Animal Farm and Lord of the Flies Essay

In 1887 Lord Acton wrote in a letter to Bishop Mandell Creighton, â€Å"Power tends to corrupt, and absolute power corrupts absolutely.† It has often been noted that this is the primary theme in both Animal Farm and Lord of the Flies. In addition, these books share two sub-themes related to this primary theme. One sub-theme is that people will often abuse power when it’s not earned. The other is that when given the opportunity people will often degrade others to ensure their own security. Both books rely heavily on symbolism, as well as the actions of their characters, to express these ideas. Consequently, both these novels show us what a frightening place the world can become if people ignore the principles of civilization as we know it. In both books, for different reasons, the characters create their own governments, and some of them soon begin to usurp and abuse power. For example, in Animal Farm seven commandments were written on the wall, a few of them were: â€Å"No animal shall sleep in a bed, No animal shall kill another animal, No animal shall drink alcohol.† When one of the pigs, named Napoleon, took over he gradually changed the commandments. For instance, he changed the commandment â€Å"No animal shall kill another animal.† to, â€Å"No animal shall kill another animal without cause.† In Lord of the Flies there are several examples of characters abusing power. One of the characters, named Ralph, had originally started a democratic form of government. Two of the boys, Roger and Jack, eventually started there own form of government and took over. Jack fell in love with his new found power and became dictator to the boys. He even started a hunt to kill Ralph simply because he felt Ralph was a threat to this power. Because several of the characters in both books were insecure, they would often degrade others to improve their own security. This occurred in Animal Farm several times. For instance, there were two characters who always seemed to disagree (Snowball and Napoleon). Whatever one said the other would put it down or find something wrong with it, even if he actually agreed. Napoleon even urinated on Snowball’s plans for a windmill and ruined  them. In Lord of the Flies there are several examples of insecure characters downing others to improve their own security. For example, Roger, Jack, and even Ralph make fun of one of the other boys they call â€Å"Piggy† because he is overweight. Roger is so insecure he even kills Piggy because Piggy makes him feel threatened by contradicting his ideas and putting forth his own ideas that were sometimes better than Rogers. These books are both amazingly written and similar in several ways, but there is one major difference. The two books end with completely different views of civilization. Animal Farm ends with the animals not being able to tell the humans and the pigs apart, showing that evil had won. However, in Lord of the Flies, Ralph realizes when he sees the pig’s head (which is used to represent evil) in its pristine state, that even in all this savagery and evil some good may occur. Right after he realized this, a ship pulled up and rescued the boys. The themes of both books are true to the dark side of human nature. Golding holds out a tiny thread of hope; Orwell lets us see the bad things that could happen and leaves us to figure out how to prevent them.

College Education Essay

It’s important to get a college education not only to be successful in the future but also to think for yourself and gain freedom through education, we can accomplish this by being educated liberally. Like Cronon, I think â€Å"a liberal education is about gaining the power and wisdom, the generosity and the freedom to connect† (Cronon; paragraph 18) to the real world. Finding a purpose to attend college should go beyond college itself, you should be motivated to learn something you have a passion for and will actually use and apply it to the world. †Truly educated people love learning, but they love wisdom more† (Cronon para 15). When learning you are just recycling information that the educators teach you just like Freire’s â€Å"banking system† but wisdom is what you incorporate to the â€Å"real world† and it is what is most valued than just being educated and not apply what you learned with other things. In my opinion liberal thinkers or people who are liberally educated want to be able to progress in life and not just do what they are told to do. They want to be able to think for themselves and come up with their own ideas. Liberal educated people want to â€Å"leave the world a better place than they had found it† (Cronon para 17). It takes wisdom and education to leave the world a better place than how it was before because it’s not an easy thing to do in a life time. Liberalists want to progress no just to benefit them but to benefit everyone else as well and I think they can accomplish this by using their wisdom and their college education. The way I see the banking system is that the educators are selfish because they only teach to their own convenience and they don’t let the receivers think for themselves. The receivers then don’t make any progress in life due to the fact that they are so used to just following the rules that are given to them by the educators. Liberal education is not like that. â€Å"Liberally educated people understand they belong to a community-and help that community flourish by making the success of others possible† (Cronon para 18). Liberalists want to succeed and want to see others succeed as well. â€Å"Liberal education must be that the freedom of the individual is possible only in a free community† (Cronon para18). When having the freedom you can think for yourself and not have others think for you like in a banking system and I personally think as well as Cronon explains that the only possible way to be gain freedom is by being liberally educated that way you learn to think for yourself and be able to be part of a free community. What is the whole point of going to college and get an education and when you graduate you will have no idea how to apply it or connect it to the real world. â€Å"Being an educated person means being able to see connections that allow one to make sense of the world and act within it in creative ways† (Cronon para 19). What’s the whole point of paying so much money for a college education if at the end you won’t know how to apply what you learned in college in the real world? If you don’t know how to apply things learned in college to the real world then you won’t be successful in the future and you practically gained no power or wisdom throughout your whole college education. Being educated can help you succeed in life and in the future if you know how to apply everything you learned in college to the real world once you graduate and help you and others succeed in your community and the real world. By being liberal educated can help you not only succeed in life but it can also help you gain freedom.

