...Hedge Funds: A liability for the economy? Sander van Bentum 362107 Max Wielitsch 385533 Dhr. B. Tims 17-10-2013 Table of Contents Introduction 3 Risks for the investors 4 The creation of risks to financial institutions 5 The excess volatility risk 6 Transparency 6 Unlevel playing field 7 Hedge funds and financial bubbles 7 The role of hedge funds in crises 8 Conclusion 10 Bibliografy 10 Introduction Everybody that is somewhat involved with finance has probably at some point heard of the term hedge fund. But what is it exactly? In simple words it can be described as, ‘’an actively managed, pooled investment vehicle that is open to only a limited group of investors and whose performance is measured in absolute return units’’ (Connor et al. 2003). This limited group of investors contain wealthy investors who would be able to cope with possible losses. Commonly hedge funds make use of arbitrages and price discrepancies, terms that are also known as inefficiencies within the market. By making small profits on a large scale by identifying these market inefficiencies and attempting to correct them these hedge funds claim to help the market become more efficient. Hedge Funds first made their appearance on to the global financial stage in 1949, when the first hedge fund was created by Alfred W. Jones. ‘’He raised $60,000 and invested $40,000 of his money to pursue a strategy of investing in common stocks and hedging the positions with short sales’’...
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...Roles, authority and involvement of the management accounting function: a multiple case-study perspective Caroline Lambert HEC, Paris 1, rue de la Libération 78351 Jouy en Josas Cedex lambert@hec.fr Samuel Sponem Conservatoire National des Arts et Métiers GREG-CRC (EA 2430) samuel.sponem@cnam.fr Acknowledgements The authors are grateful to participants at the European Accounting Association Conference 2009, the Accounting department ESSEC seminar, France, and at the seminar of Ecole de Comptabilité de l’Université Laval, Québec, Canada for their constructive comments on earlier drafts of this paper. They also wish to thank and useful suggestions of members of the CriM group, Martin Messner and Juhani Vaivio. We would particularly like to thank Markus Granlund and the two anonymous reviewers for their many helpful comments and suggestions. Both authors thank ‘Fondation HEC’ and ‘Agence Nationale de la Recherche’ for their fundings. Abstract Recent techniques and shifts in the environment are often foreseen as leading management accountants to adopt a business orientation. However, empirical evidence pointing to fundamental shifts in the roles played by management accountants remains relatively scarce. We explore this paradox and give sense to the various roles played by the management accounting function by focusing on how management accountants are involved in and endowed with authority in decision-making situations. Using data we gathered from 73 interviews in ten...
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...Accounting professionals provide validity, signing off on annual reports, which directly or indirectly play a critical role in establishing and maintaining the confidence of the investors. Unfortunately, we are not learning from our past mistakes. History shows us that after every crisis, e.g the great depression of 1929, economic downturn of 1988, dotcom bubble of 2000, Enron and Worldcom issues, and finally the subprime mortgage crisis, there has been a need to appoint boards which recommended changes mostly pertaining to the accounting areas. Accounting professionals are constrained in providing information from data provided to them. While it is their responsibility to follow Generally Accepted Account Principles (GAAP) accounting standards, they do not have a crystal ball to predict the future, but they should have seen the crisis coming much earlier and played by the ethics rules and standards established by GAAP. Also, there is a caveat in the annual reports which says it is the management teams of entity who are responsible in ensuring integrity of data provided to the accounting professionals. The mortgage subprime crisis was driven by greed at many levels including at the homeowner, broker, lender, banks, and government levels. Accounting professionals should play a role in identifying "the train" and should stop the accident from happening much earlier. Economists, however, are better equipped to do so than the accounting professionals though. They should...
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...organization. Activists, the media and governments all over the world have become adept by holding their organizations or enterprises to account for the social impacts of their actions. It is in this response that the use of Corporate Social Responsibility (CSR) has emerged to be one of the inescapable top priorities for various business leaders or managers all over the globe. However, the fact remains that many current approaches to Corporate Social Responsibility are quite disconnected from the initial strategy of various companies or firms using it. In order for business enterprises to contribute significantly towards their key competencies, then they should treat Corporate Social Responsibility as something that is central and vital towards their business strategy. The aim of this research paper is, therefore, to explain the importance of Corporate Social Responsibility in business organizations and ascertain how various organizations apply it to achieve various objectives of their business firms (Banerjee, 2007, p.90-150). 1.1 Research Objectives: The research paper addresses four specific research objectives among them the roles played by business education in the development of key Corporate Social Responsibility skills, the impact of customer perception on loyalty basing on Corporate Social Responsibility, how corporate social responsibility is capable of enhancing corporate reputation and...
