Essay on Maya - 2969 Words

Maya The ancient Maya were a group of American Indian peoples who lived in southern Mexico, particularly the present-day states of Chiapas, Tabasco, Campeche, Yucatan, and Quintana Roo, and in Belize, Guatemala, and adjacent Honduras. Their descendants, the modern Maya, live in the same regions today, in both highlands and lowlands, from cool highland plains ringed by volcanos to deep tropical rain forests. Through the region runs a single major river system, the Apasion-Usumacinta and its many tributaries, and only a handful of lesser rivers, the Motagua, Hondo, and Belize among them. The ancestors of the Maya, like those of other New World peoples, crossed the BERING LAND BRIDGE from Asia more than 20,000 years ago, during the†¦show more content†¦In 1960, Tatiana Proskouriakoff showed that the patterns of dates were markers of the important events in rulers lives. The chronological record turned out to serve history and the perpetuation of the memory of great nobles. Subsequently, major archaeological discoveries, particularly at PALENQUE and TIKAL, confirmed much of what the writings said, and examination of Maya art has revealed not only historical portraiture but also a pantheon of gods, goddesses, and heroes--in other words, Maya religion and mythic history. HISTORY OF THE ANCIENT MAYA By 5000 BC, the Maya had settled along Caribbean and Pacific coasts, forming egalitarian fishing communities. Certainly by 2000 BC the Maya had also moved inland and adopted agriculture for their subsistence. Maize and beans formed the Maya diet then as today, although many other foodstuffs--squash, tomatoes, peppers, fruits, and game--were supplements. The word for maize--wa--is synonymous with food itself, and the maize god was honored from early times. Preclassic Period During the Early Preclassic (2000-900 BC), civilization began to take shape in parts of MESOAMERICA. By 1200 BC, the OLMEC of the Gulf Coast had risen to preeminence, dominating trade routes that extended from the modern Mexican state of Guerrero to Costa Rica, passing through Maya regions. At COPAN, Honduras, and Cuello, Belize, around 1000 BC, local Maya leaders began to imitate Olmec styles of pottery and jades andShow MoreRelatedAnalysis Of Maya s The Maya 942 Words   |  4 PagesMaya Secrets Locked in Stone Maya scholars debated for decades over the fate of the Maya. Recent evidence from an unlikely source, points a sustained drought in the 9th and 10th Centuries. Stalagmites and Stone Carvings Offer Clues on the Collapse of the Maya Civilization Circa 900 A.D., the Maya world fell apart. How could an ancient Meso American civilization flourish for hundreds of years only to fade into the forest? That riddle has perplexed scholars ever since 19th century explorersRead MoreThe Aztec And Maya930 Words   |  4 Pagesshaped state authority and control. Mesoamerica is a culture and region in Mexico/northern South America, that existed from 3500 BCE to 1697 AD. Two important cultures within mesoamerica are the Aztec and Maya. More specifically, three examples of these important artifacts are the Templo Mayor, the Maya stelae and the ritual of bloodletting. These are great examples because each presents a different type of artifact and contributes to different aspects of state authority. The Templo Mayor (Spanish forRead More The Maya Essay1356 Words   |  6 Pages The Maya were a dominating society of Mesoamerica, rich in culture, community, and art. While life may not be completely interpretable yet, much in known about how these societies were constructed, and how their religion dominated their lives. Much is generally made of their massive stonework, their ceremonial complexes, and ritual sacrifices, but their small jade, ceramic, and stone sculpture deserves as much attention as the works of much larger size have received. nbsp;nbsp;nbsp;nbsp;nbsp;TheRead MoreMaya Lin918 Words   |  4 PagesMaya Lin- Video Review What was the artist work about? Maya Lin is an architect and designer. Her work is very natural and simplistic, her designs are very simple but the content of her pieces of work are very deep. She is recognized for her landscape art. She expresses her work through objects she makes. This objects or architectural works she has done are all made so people all feel connected in the same way. The Vietnam Veterans Memorial in Washington Dc, are two black granite walls which areRead MoreMaya Angelou655 Words   |  3 PagesMa 2(1565443) Maya Angelou is known as the â€Å"most visible black female autobiographer/poet.† She was born, Marguerite Ann Johnson, on April fourth, 1928 in St. Louis, Missouri. Her parents divorced when she was three, and she and her brother were sent to live with their grandmother in Stamps, Arkansas. Seeing all the racial discrimination in the American south strengthened her passion for poetry, music, dance and performance. Maya writes about the struggles people face, racism and freedom. At ageRead MoreAncient Maya Essay868 Words   |  4 PagesAncient Maya Essay Matthew Pitcher Mrs Meligrana Ancient Civilizations June 8th, 2011 Pitcher1 The Ancient Mayan civilization stands out from other ancient civilizations and is great because of its outstanding achievements and developments. The Mayans are still known to this day for their exceptional architecture, medical discoveries, astronomy, and military tactics which were very successful. In this essay I will explain what the Mayans have achieved to make themselvesRead MoreThe Maya And Aztec Civilizations866 Words   |  4 PagesThe Maya and Aztec civilizations were both indigenous people that flourished in Mesoamerica. Maya s classic period dates from 250 to 900 AD, which was considered to be the peak of their civilization. They covered much of the Yucatan Peninsula in Mexico and were centered in what is now known as Guatemala. The Aztecs dominated in the post classic period from 1325 to 1521 AD, in what is now modern day Mexico. Although, the Aztec and Maya s were from different time periods they shared cultural similaritiesRead MoreMaya Collapse1895 Words   |  8 Pagesstated in â€Å"Maya civilization† (n.d), the Maya is a Mesoamerican civilization which is not only notably well-known for its written language system but also being famous for many achievements in art, architecture, mathematics and astronomy. Although the Maya civilization lasted for a long period of time from the Pre-classic period to the Post-classic period until now, its prosperous time happened during the Classic period which thereafter seen the mystical collapse of Maya empire ( Maya civilizationRead MoreMaya Empire2343 Words   |  10 PagesInstitution Professor Date Causes of the Maya Empire Decline Introduction The Maya Empire that was located in the tropical lowlands of what now stands as the Guatamela reached its climax of power and influence in the sixth century A.D. The Maya were successful in farming, hieroglyph writing, pottery, mathematics, and architecture. They left behind impressive architecture and inscriptions that are a record of their symbolic artwork. Researchers have established that the Maya cities were completely abandonedRead MoreSecrets And The Collapse Of The Maya Essay926 Words   |  4 PagesSecrets Locked in Stone Maya scholars debated for decades over the fate of the Maya. Recent evidence from an unlikely source, points a sustained drought in the 9th and 10th Centuries. Stalagmites and Stone Carvings Offer Clues on the Collapse of the Maya Civilization Circa 900 A.D., the Maya world fell apart. How could an ancient Meso American civilization flourish for hundreds of years only to fade into the forest? That riddle has perplexed scholars ever since 19th century explorers John

Developing Sociological Imagination from an Interactionist...

