Essay --

Introduction The microgrid system comprising of small-scale distributed generation system and fill apprize be promptly integrated by means of the renewable zipper sources 1-2. Numerous researches have been conducted on the microgrid notion 3-5. The performance of microgrid system is multiform and irregular while some microsources are associated. In order to go out the behavior of a microgrid with several microsources, key issues such as microgrid manage, constancy and protection have to be considered in detail.Background The increasing wait of electricity, fast exhaustion of fossil fuels, diminution of CO2 emissions, in concurrency with the incapability and ineffectiveness of present electricity grid are cause chief changes in electricity production, circulation and consumption guides around the globe. In new-fashioned times, smart electricity grid configurations comprised with interlinked small or medium property generators, energy storage elements as well as causation electronic technologies have been germinated to find the key limitations of the conventional grid structure. Microgrids are major(ip) ingredients of these promising grid configurations. Even though microgrids are received as feasible solutions to power stability and quality topics in ac power systems, the ambiguity in the capacity of microgrids are to deal with serious opaline load and fault situation is the most important pertain in the function of these novel grid configurations.In the previous decennium, enormous attentions were exalted on the subject of distributed generation units, for instance solar photovoltaic panels, deform turbine generators, fuel cells, and so on. These Distributed Generations ... ...bjectives The focus of this research proposal is to develop of a microgrid management system for reliable operation which will be incorporated with modeling, softenling, and power management of microgrid application s. Toward this proposal a theoretical investigation of the base function of a exhausted grid will be presented. A novel grid management strategy under changeable loads will be proposed for power management. Simulation work and experimental see will also carry out to demonstrate and validate the proposed control system for the operational improvement of the DG networks. The main objectives of this research go for can be described asDevelopment of novel control techniques, flexible and advanced, for system control improvement in a halt power system.Improvement of power conversion efficiency. To examine how a feeble power system can be built up

Bloodless Revolution

THE BLOODLESS REVOLUTION. Talking ab turn out the scratch coverage, Economic Crisis causes and results ar one of the main root cause of martial(a) Law back then. Economy of many developing countries, including the Philippines, has reached its instability in its peak. When Ninoy Aquino was assassinated, many have now the courage to protest and do demonstrations against Marcos political science whether or not in Manila which caused investors to back out since they are afraid of economical instability that had been continuously brought by these protests.Since there is already economic crisis that time, many are fired from their jobs thus, leaving the country to widespread unemployment and these unemployed Filipinos joined the rallies and marches leading to more popular grievances and discontent. homosexual rights violation were rampant and landlordism and poverty grew. Due to his criticisms not only in the country but from other nations as well, Marcos state Snap Elections with Co ry Aquino as his main rival. He won evetually because of massive maneuverility. This has enraged Filipinos with their leader C. Aquino and ostracize Marcos allies companies.This has led to greater protests and marches and apparently, bloodless revolution took send out with the help of Jaime Cardinal Sin, Agapito Aquino, Juan Ponce Enrile, Fidel Ramos, religious organizations, and most importantly, the Filipino people. Marcos has leave the country with his family and went to Hawaii through the help of US Air Force. Cory Aquino has been declared by the mass as the President of the Philippines with her Vice President palm and implemented the 1987 Constitution which replaced the merciless Martial Law of Marcos People top executive Movement refers to the popular uprising that ousted Philippine president Ferdinand E.Marcos in February 1986. in any case known as the EDSA Revolution, the uprising was in reaction to the massive fraud and violence unleashed by the political science to ensure that Marcos and vicepresidential candidate Arturo Tolentino would win the questionable snapelectionsthat Marcos had called earlier that month. The opposition ticket was headed by Corazon Aquino, wife of spring Senator Benigno Ninoy Aquino, who was assassinated in 1983 byelementsof the Philippinemilitaryas he debarked his plane at theManilaInternational Airport(since renamed Ninoy AquinoInternationalAirport). umteen believed that Aquino and her running mate,SalvadorLaurel, would have won had theelectionsbeen fair and honest. Massive demonstrations were held in precedent of Malacanang (thepresidentialpalace) and twomilitarycamps located at Epifanio de los Santos Avenue (EDSA). The pacific uprising became a model for other countries wishing to change their government without resort to amilitarycoup or a blinking(a) revolution. Having the evaluation, the question that the reporter wanted to ask is thathaving now the clearer scenario and better acquaintance roughly the EDSA Revolution I, which is more preferable DICTATORSHIP or nation?As for my perspective, it would be STILL DEMOCRACY. People will tend to guess that dictatorship is better since many Filipinos now are not persistent the law and usage of force in its implementation would be the better solution. But then, I think the main and very problem of out country is the misunderstanding and mis-usage of the word FREEDOM in which DEMOCRACY is quoted with. square(a) Freedom and Democracy would always come with rights and responsibilities as citizens of our country. It is all about changenot for the worse but for the betterment.

Empire of the Sun: Nationalities Essay

Empire of the sun is a rites of passage tonic about James B onlyards life in Shanghai during the Japanese invasion in the 1940s. It describes James life from how he changes from a classy and upper-class expatriate to becoming a lonely Shanghai roamer, and his age at Lunghua camp at which his views of the four main republics in the countersign (England, Japan, China and America) change comp permitely.Ballard presents the incline at the beginning of the novel as a superpower, posh and rich. We know this because Yang their chauffer drives a green Packard, which is a valuable and flash car and they have lots of servants who, in James (Jamie to his family and shut down friends) imagination are precisely pieces of furniture, and gardeners who mind their own business passively stabbing at the grass. Despite the English being in their ivory tower and thinking themselves of a higher class than the mixed-up Chinese, they put away are concerned about the Japanese moving encompass ing(prenominal) and closer to Shanghai. Before Dr Lockwoods party Jamies father knelt by the radiogram in his pirate costume listening to the regular struggle update.While Shanghai is on the brink of being overrun and captured by the Japanese the English until now manage to fit in a few glasses of whiskey and soda and a fancy garb party, but even at the party the main focus for close to people is listening to the war update on Dr Lockwoods short-wave radio. lastly the Japanese assume control of Shanghai and Jamie is separated from his parents. In the total of Shanghai, all alone, Jamie meets two American sailors, rude and Basie. They rename him Jim, A smart name for a new life. Jim needs food and is automatic to do anything in order to perplex alive. The plainly way he can stay alive is to stick around with unmannerly and Basie.As the story goes on Jim has less and less revere for the English because they do non seem to prioritise the right things for sheath they woul d prefer to arrest from chronic dysentery quite an than make the effort of boiling the weewee because they are used to having things done for them by servants. Also the English had theatrical groups rather than upholding the ill and dying people in the hospital. These are expert some of the reasons that Jim lost respect for the English over the course of his shackles at Lunghua and eventually moving to the American quarters, where they did things properly and were prepared to do what it takes to stay alive.The helpless and passive Chinese do nothing to help themselves in the book, being this passive with no personal drive or momentum to get out and oppose the people who put them in such bad positions to build a life that is worthwhile living(a) for creates the effect that they live just to die. We are invited to paint this morbid furnish in our mind when he describes that the Chinese knew from birth, that they were all as hot as dead anyway, and that it was self-deluding to believe otherwise. When the Chinese deal with the superpowers they let them do what they want and dont even bat an palpebra at them.This just re-iterates how easily they get controlled and overpowered by other nations and cardinal therefore rich individuals. When the Japanese soldiers killed the rickshaw coolie he does not put up a entreat he just dress the4re and let the soldiers kill him. The coolie knelt on the groundamong the grains of riceas the blood ran from his back and formed a pool around his knees. The Chinese just accepted they are inferior to the Japanese and English so dont bother to put up a fight or retaliate. But everybody knows that one day China will avenge the rest of the world, and take a frightening revenge.Ballard invites us to believe that the Japanese patiently wait for their chance to attack which in Jims mind scares him more than the thought of being killed or tortured by them. There is an eerie sense towards the Japanese which Jim doesnt like, bec ause they kill for no reason for instance when the Chinese coolie is stabbed and left o die on the floor. Jim has cracking respect for the Japanese pilots and their run downs. He names every Japanese plane that flies over his head. When the war starts the turn the wrong way for the Japanese they take their anger out on the prisoners by reducing the tot up of potatoes for the prisoners to eat. As the war moved through its closing year the Japanese had become unsettled and dangerous. But despite all this Jim motionless wants to join the Japanese Air Force rather than the RAF, Im going to join the Japanese Air Force.He wants to do this because his only impression of the British is that they are pathetic and cannot care for themselves without servants whereas the Japanese showing might and power, of course all eleven year old boys take the side of the most powerful, which entices him towards their side. Even when the war is over he still has respect for the Japanese. The Americans are Jims lifeline. When he is picked up by Basie and Frank he is willing to do whatever it takes to stay alive and harness his parents, despite knowing that they want to get rid of him, but when Jim is in Lunghua camp he is told to stick around with Basie by Dr Ransome because he is a survivor. Its a good thing that youre friends with Basie. Hes a survivorwars exist for people like Basie.This shows that Basie can wangle and even thrive from the bad situations which Jim respected him for. Jim finds out that after expenditure a few weeks in the camp the English have in all different mind sets to survive to survive than the Americans, we know this because Ballard informs us that the English sit around all day drinking cholera infested water while the Americans, even those with malaria, take life as it comes and do what it takes to stay alive.In Steven Spielbergs film Empire of the Sun Jim sneaks out of the edge o the camp to place two pheasant traps and puts his life on the line, just to earn the right to live in the American dormitory hence shows that he has ultimate respect for them, so much so that he becomes obsessed by everything American. Even when they gamble with his life he just accepts it as American humour of a most peculiar(a) kind. By the end of the text Jims favourite nation (has most respect for) is most defiantly the Americans, especially after the American air raid on Lunghua airfield, where he sees the Mustangs and B-29s, one of the pilots from a Mustang waves at him as he salutes him.In conclusion Jim loses all respect for the English people, whom which he previously had a lot for, due to his experiences at Lunghua camp. The Chinese were never considered as proper people in his mind because all throughout the novel they are minorities in society and passive towards all other nations, letting them roam free in their country. Jim has the utmost respect for the Japanese in the beginning whereas by the end he still admires them but not as mu ch due to harsh things being enforced on him, and his fellow prison mates, in Lunghua camp.He withal admired the Japanese kamikaze pilots who were prepared to give up their lives even though they knew the war was lost. Jim is unsure about the Americans at first when he meets Frank and Basie but grows to love them and their pleasant but entertaining company. He would not be the same person at the end of the war if he had never met Basie. Personally, this quote sums up Jims opinion of the nationalities All in all, Jim felt, he Americans were the best company, not as strange and challenging as the Japanese, but far superior to the morose and complicated British.

Weather Investigation

AimTo record the temperature virtually School to pick up to discover if there is a microclimate.HypothesisThere is a microclimate near the school. The temperature will change.Geographical TheoryWhat is a microclimate?The climate of a vitiated, circumstantial place within a bigger area. An area as down in the mouth as a yard or park can commit several different microclimates depending on how much sunlight, shade, or exposure to the jumper lead there is at a commenceicular spot. Compare macroclimate.PlanIn my experiment I am going to measure* Wind upper* Wind direction* Temperature- caretakers room, the English room, Italian room, tree by tennis courts* Air t offstagee* Rain fall* Cloud cover order1) Firstly, we went to the Geography room where we took a look at the Barometer. We read the benighted provoke and then turned the gold needle to the black needle so that tomorrow we would be able to read the air pressure for today.2) Then we went outside to the fall gauge near the pond. We lifted it up and read how many millimetres of water were inside it. We then emptied it so that tomorrow we cold read from fresh.3) Next, we went to the tennis courts and measured the wriggle press forward and cheat direction using an anemometer and our finger. To use the anemometer you need to plunk for the digital reader in your hand and lift the other part until you get the highest tuition. We licked our finger to find the wing direction and as surface as used a compass then where our finger felt the coldest was where the wing was coming from.4) We the measured the smirch cover by using reflexion and counted the fall of clods comparing it in eighths.5) Finally, we measured the temperature around the school reading the results from four different thermometers situated in four different places around the school. These are the Italian room, the English room, the tennis courts and outside the caretakers room. We measured the rate of flow temperature from a norm al thermometer and the ut some and highest temperature of the day from a max. min. thermometer.AnalysisOn Wednesday there was the least criterion of air pressure but the nearly get of rain. It also had the slowest wind speed but the highest number of oktas. Also,on Friday there was the most sum ups of air pressure and the lowest number of oktas for the deprave cover.Description of resultsOn Monday the air pressure amount was between the highest and lowest amount, 998 mb. It had a lot of rainfall of 10 mm and the highest fastest wind speed of 6.4 ms going into the direction of east and 7 oktas for cloud cover.On Tuesday it had the second smallest amount of air pressure of 989 mb and the medial amount of rainfall which is 5.5 mm. The wind speed was one of the slowest as it was only 5.1 ms heading east. There were 6 oktas for cloud cover.On Wednesday there was the least amount of air pressure with 981 mb and the most rainfall which is 11.5 mm. It had the slowest of wind speed o f 0.75 ms heading siemenserly east and the most cloud cover of 7 oktas.On thorium it was a median amount of air pressure, 998 mb and the second smallest amount of rainfall with 5 mm but on that day the rain gauge tipped over so 5 mm was not the correct result. There was a wind speed of 5.9 heading south and the cloud cover was of 6 oktas.Lastly on Friday there was the highest amount of air pressure, 1012 mb and the lowest amount of rainfall which was 1.8mm. The wind speed consisted of 6 heading north the cloud cover being 5 oktas as the lowest.ConclusionI have concluded that there is a microclimate in different places around St Michaels Grammar School. But on certain eld it was more obvious then others. This is because all the temperatures are varied because of small changes such as facing south- which is where the sun is, or if there is a building in the way which can block sunlight, or if the prevail is cloudy, which blocks the sun from getting to a certain area, which change s the temperature in the different areas.military ratingThis investigation was quite accurate but there are a few ways I would gull this better. First of all I would make sure that the rain gauge is straight and steady so that it collects the right amount of rain that should be collected so that the rainfall results will be completely 100% accurate. Next I would make sure that the wind speed results are correct as well by using the anemometer properly and waiting longer for the highest amount of wind speed so that we can get a larger result. Another thing is to reset the temperature anyday at the exact morsel from the past 24 hours so that the temperature will be accurate for every day. Overall the investigation had reasonably accurate results and there are ways to improve it but it in the end it was a great support investigation.

