Critical Thinking and Ethics Essay

In a discussion of ethics, critical thinking may not be the first term that comes to mind, unless opposing. However in some ways, critical thinking can the foundation, from which an ethical decision is made. This paper will explain the relationship between critical thinking and ethics, how the principles and rules of critical thinking are applicable to ethical reasoning, and if ethical decisions would be necessary if everyone followed the rules of logic. Is Critical Thinking Applicable to Ethical Reasoning? Ethical reasoning is based on the principles of what is considered right and wrong. Critical thinking on the other hand, warrants more of a thought process, causing one to analyze the situation from all aspects before reaching a conclusion. â€Å"By taking the path of a critical thinker, a person develops a mental process of evaluation which helps to determine their ethical standards† (Mnmelillo, 2010, Professional Growth, para. 1). Logic versus Ethical Reasoning The purpose of logic is to find that which is true. Logical thinking processes are often times used in ethics to answer important moral questions. However logic does not guarantee a morally correct outcome. For example, the legalization of marijuana is constantly under debate. Using the rules of logic, one would be able to see both the pros and cons of this argument. Although drug use is considered unethical by US government standards, even for medicinal use, the state of California, has legalized medicinal marijuana. In this particular case or should I say state, the rules of logic did not produce a morally correct result. Conclusion Ethical reasoning and critical thinking are derived from different  processes, although there are circumstances in which one is necessary to reach a decision regarding the other. As with critical thinking, there are no hard rules determining the use of ethics, considering what may be unethical in some cultures, for example, may prove to be ethical in another. Ultimately the use of ethics versus critical thinking or logic is determined by the situation at hand. Reference: Mnmelillo, N. (2010). What is the relationship between critical thinking and ethics? Triad Search Marketing: Professional Growth. Retrieved from http://www.triadsearchmarketing.com/what-is-the-relationship-between-critical-thinking-and-ethics/

Major Depression Disorder Essay

The scenario I have chosen to write about is the case of Sylvia. She is a patient of major depression disorder. Symptoms clearly show she is struggling with major depression disorder. The five dominant theories of psychology to further understand the case of Sylvia are the cognitive theory, behavioral theory, humanistic theory, personality theory and social dominance theory. Cognitive theory of psychology is focus on internal state such as problem solving, motivation, thinking, decision making and attention. It is a key component underlying the way people think and behave. Cognitive theory is basically concerned with the development of a person’s thoughts processes. It also counts for how these thought processes influence and how a person understand and interact with the world. The technique recommend by the cognitive theory to help Sylvia. In cognitive behavioral therapy is a psychotherapeutic approach which addresses dysfunctional and emotions maladaptive behaviors and cognitive processes. CBT is an effective treatment for various conditions like anxiety, mood, personality, eating, and substances abuse which Sylvia is and has struggled with all this. So this will be very helpful for her. Behavioral theory of learning which is based upon the idea that all behaviors are acquired through conditioning. Behavioral techniques are widely used in therapeutic settings to help clients in learning new skills and behavior. It is bases on the belief that behavior can be measured, changed and trained. The technique recommended by behaviorism theory to help Sylvia. Applied behavior analysis technique is recommended by behaviorism therapy in the case of major depression. And in the case of Sylvia, this technique will be very helpful. Psychodynamic is also known as dynamic psychology. It is an approach of psychology, which emphasizes on the systematic study of psychological forces. The treatment of  psychological distress psychodynamic therapy to be less sensitive than psychoanalysis treatment. Psychodynamic therapies are basically depending upon theory of inner conflict. Psychodynamic therapy is designed to help patients explore the full range of their emotions, including feeling they may not be aware of. The technique recommended by psychodynamic theory to help Sylvia is Psychoanalytic and interpersonal technique, it is recommended by psychodynamic theory to help people like Sylvia who is struggled with major depression. This approach focuses on the interrelationship of the mind and mental, motivational or emotional forces within the mind that interact to shape a personality. Humanistic psychology is focused on understanding the unconscious motivations that drive behavior, and study the condition while processes that produce behavior. Humanistic psychology emerged during the 1950’s as a reaction to psycho analysis and behaviorism humanistic psychology was instead focused on each individual’s potential and stressed the importance of growth and self – actualization. The technique recommended by humanistic theory to help Sylvia is existential technique. If is recommended by humanistic theory to help a person who is in major depression disorder. Personality psychology looks at the patterns of thoughts and feelings that make a person unique. Some of the best known theories of psychology are devoted to the subject of personality. Almost every day we describe and access the personality of the people around us. Whether we realize it or not. These daily musings on how and why people behave as they do are similar to what personality psychologist do. Social dominance theory identifies several mechanisms by which hierarchies are developed and maintained. These theories focused on helping us understand and explain social behavior. Social theories are generally centered on specific social phenomenon including prosaically, Social behavior. These are all the theories of psychology that Sylvia could use for this scenario. All the different techniques that she can do. Each different technique helps to deal with her major depression disorder. They each help individually, but when applied together better results could be obtained. Reference Myers, D. (2014). Exploring psychology (9th Ed.). New York: NY: Worth Publishers.

Week 5 Psy/322

Case Study Analysis Psy/322 March 11, 2011 Japan to Apple’s iPhone The Apple iPhone did not make as big of a splash in Japan as Apple’s had hoped it would. The projection to sell a million iPhones in Japan unraveled and sales were very low. People of Japan were already aware of cell phones with a 3G network, which the faster network had been around for several years, much longer than the United States. A few problems that Japan had with the Apple iPhone were the touch screens, the iPhone were not as advanced as what they could already get in Japan, and the iPhone could not purchase train passes as the other phones did. Emoji†, clip art that is used to create a more interesting and creative e-mail was also an application that Apple could not offer. Citizens of Japan have high complex standards and when it comes to technology Japan is known for being well head of its time. The iPhone just did not stand up to what Japan already had in their back pocket. Cell phone us ers in Japan are infatuated with photos, video games, and high light features. Apple iPhone could not compete with what a market already established in Japan from other cell phone makers. The competitors had already offered Japan everything they needed.Japan made a mistake in trying to market the Apple iPhone in Japan at the time they did. In research they should have seen that they didn’t have everything that the Japanese wanted in a cell phone. Knowing Japan already had a 3G network that should have told Apple it would not be a new technology for the country. The people of this culture wanted everything at their fingertips and Apple didn’t have all they wanted. The Apple computers did well in Japan due to the technology is in the running with the other computers and they are similar.IPod also did well in Japan markets and that was due to the product being affordable, slim, and available to the people of Japan. Pricing and the cells phone plans in Japan are very compe titive and equates to low monthly expense for cell phones. The iPhones average monthly start around $60 dollars, which is much higher than competitors. The United States pays on average around $80 to $100 dollars for an iPhone plan. Many people of Japan also purchase their phones to use and the iPhone does not come cheap hen purchased. A large number of Japanese live with only a cell phone, so that cell phone needs to be everything in one. People of Japan do not want to use their cell phone as a personal computer and the problem with the iPhone is Apple relies on computers for syncing media and involving updates of software from the computer. ITunes is an example of an application that would require updates from a computer over time. Cell phones in Japan are about fashion as well and who has the most state of the art phone.Japan is so advanced with their technology that something new is coming out every day, so carrying around a cell phone that has been out for a year is unacceptabl e. The technology is consistently getting better and better, which the United States fall further behind. Apple did not grasp the cross-cultural concept and get an international perspective prior to marketing the iPhone. Apple also should have researched the marketing mix for the country. Price would be to high for the iPhone due to what Japan already had in service.The product did not have everything the consumer wanted on the product that would entice the consumer to purchase it. The place Apple wanted to move the product, which was Japan, already had the 3G network in place. Apple really did not have anything to promote that was different in the markets of Japan. The sheer functionality of the iPhone just did not make sense out of Japan. Mickey and Shark Fin Soup Shark fin soup is a popular soup item of Chinese culture that is usually served at big events such as weddings and banquets.This soup is considered a luxury item and the soup may cost up to $150 dollars a bowl. The soup originally came from the Ming Dynasty many years ago and is an important part of the celebrations. When Disney wanted to serve the soup to the guests that were going to have their wedding at Disney Hong Kong, advocates came out to protest serving the soup. There is an international concern over the sustainability and welfare of the sharks that will be used to make the delicacy. There is also concern that because the cost for the soup is so high there will be a higher demand for the soup.If the soup is in such high demand them the environmentalist have concern the sharks will become endangered. The Disney Company was trying to reach out to the people of Hong Kong and show an appreciation for the culture of their country. Disney wanted to offer the same items that other companies could offer to the people of Hong Kong. If Disney does not offer the Shark Fin Soup then the customers approaching Disney for their wedding will go somewhere else to receive the goods and service they want fo r the celebration.With the guidelines that Disney would have strict guidelines being such a large corporation, they would not be smuggling in sharks to create the soup. Disney chose not to serve the shark fin soup due to the pressure of the environmentalists. Much of the pressure came from the hits to Disney’s corporate image. Disney did careful research and determined that the environmentalists had a valid point that linking shark declines in the largest shark species.Disney felt the company needed to have the right balance with the cultural of Hong Kong and the conservation of the sharks. If I were a member of the Disney management team at the Walt Disney Company, I would not have the Shark fin soup on the menu for wedding in Hong Kong. Disney would lose more money by people boycotting the company then they would if Disney did not serve the soup. It is important for companies to research and know what they are dealing with before they make decisions that will affect a large group of people or animals as in this case.There is so much more money to be made through ticket sales and all the other foods that are offered by Disney. The damage that might have been done by making the decision to keep the shark fin soup on the menu would truly out way the damage if they took the soup off the menu. References: Keith Bradsher, â€Å"Chinese Delicacy Has Disney in Turbulent Waters, †New York Times, June 17, 2009, C1, C7 Yukari Iwatani Kane, â€Å"Apple’s Latest iPhone Sees Slow Japan Sales, â€Å"Wall Street Journal, September 15, 2008, B3

What Types Of Grouping And Peer Interactions Generate Authentic Essay

What Types Of Grouping And Peer Interactions Generate Authentic Student Engagement And Positive Learning Outcomes - Essay Example The study also observed that peer directed small groups can help in effective grouping techniques that eliminates the discrimination and improve positive learning outcomes. Most activities in science classes involve group work. When students work in groups, the experience is meant to be authentic and engaging, and should lead to meaningful learning. Teachers have often seen, however, group interactions that lead to student frustration. Often, poor group dynamics result in poor cooperation and communication. A lack of cooperation and communication will lead to passive compliance, rebellion or a refusal to participate. The purpose for choosing this topic is to research how to create positive group dynamics to improve student engagement. An overlying goal of this research is to develop a systematic approach to with-in class grouping, which promotes and fosters positive social interactions, increased student performance, and high levels of authentic student engagement. The Social Development Theory of learning suggested by Vygotsky will correspond to this review of research. Social Development Theory states that children learn through social interaction (Kearsley, 2008). These types of interactions are key to forming work groups that do, indeed, produce positive learning outcomes.... When some students are performing equally well with other students, a grouping of such students can help to revise the syllabus items for those students. However, there are different grouping styles observed in classes called, ability grouping, tracking etc., depending on the circumstance and need. Ability grouping also called instructional grouping, usually used for reading purposes in elementary schools. Whereas, tracking is usually observed in middle and higher classes to direct them to take particular courses basing on their performance levels in previous classes. Many teachers and scholars believe that grouping leads to 'discrimination and permanent labeling', hence do not observe grouping in teaching-learning process. One study conducted on Japanese teachers notified teacher's expressing that grouping hurts students emotionally, so they prefer having mixed-ability classrooms instead of grouping. Also some argue that grouping not only brings discrimination but also makes the children adopt the unwanted behaviors from other children in grouping, as grouping is a close social context. Though placing students into groups is an instructional technique to maximize the effectiveness of learning and classroom management, it should be done with careful planning and clear purpose. However, Cohen E.G., specifies some conditions that help the class room grouping to be productive and effective for the learning process. The paper observes the review of studies of interaction and while concentrating on the aspects like - interaction and achievement; task and interaction; the helpfulness of helping; interdependence and interaction; and reward interdependence. The author identified the aspects like- structuring the

Organizational Culture in Daimler-Chrysler Essay

Organizational Culture in Daimler-Chrysler - Essay Example The company that is the subject of this research is Daimler-Chrysler as one of the biggest automakers in the world. The aim of the company is to maintain the level of service and product quality and develop strategies to improve their product/services. Today, Daimler-Chrysler is affected by different factors of the environment which have a great influence upon it. Most companies find it no simple matter to formulate and implement socially responsible actions and programs. To operate without major disruptions, a company must at all times be in compliance with legal requirements international, state, and local. It must develop, establish, implement, and police a code of ethical and moral conduct for all members of its organization. Healthy organizational culture is one of the crucial elements which help Daimler-Chrysler to compete on the global scale and sustain its strong position in the automotive market. Maintenance of high standards is a key factor which influences company’s performance. The purpose of maintenance of high standards is to attempt to maximize the performance of service by ensuring that it performs regularly and efficiently. There are numerous quality circles within Daimler-Chrysler and their work is monitored and co-coordinated by the company management, who is responsible for estab ­lishing overall objectives and monitoring the progress towards the achievement of these objectives. In Daimler-Chrysler, the main functions of management are to plan, organize, coordinate and control all activities within the organization. Attention to HR helps Daimler-Chrysler improve the efficiency and productivity. Manage ­ment skills are transferable, and managers successfully apply their knowl ­edge and skill in a wide variety of organizations. In Daimler-Chrysler, managers have the responsibility in the organization and also held accountable for the work of others as well as their own. Their role is to coordinate and control other members of staf f accordingly with organizational objectives.

