The Frailties Of Domestic And Global Banking Markets Finance Essay - Free Essay Example

Sample details Pages: 15 Words: 4594 Downloads: 1 Date added: 2017/06/26 Category Finance Essay Type Compare and contrast essay Did you like this example? The recent financial crisis has highlighted the frailties of both the domestic and global banking markets, with attention being placed on the need for both more and better regulation. It was felt that no one had responsibility for systemic issues, the Bank of England focussed on monetary policy whilst the Financial Services Authority focussed on the supervision of individual institutions and paid insufficient attention to wider risks[1]. There is also the view that better enforcement of current regulation would be more effective.[2]Such focus on solving the issue should not be discouraged as the financial system is of paramount importance to the economy. Don’t waste time! Our writers will create an original "The Frailties Of Domestic And Global Banking Markets Finance Essay" essay for you Create order Any response does needs to be rational, as more regulation may do little beyond satisfying the calls for something to be done[3], and can be just as damaging as under-regulation.[4] The global nature of the crisis has been highlighted by the European Commission response that; an efficient single market is a key factor to facilitate recovery.[5]They stated that it is imperative; the banking sector is brought back to levels of efficiency, transparency and stability that allow confidence and reliability to be restored, to the benefit of consumers and firms alike.[6]A threat to this is the speed of change; major countries and blocs are enacting new legislation at a pace which would have been unimaginable prior to the crisis.[7]Indeed it is put forward that the big risk of all these regulation changes is to put enormous strain on the plumbing of the traditional system.[8]The fact that the crisis is unlike anything we have had before[9]justifies the international response. As changes are already well under way this article will look at whether they were needed or not, or whether the existing mechanisms could simply have been made to work. The article will begin by looking at the causes of the causes of the crisis. It will then go on to assess where change are being made or could be made to improve the regulatory system. Finally it will assess whether a global regulator is a possibility. Cause of the crisis It was the collapse of Lehman Brothers (one of the worlds largest investment banks) in the United States (US) that sent the crisis global. The De Larosire report[10]succinctly describes the crisis; low US interest rates and an extension of credit to those with poor credit histories played a significant role. Whilst, insufficiently regulated mortgage lending and complex securitisation financing techniques, the complexities of which regulators failed to understand, fuelled the crisis. This was compounded by a number of factors. In the UK the FSA failed to enforce regulation. Both the FSA and the Bank of England failed in ensuring financial stability[11]assessing risk.[12]There was too much focus on the micro-prudential supervision of individual banks and not sufficient focus on the macro-prudential risks of a contagion of correlated shocks.[13] The cause of the failure in the UK was the borrowing from US banks this assisted Northern Rock in increasing its lending 42 billion in the fall of 2003 to 113 billion by the summer of 2007, which left it severely overexposed.[14]Other failings include; the greed of bankers who were taking huge bonuses;[15]the failure to act against massive frauds with civil sanction let alone criminal ones;[16]the disclosure of the intervention of the Bank of England in the case of Northern Rock acting as a distress signal to the public, causing a run on the bank;[17]insufficient advice given by credit rating agencies and other firms outside the scope of financial regulation and their lack of accountability;[18]and finally the global complexities of financial products.[19] Reform of the National Structure An effort has been made to introduce new regulation on the back of the good will that a financial crisis brings. Past efforts have begun too late, by which time the will to act has subsided.[20]Legislators are keen for this not to be the case this time and they have recognised the need to; at the least take the opportunity of the crisis to reinforce institutional mechanisms so that we do not in 10 to 15 years time go through it all again.[21]The use of reinforce is significant, as it would seem to suggest the legislators are not seeking to reform the system with purely regulatory measures. The responses will be split into the failings highlighted above. The FSA and the Bank of England The issue of who should be the regulator is seen a contentious issue in the UK. The coalition government announced on its arrival to power the return of regulatory functions to the Bank of England, a system the Conservatives used prior to Labour winning the 1997 election.[22] The FSAs powers will be dispersed between three agencies; the Financial Policy Committee (FPC), which will be part of the bank; the Prudential Regulation Body (PRA), which will be a subsidiary of the bank; and the Consumer Protection Agency (CPMA), which will be a company limited by guarantee[23]. It is an attempt to bring accountability into the regulatory system.[24] The tripartite system was seen as the key weakness of the FSA, as it was claimed it had failed spectacularly in its mission to ensure financial stability and that failure cost the economy billions.[25]The coalition believes a switch to a single regulator is the answer,[26]meaning power has to return to the Bank due to its role as lender of last resort, which could not be filled by the FSA. Such arguments by the government are countered by the argument that the failure of the tripartite system was a result of the people involved, and it is those same people that will be moved to the Bank of England.[27] By splitting regulation into three agencies, proper attention should be paid to both prudential regulation, an area which was overlooked by the FSA, and consumer protection.[28]The CPMA will boost efficiency and oversight of the financial sector by combining consumer protection and conduct of business issues which were previously split between the FSA and the Office of Fair Trade (OFT). However, the separation of agencies may also cause inefficiencies. A start up bank will now need to gain approval from the PRA and CPMA, and the FPC may have an interest in the process; a bank will be subject to separate inspections by the PRA and the CPMA; and will receive separate communications and inspections from each regulator.