Part Four Chapter VIII

VIII At half-past six that evening, Howard and Shirley Mollison entered Pagford Church Hall. Shirley was carrying an armful of papers and Howard was wearing the chain of office decorated with the blue and white Pagford crest. The floorboards creaked beneath Howard's massive weight as he moved to the head of the scratched tables that had already been set end to end. Howard was almost as fond of this hall as he was of his own shop. The Brownies used it on Tuesdays, and the Women's Institute on Wednesdays. It had hosted jumble sales and Jubilee celebrations, wedding receptions and wakes, and it smelt of all of these things: of stale clothes and coffee urns, and the ghosts of home-baked cakes and meat salads; of dust and human bodies; but primarily of aged wood and stone. Beaten-brass lights hung from the rafters on thick black flexes, and the kitchen was reached through ornate mahogany doors. Shirley bustled from place to place, setting out papers. She adored council meetings. Quite apart from the pride and enjoyment she derived from listening to Howard chair them, Maureen was necessarily absent; with no official role, she had to be content with the pickings Shirley deigned to share. Howard's fellow councillors arrived singly and in pairs. He boomed out greetings, his voice echoing from the rafters. The full complement of sixteen councillors rarely attended; he was expecting twelve of them today. The table was half full when Aubrey Fawley arrived, walking, as he always did, as if into a high wind, with an air of reluctant forcefulness, slightly stooped, his head bowed. ‘Aubrey!' called Howard joyfully, and for the first time he moved forward to greet the newcomer. ‘How are you? How's Julia? Did you get my invitation?' ‘Sorry, I don't – ‘ ‘To my sixty-fifth? Here – Saturday – day after the election.' ‘Oh, yes, yes. Howard, there's a young woman outside – she says she's from the Yarvil and District Gazette. Alison something?' ‘Oh,' said Howard. ‘Strange. I've just sent her my article, you know, the one answering Fairbrother's †¦ Maybe it's something to do †¦ I'll go and see.' He waddled away, full of vague misgivings. Parminder Jawanda entered as he approached the door; scowling as usual, she walked straight past without greeting him, and for once Howard did not ask ‘how's Parminder?'. Out on the pavement he found a young blonde woman, stocky and square, with an aura of impermeable cheerfulness that Howard recognized immediately as determination of his own brand. She was holding a notebook and looking up at the Sweetlove initials carved over the double doors. ‘Hello, hello,' said Howard, his breathing a little laboured. ‘Alison, is it? Howard Mollison. Have you come all this way to tell me I can't write for toffee?' She beamed, and shook the hand he proffered. ‘Oh, no, we like the article,' she assured him. ‘I thought, as things are getting so interesting, I'd come and sit in on the meeting. You don't mind? Press are allowed, I think. I've looked up all the regulations.' She was moving towards the door as she spoke. ‘Yes, yes, press are allowed,' said Howard, following her and pausing courteously at the entrance to let her through first. ‘Unless we have to deal with anything in camera, that is.' She glanced back at him, and he could make out her teeth, even in the fading light. ‘Like all those anonymous accusations on your message board? From the Ghost of Barry Fairbrother?' ‘Oh dear,' wheezed Howard, smiling back at her. ‘They're not news, surely? A couple of silly comments on the internet?' ‘Has it only been a couple? Somebody told me the bulk of them had been taken off the site.' ‘No, no, somebody's got that wrong,' said Howard. ‘There have only been two or three, to my knowledge. Nasty nonsense. Personally,' he said, improvising on the spot, ‘I think it's some kid.' ‘A kid?' ‘You know. Teenager having fun.' ‘Would teenagers target Parish councillors?' she asked, still smiling. ‘I heard, actually, that one of the victims has lost his job. Possibly as a result of the allegations made against him on your site.' ‘News to me,' said Howard untruthfully. Shirley had seen Ruth at the hospital the previous day and reported back to him. ‘I see on the agenda,' said Alison, as the pair of them entered the brightly lit hall, ‘that you'll be discussing Bellchapel. You and Mr Fairbrother made good points on both sides of the argument in your articles †¦ we had quite a few letters to the paper after we printed Mr Fairbrother's piece. My editor liked that. Anything that makes people write letters †¦' ‘Yes, I saw those,' said Howard. ‘Nobody seemed to have much good to say about the clinic, did they?' The councillors at the table were watching the pair of them. Alison Jenkins returned their gaze, still smiling imperturbably. ‘Let me get you a chair,' said Howard, puffing slightly as he lifted one down from a nearby stack and settling Alison some twelve feet from the table. ‘Thank you.' She pulled it six feet forward. ‘Ladies and gentlemen,' called Howard, ‘we've got a press gallery here tonight. Miss Alison Jenkins of the Yarvil and District Gazette.' A few of them seemed interested and gratified by Alison's appearance, but most looked suspicious. Howard stumped back to the head of the table, where Aubrey and Shirley were questioning him with their eyes. ‘Barry Fairbrother's Ghost,' he told them in an undertone, as he lowered himself gingerly into the plastic chair (one of them had collapsed under him two meetings ago). ‘And Bellchapel. And there's Tony!' he shouted, making Aubrey jump. ‘Come on in, Tony †¦ we'll give Henry and Sheila another couple of minutes, shall we?' The murmur of talk around the table was slightly more subdued than usual. Alison Jenkins was already writing in her notebook. Howard thought angrily, This is all bloody Fairbrother's fault. He was the one who had invited the press in. For a split second, Howard thought of Barry and the Ghost as one and the same, a troublemaker alive and dead. Like Shirley, Parminder had brought a stack of papers with her to the meeting, and these were piled up underneath the agenda she was pretending to read so that she did not have to speak to anybody. In reality, she was thinking about the woman sitting almost directly behind her. The Yarvil and District Gazette had written about Catherine Weedon's collapse, and the family's complaints against their GP. Parminder had not been named, but doubtless the journalist knew who she was. Perhaps Alison had got wind of the anonymous post about Parminder on the Parish Council website too. Calm down. You're getting like Colin. Howard was already taking apologies and asking for revisions to the last set of minutes, but Parminder could barely hear over the sound of her own blood thudding in her ears. ‘Now, unless anybody's got any objections,' said Howard, ‘we're going to deal with items eight and nine first, because District Councillor Fawley's got news on both, and he can't stay long – ‘ ‘Got until eight thirty,' said Aubrey, checking his watch. ‘ – yes, so unless there are objections – no? – floor's yours, Aubrey.' Aubrey stated the position simply and without emotion. There was a new boundary review coming and, for the first time, there was an appetite beyond Pagford to reassign the Fields to Yarvil. Absorbing Pagford's relatively small costs seemed worthwhile to those who hoped to add anti-government votes to Yarvil's tally, where they might make a difference, as opposed to being wasted in Pagford, which had been a safe Conservative seat since the 1950s. The whole thing could be done under the guise of simplifying and streamlining: Yarvil provided almost all services for the place as it was. Aubrey concluded by saying that it would be helpful, should Pagford wish to cut the estate away, for the town to express its wishes for the benefit of the District Council. ‘†¦ a good, clear message from you,' he said, ‘and I really think that this time – ‘ ‘It's never worked before,' said a farmer, to muttered agreement. ‘Well, now, John, we've never been invited to state our position before,' said Howard. ‘Shouldn't we decide what our position is, before we declare it publicly?' asked Parminder, in an icy voice. ‘All right,' said Howard blandly. ‘Would you like to kick off, Dr Jawanda?' ‘I don't know how many people saw Barry's article in the Gazette,' said Parminder. Every face was turned towards her, and she tried not to think about the anonymous post or the journalist sitting behind her. ‘I thought it made the arguments for keeping the Fields part of Pagford very well.' Parminder saw Shirley, who was writing busily, give her pen a tiny smile. ‘By telling us the likes of Krystal Weedon benefit?' said an elderly woman called Betty, from the end of the table. Parminder had always detested her. ‘By reminding us that people living in the Fields are part of our community too,' she answered. ‘They think of themselves as from Yarvil,' said the farmer. ‘Always have.' ‘I remember,' said Betty, ‘when Krystal Weedon pushed another child into the river on a nature walk.' ‘No, she didn't,' said Parminder angrily, ‘my daughter was there – that was two boys who were fighting – anyway – ‘ ‘I heard it was Krystal Weedon,' said Betty. ‘You heard wrong,' said Parminder, except that she did not say it, she shouted it. They were shocked. She had shocked herself. The echo hummed off the old walls. Parminder could barely swallow; she kept her head down, staring at the agenda, and heard John's voice from a long way off. ‘Barry would've done better to talk about himself, not that girl. He got a lot out of St Thomas's.' ‘Trouble is, for every Barry,' said another woman, ‘you get a load of yobs.' ‘They're Yarvil people, bottom line,' said a man, ‘they belong to Yarvil.' ‘That's not true,' said Parminder, keeping her voice deliberately low, but they all fell silent to listen to her, waiting for her to shout again. ‘It's simply not true. Look at the Weedons. That was the whole point of Barry's article. They were a Pagford family going back years, but – ‘ ‘They moved to Yarvil!' said Betty. ‘There was no housing here,' said Parminder, fighting her own temper, ‘none of you wanted a new development on the outskirts of town.' ‘You weren't here, I'm sorry,' said Betty, pink in the face, looking ostentatiously away from Parminder. ‘You don't know the history.' Talk had become general: the meeting had broken into several little knots of conversation, and Parminder could not make out any of it. Her throat was tight and she did not dare meet anyone's eyes. ‘Shall we have a show of hands?' Howard shouted down the table, and silence fell again. ‘Those in favour of telling the District Council that Pagford will be happy for the parish boundary to be redrawn, to take the Fields out of our jurisdiction?' Parminder's fists were clenched in her lap and the nails of both her hands were embedded in their palms. There was a rustle of sleeves all around her. ‘Excellent!' said Howard, and the jubilation in his voice rang triumphantly from the rafters. ‘Well, I'll draft something with Tony and Helen and we'll send it round for everyone to see, and we'll get it off. Excellent!' A couple of councillors clapped. Parminder's vision blurred and she blinked hard. The agenda swam in and out of focus. The silence went on so long that finally she looked up: Howard, in his excitement, had had recourse to his inhaler, and most of the councillors were watching solicitously. ‘All right, then,' wheezed Howard, putting the inhaler away again, red in the face and beaming, ‘unless anyone's got anything else to add -‘ an infinitesimal pause ‘- item nine. Bellchapel. And Aubrey's got something to tell us here too.' Barry wouldn't have let it happen. He'd have argued. He'd have made John laugh and vote with us. He ought to have written about himself, not Krystal †¦ I've let him down. ‘Thank you, Howard,' said Aubrey, as the blood pounded in Parminder's ears, and she dug her nails still more deeply into her palms. ‘As you know, we're having to make some pretty drastic cuts at District level †¦' She was in love with me, which she could barely hide whenever she laid eyes on me †¦ ‘†¦ and one of the projects we've got to look at is Bellchapel,' said Aubrey. ‘I thought I'd have a word, because, as you all know, it's the Parish that owns the building – ‘ ‘ – and the lease is almost up,' said Howard. ‘That's right.' ‘But nobody else is interested in that old place, are they?' asked a retired accountant from the end of the table. ‘It's in a bad state, from what I've heard.' ‘Oh, I'm sure we could find a new tenant,' said Howard comfortably, ‘but that's not really the issue. The point is whether we think the clinic is doing a good – ‘ ‘That's not the point at all,' said Parminder, cutting across him. ‘It isn't the Parish Council's job to decide whether or not the clinic's doing a good job. We don't fund their work. They're not our responsibility.' ‘But we own the building,' said Howard, still smiling, still polite, ‘so I think it's natural for us to want to consider – ‘ ‘If we're going to look at information on the clinic's work, I think it's very important that we get a balanced picture,' said Parminder. ‘I'm terribly sorry,' said Shirley, blinking down the table at Parminder, ‘but could you try not to interrupt the Chair, Dr Jawanda? It's awfully difficult to take notes if people talk over other people. And now I've interrupted,' she added with a smile. ‘Sorry!' ‘I presume the Parish wants to keep getting revenue from the building,' said Parminder, ignoring Shirley. ‘And we have no other potential tenant lined up, as far as I know. So I'm wondering why we are even considering terminating the clinic's lease.' ‘They don't cure them,' said Betty. ‘They just give them more drugs. I'd be very happy to see them out.' ‘We're having to make some very difficult decisions at District Council level,' said Aubrey Fawley. ‘The government's looking for more than a billion in savings from local government. We cannot continue to provide services the way we have done. That's the reality.' Parminder hated the way that her fellow councillors acted around Aubrey, drinking in his deep modulated voice, nodding gently as he talked. She was well aware that some of them called her ‘Bends-Your-Ear'. ‘Research indicates that illegal drug use increases during recessions,' said Parminder. ‘It's their choice,' said Betty. ‘Nobody makes them take drugs.' She looked around the table for support. Shirley smiled at her. ‘We're having to make some tough choices,' said Aubrey. ‘So you've got together with Howard,' Parminder talked over him, ‘and decided that you can give the clinic a little push by forcing them out of the building.' ‘I can think of better ways to spend money than on a bunch of criminals,' said the accountant. ‘I'd cut off all their benefits, personally,' said Betty. ‘I was invited to this meeting to put you all in the picture about what's happening at District level,' said Aubrey calmly. ‘Nothing more than that, Dr Jawanda.' ‘Helen,' said Howard loudly, pointing to another councillor, whose hand was raised, and who had been trying to make her views heard for a minute. Parminder heard nothing of what the woman said. She had quite forgotten about the stack of papers lying underneath her agenda, on which Kay Bawden had spent so much time: the statistics, the profiles of successful cases, the explanation of the benefits of methadone as against heroin; studies showing the cost, financial and social, of heroin addiction. Everything around her had become slightly liquid, unreal; she knew that she was going to erupt as she had never erupted in her life, and there was no room to regret it, or to prevent it, or do anything except watch it happen; it was too late, far too late †¦ ‘†¦ culture of entitlement,' said Aubrey Fawley. ‘People who have literally not worked a day in their lives.' ‘And, let's face it,' said Howard, ‘this is a problem with a simple solution. Stop taking the drugs.' He turned, smiling and conciliating, to Parminder. ‘They call it â€Å"cold turkey†, isn't that right, Dr Jawanda?' ‘Oh, you think that they should take responsibility for their addiction and change their behaviour?' said Parminder. ‘In a nutshell, yes.' ‘Before they cost the state any more money.' ‘Exact – ‘ ‘And you,' said Parminder loudly, as the silent eruption engulfed her, ‘do you know how many tens of thousands of pounds you, Howard Mollison, have cost the health service, because of your total inability to stop gorging yourself?' A rich, red claret stain was spreading up Howard's neck into his cheeks. ‘Do you know how much your bypass cost, and your drugs, and your long stay in hospital? And the doctor's appointments you take up with your asthma and your blood pressure and the nasty skin rash, which are all caused by your refusal to lose weight?' As Parminder's voice became a scream, other councillors began to protest on Howard's behalf; Shirley was on her feet; Parminder was still shouting, clawing together the papers that had somehow been scattered as she gesticulated. ‘What about patient confidentiality?' shouted Shirley. ‘Outrageous! Absolutely outrageous!' Parminder was at the door of the hall and striding through it, and she heard, over her own furious sobs, Betty calling for her immediate expulsion from the council; she was half running away from the hall, and she knew that she had done something cataclysmic, and she wanted nothing more than to be swallowed up by the darkness and to disappear for ever.