Conflict with “Macbeth” and “World War Poetry” Essay

During this essay I am going to write close the some(prenominal) a(prenominal) diverse focal points in which booking is presented in William Shakespe atomic number 18s Macbeth and Wilfred Owens Poetry of World struggle 1. I will be crappervass the ways in which Macbeth and 3 songs create verb tout ensembley by Owen intellectual Cases, The succeeding(a) war and Dulce Et Decorum Est, link with each other. Macbeth is a behave written in 1606 by Shakespeare who wrote plays to entertain his audience. On the other hand, Owen was a soldier in World War 1 when he wrote famous poesys he wrote them to tell us about the tragedies of war and he expressed his thoughts and feelings about war and contest. Owens poems are influenced by his stimulate experiences of war. In Macbeth the appointment presentn by Macbeth and the other characters, gives us an idea of how Macbeths rivalry amongst certain characters in the play depicted the whole play itself. For example, Macbeths conflic t with King Duncan shows how Macbeth was much(prenominal) an easy target for the witches beca employment they predicted he would be the next Thane of Cawdor which came true, then they predicted he would be the next King, but when Duncan announced Malcolm to be the next heir to the throne, Macbeth become insecure and had the thoughts of cleanup position Duncan.I have no spur to prick the sides of my intent, but only all overreaching ambition which oerleaps itself Macbeths excessive ambition is analogous a horse that tries to jump too high but it falls on the other side of the fence, also Shakespeare uses a metaphor to sop up Macbeths ambition as vaulting like a horse. Shakespeare brings the idea of Macbeth killing Duncan to life. Similarly, Wilfred Owen presents the conflict in his poems in ways which he relentlessly unveils the skilful scale of the wars horrors. For example, in Owens poem psychical Cases, the conflict the soldiers have with the violent conditions they had t o depart in, Owen presents the mental nemesis suffered by the patients in this poem. He uses the simile like a wound to show that their wounds are still fresh and present in their minds. The oral communication such as blade and bleeds afresh suggest that they have been brutally ripped exculpated by the conflict happening in their minds. Owens poem Mental Cases shows us the mental anguish the soldiers had to go through during the World War. He uses the simile baring teeth that leak like skulls, teeth atrocious to describe the soldiers as skeletons because theyre half dead from fighting unendingly in the war this shows how the poems title Mental Cases links with the whole belief of the soldiers being half dead because their minds have been taken over by the trauma of the war.Batter of guns and shatter of flying muscles the use of violent imaginativeness to emphasise the way in which the soldiers are continuously surrounded by gun-shots (batter of guns) and dead bodies (fl ying muscles). Dawn breaks open like a wound that bleeds afresh Owen uses a simile, also a personified phrase to spotlight the way the soldiers wake up to constant violence around them. Wilfred Owen uses words such as skulls to show that the soldiers were like skeletons half dead. Also he uses ravished to give more part to the poem, to demonstrate that the horrors have taken over the soldiers minds. This poem links with Macbeth due to the way in which Macbeth is mentally excruciate because of the crimes hes committed which are flat acting upon him, vindicatory the way the patients are mentally tormented because of the tragic war. Shakespeare uses the personified phrase subterfuge thou not fatal vision sensible to feeling as to sight? to accentuate that Macbeth can only see the dagger in his mind but its not really there.Heres the smell of kind still, all the perfumes of Arabia will not sweeten Shakespeare macrocosmipulates the use of the senses to show that Lady Macbeth is saying that there is no perfume of this creative activity which shall sweeten our sinful hands which emphasises that Lady Macbeth still thinks about the send off of King Duncan. Shakespeare also uses the simile that not look like inhabitants othe earth to show that the witches arent humans they dont belong to the earth. If it were done when tis done, then twere well it were done quickly Shakespeare presents the idea of chivalric and present to kill Duncan quickly would be better. Thy bones are marrowless, thy line of products is cold Macbeth says to the ghost of Banquo he has no marrow in his bones, his line of merchandise is cold. Shakespeare uses words such as fatal to show the mental torment Macbeth is going through whilst he sees the dagger in his mind. Also he uses inhabitants to describe the way the witches look they dont look like they live on earth.In Owens poem The Next War he presents the inner conflict of the war because the poem is base on the idea of not being afraid of demise but get used to the fact that expiration comes anyday to them. In the beginning of the poem Owen has written a quote from Siegfried Sassoon wars a travesty for me and you, while we know such dreams are true this is an unusual praise because sonnets are usually on love and romance, but this one is on war. Owen uses personification like out there weve walked quite friendly up to Death sat down and eaten with him, cool and bland to emphasise that in the main all the soldiers are used to seeing people die and when death comes its normal for them. Also Owen describes death as cool and bland these are oxymorons because they have an unusual perspective of war. Hes spat at us with bullets and hes coughed Owen uses personification to show how death has tortured the soldiers. Owen uses many language techniques to bring the idea of welcoming death to the soldiers lives. Wilfred Owen uses words like fortitude to emphasise the soldiers characters.Also he uses gree n fatheaded odour to represent the odour as the poisonous gas that caused many soldiers deaths. This poem links with Macbeth because in this poem Owen talks about the bravery these soldiers had and how they got used to seeing their men die all the time, however, in Macbeth, Macbeth is looked at as brave Macbeth who has disdaining fortune because he won the battle for Scotland and was looked at as a hero. For brave Macbeth well he deserves that name disdaining fortune, with his jard steel Shakespeare describes Macbeth as a courageous warrior. However, during the play we limit out that Macbeth has planned to kill Duncan, but then feels a sensitive regret in going fourth with the murder we will expire no further in this business. He hath honourd me of late, and I have bought golden opinions from all sorts of people. In this scene, Lady Macbeth attacks Macbeths manliness and makes him feel like he less of a man And live a coward in thine own esteem. But screw your courage to th e sticking place Shakespeare uses a metaphor here to show the power in which Lady Macbeth has she wants Macbeth to tighten his courage to the limit, so he can go fourth and kill Duncan.Lady Macbeth tries to convince him by trade him a coward and unmanly. Macbeth is convinced enough to murder Duncan which eventually lead to his own down fall. Dulce Et Decroum Est meaning Die for Your Country is another famous poem of Wilfred Owens where it links to battlefield conflict and inner conflict. The poem is based on the whole concept of war, and how the soldiers fight for their country throughout the world war. Bent double like old beggars, coughing like hags Owen uses dickens similes to describe the soldiers as beggars and hags, due to the way they live in. Men marched slumbery this use of characterisation brings to life the way in which the soldiers were continuously marching music during their days, and nights. Owen also uses an oxymoron to bring sarcasm into the poem of gas shells dropping restfully behind gas shells are usually very loud and serious but Owen makes out the gas shells were soft. As under a green sea I saw him drowning. a metaphor to describe the poisonous gas, and Owens persona of his friend drowning in the gas. Guttering, choking, and drowning the use of onomatopoeia gives erect of the way in which Owen presents the conflict of the war. Owen also uses personified techniques to show the inner conflict of how the soldiers minds were taken over by the tragic war If you could hear, at every jolt, the blood the result that Owen uses to hear the blood.Owen gives the impression that these soldiers are low-down and describes them to be helpless. Wilfred Owen uses words such as deaf from the gun shots and bombs and screen from the tear gas and smoke he uses pitiful language to report the reality of war. This poem links with Macbeth, because Owen talks about the way in which the soldiers die for their country and linking back to Macbet h, he fought a battle for his country. However, the soldiers in the poem are describe as beggars and hags, on the other hand, Macbeth is described as brave. Macbeth has a higher reputation because he had killed the rival of King Duncans. Shakespeare describes the nature of war as if it is a game or a sport enigmatic it stood, as two spent swimmers that do cling together using the word swimmer relates to sport and doubtful makes them want to try harder and think of swimming where they are pushing the piddle away racing to the finish line makes the reader create a picture of Macbeth and Banquo slashing away with their swords creating a sea of dead soldiers and blood behind them fighting their way to glory.It is only at the end of the play that Macbeth finally discovers his fate after being told that Macduff had been, untimely ripped from his mothers womb. Macbeth describes the witches as Juggling Fiends Macbeth is accusing the witches of deliberately juggling their words so that h e could not understand them. This is a clever quote as Macbeth has however realised his life is in ruins, but the audience knew this earlier. The witches have changed Macbeth from a brave warrior to an evil, murderous, traitor, underlining the conflict of equitable and evil. By the pricking of my thumbs, something wicked this way comes this quote is significant as it illustrates the change in Macbeth throughout the play, now even the witches consider Macbeth to be evil. However, when looking at the path of oddment that Macbeth has left behind him it isnt very surprising. Just one man driven by his ambition to be king has led to a chain reaction of murders. in that respect are many important conflicts in Macbeth, like the conflict between Lady Macbeth and Macbeth, the conflict between the good which is represented by Macduff and the evil which is represented by Macbeth, and Macbeth versus himself, his inner struggle, and all of those conflicts lead to Macbeths down fall. Shak espeare gave a truthful, but interesting effect to show war and conflict in that time and age of Shakespeare. There are also many significant conflicts in the World War 1 which Wilfred Owen wrote about in all of his famous poems, like the conflict between the soldiers and death the way in which the soldiers have to welcome death because its likely they will die. This conflict leads to the soldiers becoming mentally tormented. Owen eternally revealed the truth about war and conflict.

Pregnant Couples Should Receive Parenting Lessons Essay

Parenting classes are offered for every type of evoke, from the brand new mom and protoactinium to the experienced parents of teens. Parenting classes fuck help give you a better grasp on what to expect, mark more about parenting and field styles and help you looking more confident and in control as a parent. or so parenting classes help parents to understand their roles better, they get an idea about what is going to be like, they start to get prompt for what is coming next. Regardless of the age of your children, a parenting class helps and provides confidence in parenting, you gain resources, and make new friends. about new parents are nervous about the new arrival of their piddling one, and they are completly right to be like that. A new mess up brings new challenges and experiences that some parents simply arent equipped or prepared to deal with. Taking a parenting class can help you face more confident in your abilities as a parent, whether youre rescue home a new baby or dealing with the trials of a preteen at home. Parenting classes can help in the transition of creation a normal person to the process of becoming a parent so in that management you know what to expect and how to handle the situations they present.If youre like some parents, the terms attachment parenting, or positive discipline may be confusing to you. The terms often used when lecture with other parents can leave you scratching your head and wondering avout what they tycoon be talking. Parenting classes give the chance to ask questions in a arctic setting and gain resources from the teachers, like books and pamphlets, so that you can choose the trounce parenting method based upon your own knowledge.The world of a parent sometimes can be isolating and lonely. With a child,suddenly you dont have time to spend with your single friends. Parenting classes are an excellent way to meet other parents who are in the same walk of lifetime and in similar situations like you. T ogether, you can find parenting solutions and have an opportunity to socialize with persons who can undersatnd your day-to-day struggles, or problems.Being a proper mom or dad means more than baking cookies and acquire you lots of cool stuff. An effective parent does things like structure substantive family activities that help kids learn while having fun. Providing guidance, encouragement, and discipline are some of the things well parents do, all this can be achieved by having parenting guidance. A parenting class can help you become a better parent as you learn strategies to stay close to your children as you raise them to be functioning members of society.

How Can We Say Environment Essay

The field is getting worse day by day. The most signifi brush offt reasons modify this non-grata situation are increased CO2 emission ratio, water and modify pollution and so on. Concerned people are always accusative the administers, governments and big companies of destroying nature. To some extent this argument is true however, every star individual has to recognize the importance of the environment and bear certain responsibilities. We can be the trigger factor of a remarkable change by making diminished changes in our daily life.The initial bar is diminution our energy consumption. Owing the fact that a considerable amount of the electricity need is met by hydroelectric and thermal power plants, the more we expenditure the electricity, the worse the environment is affected. The thermal power plants is mainly run by fossil fuels which make an irrevocable impact on nature by rising the CO2 emissions to dramatic levels. As a concrete instance, since the industrial Revolut ion, carbon dioxide concentration on air has doubled. Hence, by taking sm any steps like switching off the lights, plugging off the devices instead of guardianship them on stand-by we can decrease the energy consumption.70% of the human personate consists of water. This fact explains how crucial is the water for our existence. Due to the fact that only 2.5% of all water in the world is fresh water, water pollution threatens not only the wild life but also the human nature. In addition, if we add the water scarcity issue, the water will cause the conflicts in the future. Thus, this case must be taken into consideration more bad by governments, companies and people. For example we can contribute to water conversation by doing small things in our houses such as installing environmental-friendly showerheads, using cost-effective dishwasher instead of washing the dishes by hand and running it when its full. These may seem very tiny but who knows, a snow bunting may turn into an aval anche.In my point of view, the most important frame is to create a chance for this snowflake to evolve into an avalanche. But how? I recover it can be d oneness by informing people. As an outcome of Industrial Revolution, companies and governments has become more greedy. Earning money and protect their composition eat up been their only mission and for the sake of these ends, they are killing the environment. Dramatically, thither isnt adequate protest against these circumstances. Furthermore, the existing protests are suppressed or censored. Thats why I support this argument. If we inform people virtually the seriousness of this issue and encourage them to take responsibility, the hardest part will be passed. Shortly, two are more powerful than one. If this can be achieved, an capacious step will be taken towards a bright future.When one thinks about how huge is the environment and notices the smallness of himself, he may think that What I do is already meaningless. When ever yone do some thing for two themselves and nature, it gains a critical meaning. As Neil Armstrong said This is one small step for me but one giant leap for the humankind. Whatever we do about saving and protecting the nature as individuals, these all have positive effect on better tomorrows, surely.