TBD Essay Example | Topics and Well Written Essays - 1000 words

TBD - Essay Example Possibly the simplest means to resolve this dilemma is to consider the tongue-cutting in the author's book as story bound, as an application of Kingston's artistic thoughts. The remarkable effort that has been done on Kingston's ground-breaking utilization of genre in The Woman Warrior upholds such analysis. Screening Kingston's book as a chronicle in the conventional sense is presently dishonored. Yet, while The Woman Warrior does not request for a distinction of truth from imaginary tale, too quickly tagging as imaginary every occurrence in the book that potentially indicates intercultural apprehension does not facilitate comprehension of Kingston's stylish treatment of actuality and imagination. The author censures the building of a language custom by presenting how language differentiation develops into race-oriented language. The act of tongue-cutting is essential to comprehending how language, frequently considered empty of material meaning, cannot be understood apart from the body. Erving Goffman's hypothesis of stigma triggers a great fraction of this debate, since it is necessary to demonstrate the relationship between the creation of a language custom and the stigmatization of specific language dissimilarities. It is best to begin at the speaker's school commencement into a collective world of "normal" language as well as social norms. The speaker has difficulties in school, because of conflicts between her and the norms of satisfactory classroom performance, exemplify how the decisive factors for identifying aptitude and disability transform depending on social and cultural conditions. It is also ideal to concentrate on the act of tongue-cutting and the undecided association that the speaker has to her verbal communication. It is possible to examine two incidents from the story that exemplifies the speaker's worries about language and her discovery of how to establish her relationship with language. For the speaker of The Woman Warrior, school is the location where she initially studies about customs. Though public schooling is a recognized way of socialization, the cultural differentiations involving dwelling and school resulted to difficulties in the understanding of socialization for the speaker. The primary coping approach she assumed when she is shoved into an unfamiliar world of community organization is to resort to silence. Muteness has functioned as a defensive guard, but it revolves into a pressure issue the instant the speaker recognizes that muteness is not well-accepted by her instructors. The virtuousness of muteness is vanished when the speaker learns a consciousness of the social purpose credited to language. In the final episode of The Woman Warrior, the speaker ponders on the origins of her language. After analyzing her ability for formulating and exaggerating stories, the speaker astoundingly reveals

Investment Strategy Essay Example | Topics and Well Written Essays - 2750 words

Investment Strategy - Essay Example The investment idea was ‘shorts’. Market sentiments are positive for JPM and investors are expecting share prices of JPM to appreciate the trending market movements. The detailed observation and evaluation by the Chairman and CEO are discussed in the annual report of the company under the â€Å"Management Discussion and Analysis† section. Both of them has concluded that internal control and procedures were effective during the financial year 2013. The financial statement of the company aims to provide information about enterprise’s financial position on a given date. Technical analysis involves identifying patterns or trends in the movements of stock prices at an earlier stage and then device an appropriate strategy with the objective to benefit from such market movements. The technical of JPM suggests that its stock prices are currently experiencing up-trends. A bullish market sentiment and better job creation report along with better economic growth could be the probable reason for the same. The investment decision of an individual depends on certain factors like economic conditions, return on investment, the attractiveness of security, time horizon, and business outlook. An investor has the option to invest his/her savings in stock markets which provides an opportunity to maximize returns by identifying market trends. The investment idea can generally be classified as ‘turnaround’ or ‘short-sale’ investment strategy. The former strategy focus on particular sector or stocks that are currently not attractive to other investors. The technical chart of such stocks reveals that they are sellers’ favorite and are probably oversold at the moment. The key to success in ‘turnaround’ strategy is to observe the chart very carefully and determine whether the worst is over or not. By analyzing the fundamentals of the underlying asset, the analyst could tell whether the stock is left for dead or a possible turnaround is apparent in near future.

Plan before going to camping(Proposal) Essay Example | Topics and Well Written Essays - 750 words

Plan before going to camping(Proposal) - Essay Example The car company assured that there will be a 14-seater car available for us on the aforementioned days. The group should meet at exactly four o’clock in the afternoon on June 7, 2013 at Yazed’s house for instructions and last-minute reminders. In this meeting, the participants will be reminded that they are supposed to think about safety first at all times and should be responsible enough not to let their group mates worry about their whereabouts. Therefore, each participant should take note of the necessary measures that are to be observed to keep the trip safe and enjoyable. For instance, everyone should have acquired medical clearances, making sure that each camper is fit for the activities set because it is expected that there would be exhaustive activities. Moreover, maps will be distributed and the legends will be discussed for easier understanding in case some of the facilities or services need to be sought. Each should make sure to stay with the group for the wh ole duration of the camp to avoid unfavorable circumstances. In case of emergencies, the number to call is 905-336-1158. The group starts travelling from Yazed’s residence at five o’clock and we are expected to arrive at Hilton Falls Conservation Area one hour and a half later. Each member is given an hour to fix his/her things and be ready for barbecue. We will start grilling by half past seven and each should do his/her assigned task. As agreed by the group, Ali and his group will take care of the barbecue, Faisal and company will prepare the drinks, Kahlid and his friends will be in charge of the games while Yazed and the others will make sure that every other thing that may have been overlooked will be acquired when necessary. Therefore, it is expected that each one should be at his/her designated post to perform the responsibilities assigned to him/her. One goal of the camp is for stronger camaraderie to be developed among us so everyone is expected to actively pa rticipate in all the activities. It should also be noted that the activity for the night should only last until 11:30 so that we can be well-rested for the next day. Yazed will check attendance before we all get off to bed and he will do the job as well in the incoming activities, wherever we will be bound to. On June 8, everyone should be ready for breakfast at 7:30. Assigned groups are expected to accomplish their responsibilities in time for breakfast so that all should be ready to walk by 8:30. There is approximately four kilometers to Hilton Falls for us to walk so we could perhaps allot 60-90 minutes for the trip. There, we will picnic, fish and enjoy the view. Tasks should be accomplished accordingly as planned. We will have to move out at 8 o’clock in the evening to walk back to our camp to get well-rested for the following day. On the 9th, everyone should help each other to prepare our food and make sure that everything and everyone is ready for the hike. Since the a ctivity is expected to be exhaustive, each one of us should make sure that s/he is physically capable to walk the long distances. In addition, there should be no delays in the preparations so that we could start early for us to be able to complete the hike just in time. A heavy meal is recommended for each participant and each should make sure to carry enough

Finance Essay Example | Topics and Well Written Essays - 500 words - 12

Finance - Essay Example which often threaten businesses profitability due to unexpected cost, and if some businesses fail to comply with these regulations they faces penalties, and other stick regulatory problems and in short there is threat to their long term sustainability, so organization need to be serious while dealing with such regulatory issues, which are not often taken serious by most companies and at last faces huge financial liabilities Companies operating in Europe has entered into a new era of environmental risk management with regard to prevention and remedy of environmental damage as per a recent survey by Harvard Business Review Analytic services 60% of the companies are now concerned about the environmental risk and are serious about it, therefor lglo Group should conduct a complete study that this new investment should not bring such threats for which company may bear regulatory obligations that effect its profitability and bring long term sustainability of company into question, (sustainable, 2015) As for as long term business strategies are concerned lglo group need to be proactive regarding its strategic plans of either new installation or introduction of new ways power resources, that either all these activities have any environmental effect and if they have then are there any breach of regulation with regard to environmental regulation, because if such new changes affect these environmental regulations then it may harm companies long term sustainability. First of all in future it will reduce cost of production of lglo and other products also due low cost of power resource, hence it will affect production department costing, marginal cost of production reduces due to this low cost of production, so selling price would also be affected means marketing department would be affected, further external stake holders would also be affected like environmental agencies

Nixon v United States Essay Example | Topics and Well Written Essays - 500 words

Nixon v United States - Essay Example doubts the people of America had regarding â€Å"The efficiency of a system that not only comprises of the President and the White House staff, but also extends to the office of independent counsel-its authority and its jurisdiction.† (Frederick M. Kaiser, p 5). The tapes, one of them called ‘The Smoking Gun’ which include the recorded conversations, that revealed Nixon’s alleged acts that were antagonistic to justice and highlighted his attempts to cover up the attempted break-in, led to a lot of public disgust for the Republican Party. Keeping in mind the disastrous effect the Watergate scandal had on the public morale, the information these tapes contain must be kept away from Congressional oversight. They are not empowered with the right to have access to records or conduct investigations. Reports have already shown the tapes were tampered with, even when in the custody of the White House. Eighteen and a half crucial minutes of one particular tape were erased in five separate segments. The privileged information contained within these tapes, if accessed by the above-mentioned body will further lead to the establishment of an atmosphere of political insecurity that has already been created due to the illegal activities of President Nixon and his staff. â€Å"In all of this, President Nixon has acted in a manner contrary to his trust as President and subversive of constitutional Government, to the great prejudice of the cause of law and justice and to the manifest injury of the people of the United States.† (House Committee on the Judiciary, p 3). These tapes are now a matter of national security and must neither be compartmentalized nor pigeonholed as a mere political conspiracy. Congressional oversight is needed to serve many objectives and purposes. According to Frederick M. Kaiser, these include â€Å"improvement in the efficiency, economy, effectiveness of Governmental operations, evaluation of programs and their perfor mance, protection of civil liberties

Place of Duty in the Army Essay Example for Free

Place of Duty in the Army Essay Failure to Report affects the United States Army and it’s mission. Failure to Report is not clearly definably in violation of any one article. It may be, however, in violation of Article 92. This article covers a failure to obey an order or a regulation. Failure to Report falls into this article simple because the order is given by a senior ranking individual. This can be done orally, which is most common, and verbally, such as a training schedule. By not reporting for duty or accountability you are in direct violation of Article 92 and can receive a summarized, company, or field grade article 15. This will depend on how many offenses you have in the past, your work ethic and the reason you failed to report. Given enough offenses you may be chaptered for patterns of misconduct. Failure to Report negatively affects the United States Army in many ways. Let us say that SPC Snuffy misses accountability formation. He failed to report to his appointed place of duty. SPC Snuffy is not the only one who has consequences for his failure to report. He is part of a small team that affects a larger unit. Within his small team he could have soldiers under his care; he most likely has a non commissioned officer who is charged with his care. His soldiers look to him to be the middle man to help guide them day to day with his knowledge when given tasks. Accountability is very important in the Army. Accountability is taking responsibility for your actions and your items. By meaning what you say, saying what you mean, and doing what you say, when you say you will do it. By keeping track of all my items and equipment I can always be ready for anything that is needed of me by my country, my superiors, or other servicemen. Being accountable means being dependable. Where my country, my superiors and fellow servicemen can count on me in any situation. to know I will be there to do what is necessary. Taking responsibility for your own actions and equipment is what keeps things running smoothly. And keeps things from turning into utter chaos. Being in formation on time everyday is an prime example of accountability. Formation is where the Army takes accountability of everyone and to get important information out that needs to be dealt with. Without accountability there is no knowing of where everyone is or whats going on. Knowing where your equipment and personal effects are at all times is very important also. By not putting a lock on my wall locker,  I was not talking responsibility for my own items, and not doing what I was told to do by my superiors. I was not being responsible. Keeping my items locked and secured is very important now and in the future. As with keeping all sensitive items secured and accounted for later on. Keeping my wall locker locked, keeps accountability of all my items and teaches me to always maintain my equipment, my arms, and myself. Many things could have happened by me failing to adhere to my responsibilities.