What is involved in developing sociological imagination from interactionist perspective? The concept of sociological imagination was developed by C. Wright Mills who defined it as an awareness of the relationship between an individual and the wider society, both today and in the past (Schaefer 5). Sociological imagination allows us to look at cultural activities and events from a larger perspective, placing them in a proper context. For example, it is considered normal in the United States to eat food while walking. Many people do so in busy streets of American cities. In Japan, however, it is considered disrespectful to food. Therefore, the Japanese people stop and eat their food while standing or sitting somewhere. A person employing sociological imagination would understand both practices within a national cultural context. Interactionist perspective in sociology, also known as symbolic interactionism, is a theoretical framework that sees society as the product of individuals interacting with one another (Macionis 13). In other words, daily interactions among people define their behavior. This theory also posits that the interactions involve symbols, gestures, facial expressions, and movements that can help us make generalizations about a larger society. Unlike other sociological perspectives, interactionist perspective looks at micro-sociology, focusing on smaller groups and activities. Based on understanding of micro activities, interactionist perspectiveShow MoreRelatedSociology : An American Sociologist C. Wright Mills1204 Words   |  5 Pagesin the sociological world. Sociology also helps us to recognize our position in the society by our â€Å"sociological imagination.† An American sociologist C. Wright Mills created the term sociological imagination to know our interdependent relationshi p between who we are as individual and the influences around us that shape our lives. By imagining how our actions might look to another person, we can have a better understanding on ourselves and our social worlds. Mills argued that the sociological imaginationRead MoreProfessional Student4171 Words   |  17 Pagescomprehend the link between their immediate, personal social settings and the remote, impersonal social world is called A. the sociological imagination. B. anthropology. C. a theory. D. verstehen. Answer: A 4. A key element in the sociological imagination is the ability to view one’s own society A. from the perspective of personal experience. B. from the perspective of cultural biases. C. as an outsider. D. as an insider. Answer: C 5. 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Thompson1 Abstract The authors use sociology of the college classroom to analyze their experiences as feminists teaching sociology courses in the ‘‘unconventional setting’’ of prison. Reflective writing was used to chronicle experiencesRead MoreRole of education in society3291 Words   |  14 Pagesattainment. This essay will Identify and evaluate key policy developments in education provision designed to bridge the gap of gender inequality in British education. The role of education in society has been among the major issues in contemporary sociological and political debate. According to Iannelli and Paterson (2005) education is a major factor that helps determine the jobs and social class positions of individuals in society. As an institution of sociology, education plays a dominant role in transmittingRead MoreThe Impact of social class on education1908 Words   |  8 Pagesthe school labelling processes just to mention a few. 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Introduction of the Corporate Law Economic Reform Program Free Essays

string(143) " order to keep strong growing rates and get more capital in the market, these houses are besides likely to prosecute in net incomes direction\." Recent corporate failures have raised concerns about the unity of accounting information provided to investors and the independency of hearers ( Cohen et al. , 2007 ) . The major corporate prostrations such as Enron, WorldCom and HIH Insurance have sparked important force per unit area on direction, hearers, managers, the accounting profession and authoritiess ‘ inadvertence function to reexamine the issue of concern moralss and hearer independency ( Ahmed et al. We will write a custom essay sample on Introduction of the Corporate Law Economic Reform Program or any similar topic only for you Order Now , 2006 ) . These failures have led to regulative reforms in Australia with the debut of the Corporate Law Economic Reform Program ( Audit Reform and Corporate Disclosure ) Act known as CLERP 9 to advance transparence, answerability and hearer independency ( Cooper A ; Deo, 2005 ) . The literature has shown that net incomes direction is consistently related to the strength of the corporate administration environment and terrible use of net incomes are by and large associated with loose administration ( Bhat et al. , 2006 ) . Reforms by CLERP 9 have changed corporate administration enforcement through compulsory independency demands for hearers, the strengthening of the uninterrupted revelation government and a alteration in enforcement powers of ASIC through the extension of the civil punishment government to persons who are ‘involved ‘ in the breach of uninterrupted revelation proviso with an increased mulct from $ 200,000 to $ 1million. The execution of increased independency demands for hearers and strengthening of the uninterrupted revelation government will motivate direction of houses to move more diligently and with due attention in regard to stockholders ‘ involvements when describing fiscal affairs ( Robinson, 2003 ) . This research reappraisal investigates the association between increasing hearer independency proposed by CLERP 9 and net incomes direction by houses in Australia. It investigates this association by analyzing two groups of listed entities, utilizing a pre/post research design covering the fiscal old ages 2003-2006. The first group of listed entities comprises of houses in the ASX 100, which are referred to in this research reappraisal as ‘compliant ‘ houses, while the 2nd group consists of houses in the ASX Small Ordinaries Index referred to as ’emerging ‘ houses. The two groups are selected as they are likely to act in different ways based on their features including size, media coverage, analyst followers, size of retentions by institutional investors and grade of examination by regulative organic structures. 1.1 Research Question The chief research inquiry is: â€Å" Has hearer independency imposed by CLERP 9 reduced net incomes direction of Australian houses? † This will be tested analyzing the difference in accumulations behaviour of Australian houses during the pre-CLERP 9 and post-CLERP 9 periods. The research inquiry is to be tested utilizing year-by-year cross-sectional and pooled arrested developments of the theoretical account developed based on anterior literature and theory. The modified Jones ( 1991 ) theoretical account steps net incomes direction as the theoretical account has a high grade of credence within the net incomes direction literature. The cross-sectional and pooled arrested development theoretical accounts are designed jointly to prove the association between net incomes direction and corporate administration enforced by CLERP 9, measured by hearer independency. The arrested development theoretical account besides controls for factors that might hold an impact in the trials such as house size, CEO alterations, Big-4 hearers and big shareholding. 