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Course Project Research Paper Example | Topics and Well Written Essays - 3000 words

Course Project - Research Paper Example Walmart is regarded as America’s largest grocery store. It is claimed by the company that more than 245 million customers visit the 10800 Walmart stores in more than 27 countries across the globe (Walmart, 2013c). The company offers electronic commerce website in more than 10 countries and employs more than 2.2 million staff worldwide. The company generated revenue of $466 billion in the fiscal year 2013. In the year 1945 the concept of goods being offered at lowers prices was evolved by Sam Walton. He opened the first Walmart store in the then year 1962 in Arkansas which was a result of his visionary leadership (Walmart, 2013b). The company has categorized into 3 major divisions; Walmart stores, Sam’s club and Walmart International. The author has been asked to serve for the post of the finance manager in the reputed company. Although the company is one of the most profitable companies of USA it is still facing certain dilemmas in allocation of budget and expenses. 1.2 Problem Statement Although, Walmart is regarded as one of the most reputed and largest retailer of the world it has sparked controversy regarding its management practice. Some of the human resource issues that has made the company a target for criticism are gender discrimination, wage inequality, bribery etc. It is observed that Walmart are facing various challenges due to lack of implementation of an effective human resource system. The wage inequality system is often a result of lack of well defined wage and salary system in Walmart. More than 2000 women employee of Walmart in 48 states have claimed that the management of Walmart practiced gender discrimination (Hines, 2012). In the year 2011 the women employee had filed suit against the company management for denial of promotion and low pay (Levine, 2012). The women employees had even claimed that the men who held less seniority position than the women employee were promoted first. The US Supreme Court had declared that the wage system was not systematic and smooth in Walmart. This is because the regional polices for wage administration are different in the stores of Walmart. Walmart had agreed to their varied wage incentive plans in different regions and had to pay compensation damages worth $111.7 million to women employees of London(Hines, 2012). 1.3 Research Questions Based on the problem statement and objectives of the study the following questions were formulated. Each of these research questions will be addressed accordingly. 1. How can an effective salary and wage administration improve the efficiency of the employees? 2. How can an incentive plan improve the morale of the employees? 3. What contemporary human resources theories can help in promoting a congenial work environment? 1.4 Literature Review Wage &Salary Inequality in Walmart Wages and Salaries are linked to the productivity of the organization and have a direct influence on the efficiency of the employee. Walmart has been accused of wage and salary inequality practices several times in spite of being one of the most profitable companies of the world. It has been observed that the Walmart management pays $8.00 on an hourly basis with 32 works per week which equals to $256 per week (Santa Clara University, 2004). This calculation shows that

Writing Historical Fiction Essay Example | Topics and Well Written Essays - 1250 words

Writing Historical Fiction - Essay Example For a time I had decided after high school I wanted to pursue something different rather than simply entering college. I had no idea what I would do – get a job, study in a Buddhist monastery, join a commune – whatever it was it would ensure that my life was unique. One night I expressed this desire to my father, Daniel. Rather than rejecting my idea as I had expected he would, he empathized with me and told me that when he turned eighteen he had similar feelings. Rather than pursuing anything similar to what I had proposed, however, he went on a summer long excursion throughout the western United States. My father was born and grew up in Montana. Growing up in a large family he never really had the opportunity to travel throughout the country. After high school, before deciding on his next course of action, he and two of his friends piled into a Cadillac and started towards the western part of United States with nothing but a map and backpack of clothes. â€Å"We didn ’t really have a plan† he told me. â€Å"Really, all we knew is that we wanted to see California and take it from there.† They passed through Idaho and Oregon, heading straight for San Francisco. It was 1972 when my father and his friends drove over the Golden Gate Bridge into the city. Throughout the late 1960s San Francisco had become the center of hippie culture. Protests regularly occurred there, bands and artists frequented the area, and songs were even written about the city. While San Francisco had experienced this great idealism in the 1960s, the early 1970s were a time of growing cynicism. â€Å"We pulled into the city with a great sense of naivete, believing there would be young people with flowers and guitars all over the streets. In reality we were a few years late† he told me. They made it throughout many of the characteristic spots, â€Å"We went to Haight-Ashbury, saw Alcatraz, and rode the cable cars.† I had heard of San Francisco as the epicenter of 1960s culture, so I was very curious as to what had happened to the area’s optimism. â€Å"The month we pulled into the city was the same month men had been arrested for the Watergate scandal. A few years before Charles Manson had been arrested for leading the Tate-Labianca killings. It seemed like the collective culture of the area had grown tired of itself.† They explored throughout the city nonetheless. While San Francisco was the heart of the 1960s counter-culture movement, the city also has an illustrious history dating back to the 19th century gold rush. â€Å"What I remember the most is walking along the peer where the fishermen brought in their daily catch. Stands had been setup where you could buy fresh fish and chips. We sat along that peer each night looking out at Alcatraz.† After a couple days in the city they decided to explore the surrounding area. They ventured up a hill that overlooked the city. â€Å"The hill had actually bee n an old Northern Civil War army base† he told me. It really surprised me to discover that preparations for the Civil War had extended as far west as San Francisco. While the area was a designated no camping zone, they were traveling on a budget; they waited until night time and set up sleeping bags out of site of possible passersby. â€Å"We walked out to the top of the hill before right before the sunset and looked out across the Golden Gate Bridge and the city of San Francisco. I thought about all the people that had looked along here before and all the development the city had gone through. It was truly an American relic† he told me. He would go to sleep that night, but be woken up by cats clawing at his face.

Discuss the need for volunteers to serve in the community and evaluate Essay

Discuss the need for volunteers to serve in the community and evaluate your own experience - Essay Example The US military and medical filed has a long tradition of using the services of volunteers (Ellis). Moreover, community volunteering is essential for parish services, eradicating superstitions from the society, giving awareness to illiterate people about the needs of education, giving aids to the people when they faces some kind of natural or manmade disasters, giving aid to the physically or mentally disordered persons etc. Community volunteer services are of two kinds. In some cases the volunteers get remuneration whereas in some other cases, the volunteers extend their services free of cost. In any case, the need for community volunteers and their services are increasing in the current world as the governments have limitations in serving the public to their utmost satisfaction. This paper briefly explains the need for community volunteering and my own experience as a community volunteer. â€Å"The United Nations proclaimed the year 2001 as the "International Year of Volunteers" to celebrate the vital contributions of volunteers worldwide† (Kimberley et al). Community volunteering is taking place in almost every country in different forms. At the time of writing this report, reports from Haiti shows that more than 100000 people dead and many injured due to a severe earthquake happened there a couple of days before. Reports show that many people are still alive under the destructed building struggling to get out from there. Community volunteers can contribute a lot in giving aid to the people of Haiti. As the Haiti administration have lot of limitations in assisting these people, the services of international community workers are essential for Haiti at present.   Rescue teams from countries including China and France have already reached the capital of Haiti (UN chief "heartened" by scale of global response to help Haiti quake victims). Haiti disaster is one