An analysis of british rock culture and its impact on popular culture Essay

Since its genesis in the early 1960s, British tremble n Roll has been one of the most influential movements of contemporary practice of medicine worldwide. Britain has victoryfully introduced some of the most significant fluctuate musicians to ever tenderness the stage worldwide. Included in this group argon fates handle The Who, direct Zeppelin, The Beatles, The Rolling Stones, Oasis, and countless others. I chose to analyze British stir music enculturation, non solely beca example of its importance in terms of musicality, but beca drill of its profound relate on popular finale.Contemporary British rock began developing in the 1960s and early 1970s with the inception of bands like The Beatles, The Rolling Stones, and conduct Zeppelin. It derived from the skiffle and blues music of the 1950s, yet the forthcoming British artists sought to animate the upbeat music according to their own interpretations (Perone 19). British rock goal has yielded numerous sub-genres of rock n roll including Progressive endocarp, Glam Rock, Alternative, and Heavy Metal. As the movement has expanded finished come out the decades, lyrics turn out become much interlocking and have become increasingly rooted in the conveyance of sociopolitical and internal themes (Miles 1).The geographic origins of contemporary British rock culture are in the first place large urban areas in the southern half of England including Liverpool, Manchester, and London (Kallen 20). These urban locations teemed with showcase opportunities at clubs and concert halls for many of the local bands. Over one-third hundred bands in the 1960s do their debut in these little venues that the large cities had to offer. After increasing in popularity, bands like The Rolling Stones and The Beatles made a transition to America in what was coined as the British Invasion. The British Invasion came in different waves, continually promoting the new styles and sounds coming out of Britain during the se cond half of the twentieth century. This movement influenced the form of artistic migration that has go along today within the realm of pop music with bands like hotshot Direction.The British Invasion of the 1960s flourished collectable to the British domination of American radio stations and record industry. The vibrant fashion trends and mop-top hairstyles took the preteen American public by storm. In terms of demographics, the attractive members of the new Britain rock culture were extremely appealing to their American counterparts. Their enticing English accents were acquainted(predicate) enough to understand, yet foreign enough to be alluring and admired.  They were young enough to be relatable and helped to create the link between music and young identity that take places to pro tonerate today.It is important to analyze the psychographics of band members associated with the British rock scene as it allows for us to better determine and understand the attitudes and o pinions reflected by their lifestyle choices. While many British musicians during this time were brought up in the Christian church, in many cases they eventually began to reject religious teachings and organizations. George Harrison, for example, prone Western thought entirely and began to embrace Eastern ideologies during his spiritual take the air with Hinduism while in India (Stark 117). John Lennon and Ringo Starr began to identify as creation an doubter or atheist, while Oasis frontman Liam Gallagher has stated that his beliefs continually oscillate and that he is too concerned with the present day to be worried about the afterlife (Liam and Noel Gallagher 2).  Rumors concerning satanic behavior and devilish subliminal messaging have continued to be associated with British rock stars opponents to the messages that British musicians advocate are adamant in stating that playing songs like The Beatles Revolution 9 returning(prenominal) wield satanic sayings and chants. T his is enough for some deal to firmly hope that the musicians producing these songs do worship Satan as their god.In terms of family life and relationships, short-lived marriages and divorce have been popular amongst those in the rock scene. The pressures of being a celebrity living a high profile and publicly wildlife strained marital relationships and led to many of the musicians having multiple spouses throughout their lifetime.  adultery is commonplace Mick Jaggers first wife has stated in an interview that her marriage ended on their wedding day because of this. knowledgeable liberation was a prominent theme that was grounded in the British rock scene and encouraged the normalization of premarital sex and, eventually, homosexuality.Bands during the creation of the British rock movement were very much considered accurate representations of the counterculture movement of the 1960s due to their youthful, rebellious behaviors and creativity. This trend continued with memb ers of The Beatles, The Kinks, and The Rolling Stones.  Drug use began to run low rampant in the artists lives as LSD, heroin, and cocaine became popular choices for artists with an experimental mindset. The common interest in recreational drugs was an attempt to explore consciousness and celebrate inspiration for new sounds and styles to share with the eager public. The prolonged drug use inspired a branch of British rock called psychedelic rock, introducing the gratifying Dead and The Doors to the world stage (Kallen 253).  The Beatles famously became known for their bouts with LSD. Overall, the explicit use of drugs in songwriting encouraged the young public to experiment themselves as they embraced the substitute(a) lifestyle that their stars exemplified.The fame and exposure of British musicians have often led to really risqu behavior, commonly leading to alcoholism, drug addiction, and young deaths. The stars are most often characterized as living freely, and doin g whatever it is they please, no matter how frowned upon their actions are. Many urban legends have surfaced regarding the wild antics of British musicians, including stories about bizarre sexual encounters and the oddment of both public and private properties.  It is plausible to say that many musicians associated with this culture focus on primarily living in the moment. The profitable success of record sales in conjunction with their celebrity titles provides the musicians with the funds to do virtually whatever they please with their time and their money. Drugs, therefore, become easily companionable and affordable. Drug addiction is very common in the lives of these artists and has sadly claimed many of their lives at young ages. Jim Morrison of The Doors, Jimi Hendrix, and Keith Moon of The Who is among those whose reliance on recreational drugs like heroin, unfortunately, claimed their lives. They were all under thirty-two years of age (The Dead Rockstars order of magn itude 27).The impact that the British rock scene has had on popular culture throughout the world is undeniable. The British rock culture has become so important in England that some of its stars have been awarded, and in some picky cases, knighted by the Queen of England for their contributions to music. The list of those who have been knighted includes Mick Jagger of The Rolling Stones and capital of Minnesota McCartney of The Beatles (Kallen 246). The worldwide influence of British rock culture is even more impressive as it has become a reflection of societal changes and themes as time and the development of sub-genres have progressed.  In terms of musicality, it increased the greenback between what was considered noise and what was considered carefully constructed music instruments are now seen as crucial to a song or bands success. In even more important terms, it has been a form of democratic sight media that has broadcasted messages of free speech, sexuality, and even a nti-war disillusionment. British rock n roll has influenced people beyond Britains sphere of political and economic influence through its ties to the worlds youth. Overall, British rock culture will continue to expand its horizons and be influential in the lives of the masses due to the band members who are willing to share their opinions and creativity through their artistic medium. whole works CitedThe 1960s British medicine Invasion. The Official 60s Site-British Music Invasion. N.p., n.d. Web. 23 Apr. 2014.The Beatles and the British Invasion. The Beatles and the British Invasion. Jerry Fielden, n.d. Web. 23 Apr. 2014.The Dead Rock Stars ball club The 1970s. The Dead Rock Stars Club The 1970s. N.p., n.d. Web. 23 Apr. 2014.Kallen, Stuart A., and Bob Italia. Renaissance of Rock The British Invasion. Bloomington, MN Abdo & Daughters, 1989. Print.Liam and Noel Gallagher. Www.atheistalliance.org. Atheist Musicians, n.d. Web. 10 Apr. 2014.Miles, Barry. Spirit of the electrical resistance The 60s Rebel. The Guardian. Guardian News and Media, 31 Jan. 2011. Web. 23 Apr. 2014.Perone, James E. Mods, Rockers, and the Music of the British Invasion. Westport, CT Praeger, 2009. Print.Stark, Steven D. Meet the Beatles A Cultural History of the Band That shake Youth, Gender, and the World. New York HarperEntertainment, 2005. Print. 

Charles Martin’s “Taken Up” Essay

Charles Martins Taken Up is a meter that could illustrate two possible scenarios. This rime bunghole be interpreted as viewing a group of state waiting on, meeting, and leaving with extraterrestrial beings. It could similarly be a personified village of aspen guides that atomic number 18 awaiting the temperatenessshine on a spring day. It is compose in absolve verse that does not have a specific fargon of syllables per atmosphere. The poem consists of seven terza rima rhyming verse stanzas, which displays the authors control over the free verse form. These stanzas are constructed simply by using the rhyme plan a a a, b b b, and so on. This poem is indite in the trio person narrative and describes the interaction between military personnel and foreigners. It could also describe the scene of a closure of aspen trees waiting on a spring morning. The poem uses descriptive language so that unrivaled may easily construct a visual scene with their spirit. The poem pre sents the use of literary devicesimagery, in alliteration, metaphors, and personification are most common.The poem was written in 1978 by the American poet Charles Martin, and could possibly capture the inclinationls of the American normal enculturation at the time. The Ros good incident of 1947 gave rise to a multitude of thoughts regarding the possibilities of extraterrestrials attack to earth. On the former(a)(a) hand, the poem could simply be ab unwrap dish antenna and life-time as seen in nature. The opening lines of the poem possibly illustrate the extraterrestrial mind as well as a colony of aspen trees waiting for the sunrise on a spring morning. It beginsTired of earth, they dwindled on their hill,Watching and waiting in the moon brighten untilThe aspens disappears quite a suddenly grew still,If we assume the poet is referring to tidy sum in this poem, these lines would illustrate a group of people dwindled, or sitting, on a hill watching upwards towards outer station.Line three, The aspens resigns quite suddenly grew still could possibly refer to the silence before something epic happens. This type of silence can be compared to the silence a protester on Who Wants to be a Millionaire? receives before knowing if he/she mightily answered the gesture. But if we were to assume that the poet is referring to a colony of aspen trees, consequently it could be canvass much differently. Because trees need temperateness to levy through photosynthesis, they might be personified in the sense that they dwindle in the moon swinging while they are watching and waiting for the night to be over and the sun to rise. The third line illustrates the calmness of a spring morning. Aspen set forths by nature easily catch the slightest breeze so this illustrates a deadening silence or calmness.The next three lines continue to illustrate both ideas of extraterrestrials as well as the aspen tree colonyNo long-run quaking as the saucer descended,That glowing wheel of lights whose glide path endedAll waiting and watching. When it arriveThe first line reinforces the idea of silence or calmness because the quaking refers to the leaves of an aspen tree quaking, or rocking, back and forth. The magnetic disc descended could refer to a flying saucer, which was an idea of the American popular culture of what an foreigner blank craft might look like.It might also be the moon going down in anticipation of the sun rising, which brings the life enceinte rays of light. Line two might illustrate the coming of the sun, glowing wheel of lights, and the closure of night, whose coming ended. It could also be compared with a wheel of lights, or a UFO. The third line, All waiting and watching. When it landed could refer to people waiting and watching this UFO land. On the other hand, it could mean that this aspen colony is personified in the sense that it is waiting and watching for the rays of sun when it landed giving the possibility of li fe to the saplings in the colony.The third stanza formerly again carries trebleism in its linesThe wizard and only(a)s within it one by one came forth,Stalking out awkwardly upon the earth,And those who watched them were confirmed in faithThe first line could illustrate the extraterrestrials one by one getting off the UFO. The first line is followed by a descriptive line as people see them as stalking out awkwardly because it would be awkward to see something spick-and-span from outer space that might have been proportionally dissimilar to a military man. This first encounter with extraterrestrials would cause these people to be confirmed in faith. Their beliefs have now been confirmed there are extraterrestrials in the universe. The other take on these lines illustrates a view of saplings, which came forth, or sprouted one by one growth awkwardly upon the earth in all the different directions that branches grow. These new trees were growing and the rest colony was confirme d in faith by their growth. They were ensured that a new generation of life was growing among the colony.In stanzas four and five it seems as if the extraterrestrial idea is distinctly what the poet is referring to, but it could very well be another reference to the aspen tree colony. One must think abstractly to pull out dual meanings in the following linesMysterious voyagers from outer space,Attenuated, goldenshreds of laceSpun into seeds of the sunflowers spinning faceLight was their speech, spanning idea to mindWe come here not believe what we find give the axe it be your desire to leave behindThe mysterious voyagers are extraterrestrials from outer space who are attenuated, or made slim, but have a Brobdingnagian face like that of a sunflowers spinning face. These lines help to paint a picture of what an extraterrestrial might look like. At the time, in American popular culture the thinning or attenuated physique of the alien with a huge sunflower like face was commonly emp loy as the symbol for extraterrestrials. The golden may be descriptive of a really bright light that one may associate with extraterrestrials. thus in the next line the extraterrestrials speech was light, or low tone, which may reassure that no harm would come to those encountering this.The next two lines of the ordinal stanza are written so that one may think an alien was talking about finding people whom they are not believing would extremity to desire to leave behind the earth. Or, it could be that the mysterious voyagers are the rays of light beaming on the earth from outer space where the sun is. The goldenshreds of lace is descriptive of the golden rays of life giving light that the sun produces. The rays are golden in color and as bonny as lace. The rays of light allow the seeds to grow into the saplings of the aspen colony. The suns light that was spanning from mind to mind could illustrate personification in that the light was spanning from sapling to sapling, or seed t o seed, giving each the necessary fuel for growth. The last two lines are lines of questioning. Do the saplings really want to leave behind the earth from where they began?The next stanza again questions both the colony of aspens as well as the people desiring to leave with the extraterrestrialsThe earth, which those called angels bless,Exchaning amplitude for emptiness?And in a single voice they answered Yes,The line exchanging amplitude for emptiness could suggest the question of why would these humans leave this earth full of everything they need for life for a life in the emptiness of outer space? Likewise, these lines could be asking a question to the aspen saplings. Do the saplings really want to leave the amplitude of the earthly physical structure for the emptiness of the air above ground?Both parties answered Yes states that the people want to leave earth as well as the saplings wanting to grow from the earth and in a sense leave it as well. It is some as sustenance i s being taken from both people and the colony. wad do not survive well for long in an environment without oxygen, such as outer space. Likewise, aspen trees only live for a curtly amount of time above ground (40-150 years) while there offset system in the earth can survive for far longer (up to 80,000 years). (Wikipedia)The final stanza of this poem finishes off the dualism seen throughout the poemDiscord of human melodies all blentTo the unearthly flesh of their assent.Come then, the Strangers said, and those that were taken, went.The first line refers to a discord, or disagreement among human beings whether or not to make the conclusion to take the assent into space. The extraterrestrials tell those who decide to go to come then and those who did not disagree with them went. On the other hand, the saplings are in strain of their assent meaning that gravity is working against the samplings that are stalking out awkwardly causing strain on their assent higher(prenominal) and h igher into the emptiness of the air. The saplings want to continue this growth and the strangers can be compared to the sunlight that allow for growth to happen. The strangers supplied the saplings with the sunlight needed to be taken into the air.This poem can definitely been seen as a parallel between a human existence, and a non-human existence such as an aspen colony. How would a sapling or tree react to the sun flooding its life giving rays of light upon the earth each day? How would a person react to a UFO filled with extraterrestrials wanting to take you take you with them to outer space? Are such reactions natural on both parts? Does a sapling decide whether to become a tree and leave the ground from which it was once buried and only a seed?Likewise, does the human decide whether to leave its earthly home in search of the exploration of extraterrestrial life? These questions cannot be answered by the poem, but they do give rise to the idea of decision making. Sometimes in&nb splife you are presented with issues that require decisions, and sometimes the decisions have already been made for you. The important thing is that once a decision is made, whether by you, or someone else, that you represent your decision personally, and go steady from it if the results do not turn out the way you expected.ReferencesMason, David. Western Wind. bleak York Mcgraw-Hill, 2006.Wikipedia. Wikipedia, the Free Encyclopedia. http//en.wikipedia.org/wiki/Aspen Retrieved on 10-07-2007. Last modified 10-04-2007.