1.2 Motivation In a recent commentary, Justice Owen emphasized the importance of the audit map for the capital market as a whole and the trust placed on the audit map by users of fiscal statements ( Robinson, 2003 ) . Justice Owen made several recommendations aimed at heightening the audit map, including the appropriate criterion of independency, the proviso of non-audit services and the relationship between hearers and their clients. The series of corporate dirts in 2000-2002 scoured trust in fiscal studies and in hearers. One of the aims of CLERP 9 is to beef up independency in hearers and to reconstruct unity of fiscal studies by controling net incomes direction and accounting fraud. Therefore, the extent of net incomes direction prior to CLERP 9 and the consequence of the CLERP 9 â€Å" event † on net incomes direction is an of import research subject. Therefore, the primary motive of this research study is to analyze the alteration in net incomes direction in the period taking to CLERP 9 compared to after CLERP 9. This research is motivated by the desire to understand the consequence of corporate administration enforcement by CLERP 9 on net incomes direction in Australian houses. The secondary motive is to analyze whether reforms by CLERP 9 to turn to hearer independency have weakened the hearer ‘s economic bond with the client, therefore take downing net incomes direction. There are significant sums of research in the audit literature that suggest that audit efficiencies are gained from cognition spillovers when non-audit services are jointly provided with an audit and therefore, it becomes in the best involvements of audit companies to supply both audit and non-audit services to their clients ( Solomon, 1990 ) . CLERP 9 has been introduced to command the proviso of non-audit services and heighten the unity of fiscal studies. Consequently, this research examines the relation between hearer independency and net incomes direction in the period integrating the debut of CLERP 9 in an event survey attack. 1.3 Contribution The most important part of this research is in look intoing the effects of CLERP 9 reforms on net incomes direction in â€Å" compliant † and â€Å" emerging † houses. The impact of CLERP 9 on emerging houses is of import to analyze every bit good since in a recent article published in Alan Kohler ‘s Eureka Report, fiscal instruction adviser, Scott Francis analyzed the recent public presentation of the little cap section of the Australian portion market and stated that the recent returns have been strong with the ASX Small Ordinaries Index surpassing the ASX 100 by 18 % in 2009. However, the Small Ordinaries Index underperformed the ASX 100 by 16 % in 2008 ( Francis, 2009 ) . This shows the intense competition between the two indices and besides shows the possible growing of the emerging houses in the Small Caps Index. In order to keep strong growing rates and get more capital in the market, these houses are besides likely to prosecute in net incomes direction. You read "Introduction of the Corporate Law Economic Reform Program" in category "Essay examples" Therefore, this research will supply grounds associating to the efficaciousness of CLERP 9 reforms in turn toing hearer independency and whether increasing hearer independency constrains net incomes direction in these houses. By analyzing two different groups of houses, this survey will supply an penetration into net incomes direction of these houses in the period prior to CLERP 9 and the period after CLERP 9. This survey besides contributes to bing literature on hearer independency, by supplying grounds in whether hearer independency constrains net incomes direction patterns in compliant and emerging Australian houses. The survey besides provides an penetration into whether emerging houses react otherwise to compliant houses in footings of net incomes direction, during the survey periods before and after the passage of CLERP 9. Regulatory reforms from CLERP 9 have different deductions for different types of houses and through comparing of emerging houses with ailment houses, it is expected that net incomes direction has declined significantly for some group of houses, whilst others have continued in pull offing net incomes. As mentioned earlier, both the groups have different external factors impacting them, hence it will be interesting to analyze the reaction of both groups after the passage of CLERP 9. 2.0 LITERATURE REVIEW 2.1 Net incomes Management Net incomes direction has assorted definitions normally classified as white, grey, or black. â€Å" Beneficial † ( white ) net incomes direction enhances the information value of studies by conveying private information ; the â€Å" baneful † ( black ) involves straight-out deceit and fraud ; the â€Å" impersonal † grey is use of studies within the boundaries of conformity with bright-line criterions, which could be either timeserving or efficiency enhancing ( Yonen A ; Yaari, 2007 ) . The footings â€Å" private addition † ( Schipper, 1989 ) , â€Å" mislead † ( Healy A ; Wahlen, 1999 ) stress the timeserving feature of net incomes direction and prevent the possibility that net incomes direction can heighten the information content of reported net incomes. Scott ( 1997 ) and Mulford A ; Comiskey ( 2002 ) suggest the possibility that net incomes direction can happen for signaling intents every bit good. The deduction of their definition is that reported net incomes can be enlightening for users if the direction pick of accounting policies or estimations is perceived to be believable signals of a house ‘s implicit in public presentation. To understand net incomes direction better, the difference between net incomes direction and accounting fraud needs to be distinguished. Academic literature normally defines direction discretions which fall within Generally Accepted Accounting Principles ( GAAP ) as net incomes direction, whereas the Security Exchange Commission ( SEC ) extends its analyzing standards of net incomes direction to outright deceitful accounting ( Yonen A ; Yaari, 2007 ) . The reading that net incomes direction can happen within the GAAP is consistent between academe and regulator, but whether fraud constitutes net incomes direction is equivocal in academic definitions. Brown ( 1999 ) argues that the difference between net incomes direction and deceitful coverage is frequently really narrow and ill-defined. Net incomes direction incorporates a prejudice and use of just value of reported net incomes, hence regulators frequently view it as bad and therefore be given to sort it as fraud. However, there is a clear differentiation between fraud and net incomes direction depending on the managerial purpose to deceive investors. Any presentation of reported net incomes which deviates from the just net incomes of the house but falls into the boundary of fraud can be defined as net incomes direction. 