Movie Genre Essay Example for Free

Movie Genre Essay In a dystopian era plagued by radiation, Dredd is one of the Judges, which is the only presence of law in the land. The most feared of all Judges, Dredd is on a mission to stop the distribution and use of a new drug, â€Å"Slo-Mo†. While training a new Judge, Dredd and his trainee are caught in a slum apartment where a drug lord, Ma-Ma, has gained control over almost all of the inhabitants. The two Judges must fight for survival when the futuristic apartment building’s security is taken over by the drug lord with one mission: to kill Dredd and save the business. Films are generally pretty personal things. What one person loves, another may hate, and there are many concepts that can or cannot be included to create the desired effect. Regardless, there are a few things a film needs that everyone can agree on; an interesting plot, believable characters, captivating dialogue, a realistic set design, and must have a destination (and get there in a reasonable time). Dredd accomplishes all of these with ease, and was a film worth seeing. The plot is pretty basic, and while the basic idea of clashing with authority and who will prevail isn’t relatively new, Dredd presents the concept in a fresh way. Thrilling and suspenseful, Dredd is very well written and captivates the audience. NPR reviewed the film, stating, â€Å"Dredd works because its an action flick with wide appeal that takes risks it doesnt need to in its delightfully off-putting violence and daring style and those choices pay off in a singular and exhilarating movie experience. Its savage, beautiful and loads of fun. (ARNOLD)† Taking something so extraordinarily simple and making a masterpiece is what Alex Garland, the writer, has done. While there seems to be a constant flow of action scenes, the rising action isn’t typical backstory stuff. It offers the pertinent information, but in an energetic way. The climax is certainly the definition of, with more guns and ammunition than you can shake a stick at. Dredd lacks in the falling action, but after the previous high point, any more action may border on too much. Judges are self-described as â€Å"Judge, Jury and Executioner†, being given the power to determine charges on scene, and execute the appropriate punishment immediately. This kind of power is overwhelming and one would expect anyone in this position to be a bit arrogant and demeaning. This demeanor is shown exceptionally well by the Judges at the end of the movie. Many are on Ma Ma’s payroll and corrupted Judges are aplenty. These characters act, as one would expect, prompting the audience to feel a bit of animosity towards them: aptly so, since they are part of the villainous crowd. With a plot as dramatic and intense as Dredd’s, the set must be equally astonishing. Set in a futuristic time, after bouts of radiation, Mega-City One looks drastically different than Earth in present day. Shooting in South Africa provided plenty of vast land to create the perfect set that accurately portrayed the ‘goings-on’. The set is authentic and eerie, and strangely draws you in to the point that when you leave the theater, you wonder where all of the sunlight came from. This kind of believable set makes the movie experience that much more enjoyable. â€Å"I am the law†. Potentially one of the most raw lines in the film, this is the overall theme of the Judge’s attitudes. Being a drama, the film must deliver dialogue that is as captivating as the other elements of the film. Audiences love wit, one-liners, and humor, of any variety. But, in fact, the movie is devoid of too much dialogue, giving the audience the ability to absorb the beautiful set and the extreme action shots that seem to never end. Dredd could have offered more in the way of ‘captivating dialogue’, but Karl Urban, who plays Dredd, makes up for it with the delivery, using his raspy, Clint Eastwood-like voice. Perhaps the most important part of the movie is the plot, and how the movie reacts and evolves around the plot. The natural progression of things, the speed of that progression, and the in-betweens of the plot are all extremely important in holding the audience’s attention and not boring them half to death, or leaving them in the dust, confused. Dredd’s plot is pretty simple; stay alive in a post-radiation era while trying to solve a crime and bring down a drug lord. With the wrong writer, Dredd could be very short, and very boring. However, Garland creates intensity and draws the viewer in with numerous action scenes and suspense with not knowing if they will survive or not. Wired. com calls Dredd, â€Å"a fantastic action spectacle set against the back drop of two people trying to escape hell on Earth. There are massive bombtastic fights, near-death face offs, and bro-ing out between new BFFs Anderson and Dredd. The climax is reached in due time, with an ending that, as a viewer, you can’t help but shout a little â€Å"hoo-ra† at. Dredd is strong on the dialogue and characters, but shines on the set and plot areas. An astonishing set and a plot with non-stop action make Dredd an intense film you won’t want to miss.