[29]To be successful a lot will depend on how the mechanisms of cooperation between CPMA and PRA work in practice. Lessons should be learned from the failure of the memorandum of cooperation between the FSA, Bank of England and the Treasury during the crisis. Another worry is that the transition between regulators will cause a drop in regulation,[30]when it is most needed. The switch to the Bank of England is not without its critics, who suggest that the FSAs failed due to it having to adhere to the light touch approach.[31]A tougher approach was promised after the crisis, as the FSA had been; doing regulation on the cheap.[32]Hector Sants added; people should be very frightened of the FSA.[33]Indeed the FSA have been praised for their approach to the crisis.[34]The FSA have adopted a tougher approach and there was increased action in areas such as insider trading.[35]Thus the criticism by the Turner Report that regulation needed to be more intrusive and more systemic through adopting intensive supervision was already being successfully addressed.[36] Further, the Bank of England has already failed as a regulator, so it is arguable that it is not necessarily a better prospect than the FSA. The Turner review pointed out that the success of a nation to deal with a financial crisis is about as correlated to the choice of structure as it is to the choice of supervisory style.[37]It is suggested that removing regulatory powers from the Bank of England was a good decision.[38]So the decision to hand the powers back makes little sense other than it being a preference of the coalition government, and that perhaps it is seen as removing some of the stigma attached to the regulatory system following the crisis. An independent banking commission chaired by John Vickers (former head of OFT) has been set up to monitor the Bank of England, with the aim of highlighting any failings. It will also report every six months to the treasury on matters such as breaking up the banks, policy objectives to mitigate systemic risk, and consider the competitive advantage of banks being considered too-big-to-fail.[39] Too-big-to-fail The too-big-to-fail ideology has also caused issues for the UK, who during the crisis adopted the practice of bailing out the banks, including Lloyds Banking Group and RBS believing that they posed too big a systemic risk to be allowed to fail. Mervyn King supported this approach of protecting the economy from the banks during the crisis, but adds that it may not seem fair and it is not when other companies, such as Jaguar, had to stand on their own two feet or go to the wall.[40] The US has allowed its banks to fail and in the long term it is thought that this is the best approach otherwise banks will continue to take excessive risks. The FSA has previously stated that; a zero failure regime is neither; achievable in practice or desirable or in principle.[41]So it needs to be asked why they sought to achieve this during the crisis. Mechanisms need to be developed that will allow banks to fail so as to prevent future crisis. It is the banks that need to be made to pay for their risks and not the taxpayer.[42] Bonus culture The bonuses of bank executives and directors is an area which needs to be addressed as prior to the crisis it was uncapped. The Walker report said that it is bonuses which drove the behaviour which lead to the crisis, as bankers are assessed on short term success.[43]Top bankers should be looking at objectives 15 years out and not on short term moves to boost the companys share prices and market cap.[44]The crisis has lead to calls for transparency in executive pay;[45]however there is concern about how difficult it will be to make changes in this area.[46] At national level there is a lack of action, despite the coalition agreement having stated; detailed proposals for robust action to tackle unacceptable bonuses in the financial services sector will be brought forward.[47]This has not occurred, and since bonus rounds are in January many have seen no impact on their bonuses. It appears there will now be no cap on bonus pools and even modest proposals to require greater disclosure of pay and bonuses have been dropped.[48]There is a worry that over-regulation would impair international competitiveness indirectly by encouraging an uncompetitive domestic market, and directly by driving operations to less heavily regulated jurisdictions.[49]So the government are reluctant to act too harshly. There has been some action at EU level and this will be implemented into UK law. The commission amended its 2004 and 2005 guidances on directors remuneration in listed companies[50]so that executive remuneration is aligned with the long term goal of the company. Further it has added a new recommendation on remuneration in the financial services sector that seeks to address perverse incentives and excessive risk-taking.[51]On top of this, the European Parliament has passed new rules to restrict bankers bonuses; this includes deferring 40 to 60 per cent of bonuses for three to five years, and half of any immediate bonuses must be paid in shares or in other securities related to bank performance, meaning bankers can only receive 20 to 30 per cent of any bonus in upfront cash.[52]The enactment of this legislation in Europe does cause a few problems, in particular the risk of talented staff moving to companies in other continents in search of higher cash bonuses which could weaken the UKs financial sector. Further, it does little to curtail excessive bonuses; it just means they have to be paid in a different way. The commission have also proposed limits to the payment of golden parachutes. To achieve this they seek to; limit bonus payments to a fixed term or a fixed amount and only on the basis of the non-variable component of annual remuneration;[53]and if the termination was due to poor performance the payment cannot be made.[54]This would have prevented Adam Applegarth (chief executive officer of Northern Rock) from receiving his 760,000 pay off and 346,000 pension top up.[55] Capital measures There has been a growing realisation that Emergency Liquidity Assistance needs to be carried out in confidence, so as to prevent future runs on banks.[56]As the lending of money to banks tends warn to the public of banks difficulties leading them to panic and remove their money. Also it has been recognised that there is a need for greater restrictions on bank lending, and measure to ensure increased holding of capital. If banks hold more money they can absorb shocks to the market more easily. In the recent crisis banks had a lack of liquid assets. Minimum capital requirements restrain leverage and risk taking and therefore reduce the likelihood of gambling for resurrection and reduce the effects of moral hazard.