2.2 Two cardinal conditions of Earnings Management There is no substantial function for fiscal revelations within perfect and efficient markets since fiscal statements are wholly relevant and dependable and hence, directors and users of fiscal statements would hold no struggle over accounting judgements excluding the range for accounting use ( Watts A ; Zimmerman, 1979 ) . Unfortunately, in our universe of progressive and uncomplete markets, the ideal status does non ever prevail. Two types of market imperfectnesss exist as a consequence: 2.2.1 Information Asymmetry The two rules of fiscal describing – relevancy and dependability, straight reflects the function of accounting information and are aimed to decide the cardinal job of information dissymmetry. The released information is relevant information with regard to the house ‘s future chances, and is dependable information free of managerial use. Where fiscal revelation and judgements ab initio are aimed to cut down the information dissymmetry between directors and foreigners, it has been progressively argued that director ‘s ability in exerting discretion is likely to enforce costs on the users of accounting information. Dye ( 1988 ) and Trueman A ; Titman ( 1988 ) point out that the being of information dissymmetry between directors and stockholders is a necessary status for net incomes direction. Schipper ( 1989 ) besides highlights the status for net incomes direction being the continuity of asymmetric information, but she unwinds the status by reasoning that the out of use communicating can be eliminated through the enforcement of contractual agreement. From the position of a positive association between the conservativism of accounting estimations and corporate revelation, Imhoff A ; Thomas ( 1994 ) supply empirical grounds in back uping this line of statement. They conclude that houses who unwrap more information are more likely to hold conservative accounting estimations ( prosecuting in less net incomes direction ) . Richardson ( 1998 ) uses the bid-ask spread and the scattering in analysts ‘ prognosiss as a step of information dissymmetry and finds a positive association between net incomes direction and the degree of information dissymmetry. 2.2.2 Agency Costss The 2nd cardinal status for the being of net incomes direction is bureau costs which is based around the theoretical model of the bureau theory. Jensen and Meckling ( 1976 ) developed the bureau theory to explicate the link between principals ( stockholders ) and agents ( directors ) . Principals use contracts to actuate agents who would otherwise hold struggles of involvement with principals. Although the primary map of catching is designed to aline the inducements between principals and agents ( Deegan, 1996 ) , the rawness and the rigidnesss in binding of contracts create bureau concerns, which lead to use of the coverage procedure. Watts A ; Zimmerman ( 1986 ) suggest that the ex-post managerial discretions are made to increase compensation or to avoid debt compact misdemeanors. They use Positive Accounting Theory to exemplify how directors choose accounting methods to accomplish coveted accounting Numberss and therefore act upon the house ‘s contractual agreements. In fact, grounds of net incomes direction pattern to bring forth higher direction compensation suggest that the design of contracts to aline the inducements of the agents with those of the principal might non be the optimum solution in extenuating bureau costs ( Hart A ; Holmstrom, 1987 ) . Watts A ; Zimmerman ( 1978 ) take the position that directors ‘ pick of accounting methods is to maximise their ain public-service corporation, where the public-service corporation is a map of the direction compensation and the house ‘s stock monetary value. Therefore, undertaking which is designed to work out bureau struggles non merely raise room for managerial self-interested behaviour, but besides imposes extra costs on stockholders if it is used in advancing directors ‘ ego involvements instead than that of stockholders. 2.3 Two viing positions of Net incomes Management Net incomes direction arises from information dissymmetry job and bureau struggles that occur when equity ownership is separated from the daily operation of the corporation and directors have a comparative information advantage over stockholders. On one manus, these market imperfectnesss create an environment for directors to prosecute in accounting discretion to advance their opportunism at the disbursal of stockholders. On the other manus, they besides create an chance for directors to utilize accounting discretion to pass on their company ‘s performance-related information in an appropriate mode with investors ( Trueman A ; Titman, 1988 ; Dye, 1988 ; Schipper, 1989 ) . Net incomes direction literature reflects these two viing positions as timeserving behaviour and signaling mechanism. 2.3.1 Opportunist behaviour The position of timeserving behaviour takes the position that directors use information dissymmetry between foreigners and insiders to maximise their public-service corporation in covering with compensation, debt contracts and ordinances. Investors are thereby misled by the undependable information reported. Watts A ; Zimmerman ( 1978 ) used self-interest attack in explicating directors ‘ discretional behaviour over reported net incomes to act upon contractual results. Opportunist net incomes direction illustrates directors ‘ desire to impact wealth transportation between related undertaking parties and themselves. Positive Accounting Theory states that proprietors expect directors to exert discretion towards their personal addition and take this into consideration when they offer directors with compensation programs. The value of direction compensation contracts drive up managerial outlook and therefore increases the degree of discretions itself. Scott ( 1997 ) refers to this as â€Å" unexpected † managerial discretion which consequences in a net loss in the aggregative stockholder wealth. In a catching relationship, nevertheless, directors are more risk averse compared with other undertaking parties. Capable to restraints of these contracts, they will try to maximise their personal wealth. Dye ( 1988 ) and Fudenberg A ; Tirole ( 1995 ) demonstrate that risk-averse directors without entree to capital markets will hold an inducement to prosecute in net incomes direction. 2.3.2 Signing mechanism The advocates of the signaling perspective argue that directors manage net incomes to convey their inside information about houses ‘ chances and therefore it serves as a signaling mechanism. Directors may be able to impact the stock monetary value by prosecuting in net incomes direction making a smooth and turning net incomes threading over clip. As such, net incomes direction can be a signal mechanism through which inside information about the house can be communicated from the direction to investors. A figure of surveies have modeled some signifier of information dissymmetry and depicted net incomes direction as rational equilibrium behaviour ( Hunt et al. , 1997 ; Bartov et al. , 2002 ; Lev, 2003 ; Dye, 1988 ) . These surveies document signaling grounds of net incomes direction to ease efficient communicating between directors and information users to better the value relevancy of fiscal coverage and enhance investors ‘ ability in foretelling house ‘s public pres entation. Further, the signaling position besides implies that net incomes direction is sometimes demanded by stockholders. Beidleman ( 1973 ) and Dye ( 1988 ) argue that stockholders will demand for net incomes direction for two grounds. First, directors can cut down the cost of capital through a drum sander, more predictable income watercourse. Second, Dye ( 1988 ) states that a more stable income watercourse influences prospective investors ‘ perceptual experience of house value. Since current stockholders will sell their portions to the following coevals of future stockholders, directors will move on behalf of the current stockholders and have an inducement to pull off net incomes to maximise the merchandising monetary value received by the current stockholders ( Easton A ; Zmijewski, 1989 ; Chaney A ; Lewis, 1995 ) . 