s case was his frequent absences. He in some ways had to use Jean and others to be able to pay for his disease. The employees at DEC had to put in extra time and carry the extra workload to compensate for his frequent treatments. Besides, people were not even informed about the reason of his absences, and thus had a reason to believe that he was merely using them to take time off work to attend to his personal matters. Utilitarian Perspective If Jean had viewed the happenings from a utilitarian perspective, she would merely be concerned with the consequences of her decisions, and in evaluating those consequences, her primary focus would be the amount of happiness or unhappiness of the people that would result from it. Thus, dismissal of Frank Deloisio seems a plausible option. If he had been fired for his illness, the company would have to replace him with a different person who would most likely be able to handle the responsibilities, devoting more time to them. Then all the employees would be happy, as they would be relieved of their extra responsibility. As for Frank, he would be less important, as his troubles are those of a single person. Deontological Perspective From a deontological view, it is necessary to do what is right regardless of the consequences. The view taken and the practical steps depend on the stance adopted towards what is right or wrong. Thus, if the right thing is standing by the sick person, then the right thing is to help Frank in his predicament, sharing his responsibilities. One could say that a sick person is not able to care for oneself, and thus it is correct from the ethical standpoint to share the benefits available to other people to help the sick one. On the other hand, if one adopts the view that the ultimate good is efficiency, then Frank’s dismissal is a viable option as he is clearly in the way of the company’s success. His replacement with a different person would contribute to the efficient functioning of the company as a whole. Fairness to AIDS-Infected Person Fairness means dealing with people honestly and in accordance with principles. In this sense, the manager’s obligation consists in dealing with employees fairly, without bias or prejudice. Thus, a person suffering from AIDS should be dealt with in the same manner as any other person who is suffering from a serious health disorder. This also means that the manager should induce all the employees to treat the one infected with AIDS in the same manner. Thinking about Rights Maintaining the rights of a person requires the adherence to a certain set of principles. For instance, the sick person has the right to confidentiality, and this is what Jean has been trying to do for Frank. Besides, Frank was also entitled to company’s medical insurance, and the full coverage of the costs associated with his illness. Regarding a case from this perspective involves the maintenance of a number of basic principles, but there is always the danger that something might fall through the cracks. For instance, if the person is not entitled to a change in job responsibilities, this will not be pursued by the manager as it is not part of the sick employee’s specified rights. How Jean Did Jean, although unprepared to deal with a situation like that, lived up to the challenge of solving organizational problems in her department. She was not reached by the AIDS programs to the extent that she could derive her knowledge of what she could do from that source, and thus she was acting based on her own ethical judgement. Jean went far beyond what was necessary according to the formalities at the company. She assisted Frank in adjusting his responsibilities to suit his current health conditions, and even had an idea to coin a new position designed for him where he could emphasize his technical skills, without putting pressure on him that he could not handle. When his health deteriorated, she relaxed his responsibilities even further. This raised her authority with the personnel, allowing people at the company to see that she was ready to go beyond what was prescribed by the rules to accommodate her employees. In a way, her own ethical perspective was changed: if previously she looked at the people as professionals, restricting her relationship with them as a purely business one, now she could show that she was ready to see them as unique individuals that are important not only as cogs in the machine. Perhaps the clear-cut nature of the case that involved helping a sick person helped Jean to make a leap from a strict and formal manager to a life-and-blood personality. If Jean had been confronted with a more ethically ambiguous case like accommodating the frustration of person in the middle of a divorce, she would be more tempted to think along the lines, â€Å"They have to cope with their problems on their own†. Facing a situation of someone hopelessly ill changed her behaviour and views. Conclusion Jean did well as she preserved the rights of a sick person, acted fairly, and was good at maintaining the basic principle of helping a sick person. Jean’s actions were also right from the utilitarian perspective in a sense. Supporting an employee in need helped her to uphold her image in the eyes of others, as well as the image of the company. The employees at DEC were able to draw the conclusion that if they fall ill with AIDS, they can probably expect the same sensitive and insightful treatment. This idea is going to boost their morale in the long run, and increase their loyalty for the company. The case made headlines, which is going to serve as positive publicity for DEC, elevating the corporate image. It is perhaps unfair to suspect Jean of such a motivation being her primary driver, but this serves to show that her actions gain support from both deontological and utilitarian perspective. How to cite Managing AIDS, Essay examples

Nature Of Business Combinations And The Required Disclosures