Qing China and the consequences of the golden age Essay Example for Free

Qing China and the consequences of the golden age Essay Introduction The â€Å"Prosperous Age† was a period where Qing China experienced a drastic increase in population, flourishing trade and commerce, and a remarkable level of social and political stability during the reign of Emperor Kangxi, Yongzheng and Qianlong. However, its brilliance was overshadowed by its subsequent consequences and China was soon at its breaking point in the 19th century. This essay would then evaluate on the implications of the â€Å"Prosperous Age† and how the long-term consequences proved to be more negative in the 19th century due to a string of crisis, and subsequent problems that continued even in modern China of the 20th century. Negative Unanticipated Long Term Consequences Reversal of Trade Fortunes with Britain During the 18th century, there was mounting European demand for Chinese goods (Hung, 2011). Britain in particular, had strong liking and demand for Chinese goods especially tea. Hence, it led to the outflow of British silver into China, but little inflow of silver back into the British economy resulted in China enjoying a trade surplus (City University HK, 2007) while Britain suffered from a trade deficit. To redress this deficit, Britain began to smuggle and sell opium in China (City University HK, 2007). China’s attempt to prohibit opium then resulted in the Opium Wars and suffered a tragic defeat. The defeat in the Opium War led to the signings of unequal treaties . Upon signing of the unequal treaties, much Chinese marked it as the beginning of a century of shame and humiliation. Although China was never formally colonized, the lack of ability to defend its basic sovereign rights and ability to govern its own country made it look like a like semi-colonized state of Britain. Consequently, the Qing government was seen as weak and inefficient to combat against the foreigners and much Chinese lost faith in the Manchurian Qing government. As a result, this gave rise to the Boxer Rebellion (1899-1901) where violent revolts and attacks were targeted against foreigners as a sign to resist their influence. Boxers,  supported by China, suffered a yet another defeat and were forced to sign yet another unequal treaty: Boxer Protocol, where the reparations drastically crippled the Chinese economy till the mid 20th century (Zheng, 2009). Thus, we can see that the initial trade surplus, a sign of â€Å"Prosperous Age† resulted in British to redress the situation by selling opium to the Chinese led to the Opium Wars and the unequal treaties which greatly weakened Qing China internally and externally in the 19th century. China’s failure to counter foreign influence led to their continued defeat in the Boxer Rebellion at the end of 19th century, where another unequal treaty continued to cripple her till mid 20th century , thereby demonstrating the long term consequence of the â€Å"Prosperous Age† was indeed negative in the long run, especially since the consequences did not confine just to the 19th century but even stretched to the 20th century. Reforms did not keep up with population boom During the â€Å"Prosperous Age†, China’s population tripled from less than 150 million to over 400 million (Perkins, 1969). Civil Service Exam however continued its strict quota for passing (Bentley Ziegler, 2003) and that meant a lower ratio of scholar to population passes. The frustration of students led to the rise of influential leaders like Hong Xiuquan who sought for reforms which led to the Taiping Rebellion . Coincidentally, the backbone of his rebels were the poor peasants who were forced out of arable lands and were socially upset and frustrated, which was also due to the consequence of the population boom. The consequence of the Taiping Rebellion led to a weakened Qing as they were forced to decentralize power to provincial elites to deal with the crisis and this power was never fully recovered even after the rebellion was suppressed (Sng, 2011). Provincial elites who did not return the power were a growing sign of defiance and could have the possibility of rising up against the imperial court. The unneeded civil unrest caused by Taiping Rebellion also served to exacerbate subsequent crisis like the Northern Chinese Famine (1876-1879) where the government was severely blamed for not providing sufficient aid. The excess unrest and loss of power proved to be detrimental in the 19th century as it  crippled China and the country with no official political bloc stepping up to assist with the problems and crisis. In short, China was in a total disarray and chaotic. Lack of technological advancement Qing China favoured political and social stability over technological innovation which they feared would lead to unsettling changes. Furthermore, the vast population available to firms was a cheaper alternative to increase output, rather than investment of new technologies which was costly (Bentley Ziegler, 2003). This proved to be adverse in the 19th century when China engaged in wars. In the Opium Wars, the Qing military was no match against the British who utilized better technology to triumph (Tanner, 2010). The first defeat resulted in Treaty of Nanjing which ceded Hong Kong to Britain. Subsequent wars like the First Sino-Japanese War (1894-1985) had China suffering a crushing defeat against a more superior and modernized Japanese army. China then ceded Taiwan, Penghu and the Liaodong peninsular to the Japanese. It clearly implied that China could not defend its own sovereign ground and indicated how backward the Chinese army. It questions the right of China to even claim rights over those territories if she could not even defend it properly. The problem gets exemplified into the 20th century when China continued to suffer several defeats to the Japanese in the Second Sino-Japanese War . Even with the Self-Strengthening Movement (1861-1895) which was embraced to modernize China was insufficient. The subsequent defeats to Allied forces in the Boxer Rebellion and Japanese in the Sino-Japanese Wars marred the success of the movement. Especially significant was the defeat in First Sino-Japanese war as for the first time in over 2000 years of history, regional dominance in East Asia shifted from China to Japan (Johnson, 2010). Coupled with the defeat, China’s international and regional standings were challenged and staged subsequent revolutions that led to other problems and the eventual demise of Qing. Positive Long Term Unanticipated Consequences Building a new foundation based on common people The end of Taiping Rebellion inspired nationalists (Del Testa Lemoine Strickland, 2001) to fight for the betterment of Chinese. It was because of the consequence of the â€Å"Prosperous Age† that led to the decisive rise of nationalist to seek for reforms. An example would be the decentralizing of power, which meant many parties would be involved in decision-making process, rather than just the monarch government. This would ensure that concerns are taken into deliberation before decision-making that will benefit majority of the Chinese, rather than the imperial court only. The nationalist dream then culminated in the 1911 Revolution in the early 20th century, where the Qing was overthrown and the Republic of China was established. Nevertheless, the dream of the nationalist was short-lived due to a power struggle within. Even though election was scheduled for 1913, but it soon became clear than Yuan Shikai wanted to establish his own power base. Sun Yat Sen was then forced into exile after he stepped down as head of the newly formed Kuomintang (Foster, 2007). The new government was then monopolized by Yuan and led to decades of political division and warlordism, including monarchy restoration (Blecher, 2010). Therefore we can see that the perceived benefits from the consequence of â€Å"Prosperous Age† in the 19th century did not fully materialize in the 20th century. Monarchy restoration was attempted and defeats the purpose of the promised sharing of power with the people initially. Political and social unrest persisted even with the new government which culminated in the May Fourth Movement (1919). Hence, we can see that China did not become better even with the end of Qing. It would be judgmental to argue that the initial rise of nationalists had resulted in a better China. It would be fairer to argue that the initial rise of nationalists led to more power struggle and dissident movements like the Chinese Warlord Era (1916-1928) as there were no strong political forces to enforce stability and order until the Chinese Communist Party (CCP) came in 1949. Conclusion Hence, we can see that the consequences of the â€Å"Prosperous Age† proved to be more negative. The severity of the negative consequences shed light on the  crises in the 19th century which crippled China internally and externally. The impact of the consequences was so overwhelming that it even snowballed to the 20th century and further crippled modern China. In contrast, the perceived positive consequences was that it built the foundation but the problem was that the foundation was weak and unstable which in turn led to more problems which culminated in more movements and revolutions. Furthermore, problems like sovereign issues were not solved by reforms or China’s surge in military strength but rather treaties that returned territories to her under imminent conditions . Thus, we can see that the long term consequences were more negative in the 19th century as it continued the crippling of China economically, socially and militarily and as well as set the stage for the movements and revolutions in the 20th century which did not necessary bring about stability and communal power amongst its people until the CCP came into power in 1949. References Hung, H.F. (2011), Protest with Chinese characteristics: demonstrations, riots, and petitions (p24-26). USA: Columbia University Press Qian Long Emperor’s Letter to George III, 1793, retrieved from Sanders Morillo Nelson Elleberger (2005), Encounters in World History: Sources and Themes from the Global Past, Volume 2 (p289). McGraw-Hill Sng, T.H (2011, Oct 4). Size and Dynastic Decline: The Principal-Agent Problem in Late Imperial China 1700-1850.   City University of HK Press (2007), China: Five thousand years of history and civilization (p109). Hong Kong: City University of HK Press Perkins, D.H. (1969). Agricultural development in China, 1369-1968. Chicago: Aldine Bentley Ziegler (2003). Traditions and Encounters (p724-740). New York: McGraw-Hill Tanner, H.M. (2010), China: From the Great Qing Empire through the People’s Republic of China 1644-2009 (p77). USA: Hackett Publishing Company, Inc. Del Testa Lemoine Strickland (2001). Government leaders, military rulers and political activist (p86). Greenwood Publishing Group Foster, S (2007). Adventure Guide China (p18-19). Hunter Publishing, Inc. Blecher, M.J. (2010). China against the tides: restructuring through revolution, radicalism, and reform (p205). Continuum International Publishing Group Johnson, R.E. (2010). A Global Introduction to Baptist Churches (p267). Cambridge University Press Zheng, J.G. (2009). Historical dictionary of modern China 1800-1949 (p32). USA: Scarecrow Press

Research Achievements in Biomedical Engineering

Research Achievements in Biomedical Engineering BIOMEDICAL ENGINNERING Biomedical Engineering is a branch of engineering which combines biology and medicine with engineering principles and mechanics for the enhancement of advanced health care treatment and numerous breakthroughs in medicine. Bioengineer is a cross-disciplinary field which requires skills and knowledge to understand, define and solve biomedical and clinical problems through engineering sciences. Biomedical Engineers works on various sector within bioengineering i.e. tissue engineering, genetic engineering, imaging, biomaterials and a lot more. Bioengineers design and develop new equipment and methods, surgical devices, prosthetics and artificial organs for medical imaging, monitoring and diagnosing disease. They also work for the development of new medical procedures and research solutions. Bioengineering has become a promising and developing field in present times. Among various inventions of biomedical engineering, a cochlear implant is one of the important medical discovery. A cochlear implant is a surgically implanted medical device which replaces the function of a damaged inner ear by bypassing the damaged hair cells of a cochlea to provide signals to the brain. It works more than a hearing aid device. It is basically used by the people who have hearing loss in both ears and those who are not benefitted by hearing aids. The implant has been used by enormous population having hearing loss and difficulties because of its immense effectiveness. And as of December, 2012, approximately 324,200 registered devices have been implanted worldwide. Figure: Cochlear Implant (https://www.google.com/url?sa=irct=jq=esrc=ssource=imagescd=cad=rjauact=8ved=0ahUKEwiNqNuKhqrSAhWBPCYKHUGND3IQjRwIBwurl=http%3A%2F%2Fwww.medindia.net%2Fpatients%2Fpatientinfo%2Fcochlearimplants.htmpsig=AFQjCNHJBWApt8n01ZcD9A0LCeka2nVq7Aust=1488070699063874) Another Significant achievement in Biomedical engineering is Composite tissue transplantation. There has been a lot of interest in the development of bioengineered structures with multiple tissue types because of the recent success of clinical Vascularized Composite Allografts (VCAs) including the face (upper, lower) and abdominal walls. The tissue transplantation serves as a replacement of traumatic losses from explosives, burns, cosmetic concerns and various major functional injuries. Since VCA depends upon the growth of recipients nerves into the grafted donor tissue, many difficulties have been arising for achieving the cooperation of different tissue in vivo. Further research is going on to meet the challenges and difficulties. The field of biomedical engineering is expanding with successful experiments and surgeries. However, there are certain experimental and surgical failures as well. In one of the cases, one of the Duke university Hospital surgeon operated a heart and lung transplantation surgery of Jessica Santilan on February 7, without recalling the information of the donors blood type. There was absence of positive confirmation of ABO compatibility of the donor organs and the identified recipient patient. This was considered a critical mistake as it caused Ms. Santilan desperately ill with signs of irreversible brain damage. Biomedical Engineering is one of the most promising career. One must complete a four years Bachelors degree and a two years master degree in Biomedical Engineering major to become a professional Biomedical Engineer. An average salary of a Biomedical Engineer is $86,220 per annum. Being a Biomedical engineer, one can work for the betterment of health, society and can achieve a standard professional and financial living. REFERENCES Â   Â   Mattsson, J., Ringden, O., Storb, R. (2008, Januaary). Graft Failure Allogenic Hematopoietic Cell Transplantation. Retrieved from: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2344125/ Ericson, G. (2016, January 13). One-sided hearing, cochlear implants studied in project. Retrieved from: https://source.wustl.edu/2008/09/onesided-hearing-cochlear-implants-studied-in-project/

Essay --

As young adults and teens, we all face social and emotional issues. After World War I, the Germans were killing the Jews because they were blaming them for losing the war. For example, Holocaust began because the Jews were being blamed. This was the main issue that the Jews faced. Hitler then got everyone to believe that the Jews were the problem for everything. This is just one example of how issues affected people. Issues are a problem that people face daily. Issues can be divided in to social, emotional, physical. An example of a social issue could be bullying. Bullying is a social issues because it is the way a person decided to communicate to another. Depression is an example of an emotional because it has to do with how a person feels inside. An example of a physical issue would be abuse. Social and emotional issues can be seen in families, friends, and depression. When teens are faced with these issues, they cope in different ways. When young adults and teens cope with social and emotional issues in families, it is shown in many ways. First of all, families usually have social issues. An example can be when a family has bad communication and they are fighting. Fighting with family members would be a social issue as well because it is the way they communicate together. A few ways that young adults cope with social issues includes fighting with others, staying quiet, and violence. Next, families can have emotional issues too. Some emotional issues can be caused because of social issues. For example, if a family is ignoring one child, that child could feel unimportant. The was that young adult cope with emotional issues are similar to the ways they cope with social issues. Thirdly, in the book Speak by Laurie Halse Anderson, ... ...motional issues. For example, fighting with family members is a social issues that can lead to emotional issues. Secondly, friends are another big cause of social and emotional issues for young adults and teens. For instance, when friends talk behind each others back. Lastly, depression is a sadness inside a person that can cause social and emotional issues, and the ways of coping are different. For example, if someone was depressed, the may decide to cope by keeping the problem to themselves because they are scared to tell others. During the Holocaust, the Jewish had to deal with their issues. Their issue was that the German were killing Jews because they were blaming them for losing World War I. The way the Jews coped with their issue was going into hiding. They believed going into hiding would be the best way to cope because nobody would be able to find them. 

How Artists Act as Gentrifiers :: Artists Gentrification TriBeca Essays

How Artists Act as Gentrifiers From TriBeCa to SoHo to Dumbo, artists tend to agglomerate in well-publicized art centers rich in loft space. However, the paradox of artistic agglomeration is that artists are eventually priced out of the region of agglomeration as their presence attracts bourgeois residents and capital-rich businesses that together bid up rents. Art centers thus possess a dynamism that other regions of agglomeration, like Silicon Valley or Route 128, do not share. While the dynamic quality of art centers is well-known, artists’ crucial role in gentrification is not. Often, artists are considered victims of gentrification since they are often the ones being priced out of a region by more affluent businessmen. However, artists play a crucial role in the gentrifying process as they help revitalize areas of past stagnation and crime. That artists are eventually priced out of the regions they helped to revive is not necessarily inefficient as they move on to improve the next low-rent industrial area leaving the old art center with increased land value and more businesses. To understand how artists act as gentrifiers and fit into capitalist plans to raise land value, we must first establish a working definition of gentrification as: â€Å"A process by which dilapidated subdivided dwellings or slum neighborhoods are taken over by the wealthy or their agents through purchase, the non-renewal of leases or occasionally, the harassment of tenants, and then converted to expensive single-family housing. Gentrification is a reversal of the normal filtering process, for it involves old substantial dwellings that usually filter down the social hierarchy but in this case are recolonised and filtered back up.† (Yardley 3-4) Since identifying artists’ role in the gentrification process is the subject of this paper and since the process relies on the establishment of an arts center, we must first ascertain artists’ reasons for agglomerating. Artists agglomerate for four primary reasons: to efficiently coordinate complex and ordinary inputs, to facilitate training, to aid in gatekeeper filtering, and to gain the public exposure necessary to effect sales (Caves 26). Artists living in art centers enjoy low-cost access to specialized auxiliary service providers, like low-cost, high-variety suppliers of the art’s raw material, whether it consist of frames, paints, musical instruments, etc. While this cost advantage might play a small role in agglomeration, an art center’s ability to employ critical writers and important industry publications, which are necessary to legitimize and popularize the artists, provides increasing returns to an art market’s scale.