2.4 Motivations to prosecute in Earnings Management 2.4.1 Contracting Incentives Fiscal information and studies of a house drama an of import function in set uping and supervising contracts between a house and its stakeholders ( Sweeney, 1994 ) . Debt suppliers and creditors of houses commonly include contracts that are linked with fiscal statement information in order to protect their involvements. Watts and Zimmerman ( 1978 ) indicate that such contracts encourage houses to pull strings net incomes for the fiscal statements to look attractive to creditors. Under footings of the debt contract houses are required to show their fiscal information in a mode that is consistent with the understanding in order to avoid punishments under the contract. DeFond A ; Jiambalvo ( 1994 ) found grounds that houses apply income-increasing accumulations as a agency of avoiding the effects of debt contract misdemeanor. There are besides other contractual inducements for directors to pull off net incomes, for illustration in a direction buyout contract ; directors have an inducement to understate net incomes in an effort to get a house at a lower monetary value ( Wu, 1997 ) . In coup d’etat or amalgamation contractual scenes, Easterwood ( 1997 ) found grounds that mark companies of hostile coup d’etats attempt to blow up net incomes in the period prior to a hostile coup d’etat effort to deter their stockholders from back uping the coup d’etat. 2.4.2 Capital Market Expectations Capital markets use fiscal information to put security monetary values. Investors use fiscal information to make up one’s mind whether to purchase, sell or keep securities. Market efficiency is based upon the information flow to capital markets. When the information is wrong, it may non be possible for the markets to value securities right ( Xie et al. 2003 ) . To this extent, net incomes direction obscures existent public presentation and lessens the ability of stockholders to do informed determinations. Prior surveies have examined the inducements of directors to pull strings net incomes in an effort to act upon assorted capital market participants. Dechow et Al. ( 1996 ) and Teoh et Al. ( 1998 ) supply grounds that directors inflate net incomes prior to seasoned equity offerings. These findings are consistent with the contention that directors seek to pull off pre-issue net incomes in an effort to better investors ‘ outlooks about future public presentation ( Xie et a l. 2003 ) . Directors besides engage in net incomes direction to run into and crush net incomes benchmark as failure to run into net incomes benchmarks are believed to increase uncertainness about the company ‘s future chances and a perceptual experience among foreigners that there are deep, antecedently unknown jobs at the company ( Graham, 2006 ) . The importance of these concerns increases with the grade of net incomes counsel that the company provides. There is a common belief that everyone plays the net incomes game, losing net incomes marks indicate that a company has no available slack to present net incomes. Therefore, the market assumes that losing the mark means the company is potentially confronting serious jobs and must hold already used up its ‘cushions ‘ ( Graham, 2006 ) . 2.5 Net incomes Management and CEO Compensation Incentives An built-in constituent of houses ‘ net incomes direction is the proportion of CEO compensation that is attached to company ‘s stocks and options. Bergstresser A ; Philippon ( 2006 ) supply grounds that net incomes direction is more marked at houses where CEO ‘s entire compensation is closely tied with houses ‘ stocks and options. Evidence from Bergstresser et Al. ( 2006 ) indicate that companies with more incentivized CEOs have higher degrees of net incomes direction as these CEOs appear to be more aggressive in their usage of discretional constituents of net incomes to impact their house ‘s reported public presentation. They argue that CEOs whose entire compensation consists chiefly of stock and options have an inducement to pull strings net incomes so that the house can describe a net income and supply favourable intelligence to investors ; taking to an addition in portion monetary value. Tiing CEO compensation to company stocks may hold the conseque nce of promoting CEOs to work their discretion in describing net incomes, with an oculus to pull strings the portion monetary value of the company ( Bergstresser A ; Philippon, 2006 ) . 2.6 Net incomes Management and Corporate Governance Leuz et Al. ( 2003 ) found empirical grounds that net incomes direction occurs less often where outside investors are provided more rigorous protection by the state ‘s legal administration system and occurs more often in states where the legal administration system provided to outsider investors is weak. Leuz et Al. ( 2003 ) argues that the presence of a administration environment that provides strong, well-enforced protection of the rights of corporate foreigners serves to restrict the ability of inside direction to get private control benefits through net incomes direction. Wells ( 2002 ) provides empirical support that incoming CEO ‘s take an ‘earnings bath ‘ in the twelvemonth of the CEO alteration. DeAngelo ( 1988 ) provides direct grounds of net incomes direction subsequent to CEO alteration and notes that the period subsequent to CEO alteration, incoming directors take an ‘earnings bath ‘ from both non-cash write-downs and unexpected accumulations and that they attribute this to the former direction. Incoming CEO ‘s may hold considerable inducements to minimise reported income in the initial phase of their term of office. This arises as a effect of accounting income being mostly irrelevant to managerial public assistance during the first fiscal twelvemonth of term of office, which is typically a partial twelvemonth ( Wells, 2002 ) . Incoming CEO ‘s are non held responsible for past public presentation and may explicitly impute past public presentation to prior direction. Consequently, income may be deferred to subsequent periods when it will more probably have a positive impact on compensation either through expressed contracts or inexplicit wagess. In this scene, the entrance CEO is typically associated with past determinations, inexplicit unfavorable judgment of which may be embodied in downwards net incomes direction ( Wells, 2002 ) . Furthermore, the surpassing CEO is unable to restrain such behaviour and this high spots an of import corporate administration issue ( Godfrey et al. , 2003 ) . Klein ( 2002 ) found grounds of a negative relation between board independency and unnatural accumulations, proposing that decrease in board independency is accompanied by big addition in unnatural accumulations. In add-on to Klein ( 2002 ) , Xie et Al. ( 2003 ) found consequences that suggest lower degrees of net incomes direction is associated with greater independency on the board of managers. These findings indicate that independency of the board of managers is of import in restraining the leaning of directors to prosecute in net incomes direction. Based on the literature on board independency, this research will use a variable to command for board independency in the cross-sectional and pooled arrested development theoretical accounts. 