Financial Policies and the Value of the Firm Literature review

Financial Policies and the Value of the Firm - Literature review Example The research identified that the matter of a firm’s dividend policy and its effect on current share prices. The effects of different dividend polices on current share prices based on assumptions of perfect capital markets, rational behaviour on the part of investors and perfect certainty. The assumption of perfect markets means that all traders have equal access to information and transaction costs such as brokerage fees and transfer tax which are normally associated with the sale and purchase of shares are non-existent. Rational behaviour indicates a preference for more instead of less and an indifference to the form that wealth takes – whether it is in the form of cash payments as dividends or increases in the market value of shares. Perfect certainty on the other hand indicates that investors have no doubt in relation to the investment and financial policy of the firm as well as the future levels of profitability of all firms. Stiglitz extends the argument that the f inancial policy of the firm is irrelevant to a multi-period model. The reason for this extension is to give consideration to a wider range of financial policies to include not only a debt to equity ratio but a dividend retention ratio, a debt maturity structure and possibly the holding of securities in other firms. While stressing the importance of financial policy on the value of the firm to students of finance, Stiglitz indicates that ‘if the conditions under which the â€Å"irrelevance† theorems obtain’ are considered to be realistic it results in a reduction in the tools that they require to function effectively. Stiglitz (1974) suggested that it is possible to place the decisions that a firm makes into four groups: i. the way in which investment is financed; ii. the way in which revenue is distributed; iii. the amount that should be invested in any particular projects; and iv. the projects that should be undertaken as well as the techniques that should be em ployed. The first two relates to the firms financial policy while the last two relate to its investment policy. Stiglitz (1974) highlights the fact that there is a relationship between both types of decisions which may not be obvious. Stiglitz (1974) also indicates that two different but still closely related propositions have been confused. While they assert that a firm’s financial policy does not affect its value. The first asserts that the individual does not prefer one financial policy over another and specifically to the debt to equity ratio implying therefore that there is determinate ratio for the economy as a whole while the second indicates that there might be some preference as there may be a determinate debt to equity ratio for the economy as a whole but the financial policy of a particular firm makes no difference. Stiglitz (1974) concludes that the first preposition is stronger because it indicates that the financial structure of the economy and therefore the fir m is irrelevant while the second indicates its irrelevance in relation to the firm only. Stiglitz (1984) points out that the decisions that the firm makes are interrelated and so the decision to increase dividend and still decide to invest would suggest that additional capital needs to be obtained. If a loan is obtained to facilitate the investment then less would be available in the following period and to either retained earnings or dividends would decrease. If instead, shares are issued to facilitate the decision to invest then the amount distributed to shareholders in the following period would decrease if retained earnings is left unchanged. Stiglitz (1974) points to shortcomings in Baumol and Malkiel (1967) and Modigliani and Miller (1958) in their discussion of on how taxation impacts the optimal financial policy of the firm. Baumol and Malkiel (1967) and Modigliani and Miller (1958) observed that debt reduces the amount of tax that a firm is

Assessment and Accountability Assignment Essay Example | Topics and Well Written Essays - 500 words

Assessment and Accountability Assignment - Essay Example To answer these questions, there is the need for one, as the teacher to assist the students in examining their performance and progress in the whole process of learning. They also need to offer them with descriptive and explicit responses which are certain to the task of learning. According to Coffey (2009), some of the learning activities which would help the students in achieving the goals of formative assessment would include: Students, with the help of the teacher setting short-term goals so as to be able to monitor their progress and create a big picture of the subject. As the teacher, one should identify and communicate the goals of the course for achievement of the supposed results. There is need to communicate these objectives in a language which is learner-friendly for the learners to comprehend and take part in completing their obligations. One needs to introduce self and peer-assessment which are crucial in offering the students with a chance to consider their learning. This would make the students have responsibility of their work and examine their own performance. Opportunities which model the students to take part in the learning process actively for constructive and meaningful response would be included.