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...multinational financial and banking service business companies that have its headquarters in London. In connection to that, there are various duties or roles that the above bank’s manager does in ensuring that the daily activities of the bank run smoothly. The Barclays Bank manager is regarded as being the heart of the banking services offered by this organization. Typically, his or her responsibility entails managing the customers’ finances as well as saving time. As the manager of the bank, his or her role will be the management of workers to the point of increasing the general sale of the financial products and services (Downes et al, 2008). Such a manager also has the task of attracting new clients to their business organization. He or she will also be required to understand all the financial product rules. In connection to that, there is variety of roles that the Barclays Bank manger does. First is the general monitoring of sales targets and budgets generating figures and financial reports. Second, is the extensive promoting of his or her bank in the local society and attending conferences and meetings. Third, is the handling of their clients complaints and coming up with the rationale of solving them. In addition to that he has the responsibility of supervising the staff members and training, assessing any form of lending risk the bank might experience and motivating the bank’s staff to meet their targets (Duquenoy et al, 2008). Similarly, as a bank manager he or she has...
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...PRESENTER: GRACE Global Business Management PROJECT MANAGEMENT ASSIGNMENT TOPIC HOW PROJECT MANAGEMENT IS USED IN AN INDUSTRY? QUESTIONS: WHAT ROLE PROJECT MANAGEMENT PLAYS IN THE INDUSTRY CHOSEN? IS IT A CORE REQUIREMENT TO KNOW THE SUBJECT? HOW PERVASIVE IS ITS USAGE? HAS IT ALWAYS BEEN A TOOL IN THE INDUSTRY? WHO USES THE TOOL AND FOR WHAT: GIVE EXAMPLES Contents This research seeks to answer the questions as outlined in the the topic, as they relate to project management in the financial sector and specifically the banking sector. Research on five of Canada’s top bank was conducted along with examining project management as a whole. The financial sector was chosen based on the fact that Banking will be my place of work in the future and given my overall background in financial services, having worked in this field for a number of years. INTRODUCTION Brief History According to Wikipedia Project management processes took shape round about the 1950’s wherein organizations began to analytically apply the process to complex engineering projects. It was developed from several fields of applications namely, civil engineering, construction, and heavy defense activity. The two forefathers of this discipline were Henry Gantt (1861-1919) who was the founder of the Gantt Chart, used as a project management tool and Henri Fayol,(who created the five management functions that today is referred to as the body of knowledge and is...
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...Introduction Music has the ability to shape one mind. Throughout history it has been blatantly obvious that this favoured type entertainment have changed with the passing times. The growth of music has led to an expansion to ones freedom of expression. It has become a part of people, and who they are. Some music represents people, and other music expresses people. Either way, music is around and keeps on growing. Growing to new ideas and feelings that capture its listeners. Any man who says that music doesn`t play a major role in one’s life is deserving of pity. Every man today fits under at least one classification of music. Today, I`ll share with you on the types of instruments, music and emotion and also the role of woodwind and brass in an orchestra. Body Do you know what an orchestra is? In simple words it brings the meaning of a group of people playing instruments that are classified into woodwind and brass. Do you know how a trumpet or a saxophone looks like? Do you know in which categories are these instruments classified? Well no worries, I`ll share with you. A woodwind instrument is an instrument in which sound is produced by blowing against an edge or by a vibrating with air a thin piece of wood known as a reed. Most of these instruments were originally made of wood, but some such as the saxophone and some flutes are now made of other materials. The examples of the woodwind instruments are flute, saxophone, clarinets, oboe and bassoon. Meanwhile a brass instrument...