Easy Access For Children on Pornography Sites Essay -- Argumentative P

Easy Access For Children on Pornography Sites You just finished a day's work, have arrived home, unlocked the door, step inside, and just as you are about to yell, "anyone home," you hear hooting and hollering coming from the family room. As you enter the room you see your children and their friends glued to the computer screen, which is covered with explicit images not intended for the eyes of children. According to an article written by P.J.Huffstutter, "Yahoo, MSN Criticized for Offering Easy Access to Pornography," (C1) these two large Internet companies, have made it possible for everyone of all ages to access these adult communities. They require no proof of age, making it far too easy for under-age children to freely view the pornographic pictures and videos of their choice While adults may find leaving a site easy if they are uncomfortable, trying to restrict children from accessing these sites is a different issue. To watch your kids every moment is unrealistic and would not please anyone. According to Net Nanny, "Kids need to learn Internet safety practices and differentiate between right and wrong, because their parents won't always be there." There must be some sort of compromise. We, being responsible adults, need to take charge of what our children are doing when online, since little effort is required to gain entry to pornography sites. I used Microsoft's MSN search facility to look for "porn," and the only warning I received was that I had entered a search term that was likely to return adult content. While that may be more warning than in the past, it still isn't enough to keep children away. Then I was directed to a related link entitled NightSurf, and within two minutes I was presented with images of nudity... ...pornography with such ease, parents are going to have to figure out a way to keep their children off these sites. The only other option is coming home and finding them looking at something they shouldn't. Because some children, given the opportunity, are going to seek out these sites, even if you ask them not to. After all, children will be children. Works Cited Huffstutter, P.J.. "Yahoo, MSN Criticized for Offering Easy Access to Pornography." Los Angeles Times 23 Sept. 2001, sec. C: 1-2. Bruckman, Amy. "Finding One's Own in Cyberspace." Composing Cyberspace. Richard Holeton. United States: McGraw-Hill, 1998. 171-178. SafeSurf. Press Release. "Netscape and SafeSurf Team Up to Protect Children Online." Westlake Village, CA. 17 June. 1998. "Net Nanny 4: Product Description." http://www.netnanny.com/home/net_nanny_4/product_description.asp. 4 Oct. 2001.

Seminar Option

(1) What are some factors both developmental and environmental associated with the safety of infants through the second birthday? â€Å"Sharing a bed with a newborn is dangerous if the adult is drugged or drunk-and this in danger of â€Å"overlying† the baby. It may be that co-sleeping is beneficial but bed-sharing is not, partly because adult beds. Unlike cribs, are often soft, with comforters, mattresses, and pillows that increase a baby’s risk of suffocation (Alm, 2007)†. (Berger 2012, p. 137). (2) What is cot death? Cot death is a diagnosis that’s made when an apparently healthy baby dies, without, warning, and for no clear reason.No one knows why babies die in this way. It must be a combination of factors that affect a baby at a vulnerable stage in their development. Some babies may have a problem with the part of the brain that controls breathing and walking. These babies don’t respond if their breathing is slightly restricted, such as if ther e are bed clothes covering their nose or mouth. Sadly, there’s no failsafe way to prevent cot death. However, you can do a number of things to keep your baby safe and reduce the risk. Put your baby to sleep on his/her back in a cot or Moses basket. For the first six months this should be in a room with you.Healthy babies placed on their back to sleep are not more likely to choke. This is the safest place and position for your baby to sleep in. At about five months of six months, babies start to roll. At this age the risk of cot death reduces and it’s safe to let your baby find his/her own comfortable sleeping position. But you should still put your baby down to sleep on his/her back. If you wake up and see that your baby is on his/her front, and he/she’s younger than six months old, gently roll him/her onto his/her back. Babies older than this can usually roll on to their back themselves.You don’t need to get up and check throughout the night, as likely t o change position regularly when he/she sleeps. Don’t smoke during pregnancy or allow anyone to smoke around your baby. If you smoke during or after pregnancy, your baby’s risk of cot death increases. Cot death is more common in babies who are regularly exposed to smoke. The risk to your baby is increased if anyone in the house smokes, even if it’s in another room with a window open. Visitors should smoke outside so the air around your baby is always smoke-free. Never smoke in the same room as your baby.The safest place for your baby to sleep for the first six months is in a cot or Moses basket in the same room as you. Never share a bed with your baby if you or your partner are a smoker (even if you never smoke near your baby), have been drinking alcohol, are taking any medication or drugs or are very tired† (Baby Center, L. L. C. 2012). â€Å"Many factors can affect the development of a fetus. Environmental agents that can negatively affect prenatal deve lopment are called teratogens. Teratogen exposure tends to be most detrimental during the first trimester (the first three months) of pregnancy, when formation of the organs and brain occurs.However, some substances, such as alcohol, can have an effect at any point in pregnancy. Alcohol consumption can harm a developing embryo or fetus, although how much is too much remains much is too much remains unclear. â€Å"The only way to be absolutely certain that your baby is not harmed by alcohol is not to drink at all during pregnancy or while you are trying for a baby,† says the Royal College of Obstetricians and Gynecologists (RCOG). Pregnant women who continue to drink are at increased risk of experiencing a miscarriage or still birth.Infants exposed to alcohol before birth may show signs of Fetal Alcohol Spectrum Disorder (FAST) including learning problems, behavioral problems, and physical disabilities, the RCOG reports. Fetal Alcohol Syndrome, which results in mental retardat ion and facial abnormalities, is uncommon. Unlike FAST), which can occur with only moderate exposure to alcohol. Fetal Alcohol Syndrome only occurs due to heavy drinking during pregnancy† (Demand Media, Inc. 2012). (3) How can you, as an early childhood care professional help parents plan for developmental and environmental factors associated with the safety and health of infants and young children?As an early childhood care professional I can help parents plan for developmental and environmental factors associated with the safety and health of infants and young children by providing parenting education services â€Å"that assist parents or primary caregivers to strengthen their knowledge and skills thereby enhancing positive parenting practices and promoting the health and optimal development of young children and by providing family support services that work with families to strengthen their resiliency and to address the stressors that impair their ability to nurture or su pport the healthy development of their children (ucla. du 2012). (4) Discuss some safety factors associated with toys. â€Å"There are many factors that should be considered in choosing a toy. Assuming that selected toys have been carefully made out of safe materials, the most important thing a consumer should do is consider the age and developmental stage of a child. Even when a child is very intellectually advanced, the age and developmental level of the child must be considered. When toys have labels indicating that they are not appropriated for children under three, they have not been safety tested for infants and toddlers.Genreally the concern is the size of the toy pieces and the risk or potential for choking† (CapitalKids. com 2012). References: Berger, K. (2012). The developing person through childhood. (6th ed. ). New York: Worth Publishers http://www. babycentre. co. uk/baby/health/cotdeath/? oo=0 http://www. livestrong. com/article/92641-factors-affecting-fetus-dev elopment/ http://www. healthychild. ucla. edu/Publications/Documents/ParentEd. pdf http://www. capitolkids. com/toy_safety. html

Contract and Additional Work

Gary Porter Construction v. Fox Construction, Inc. , 2004 Ut. App. 354, 101 p. 3d 371 (2004). Facts: The University of Utah was in need of a women’s Gymnastics training facility so they subcontracted Fox Construction, Inc. to complete the project. For the soil and ground work Fox Construction, Inc. subcontracted with Gary Porter Construction. Gary Porter Construction, Inc. performed their work based on specific plans as well as some work outside of the plans. The combined total from the planned project was $146,740.The additional work completed at Fox’s request cost Gary Porter construction additional costs and Fox refused to pay for the additional work done outside the subcontract. Procedure: A suit was filed by Gary Porter in the Utah State Court against Fox with alleging breech of an implied-in-fact contract. The court granted summary judgment for Porter, which Fox later appealed to a state intermediate court. Issue: If sections of a contract are left out by mistake, is the contract still valid and enforceable? Were all the requirements of an implied-in-fact contract met?Holding: Yes Reasoning: The appellate court affirmed the lower courts summary judgment in favor of Porter. Fox knew that the additional work that Porter did would be followed up with an additional charge. Fox should have known that there would have been additional costs for the work outside of the planned procedure. Porter completed the work only after Fox’s manager requested it and it was implied to be additional from the start. The additional work not planned in the subcontract was valued at $161,309. 08 as well as the $135,441. 62 contacted value.The issue of the sections being mistakenly not represented in the contract is voided because Fox did not inform Porter about what all needed to be included. Decision and Remedy: Gary Porter Construction won against Fox Construction, Inc. Fox was ordered to pay Porter the balance of $161,309. 08 for the work done but was exclu ded in the original contract. Blackmon v. Iverson, 324 F. supp. 2d 602 (2005). Facts: In 1987 Jamil Blackmon met a promising high school basketball star, Allen Iverson. Blackmon supported Allen Iverson financially and provided other forms of support for his family as well, realizing his athletic potential.In 1994 Jamil Blackmon proposed a new nickname for the basketball star â€Å"The Answer†. The nickname would represent Mr. Iverson with clothing, sports apparel, and basketball shoes. Mr. Blackmon presented the idea to Allen and Allen agreed to give Blackmon 25 percent of profits from the nickname. Iverson was later drafted by the Philadelphia 76ers. After many months, Iverson entered a contract with Reebok, a shoe company, to manufacture, market, and sell a line of sportswear using the same nickname, â€Å"The Answer†. Blackmon moved to Philadelphia at the request of Mr. Iverson and has requested 25 percent of the profits on many occasions.Allen Iverson continues to receive pay from Reebok from the continuing product line. Procedure: Mr. Blackmon filed a suit in Federal District Court against Mr. Iverson for breach of an express contract to which Allen Iverson filed a motion to dismiss. Issue: Is past consideration sufficient to create a binding contract? Is continuous gracious conduct in exchange for a promise a valid consideration? Holding: No Reasoning: The court’s reasoning was fully based on past consideration. Mr. Iverson allegedly promised 25 percent of his profits because of three forms of consideration.First, Blackmon provided him with the nickname â€Å"The Answer†. Second, he helped Allen Iverson’s family, and third, he moved to Philadelphia when Iverson was drafted there. Mr. Iverson offered to pay Mr. Blackmon 25 percent long before entering a contract with Reebok. These forms of past consideration make the contract invalid. There were no valid forms of consideration to make a valid express contract between the two men. Decision and Remedy: Allen Iverson won the case. The United States District Court, eastern District of Pennsylvania, granted Allen Iverson’s motion to dismiss.Vokes v. Arthur Murray, Inc. , 212 So. 2d 906 (Ct. App. Fl. 1986). Facts: Audrey E. Vokes, a widow with no family, had a passion for dancing and wanted to become a successful dancer and find a new interest in life. In 1961 Arthur Murray, Inc. , a franchise that has taught about 20 million people to dance, invited Audrey to a dance party. When she attended her instructors told her about her potential as a successful dancer due to her excellent grace and poise. After being told about her â€Å"good† potential, she bought eight half-hour dances for $14. 50 each to be used in one month.Throughout the next sixteen months she continued to buy these lessons totaling $31,090. 45. Ms. Vokes eventually began to realize that her instructors were only telling her what she wanted to hear and she was not actually goo d at dancing. Procedure: Vokes filed a suit against Arthur Murray, Inc. for fraudulent misrepresentation. After being dismissed in trial court, Vokes appealed her complaint to the District Court of Florida. Issue: If a party possesses expertise, can a statement of opinion be regarded as a statement of fact and be actionable? Holding: Yes.Reasoning: Misrepresentation cannot regard opinions; they must contain facts. If one party has a statement that could be considered an opinion, it could result being a factual statement based on the amount of superior knowledge contained by that party. Using the â€Å"reasonable person† method, Vokes would potentially have reason to believe that Arthur Murray Inc. has superior knowledge of her dance potential. When her instructors Revels v. Miss America Organization, __N. C. __, 641 S. E. 2d 721 (2007). Facts: Miss North Carolina Pageant Organization, Inc. (MNCPO) is a franchise of Miss America Organization (MAO).Under contract between these two parties, MNCPO holds a state competition to select a finalist for the national competition ran by MAO. On June 22, 2002, Rebekah Revels was selected to be Mrs. North Carolina. On July19, 2002 an anonymous e-mail said came out stating that Mrs. Revels cohabitated with a male non-relative and that nude photos of her existed. Mrs. Revels came out and confirmed that the photos existed. MAO and MNCPO approached Revels and asked her to resign from her position as Miss North Carolina or else she would be excluded from the national competition.On July 23, 2002 Mrs. Revels ended up resigning from her Miss North Carolina position. Procedure: Revels resulted in filing a suit in the North Carolina state court against MAO, MNCPO, and other organizations for breach of contract. The court issued a summary judgment in MAO’s favor to which Revels appealed to a state intermediate appellate court. Issue: Must a contract be executed for the direct, and not incidental, benefit of the third pa rty in order to assert rights as a third party beneficiary? Holding: Yes.Reasoning: A person isn’t the direct beneficiary of a contract if the contract benefits that person but wasn’t intended to benefit that person. A person is the direct beneficiary of a contract only if the contracting parties intend to confer a legally enforceable benefit directly to that person. Revels was unable to prove that MAO’s contract was intended to have her be the sole beneficiary because anyone who wins can be the beneficiary under the franchise agreement. The agreement did state that the MAO will accept the MNCPO winner but this does not show that Mrs.Revels was the intended beneficiary of this agreement. Rebekah Revels was an incidental beneficiary of the agreement because she won the pageant and does not have enforceable rights against Miss America Organization based on their agreement with MISS north Carolina Pageant Organization Inc. Decision and Remedy: Based on the agreemen t between the two organizations, Revels was an incidental beneficiary and therefore couldn’t maintain any actions against them. The state intermediate appellate court affirmed the lower court’s decision in favor of MAO.