[57]Basel III will force banks to triple their triple capital reserves they must hold against losses, as well as demanding enough liquid assets to survive the market crisis.[58]Such requirements need to be balanced as increased capital requirements also make it harder for banks to lend during a crisis. The proposal put forward by Basel III will avoid this by ensuring that a banks minimum capital requirement falls in proportion to their losses in a crisis.[59] Agencies previously outside regulation Credit rating agencies which had been hitherto unregulated in the UK and US and there is now plans to regulate them. Their failure to warn of the toxic nature of some collateralised debt obligations was seen as key to the banking crisis.[60]Indeed, Consumer losses to real fraudsters must be small compared to their losses investing in high-tech companies on the advice of or through credit rating agencies.[61]The Turner report reflected this by calling for; more supervision of unregulated activities by regulated groups, and regulated firms exposures to unregulated entities.[62] There is no accountability for the quality of their ratings as there is no contract between the agency and user. The De Larosire report proposes that the direct authorisation of credit rating agencies should come under the newly created Agencies where they have a cross border element.[63]It is also proposed that better enforcement of agency duties may have prevented the credit rating agencies passing on bad information to the customer. Lightly or unregulated hedge and private equity funds also need to be brought under the scope of regulation even though they played little role in the recent crisis as they too could cause systemic risks in the future.[64]The International Monetary Fund (IMF) reflected this in their report.[65]seeing a need to extend the perimeter of regulation to capture firms at the edges and to reduce any systemic risk they pose. Essentially there is a need for a Macro-prudential approach to regulation, all firms that can cause a potential banking crisis need to be scrutinised.[66] Disclosure A lack of disclosure has caused problems. More disclosure would ensure an earlier, more graduated response to potential risks, enabling the regulator to respond before the problem gets excessive.[67]By encouraging more disclosure there would not be less of a need for more regulation as the regulator would be in a better position to mitigate risks. It has been shown that banks which disclose less are generally riskier relative to the capital they hold.[68]Difficulties facing any new system include; increased costs and burden on the banks, and pressure on the government to provide regulatory, analytical and intervention infrastructure.[69] Reform of the International Structure The global nature of todays banking system has caused the call for international regulation. Whilst a global regulator is some way off there are plans afoot for a Pan-European regulator. Proposals for a Pan-European Regulator An issue of the crisis was the regulation of cross border EU-institutions which were poorly regulated; a solution to this is the Pan-European regulator which would be able to monitor home-country and host-country relations. It is hoped it would create a more cohesive global system of regulation by coordinating domestic and European agencies.[70] The introduction of a Pan-European regulator is not really more regulation in itself, as the agencies it will preside over are already in place (albeit in a different form).[71]However, the increased powers of the agencies which it presides over would mean that there would be a need for more legislation for it to succeed. The hierarchy of it and the national systems would need to be clearly defined. A Pan-European regulator could not be granted any control over fiscal policy though unless there is an EU level lender of last resort developed, as Countries would be unlikely to want to cede any more sovereignty to Europe, if they still had to bail out the banks.[72] Basel III will propose more on the need for a Pan-European regulator, as well as the need for separate EU-regulators for banking, insurance and securities markets.[73]These will be useful as there is a need for nations to have a better assessment of macro-prudential risk no longer can big cross border firms be allowed to be regulated solely by national regulators. There needs to be closer inspection of cross border firms which national systems are inadequate to cover. European Agencies The De Larosire report proposed a European Systemic Risk Council (ESRC) who would have responsibility for monitoring and giving advice on systemic risks to the financial system of a whole. Its policies would be responded to by the three new European Supervisory Agencies (ESAs); the European Securities and Markets Agency (ESMA), the European Banking Agency (EBA), and the European Insurance and Occupational Pensions Agency (EIOPA), who replace three similar agencies. These have been implemented as of January 2011 following calls by the European Council, that the European Parliament passes legislation to enact the agencies.[74]Together the agencies have the aim of improving coordination between national supervisory authorities, such as the FSA, and of raising the standards of national supervision across the EU.[75]This will be achieved by further pushing for harmonisation across the EU including an increase in the use of regulations rather than directives as the former is directly appli cable to national law.[76]This has shown that there was a need for more regulation so as to provide more oversight of the industry. However the agencies affects of individual banks will be quite limited as they will have little, as it will be the national regulators that deal with them day to day. The UK in particular was against the ESRC having direct power over national regulators, instead preferring them to just give advice and warnings. The structure does bring about an accountability issue with regard to who answers to whom. Global regulator If anything the current crisis has highlighted a need for new laws and regulation on a wider scale than previously envisaged. Todays banks deal on a global level, to leave regulation on a nation by nation basis is not effective, and even proposals for a Pan-European regulator may not be enough[77]. It is worth remembering the current crisis had its origins in America. What is required is a compressive overhaul of the national and international financial systems requiring ethical considerations to be taken into account.[78]There needs to be a new and decisive approach to regulation which starts the process of reform so as to manage globalisation as a force for good in the medium term.[79] The need for a global regulator has been voiced by the Association of British Insurers who state at the very least there is a need for strong international links, as European wide insight may not be enough.