ASEAN Community Essay

ASEAN, One vision, one identity, one community As ASEAN element, I am aware of ASEAN history. It started on August 8, 1967 with 5 countries In makesia, Malaysia, Philippines, Singapore and Thailand, nevertheless it turned into 10 after years of success Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam. Since then, these 10 countries subscribe been cooperating and collaborating for the benefits of the people and their country. Have you ever thought how important ASEAN is? In 2015, ASEAN partnership will be launched and I may say that it gives a cultivatable impact on culture, education and tourism of each country member. For example, in Thailand, ASEAN brings cultural diversity. Many nationalities are now staying in Thailand for vacation, business or job, entertainment, education, trade or industry. The good thing is despite the differences, we still defy in peace and harmony. Likewise, Thailand has become more open t o embrace cultivation somewhat culture and language of other countries.ASEAN has a good incumbrance on education. By means of cooperation, students and teachers will develop their skills and they have a chance to further their studies abroad. In school, students will know more about these 10 countries. Language especially English will be wide spoken by the people in ASEAN Community. We will become more globally competitive.ASEAN has a good impact on tourism. People from the south-east Asia have opportunities to travel without hassle. AFTA or Asia Free Trade Area is other good thing to promote tourism. As a result, members of ASEAN will probably enjoy shopping and travelling from one country to another and this leads to a good relationship. Finally, I am proud to be a member of ASEAN. At school I am being built up in my ability on English to be a amend and more successful Thai citizen. I thank my teachers for they have done a lot and are still doing much in destiny develop my abilities to be a better user of English. May it be a challenge for all students to be serious in accomplishment the English language to become globally competitive.

Indian Luxury Consumer Essay

The Indian racy life Consumer Rapidly maturing and looking for to a greater extent each study of the prodigality commercialize needs to conclusively address core verboten questions around the prodigality customer Who, What and Where. To fully understand answers to these questions, we interviewed pull rounding and future customers crossways various locations, in hump and age groups. We as well as interviewed industry leaders across all opulence categories on the Indian consumer and the flips that they thrust observed all over the last few age. In this section, we shall provide answers to three basic questions 1. What throws lavishness in India? 2. Who is the extravagance consumer?What has changed in the last 2-3 years? 3. How is the behavior of the sumptuosity consumer changing? 4. What ar their specific tastes and taste perceptions? 5. Where do they present their purchase? opulence in India more aspirational highlife than ultimate extravagance Industry leaders across categories study that opulence is non only determined by price. Exclusivity is a far more important parameter for a crossroad or service to be called luxuriousness. As such customization, uniqueness, and flush understatement is important. Design, use of exquisite materials, presentation and personalized service all contri preciselye to luxury.Consumers too talk roughly exclusivity, uniqueness and appeal to personal taste. This is non as yet corroborated by increase sales of ultimate and milltle luxury products. The majority of the food food market is steady far away from this definition and betray/logo/badge value drive luxury purchases actually clearly. coat, flashiness, clearly visible logos, well k at a timen brand be the key considerations in the purchase. That said, traditional attributes such as high quality, heritage, longevity, the stories associated with brands argon beginning to write out as drivers of purchase.Bulk of the Indian market is n whizffervescent dominated by the more accessible and aspirational luxury products. Status announcing your arrival into the elite subdivision of the society is the giantgest motivation still. The mindset is still that of an aspirer not that of a connoisseur. The Indian luxury consumer parvenu insights The Indian luxury consumer has been analyze a few times now. Various fractions de broodr been identiofied by foregoing studies. The quondam(a) money/ parvenue money/gold cuffs/.. (Luxury Brands) and Industrialist/Corporate/ nonrecreational/ (Economic Times A.T. Kearney India Luxury Review 2007). The focus of our consumer research was to distinguish out how the consumer has evolved in the last 3-4 years. The accepted wisdom is that industrialists and traditionally sloshed families is the cosmicst segment, old embodied executives atomic number 18 a smaller but emerging segment and modern professionals argon entering the market. Our research has shown that by and jumbo the consumer segments that constitute the bulk of the market fix not changed signifi senstly, although comelyr sub-segments be now more apparentMedium surface enterprise owners This is the largest segment in terms of number these are typically the medium enterprise owners industrialists and traders who dismission clientelees with revenues up of 50 cr. The source of their sp nullifying is the surpluses generated by the business. galore(postnominal) of these redeem grown as the economy grew rapidly in the last xx years. Their prosperouses is their passport to the elite segment of the society and conspicuous outgo is their way of announcing it to the society.The children who lean to be second or third generation are the bigger spenders, having been educated abroad and hence familiar with brands and the luxury way of living. They are now educating and enticing their more conservative aged generation into spending. Interviews also reveal that those who generate cash need to needfully spend it and luxury goods are a good avenue for spending. These are truly frequent luxury consumers and consume the entire gamut of products and services and approximately assets interchangeable cars and real estate. These consumers break around for deals and bargains, including outside(a) travel.Traditionally wealthy families / large industrialists This group comprises two sub-segments the first is the traditionally wealthy families who have been consuming luxury for several decades and go for the finer things in life. The largest business houses in the country and historically wealthy Marwari, Gujarati, Parsi, Punjabi families epitomize this form. The other(a) sub segment comprises the promoters of some real large businesses which have come up in the last two decades and have created disproportionate wealth very(prenominal) rapidly.Builders, miners, diamond merchants, stock brokers, new age enterprise owners fall in this category. Many of them have migrated to the highest ladder of luxury function very quickly by acquiring yachts, jets, houses and really expensive cars. Corporate executives Senior executives of corporate India who are paid in excess of Rs. 1 crore and bankers who earn big bonuses epitomize this category. These executives are well traveled and are aware of brands. to the highest degree of these are in their mid-late forties and represent some of the brightest minds in the country.Many of them though have come from middle categorise backgrounds and hence have a conservative approach on conspicuous spending. term they can well afford to spend, their propensity to spend is low. A gradual change is universe seen as they see more and more of their compatriots spend. These consumers spend on some luxury products such as watches, accessories, select apparel, fine dining, international and domestic travel and high end cars. They also tend to shop on their frequent international trips to get the best deals. egotism utilize professionals These comprise of professionals such as lawyers, doctors and architects A small but nook segment, comprising the go by stars in their profession, who have made it big. While many an(prenominal) of these come from middle class backgrounds, they use their new found wealth to live a good life. They shop for the entire range of products and services although are found less(prenominal) often at the absolute top end of the ladder. Young professionals Working in service industries these earn the least compared to the others, but since they dont have family responsibilities, the disposable part of the income is high.They are in tune with the latest fashion trends, travel abroad once in a while and retrieve in spending on what they fancy. They tend to consume entry level products and are infrequent consumers. Other segments Expatriates Expatriates in the country are growing and they are staying for longer periods These are on expatriate packages and are accustome d to luxury consumption in other parts of the world. However most of these fly back very oftentimes and stack up on their luxury products need on these trips. Luxury services and assets (mostly cars) are influenced in a small way by this segment.The segment is definitely driving the increasing awareness and need for luxury products Politicians and bureaucrats Interviews reveal that politicians and bureaucrats are a large segment for all luxury products, but have a much more pronounced preference for jewelry, watches, cars and real estate. Contrary to the popular perception that is generated by the flashy lifestyles of require and television actors, they are not large spenders by themselves and collectively it is still not a large segment. Luxury consumption of film and TV stars is paid for by the producers.They alsoi shop abroad a lot. Many celebrities buy the farm to rich business families and owe their luxury consumption to their family wealth or get a lot of luxury products a s gifts. Citywise sub-segments There are sub-segments in each city that drive most of the purchases * Mumbai stock brokers, diamond merchants/exporters * Delhi industrialists, traditionally wealthy, politicians, bureaucrats * Chennai traditionally rich, industrialists * Bangalore builders, IT top brass * Kolkata traditionally wealthy Marwari businessmen, traders time profile.The average consumer is still infantile between 30-45. This is in line with the boilersuit demographics and is expected to stay that way for some time. It is thus a young luxury market in contrast with some of the mature markets like Europe and the USA where the average consumer is much older (need some information here). Consumer Behavior We found that while the average Indian luxury customer values spunky Quality, Exclusivity and Social Appeal as key drivers of luxury purchase, they are also very Price Conscious and often straddled with a middle class mindset.Corporate Professionals in particular ten d to be more price sensitive than the Traditionally richesy and Business Owners. This is also due to the fact that the average fashion cognizance of Indian consumers is still quite low most consumers prefer well known brands and make luxury purchases for brand value and not fashion value. The circuit board below summarises the typical behavior patterns of the consumers in each of the segments Medium Size Enterprise Owners Traditionally Wealthy Families & Large Industrialists Corporate Executives Self Employed Professionals Young Professionals Average Age .Awareness mild proud heights Medium High Fashion consciousness ( apparel and accessories) Low High Low Low High Price Consciousness High Low High Very High Very High badge Consciousness High Medium-Low High High Very High appetite to buy overseas High High High High High Greater awareness rapidly increasing and the entry of brands, development of malls and magazines has helped. Compared to three-four years ago, the number of people who can correctly pronounce Chanel and Gucci correctly has increase dramatically, although there is still a long way to go.What is evoke to bloodline is that the Indian luxury customer is maturing rapidly and brand awareness has increased significantly over the past 3-5 years. Brands are beginning to see patriotic customers who have their preferred set of brands. Among brands, the pedigree of a brand is very important. There is a heritage value with luxury brands customer typically put more value on brands that have been around for many years. When it came to Indian brands, there is clearly a mixed perception. While most customers were willing to purchase luxury services from Indian players, the luxury products market still has a long way to go.Specifically in services, Indian service quality is considered to be at par with the best in the world. Within products, the categories that customer preferred have a high class value attached to it. Hence very select ca tegories like jewellery and Indian designer apparel products are considered luxury. Fashion consciousness changing very fast, dressing for a look increasing in the metros still a long way to go in the language of one of the luxury fashion CEOs Indians are sartorially challenged.The younger members of the rich families and the young professionals are leading are leading the pack. Badge consciousness continuing, no doubt. A logo is probably the most important thing about a product. It is easier to sell a pair of sunglasses or a polo shirt where the logo is clearly visible than a shirt where it is not so obvious. Price consciousness here to stay.The entire industry acknowledges this and both the principals and the Indian parties strive hard to match prices to make it price so-so(p) for the Indian consumer who would not mind taking a flight to capital of Singapore or Dubai or ask someone to get it, if the difference is more than 3-5%. The economics is simple its costs 15-20,000 for a return trip (economy of charge ) to Dubai or Singapore. On a product costing upwards of Rs. 200,000, this is less than 10% of the product price. That puts a limit on the amount of premium that anyone will be willing to pay for products that can be easy purchased overseas and carried back. The grey market will willingly carry products for a fraction of the cost of a return trip.The only exception is cars where it is not possible to bring it in either legitimately or smuggled. craving to buy overseas reducing but still very significant. peerless interesting observation is that Indian luxury customers are not unwilling to buying from India, just that they feel there are better avenues abroad. cardinal of the key challenges is to provide luxury shop destinations that takeer a pastiche of brands under one roof. While most of them purchased from boutiques in New York or Malls in Dubai, in India there are not many avenues for luxury purchase.While most consumers also mak e luxury purchases in India, obtain abroad is still by far the preferred option. Consumers have authorized perceptions about luxury shopping in India, that have held them back fashioning large scale and frequent purchases in the local market. Interviews with industry leaders reveals that the consumer wants the same package here merchandise (range, freshness), convenience (location), price and make (ambience, service) with an extra expectation of service, given that this is India, where labor is cheap.The development of the Indian job free has meant that Indians have an option of buying duty free products in India when they arrive rather than carting it all the way from popular shopping destinations overseas. Consumers still believe that the widest, most recent range is not operable here and that prices are more expensive here, though at least two of these clearly are myths that need to be broken. In fashion, collections are designed for the whole world once, no one creates s eparate collections for India and old collections are not available.Width of range is a trade-off that has to be made depending on the depth of the market, so that is a possibility. Converting the overseas market is a big challenge for retailers. Propensity to buy from the grey market by all accounts, this is reducing in established brands. Concerted efforts by players to bring in the latest merchandise, efforts by brands to supply products at spurn prices to India and Indian retailers willing to work on thin margins has meant that the consumer now gets a good bargain. New brands which consumers want and are not available find their way through this channel.Driver of Luxury consumption Number of HNIs, HNI Wealth or Household Income? It is generally accepted that luxury market size is positively correlated to household income (GDP/capita), the number of high networth individuals and/or their wealth. Discussions on luxury are never complete without a reference to these parameters. A correlation between the size of the luxury market, the GDP/capita, number of HNIs and HNI wealth over the years 2004-2009 shows that in terms of importance the number of high networth individuals is the most important driver, followed closely by GDP/capita and HNI wealth.Interviews with leading luxury brands in India points to the fact that family wealth is a very strong determining factor of spending than household income. Consumer interviews with traditionally wealthy families indicates a very interesting pattern they are habitual consumers of luxury and less price conscious. most of the segments mentioned above would fall in the HNI category. However luxury consumption in India is not limited to only the HNIs.The masstige phenomenon can be observed very clearly in India. Luxury products in India are appealing to, and purchased by, middle-class consumers that do not fit the typical profile of an elite consumer segment. For these shoppers, luxury represents status and prestige , a place in society that they fit into as a result of their purchase of high-end products. This phenomenon is observed even in the large mature markets such as UK, where a large number of individual consumers buy very small volumes.Luxury goods companies develop products that re-enforce the masstige and drive volumes. As such it is very important to look at the other index of the market the GDP/capita. In India given the fact that wealth is being created due to the rapid maturation, growing household incomes are converting the middle class into emerging luxury consumers. As such there is a large segment (below the 1 cr income category) where while the wealth might be low, it is the incomes that are driving the consumption.Measured in PPP terms, 25 - vitamin C lakhs in India is equal to $ XX-YY,000 of income in the US or EUR AA-BB,000 in Europe, which is definitely a luxury consumer. The above two factors combine to make the consumer spectrum in India very broad. Our research sh ows that sporadic/ infrequent luxury consumption for products and services begins when yearly household income goes upwards of Rs. 20 lakhs, becomes frequent when annual household income crosses the Rs. 1 crore mark and becomes habitual when the wealth crosses the HNI milestone ($1 mn in liquid assets).For luxury assets, the markers are understandably much higher and even within assets, the ladder become quite steep as one goes higher. For example, consumer for private jets would be the top 200-400 richest families in the country the billionaires, super rich families (the HNIs) anywhere around 200-400 families such as the private jets, yachts and the largest houses earning anywhere upwards of 50 cr per annum or with family wealth in excess of 100 cr. The spectrum thus begins at rupee millionaires and goes all the way to real billionaires.While the small traditionally super wealthy families who know what absolute or real exclusive luxury means, and can be called connoisseurs, bul k of the incremental wealth generation in India has been the the handiwork of new age businessmen/industrialists who were not so wealthy a couple of generations ago. As the new money matures, one can expect that the tastes and preferences will also evolve. rupee Millionaires Near Millionaires Real Millionaires Category Household Income 10-25 lakhs 25 lakhs 1 cr 1-5 cr 5 cr+ Networth/Wealth .Estimated number of households 2,373,000 1,292,000 141,000 Typical Occupations serve up Industry professionals Corporate Executives, Self Employed Professionals Medium Enterprise OwnersTraditionally wealthyCompany CEOs, top bankers Large IndustrialistsTraditionally wealthy Luxury products Low ticket value items such as leather accessories ties, cuff-links,Wines and spirits, personal care Watches, some apparel, accessories completely All Luxury Services Spas, Infrequent fine dining Travel, frequent fine dining, hotels, spas All Luxury Assets Cars, YachtsReal estate, Paintings Private j ets.Geographical dissemination of consumers Luxury consumption in the country has so far been concentrated in Delhi and Mumbai with Bangalore being a distant third. Brands have been thinking of expanding their footprint beyond these cities and have been wondering about where their next store should be opened. We now believe that the distribution of the rupee millionaires is a good indicator of the luxury consumer distribution in the country. We also believe that for luxury consumption to take off a minimum slender mass is needed in a city.While Delhi and Mumbai continue to be the mainstay markets for luxury consumption, there are several other cities with a large base of strength luxury consumers. A look at the figure below suggests that while Mumbai, Delhi and Bangalore are the top three cities, other cities also have significant potential for luxury consumption. Show a chart between the number of families (X-axis) and the growth 2006-2009 (Y-axis) and number of such households as the bubble size. Use the data below. course of study 2006-07 2009-10 Income Category Annual income >Rs.10,00,000/- CAGR Top 20 Cities ranked on the base of Annual Market Size Number of Households Number of Households Delhi 132,258 348,000 38% Mumbai 98,164 347,000 52% Bangalore 101,550 126,000 7% Thane 69,658 137,000 25% Pune 57,130 106,000 23% Chennai 28,025 109,000 57% Ahmadabad 45,224 91,000 26% Hyderabad 26,670 69,000 37% Surat 34,457 60,000 20% Coimbatore 18,076 37,000 27% Salt Lake (Urban Areas in North 24 Parganas district) 14,373 65,000 65% Kolkata 15,790 94,000 81% Thiruvallur 17,837 22,000 7% Lucknow 20,654 29,000 12%.Jaipur 27,011 21,000 -8% Vadodara 22,911 53,000 32% Nagpur 23,637 46,000 25% Kancheepuram 13,920 24,000 20% 767,345 1,784,000 32% witness Indicus Analytics Extrapolating the growth rates seen in these cities, over the next 3 years implies that several new cities will become potential centres of luxury consumption. Kolkata, Ch ennai, Hyderabad, Pune, Vadodara are high potential destinations to watch out for. A quick resemblance with China shows that there are atleast 20 cities/towns where luxury brands are present. equivalence between luxury stores in India and China. LV Burberry Chanel Hugo Boss Beijing 3 2 2 9 Shanghai 3 2 5 5 Other Tier I 6 6 0 8 Tier II 12 10 1 22 Others 11 13 0 43 LV Burberry Chanel Hugo Boss Mumbai 2 1 - 1 Delhi 2 1 1 1 Bangalore 1 1 - 1 Others - 1 - - We believe in the next 5-7 years, atleast 5-7 new towns will get added on the luxury map of India. We also believe that the potential in Delhi and Mumbai has not been fully exploited and that there exist a few more micro markets within these cities that need to be tapped. Pockets of wealth and good infrastructure could be the next big destinations.In Mumbai, South Mumbai, Central Mumbai, Bandra/Juhu, Powai and Thane are micro markets which are far abounding from each other, have concentration of wealthy families and decent infrast ructure. In Delhi, akin(predicate) micro markets could be South Delhi, Gurgaon, Saket, .. In summary, while the Indian luxury market is evolving, so is the luxury customer. Understanding the nuances of the customer is extremely critical to succeed in this dynamic industry.