Of Mice and Men – Isolation – Curley’s Wife

Curley’s wife is the only female on the ranch and is described in a very feminine and incongruous manner, â€Å"full, rouged lips and wide spaced eyes, heavily made-up. Her fingernails were red. Her hair hung in little rolled clusters, like sausages. She wore a cotton house dress and red mules, on the insteps of which were little bouquets of red ostrich feathers†. The bold, heavily made-up appearance matches her personality as she disguises her true feelings and emotions with lies like the colourful, interesting appearance disguises her lonely, isolated life. As the only woman, she is segregated from the ranch society and Steinbeck makes her seem more isolated and friendless by never giving her a name but being identified as Curley’s possession. She is seen throughout the novella searching constantly for Curley yet this is just an excuse to talk to the other people, â€Å"â€Å"I’m looking for Curley,† she said, her voice had a nasal, brittle quality. † She struggles to create friends or let alone have a civilised conversation with the men on the ranch. She uses this feminine appearance and flirtatious, predatory behaviour in an attempt to communicate and attract attention to herself. However this backfires and leaves her in a no-win situation as her heavily sexualised manner is the key point of criticism amongst the men as they describe her as a â€Å"tart† and â€Å"a piece of jail bait† who, if approached, will only lead to trouble as she can ultimately cause the destruction of their own versions of the ‘American Dream’. Her isolation throughout the novella is caused by her gender, sexual appearance and predatory behaviour.