[80] However, the possibility of a global regulator seems a long way off as different countries would be seeking to protect their differing interests. For instance it is unlikely that a growing economy like Chinas is going to want or require the same sort of regulation that an economy like the UKs would require. Further the various international standard setting agencies neither individually, nor collectively have the mandate or budget to fulfil the role or functions of global regulator.[81] Conclusion Whilst there has been a lack of regulation in certain areas of financial services activity, the failures and the crisis have been exacerbated by lax supervision and failings in enforcement.[82]It is supervision not regulation which is often the source of aggravation in a banking crisis.[83]Adequate banking governance incites healthy and sustainable economic development.[84]Not only was there a failure to mitigate the crisis there was an initial failure to act once it arrived. It has been suggested by this article that the decision to give regulatory powers back to the Bank of England makes little sense. Either it amounts to more regulation just for the sake of it, or simply a preference of the coalition government, as there are few compelling arguments for a shift away from the FSA. Whilst it is accepted the new structure will bring some efficiency gains, it is also highlighted it will be less efficient in other ways. Further it is a return to a system which has already failed numerous times. Bankers bonuses are a key area that needs reform, and whilst there has been some at EU level it is looking increasingly likely that there will be none in the UK. The need for more regulation in this area stems from the fact that there is a strong correlation between high bonuses and excessive risk taking. Thus there is a need to act to prevent future crisis. The article has also put forward that there is a need for increased minimum capital requirements so that the banks can be made to bear the costs of any future crisis. The current requirements were too low and Basel III will seek to address this. It is important however that any minimum requirement is not too excessive as it could have a negative impact on the banking industry. Credit Rating Agencies are another area which have been highlighted as an area where the regulation was previously too weak. There is a need for more regulation in order to ensure the quality of their work is improved in the future in order to protect the public and the market. Due to the fact they are currently outside the scope of legislation it will require new legislation and more regulation to achieve this. On the other hand with regards to disclosure it is proposed that it would simply require better enforcement of current regulation. It was the lack of disclosure by the firms which was a problem not the quality of the system by which they disclose. Further any new system for disclosure would come at a high cost and would likely face similar problems to the current system. Banks also need to be allowed to fail otherwise another crisis will emerge. Lessons need to be learned from the recent crisis and new legislation needs to be passed that would allow banks to fail. It has also been suggested that the proposals for a Pan-European regulator and new European agencies should not be viewed as more regulation, rather an attempt to better orchestrate the current European system. Further the bodies themselves will have little day-to-day involvement with the national banks. Further the Pan-European regulator cannot gain any significant powers over national regulators unless it makes a European lender of last resort. Finally it was proposed that a global regulator would be beneficial. However, this article suggests that it is still some way off becoming a reality, as the nations that it would involve all have different interests so it would be hard to reach a consensus. Further it is unlikely that nations would be willing to cede further sovereignty. So then as can be seen the answer to the question is not as simple as there needs to be more regulation, or more effective enforcement of current regulation. Banking regulation is a complex area and each aspect needs to be taken separately and analysed before deciding the course of action. However, what cannot be seen is what the effect of change in one area will have on another, so for that reason it is trial and error. Unfortunately, those errors are generally only highlighted by a crisis. Bibliography Materials used in Coursework Articles Alcock, Alistair Are financial services over-regulated?, (2003) 24 Comp. Law 132 Arora, Anu The 2007-9 banking crisis and the EUs regulatory response, (2010) 21(5) 603 Arora, Anu The global financial crisis a new regulatory order (2010) 8 J.B.L. 670 Catanach, Anthony H. What about effective enforcement of existing regulations? (2009) Strategic Finance, Chiu, Iris H-Y Legislative, regulatory and governance reforms in financial regulation: reflections on the global financial crisis 2010 31(6) Comp. Law 165, 165 Hall, Maximilian J.B. The evolution of the financial regulation and supervision in the UK: why we ended up with the FSA, Banca Impresa Societa, Vol. XX No.3, 377 Hall, Maximilian J.B. The sub-prime crisis, the credit crunch and bank failure: an assessment of the UK authorities response, 2009, J.F.R. C. 427, 432 Hindle, Joanne the future of regulation, (2009) 17(4) J.F.R. C. 415, 416 Jackson, Patricia Financial stability as a policy objective (2004) 11(4) J.F.C. 356, 357 Krawcheck, Simon Research conflicts point way for ratings agencies, Financial times, (21st July 2009) https://www.ft.com/cms/s/0/55b313d0-762b-11de-9e59-00144feabdc0.html#axzz1BvR2gP6T Masciandaro, Donato and others, Who pays for banking supervision? Principles and trends, (2007) 15(3) J.F.R C. 303 Mehram, H. Corporate Governance in the Banking and financial services industries, (2004) 13 Journal of financial intermediation Rachdi, Houssem The link between international supervision and banking crisis (2010) 3 Panoeconomicus 321 Rawlings, Philip reform of bank regulation in the UK: the opening salvo, (2010) 25(10) J.I.B.L.R. 522 Tomasic, Roman the financial crisis and the haphazard pursuit of financial crime, (2011) 18 J.F.C. 7 Editorial, Major reforms to banking and financial regulation put forward, (2008), 29(5) Comp. Law. 150 Verschoor, Curtis C. Should We Just Re-Regulate or Totally Restructure Banks?, (2009) Strategic Finance 13

Women And Leadership - Female Style Or Male Style