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...development process and managers need to understand how to create effective and productive teams and the roles performed by each of the members. The theory used is the Tuckman’s five stages of group development process that involves forming, storming, and norming, performing and adjourning. Another important aspect of effective teams is the right mix of role categories from Belbin theory, which identifies nine types of people, categorised into three specific skills of action, people and thought orientation roles. This essay will analyse the roles managers undertake to facilitate effective team management that is productive and effective in business organisations. An important aspect of leadership management in any organisation team leaders need to have a good understanding of Tuckmens’ stages of team development to build a cohesive productive workplace and an ability to identify Belbin specific types of people and adapt your approach when dealing with the different types of people. (Manning, 1996, pg. 298-302)(Belbin Team Roles. 2013.) Dr Meredith Belbin (1981) team roles based on the behaviour characteristics and interpersonal skills of the individuals within a team. He determined that there were nine different roles in an effective team who undertook specific tasks. These nine roles classified into three major groups. The three major groups of Belbin are action, people and thought orientation skills and within each group, there are three specific roles. The action orientation...
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...The Japanese corporate governance system differs vastly from the US system. Discuss corporate governance issues that may arise under the Japanese Keiretsu system from the perspective of a).financiers, b). Owners, c). Suppliers, d). Employees. Corporate Governance System in Japan (1) Definition of Corporate Governance Corporate governance deals with the agency problem: the separation of management and finance. This basic agency problem suggests a possible definition of corporate governance as addressing both an adverse selection and a moral hazard problem. The traditional definition of corporate governance was such a narrow view as Shleifer and Vishny (1997) mentioned that the ways in which the suppliers of finance to corporations assure themselves of getting a return on their investment. Recent trend, however, express doubts on the definition that solely focuses on shareholder value. EPA (1998) shows the constituents of corporate governance as follows: Table 1: Constituents of corporate governance Stakeholders | Interest | Desired Management | Shareholders | Maximize profitsAsset protection | Profitable managementSound management | Investors | Efficient investment | Exploitation of profitable investment | Creditors | Protection of receivables | Sound management | Main bank | Corporate growth | Sound managementPursuit of productivity growth | Employees | Pay raiseSecure employment RelationshipPromotion | Profitable managementSound managementSustainable...
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...Insight on WorldCom Scandal Table of Contents ABSTRACT 2 The importance of accounting conceptual framework 3 Historical Background 5 The Scandal – what happened 6 PENALTIES 7 How the scandal relates to accounting theory 8 RELATION TO POSITIVE ACCOUNTING THEORY 9 Conservatism Principle 9 Lack of Reliability 10 Lack of Relevance 11 Financial Misstatement 11 Conclusion 12 Bibliography 14 Insight on WorldCom Scandal ABSTRACT The scope of this paper deals with the WorldCom accounting scandal of the early 2000’s as it relates to elements of accounting theory. The discussion will cover the key reasons that contributed to the collapse of WorldCom. Specifically, this paper will look at: Executive compensation, Earnings Management, and Information Asymmetry. The authors will present arguments that clearly show how each of these three sub-topics played a pivotal role in the scandal. The reader will also see how these reasons are often inter-related, and often overlap each other, the enormity of which caused the company to fall like a stack of dominoes. In particular, information asymmetry was allowed to flourish as the WorldCom executives lavished themselves with huge compensation, all the while keeping the board of directors and investors out of the loop. A poor corporate government structure existed as the board was filled with inept and ineffective individuals who were powerless to stop the pilfering of profits. The end result of these actions...
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...The Role of Capital Market Intermediaries in the Dot-Com Crash of 2000 1. What is the intended role of each of the institutions and intermediaries discussed in the case for the effective functioning of capital markets? The intended role for intermediaries and institutions were different. For example, Venture Capitalist role was to help business develop a firm ground in which firms could depend on when going public. Venture Capitalist were the safeguard for companies decisions on when they were ready to compete at a higher level. In addition, Investment Banks helped companies valuate their shares and provided advisory financial services. A third intermediary are the Sell-Side Analysts whose role is to publish research on public companies. This is of great influence due to the amount of people within the industry who follow that these analysts have to say. The last intermediaries discussed in this case are Buy-Side Analysts and Portfolio Managers. While SellSide Analysts have to publish their work, Buy-Side Analysts do not. Both types of analysts have to do intensive research on a reasonable amount of companies, however, Buy-Side Analysts directly communicate with Portfolio Managers. Portfolio Managers are the decision makers of whether to buy, sell, or hold any stocks. Their decisions is composed of the analysis obtained from all intermediaries, however, they are the ones with the actual power to make things happen. On the other hand, we have institutions that played an important...