The paper is on how leaderhship plays an important role in the movie Essay

The paper is on how leaderhship plays an important role in the movie Gladiator - Essay Example Here Maximus Decimus Meridus is seen to have evolved through all the ranks from glory to grass and back to the glory again. He was first a general, then a slave, then a gladiator and finally a hero. His evolution through all these stages bequeathed him with the charisma of a leader. He portrays the desire to see his fellow slaves set free, and his gladiators succeed to freedom without having to kill each other. His strong character and will take risks propels him to glory as a hero in Rome through conquests that he stages. He exercises the power of charisma as a leader and wins the hearts of many people including his fighters to fight for the common good of all. Leaders in the movie portray leadership through abilities of decision-making processes. In times of war, they inspire their soldiers to fight for the good of their nation. This shows that leadership should be taken as a source of inspiration. This authority helps in deriving a persons authority in a group. Leadership in this context is seen as an exercise of power, the power of information is used to exact control upon the people. Information is only spread at specific times under the control of the King or the ruler. Information gathering through spying and its dissemination among the power elites enables the ruler to stay on top of issues. He makes sure that he is well informed as a leader of every situation that is going own within his territory. Leadership in this movie is also strengthened much through the power of relationships. Leaders have established both formal and informal networks both within and without their territories. Leadership is strengthened by the appreciation of the power of expertise. Leaders rely so much on the council of senators and other influential figures including the most talented gladiators. These experts are used either in the development of specialized knowledge are being communicated

The Effects of Global Warming on Coral Reefs Research Paper

The Effects of Global Warming on Coral Reefs - Research Paper Example There are three ways in which global warming affects coral reefs: through a direct increase in water temperature; through a rise in the carbon dioxide levels in water which makes water acidic; and through rising sea levels which results in inadequate sunlight for the existing coral reefs. In addition, the study points towards various indirect ways through which rising temperature leads to coral reef damage. One issue is the increasing incidence of various coral diseases and another problem is the occurrence of natural disasters like El Nino which damage coral reef habitats. Thus, the study ends with the suggestion that the ultimate way to save coral reefs would be to address the effects of global warming. Introduction Global warming is a potential environmental problem that has been adversely affecting the global climatic patterns for more than a century. Global warming can be simply referred to the process of increasing the average temperature of Earth’s atmosphere and oceans. By definition â€Å"global warming is an increase in temperature worldwide due to gaseous emissions known as greenhouse gases, and depletion of the upper atmospheric (30-50 kilometers) or stratospheric ozone layer† (Liu, 58). Meteorologist identified an increase in Earth’s average surface temperature by nearly 0.8o C in the beginning of the 20th century. Scientists hold that the increased concentrations of greenhouse gases caused by thoughtless human activities including combustion of fossil fuels and deforestation are the major factors leading to global warming. ‘The Intergovernmental Panel on Climate Change’s (IPCC) Fourth Assessment Report’ (AR4) (qtd. Deimling et al) forecasts th at the average global surface temperature may rise from 1.1o C to 2.9o C during the 21st century under lowest emissions scenario, whereas the expected range lies between 2.4o C to 6.4o C under highest emission scenario. Studies have identified that the rising average temperature of oceans has a devastating effect on coral reefs. Coral reefs are underwater forests formed of calcium carbonate secreted by corals. Coral reefs play a pivotal role in protecting coastal regions. Coral reefs contain a wide variety of fishes and plants among which most of them belong to some of the most fragile ecosystems of the planet. Studies point to the fact that even a one degree Celsius change in average sea temperature would cause dreadful effects on these underwater structures. This paper will discuss the effects of global warming on coral reefs in the context of current beliefs and researches. The paper will also give focus on the potential long term effects of global warming on the human sustainabi lity. Finally it will propose solutions to the issue on the strength of identified causes and effects. Coral Reef Habitat Coral reefs are considered colonies of micro living animals found in less-nutrients contained marine waters. It has been identified that majority of the coral reefs are made up of stony corals and which in turn contain polyps. Most of these underwater structures were formed after the last glacial period and therefore it can be concluded that most coral reefs are not more than 10,000 years old. Coral reefs constitute the most diverse and fragile ecosystems on Earth and they are often referred to as ‘rainforests of the sea’. As stated in the article, Introduction to Coral Reef ecosystems, threats, and solutions, although coral reefs occupy only less than 0.1% of the worlds’ ocean surface, they are rich sources of different marine species such as fish, worms, sponges, crustaceans, and mollusks. As reported by National Wildlife Federation, the stu nning and frail coral reefs found