Recent Trends in Capital Market of Bangladesh Critical Evaluation

RECENT TRENDS IN CAPITAL MARKET OF BANGLADESH: CRITICAL EVALUATION OF REGULATION by Syed Golam Shahjarul Alam A thesis submitted in partial fulfillment of the requirements for the degree of Professional Master in Banking and Finance Examination Committee: Dr. Sundar Venkatesh (Chairperson) Dr. Winai Wongsurawat Dr. Yuosre Badir Nationality: Previous Degree: Bangladeshi Master of Business Administration University of Dhaka Dhaka, Bangladesh Bangladesh Bank (Central Bank of Bangladesh) Scholarship Donor:Asian Institute of Technology School of Management Thailand May2012 ACKNOWLEDGEMENTS My greatest Gratitude is given to Dr. Sundar Venkatesh, my project advisor, for his deep insight in capital market, which helped me to accomplish the project paper. His dedication towards teaching, motivating and supervising influenced me greatly, leading to do my project work carefully and seriously. I wish to express my deepest gratitude and appreciation to Bangladesh Bank, My office, for granting me a scholarship, to pursue my Masters in banking and finance.I express my gratitude and deepest appreciation to my friend Ms. Senjuti binte rafiq, My Colleagues in Bangladesh Bank and DSE Library staffs who helped me by providing valuable suggestions and necessary data for my analysis. I am very much thankful to Dr. Winai Wongsurawat and Dr. Juthathip Jongwanich for their valuable suggestions regarding my project. I express my gratitude and deepest appreciation to Ms Kluaymai Thongkham, Ms. Farah Nashid Hossain and other AIT staffs for their effort in creating a homely atmosphere amid the difficult time. i ABSTRACT The Capital Market of Bangladesh is passing tough times since December 2010 as high volatility is eroding the capital of Thousands of Investors that might turn into social instability. This fall is caused by many factors that I tried to identify and tried to link up between causal factors of market crash and regulatory failure. Primary issue related problems was faulty list ing methods and IPO overpricing, few numbers of new listings, revaluating assets before company listing, high premium in issuance of right share/Repeat IPO etc. hile secondary market related problems was stock splits and stock price manipulations through block trading, circular trading and insider trading. Investor’s greed and irrational behavior played a big rule to make the stock prices sky rocking as they were crazy to buy shares without judging the company fundamentals. Shares of the companies with closed operations and big accumulated losses were rising constantly due to investors high risk appetite that caused them to loss everything.Government had already taken many steps (including SEC reforms) to stabilize the market but failed as investors confidence is in the bottom level. Government and regulators should work together to identify the main speculators and should brought under proper trial to bring investors back to the market. Regulator should make reforms on Listi ng procedures and other faulty regulatory frameworks to ensure transparency and efficiency in the capital market and also should bring clear guidelines regarding Private Placements, Asset Revaluation, Insider Trading, Dealing with Omnibus Accounts etc. ii TABLE OF CONTENTS CHAPTER TITLE Title Page Acknowledgements Abstract Table of Contents List of Tables List of Figures List of Illustrations 1 Introduction 1. 1 Background 1. 2 Statement of the problems 1. 3 Objectives 1. 3. 1 Overall Objective 1. 3. 2 Specific Objectives 1. 4 Scope Literature Review 2. 1 Terminology 2. 2 Previous research works on this topic Methodology 3. 1 Data Source 3. 2 Methods Recent Trends of Capital Market PAGE i ii iii iv vi vii viii 1 1 1 2 2 2 2 3 3 10 14 14 14 15 2 3 4 6 7 8 Factors behind recent Capital market Crash in Bangladesh Conclusions and Recommendations Bibliography/References Appendixes 22 35 39 40 iv LIST OF FIGURES FIGURE 2. 1 2. 2 2. 3 5. 2 TITLE Trend of Bombay Stock Exchange-30 (BSE-30) i ndex Trend of DSE General (DGEN) index Trend of SET Index Price Trend of Chittagong Vegetable Oil Ind. Ltd. PAGE 9 9 10 30 v LIST OF TABLES TABLE 2. 1 2. 2 4. 1 4. 2 4. 3 4. 4 4. 5 5. 1 5. 2 5. 3 5. 4 5. 5 5. 6 5. 7 5. 8 5. 9 5. 10 5. 11 5. 12 5. 13 5. 14 5. 15 5. 16 5. 7 TITLE DSE Top five BO Accountholders in 2010 Comparison of DSE volatility with other market Dhaka Stock Exchange (DSE) activities DSE Highest Records Change in total Number of BO Accounts in two Years Detail information of fresh Issues in the DSE during 2009-11 Inconsistency in regulations regarding Margin Loan Price comparison of companies with different per value Price comparison of Mutual Funds with different per value List of some stock split companies and their Market Capitalization Top 10 NAV-gainer companies after asset revaluationsTop Companies offered Right shares with high premium Top Companies offered preference Shares Companies floated shares through Book Building Method Basic Listing Information of Khu lna Power Company Ltd. Basic Listing Information of Ocean Containers Limited.Top 20 Gainers in 2010 Financial Performance of Chittagong Vegetable Oil Industries Ltd Price trends of the stocks of Chittagong vegetable oil Industries Ltd Paired Samples Test One Sample Test Price sensitive information of Chittagong vegetable oil Industries Regulatory Actions displayed in DSE screen Increase of Market Capitalization and Total Turnover PAGE 5 9 17 17 18 19 20 22 23 24 25 25 26 26 27 27 28 30 31 32 32 32 33 39 viLIST OF ABBREVIATIONS AIT Asian Institute of Technology BB Bangladesh Bank DSE Dhaka Stock Exchange SEC Securities and Exchange Commission CSE Chittagong Stock Exchange Report Ibrahim Khalid Share Probe Report FI Financial Institution ADB Asian Development Bank EII Eligible Institutional Investors IPO Initial Public Offerings PER Price Earnings Ratio DGEN DSE General Index vii viii CHAPTER 1 INTRODUCTION 1. 1 Background/Rationale for the thesis Sound Capital Market is an indispensi ble part of an Economy.Without sound and efficient capital market, rapid economic development could be hampered as capital market provides long term funds to entrepreneurs. Capital Market of Bangladesh is still highly speculative and lacks transparency due to poor regulatory framework. In Bangladesh, Financial sector was historically driven by banks and capital market had fewer rules to play as people had mixed perception about the risk pattern in capital market that discouraged them mostly to invest there. But in the mid of ninetieths of last century capital market started to show vibrant behavior that make people interested bout the stock exchanges. As the index was rising sharply and everyone was making money, many people started to invest their money to the heated market that made a bigger bubble and finally the bubble bursts. Benchmark index came down to 700 point in November 1997 from its highest 3600 point in November 1996. Thousands of investors lost their money that made th em reluctant to invest in the capital market again. It took one decade for them to forget the history of collapse. After that, regulators had taken many steps to stabilize the market. Hundreds of new issues came to the market.Central depository, circuit breaker, online trading, etc. were introduced in the market to attract investors. As a result, the market started to grow again. Investors started to forget the history of 1996 and started to invest again. This time most investors were new and young with little knowledge about stocks and did not care about market risk. They invested their money and finally lost everything when the bubble started to burst in December, 2010 that had started to grow from the year 2009. This time Benchmark index came down to 3616 points in early February 2012 from its highest point 8918 in December 2010.Millions of investors lost their money and came down to the street. This is the small picture of stock market crashes in Bangladesh. In both cases regula tors had failed to take proactive measures to not grow the bubble and caused losses for millions of investors when the bubbles burst. When analysts were anxious about the bubbles, regulators were ignoring them and even defended the bubbles. The recent volatility of the capital market of Bangladesh is an abnormal phenomenon and such volatility tends to economic instability. I believe it will be interested enough to look into the causes of the problem.As such volatility affects mass people (many investors), it is essential to try to minimize such volatility by identifying the causes (esp. , Regulatory failure) and solving the problems. In my study, I will try to identify the reasons of this volatility and also to recommend some suggestions to minimize such volatility in future. 1. 2 ? Statement of the Problems As recent volatility raises many questions about the regulatory capability of the SEC, I would like to study whether regulator had any rule to worsen the problem or does it had anything to do at all?In my study, I will try to identify the reasons of recent unexpected events of the capital market of Bangladesh and will also try so suggests some ways to avoid same incidences in the future. Another reason to choose this topic is my present job field. I work for the central Bank of Bangladesh that plays a vital rule for economic development as a regulator. So the learning from this study will help me to identify 1 ? ? ? ? ? future risks associated with both money and capital market and also will make me able to make proactive decisions to prevent the economy from such disasters.As no research is made in this important issue, I believe that my research will be very useful for users. I also believe that regulators (e. g. , SEC, DSE, CSE, Bangladesh Bank) might use my study to strengthen the financial system (esp. , capital market) of Bangladesh. It is unknown whether the recent stock market fluctuation is due to regulatory failure or due to irrational behaviors of investors. Irrational behavior of investors might be an important reason for recent stock market bubble. Patterns of investor’s behavior might be covered by the study.In many cases, data availability might hinder to reach on my objectives. Data related to stock manipulations and insider trading are not available and that’s why I have to rely on secondary sources (if there is any) to conduct my study. Objectives of the Research Overall objective The study will try to identify the rule of regulators behind the recent capital market crash and focus on developing a road map for promoting Sustainable capital market regulatory framework in Bangladesh. Specific objectives 1. 3 1. 3. 1 1. 3. 2 The specific objectives of the study will be: ? To analyze and identify the reasons (Esp. regulatory rules. ) for recent stock market crash in Bangladesh. ? To review the existing listing and trading rules in Stock indices in Bangladesh. ? To recommend some guidelines for better regul ations to strengthen the capital market of Bangladesh. 1. 4 Scope This study is focused on the recent trend of the capital market of Bangladesh. The study will explain the regulatory aspects of capital market of Bangladesh on the basis of disclosed regulations and will try to judge the quality of the regulations in terms of its achievement of the goals. This study is basically descriptive in nature.Data is collected from both Primary (Stock Exchange, SEC) and secondary sources like different publications of DSE, Bangladesh Bank, ADB, WB and IMF. Some other research papers in this line will also be used. The areas that will be concentrated are: ? Various aspects of capital market regulations of Bangladesh ? Recent trends of Capital Market ? Bubble creation and Bubble Burst and reasons behind this market collapse 2 CHAPTER 2 LITERATURE REVIEW 2. 1 Terminology To establish the conceptual framework for the research, it is important to provide definitions of key terminologies that are gi ven below: 2. 1. 1 Capital MarketA capital market is a market for both debt and equity securities, where business enterprises and governments can raise long-term funds. It is defined as a market in which money is provided for periods longer than a year (Sullivan et. al. , 2003) 2. 1. 2 Money Market Money market is a segment of the financial market in which financial instruments with high liquidity and short maturities (one year or shorter) are traded. Trading in the money markets involves Treasury bills, bankers' acceptances, certificates of deposit, commercial paper, federal funds, and short-lived mortgage- and asset-backed securities.It provides liquidity support to the global financial system (Frank J. Fabozzi et. al. , 2002). Money market of Bangladesh consists Bangladesh Bank (BB) as the central bank, 4 State Owned Commercial Banks (SCB), 5 government owned specialized banks, 30 domestic private banks, 9 foreign banks and 29 non-bank financial institutions. Moreover, MicroCredi t Regulatory Authority (MRA) has given license to more than 300 Micro-credit Organizations. 2. 1. 3 Stock Exchange A stock exchange is a body that provides services to stock brokers and traders to trade stocks, bonds, and other securities.Stock exchanges also provide facilities for issuance and redemption of securities and other financial instruments, capital events including the payment of income and dividends. Securities traded on a stock exchange include shares issued by companies, Mutual funds, unit trusts, derivatives and bonds. The initial public offering (IPO) of securities (stocks and bonds) is done in the primary market and subsequent trading of it is done in the secondary market. A stock exchange is often the most important component of a stock market. The major functions of Stock Exchanges are: 1.Listing of Companies (As per Listing Regulations). 2. Providing the screen based automated trading of listed Securities. 3. Settlement of trading (As per Settlement of Transactio n Regulations). 4. Gifting of share / granting approval to the transaction/transfer of share outside the trading system of the exchange (As per Listing Regulations 42). 5. Market Administration & Control. 6. Market Surveillance. 7. Publication of Monthly Review. 8. Monitoring the activities of listed companies (As per Listing Regulations). 9. Investor’s grievance Cell (Disposal of complaint by laws 1997). 0. Investors Protection Fund (As per investor protection fund Regulations 1999). 3 11. Announcement of Price sensitive or other information about listed companies through online. 2. 1. 6 Demutualization Demutualization of a stock exchange is the process of transforming a non-profit memberowned mutual organization into a profit seeking shareholder Corporation. Exchanges all over the world have been demutualizing due to increasing international competition and technological challenges to traditional modes of securities trading.The change of a stock exchange from a member-owned organization to a for-profit shareholder corporation triggers a number of questions about regulatory oversight. In Bangladesh, Stock indices are directed by the elected body of stock brokers where conflict of interest happens. There is very poor corporate governance in the Stock Indices that is an important reason of recent debacle (Investigation Report by the Committee). In chapter 2 I discussed about benefits of demutualization that are applicable for the capital market of Bangladesh.As stock dealers and brokers are familiar as institutional investors and play a big rule in the capital market mechanism, they should be regulated properly. In Bangladesh, DSE conduct inspection on brokerage houses and DSE is also run by a selected committee of brokerage house, so one cannot expect proper judgment from the DSE. Table 2. 1 DSE Top five BO Accountholders in 2010 Name Total Annual Turnover (Tk. Billion ) Prime Bank Investment Ltd. 676. 73 IDLC Finance Ltd. 555. 58 LankaBangla Securities Ltd. 525. 33 Trust Bank Ltd. 523. 25 AB Investments Ltd. 497. 33 Sl. 1. 2. 3. 4. 5.From the table, we find that all the top investors are brokerage houses who are mainly monitored by DSE that creates many conflicts of interests. So, if brokerage houses make any big irregularity, DSE is supposed to hide it as it a member of DSE. In 2010, many positive factors along with regulatory supports (SEC, DSE) inflated the market and finally caused big losses for general investors. In case of irregularities (serial Trading, price manipulation) by brokerage houses/members, DSE had failed to make any proper investigation and also failed to inform it to SEC for regulatory actions and favored members.In case of price bidding under book-building method, some members (associated to underwriter of the company) quoted very high and irrational price and DSE listed the securities of these companies without asking any question that rises about the transparency of the listing methods. Without stock excha nge demutualization such conflict of interests could not be avoided. 2. 1. 7 Stock market Bubble A stock market bubble is one kind of economic bubble that takes place in stock markets when market participants drive stock prices above their value in relation to some system of stock valuation. (Smith et. al. 1988) 4Impact of Bubble: There is debate about the impact of economic bubbles among different schools of economic thoughts. Many of the mainstream economists believe that bubbles cannot be recognized in advance, cannot be prevented from forming and attempts to â€Å"prick† the bubble cause financial crises. Instead of pricking the bubble, authorities should wait for bubbles to burst by their own ways, dealing with the consequences via monetary and fiscal policies (Robert E. Wright, 2010). Other economists believe that bubble have negative impact on the economy as it tends to cause misallocation of resources into non-optimal uses.Robert E. Wright, a political economist argue s that bubbles can be identified ex ante with high confidence. In addition, the crash that is caused by an economic bubble can demolish a large amount of wealth and might cause continuing economic depression; this view is particularly linked to the debt-deflation theory of Irving Fisher and elaborated within PostKeynesian economics. An important aspect of economic bubbles is its impact on spending habits. Market participants with overvalued assets tend to spend more because they â€Å"feel† richer (the wealth effect).Many observers quote the housing market of New Zealand, Spain, United Kingdom, Australia and United States in recent times as an example of this effect. Possible causes of Bubble: Low interest rate policies by the Federal Reserve system are believed to have exacerbated housing and commodities bubbles. The housing bubble popped as subprime mortgages began to default at much higher rates than expected, which also coincided with the rising of the fed funds rate. It has also been variously suggested that bubbles may be intrinsic, rational and contagious.To date, there is no widely accepted theory to explain their occurrence. Recent computergenerated agency models suggest that excessive leverage could be a key factor in causing financial bubbles. Some of the causes of economic bubble are given below: Liquidity: One of the possible causes of bubbles is the presence of excessive liquidity in the financial system that induces aggressive lending banks that make asset markets vulnerable. Economic bubbles often occur when too much money is chasing too few assets, causing both good and bad assets to appreciate excessively beyond their intrinsic value to an unacceptable level.Greater fool theory: Greater fool theory says that bubbles are driven by the behavior of highly optimistic market participants (the fools) who buy overpriced assets in anticipation of selling it to other speculators (the greater fools) at a higher price. According to this unsupport ed explanation, the bubbles continue as long as the fools can find greater fools to pay up for the overpriced assets. The bubbles will be ended only when the greater fool becomes the greatest fool who pays the highest price for the overpriced asset and no longer finds another buyer to pay for it at a higher price (Levine et. al. 007) Extrapolation: Extrapolation is the process of projecting historical data into the future on the same basis. If price of an asset have increased at a certain rate in the past, they are supposed to continue to rise at that rate perpetually. It says that investors tend to extrapolate past abnormal returns on investment of certain assets into the future, causing them to overbid those risky assets in order to attempt to capture the same rates of return 5 again. Overbidding on certain assets will at a point of time results uneconomic rates of return for investors and then the asset price starts to shrink (Buchanan and Mark, 2008).Herding: Investors tend to b uy or sell an asset in the direction of the market trend. This is sometimes supported by technical analysis that tries to identify those trends and follow them that creates a self-fulfilling prophecy. Investment managers are compensated and retained in part due to their performance relative to their industry peers. Taking a conservative or contrarian position as a bubble builds results in performance unfavorable to peers that might cause customers to go to competitors and might affect the investment manager's employment and compensation.Moral hazard: Moral hazard is the prospect that a party insulated from risk may behave differently from the way it would behave if it were fully exposed to the risk. A person's belief that they are responsible for the consequences of their own actions is an important aspect of rational behavior. An investor must balance the possibility of making a return on their investment with the risk of making a loss – the risk-return relationship. A moral hazard can occur when this relationship is interfered with, often via government policy.A recent example is the Troubled Asset Relief Program (TARP), signed into law by U. S. President George W. Bush on October 3, 2008 to provide a Government bailout for many financial and non-financial institutions who speculated in high-risk financial instruments during the housing boom condemned by a 2005 story in The Economist titled â€Å"The worldwide rise in house prices is the biggest bubble in history†. Manipulation: Manipulation could be a very important reason of economic bubble. Especially, stock market bubble could be created through stock manipulations.In many developed and developing countries, big investors (Both individuals and Institutional) might manipulate the stock price and could create a bubble. Recent stock market bubble in Bangladesh is mostly caused by manipulations (Ibrahim Khalid stock market probe Report, 2011) Insider Trading: Insider trading also might be a cau se of economic bubble, esp. , in the capital market. Insiders can use the hidden information to take advantage of the undisclosed news from the market and can make the stock price higher than its intrinsic value (Ronald R et. al. 993) Other possible causes of Economic Bubble: Some regard bubbles as related to inflation and thus believe that the causes of inflation are also the causes of bubbles. Others think that bubbles represent an increase over that â€Å"fundamental value† of an asset, which finally return to that fundamental value. Finally, others regard bubbles as necessary consequences of illogically valuing assets solely based upon their returns in the recent past without resorting to a rigorous analysis based on their underlying â€Å"fundamentals†. 