Question: Write essay about the nature of business combination and required disclosures including referencing. Answer: Business combination is a type of merge wherein the two merging companies assets are consolidated as on under the ownership of one single person. Thus the fact that the controlling interest vests in the hands of a single business entity is its main feature. Business combinations generally takes place between entities which are in the same line of business activities so as to derive the benefit of large scale production and thus reduce cost of production. This in turn enables to cut down the competition in the market significantly. The accounting for business combinations is also very clearly spelt out so as to ensure that the combining entities have the ease to work together while adhering to the statutory requirements as per IFRS3 (Khan, 2015). Business combinations are of various nature and all have various requirements of disclosures. The disclosure is a mandate as it is through a financial statement of an entity that the end users are made aware of the activities that the organization has undertaken. The various nature of business combination and the disclosures exclusively for the combinations are enumerated as under: 1. Horizontal Combination: In the said nature the entities with similar lines of operation combine their activities so as to achieve economies of production and greater market share. Such as mergers and acquisitions. Merger is a method wherein two entities join hands and acquisition is a method where an entity known as the acquirer takes over the other entity known as acquire for financial benefits. Thus mergers are always friendly in nature whereas acquisitions can be mutual as well as hostile. But both kinds of combinations are done so as to create a monopoly or to gather a larger market share. It is a sort of horizontal combination (Singla, 2011). The said type of combination requires entities to disclose the purpose of acquisition, the goodwill it calculated via this association, the purchase price and the forms in which such purchase consideration is being fulfilled (Sai, 2015). 2. Vertical Combination: This nature of business engagement is internal to an organization. It basically thrives towards integrating various departments under the guidance of a single managing authority. This basically leads to a better communication between departments, thus reducing wastages, better co-ordination between the demand and supply chain and thus maximizing the profits. This kind of combinations are generally seen in a more positive manner by the investors as it prevents dilution of their interests and is less costly a method. Its disclosures basically needs to highlight the various departments that have been integrated and the kinds of benefits the entity has or expects to derive from such a combination (Rasel 2014). 3. Circular Combination: This sort of combination is basically to establish a big business empire with varied businesses and none of them are connected to each other but managed by a common business house. The perfect example for the same is that of TATA Group of companies which are engaged in iron and steel production, sugar industry, salt industry, motor vehicles and many more and none of them is dependent on each other for their production, marketing or sales processes. Even the disclosure requirements are different and the accounting standards applicable also varies industry wise (Qureshi, 2016). Thus a combination wherein different industries come together under the same roof of the management is known as circular combination. The disclosure requirements of such a combination is very simple. Individual financial statements are prepared and when the parent groups results are published then a detail regarding its other businesses are only published. However the annual report of th e various industries under one management are different (Bradford, 2013). 4. Diagonal combination: This type of combination involves the main units of an organization to join hands with its ancillary industries whose services are required for the smooth and a speedy discharge of duties. For example a newspaper industry ties up with a transportation company so as to enable speedy delivery of the newspaper to its customers . This helps the ain industry function smoothly. Thus the disclosure requirements for such type of business combination is very simple. It just needs to disclose the reason for such an acquisition and the benefits with regards the scale of operations as well as monetary gains is to be established. The combination with an ancillary industry may not be a very expensive affair as the organization being acquired may be a small one and hence the cost of purchase may not be too high to effect the main business. Apart from some specific disclosures required to be made for the various kinds of business combinations that an entity undertakes following are also needed to spelt out: The name and full description of the firm being acquired. The date from which such a combination came into effect. The amount of controlling interest acquired. The reason for such a combination. The methodology using which the purchase consideration has been arrived at (Financial Accounting standard Board, 2007). Thus on a concluding note it is clear that a business combinations leads to a number of important financial as well as operational changes which is very significant to be disclosed for the investors and the users of the financial statement. Assessing of the effects of a business combination post transaction on the profitability and the cash flows is very crucial. This assessment enables to understand how successful has the said business combination been for the acquirer and what value addition it has done for the shareholders. Lastly it is to be understood if a combination takes place after the reporting year ends but before th financial statement is issued then a disclosure for the same is a must. It is a very common practice in todays scenario to keep on acquiring businesses and indulge into various kinds of combinations so as to be able to survive this competition. References: Khan, W., 2015, Business Combination, viewed on 21st May 2016. Sai, S., 2015, Business Combination: Concept, Causes and Forms, viewed on 21st May 2016. Rasel, 2014, Different Types of Business Combination, viewed on 21st May 2016. Financial Accounting standard Board, 2007, Statement of financial Accounting Standards No. 141, Business Combinations, viewed on 20th May 2016. Bradford, S., 2013, Types of Business Combinations, viewed on 21st May 2016.. Singla, R.K., 2011,Business Organization, VK (India) Enterprises: India Qureshi, S., 2016, What is Business Combination and its types, viewed on 21st May 2016.