Effect of MA Strategy on Shareholder Value

Effect of MA Strategy on Shareholder Value The aim of this project is to examine whether the decision of large UK companies looking to pursue a merger/acquisition strategy will affect shareholder value. The data analyzed in this study will determine if there is a positive or negative correlation in shareholder wealth when a merger/acquisition occurs. The research for this project will be conducted through the analysis of 40 different large UK companies that were merged or acquired by other UK based firms prior to 2002. The data will be obtained from the Bloomberg website. Further research and analysis on the topic will include information obtained from books, journals and reliable internet sources. To test the value of shareholder wealth when a merger/acquisition is pursued, different models will be used which includes Capital Asset Pricing Model, Efficient Capital Markets, Equilibrium Models, and Market Model (Event Studies and Abnormal Returns Methodology). The hypothesis that will be tested in this study is: H0 = If managers of large sized UK companies pursue a merger and acquisition strategy then shareholder wealth (value) will increase. H1 = If managers of large sized UK companies pursue a merger and acquisition strategy then shareholder wealth (value) will remain unchanged or will decrease. The first chapter will give a brief overview of mergers and acquisitions and introduce the reader to recent merger trends in the UK and different types of takeovers. The second chapter will be an in-depth analysis of past research studies which includes: examining different ways a company pays for a bid in a merger, exploring shareholder and managerial wealth perspectives, and analyzing long term post-merger performance of target and bidder firms. Chapter three presents the research methodology used in wealth gain studies and also states the methodology adopted for this dissertation. Chapter four analyzes and discusses the findings in context to wealth gain effects of mergers and acquisitions among the large UK companies chosen for this study. Chapter five concludes this research and highlights possible areas that may require further investigation. EXECUTIVE SUMMARY Mergers and acquisitions have become important events in todays rapidly changing business environment and have been the subject of many research studies. Reasons as to why companies may pursue a merger or acquisition strategy could be to reduce costs to achieve economies of scale or to reduce competition due to increased market power. Mergers and acquisitions have also been known to facilitate entry into new markets or industries and increase the level of effectiveness in a company by eliminating inefficient management. Mergers and acquisitions worldwide have tended to follow a pattern of waves, with there being periods of frantic takeover activity followed by relatively calmer periods. The main objective of financial theory is to maximize shareholder wealth therefore all decisions are taken with the aim of maximizing shareholder value. The purpose of this research is to re-examine the shareholder wealth gain criterion with regards to mergers and acquisitions within the United Kingdom. The objective of this study is to find out if shareholders of large UK companies benefit from the acquisition decisions made by the managers. Past research studies on post-acquisition performance of acquiring and target firms have mixed results. To determine if there is an increase or decrease in shareholder value from corporate takeovers, the Market Model and Event Study Methodology will be used in this study. The hypothesis developed in this study aims to support the argument that mergers and acquisitions are profitable events and lead to an increase in shareholder value. This study however concluded that merger and acquisitions among the large UK organizations chosen did not lead to an increase of shareholder value for both target and bidder firms. These results might not be entirely accurate due to various reasons such as size effects and the firms chosen in this study are from different industries. Other factors such as acquisition financing and acquisition motives also may have an effect on shareholder value however the testing of these factors is outside the scope of the following study. CHAPTER 1: OVERVIEW OF MERGERS AND ACQUISTIONS The following chapter briefly examines the benefits that a merger is expected to generate for both the target firm and the acquiring firm. The historical pattern of takeover activity in the UK from 1964-1992 is discussed to show merger and acquisition (MA) trends and recent MA activity abroad and within the UK will also be highlighted among large UK companies in 2008. In addition, the definition of mergers and acquisitions is provided and the second part of chapter one introduces the reader to different types of mergers used to create value for an organization. 1.1 Benefits to Mergers and Acquisitions Activity The main objective for an acquiring firm is to grow and expand its assets, sales and market shares. Other specific reasons for entering into a merger bid are reflected in the benefits that are expected to be generated which include: Exploiting scale economies Obtain synergy Enter into new markets To restore growth impetus To acquire market power To reduce dependence on existing or perhaps risky activities With the above mentioned benefits to MA activity, it should also be noted that takeovers most likely to succeed are those approached with a strategic focus, incorporating a detailed analysis of the objectives of the takeover, the possible alternatives and how the acquired company can be integrated in the new parent (Pike and Neale). 1.2 Trends in UK Merger Activity There has been an increasing trend of MA activity in the UK over the past few decades, with there being periods of high takeover activity followed by relatively slower periods as can be seen by the graph below. Figure 1.0 History of UK MA Activity Source: National Statistics, 2002 The highest peaks in takeovers are during the period 1984-1989. During this time, the average size of an acquisition had grown significantly from 9.64 million to 20.38 million. As per Sudarsanam (1995) the main reason for this was because the stock market in the UK, along with the harmony with the rest of the world stock markets experienced a strong bull phase which culminated in the October 1987 crash. Furthermore, the 1980s also experienced divestments on a large scale which meant companies would sell off divisions or subsidiaries to other firms of the divested parts in a management buyout. This increase in acquisitions and divestments had shown significant amount of corporate restructuring in the UK and thus led to new organizational innovations such as management buyouts and management buyins, as well as by financial innovations like high-leverage buyouts and mezzanine finance (Sudarsanam, 1995).As can be seen from the graph above, the UK MA market has experienced a relatively le aner period, which has continued till date. The main reasons that can be attributed to this are the various world catastrophes and the overall global economic slowdown. As per the office of National Statistics, the largest significant transaction recorded during the first quarter of 2008 was the acquisition by Imperial Tobacco Group Plc of Altadis S.A. for a press reported value of 9.3 billion. Another significant transaction was the acquisition by Carillion Plc of Alfred McAlpine Plc for a reported value of approximately 0.5 billion. For quarter one in 2008, the number of transactions reported for acquisitions in the UK by UK companies has been the lowest reported since quarter one 2003. Other recent major UK mergers acquisitions (2008) are as follows: Table 1.0 Recent Acquisitions in the UK by UK Companies Company Value in million Carillion Plc acquiring Alfred McAlpine Plc 554 Willmott Dixon Ltd acquiring Inspace Plc 133 easyJet Plc acquiring GB Airways Ltd 104 iimia MitonOptimal Plc acquiring Midas Capital Partners Ltd 100 Source: National Statistics, 2008 Table 2.0 Recent Acquisitions abroad by UK Companies Company Value in million Imperial Tobacco Group Plc acquiring Altadis S.A. 9339 Reckitt Benckiser Group Plc acquiring Adams Respiratory Therapeutics 1100 Scottish and Southern Energy Plc acquiring Airtricity Holdings Ltd 808 SABMiller Plc acquiring Koninklijke Grolsch N.V 606 Ineos Group Ltd acquiring Kerling AS 429 429 Standard Chartered Plc acquiring American Express Bank Ltd 413 Kesa Electricals Plc disposing of BUT SAS 389 Source: National Statistics, 2008 1.3 Definitions and Different Types of Mergers and Acquisitions Although the terms merger, acquisition and takeover are used interchangeably, technical differences do exist. A merger is when corporations come together to combine and share their resources to achieve a common set of objectives (Sudarsanam, 1995). The shareholders of the two combined corporations will continue to be joint owners. An acquisition is when one firm purchases the assets or shares of another firm however the shareholders of the acquired firm continue being owners of that firm. A takeover is the acquisition by one company of the share capital of another in exchange for cash, ordinary shares, loan stock or a combination of these (Pike and Neale). This distinction between the three terms is important in certain contexts however they are used by researchers and authors interchangeably. In the following dissertation, I too will use these three terms interchangeably. There are different types of mergers that exist to create value and are classified into three main categories: horizontal, vertical and conglomerate (Pike and Neale). Horizontal integration: this is when a company takes over the target firm from the same industry and at the same stage of the production process. Vertical integration: where the target is in the same industry as the acquirer however is operating at a different stage in the production process. This can be either close to the source of materials (backward integration) or close to the final customer (forward integration). Conglomerate integration: occurs when the target is in a business that is different to the acquirer. The reasons a firm may undergo a conglomerate merger is to reduce risk through diversification, opportunities for cost reduction and improving internal and external efficiencies. In order to understand whether mergers and acquisitions create or destroy shareholder value, it is important to appreciate and understand few critical aspects of the complex MA theory. The three areas in helping to answer this question with respects to the impact of shareholder value in my opinion are different modes of financing mergers and acquisitions, motives for MA activity and post-merger performance. Various researchers in the finance field have conducted a great amount of research on the above mentioned areas and this dissertation will help put into perspective mergers and acquisitions impact on shareholder value currently in the UK. CHAPTER 2: BACKGROUND OF STUDY Mergers and acquisitions are undertaken as a means of corporate growth and expansion but are also an alternative to growth through internal or organic capital investment. The immediate objective of an acquisition is self-evidently growth and expansion of the acquirers assets, sales and market share (Sudarsanam, 1995). Another objective of acquisitions would be to increase the growth of shareholders wealth aimed at creating a strong competitive advantage for the acquirer. In modern finance theory, shareholder wealth maximization is a strong rational for financing and investment decisions made by management. This leads to the question of wealth gain effects of mergers and acquisitions, specifically among large UK companies. The following chapter introduces various literature regarding wealth gain effects of mergers and acquisitions and highlights the various aspects of mergers and acquisitions which may have an effect on the shareholder value within large UK corporations. 