2. 1. 8 Omnibus Account Omnibus account is a type of account between two futures merchants (brokers).Transaction of individual accounts is combined in this type of account that allows easier management of portfolio by the futures merchant. But this type of account could be used to manipulate stock as many individual transactions are kept hidden over there. 6 In a recent investigation, it was found that many speculative deals were made through Omnibus accounts of Merchant Banks. Report showed that each Omnibus account consists of 3000-10000 individual accounts and big market players/manipulators used Omnibus Accounts to make speculate stock prices.Even high SEC and Government Officials used the help of Omnibus account to buy and sell share though its prohibited for them to involve invest in the stock market. (Ibrahim Khalid Committee Report) In this case Merchant Bank did not comply with SEC and Bangladesh Bank rules. As per central Bank law, shares of Banks cannot be bought in unidentified accounts but Merchant banks did so in many cases. But SEC never raised any question about such accounts and never made any investigations to dig out irregularities that indicate poor regulations. . 1. 9 Sto ck market crash A stock market crash is a sudden dramatic fall of stock prices across a significant crosssection of a stock market, resulting in a significant loss of paper assets. Crashes are driven by panic as much as by underlying economic factors. They often follow speculative stock market bubbles. Stock market crashes are social phenomena where external economic events combine with crowd behavior and psychology in a positive feedback loop where selling by some market participants drives more market participants to sell.Generally speaking, crashes usually occur under the following conditions, a prolonged period of rising stock prices and excessive economic optimism, a market where P/E ratios exceed long-term averages, and extensive use of margin debt and leverage by market participants (Galbraith, The Great Crash 1929, 1988). There is no numerically specific definition of a stock market crash but the term commonly applies to steep double-digit percentage losses in a stock market index over a period of several days. Crashes are often distinguished from bear markets by panic selling and abrupt, dramatic price declines.Bear markets are periods of declining stock market prices that are measured in months or years. While crashes are often associated with bear markets, they do not necessarily go hand in hand. The crash of 1987, for example, did not lead to a bear market. Likewise, the Japanese Nikkei bear market of the 1990s occurred over several years without any notable crashes. 2. 2 Comparison of recent stock market volatility of DSE with other markets As any sudden dramatic and persistent stock price fall is treated as stock market crash, I believe the recent price fall of Dhaka stock exchange should be called a crash.Recent price fall in DSE was sudden and persistent that caused significant loss of paper wealth and was abnormal in nature compared to other stock markets. If I compare the price trends of Dhaka Stock exchange with other stock exchange I find t he price movement of DSE is absolutely different from other stock markets. Table-22: Comparison of DSE volatility with other market Name of the Index Index Return Std. Dev of index return (Dec’10-Jan’12) (Dec’10-Jan’12) DSE (50%) 11% BSE-30 (14%) 7. 8% SET 55. 62% 5. 84% 7 From the table 2. , we find that during December 2011 to January 2012 Bombay Stock Exchange selected index (BSE-30) felled by 14% while SET index of Thailand increased by 55. 62% during the period while Dhaka Stock Exchange general Index (DGEN) felled by more than 50% during that period, i. e. , DGEN lose its value by 50% during the period that says that this is not simple volatility and it can be defined as a collapse. On the other hand, Standard deviation of index return (a measure of volatility) for BSE-30 and SET index was respective 7. 8% and 5. 4%. But for DSE, the standard deviation of index return was 11% that was much higher than other two indices. DSE index felled sharply duri ng the period from 8200 point (approx. ) to 4000 point (approx. ) and the fall was persisted over a long period. Graph 2. 1 Trend of Bombay Stock Exchange-30 (BSE-30) index Graph 2. 2 Trend of DSE General (DGEN) index Graph 2. 3 Trend of SET Index 8 From the graph 2. 1 we find that BSE-30 index fluctuating over the period in the range of 10000 to 20000 points and showing an increasing trend now.As a result the standard deviation of the index return was 7. 8%. But the BSE-30 index fluctuation is much lower than the DSE general index (Graph-2. 2). Graph 2. 3 gives the trend of SET Index of Thailand that is growing fast and crossed 1000 points from 600 points during the period. Standard deviation of SET index was 5. 84% that is much lower than that of DSE general index (11%). Graph 2. 2 gives the highly volatile and sharply falling index trend of DSE general Index that started to increase from 2600 points in January 2009 and crossed its zenith price of 8600 in December 2010.After climb ing the highest point it started to fall sharply and came down below 4000 in January 2012 less than half of the highest point. From the above analysis we can conclude that DSE index movement was not normal and the fall was so abrupt that it caused huge loss for investors. Especially investors who invested with margin loan lost everything as the index loss was more than 50%. Both BSE30 and SET are facing regular rise and fall while DSE is facing regular and sharp that indicates that the fall was like a stock market collapse and in the later part of the study I will identify this as a stock market collapse. 2. Previous research on this topic Many studies are done around the world to find the reasons of stock market crash and linked with regulatory issues. Recent economic crunch and stock market crash in US motivated economists to conduct in-depth research on it. In Bangladesh many analysts expressed their view regarding the capital market crash but no comprehensive research work is st ill done on it. Government had formed an enquiry team headed by Mr. Ibrahim Khalid, former deputy Governor of the Central Bank to make a probe into the recent activity and to identify the culprits that submitted their report to the government.I am going to discuss the causes of recent Credit Crisis of 2007-2009 and â€Å"Ibrahim Khalid stock probe report† regarding the stock market of Bangladesh in this chapter. 2. 3. 1 Research on Capital Market crash in Bangladesh After the recent catastrophe of capital market of Bangladesh, Government of Peoples republic of Bangladesh had formed a high-powered committee in 2011 to investigate the issue and to give a report to the government within two months. The committee was headed by the ex-deputy governor of Bangladesh Bank, Mr. Khondoker Ibrahim 9 Khaled and the committee was named â€Å"Ibrahim Khaled share market probe Committee†.The committee published a report that was initially kept undisclosed to the general people but la ter on it was disclosed as investors groups and civil society was creating pressure over the government for disclosing it. I will try to summarize the findings of the report in this chapter. Reasons behind the Market Failure: Committee identify following broad factors that caused the capital market disaster recently: a) Primary Issue related Problems: ? Direct listing in Primary issue ? Abuse of Book Building Method of IPO ? High premium for stock listing ? Illegal Private placement market ?Asset Revaluation of Companies before listing to charge higher premium. b) Secondary market related problems: ? Circular trading in Secondary market ? Block trading ? Stock Price Manipulation through Omnibus Accounts ? Most of the market players are identified in the report c) Irregularities in issuance of Right Share/Preference Share/Repeat IPO etc. d) Recommendation of Stock Dividend by companies against unrealized Profits e) Regulatory Failure ? Inconsistency in regulatory activities ? Support ing and legalization of unethical activities of Big Investors ?Irresponsible Behavior/Weakness in many areas ? Formulating policies to support market Players (Manipulators) ? Lack of Due Diligence ? Lack of Co-ordination between SEC and Stock exchanges ? Allowing Financial Institutions to invest in capital market aggressively ? SEC Failed to take measure against manipulation of Financial statements Report says that the burden of this failure should be carried by Securities and Exchange Commission (SEC). Recommendations by the Committee The Committee has recommended some suggestions to the Government to recover the Capital Market from the depression.Major points of their recommendations are given below: a) Restructuring of SEC ? Termination of SEC chief and some other corrupt members ? Comprehensive inspection of their corruption and necessary legal actions ? Recruiting qualified accountants/financial analysts/experts/Talents for SEC ? Increase the remuneration of SEC staff to attrac t talents ? Ensuring integrity of SEC personnel b) Stock Exchange Demutualization: ? Form Committee within DSE to give report regarding demutualization process within 3 months 10 c) d) e) f) g) h) i) j) k) l) m) If DSE fails to give report on time, Government should take steps after 3 months ? Government can take advisory supports from World Bank or any other international organization ? Government can employ an â€Å"Administrator† to DSE to implement the demutualization process. Co-ordination between SEC and stock exchanges for better regulation Capital Market financing by Financial Institutions (FI’s) ? Formulate policy for capital market investment by FI’s in the line of such policies in India and Pakistan ? Take measures against FI’s who are involved with the recent stock market manipulation ?Central Bank should monitor FI’s aggressive stock investment very strictly Formulate clear policy for Pre-IPO placement Ensure transparency in dealing wi th Omnibus Accounts Prohibit share trading by some Government Officials (e. g. , SEC, DSE, CSE, Bangladesh bank , Commercial bank officials) Asset Revaluation by companies should be reviewed by SEC Review the Book-Building Method of IPO Make uniform face-value of all companies Take legal actions against market players/manipulators Government should be more aware about the capital market and they should be free from influence of top market players ( Salman F.Rahman, Rakibur Rahman etc. ) SEC should Open Investors advisory support services to avoid rumor-based trading Conclusion: Committee has made a study on the capital market issues. They specially focused on individual manipulations and regulatory system failure and provided some clear-cut recommendations for the government. I will conduct empirical study on some of the factors to test whether the volatility was due regulatory failure or not. 11 CHAPTER 3 METHODOLOGY 3. 1 Data Source This study is basically descriptive in nature.Da ta is collected from both Primary (Stock Exchange, SEC) and secondary sources like different publications of DSE, Bangladesh Bank, ADB, WB and IMF. Some other research papers in this line will also be used. 3. 2 Analysis Technique/method 3. 2. 1 Qualitative analysis: As my study will try to examine the regulatory aspect in the capital market of Bangladesh, I will focus more qualitative analysis techniques. Quantitative Analysis: In my study, I will also use quantitative techniques to analyze data. Software’s like SPSS, Excel might be helpful for me. 3. 2. 2 12CHAPTER 4 Recent Trends of Capital Market Over the last few years, the capital market of Bangladesh has witnessed a super-normal growth which is not in line of development of real sector of the country. Progress in capital market development has been made possible by, among other things, the central depository system and the automated trading system, a substantial increase in the minimum capital requirement of banks and nonbank financial institutions, lower interest rates on long-term government savings instruments, and an increase in overseas workers’ remittances (Bangladesh Bank, 2011).Increased investors' participation and demand for stocks are fueling price hikes in the market. Other indicators of the capital market also recorded significant growth. Market capitalization of DSE remarkably increased during last three years as reflected in the ratios of market capitalization to the country's GDP at current market price. Market capitalization stood at Taka 2700. 7 billion at the end of FY10 increased by 190. 1 percent from Taka 931. 0 billion of end FY08. The ratio of market capitalization of DSE to GDP rose to 39. percent in end FY10 from 5. 2 percent in FY06 and from 2. 3 percent of FY00. Except for the 13. 1 percent bubble in 1996, the ratio was almost flat at below 3 percent up to FY04. After the 1996's bubble and bust, the market returned to sunny days in the beginning of last quarter FY04 by crossing the index 1100 marked point. After ten years of a flat capital market, the DSE General Index (DGEN) crossed 3000 marked point in December 2007 for the second time. Since the third quarter of FY09, the DGEN gained sharply and it jumped to 8918. 1 in December 2010 increased by 5908. 51 points or 197 percent from the index of end June 2009(3010 points). When the recent past global recession adversely affected the world capital market, sustained rise of price index and daily average turnover of Bangladesh capital market could be seen as a positive sign for the Bangladesh economy. Investment by foreigners in DSE increased during last three years. In FY10, the foreign trade turnover was Taka 18. 7 billion (0. 7 percent of total turnover in DSE) which was 57. 9 percent higher than previous year.Foreign trade was Taka 9. 9 billion (6. 0 percent of total turnover) in FY07 and was Taka 3. 4 billion (9. 7 percent of total turnover) in FY97 (Bangladesh Bank, 2011) Nonetheless, long-term prospects for capital market development are mixed. Although, the Securities and Exchange Commission (SEC) of Bangladesh has tried to correct the abnormal behavior observed in the market, very often it is argued that lack of proper and firm decisions from the regulator’s side has contributed to make the market more unstable rather than stabilizing it.At the beginning of recent Bull Run, Bangladesh capital market was fairly underpriced in terms of Price Earnings Ratio. The market weighted PER of DSE was 11 to 18 during FY04-FY07. PER became to bigger from beginning of FY09 as the acceleration of price index. The PER reached to its peak level at 30. 6 in February 2010 from 18. 4 of end June 2009. The high PER indicates that the market is highly overpriced and overheated. The strong demand from the retail investors, not matched by a corresponding increase in supply of stocks, has caused the PER to rise beyond rational levels.In terms of any measure, Bangladesh capital market is overheated during last couple of years as supply shocks (Bangladesh bank, 2011). 13 The capital market developments and its sustainability depend on market fundamentals at least in the medium term, and the fundamental strength of the market essentially comes from financial strength of the listed companies. Also, strong regulatory environment created and maintained by the regulatory bodies and participation of institutional investors and professional market analysts help orderly market operations.The market witnessed that last few years many fundamental companies with strong financial strength have been listed in the market. The main regulatory body SEC and the Government of Bangladesh and others related regulatory authorities have continued their all efforts to develop the Bangladesh capital market that reflected in the market trends. But growth of market demand for stock was much then that of supply that inflated the market in recent years and made the market most volatil e one in the region.The recent vibrant nature of the capital market also might be due to the increased interest in the market by a large number of individual investors which has been influenced by the government’s decision to reduce the bank interest rates for its different types of savings instrument. Some basic information regarding Dhaka stock Exchange is given below: Table 4. 1 Dhaka Stock Exchange (DSE) activities FY08 FY09 FY10 378 443 450 No. of listed securities 284. 4 457. 9 607. 3 Issued equity and debt (billion Taka) 1044. 80 1903 3508. 0 Market capitalization (billion Taka) 4309. 46 9327. 153 17831. 37 Turnover in value (million Taka) 2795. 00 4535. 30 8290. 50 DSE General Index* ? Year-end close Price, Source-Dhaka Stock exchange FY11 459 618. 51 2616 5598. 52 5257. 50 Table 4. 2 DSE Highest Records Total Number of Trades Total Trade Volume Total Traded Value in Taka(mn) Total Market Capital in Taka(mn) DSI Index Values 389310 242856735 32495. 756 3680714. 195 73 83. 93657 8918. 51346 Date 05-12-2010 21-07-2011 05-12-2010 05-12-2010 05-12-2010 05-12-2010From Table 4. 1, we find that DSE general index, Daily trade value and market capitalization of DSE increased substantially during last 4 years. But number of listed securities remained almost the same during the period that implies that supply side response was less relative to demand side response and market capitalization and index increased due to increased demand for securities and scarcity of good securities. Nature of Investors: At the end of 2010, total number Beneficiary Owner (BO) Account stood at 3. Million (DSE Data). Out of that a big number of investors did not have sufficient knowledge about securities trading and most of them were relying on rumors spread by big investors. Information of BO accounts of last 3 years are given below: Table 4. 3 Change in total Number of BO Accounts in two Years Date 01. 01. 2009 30. 06. 2009 31. 12. 2009 Total No. of BO A/C 14,68,500 14,19,019 1 9,20,602 Change (+/-) -(49481) 5,01,583 14 30. 06. 2010 31. 01. 