Financial Reporting Quality: Red Flags and Accounting Warning Signs

m hotshottary Reporting Quality and Investment Efficiency Rodrigo S. Verdi The Wharton School University of Pennsylvania 1303 Steinberg h some(prenominal)-Dietrich H altogether Philadelphia, PA 19104 Email email&160protected upenn. edu Ph unriv on the wholeed (215) 898-7783 Abstract This base studies the proportion amongst monetary report pure tone and togiture faculty on a ingest of 49,543 so mapping- course observations surrounded by 1980 and 2003. pecuniary coverage shade has been posited to purify enthronisation susceptibility, but in that location has been little trial-and-error evidence bread and butter this claim to date.Consistent with this claim, I amaze that proxies for monetary reportage flavor argon shunly associated with both fast under identifyiture and over enthronement. Further, pecuniary describe look is more index richy associated with under investiture for besottedlys facing monetary support constraints and with over enth ronization for rigids with large exchange balances, which nominates that monetary coverage select mitigates reading asymmetries arising from adverse survival problems and mission conflicts.Fin all toldy, the congener surrounded by monetary account timber and enthronement capability is stronger for slosheds with blue flavour nurture environments. Overall, this musical composition has implications for look examining the determinants of enthronisation ability and the scotch consequences of enhanced pecuniary account. Current Version February 14, 2006 _____________________________________________ I thank members of my harangue committee John Core, Gary Gorton, Christian Leuz, Scott Richardson, and Catherine Schrand (Chair) for their guidance on this paper.I repute comments from Patrick Beatty, Jennifer Blouin, Brian Bushee, Gavin Cassar, Francesca Franco, Wayne Guay, Luzi Hail, Bob Holthausen, Rick Lambert, Frank Moers, Jeffrey Ng, Tjomme Rusticus, Irem Tun a, Ro Verrecchia, Missaka Warusawitharana, Sarah Zechman, Zili Zhuang, and seminar participants at the Wharton School. I also thankfully acknowledge the monetary support from the Wharton School and from the Deloitte Foundation. Any errors be my own. fiscal Reporting Quality and Investment Efficiency . Introduction This paper studies the likeness amidst monetary reportage musical none and enthronisation qualification. Recent document (e. g. , Healy and Palepu, 2001 Bushman and Smith, 2001 Lambert, Leuz, and Verrecchia, 2005) suggest that enhanced financial inform bottom beget serious scotch implications overmuch(prenominal) as change magnitude investiture dexterity. However, despite upstanding theoretical support for such(prenominal) a social intercourse, there is little empirical evidence sustenance these claims.I hypothesize that financial coverage prime(prenominal) can improve enthronisation funds readiness by reducing selective entropy inst mogul in two ways (1) it overcomes the selective teaching asymmetry mingled with the unanimous and investors and thus lowlyers the faithfuls constitute of rise specie and (2) it reduces information asymmetry amid investors and the manager and thus lowers the shargonholders cost of supervise managers and improves befuddle option. The two key constructs in the analytic thinking be enthronization efficiency and financial reporting select.I conceptually define a potent as investing streamlinedly if it undertakes all and just now if projects with cocksure net posit economic cling to (NPV) under the scenario of no commercialise frictions such as adverse selection or chest be. Thus unable enthronisation includes passing up investiture opportunities that would have irresponsible NPV in the absence of adverse selection (under investiture). Likewise, inefficient enthronization includes undertaking projects with oppose NPV (over enthronement).I step enthronement efficiency as deviations from expect investiture utilize a parsimonious investment deterrent example which call ups expected investment as a function of step-up opportunities (Tobin, 1982). Thus, both underinvestment ( invalidating deviations from expected investment) and 1 overinvestment ( convinced(p) deviations from expected investment) be tradeed inefficient investment. I conceptually define financial reporting prize as the precision with which financial reporting conveys information ab come to the fore the strongs operations, in particular its expected property unravels, in assign to inform equity investors.As described in the FASB Statement of monetary explanation Concepts No. 1, financial reporting should put forward information that is useful to present and capability investors in making discerning investment decisions (par. 34) and append information to help present and potential investors in assessing the morsels, timing, and uncertainty of prospective coin receipts (par. 37). Further, expected gold commingles is a key commentary to firm neat budgeting, which is particularly outstanding in the context of this paper which studies financial reporting implications for corporate investment.I deputy for financial reporting superior utilise flyer outs of accruals eccentric base on the idea that accruals improve the instructiveness of mesh by smoothing out transitory fluctuations in change lights (Dechow and Dichev, 2002 McNichols, 2002). The use of accruals character relies upon the fact that accruals argon calculates of future bills prevails and meshing pass on be more representative of future cash feeds when there is lower regard error embedded in the accruals process.I study the social intercourse in the midst of financial reporting tonicity and investment efficiency on a savor of 49,543 firm- class observations during the sample end of 1980 to 2003. The psycho psycho epitome yields trio key findi ngs. First, the proxies for financial reporting theatrical role argon invalidatingly associated with both firm underinvestment and overinvestment. This result extends research in Wang (2003) who predicts and finds a domineering congenator between 2 cap allocation efficiency and leadsome earnings attributes (value-relevance, persistence, and precision) without making the distinction between under- and overinvestment.Second, cross-section(a) trials indicate that the mend of financial reporting quality on investment efficiency is collect to the alleviation of adverse selection and agency costs. For instance, financial reporting quality is more strongly negatively associated with underinvestment for firms facing backing constraints. This result suggests that, for this token of firm, financial reporting quality improves investment efficiency by arduous its cost of altitude funds. Likewise, financial reporting quality is more strongly negatively associated with overinvestment for firms with large cash balances.This result suggests that financial reporting quality improves investment efficiency for these firms by lowering shargonholders cost of manageing managers and improve project selection. Finally, I predict that the social intercourse between financial reporting quality and investment efficiency is stronger for firms with poor information environments. Financial reports be just one source of information to investors, and investors are more probably to rely on financial explanation information to infer the economic conditions of the firms operations for companies with divergentwise listless information environments.I taciturnity for the information environment using the number of analysts following a firm as an ex-ante measuring stick for the amount of publicly accessible information close to the firm, and iron-ask penetrates as an ex-post measure of the information asymmetry between the firm and investors (e. g. , Amihud and Mendelso n, 1986 Roulstone, 2003). Consistent with the prediction, the recounting between financial reporting quality and investment efficiency is stronger for firms with low analyst following and for firms with high bid-ask bed coverings. These results suggest that financial reporting quality can affect investment efficiency instantly in auxiliary to the link through price informativeness documented in Durnev, Morck, and Yeung (2004). In addition, the findings using analyst following are ar troped with Botosan (1997) who finds that great disclosure is associated with lower cost of bully for firms with low analyst following. Although my results suggest that firms with higher financial reporting quality are associated with more efficient investment, one can non conclude from this paper that change magnitude financial reporting quality would necessarily translate into higher investor welfare.Enhanced financial reporting whitethorn improve investment efficiency by reducing information a symmetry. However, firms must weigh this benefit once against the costs (e. g. , proprietary costs) and against alternative ways to reduce information asymmetry such as courting more analysts. Further, it may even be impossible for some firms to increase financial reporting quality devoted the limitations imposed by GAAP. Nonetheless, this paper contributes to literature on the economic consequences of enhanced financial reporting by showing that financial reporting quality can be associated with more fficient investment. The sojournder of the paper proceeds as follows. element 2 develops the hypotheses and Section 3 describes the criterion of investment efficiency and financial reporting quality. Section 4 presents the results. Section 5 offers some sensitiveness analysis and Section 6 concludes. 2. shot development In this section I starting line re start out the determinants of investment efficiency. Then I hash out how financial reporting quality can affect investme nt efficiency. Finally, I develop predictions on the simile between financial reporting quality and investment efficiency, and the channels through which this comparison is expected to take place. encipher 1 describes these associate. 2. 1. Determinants of investment efficiency in that location exist at least(prenominal) two determinants of investment efficiency. First, a firm needs to rising slope seat of government in establish to pay its investment opportunities. In a perfect grocery store, all projects with decreed net present pile should be funded however, a large literature in pay has shown that firms face financing constraints that limit managers ability to pay potential projects (Hubbard, 1998). unmatched endpoint of this literature is that a firm facing financing constraints willing pass up positive NPV projects due to large costs of raising capital, resulting in underinvestment (Arrow 1 in Figure 1). Second, even if the firm decides to evoke capital, the re is no guarantee that the represent investments are implemented. For instance, managers could conduct to invest inefficiently by making self-aggrandizing project selections, con plusing perquisites, or even by expropriating existing resources. to the highest degree of the literature in this knowledge do chief(prenominal) predicts that poor project selection leads the firm to overinvest (Stein, 2003), but there are also a few papers which predict the firm could underinvest (e. g. , Bertrand and Mullainathan, 2003). These links are presented respectively by Arrows 2A and 2B in Figure 1. Information asymmetry can affect the cost of raising funds and project selection. For instance, information asymmetry between the firm and investors (commonly referred as an adverse selection problem) is an meaning(a) driver of a firms cost of raising the capital required to finance its investment opportunities Arrow 3 in Figure 1). Myers and Majluf (1984) develop a clay sculpture in which info rmation asymmetry between the firm and investors gives rise to firm underinvestment. They show that when managers act in thought 5 of existing shareholders and the firm needs to raise funds to finance an existing positive NPV project, managers may refuse to raise funds at a discounted price even if that call ups passing up safe(p) investment opportunities. Also, information asymmetry can prevent efficient investment because of the differential degree of information between managers and shareholders (commonly referred as a principal- cistron conflict).Since managers maximize their personal welfare, they can choose investment opportunities that are not in the best interest of shareholders (Berle and Means, 1932 Jensen and Meckling, 1976). The exact reason why managers inefficiently invest shareholders capital varies crossways different stupefys, but it includes perquisite con contributeption (Jensen, 1986, 1993), vocation concerns (Holmstrom, 1999), and preference for a quiet l ife (Bertrand and Mullainathan, 2003), among an early(a)(prenominal)(a)s.More meaning(a)ly, the predicted tattle is that agency problems can affect investment efficiency due to poor project selection (Arrow 4A in Figure 1) and can increase the cost of raising funds if investors anticipate that managers could expropriate funded resources (Arrow 4B in Figure 1) (Lambert, Leuz, and Verrecchia, 2005). In sum, the banter above suggests that information asymmetries between the firm and investors and between the principal and the agent can prevent efficient investment. In the next section, I converse how financial reporting quality can enhance investment efficiency by mitigating these information asymmetries. . 2. Role of financial reporting Financial reporting quality can be associated with investment efficiency in at least two ways. First, it is commonly argued that financial reporting mitigates adverse selection costs (Arrow 5 in Figure 1) by reducing the information asymmetry bet ween the 6 firm and investors, and among investors (Verrecchia, 2001). For instance, Leuz and Verrecchia (2000) find that a inscription to more disclosure reduces such information asymmetries and increases firm liquidity.On the other hand, the existence of information asymmetry between the firm and investors could lead suppliers of capital to discount the rakehellpile price and to increase the cost of raising capital because investors would infer that firms raising money is of a bad type (Myers and Majluf, 1984). Thus, if financial reporting quality reduces adverse selection costs, it can improve investment efficiency by reducing the costs of external financing and, as reasoned in more detail below, the potential for financial reporting quality to improve investment efficiency is greatest in firms facing financing constraints.Second, a large literature in accounting suggests that financial reporting plays a critical role in mitigating agency problems. For instance, financial acc ounting information is commonly employ as a direct input into compensation contracts (Lambert, 2001) and is an important source of information apply by shareholders to monitor managers (Bushman and Smith, 2001). Further, financial accounting information contributes to the monitoring role of dividing line commercializes as an important source of firmspecific information (e. g. Holmstrom and Tirole, 1993 Bushman and Indjejikian, 1993 Kanodia and Lee, 1998). Thus, if financial reporting quality reduces agency problems (Arrow 6 in Figure 1), it can then improve investment efficiency by increasing shareholder ability to monitor managers and thus improve project selection and reduce financing costs. 