2.7 Net incomes Management and Auditor Independence Hearers are appointed as an independent party to supply an sentiment as to whether fiscal statements supply a ‘true and just ‘ position ( Chapple A ; Koh, 2007 ) . Independence is by and large understood to mention to a mental province of objectiveness, deficiency of prejudice, personal involvement, prior committedness to an involvement, or susceptibleness to undue influence or force per unit area. Independence is important in the auditing profession and this has come into light through the failures of Enron and WorldCom. Without independency, investors and stakeholder will lose assurance in audit studies, the hearer ‘s sentiment will non be believable, and besides fiscal statements will lose credibleness, therefore lead to future corporate failures as was the instance of Enron ( Chapple A ; Koh, 2007 ) . It is in direction ‘s involvements to hold an external audit to cut down bureau costs: deficiency of a believable independent audit will increase cost of c apital, restrict entree to capital and enforce terrible limitations on direction ‘s actions. The demand of hearer independency is critical and any damage or perceived damage of independency will increase bureau costs ( Firth, 1997 ) . Literature has expressed concerns about the effects of hearers ‘ proviso of non-audit services on the independency of hearers. For illustration, Beeler A ; Hunton ( 2001 ) reference that the proviso of non audit services arguably strengthens the hearer ‘s economic bond with the client, thereby cut downing hearer independency and increases hearer ‘s inducement to assent to client force per unit area, including force per unit area to let net incomes direction. Firth ( 1997 ) suggests that any existent or sensed damage of hearer independency will earnestly impact the credibleness of fiscal statements. One possible signal of hearer independency jobs is the grade to which the audit house is economically bonded to a client. Supplying joint services leads the hearer to agree with direction ‘s positions on questionable accounting patterns because challenging these patterns will probably ensue in the loss of non merely the audit fee, but besides consultancy assignments ( Firth, 1997 ) . DeFond et Al. ( 2002 ) besides suggests that although hearers have market-based inducements to stay independent, auditor independency may be threatened when hearers provide non audit services to their clients. Increased economic bonding between hearer and its client ensuing from non audit services induces the hearer to decide differences in the client ‘s favor in order to keep tenure ( Simunic, 1984 ) . The issue of mensurating the economic bond and economic importance of a client to the hearer is further addressed by Ashbaugh et Al. ( 2003 ) , who argue that the amount of audit and non audit fees, i.e. entire fees best captures the expressed economic bond between hearer and client. Motivated by turning public and regulative concerns over possible hurtful effects of non-audit services, new ordinances control the proviso of non-audit services and heighten the unity of fiscal studies ( Ferguson et al. , 2004 ) . A host of empirical surveies have examined the relationship between hearer independency, non-audit services and net incomes direction. Empirical grounds from Frankel et Al. ( 2002 ) indicated that non audit fees are positively related with the magnitude of discretional accumulations, while audit fees are negatively associated with net incomes direction. Ferguson et Al. ( 2004 ) examined the association between non audit services and net incomes direction activity and found grounds coverage net incomes direction to be significantly and positively related to non audit services. This is consistent with their statement that higher degree of economic bonding between hearer and client ensuing from non audit services may cut down hearers ‘ willingness to re strain net incomes direction activity. 2.8 Corporate Law Economic Reform Program ( CLERP 9 ) Severe use and fraud have been associated with loose corporate administration, deficiency of hearer independency and executive inducements construction conducive to timeserving behaviour ( Leuz et al. , 2003 ) . Recent planetary corporate failures have sparked important force per unit area on direction, hearers, managers, the accounting profession and authoritiess ‘ inadvertence function to reexamine the issue of concern moralss and hearer independency. These corporate failures have led to formal authorities questions to look into the grounds behind these unexpected corporate prostrations. In Australia, the failure of HIH Insurance led to the enquiry into the fortunes environing its failure. The study of the HIH Royal Commission indentified a figure of possible breaches of the Crimes Act and the Corporations Act. It was besides found that there was grounds on deficiency of audit inadvertence, transparence, answerability and hearer independency ( Robinson, 2003 ) . The study ‘s policy recommendations on corporate administration, fiscal coverage and confidence were considered into the CLERP 9 amendments for the Corporations Act as these amendments changed the manner the jurisprudence recognized the direction and administration of companies and corporate groups. On 25th June 2004, the CLERP 9 Bill gained blessing of Parliament and came into consequence as the Corporate Law Economic Reform Program ( Audit Reform and Corporate Disclosure ) Act 2004 ( Cth ) on 1 July, 2004. The CLERP 9 Act contains a figure of agendas covering with: audit reform, fiscal coverage, wage of managers and executives, uninterrupted revelation, hearer independency, write offing of options, conformity controls and encouragement of greater stockholder engagement at meetings ( Robinson, 2003 ) . Since the debut of CLERP 9, scrutinizing criterions have become statutory and non simply professional duties. CLERP 9 embodies recommendations associating to auditor independency and audit quality. One of the most of import alterations CLERP 9 made was set uping the Auditing and Assurance Standards Board ( AUASB ) as a statutory organic structure and making the Financial Reporting Council ( FRC ) which is responsible for the inadvertence of the AUASB and for O.K.ing its strategic determinations. Under the CLERP 9 Act, hearers are now required to supply to their clients a written declaration that the hearer has complied with the hearer independency demands and any applicable codifications of professional behavior ( Chapple A ; Koh, 2007 ) . Section 324CA of CLERP 9 enforces rigorous demands of the proviso of both audit and non audit services to the same client and house every bit good as to the fortunes that will amount to a struggle of involvement. The new liability model is designed to promote a ‘culture of conformity ‘ by doing it an offense to transgress the independency demands and puting liability on all members of an audit house and all managers of