2011 25,70,654 33,79,719 6,50,052 8,09,065From the table we find that most of the BO accounts were opened during June ’2009 to January ’2011 that indicated that more than half of the investors could be treated as new investors. During 2009, stock exchanges, Institutional investors and SEC make many campaigns within and outside the country to attract new investor that seems to be successful as the BO accountholders was doubled in last two years that might be treated as a potential for market development. But due to scarcity of new securities market price increased substantially.This demand-supply mismatch along with inadequate investor’s knowledge made the stock prices in a new height and finally turned into a big depression that is still going on. Recently listed Companies with financial information: Twenty three companies (including three direct listing companies) raised new equity of Taka 18. 2 bi llion in the capital market in FY10, higher than the Taka 5. 9 billion raised by the sixteen companies in FY09. Of the new equity issued, Taka 5. 3 billion raised through private placements and Taka 12. 9 billion raised through public placements against Taka 0. billion raised through private placements and Taka 5. 0 billion through initial public offerings (IPO) in FY09. The volume of public offerings in FY10 was oversubscribed more than nine times indicating the high demand of new securities in the primary market. Bonus shares valued at Taka 27. 6 billion were issued in FY10 by one hundred and twenty one companies against retained profits, higher than the Taka 16. 2 billion issued in FY09 by ninety one companies. Currently 493 securities (Debt and Equity securities) are being traded in Dhaka stock exchange. Few numbers of companies are making fresh issue every year. 3, 18 and 10 companies listed their securities respectively in 2009, 2010 and 2011(up to July). Traditionally DSE use d fixed price method for flotation of new companies. But fixed price method does not attract good companies always. So, to attract new companies, SEC decided to introduce Book building method that is a globally acceptable method for IPO. But in Bangladesh, Book Building method is handled very roughly that caused loss for millions of investors. Detail information of securities floated in the market for last 3 years are given in table 4. 4. 15 Table 4. Detail information of fresh Issues in the DSE during 2009-11 Book Value 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 100 10 10 10 10 100 100 10 10 10 100 10 10 10 100 100 10 10 10 100 100 100 10 Issue Price 111. 6 127 10 10 10 60 10 10 10 10 10 10 10 10 10 10 10 25 100 10 10 10 48 120 100 10 10 10 100 10 20 70 100 100 10 90 10 100 100 250 10 Opening Price 134 145 12. 7 10 10. 2 73 68 10. 8 9. 5 74 9. 6 136 9. 3 10. 9 12. 6 11. 4 89. 2 89 235 12. 7 12. 9 16. 5 208 799 514 28. 6 23. 5 27 559 25 57 177 462 261 63. 1 325 35. 5 1955 405 784 71. 6 1st day return 20. 07 14. 7 27. 00 0. 00 2. 00 21. 67 580. 00 8. 00 -5. 00 640. 00 -4. 00 1260. 00 -7. 00 9. 00 26. 00 14. 00 792. 00 256. 00 135. 00 27. 00 29. 00 65. 00 333. 33 565. 83 414. 00 186. 00 135. 00 170. 00 459. 00 150. 00 185. 00 152. 86 362. 00 161. 00 531. 00 261. 11 255. 00 1855. 00 305. 00 213. 60 616. 00 1st Month close Price 140 190 10. 5 9. 2 8. 5 65 48 9. 5 9. 8 61 9. 5 130 10. 2 10 11. 4 10. 5 85. 2 85 620 12. 4 12. 7 16 170 740 506 24. 2 20. 6 20 619 27 60 171 511 180 59 451 31. 5 1667 470 762 46. 9 1st Month return 25. 45 49. 61 5. 00 -8. 00 -15. 00 8. 33 380. 00 -5. 00 -2. 0 510. 00 -5. 00 1200. 00 2. 00 0. 00 14. 00 5. 00 752. 00 240. 00 520. 00 24. 00 27. 00 60. 00 254. 17 516. 67 406. 00 142. 00 106. 00 100. 00 519. 00 170. 00 200. 00 144. 29 411. 00 80. 00 490. 00 401. 11 215. 00 1567. 00 370. 00 204. 80 369. 00 1st year close price 70 71. 9 8. 3 8. 6 8. 7 35. 1 23. 5 7. 7 9. 5 29. 3 5. 4 77 7. 2 7. 4 8. 1 7. 4 41 70 510 8. 7 9. 4 14 103 2 646 1197 16. 1 17. 5 17 800 17 102 245 604 156 73. 1 672 17. 5 2497 838. 5 1721 29. 8 Yearly return -37. 28* -43. 39* -17* -14* -13* -41. 5* 135* -23 -5 193 -46 670 -28 -26 -19 -26 310 180 410 -13 -6 40 114. 8 2105 1097 61 75 70 700 70 410 250 504 56 631 646. 67 75 2397 738. 5 588. 4 198 year 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2009 2009 2009 2009 2009 2009 2009 2009 2009 2009 2009 2009 2009 2009 2009 2009 2009 2009 Issue Name M. I. Cement MJL BD Ltd. Reliance MF EBL NRB MF SEBL 1st MF Barkatullah Electrodes Salvo chemicals MBL MF AIBL MF Deshbandhu polymer PHP MF Active Fine Chemicals IFIL MF Popular MF Janata MF Green delta MF Beacon Pharma Malek Spinning United Air ICB 3rd MF Phoenix MF IFIC MF RAK Ceramic Dhaka Insurance R.N. Spinning DBH 1st MF Prime Bank 1st Icb MF Trust Bank MF Provati Insurance ICB employees MF Goldenson (RPO) Grameen Phone Ltd. Islami Insurance ICB AMCL MF Dacca Dying MARICO BD L td. EBL 1st MF Rupali Life insurance Asia Insurace Bay Leasing Prime Finance 1st MF From the table it was found that many of the new issues were overvalued and lost value in fast few month that are contrary to traditional ideas regarding IPO.Most of such losing stocks were listed through Book building method where it was assumed that premium value for new stock was much higher than the intrinsic value and after listing in the market these stocks reached on their fundamental value. Actually this is an example of overpricing of IPOs in Bangladesh that caused bubble in the market. 16 CHAPTER 5 Empirical examination of three problems identified by Ibrahim Khalid committee In recent years, Bangladesh capital market witnessed both bullish and bearish trends caused by irregular fluctuation in the indices due to various reasons.In this chapter, I will try to identify some reasons/factor that caused such irregular cycles or stock market crash in Bangladesh. 5. 1 Changes in Face Value (Stock Split) of Securities: There are several theories that explain the reasons of stock split by companies. The most common reasons are to achieve an optimal price range for liquidity, to achieve an optimal tick size and to signal the confidence of managements’ in the future stock price. Various studies on stock split and market behavior shows that there are stock price might lead increase in stock price and trade volume in the short term (Aduda and Caroline. 2010).Copeland (1979) noted that a stock split changes stock prices to a more optimal price, which in turn increased demand for the stock. Their hypothesis of the optimal price range stated that there was a price range within which trading was most liquid for stocks of a company. Baker and Powell (1993) noted that the main motivation for the executives to split stock was toward improved liquidity. High-priced stocks found to be illiquid due to the psychological reasons and transaction costs. Therefore, when the prices climbs up to a certain level, the executive splits the stock to lower prices which facilitates trading and enhance liquidity.Benartzi et al. (2005) argued that management splits their stocks only if it considers the current level of stock price and earnings to be persistent. In Bangladesh, price of small face value (Tk. 10) securities are relatively higher then big face value (Tk. 100) securities where other things remain the same. By May 2010, SEC instructed all companies to convert the face value of securities to Tk. 10 from various per values that increased price level of Tk. 10 share substantially that inflated both the individual stock price and indices. During the period of 2009-2010, 62 companies had changed their face value.Some of the examples are given below with pairs: Table 5. 1 Price comparison of companies with same fundamentals but different per value Items EPS-2009 (Tk. ) NAV-2009 (Tk. ) (floating share (%)) Dividend-2009 Price-30/12/09 Price-30/12/10 1. Union Capital (Par value- 2. BIFC (Par value- Differences(1-2) 10) 100) 3. 90(39. 00) 34. 35 15. 60(156) 153 417. 5 Million (21%) 359. 0 Million (22%) 30%B 10%C, 12%B 116. 50(1165) 323. 00 246. 80(2468) 1117. 00 Market Return (31/12/09-31/12/10) -4. 65 +3 +58. 50 +8% TK. 842 (+360%) TK. 1351 (+221%) 82% Table 5. 2 Price comparison of Mutual Funds with different per value Items EPS-2009 (Tk. NAV-2009 (Tk. ) Paid Up capital 1. AIMS MF (Par 2. GrameenMF(Par value-1) value-10) 0. 19(1. 9) 3. 45 1. 91(19. 1) 34. 65 168. 0 Million 170. 0 Million Differences (1-2) -1. 55 -15. 55 -2 17 Dividend-2009 Price-30/12/09(TK) Price-30/12/10 (TK) No dividend was declared that year due to pending case with the court. 13. 83(138. 30) 78. 48 +59. 52(176%) 11. 85(118. 50) 104. 17 +14. 33(114%) From the both table given above that with similar financial condition or weaker financial conditions lower face value companies were overvalued relative to higher face value companies in same industries.This situation was persisting for many years and regulator failed to identify the face value of all listed companies that created some overvalued securities in the market. Investors were eager to buy the securities of these companies that were going to change face and before split price of these were jumping. As an example, National Bank Ltd (NBL) spits its share from Tk. 100 par value to Tk. 10 at 22/09/2010. At that day, the price of those securities was Tk. 823. 00(82. 30) only. But after just two months, price of the securities stood at Tk. 40 (22/11/2011) without any significant change in the company fundamentals. Another example is Prime finance and Investment Companies Ltd. that split the stock in 25 July 2010 when the stock price was Tk. 331. But just after two month (26 July 2010) stock price rose to Tk. 472 and the increase during this two month is almost 43%. So, we might say that change in face value (stock Split) inflated the market and caused an unanticipated bubble in the market. List of some sto ck split companies and their market capitalization are given below: Table 5. List of some stock split companies and their Market Capitalization(Tk. ) Market Capitalization Market Capitalization Change Market Millions Name of the Company (as on 02. 07. 2009) (as on 05. 12. 2010) (%) Adjusted Return (%) NBL Pubali Bank UCBL Uttara Bank ICB Islamic Bank Ltd Eastern Bank Uttara Finance Al-Arafah Islami Bank Prime Bank Southeast Bank Dhaka Bank NCCBL Social Islami Bank MIDAS Finance Standard Bank EXIM Bank People’s Leasing Prime Finance Jamuna Bank Shahjalal Islami Bank Premier Bank Ltd. BD Finance Phoenix Finance First Security Bank Ltd. Automobile Aftab 17093. 5 16979. 24 9544. 65 20777. 12 7946. 52 2475. 00 2475. 00 6687. 61 15747. 27 10584. 51 7324. 53 7511. 61 6762. 96 1560. 80 6953. 95 12498. 38 10172. 48 10172. 48 5100. 82 7583. 21 6889. 42 2039. 68 1059. 30 2768. 4 2768. 41 18 77256. 42 57735. 13 765099. 54 43391. 15 13958. 75 39460. 16 21859. 2 32413. 54 57186. 03 45708. 89 21250. 18 37404. 66 16044. 57 12483. 34 22424. 52 42838. 33 33180. 05 43690. 10 17602. 83 309117. 03 20200. 744 20200. 75 12199. 52 12963. 72 24360. 48 351. 96 240. 03 7916. 0 0 108. 84 75. 65 1494. 3 5 783. 2 384. 68 263. 14 331. 84 190. 12 397. 95 137. 24 699. 0 222. 47 242. 75 226. 17 329. 49 245. 09 3976. 3 3 193. 21 890. 38 1051. 6 5 368. 27 779. 94 2. 5 (30) Not traded in 2009 (150) (147) 4 240 101 (30) (77) (55) (54) (76) 228 (23. 8) (153) 612 263 (103) 45 (62) 273 225 (65) 70 From the table we find that market capitalization of stock split companies increased substantially during that period. Market adjusted returns of these companies were mixed as dividends, Right share issues are not considered here. Stock denomination fixation and Regulatory rules: From the table 4. 5 we find how stock split companies’ shares increased substantially.But such behavior is considered as normal in terms of other markets and cannot be treated as market failure and regulator cannot st op stock split in a stock market. 5. 2 Asset Revaluation: Chainirun and Narktabtee (2008) argued that firms revalue their assets to signal the firms’ growth prospect and liquidity improvement in order to decrease information asymmetry. Sharpe and Walker (2007) revealed that announcements of asset revaluation were associated with substantial upward movement in stock price and these shift in stock price generally sustains in later months.In Bangladesh, companies revalued their assets (Land and other Fixed Assets) that increased their asset value substantially as price of land and all other assets increased sharply that caused increased stock prices in the market. Many factors influenced companies to revalue their fixed assets. Some of these factors are to increase Stock price, to get more credit under NAV-based margin rules, to get higher ratings, to strengthen financial statement and to attain investors confident etc. sample of the companies of top value gainers are listed bel ow: Table 5. Top 10 NAV-gainer companies after asset revaluations Stock Price DGEN the NAV per Share(Tk. ) NAV Before Asset Revaluation After Asset Revaluation Name of Company Change (%) Change during Jan’2009Dec’2010 (%) Change Jan’2009Dec’2010(%) Market Adjusted return (%) Libra Infusions Ltd. 438 15,667 Sonali Ansh Ltd. 297 2,157 Rahim Textile Ltd. 127 785 BD Thai Aluminum 142 566 Ltd. Infusions Ltd. Orion 20 101 Ocean Containers 13 50 Shinepukur 12 26 ceramics Prime Textile 300 633 Eastern Insurance 151 309 BD welding 20 39 electrodesthe company was listed in 2010. As 3472 626 518 298 413 296 120 110 104 95 355 767 641 185 357 Not Applicable* 212% 21 572 162 1001 143 555 429 (27) 145 —(191) 360 (50) 789 From the Table 5. 4 given above, we find that some company gained up-to 1000% after asset revaluations during the period of 2009-10. As there is a clear and direct relationship between asset revaluation gain and stock price growth, I can say tha t revaluation might help the market to grow up faster and also caused much volatility. Many of the company directors sold their shares when the price went to the peak in 2010.But such phenomenon is supported by study and cannot be treated as regulatory failure. 19 5. 3 Issuance of Right/Preference Shares: Companies offer right shares to increase capital base or to meet regulatory capitals. In 2010, 22 companies proposed right shares to existing shareholders valuing 24720 million Taka that almost 17 times than that of 2009 figure which was only 1450 Million taka. Most of the right proposals of 2010 were with a premium price that differed on a range of 10% to 600%. Table 5. 5 Top Companies offered Right shares with high premium Company Name Confidence Cement Co.Ltd. Bay Leasing & Finance Eastern Insurance Co. Ltd. The City Bank Ltd. Phoenix Finance Asia Insurance *Close Price of 1st Trading day Premium Value (Tk. ) 600 250 200 100 100 100 Stock Price on 01/01/2009 (Tk. ) 323. 00 784. 75* 562. 25 432. 50 440. 50 404. 30* From table 5. 5 we find that in January 2009, price of confidence cement co. ltd. was only Tk. 323 but just after one year its right offer price was Tk. 700 (including Tk. 600 Premium) that was approved by the SEC which is a classic example of regulatory silence toward manipulation. Table 5. Top Companies offered preference Shares Company Name Value of Preference Share (Tk. Million) Private Placement Beximco Pharma 4100 63% Sumit Power 3000 69% Aftab Automobile 1800 82% Peoples Leasing 1200 58% BD Thai Aluminum 750 77% In case of preference share, most of them are distributed through private placement where there was no transparency of allocation. Another interesting thing is that, stock price of most of the companies mentioned above increased substantially just after the offerings that increased the greed of investors to make profit through buying right/preference shares of these companies. . 4 Faulty listing methods: In the year 2010, regulator introduced Book building method to attract new companies to the market. Some companies abused this opportunity to exploit maximum benefits from listing that inflated the market. SEC allows companies to float securities through IPO (Fixed Price and Book Building method), Direct Listing and Repeat IPO where Book building method is used mostly in the year 2010. In Bangladesh, following companies used book building method for listing in the capital market: 20 Table 5. Companies floated shares through Book Building Method Name of Company Premium Offer Collected capital value price (Million Tk. ) MJL Bangladesh Ltd. MI cement Ltd. Khulna power company Ltd. Ocean containers Ltd. (OCL) RAK Ceramics Ltd. 142. 40 101. 60 184. 25 135 38 152. 40 111. 60 194. 25 145 48 5690 3050 9600 1600 1310 Market Price (02/02/12) 68. 10 65. 20 43. 20 46. 20 54. 07 From the Table 5. 7 we find that first four companies charged very high premium for its share where and withdrawn huge amount of capital from mar ket.When these companies asked for very high price, shares of other companies of same industry tends to rise on an expectation that it is highly undervalued that increases the general price index. As per the local expert, local media and committee report, Book building method is the most important factor behind the recent stock market volatility in Bangladesh. So we need to study this factor deeply to reach on a conclusion. I would like to describe the implication of price discovery method followed to discover the price of KPCL and OCL here. Khulna Power Company Ltd: Khulna Power Company Ltd. s a power generation company under private ownership that sells supply electricity to consumers through national distribution system. Its security was first traded in 18April, 2010 and price of the securities is being discovered by eligible institutional investors through Book Building system. The company was registered in 15 October, 1997. Its NAV was 17. 09 and 18. 53 respectively for the yea r 2008 and 2009 while EPS was 0. 97 and 2. 79 respectively for the year 2008 and 2009. Other listing related information regarding the company is given below: Table 5. Basic Listing Information of Khulna Power Company Ltd. Khulna Power Company Ltd. Name of the Item Sl. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. Face Value Indicative price Offer Price NAV (As of 2009) EPS(As of 2009) Salable Shares Paid Up capital(As of 2009) First day Trade Price(18/04/2010) Trade price after 7 days Trade price after 30 days Trade Price After 1 year Lowest trade price Highest Trade Price(18/04/2010) Taka Tk. 10 Tk. 162 TK. 194 Tk. 18. 53 Tk. 2. 97 5,21,48,250 TK. 208,593,0000 Tk. 273. 60 TK. 270 TK. 207 Tk. 90. 60 TK. 55. 00 Tk. 341 21 Net Asset Value of KPCL was TK. 18. 3 and indicative price was Tk. 162 that is Ten times higher than the asset value of the company. EPS of the company was TK. 2. 79 and before the listing P/E of the security stood at almost 60 that is unusual in respect of other company. Ocean Containers Limited: It is the pioneer for Inland Container Depot (ICD) and Container Freight Stations (CFS) and is the largest privately owned land container port (Off-dock) in Bangladesh. It is located at Patenga Industrial Area of Chittagong on the International Airport road, which is only 6 km from the country’s largest seaport, Chittagong Port.It was listed with DSE in 2010 through book building method. Other listing related information regarding the company is given below: Table 5. 9 Basic Listing Information of Ocean Containers Limited. Sl. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Ocean Containers Limited. Name of the Item Face Value Offer price NAV (As of 2009) EPS(As of 2009) First day Trade Price (04/03/2910) Trade price after 7 days Trade price after 30 days Trade Price After 1 year Lowest trade price Highest Trade Price (04/03/2910) Taka Tk. 10 Tk. 145 Tk. 55 Tk. 3. 73 Tk. 297 TK. 79 TK. 258 Tk. 96. 60 TK. 62 Tk. 2254 From these figures, we find that the maximum price of the stock was Tk. 2254 and minimum price was Tk. 69 only against face value of Tk. 10. The lowest price of the securities was half of the offer price of the securities that indicates that many shareholders caused huge losses out of this security. In both cases discussed above most benefit goes to the owners of the company and both the company are owned by same people. Few institutional investors benefited directly from these two securities.Book Building method for price discovery gives various massages to the market. Some of these are follows: 1. Investors will feel that market is undervalued and they will select instruments that are already in the peak but relatively undervalued if compared to KPCL/OCL. 2. Companies of same industry of which KPCL is operating should go up. Most of the companies of power sector seemed undervalued relative to KPCL as it was overvalued and investors had expectations that price of each company will go to that level that fueled the speculative trend of the market. 3.General Investors had a perception that Eligible institutional investors are technically sound to discover the justified price for a specific stock and th