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...Case Study 1 – “Once Upon A Time At Disney Summary: Since 1923, Walt Disney Co. has been an icon of animated and live-action films. It is because of Michael Eisner that Disney has become an entertainment conglomerate. Eisner is a very hands on manager, and under his leadership, the company adapted to the fast changing entertainment environment and played to it’s strengths. Since it’s founding in 1923, Walt and his brother Roy split their talents. Roy handed the financials, Walt the creativity. Mickey Mouse was their first major hit. In 1984, Eisner was named chairman where he immediately started transforming Disney into a learning organisation dedicated to creativity. 2. Why is it critical for Disney to be a learning organizing? Disney achieved their standing momentous status of being a leader of pure entertainment through fostering a learning attitude prevalent throughout their workforce. Their patented learning organization was derived from none other than their founder who realized that even the most beautifully crafted place in the world amounts to nothing without the people to make dreams a reality. Straying away from the orthodox image of a divided workforce, Disney revolutionized the workplace by closing the gap between corporate executives and clerical workers; all members of the workforce were mandated to participate in hands-on activities. Having all the employees involved in the most basic...
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...and other boards controlling the companies affiliated to Insider Trading have failed to control business issues in the companies. In some cases, the boards have interfered with the functioning of the Insider Trading through the manner in which they make decisions. Boards have been involved in making decisions and approving some deals in the company, which resulted into the cases. A good example is the Goldman case where the board approved the deal at a time of financial crisis. Some directors helped each other in acquiring deals within a few minutes which led to illegal business deals. Different nations have enacted laws concerning insider trading in control of the roles played by boards of directors. In Canada and USA, there have been considerable changes in the laws concerning securities in the business (Foster, 1996). The federal legislation regulates the securities trading and contribution of boards and CEOs in different sections. The subsequent judicial decisions introduced in the business outline the main roles of the insider trading regulations. In the regulations, boards monitor operations in the business, as well as operations of CEOs. The Securities Exchange Act enacted in 1934 regulates secondary trading and also outlines board responsibilities (Foster, 1996). The Act outlaws any form of purchase manipulation and deception that can be brought about by wrong decisions. Based on the enacted laws, a board of directors forms the most important organ concerned with...
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...the mandated requirements for legal compliance (from chapter 4) and determine which requirements apply to the Arthur Andersen case. Explain your rationale After re-reading Chapter 4 there are five areas that separate the mandated requirements for legal compliance, and I feel the that two apply to the Arthur Andersen case; the protection of consumers, and incentives to encourage organizational compliance programs. In the laws that protect consumers they require businesses to provide accurate information protecting them from financial scams, unfair, fraudulent, or deceptive practices. There are “Gatekeepers” that are in charge of that such as lawyers, financial rating agencies, and financial reporting services that help enforce high ethical standards. This was the issue wan Andersen as there were no such “Gatekeepers” or compliance programs so they used the loopholes to their advantage. Discuss how the issues with the Arthur Andersen case may have played out differently if the Sarbanes-Oxley Act had been enacted in 1999. The provisions of Sarbanes-Oxley Act help minimize the likelihood of auditor failing to identify accounting irregularities...
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...Corporate Ownership & Control / Volume 2, Issue 2, Winter 2005 РАЗДЕЛ 3 УГОЛОК ПРАКТИКА SECTION 3 PRACTITIONER'S CORNER INVESTORS TRUST AFTER PARMALAT SCANDAL: THE ROLE OF CORPORATE GOVERNANCE Giovanni D’Orio Giovanni D’Orio, Department of Economics and Statistics, University of Calabria – Rende (CS) Italy. Contact: gio.dorio@unical.it 1.1. Introduction The collapse of the Parmalat food empire reveals a troubling aspect about Italian capitalism - the lack of effective financial control over its family-owned companies. But was Parmalat scandal a pure problem of corporate governance or was it simply a “fraud”? Bearle and Means (1932 pg. 6) famously explained: “The separation of ownership from control produces a condition where the interests of owner and of ultimate manager may, and often do, diverge ....”. Is this the case? Were the people who invested in bonds and shares of Parmalat savers, investors or what? Which was the role played in the story by Auditors, CONSOB and Bank of Italy? This paper analyse the current situation of the Italian corporate governance and saving system in a critical view trying to find an explanation to the previous questions. 1.2. Corporate Governance and the legislative decree 19/01/03nr. 6: the alternatives The Italian system of corporate governance does not fit in either of the categories of the well-known distinction between bank-based and stock exchange 102 based systems. Instead, it can be ranked among the ...
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