Title: Women and leadership – female style or male style? The Pitch: The debate about the difference in leadership style of women and men continues to attract attention since women make strides into leadership position dominated mainly by men. Men have long been holding these leadership roles and have defined styles accepted by people. Therefore, it is not surprising that women are usual the focus in terms of the discussion on gender difference in leadership styles. There seems to be great disagreement about the behaviour of women and men actually performing such roles (Eagly, 2001). This disagreement on this focus can be divided into two groups. One is the no-difference camp, who commonly agreed that there are few differenced in the leadership style of female and male leaders. The other is the gender-stereotypic camp who believed the existence of crucial differences in the leadership style between both (Alvesson, 2009). Leadership style is usually viewed as relatively stable patterns of behavior that are represented by leaders. In the circumstance of leadership, agentic and communal features seem especially relevant. For example, agentic features such as independent, dominant and competitive are more attached to men than to women. While communal features such as helpful, kind, gentle, sympathetic and personal sensitive are strongly occupied by women than men (Eagly, 2003). In addition, according to Eagly and Johannesen-Schmidt (2001), the difference between agentic andShow MoreRelatedWomen Go Into Leadership - Female Style Or Male Style?2143 Words   |  9 PagesTitle: Women go into leadership – female style or male style? The Pitch: The debate about the difference in leadership style of women and men continues to attract attention since women make strides into leadership position dominated mainly by men. Men have long been holding these leadership roles and have defined styles accepted by people. Therefore, it is not surprising that women are usual the focus in terms of the discussion on gender difference in leadership styles. There seems to be great disagreementRead MoreEssay on Women and Men in Leadership1424 Words   |  6 Pagesthinking styles. Many historical events have occurred that have cleared the way to analyze these differences of men and women in the workplace. These gender differences are likely to exist in the way men and women influence, communicate, and lead. The male and female gender has always been viewed as two unique and different sets of people. It is perceived that males and females have different styles when it comes to leadership. First, we will look at the leadership styles of men. Males have beenRead MoreGender in Leadership1639 Words   |  7 PagesResearching in Business HR 3010 Title: Gender in leadership Introduction To what extent does gender affect leadership style? 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InRead MoreA Historical Perspective Of Women1509 Words   |  7 PagesHistorical Perspective Women entered the labor workforce in large numbers in the 1940s, yet over 70 years later debates over leadership effectiveness and gender differences are still ongoing. Through ingrained global and organizational biases, stereotypes, and conditioning, men and women are expected to bring bring two different skill sets to the boardroom. Looking at the significant body of research on the topic of gendered leadership, the overwhelming opinion is that men and women are thought to behaveRead MoreLeadership Styles Of Women And Men1713 Words   |  7 Pagesto the Business Dictionary (2015), leadership is defined as the management staff that typically provides inspiration, objectives, operational oversight, and other administrative services to a business. Effective leadership can help prioritize objectives for subordinates and can provide guidance toward achieving the overall corporate vision. 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What is Punishment Free Essays

string(57) " is no perfect way of teaching and classroom management\." According to Krauth, (1996), punishment usually involves the deliberate incision of ache, misery or the removal of rights and/or freedom. Basically, these actions are definitely wrong. We will write a custom essay sample on What is Punishment or any similar topic only for you Order Now However, our society/community are using these methods particularly in law-breaking issues to maintain peace and order. The community gives punishment to avoid crimes and violence. The people are encouraged to be vigilant and to disclose any information pertinent to the occurrence of violent offenses (Krauth, 1996). Krauth, (1996) cited that a number of communities in some parts of the world have attempted to develop community-based crime prevention strategies as supplemental action for the government’s efforts in giving punishment. Basically, punishment of offenders in society is a wide context, thus to narrow the context this review will cover only the role and effect of punishment in shaping the behavior of an individual; i. e. parenting and learning strategies which summarizes the studies conducted by Ballantine, J. (2001), Moeller (2001), and Hill (1990). On the other hand, in the report of Hyman and Zelikoff (1987), the issues regarding the worst result of punishment to an individual i. e. trauma is also reviewed. In follow up to this, Bartol (1995) identifies the possible bad result of punishment i. e. aggression. The report concerning the theories of behavior in accordance to learning behavior were further discussed in the paper of Slavin (1995), Kounin (1970), Skinner (1974), Thorndike (1912) and Pavlov, (1927). During our childhood days, our parent usually imposed punishment to us if we got mistakes. Actually, this punishment affects our development as a child. It could have either positive or negative effects. And of the negative effects of it is aggression (Bartol 1995). With this regard, this review of literature also seeks to realize why people permit the legitimation of this type of infiltration. Thus, it evaluates the reason behind why discipline relies on punishment and negative consequences to improve child’s behavior. Punishment also affects the education and learning behavior of a child, thus we will also cover issues of punishment in school setting. Review In the study conducted by Ballantine, J. 2001; p. 46), he argued that parents usually give punishment to their children just to discipline them. However, parents should be cautious in giving punishment. This might cause physical, emotional and mental problems or this may also results to rebellious behavior or worst a trauma. Research has long proven that the parenting styles adopted by parents often have a gre at impact on the development of the child (e. g. Ballantine, J. 2001; p. 46). Ballantine, J. (2001; p. 46) stated that there are three basic parenting styles i. e. authoritative, authoritarian and permissive styles. Basically, Ballantine, J. (2001) stated that authoritarian parents tend