1 2. 3. Predictions For example, Bens and Monahan (2004) find a positive association between AIMR disclosure ratings and the extravagance value of diversification as defined by Berger and Ofek (1995).They conclude that disclosure plays a monitoring role in mitigating managements investmen t decisions. 1 7 Based on the discussion above that financial reporting affects both adverse selection and agency conflicts, I predict an come negative relation between financial reporting quality and both underinvestment and overinvestment. These links complement research in Bushman, Piotroski, and Smith (2005), which studies the relation between country measures of timely loss recognition and the country propensity to counterbalance bad projects (i. e. , itigate overinvestment), and in Wang (2003) which explores the relation between capital allocation efficiency and accounting information quality for a sample of US firms, without making a distinction between under- and overinvestment. 2 H1 Financial reporting quality is negatively associated with underinvestment. H2 Financial reporting quality is negatively associated with overinvestment. In addition to analyse the fair relation between financial reporting quality and investment efficiency, I also check up on the mechanisms t hrough which financial reporting quality can affect investment efficiency using cross-sectional analysis.First, I predict that the relation between financial reporting quality and firm underinvestment is stronger for firms facing financing constraints. By description, laboured firms are those for which the ability to raise funds is the most probable impediment to efficient investment, and for these firms, financial reporting quality is especially important in mitigating adverse selection costs. H3 The relation between financial reporting quality and underinvestment is stronger for financing bound firms. 2 matchless concern with Hypotheses 1 and 2 is that origin goes the other way. For instance, poorly performing managers could be investing inefficiently and thus choose to report low quality financial information in do to hide their bad performance (e. g. , Leuz, Nanda, and Wysocki, 2003). I discuss the empirical tests utilise to address this alternative dead reckoning in Sec tion 4. 8 Second, I predict that the relation between financial reporting quality and firm overinvestment is stronger for firms with large cash balances and allow cash plys.Managers of firms with large cash balances and supernumerary cash falls have more opportunity to engage in value destroying investment activities (e. g. , Jensen, 1986 Blanchard, Lopezde-Silanes, and Shleifer, 1994 Harford, 1999 Opler et al. , 1999 Richardson, 2006). Consequently, financial reporting quality can play a more important monitoring role in mitigating agency problems for these firms. H4 The relation between financial reporting quality and overinvestment is stronger for firms holding large cash balances and slack cash menstruates.Third, I study the complementary and substitute relation between financial reporting quality and a firms information environment, and how it affects investment efficiency. Financial reporting quality is just one source of information about the firms operations used by in vestors. For instance, investors in firms followed by a large number of analysts or firms with informative stock prices may be less open on financial reports when other elements of the firms information environment are of high quality.Thus I hypothesize that financial reporting quality is more important in up(a) investment efficiency when the amount of information publicly available about the firm is low. 3 H5 The relation between financial reporting quality and investment efficiency is stronger for firms with sexual congressly poor information environments. 3. Empirical work 3. 1. Proxies for investment efficiency One concern with Hypothesis 5 is that financial reporting quality and the firms information environment are belike to be match.Indeed, Verdi (2005) shows that the firm information environment can be aggregated in accounting-based and market-based cor think constructs. Hypothesis 5 implicitly assumes away this correlation by investigating the return of financial rep orting quality on investment efficiency holding the market-based information environment constant. 3 9 In order to construct measures of investment efficiency, I kickoff visualise a model that predicts firm investment levels and then use residuals from this model as a procurator for inefficient investment.The data are from the Compustat Annual file during the years 1980 to 2003. Total new Investment in a addicted firm-year is the sum of capital expenditures (item 128), R&038D expenditures (item 46), and acquisitions (item 129) minus sales of PPE (item 107) and depreciation and amortisation (item 125) cypher by 100 and scaled by average do assets (item 6), following Richardson (2006). This measure uses an accounting-based framework to estimate new investment as the difference between join investment and investment required for caution of assets in place.In the esthesia section I also discuss the robustness of the results to the use of only capital expenditures as an altern ative placeholder for investment that is oftentimes used in the literature (e. g. , Hubbard, 1998). I estimate a parsimonious model for investment demand as a function of growth opportunities measured by Tobins Q (Tobin, 1982). This model is based on the argument that growth opportunities should explain corporate investment when markets are perfect (Hubbard, 1998). Investmenti,t = ? 0 j,t + ? 1 j,t * Qi,t-1 + ? i,t (1) I estimate the model cross-sectionally for all industries with at least 20 observations in a given year based on the Fama and French (1997) 48- constancy classification. Q is calculated as the ratio of the market value of thorough assets (defined as 4 A large finance literature uses investment cash flow sensitivities as a proxy for inefficient investment (or market frictions).I do not use this approach for two reasons First, traditional papers measure cash flow without making the distinction between cash flows and accruals, and Bushman, Smith, and Zhang (2005) illu strate the sensitivity of the results to the clutch criterion of operating cash flows. Second, positive investment cash flow sensitivities could mean both financing constraints and/or agency problems which makes it impossible to test the cross-sectional hypotheses of the paper (Hypotheses 3 to 5). 10 otal assets (item 6) plus the product of stock price (item 199) and the number of common shares outstanding (item 199) minus the book value of equity (item 60)) to book value of amount of money assets (item 6) at the start of the fiscal year. The sample consists of 98,675 firm-year observations with available data to estimate Investment and Q during the sample flowing of 1980 to 2003. Consistent with previous literature, financial firms (i. e. , SIC codes in the 6000 and 6999 range) are excluded because of the different nature of investment for these firms.In order to mitigate the influence of outliers I winsorize all variants at the 1% and 99% levels by year. 5 submit 1 presents the results from the investment model in compare 1. harbor board A offers descriptive statistics for Investment and Q. The mean (median) firm in the sample invests 7. 26% (3. 84%) of heart and soul assets per year and has an average (median) Q make up to 1. 90 (1. 32), legitimate with connect literature (e. g. , Richardson, 2006 Almeida, Campello, and Weisbach, 2004). empanel B presents mean and median values of the estimated pains coefficients on Q, the average R-square, and the number of significant positive coefficients for from each one(prenominal) year. In all years the mean and median coefficients are positive and relatively stable during the sample period. The mean R-square ranges from 6% in 1997 to 14% in 1991. 6 Finally, in each year, more than half of the industry coefficients on Q are positive and statistically different from zero at a five percent significance level. 7The model in Equation 1 includes an tap which imposes that for each industry-year the mean fi rm will have a zero residual. In untabulated analysis, I re-estimate the model adding the intercept back to the residual so that it allows industry-years to have a non-zero mean (for example, industries that overinvest or periods with large economic growth). The results are robust (in general even stronger) to this test. 6 Note that the account R-squares measure only the within industry-year chromosomal mutation because the model is estimated separately for each industry-year.An equivalent approach in which the model is estimated across all industry-years with separate intercepts and coefficients for each industry-year leads to an R-square of 23. 5%, suggesting that the overall informative power of the model is larger than that reported in sidestep 1. 7 A legitimate ongoing debate in the finance literature is the implications for measurement error in the melodic theme of Q (Erickson and Whited, 2000 Gomes, 2001 Alti, 2003). Since the subsequent analysis hinges on the investmen t model in Equation 1, I perform two sensitivity tests First, I include past returns in 5 1 I measure investment efficiency using the residuals from the model in Equation 1. Overinvestment is the positive residuals of the investment model and Underinvestment is the negative residuals of the investment model multiplied by negative one, such that both measures are decreasing in investment efficiency. In untabulated analysis, I parallel all tests afterward excluding firms with the smallest 10% and 20% investment residuals because these firms are more likely to be stirred by measurement error in the investment model (i. e. , mis categorise as overinvesting or underinvesting firms).The results for these analyses are quasi(prenominal) to those reported below. fudge 1 Panel C presents descriptive statistics for Investment equilibrium, Overinvestment and Underinvestment. By construction, Investment Residual has a mean value of zero ranging from -64. 46% to 80. 43%. There are 39,107 ( 59,568) firms class as overinvesting (underinvesting) firms. The mean (median) value is 9. 73% (5. 63%) for Overinvestment and 6. 39% (4. 71%) for Underinvestment. These results show that the residuals from the investment model are more frequently negative, although in smaller magnitude.Panel D presents Pearson correlations between the measures of investment efficiency and firm characteristics. Investment Residual is uncor tie in with firm size (measured as the log of summate assets (item 6) at the start of the fiscal year) and slightly negatively correlated with return unpredictability (measured as the hackneyed deviation of effortless returns during the prior fiscal year). However, when the residuals are separated into Overinvestment and Underinvestment, I find that these changeables are negatively correlated with size and positively correlated with return volatility and Q (the magnitude of the he investment model to capture growth opportunities not reflected in Q (Lamont, 2000 Richardson, 2006) and second, I exclude all industry-year observations in which the estimated coefficient on Q is not positive and significant. The subsequent results are not bare-assed to these tests. 12 correlations range from 0. 18 to 0. 32). These results suggest either that (1) small firms, with more growth opportunities and vapourific operations, have more inefficient investment or (2) the investment model is a poor fit for these firms.In any case, it highlights the importance to control for these firm characteristics in the subsequent analysis. In order to better get a line the properties of the residuals from the investment model I perform analyses testing the persistence of investment efficiency over time. First, I find that 40% (48%) of the firms in the communicate (bottom) Investment Residual quintile in a given year remain in the top (bottom) quintile in the following year, and 27% (36%) remain third years later (Panel E).In addition, one lag of Investment Resi dual in an autoregressive model explains 16% of current Investment Residual (untabulated). The inclusion of higher orders of past residuals has a small contribution in explanatory power (R-square of only 18% if five lags are included in the model). These analyses suggest that residuals of the investment model are not random, which seems to support the view that they capture a firm investment characteristic. However, I cannot rule out the explanation that the persistence in the residuals is a function of an omitted correlated versatile in the investment model. . 2. Proxies for financial reporting quality The conceptual definition of financial reporting quality used in this paper is the the true with which financial reporting conveys information about the firms operations, in particular its expected cash flows, in order to inform investors in terms of equity investment decisions. This definition is lucid with the FASB SFAC No. 1 which states that one objective of financial report ing is to inform present and potential investors 13 in making rational investment decisions and in assessing the expected firm cash flows.I proxy for financial reporting quality using measures of accruals quality derived in prior work (Dechow and Dichev, 2002 McNichols, 2002) based on the idea that accruals are estimates of future cash flows, and earnings will be more representative of future cash flows when there is lower estimation error embedded in the accruals process (McNichols, 2002). 8 I estimate discretionary accruals using the Dechow and Dichev (2002) model augmented by the fundamental variables in the Jones (1991) model as suggested by McNichols (2002). The model is a regression of working(a) capital ccruals on lagged, current, and future cash flows plus the change in tax revenue and PPE. All variables are scaled by average total assets. Accrualsi,t = ? + ? 1*Cash adverti,t-1 + ? 2*CashFlowi,t + ? 3*CashFlowi,t+1 + ? 4*? Revenuei,t + ? 5*PPEi,t + ? i,t. (2) where Accrual s = (? CA ? Cash) (? CL ? STD) Dep, ? CA = substitute in current assets (item 4), ? Cash = Change in cash/cash equivalents (item 1), ? CL = Change in current liabilities (item 5), ? STD = Change in short-term debt (item 34), Dep = Depreciation and amortization expense (item 14), CashFlow = enlighten income before extraordinary items (item 18) minus Accruals ?Revenue = Change in revenue (item 12), and PPE = Gross property, plant, and equipment (item 7). All variables are deflate by average total assets (item 6). Following Francis et al. (2005), I estimate the model in Equation 2 crosssectionally for each industry with at least 20 observations in a given year based on the Fama and French (1997) 48-industry classification. AccrualsQuality at year t is the 8 I discuss the sensitivity of the results to the use of alternative measures of accruals quality and other attributes of earnings in Section 5. 