audit companies. The debut of CLERP 9 has brought many reforms in a manner of beef uping the independency of hearers so investors, stakeholders and the populace in general can hold higher assurance in audit studies and in the long-term public presentation of companies. Enhancing auditor independency came through the signifier of subjecting Australian public companies and their external hearers to detailed commissariats regulating hearer independency, and beef uping bing hearer independency through ( Robinson, 2003 ; Federal Treasury, 2003 ; Cooper A ; Deo, 2005 ) : A new general criterion of hearer independency Auditor rotary motion Restrictions on employment relationships between hearers and audit clients A compulsory chilling off period before members of an audit house can go a manager or officer of the audit client Self-review menace was addressed by CLERP 9 necessitating two things: compulsory revelation of fees paid for non audit services in certain classs and a statement from the audit commission to be included in the one-year study that it is satisfied that the proviso of those services is compatible with auditor independency. In drumhead, the literature reappraisal presented a treatment on net incomes direction and assorted topics in relation to net incomes direction such as hearer independency, CEO compensation inducements, corporate administration, etc. From net incomes direction literature, it is apparent that capital market outlooks and undertaking inducements are the few of the chief motives driving directors to prosecute in net incomes direction. 3.0 HYPOTHESIS DEVELOPMENT 3.1 Net incomes Management 2003-2006 The debut of increased regulative reforms to heighten the corporate administration environment will supply strong, well-enforced protection of the rights of corporate foreigners and will function to restrict the ability of inside direction to get private control benefits through net incomes direction ( Wright et al. , 2006 ) . Anterior literature has suggested that the deficiency of corporate administration enforcement could enable directors to more easy run into analysts ‘ prognosiss, misuse the company ‘s financess and run into net incomes marks through net incomes use ( Hope, 2003 ) . Australian houses are expected to follow CLERP 9 reforms rather exhaustively as any non-compliance will ensue in important punishments and bad image. Conformity with demands of hearer independency introduced by CLERP 9 will cut down the economic bond companies have with their hearers, and this is expected to ensue in hearers supplying nonsubjective audit studies free from any prejudice an d direction force per unit area. With the debut of CLERP 9, it is interesting to analyze the consequence CLERP 9 has on the net incomes direction patterns of these houses. It is expected that the compliant group of houses ( ASX 100 ) will react faster to CLERP 9 reforms than emerging houses ( Small Ordinaries Index ) . First, it is expected that compliant houses have an equal internal administration construction in topographic point to better transparence and to guarantee the market that these houses are one measure in front of the remainder of the houses. Compliant houses would hold prepared for CLERP 9 prior to its debut, and therefore the consequence of CLERP 9 as an ‘event ‘ in these houses will be less as compared to the consequence on emerging houses. Compliant houses are besides under heavy examination from regulators than the rising houses, while the houses in the compliant group are all audited by the Big-4 hearers. Therefore, it is expected that CLERP 9 will hold an consequence on net incomes d irection in the station CLERP 9 period for the compliant houses. Compliant houses have less to derive and are risk averse, whilst rising houses would desire to turn and raise capital and in order to make so, direction will be inclined to ‘play ‘ with accounting Numberss to pull possible investors. It is expected that CLERP 9 will heighten transparence, better hearer independency and these are expected to act upon the net incomes direction patterns of emerging houses. As indicated by Wright et Al. ( 2006 ) , the debut of increased regulative reforms to heighten the corporate administration environment will function to restrict the ability of inside direction to get private control benefits through net incomes direction. These treatments hence lead to the undermentioned hypotheses: Hypothesis 1: Net incomes direction is expected to diminish in the station CLERP 9 period for the ASX 100 â€Å" compliant † houses. Hypothesis 2: Net incomes direction is expected to diminish in the station CLERP 9 period for the ASX Small Ordinaries Index â€Å" emerging † houses. Hypothesis 3: Net incomes direction is expected to be low ( high ) when hearer independency is high ( low ) in ASX 100 â€Å" compliant † houses and ASX Small Ordinaries Index â€Å" emerging † houses. Hypothesis 4: Net incomes direction is positively associated with CEO equity based compensation. 4.0 RESEARCH METHOD 4.1 Sample Description The sample for this survey consists of Australian houses selected indiscriminately from the ASX 100 and ASX Small Ordinaries Index. This will guarantee that the sample from each index will be relative to the population. The survey period is between 2003 to 2006, covering four fiscal old ages. The houses will be classified in the two classs ( ASX 100 and ASX Small Ordinaries Index ) for each twelvemonth of the survey identified from the Standard A ; Poor peoples ( S A ; P ) database and information from the Australian Stock Exchange ( ASX ) . The first group of houses includes the ASX 100 index, which are the 100 largest stocks listed on the ASX and 50 houses will be picked indiscriminately for this sample. The index is float-adjusted, with securities that are extremely liquid and hence, institutionally investable ( Standard A ; Poor peoples, 2007 ) . The 2nd group includes 50 houses besides picked indiscriminately based on the ASX Small Ordinaries which is used as an institutional benchmark for little cap Australian equity portfolios ( Standard A ; Poor peoples, 2007 ) . The sample from both the indices will be grouped together in a pooled arrested development and a silent person variable for emerging and compliant houses will be used to find size. Datas for the independent and control variables will besides be obtained from the undermentioned beginnings: Connect 4 on-line database, Fin Analysis on-line database and through company one-year studies. The sample choice standards are as follows: ( i ) houses continuously listed on their relevant constitutional list and ( two ) all necessary informations available for the research method adopted in this survey. 