to control their offspring. Also, they are very demanding and have high expectations for their children. But also, they tend to be less responsive to their children’s needs. They rely very heavily on punishment. Authoritative parents, on the other hand, though also very demanding, gain the favor of their children by being highly responsive as well. They have clear definitions on the limitations and freedom of their children. They are also very supportive and give out punishment but explain the reasons for the action. Permissive parents are the opposite of authoritarian parents. They require les of their children but still is very responsive to them, they are often very lenient and don’t, if possible give out punishments. The uninvolved parents are also opposite of authoritative parents. As the name suggests, they are really uninvolved with their children. Often, they are very apathetic to the happenings in their children’s lives. They put a very high risk on their children since they do not put a defined line on what they expect of their children. Parenting styles differ and have profound effects in child development. According to Ballantine, J. (2001; p. 46), parenting styles that involve punishment trigger aggression in children, and then the aggression in children continue on to their own children, thus, resulting in an endless and vicious cycle. But just what is aggression? According to Bartol (1995; p. 184), aggression is a â€Å"behavior perpetrated or attempted with the intention of harming another individual physically or psychologically (as opposed to socially) or to destroy an object† (p. 184). According to Moeller (2001), agreement to Bartol (1995; p. ), defines aggression as an act to that has intent to harm another object or person. Aggression as effect of punishments can either be physical or psychological (Bartol 1995; p. 2 and Moeller, 2001). Many factors point to a child’s aggression, one of which is parenting styles adopted by parents. Actually, if the child is constantly exposed to excessive punishments, it is most likely that the child would be inclining to aggres sive behavior. Punishment is actually a form of aggression that can very well make the child inclined to aggression himself. If the child is repeatedly treated aggressively or punished excessively by his parents would most likely resort to aggression later on. As shown in the study of Hill (1990; pp. 70-77), punishment is also observed in schools or in any learning situation. Hill (1990; pp. 70-77) claimed that reliance on such measures i. e. punishment have negative effects on the learners. In all styles of teaching and classroom management, there are proper ways of carrying out the strategies so that the ends to these styles may be met (Hill 1990; pp. 70-77). In the case of assertion as added by Meyer, A. 1990), there are positive and negative methods of reinforcing these strategies. As students’ behavior vary, the teachers’ delicate role is to determine which would work best for the particular students. Basically, Meyer, A. (1990) stated that learners will react differently to situations, and if every positive method does not work out with them, then negative reinforcement is called for. T his is not to become unfair to the students. This is just to show them that there are regulations to be observed and authorities to be respected, as that virtue will better prepare them for life outside the confines of the school. There is no perfect way of teaching and classroom management. You read "What is Punishment" in category "Papers" There are only receptive teachers who are attuned to individual students’ needs, thus a successful implementation of the assertive style of teaching and classroom management (Meyer, A. 1990). In the report of Hill (1990; pp. 70-77) on an incident in preschool in which punishment was used to help children learn to obey rules. One of the punishment procedures was to write the name of the offending child on the board the first time non-compliance with rules occurred. The goal is impressive in that it make the most of learning time, but there were some unintentional depressing side effects. In this case, a child told to his parents the list of names of â€Å"bad kids† in the class, and the child also described how they were being reprimanded. The child also told to her parents that these kids had their names written on the board. In relation to this, the child asked his parents if being with the kids would make him become one of them. From the child’s story, the mother decided to visit the school where she found a group of 5 and 6 year olds trying not to speak or move. As the parent observed, the teacher was diligently using rewards and punishment to mould the behavior of children. But every time a child giggled or laugh extremely or spoke without permission, another name went on the board. As the result, most of boys who came from families of lower socioeconomic background are found on that board (Hill 1990; pp. 70-77). From the results of the study of Hill (1990; pp. 70-77), it appears evident that what the child had absorbed from their punishment experiences, either vicariously or literally, was to spotlight on the manners that the teacher found unpleasant. The children tend to avoid such behavior at all costs, even if it is annoying just to impress the teacher instead of attending to the learning activities. As part of the giving punishment in shaping the behavior of the child, classroom management as stated by (Slavin, 2005; p. 1) in his paper should be observed. One characteristic of effective classroom management introduced by Slavin is that it involves a clear, specific plan of classroom rules and procedures that would guide performance (Slavin, 2005; p. 1). There was also a reward and punishment system observed. According to the teachers in the report of (Slavin, 2005; p. 1), every student was treated without bias but recognition was given to the most deserving and punishment was also implemented to address misbehavior. Praise or exemptions from some projects were the usual rewards given to performing students. The usual punishments were extra assignment, reprimand, or in worst case, detention. The purpose of the reward and punishment system was to delineate the acceptable behavior from the unacceptable. Praise i. e. â€Å"catching the students in the act of doing right†, can be a powerful motivator for many students. One strategy for reducing misbehavior in class is to make sure to praise students for behaviors that are incompatible with the misbehavior you want to reduce (Slavin , 2005; p. 1). In relation to this, Kounin (1970; p. 10) justified that the transfer of pupil attention to the child being punished is a usual phenomenon, and almost always results in less attention, rather than more, being paid to the