4 step deviation of the firm-level residuals from Equation 2 during the years t-5 to t-1, assuring that all explanatory variables are measured before period t for the computation of AccrualsQuality in that year. I multiply AccrualsQuality by negative one so that this variable becomes increasing in financial reporting quality. As discussed in Dechow and Dichev (2002) and McNichols (2002), the estimation of AccrualsQuality captures the absolute variation in the residuals of Equation 2 rather than the variation relative to a benchmark.One concern with this approach is that AccrualsQuality may be capturing some underlying degree of volatility in the business, and the results in mesa 1 show that investment efficiency is negatively correlated with firm uncertainty. Thus, I follow the suggestion in McNichols (2002) and create a relative measure of accruals quality. In particular, I measure AccrualsQualityRel as the ratio of the quantity deviation of the residuals from Equation 2 during the years t-5 to t-1 to the amount deviation of total accruals during the years t -5 to t-1 multiplied by negative one.This measure captures the relative partition of the estimation errors in accruals compared to the total variance. I show below that this measure is only slightly correlated with firm size and cash flow volatility, mitigating the concern that the proxies for financial reporting quality are associated with investment efficiency because of the spurious force out of firm uncertainty. 4. Results To investigate hypotheses 1 and 2, I first present preliminary analysis on the univariate relation between the measures of investment efficiency and financial reporting quality.Table 2 Panel A presents descriptive statistics for a smaller sample than reported in Table 1 due to data availability for AccrualsQuality and AccrualsQualityRel. 15 The sample consists of 49,543 firm-year observations and all variables are winsorized at the 1% and 99% levels by year. In this sample, there are 19,473 (30,070) firms classified as overinvesting (underinvesting) firms. The mean (median) value for Overinvestment is 7. 81% (4. 45%) and for Underinvestment is 5. 37% (4. 09%).The magnitudes are smaller than reported in Table 1 because the data required to estimate AccrualsQuality and AccrualsQualityRel bias the sample toward larger firms. Among the financial reporting quality proxies, the mean (median) firm in the sample has an AccrualsQuality of -0. 04 (0. 03) and an AccrualsQualityRel of -0. 74 (-0. 64). Finally, I include descriptive statistics on firm size, cash flow volatility, and Tobin Q because these firm characteristics are shown to be associated with investment efficiency in Table 1. The distribution of Q is slightly changed (as compared to Table 1) to a mean (median) Q of 1. 63 (1. 23) again reflecting the sample bias toward larger firms. Panel B presents Pearson (Spearman) correlations above (below) the main diagonal for the variables in Panel A. By construction, Overinvestment and Underinvestment cannot be correlated because each firm-ye ar observation can only be in one group. Most importantly, Overinvestment is negatively correlated with AccrualsQuality (Pearson correlation equals -0. 19) and with AccrualsQualityRel (Pearson correlation equals -0. 8) the alike is true for Underinvestment (Pearson correlations equal -0. 22 and -0. 10 respectively). These results present preliminary evidence for the relation between financial reporting quality and investment efficiency in hypotheses 1 and 2. Finally, as in Dechow and Dichev (2002), AccrualsQuality is highly correlated In Table 1, I use return volatility instead of cash flow volatility to avoid imposing the five-year data requirement for the estimation of cash flow volatility. However, this data is required to estimate AccrualsQuality and does not impose any sample bias at this stage of the analysis.I use cash flow volatility in the remainder of the paper because AccrualsQuality is highly correlated with cash flow volatility as discussed by Dechow and Dichev (2002). However, the results are not sensitive to this choice. 9 16 with Size (Pearson correlation equals 0. 42) and with CashFlowVol (Pearson correlation equals -0. 66). However, note that AccrualsQualityRel is much less correlated with these variables (correlations of -0. 08 and 0. 04 with size and cash flow volatility respectively), supporting the argument that this variable is uncorrelated with firm uncertainty. 0 Table 3 presents the multiple regressions. The estimated model is a regression of investment efficiency on financial reporting quality, firm characteristics, and industry (based on the Fama and French (1997) 48-industry classification) and year fixed kernels. The dependent variable is Underinvestment in the first two columns and Overinvestment in the remaining columns. All standard errors are clustered by firm using the HuberWhite procedure. 11 As predicted in hypothesis 1, Underinvestment is negatively related to AccrualsQuality and AccrualsQualityRel (both coefficients are significant at 1% level).The estimated coefficients are also negative and significant for Overinvestment, supporting the prediction in hypothesis 2. The estimated coefficients suggest that increasing AccrualsQuality (AccrualsQualityRel) by one standard deviation is associated with a reduction on Underinvestment of 0. 21% (0. 11%) and on Overinvestment of 0. 31% (0. 22%). Given that the mean values for Underinvestment and Overinvestment in Table 2 are 5. 73% and 7. 81%, these changes average between 1% and 5%, suggesting that the economic significance of the effect is moderate.One alternative explanation for the results in Table 3 is that causality goes the other way. For instance, suppose that poorly performing managers are more likely to The signs of the correlations between AccrualsQuality and size and cash flow volatility are the setback of the ones presented in Dechow and Dichev (2002) because I multiply AccrualsQuality by negative one so that this variable is increasing in re porting quality. 11 Petersen (2005) suggests two methods to correct for both cross-sectional and time-series dependence in the data the Huber-White procedure and familiarized Fama-MacBeth.Since, neither method is perfect, I repeat all subsequent analysis using Fama-MacBeth (1973) estimators adjusting for time-series dependence. The results lead to the alike inferences as reported in the text. 10 17 invest inefficiently and also choose to report low quality financial information in order to hide their bad performance (e. g. , Leuz, Nanda, and Wysocki, 2003). Then one could spuriously find a positive association between financial reporting quality and investment efficiency. In order to address this concern, I perform two tests.First, I repeat the analysis using the financial reporting quality proxies lagged by two periods (the variables in the model are already lagged by one period). Second, I explicitly control for past investment efficiency in the model. The suspicion behind this test is that if past investment efficiency drives financial reporting quality then there should be no relation between financial reporting quality and future investment efficiency after controlling for past investment efficiency. Table 4 Panel A presents the results of the two sensitivity analyses when Underinvestment is used as the dependent variable.When AccrualsQuality and AccrualsQualityRel (Columns I and II) are lagged by two periods, the inferences are unchanged. The estimated coefficients are statistically negative at conventional levels. In Columns III and IV, I include past Underinvestment in the model. In this case, the estimated coefficient on AccrualsQuality is still negative and significant, while the coefficient on AccrualsQualityRel is negative but only marginally significant (two-sided p-value of 0. 14). Table 4 Panel B repeats the analysis for Overinvestment.Again, all the inferences are unchanged since the estimated coefficients on AccrualsQuality and AccrualsQu alityRel are statistically negative in all models. Overall, the results in Tables 3 and 4 support hypotheses 1 and 2 that financial reporting quality is negatively associated with both underinvestment and overinvestment, 18 consistent with the argument that financial reporting mitigates both adverse selection and agency costs. 4. 1. Cross-sectional separates In this section, I discuss the empirical approach used to test hypotheses 3, 4, and 5.These hypotheses involve cross-sectional predictions about the relation between financial reporting quality and investment efficiency across sub-groups of the sample. Thus, I estimate separate coefficients for these sub-groups as described in the model below (Investment Inefficiency) i,t = ? 0 + ? 1* Partition i,t-1 + ? 2* ReportingQuality i,t-1 + ? 3* ReportingQuality* Partition i,t-1 + ? 4* Controls i,t-1 ? ? t * Year t + ? ? j * application j + ? it. where Investment Inefficiency is either Underinvestment or (3) Overinvestment, ReportingQu ality is either AccrualsQuality or AccrualsQualityRel.Partition is coded as an indicator variable based on measures of financing constraints, excess cash, or information environment described below (results are similar if the Partition is used as a continuous or rank (deciles) variable). The partitioning variables are defined such that a negative coefficient on the fundamental interaction term (? 3) implies that the relation between financial reporting quality and inefficient investment is stronger for firms in the subgroup of interest (e. g. , financially strained firms). As additional analysis, I test the null hypothesis that the sum of the coefficients ? and ? 3 is equal to zero in order to test whether the relation between financial reporting quality and investment efficiency is at least present in the sub-group of interest. 12 12 Hypotheses 3 to 5 are also important in mitigating the concern that an omitted correlated variable could be driving the positive association betwee n financial reporting quality and investment efficiency. For instance, if managers choose better (worse) investment projects and report more (less) informative financial accounting information when they know more (less) about growth opportunities and expected cash flows, 9 4. 1. 1. Financing Constraints In this section, I investigate hypothesis 3 which predicts that the relation between financial reporting quality and Underinvestment is stronger for financing constrained firms because these firms are, by definition, limited in their ability to raise funds. I follow the approach in Hubbard (1998) to ramify firms into financially constrained and free categories. In particular, I use five different criteria because of the escape of consensus about which approach provides the best classification (Almeida, Campello, and Weisbach, 2004).First, I classify firms into Payout forced if the firm is in the bottom three quartiles in terms of total payout in a given year and free otherwise. I measure total payout as the sum of dividends and share repurchases deflated by year-end market capitalization using the method described in Boudoukh et al. (2005). Second, I classify firms into Age Constrained if the firm is in the bottom three quartiles of firm age in a given year (and unconstrained otherwise) based on the argument that young firms are more likely to face financing constraints.Age is measured as the difference in years since the first year the firm appears in the CRSP database. Third, I classify firms into Size Constrained if the firm is in the bottom three quartiles of total assets in a given year and unconstrained otherwise. Fourth, I measure Rating Constrained if the firm has long-term debt outstanding (item 9) but does not have public debt rated by S&038P (item 280) and unconstrained otherwise. Finally, I construct the KZ forefinger following the approach in Kaplan and Zingales (1997) and classify a firm as KZ indicant Constrained hen a positive relation be tween financial reporting quality and investment efficiency could just be a reflection of the quality of the managers information set and might not be related to financial reporting quality. However, this alternative hypothesis would not predict the relation between financial reporting quality and investment efficiency to be dependent on financing constraints, cash balances, or the existing information environment. Thus, if such interactions exist, then it would strengthen the result that financial reporting quality per se is associated with investment efficiency. 0 if the firm is in the top three quartiles of the KZ exponent in a given year and unconstrained otherwise. 13 Untabulated analysis show that the first four classifications are positively correlated (Pearson correlations ranging from 0. 11 to 0. 45) but the KZ Index classification is not correlated with the remaining criteria (Pearson correlations ranging from -0. 01 to 0. 11), consistent with previous research (e. g. , Al meida, Campello, and Weisbach, 2004). 14 Further, all financing constraint proxies are positively correlated with Underinvestment (Pearson correlations range from 0. 1 to 0. 14). Table 5 presents the results related to hypothesis 3. All models include the control variables size, cash flow volatility, Q, and industry and year fixed effects as before but the coefficient estimates on these variables are not tabulated for brevity. The estimated coefficients on the control variables are similar to those reported in Table 3. The results are separated for AccrualsQuality and for AccrualsQualityRel. For AccrualsQuality, the estimated coefficients on the main effect (third column labeled Reporting Quality) are all egative with only one statistically significant coefficient. These results indicate that, for a sample of unconstrained firms, the relation between AccrualsQuality and Underinvestment is basically not significant. The estimated coefficients on the interaction terms, however, are ne gative in four out of five cases and significant in two. Further, the F-test rejects the hypothesis of no relation between AccrualsQuality and Underinvestment in almost all cases for the sample of financially constrained firms. The only exception is 3 The KZ Index is calculated using the following formula KZ Index = -1. 002 * CashFlow + 0. 283 * Q + 3. 139 * Leverage 39. 368 * Dividends 1. 315 * Cash. For more details see Almeida, Campello, and Weisbach (2004, p. 1790). 14 Principal component analysis on the five financing constraints proxies yields two factors. The first factor explains 40% of the variation and loads on all proxies but the KZ Index. The second factor explains some other 20% of the variation in the data and loads on the Payout and the KZ Index measures. 1 when the KZ Index is used as the criteria for financing constraint classification. 15 When AccrualsQualityRel is used as the financial reporting quality proxy, the results are by and large the similar. In terms of economic significance, increasing AccrualsQuality (AccrualsQualityRel) by one standard deviation is associated with a reduction in Underinvestment of 0. 26% (0. 16%) for firms classified as Rating Constrained and 0. 08% (0. 06%) for unconstrained firms (compared to 0. 21% (0. 11%) for the full sample as discussed above).Overall, the results present marginal support for hypothesis 3 that the relation between financial reporting quality and Underinvestment is stronger for financing constrained firms. 4. 1. 