2.1 Modes of Acquisition Financing There are various modes of financing a takeover which includes: cash (preferred method), issuing of ordinary shares and fixed interest securities (loan stock, convertibles, and preference shares). The way in which a merger and acquisition is financed has different benefits to the target shareholders and bidder shareholders. In addition, cash takeovers may be sufficiently different from non-cash acquisitions and failure to distinguish between them may lead to inappropriate generalizations (Carleton et al, 1983). As per Sudarsanam (1995), there are various ways a firm can bid an acquisition, which is shown in Table 3.0. Table 3.0 Bid Financing Bidder Offers Target shareholders receive Cash Cash in exchange for their shares Share Exchange A specified number of bidder s shares for each target share Cash underwritten share offer (vendor placing) Bidders shares, then sell them to a merchant bank for cash Loan stock A loan stock/debenture in exchange for their shares Convertible loan or preferred shares Loan stock or preferred shares convertible into ordinary shares at a predetermined conversion rate over a specified period Deferred payment Part of consideration after a specified period, subject to performance criteria Source: Sudarsanam (1995, p.177) In addition, a bidder making cash offer can finance it from one or more of the following sources (Sudarsanam, 1995): Internal operating cash flow A pre-bid rights issue A cash underwritten offer, e.g. vendor placing or vendor rights A pre-bid loan stock issue Bank Credit A cash offer has two advantages from the point of view to both the target and acquiring shareholders which includes (Pike Neale, 1999): The amount is certain; there is no exposure to the risk of adverse movement in share price during the course of the bid. The targeted shareholder is more easily able to adjust his or her portfolio than if he or she receives shares, which involve dealing costs when sold. Because no new shares are issued, there is no dilution of earnings or change in the balance of control of the bidder. In terms of shares being used as a medium of exchange again there are some advantages to both target as well as acquiring shareholders (Arnold, 2002) which are: For target shareholders use of shares helps avoid capital gains tax. Target shareholders maintain an interest in the combine entity thus helping preserve as well as increase shareholders value. Acquiring shareholders gain from the fact that there is no immediate cash outflow. Nickolaos Travlos (1987) study titled Corporate Takeover Bids, Method of Payment, and Bidding Firms Stock Returns was to examine the role of the method of payment in determining common stock returns of bidding firms at the announcement of takeover bids. The analysis in the study was to show the valuation effects on two common methods of payment which are common stock exchanges and cash offers. The results showed that bidding firms had normal returns in cash offers however experienced significant losses in pure stock exchange acquisitions. Other literature studied by Asquith and Mullins (1986), Kalay and Shimrat (1987), Masulis and Korwar (1986) and Mikkelson and Partch ( 1986) show that common stock issues have negative stock price when there are new common stock offerings. These results were supported by various other studies such as Henri Servaess (1991) study titled Tobins Q and gains from takeovers. Agrawal, Jaffe and Mandelkar (1992) found post-acquisition returns to be lower fo r share-financed acquisitions in comparison to cash-financed acquisitions. They further went on to prove that shareholders of acquiring firms suffered a statistically significant loss of about 10% over the five-year merger period. The bidding firms method of payment provides valuable insight to the market. If the bidding firms managers possess information about the intrinsic value of their firm, independent of the acquisition, which is not fully reflected in the pre-acquisition stock price, they will finance the acquisition in the most profitable way for the existing stockholders (Travlos, 1987). Myers and Majluf (1984) model states that management will prefer cash offerings if they believe their firm is under-valued however a common stock exchange offer will be preferred if they believe their firm is over-valued. In addition, market participants will strongly favor a cash offer as good news while the opposite holds true for a common stock exchange about the bidding firms true value. If such information is important in the market, then the bidding firms stock price change at the proposals announcement will reflect both the gain from the takeover (weighted by the probability that the takeover bid will go throug h) and the information effects (Nickolaos, 1987). Jensen and Ruback (1983) state that most tender offers are financed by cash however merger proposals are financed by the exchange of common stock therefore the information argument states that larger target residuals occur in tender offers rather than in mergers. In their study conducted, they determined that for mergers, the weighted abnormal target firm return is 16.3% over the month before announcement however for tender offers; the weighted target return is 30.9% over the two-month period surrounding the announcement dates. Cash is by far the most widely used form of payment in mergers and acquisitions. There are many reasons as to why there is an increased use of cash in financing mergers. One possible explanation for the increasing use of cash depends on market imperfections and/or agency considerations (Carleton et al, 1983). Another reason for why bidding firms use cash in financing mergers is the increase in the number of hostile mergers. Cash not only signals a high value for the target, but also preempts other firms from bidding (Martin, 1996). These findings were also found in the literature of Eckbo, Giammarino and Heinkel (1990) which include a role for mixed financings in which higher-valued bidders are more likely to use more cash to finance the acquisition. As can be seen from the literature above the mode of payment in an acquisition may be driven by various motives and can have various effects on the bidders and acquirers stock price. This can have a major impact on shareholder value during corporate acquisitions as well as value gain studies. A study by Loughran and Vijh (1997) formed an association between the mode of acquisition (merger and tender offer) and the method of payment (cash or stock). They studied this relationship in the context of wealth gains from acquisitions and concluded that the post-acquisition returns of acquirers are related to both the mode of acquisition as well as form of payment. This was also proved by various other researchers (mentioned above) thus making the method of payment during an acquisition all the more important. Reason being, post-acquisition returns are what tend to effect shareholder value the most therefore the knowledge and distinction of the various modes of financing an acquisition is ve ry relevant and essential. 2.2 Motives for Mergers Acquisitions A Dual Perspective Tender offers allow for an in-depth analysis of agency relationships since the best interests of the principal (target firm shareholders) and agent (target firm managers) are often in conflict. Managers of the target firm are often in conflict of interest between their fiduciary responsibilities to the shareholders and their own personal wealth. For this reason, tender offers allow for the analysis of agency conflicts between shareholders and management of the target firm. According to Sudarsanam (1995) there are two main perspectives for acquisition motives which are: Shareholder wealth maximization perspective Under the shareholder wealth maximization perspective, all firms decisions including acquisitions are made with the objective of maximizing the wealth of the shareholders of the firm. In mergers and acquisitions, management of the target firm will oppose bidding firms to takeover if they believe this action would not be in the best interest of its shareholders. Target managers that oppose a bid defend their reasoning by claiming that the bid price is not adequate enough. Managerial wealth perspective Under the managerial wealth perspective, target managers may face an uneasy choice between obligations to current shareholders and those who aspire to such a position (Walkling and Long, 1984). For many target managers, if they sense a possibility of a loss in compensation from the merger or acquisition, conflict of interest will then increase. If self interest is pursued by target managers, there is a possibility that a bad acquisition may occur and/or a loss of shareholder wealth. According to Sudarsanam (1995), managers may undertake acquisitions for the following reasons: To pursue growth in size of their firm, since their salary, prerequisites, status and power are a function of firm size. (Empire-building syndrome) In order to deploy their currently underused managerial skills. (self-fulfillment motive) To diversify risk and minimize costs of financial distress and bankruptcy. (job security motive) To avoid being taken over. (job security motive) The managerial wealth perspective motive is one of survival. Not only do managers tend to seek motivation from sustained growth but also seek job security. Managers unlike shareholders cannot diversify to spread their risks since they are tied to one company. If that company is acquired, managers have a high probability of losing their jobs. A study conducted by Firth (1991) tests to see if executive reward increases when an acquisition takes place. In a sample of 254 UK takeover offers during 1974-1980 found that the acquisition process leads to an increase in managerial remuneration, and that this is predicated on the increased size of the acquirer and concludes that the evidence is consistent with takeovers being motivated by managers wanting to maximize their own welfare'(Firth, 1991). Agency conflicts arise whenever differing incentives cause managers to take actions that benefit themselves but harm shareholders. In the context of acquisitions, agency conflicts may lead to a reduction in shareholder wealth if managers pursue expansion for nonprofit-maximizing reasons. According to past literature, large target shareholder wealth gains are experienced during the announcement of a takeover and large shareholder wealth losses occur when a takeover bid fails (Jensen and Ruback, 1983). This implies that target management interests are not always achieved by accepting bid offers. In addition, target managers may lose compensation and other perks if they are replaced after a successful bid offer. These findings are also confirmed by Walkling and Long (1984) and Martin and McConnell (1991), all of whom reported above-average managerial turnover after a successful takeover bid. The study findings show that in addition to lost compensation, managerial turnover may also be a ssociated with loss of status. Martin and McConnell (1991) further go on to say that the mergers and acquisitions market plays an important role in controlling the non-value maximizing behavior of managers of large corporations. As shown from the literature above, the shareholder wealth perspective and managerial wealth perspective may conflict with one another. With respects to mergers and acquisitions, the managerial motives and a mangers reaction to a takeover bid may have an impact on the shareholder wealth maximization criterion. The extent to which it would impact shareholder value will be decided by the amount of control managers have within the organization. 2.3 Post Merger Performance Debate (Targets and Bidders) There has been considerable interest in the post merger performance on shareholders returns in the target and bidder firms. Typical findings by researchers show three patterns: (1) target shareholders earn significantly positive abnormal returns from all acquisitions, (2) acquiring shareholders earn little or no abnormal returns from tender offers and (3) acquiring shareholders earn negative abnormal returns from mergers. Overall, the results of post merger performance have been mixed. According to Langetieg (1978) and Asquith (1983), their research concluded that acquired firms experience significantly negative abnormal returns over one to three years after the merger. In the research study conducted by Agrawal, Jaffe and Mandelker (1992) titled The Post-Merger Performance of Acquiring Firms: A Re-examination of an Anomaly found that stockholders of acquiring firms experience a statistically significant wealth loss of approximately 10% over five years after the merger completion date. Research conducted by Franks, Harris and Titman (1991) found that no significant underperformance of stockholders returns exist over a three year period after the acquisition. Franks et al concluded that the previous findings of poor performance post-acquisition were likely to be due to benchmark errors rather than inconsistencies with the Efficient Market Theory (EMH) or mis-pricing at the time of the takeover. Similar results that underperformance of stockholders returns do not exist over a three year period after acquisition is also concluded by Bradley and Jarrell (1988). A few studies have analyzed value gains during merger and acquisitions with respect to various classes of merging firms security holders. A study was carried out by Dennis and McConnell (1986) namely, Corporate Mergers and Security Returns and their results indicated mergers on average to be value creating activities for the acquired and the acquiring company individually. They found by other previous studies that on average common stockholders of acquiring firms earn positive returns but are usually not statistically significant. Their results also indicated that convertible preferred stockholders (of acquiring firm) received positive and statistically significant returns post-merger; however, non-convertible preferred stockholders received positive but not statistically significant returns post-merger. The combination of the above mentioned results lead to an overall increase in the value of the firm therefore presenting us with the reason as to why corporations go ahead with merge rs which do not earn statistically significant returns to common stockholders of the acquiring firms. Research results by Asquith and Kim (1982) also confirm what other investigators found for mergers: abnormal returns to the common stocks of acquired firms are positive and statistically significant; abnormal returns to the common stock of acquiring firms are not significantly different from zero. In the study Do Long-term Shareholders Benefit Corporate Acquisitions? by Loughran and Vijh (1997), found that post acquisition returns of acquirers stock are related to both the form of payment as well as the mode of acquisition. They concluded in the overall sample of 947 cases, acquirers that make merger bids earn, on average, 15.9 percent less than matching firms whereas acquirers that make tender offers earn 43.0 percent more than matching firms during a five-year period after acquisition. In addition, stock acquirers earned 24.2 percent less however cash acquirers earn 18.5 percent more with respects to matching firms. Furthermore, conclusions show that during a five year period following the acquisition, on average, firms