4.2 Measuring Net incomes Management Anterior net incomes direction surveies have developed several trials for observing net incomes direction. Healy ( 1985 ) tested net incomes direction through the appraisal of accounting policy alterations, McNichols A ; Wilson ( 1988 ) tested the discretional accrual constituent of a individual history and Jones ( 1991 ) used the estimation of the discretional constituent of entire accumulations to prove for net incomes direction. Net incomes direction can be achieved by assorted agencies such as the usage of accumulations and alterations in accounting methods. However, net incomes direction through the use of accumulations is believed to be the favoured instrument because accumulations have no direct hard currency flow effects and hence, are less likely to be ‘undone ‘ by the market ( Trueman A ; Titman, 1988 ) . Accrual net incomes is considered superior to hard currency flows because it overcomes the timing and mismatching jobs built-in in mensurating hard currency flows ( Dechow, 1995 ) . In add-on, accumulations let directors pass on their private, inside information and hence, better the ability of net incomes to reflect the implicit in economic value. At the same clip, directors could mistreat the flexibleness permitted by GAAP by prosecuting in aggressive coverage of accumulations that can sabotage the informativeness of reported net incomes. The usual starting point for the measuring of net incomes direction is entire accumulations ( Dechow et al. , 1995 ) . Entire accumulations are so divided into a discretional ( DA ) and non-discretionary ( NA ) constituent. The discretional part of entire accumulations is used in this survey to mensurate net incomes direction, as the premise underlying the net incomes direction model is that the higher the composing of discretional accumulations within entire accumulations, the higher the likeliness that a house is utilizing discretion within accrual accounting to prosecute in net incomes direction. Non-discretionary accumulations are portion of entire accumulations caused by house ‘s gross revenues growing and are ‘viewed as independent of managerial control ‘ or beyond the control of the CEO ( Frankel et al. , 2002 ) . The part of entire accumulations unexplained by normal operating activities is labeled discretional accumulations. A time-series attack based on the Jones ( 1991 ) theoretical account allows a comparing of net incomes direction activities of houses. The Jones ( 1991 ) theoretical account regresses entire accumulations against the alteration in grosss and the degree of gross fixed assets. Entire accumulations include alterations in working capital histories that, in portion, depend on alterations in gross. Changes in gross are used to command for the economic environment and the gross belongings, works and equipment ( PPE ) is included to command for the non-discretionary depreciation disbursals. However, factors such as growing and rising prices can do the time-series of a house ‘s economic variables to expose unequal discrepancies over clip. To get the better of this job the Jones ( 1991 ) theoretical account uses lagged assets to scale the independent and dependent variables to cut down the possibility of heteroscedasticity ( Lim et al. , 1999 ) . Dechow et Al. ( 1995 ) refined the Jones ( 1991 ) theoretical account by deducting the alteration in receivables from the alteration in grosss and hence, the invention leads to the modified Jones ( 1991 ) theoretical account as demonstrated in equation 1.0 below. The modified Jones ( 1991 ) theoretical account provides the most powerful trial for observing net incomes direction as it corrects the inclination of the Jones theoretical account to mensurate discretional accumulations with mistake when discretion is applied over grosss ( Dechow et al, 1995 ) . While this attack is capable to unfavorable judgment from Kothari et Al. ( 2005 ) , which has suggested that public presentation matched discretional accrual steps enhances the dependability of illations from net incomes direction when the hypothesis being tested does non connote that net incomes direction will change with steadfast public presentation. Kothari et Al. ( 2005 ) suggest that public presentation fiting on return on assets controls for the consequence of public presentation on measured discretional accumulations. However, due to the prevalence of the modified Jones ( 1991 ) theoretical account in net incomes direction literature, gauging discretional accumulations is to be conducted utilizing the modified Jones ( 1991 ) theoretical account. Non-discretionary Accumulations: Modified Jones ( 1991 ) Model Original Jones ( 1991 ) Model Where: = entire non-discretionary accumulations in twelvemonth T for house I = entire accumulations in twelvemonth T for house I = entire assets in twelvemonth t-1 for house I = grosss in twelvemonth T less grosss in twelvemonth t-1 for house I = gross belongings, works A ; equipment in twelvemonth T for house I The traditional method of calculating entire accumulations ( TA ) follows the lines of anterior research such as Healy ( 1985 ) , Jones ( 1991 ) and Dechow et Al. ( 1995 ) which have used the balance sheet attack to cipher TA. Hribar and Collins ( 2002 ) argue that utilizing the balance sheet attack to calculate entire accumulations is inferior in certain fortunes to a hard currency flow statement based attack. Austin and Bradbury ( 1995 ) concluded from their survey that anterior research which compares different hard currency flow steps is likely to be robust against mistakes contained in the hard currency flow estimations. They besides mention that it is preferred to utilize reported hard currency flows from operations instead than gauging hard currency flows from alterations in balance sheet histories and income statement points since these contain significant mistakes and therefore is a lacking placeholder of reported hard currency flow from operations ( Austin A ; Bradbury, 19 95 ) . Hribar and Collins ( 2002 ) point out that utilizing successive-year balance sheet variables to mensurate net incomes direction creates possible jobs around ‘non-articulation ‘ day of the months such as amalgamations and acquisitions. Due to the unfavorable judgments of the balance sheet attack, the hard currency flow attack is to be used for mensurating entire accumulations ( TA ) . Entire Accumulations Where: = Net income in twelvemonth T = Cash flow from operations in twelvemonth T = lagged entire assets Discretionary Accumulations The usage of natural accrual sums as a placeholder for net incomes direction is a simple method to measure net incomes quality because houses can hold high accumulations for legitimate concern grounds, such as gross revenues growing. A more complicated placeholder can be created by trying to categorise entire accumulations into non-discretionary and discretional accumulations. The non-discretionary constituent reflects concern conditions such as growing and he length of the operating rhythm that of course create and destroy accumulations, while the discretional constituent identifies the direction picks. Therefore, the consequence of drawing discretional accrual sums from the entire accrual sum is a metric that to a certain extent reflects accumulations that are due to direction ‘s pick since they are non obligatory disbursals that are yet to be realized and recorded in the histories. Hence, discretional accumulations is a better placeholder for net incomes direction. 5.0 Decision The research reappraisal aims to look into whether the debut of the Corporate Law Economic Reform Program Act ( CLERP 9 ) has influenced net incomes direction patterns of Australian listed companies in the ASX 100 and ASX Small Ordinaries sample groups. The research inquiries are to be examined beyond the context of anterior literature mentioned in the reappraisal. As with all accruals-based testing of net incomes direction, the ability to How to cite Introduction of the Corporate Law Economic Reform Program, Essay examples