desired learning outcomes. Every so often, the teacher’s intent to help a child alter a behavior to one which is more acceptable to both the youngster and his superiors has tragic sequelae. Educators using disciplinary procedures perceived by the child as stringent and unfeeling can cause trauma. According to Hyman and Zelikoff (1987; pp. 1-2), the symptoms of this trauma are often similar to those observed in adults with Post Traumatic Stress Disorders. Symptoms seen in children include somatic complaints, avoidance of school, and sleep disturbances. As Skinner (1974; p. 8) emphasized a behavior which is followed a positive reinforcing motivation or circumstance will result in an increased tendency or probability that the person will repeat such behavior, this concept also operates in the opposite direction wherein the person will have a decreased tendency to do an act from which he or she received a negative reinforcement in the form of punishment. According to Thorndike (1912; p. 164-165), the main b usiness of thought surely is to guide and control action. To make it intelligent, adaptive, efficient, Thorndike’s Law of Effect proposed an alternative means of achieving the same end. Effects, rewards and punishments, were seen as stamping actions â€Å"in† or â€Å"out† and selectively, intelligently, adaptively determining behavior (Pavlov, 1927; p. 25). The effects of a given action thus altered redirected, controlled subsequent conduct and left no place or need for thought or intellect. While Pavlov’s formulations, though different principle from those of Thorndike but similar in goal. Pavlov was likewise interested, not just in a theory of learning but also in the organism’s total behavior, in what was later referring as the principles of adaptive action. Both trial and error learning and conditioning imply adaptation to the environment but this end was achieved in both cases mechanically, non-mentalistically without thought (Pavlov, 1927; p. 25). As part of development in shaping the behavior of an individual Thorndike 1912 reported that the two-factor learning theory in its version accepted Thorndale’s theory of habit formation, essentially unmodified and in doing so, necessarily aligned itself with the thoughtless psychologies or behavior-zoologies (Thorndike 1912; p. 64-165). In admitting fear conditioning and in developing a feedback conception of punishment, the theory disposed itself toward what has become explicit. Now response facilitation as no less a matter of conditioning and meaning change than is response inhibition. And what is more immediately important, this new position, while in some ways just as mechanical and automatic as were the views of Thorndike and Pavlov. The prototype of knowledge in general are hopes and fears, both are internal events and such are assumed to be learned and after learning, to occur in a purely automatic, involuntary manner, these are mechanism and determinism. There is no simple and direct relationship between what an organism learns and what it does. Action is the result of more or less intricate and elaborate processes intervening between the end result of more or less intricate and elaborate processes â€Å"intervening between the end results of learning and the execution of behavior† (Thorndike 1912; p. 64-165). As described in the previous discussions, motivation and reward offers more positive effect in learning than punishment. Punishment normally directs the action to do desired behavior which results to aggression, weak learning and trauma. The incident of trauma from punishment initiated by educators is much greater than one would think. According to the study of Hyman and Zelikoff (1987; p. 11), 40 to 60 percent of college graduates remember an event of extremely retaliatory disciplinary action given by educators. In Unites States over 1,000,000 students were beaten by their teachers in 1980 (Meyer 1990; 30-47). As revealed in the study of Hyman and Zelikoff (1987), an individual that was previously abuse, beaten and punish are prone to become aggressors and criminals. Thus, the community should identify the significant risk factors of aggression and punishment provided by the community itself, the families that comprise the community, schools and academic institutions in the area, and individual backgrounds of the people. Moreover, the family also provides certain risk factors of aggression and punishment contributory to the development of violent attitudes and behaviors among children such as lack of oversight of children’s activities and habits, unfair and severe punishment for any misdemeanors and mistakes, conflicts between parents and children and between siblings, and parental toleration of violent behaviors. Review Synthesis From the given reviews concerning punishments, it is justified that parents, should very well know how to raise their children. Psychologists and researchers often recommend the use of authoritative parenting since it is well-rounded in all parenting aspects but they should be cautious in giving punishments. Since authoritative parents have high expectations of their children, one can expect that a child will be pushed to do the best, and that authoritative parents also reciprocate love and warmth, the child can have feelings of security. Another is that a child can also have the freedom to express his own thoughts and beliefs. The relationship between parenting styles and punishment resulting to aggression is very clear. Authoritative and Permissive parents’ children often resort to aggression since the upbringing of the parents is, faulty, if you may. The resort to aggression can also be triggered by relatively high and constant exposure to aggression by family, peers and the media. Also, the cross-generational aggression can also trigger aggression. It creates an unending cycle of aggression. On the other hand, punishment given to a child in school setting should be observed by the educators to avoid weak learning effectiveness. Positive learning environment or classroom management involves the strategies that teachers implement in preventing and handling misbehavior, using class time effectively, creating an atmosphere that encourages interest and inquiry, and permitting activities that engage students’ minds and imaginations (Slavin, 2005). Teacher should carefully observe the effect of punishments to students. Actually, it is suggested that teacher should use rewards strategy more often than giving punishment. Teachers and students have to work together to sustain positive behaviors and effective atmosphere for learning in order to ensure the successful transmission of knowledge in the classroom. How to cite What is Punishment, Papers

Accounting Information to Make Better Decisions