t Effect of MA Strategy on Shareholder Value Effect of MA Strategy on Shareholder Value The aim of this project is to examine whether the decision of large UK companies looking to pursue a merger/acquisition strategy will affect shareholder value. The data analyzed in this study will determine if there is a positive or negative correlation in shareholder wealth when a merger/acquisition occurs. The research for this project will be conducted through the analysis of 40 different large UK companies that were merged or acquired by other UK based firms prior to 2002. The data will be obtained from the Bloomberg website. Further research and analysis on the topic will include information obtained from books, journals and reliable internet sources. To test the value of shareholder wealth when a merger/acquisition is pursued, different models will be used which includes Capital Asset Pricing Model, Efficient Capital Markets, Equilibrium Models, and Market Model (Event Studies and Abnormal Returns Methodology). The hypothesis that will be tested in this study is: H0 = If managers of large sized UK companies pursue a merger and acquisition strategy then shareholder wealth (value) will increase. H1 = If managers of large sized UK companies pursue a merger and acquisition strategy then shareholder wealth (value) will remain unchanged or will decrease. The first chapter will give a brief overview of mergers and acquisitions and introduce the reader to recent merger trends in the UK and different types of takeovers. The second chapter will be an in-depth analysis of past research studies which includes: examining different ways a company pays for a bid in a merger, exploring shareholder and managerial wealth perspectives, and analyzing long term post-merger performance of target and bidder firms. Chapter three presents the research methodology used in wealth gain studies and also states the methodology adopted for this dissertation. Chapter four analyzes and discusses the findings in context to wealth gain effects of mergers and acquisitions among the large UK companies chosen for this study. Chapter five concludes this research and highlights possible areas that may require further investigation. EXECUTIVE SUMMARY Mergers and acquisitions have become important events in todays rapidly changing business environment and have been the subject of many research studies. Reasons as to why companies may pursue a merger or acquisition strategy could be to reduce costs to achieve economies of scale or to reduce competition due to increased market power. Mergers and acquisitions have also been known to facilitate entry into new markets or industries and increase the level of effectiveness in a company by eliminating inefficient management. Mergers and acquisitions worldwide have tended to follow a pattern of waves, with there being periods of frantic takeover activity followed by relatively calmer periods. The main objective of financial theory is to maximize shareholder wealth therefore all decisions are taken with the aim of maximizing shareholder value. The purpose of this research is to re-examine the shareholder wealth gain criterion with regards to mergers and acquisitions within the United Kingdom. The objective of this study is to find out if shareholders of large UK companies benefit from the acquisition decisions made by the managers. Past research studies on post-acquisition performance of acquiring and target firms have mixed results. To determine if there is an increase or decrease in shareholder value from corporate takeovers, the Market Model and Event Study Methodology will be used in this study. The hypothesis developed in this study aims to support the argument that mergers and acquisitions are profitable events and lead to an increase in shareholder value. This study however concluded that merger and acquisitions among the large UK organizations chosen did not lead to an increase of shareholder value for both target and bidder firms. These results might not be entirely accurate due to various reasons such as size effects and the firms chosen in this study are from different industries. Other factors such as acquisition financing and acquisition motives also may have an effect on shareholder value however the testing of these factors is outside the scope of the following study. CHAPTER 1: OVERVIEW OF MERGERS AND ACQUISTIONS The following chapter briefly examines the benefits that a merger is expected to generate for both the target firm and the acquiring firm. The historical pattern of takeover activity in the UK from 1964-1992 is discussed to show merger and acquisition (MA) trends and recent MA activity abroad and within the UK will also be highlighted among large UK companies in 2008. In addition, the definition of mergers and acquisitions is provided and the second part of chapter one introduces the reader to different types of mergers used to create value for an organization. 1.1 Benefits to Mergers and Acquisitions Activity The main objective for an acquiring firm is to grow and expand its assets, sales and market shares. Other specific reasons for entering into a merger bid are reflected in the benefits that are expected to be generated which include: Exploiting scale economies Obtain synergy Enter into new markets To restore growth impetus To acquire market power To reduce dependence on existing or perhaps risky activities With the above mentioned benefits to MA activity, it should also be noted that takeovers most likely to succeed are those approached with a strategic focus, incorporating a detailed analysis of the objectives of the takeover, the possible alternatives and how the acquired company can be integrated in the new parent (Pike and Neale). 1.2 Trends in UK Merger Activity There has been an increasing trend of MA activity in the UK over the past few decades, with there being periods of high takeover activity followed by relatively slower periods as can be seen by the graph below. Figure 1.0 History of UK MA Activity Source: National Statistics, 2002 The highest peaks in takeovers are during the period 1984-1989. During this time, the average size of an acquisition had grown significantly from 9.64 million to 20.38 million. As per Sudarsanam (1995) the main reason for this was because the stock market in the UK, along with the harmony with the rest of the world stock markets experienced a strong bull phase which culminated in the October 1987 crash. Furthermore, the 1980s also experienced divestments on a large scale which meant companies would sell off divisions or subsidiaries to other firms of the divested parts in a management buyout. This increase in acquisitions and divestments had shown significant amount of corporate restructuring in the UK and thus led to new organizational innovations such as management buyouts and management buyins, as well as by financial innovations like high-leverage buyouts and mezzanine finance (Sudarsanam, 1995).As can be seen from the graph above, the UK MA market has experienced a relatively le aner period, which has continued till date. The main reasons that can be attributed to this are the various world catastrophes and the overall global economic slowdown. As per the office of National Statistics, the largest significant transaction recorded during the first quarter of 2008 was the acquisition by Imperial Tobacco Group Plc of Altadis S.A. for a press reported value of 9.3 billion. Another significant transaction was the acquisition by Carillion Plc of Alfred McAlpine Plc for a reported value of approximately 0.5 billion. For quarter one in 2008, the number of transactions reported for acquisitions in the UK by UK companies has been the lowest reported since quarter one 2003. Other recent major UK mergers acquisitions (2008) are as follows: Table 1.0 Recent Acquisitions in the UK by UK Companies Company Value in million Carillion Plc acquiring Alfred McAlpine Plc 554 Willmott Dixon Ltd acquiring Inspace Plc 133 easyJet Plc acquiring GB Airways Ltd 104 iimia MitonOptimal Plc acquiring Midas Capital Partners Ltd 100 Source: National Statistics, 2008 Table 2.0 Recent Acquisitions abroad by UK Companies Company Value in million Imperial Tobacco Group Plc acquiring Altadis S.A. 9339 Reckitt Benckiser Group Plc acquiring Adams Respiratory Therapeutics 1100 Scottish and Southern Energy Plc acquiring Airtricity Holdings Ltd 808 SABMiller Plc acquiring Koninklijke Grolsch N.V 606 Ineos Group Ltd acquiring Kerling AS 429 429 Standard Chartered Plc acquiring American Express Bank Ltd 413 Kesa Electricals Plc disposing of BUT SAS 389 Source: National Statistics, 2008 1.3 Definitions and Different Types of Mergers and Acquisitions Although the terms merger, acquisition and takeover are used interchangeably, technical differences do exist. A merger is when corporations come together to combine and share their resources to achieve a common set of objectives (Sudarsanam, 1995). The shareholders of the two combined corporations will continue to be joint owners. An acquisition is when one firm purchases the assets or shares of another firm however the shareholders of the acquired firm continue being owners of that firm. A takeover is the acquisition by one company of the share capital of another in exchange for cash, ordinary shares, loan stock or a combination of these (Pike and Neale). This distinction between the three terms is important in certain contexts however they are used by researchers and authors interchangeably. In the following dissertation, I too will use these three terms interchangeably. There are different types of mergers that exist to create value and are classified into three main categories: horizontal, vertical and conglomerate (Pike and Neale). Horizontal integration: this is when a company takes over the target firm from the same industry and at the same stage of the production process. Vertical integration: where the target is in the same industry as the acquirer however is operating at a different stage in the production process. This can be either close to the source of materials (backward integration) or close to the final customer (forward integration). Conglomerate integration: occurs when the target is in a business that is different to the acquirer. The reasons a firm may undergo a conglomerate merger is to reduce risk through diversification, opportunities for cost reduction and improving internal and external efficiencies. In order to understand whether mergers and acquisitions create or destroy shareholder value, it is important to appreciate and understand few critical aspects of the complex MA theory. The three areas in helping to answer this question with respects to the impact of shareholder value in my opinion are different modes of financing mergers and acquisitions, motives for MA activity and post-merger performance. Various researchers in the finance field have conducted a great amount of research on the above mentioned areas and this dissertation will help put into perspective mergers and acquisitions impact on shareholder value currently in the UK. CHAPTER 2: BACKGROUND OF STUDY Mergers and acquisitions are undertaken as a means of corporate growth and expansion but are also an alternative to growth through internal or organic capital investment. The immediate objective of an acquisition is self-evidently growth and expansion of the acquirers assets, sales and market share (Sudarsanam, 1995). Another objective of acquisitions would be to increase the growth of shareholders wealth aimed at creating a strong competitive advantage for the acquirer. In modern finance theory, shareholder wealth maximization is a strong rational for financing and investment decisions made by management. This leads to the question of wealth gain effects of mergers and acquisitions, specifically among large UK companies. The following chapter introduces various literature regarding wealth gain effects of mergers and acquisitions and highlights the various aspects of mergers and acquisitions which may have an effect on the shareholder value within large UK corporations. 