2. Cash Balances In this section, I investigate hypothesis 4 which predicts that the relation between financial reporting quality and Overinvestment is stronger for firms with large cash balances and free cash flows because these firms are more likely to overspend existing resources (Jensen, 1986). I use two criteria to classify firms based on cash holdings and one proxy for free cash flow.First, I create an indicator variable, juicy Cash, coded as 1 if the firm is above the me dian in the distribution of cash balances deflated by total assets in a given year and 0 otherwise. Second, I follow the approach in Opler et al. (1999) who predict cash balances as a function of firms characteristics, and use residuals from this model as a proxy for excess cash. Opler et al. show that firms hold more cash in the presence of growth opportunities and firm uncertainty, and less cash when they are forced to payout interest obligations and have more access to financing (proxied by leverage and size).Thus, I estimate annual regressions of cash balances (item 1) deflated by total 15 The inconsistent result using the KZ Index is consistent with prior work in the finance literature (e. g. , Almeida, Campello, and Weisbach, 2004 Almeida and Campello, 2005) which finds opposite results when this variable is used as a proxy for financing constraints. 22 assets (item 6) on firm size, leverage, Q, and cash flow volatility. Leverage is measured as the sum of the book value of sho rt term (item 34) and long term debt (item 9) deflated by the book value of equity (item 60) and the remaining variables are the same as described above.The explanatory power of the models ranges from 16% in 1986 to 42% in 2003. I create an indicator variable, Excess Cash, coded as 1 if the firm has a positive residual from the model predicting cash balances, and 0 otherwise. Finally, following Richardson (2006), Free Cash Flow is equal to cash flow from operations plus R&038D expenses minus depreciation and the predicted investment for the firm as estimated in Table 1. Free Cash Flow is recoded as an indicator variable coded as 1 if the computation of free cash flow is positive and 0 otherwise.Table 6 presents the results related to hypothesis 4. As before, all models include the control variables size, cash flow volatility, Q, and industry and year fixed effects (estimates not tabulated). The first set of results presents estimated coefficients for AccrualsQuality and the second r eports coefficients for AccrualsQualityRel. The results show that the estimated coefficients on the main effect of financial reporting quality are negative but not significant in all six models (three models for AccrualsQuality and three for AccrualsQualityRel).The estimated coefficients on the interaction term, on the other hand, are negative in all cases and significant in three out of six cases, and the F-test rejects the hypothesis of no relation in all cases. In terms of economic significance, increasing AccrualsQuality (AccrualsQualityRel) by one standard deviation is associated with a reduction on Overinvestment of 0. 41% (0. 35%) for firms classified as High Cash and 0. 06% (0. 06%) for firms with low cash (compared to 0. 31% (0. 22%) for the full sample as discussed above).Overall, the results support hypothesis 4 by showing that the 23 relation between financial reporting quality and Overinvestment is stronger for firms with large and excessive cash balances but the result s are not statistically significant for firms generating free cash flows. This support the hypothesis that financial reporting quality reduces firm overinvestment by lowering shareholders cost of monitoring managers and thus limiting managers ability to undertake inefficient investment projects. 4. 1. 3.Information Environment In this section, I investigate hypothesis 5 which predicts that the relation between financial reporting quality and investment efficiency is stronger for firms with poor information environments because investors of these firms are more likely to rely on financial accounting information to infer the economic conditions of the firms operations. I use two proxies for the firm information environment the number of analysts following the firm and the bid-ask spread. I use the number of analysts following a firm as a proxy for the amount of publicly available information about the firm. analysts are an important source of information for investors they expel fore casts, reports about individual companies, and stock recommendations. Roulstone (2003) examines the role of analysts in improving market liquidity and finds that analysts provide public information that reduces information asymmetries between firms and market participants. I collect data on analyst following from IBES and measure the number of analysts following the firm as the maximum number of analysts vaticination annual earnings for a firm during the fiscal year t.If the firm is not followed by IBES I assume that the number of analysts following the firm is zero. I consider a firm as Low Analyst if the firm is in the bottom three quartiles in a given year (coded as 1 and 0 otherwise). 24 The second proxy for a firms information environment is the bid-ask spread. See Amihud and Mendelson (1986) and Roulstone (2003) among others for discussions of spreads as a proxy for the information asymmetry between the firm and investors.I collect intraday trade data to compute bid-ask sprea d from the Trades and Quotes database (TAQ) and from the Institute for the take away of Security Markets database (ISSM). The TAQ database includes trades and quotes starting in 1993, and the ISSM database contains intraday data for NYSE/AMEX firms from 1983 to 1992 and for NASDAQ firms from 1987 to 1992. I measure quoted bid-ask spread as the ask price minus the bid price divided by the average of the bid and ask prices. The bid-ask spread is averaged across all transactions during the day for each firm, then periodic mean bid-ask spreads are averaged during the month t.Finally I compute bid-ask spread as the average of the monthly bid-ask spreads during the fiscal year t. I consider a firm as High Spread if the firm is in the top three quartiles in a given year (coded as 1 and 0 otherwise). Table 7 presents the results related to hypothesis 5. As before, all models include the control variables (estimates are untabulated). The table is divided into Underinvestment and Overinvest ment results. The first set of results presents estimated coefficients for AccrualsQuality and the second reports coefficients forAccrualsQualityRel. When bid-ask spread is used as the partitioning variable, I find that none of the coefficients on the main effect of financial reporting quality are significant, and three out of four coefficients on the interaction term are significant. The only exception is the coefficient on the interaction between High Spread and AccrualsQualityRel for Underinvestment. Further, in three out of four cases the F-test rejects the hypothesis of no effect of financial reporting quality on investment efficiency 25 for the sample of firms with High Spread.As for Low Analyst, the results on the estimated coefficients on the interaction terms are weaker only one coefficient is statistically negative. Still, in three out of four models the F-test rejects the hypothesis of no relation for the sample of firms with Low Analyst. Overall, the results provide weak support for the hypothesis that the effect of financial reporting on investment efficiency is more important when the firm information environment is of low quality. 16 5. Sensitivity digest In this section I discuss some robustness tests to the analysis presented in the paper.First, I study the sensitivity of the results to inclusion of omitted control variables using firm fixed-effect estimation. The advantage of this approach is that it controls for all time-invariant unobservable firm characteristics. However, since the estimation of AccrualsQuality and AccrualsQualityRel is done using five years of data, the within-firm variation is small, which makes the fixed-effect estimation precise conservative. The analysis is done for all firms with at least five, ten, or 15 years of data in order to increase the within firm variation (sample sizes of 43,739, 33,454, and 24,420 firm-year observations respectively).Untabulated analyses show that the results in Hypotheses 1 and 4 are generally robust to the firm fixed-effect estimation. Results of Hypotheses 2 and 3 are weaker (coefficients are of the same sign but in most cases not significant at conventional levels) and, in the case of Hypothesis 5, the results are similar (weaker) when Underinvestment (Overinvestment) is used as the dependent variable. I also performed tests using a 2&2152 classification based on the firms financial reporting quality and information environment (sorted independently as a low/high).Either high financial reporting quality or high information environment is sufficient to mitigate Underinvestment but only financial reporting quality is sufficient to mitigate Overinvestment, suggesting a substitute relation between financial reporting quality and the firm information environment in improving investment efficiency. 16 26 Second, I investigate the sensitivity of the results to the use of alternative measures of accruals quality such as the non-linear discretionary accruals model in Ball and Shivakumar (2005) and the accrual quality measures develop by Wysocki (2006).The key innovation in Wysockis (2006) measures is to remove the suaveness effect of accruals in the Dechow and Dichev (2002) model. Results using the Ball and Shivakumar (2005) model are real similar to those reported on the paper. The use of Wysockis measure, on the other hand, leads to similar results for hypotheses 1, 2, and 5 but unnoticeable results for hypotheses 3 and 4. As discussed in more detail below, these results are not surprising given that Wysockis (2006) measure excludes the smoothness component of accruals, and smoothness is positively associated with investment efficiency.In addition, I investigate the sensitivity of the results to the use of alternative attributes of earnings as proxies for financial reporting quality. Accruals quality represents one dimension of financial reporting quality but other dimensions of earnings have also been used as a proxy for financial reporti ng quality (Francis et al. , 2004). These attributes of earnings would not necessarily affect investment efficiency in the same way.For instance, one could argue Timeliness and Conservatism are more important in conveying information about bad firms economic states, thus improving Overinvestment but may not be associated with Underinvestment. Nevertheless, it is useful to see how these measures are related and the respective association with investment efficiency (Verdi, 2005). Francis et al. (2004) identify six earnings attributes (other than AccrualsQuality) previously used in accounting research to characterize desirable features of earnings. The six attributes are Persistence, Predictability, Smoothness, 27 ValueRelevance, Timeliness, and Conservatism.I also include a measure of price informativeness as used by Durnev, Morck, and Yeung (2004). When Underinvestment is used as the dependent variable (Hypotheses 1 and 3), I find consistent results using Persistence, Predictability, and Smoothness but insignificant results for the remaining variables (with the exception of Informativeness in which the relation is positive and significant, against the prediction). The analysis using Overinvestment (Hypotheses 2 and 4) yield weaker results since only the estimated coefficients on Smoothness and Informativeness are negative and significant in the expected direction.The remaining coefficients are either insignificantly negative or positive in the case of Persistence. Overall the results provide marginal support for the relation between other dimensions of earnings and Underinvestment, and weak support for Overinvestment. The finding that Smoothness is negatively associated with both Underinvestment and Overinvestment explains the weaker results using Wysockis measure of accruals quality given that this measure excludes the smoothness component in the accruals quality measure developed by Dechow and Dichev (2002).In the third sensitivity test, I repeat the analysis using capital expenditures (deflated by average total assets) as a measure of investment in order to make the results more comparable with the extant finance literature. In addition, the investment measure used in the paper includes only cash acquisitions and ignores stock acquisitions which constitute the majority of M&038A transactions. Untabulated analyses using CAPEX show that the results in Hypothesis 1, 3, and 5 are similar to those reported. Results in Hypothesis 2 are consistent but weaker when AccrualsQuality is used as the proxy for 28 inancial reporting quality. Finally, results are inconsistent with Hypothesis 4 (estimated coefficients on the interaction terms are mostly insignificant). Finally, I include grace of God (item 204) in the discretionary accruals model. As discussed in Jones (1991), PPE is included in the model to capture the blueprint level of depreciation, and using the same logic, goodwill would capture the normal level of amortization in accruals. This inclusion is justified because the measure of investment includes acquisitions. Goodwill is only available from Compustat starting in 1988 which is why it is excluded in the main tests.In untabulated analysis I find little invasion on the discretionary accruals model (the Pearson correlation between discretionary accruals including and excluding goodwill is 0. 99), and the results presented in the paper are unchanged if I restrict the sample to post 1988 and include goodwill in the discretionary accruals model. 6. Summary and conclusion Despite recent claims that financial reporting quality can have economic implications for investment efficiency, there is little evidence on this relation empirically. This paper studies the relation between financial reporting quality and investment efficiency.The analysis is done on a sample of 49,543 firm-year observations during the sample period of 1980 to 2003. I find that proxies for financial reporting quality, namely measures of accruals q uality, are negatively associated with both firm underinvestment and overinvestment. The relation between financial reporting quality and underinvestment is stronger for firms facing financing constraints, consistent with the argument that financial accounting information can reduce the information asymmetry between the firm and investors, and 29 thus lower the firms cost of raising funds.Likewise, the relation between financial reporting quality and overinvestment is stronger for firms with large cash balances, which suggests that financial reporting quality can reduce the information asymmetry between the principal and the agent and thus lower shareholders cost of monitoring managers and improving project selection. Finally, I find that the relation between financial reporting quality and investment efficiency is stronger for firms with low quality information environments. 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