Question: Discuss about the Accounting Information to Make Better Decisions. Answer: Introduction The need for information is vital for explicit and concrete management decision-making as well as providing the basis for the sustainable success of an organization. In this regard, accounting information tends to be indispensable to achieving the goal as it serves as an efficient tool for decision making in an organization. In their research, Radcliffe, Campbell Fogarty (2001), provide the notion that decision-making is a core aspect of the executive or management in any organization; however, must be based on the best course of action. The research identifies management accounting as a core aspect that guides decision making by providing financial and economic information which are critical elements for the organization. Nnenna (2012) defines management accounting as " the process of identifying, measurement, accumulation, analysis, interpretation and communication of information that can help the management in fulfilling the organizational objectives." As derived from the definition, the information provided by management accounting enhance the ability to make economic or financial choices in any organization (Schipper, 2010). Apparently, most of the organizations have experienced failures due to poor decision making; however, successful companies thrive through good decisions influenced by accounting information promoting the idea that it's vital for the survival of an organization. Rich, Jones, Mowen Hansen (2012) also postulates that accounting information uncovers bottlenecks before the occurrence and provides a chance to coordinate organizational activities as well as compelling managers to formalize planning based on the defined goals and objectives. The research will evaluate how managers can utilize accounting information to enhance decision-making in their organizations by adopting a mixed research approach and data collection methods such as interviews, observations, and questionnaires to make valid conclusions. Research Aim and Objectives The aim of this research involves evaluating how accounting data can be applied to inform the leaders on the most appropriate decisions to make in their organizations to maximize profits. Different objectives will also be used to help in achieving the above aim as listed below: To evaluate the uses of accounting information in any organization or business To establish how the accounting information can assist managers in decision making. To assess the effectiveness of the decisions made through the influence of accounting information. To explore how the managers can achieve quality accounting information to promote decision making. A brief Methodology The research will adopt different methods to ensure quality information is achieved as well as understand the research objective. The following methods will be applied in this study: Literature Review: The approach is based on an in-depth analysis of critical research works on the same research problem derived from diverse scholarly sources. Being a key management topic, there exist numerous research works on the subject which will provide the basis to compare the research data collected and the existing works to make concrete conclusions on the topic. The literature review approach will also assess the underlying theories or themes to understand what is contained in accounting information and why its effective in decision making (GraziaOana, 2012). Mixed Research Approach: The research approach involves a combination of both qualitative and quantitative research and will form the basis for performing the research. Its impact will be in both data collection and analysis where a descriptive approach will provide data. Additionally, quantitative analysis will be applied and will make use of statistical figures such as graphs and pie charts to analyze and present data. Surveys and Interviews: The two will serve as some of the key methods to collect data necessary to understand the research problem as well as decision making. The methods are effective in providing descriptive data which forms the basis for the completion of this research. To enhance the effectiveness of the research, the data collection tools will be based on selected case such as a renowned organization through which general information on the effectiveness of accounting information on decision-making (Christensen, 2010). Surveys will be conducted through self-administered questionnaires while interviews will include face-to-face method. Information relating to employee views will also be collected as well as that of the managers (Eierle, 2013). Observation of Key indicators of success or failure of the case organization: The method will involve observing the impact of decisions made through the influence of accounting information on the selected case and analyzing the same about performance before the use of the data (Bhimani, Gosselin, Soonawalla Ncube, 2007). Key indicators such as organizational success, financial stability, employee trust on management will help evaluate the effectiveness of the method in decision making. References Bhimani, A., Gosselin, M., Soonawalla, K., Ncube, M. (2007, Jan). The Value Of Accounting Information In Assessing Investment Risk.Cost Management,21, 29-35. Retrieved from https://search.proquest.com/docview/209698804?accountid=45049 Christensen, J. (2010). Conceptual frameworks of accounting from an information perspective.Accounting and Business Research,40(3), 287-299. Retrieved from https://search.proquest.com/docview/726401450?accountid=45049 Eierle, B. (2013). The Role Of Management As A User Of Accounting Information: Implications For Standard Setting.Accounting and Management Information Systems,12(2), 55-189. Retrieved from https://search.proquest.com/docview/1491345010?accountid=45049 GraziaOana, P. (2012). The Role of Accounting Information in the Decision Making Process.Ovidius University Annals, Economic Sciences Series,12(1), 1594-1598. Nnenna. O. M (2012).The use of Accounting Information as an Aid to Management in Decision Making.British Journal of Science, 5(1). Retrieved from https://www.ajournal.co.uk/pdfs/BSvolume5(1)/BSVol.5%20(1)%20Article%207.pdf Radcliffe, V. S., Campbell, D. R., Fogarty, T. J. (2001). Exploring downsizing: A case study on the use of accounting information.Journal of Management Accounting Research,13, 131-157. Retrieved from https://search.proquest.com/docview/210235498?accountid=45049 Rich, J. S., Jones, J. P., Mowen, M. M., Hansen, D. R. (2012).Cornerstones of financial accounting. Mason., OH: South-Western. Schipper, K. (2010). How can we measure the costs and benefits of changes in financial reporting standards?Accounting and Business Research,40(3), 309-327. Retrieved from https://search.proquest.com/docview/726391189?accountid=45049