2.1 Modes of Acquisition Financing There are various modes of financing a takeover which includes: cash (preferred method), issuing of ordinary shares and fixed interest securities (loan stock, convertibles, and preference shares). The way in which a merger and acquisition is financed has different benefits to the target shareholders and bidder shareholders. In addition, cash takeovers may be sufficiently different from non-cash acquisitions and failure to distinguish between them may lead to inappropriate generalizations (Carleton et al, 1983). As per Sudarsanam (1995), there are various ways a firm can bid an acquisition, which is shown in Table 3.0. Table 3.0 Bid Financing Bidder Offers Target shareholders receive Cash Cash in exchange for their shares Share Exchange A specified number of bidder s shares for each target share Cash underwritten share offer (vendor placing) Bidders shares, then sell them to a merchant bank for cash Loan stock A loan stock/debenture in exchange for their shares Convertible loan or preferred shares Loan stock or preferred shares convertible into ordinary shares at a predetermined conversion rate over a specified period Deferred payment Part of consideration after a specified period, subject to performance criteria Source: Sudarsanam (1995, p.177) In addition, a bidder making cash offer can finance it from one or more of the following sources (Sudarsanam, 1995): Internal operating cash flow A pre-bid rights issue A cash underwritten offer, e.g. vendor placing or vendor rights A pre-bid loan stock issue Bank Credit A cash offer has two advantages from the point of view to both the target and acquiring shareholders which includes (Pike Neale, 1999): The amount is certain; there is no exposure to the risk of adverse movement in share price during the course of the bid. The targeted shareholder is more easily able to adjust his or her portfolio than if he or she receives shares, which involve dealing costs when sold. Because no new shares are issued, there is no dilution of earnings or change in the balance of control of the bidder. In terms of shares being used as a medium of exchange again there are some advantages to both target as well as acquiring shareholders (Arnold, 2002) which are: For target shareholders use of shares helps avoid capital gains tax. Target shareholders maintain an interest in the combine entity thus helping preserve as well as increase shareholders value. Acquiring shareholders gain from the fact that there is no immediate cash outflow. Nickolaos Travlos (1987) study titled Corporate Takeover Bids, Method of Payment, and Bidding Firms Stock Returns was to examine the role of the method of payment in determining common stock returns of bidding firms at the announcement of takeover bids. The analysis in the study was to show the valuation effects on two common methods of payment which are common stock exchanges and cash offers. The results showed that bidding firms had normal returns in cash offers however experienced significant losses in pure stock exchange acquisitions. Other literature studied by Asquith and Mullins (1986), Kalay and Shimrat (1987), Masulis and Korwar (1986) and Mikkelson and Partch ( 1986) show that common stock issues have negative stock price when there are new common stock offerings. These results were supported by various other studies such as Henri Servaess (1991) study titled Tobins Q and gains from takeovers. Agrawal, Jaffe and Mandelkar (1992) found post-acquisition returns to be lower fo r share-financed acquisitions in comparison to cash-financed acquisitions. They further went on to prove that shareholders of acquiring firms suffered a statistically significant loss of about 10% over the five-year merger period. The bidding firms method of payment provides valuable insight to the market. If the bidding firms managers possess information about the intrinsic value of their firm, independent of the acquisition, which is not fully reflected in the pre-acquisition stock price, they will finance the acquisition in the most profitable way for the existing stockholders (Travlos, 1987). Myers and Majluf (1984) model states that management will prefer cash offerings if they believe their firm is under-valued however a common stock exchange offer will be preferred if they believe their firm is over-valued. In addition, market participants will strongly favor a cash offer as good news while the opposite holds true for a common stock exchange about the bidding firms true value. If such information is important in the market, then the bidding firms stock price change at the proposals announcement will reflect both the gain from the takeover (weighted by the probability that the takeover bid will go throug h) and the information effects (Nickolaos, 1987). Jensen and Ruback (1983) state that most tender offers are financed by cash however merger proposals are financed by the exchange of common stock therefore the information argument states that larger target residuals occur in tender offers rather than in mergers. In their study conducted, they determined that for mergers, the weighted abnormal target firm return is 16.3% over the month before announcement however for tender offers; the weighted target return is 30.9% over the two-month period surrounding the announcement dates. Cash is by far the most widely used form of payment in mergers and acquisitions. There are many reasons as to why there is an increased use of cash in financing mergers. One possible explanation for the increasing use of cash depends on market imperfections and/or agency considerations (Carleton et al, 1983). Another reason for why bidding firms use cash in financing mergers is the increase in the number of hostile mergers. Cash not only signals a high value for the target, but also preempts other firms from bidding (Martin, 1996). These findings were also found in the literature of Eckbo, Giammarino and Heinkel (1990) which include a role for mixed financings in which higher-valued bidders are more likely to use more cash to finance the acquisition. As can be seen from the literature above the mode of payment in an acquisition may be driven by various motives and can have various effects on the bidders and acquirers stock price. This can have a major impact on shareholder value during corporate acquisitions as well as value gain studies. A study by Loughran and Vijh (1997) formed an association between the mode of acquisition (merger and tender offer) and the method of payment (cash or stock). They studied this relationship in the context of wealth gains from acquisitions and concluded that the post-acquisition returns of acquirers are related to both the mode of acquisition as well as form of payment. This was also proved by various other researchers (mentioned above) thus making the method of payment during an acquisition all the more important. Reason being, post-acquisition returns are what tend to effect shareholder value the most therefore the knowledge and distinction of the various modes of financing an acquisition is ve ry relevant and essential. 2.2 Motives for Mergers Acquisitions A Dual Perspective Tender offers allow for an in-depth analysis of agency relationships since the best interests of the principal (target firm shareholders) and agent (target firm managers) are often in conflict. Managers of the target firm are often in conflict of interest between their fiduciary responsibilities to the shareholders and their own personal wealth. For this reason, tender offers allow for the analysis of agency conflicts between shareholders and management of the target firm. According to Sudarsanam (1995) there are two main perspectives for acquisition motives which are: Shareholder wealth maximization perspective Under the shareholder wealth maximization perspective, all firms decisions including acquisitions are made with the objective of maximizing the wealth of the shareholders of the firm. In mergers and acquisitions, management of the target firm will oppose bidding firms to takeover if they believe this action would not be in the best interest of its shareholders. Target managers that oppose a bid defend their reasoning by claiming that the bid price is not adequate enough. Managerial wealth perspective Under the managerial wealth perspective, target managers may face an uneasy choice between obligations to current shareholders and those who aspire to such a position (Walkling and Long, 1984). For many target managers, if they sense a possibility of a loss in compensation from the merger or acquisition, conflict of interest will then increase. If self interest is pursued by target managers, there is a possibility that a bad acquisition may occur and/or a loss of shareholder wealth. According to Sudarsanam (1995), managers may undertake acquisitions for the following reasons: To pursue growth in size of their firm, since their salary, prerequisites, status and power are a function of firm size. (Empire-building syndrome) In order to deploy their currently underused managerial skills. (self-fulfillment motive) To diversify risk and minimize costs of financial distress and bankruptcy. (job security motive) To avoid being taken over. (job security motive) The managerial wealth perspective motive is one of survival. Not only do managers tend to seek motivation from sustained growth but also seek job security. Managers unlike shareholders cannot diversify to spread their risks since they are tied to one company. If that company is acquired, managers have a high probability of losing their jobs. A study conducted by Firth (1991) tests to see if executive reward increases when an acquisition takes place. In a sample of 254 UK takeover offers during 1974-1980 found that the acquisition process leads to an increase in managerial remuneration, and that this is predicated on the increased size of the acquirer and concludes that the evidence is consistent with takeovers being motivated by managers wanting to maximize their own welfare'(Firth, 1991). Agency conflicts arise whenever differing incentives cause managers to take actions that benefit themselves but harm shareholders. In the context of acquisitions, agency conflicts may lead to a reduction in shareholder wealth if managers pursue expansion for nonprofit-maximizing reasons. According to past literature, large target shareholder wealth gains are experienced during the announcement of a takeover and large shareholder wealth losses occur when a takeover bid fails (Jensen and Ruback, 1983). This implies that target management interests are not always achieved by accepting bid offers. In addition, target managers may lose compensation and other perks if they are replaced after a successful bid offer. These findings are also confirmed by Walkling and Long (1984) and Martin and McConnell (1991), all of whom reported above-average managerial turnover after a successful takeover bid. The study findings show that in addition to lost compensation, managerial turnover may also be a ssociated with loss of status. Martin and McConnell (1991) further go on to say that the mergers and acquisitions market plays an important role in controlling the non-value maximizing behavior of managers of large corporations. As shown from the literature above, the shareholder wealth perspective and managerial wealth perspective may conflict with one another. With respects to mergers and acquisitions, the managerial motives and a mangers reaction to a takeover bid may have an impact on the shareholder wealth maximization criterion. The extent to which it would impact shareholder value will be decided by the amount of control managers have within the organization. 2.3 Post Merger Performance Debate (Targets and Bidders) There has been considerable interest in the post merger performance on shareholders returns in the target and bidder firms. Typical findings by researchers show three patterns: (1) target shareholders earn significantly positive abnormal returns from all acquisitions, (2) acquiring shareholders earn little or no abnormal returns from tender offers and (3) acquiring shareholders earn negative abnormal returns from mergers. Overall, the results of post merger performance have been mixed. According to Langetieg (1978) and Asquith (1983), their research concluded that acquired firms experience significantly negative abnormal returns over one to three years after the merger. In the research study conducted by Agrawal, Jaffe and Mandelker (1992) titled The Post-Merger Performance of Acquiring Firms: A Re-examination of an Anomaly found that stockholders of acquiring firms experience a statistically significant wealth loss of approximately 10% over five years after the merger completion date. Research conducted by Franks, Harris and Titman (1991) found that no significant underperformance of stockholders returns exist over a three year period after the acquisition. Franks et al concluded that the previous findings of poor performance post-acquisition were likely to be due to benchmark errors rather than inconsistencies with the Efficient Market Theory (EMH) or mis-pricing at the time of the takeover. Similar results that underperformance of stockholders returns do not exist over a three year period after acquisition is also concluded by Bradley and Jarrell (1988). A few studies have analyzed value gains during merger and acquisitions with respect to various classes of merging firms security holders. A study was carried out by Dennis and McConnell (1986) namely, Corporate Mergers and Security Returns and their results indicated mergers on average to be value creating activities for the acquired and the acquiring company individually. They found by other previous studies that on average common stockholders of acquiring firms earn positive returns but are usually not statistically significant. Their results also indicated that convertible preferred stockholders (of acquiring firm) received positive and statistically significant returns post-merger; however, non-convertible preferred stockholders received positive but not statistically significant returns post-merger. The combination of the above mentioned results lead to an overall increase in the value of the firm therefore presenting us with the reason as to why corporations go ahead with merge rs which do not earn statistically significant returns to common stockholders of the acquiring firms. Research results by Asquith and Kim (1982) also confirm what other investigators found for mergers: abnormal returns to the common stocks of acquired firms are positive and statistically significant; abnormal returns to the common stock of acquiring firms are not significantly different from zero. In the study Do Long-term Shareholders Benefit Corporate Acquisitions? by Loughran and Vijh (1997), found that post acquisition returns of acquirers stock are related to both the form of payment as well as the mode of acquisition. They concluded in the overall sample of 947 cases, acquirers that make merger bids earn, on average, 15.9 percent less than matching firms whereas acquirers that make tender offers earn 43.0 percent more than matching firms during a five-year period after acquisition. In addition, stock acquirers earned 24.2 percent less however cash acquirers earn 18.5 percent more with respects to matching firms. Furthermore, conclusions show that during a five year period following the acquisition, on average, firms t