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CAPITAL STRUCTURE OF A COMPANY

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Introduction

Before making an investment, investors assess different companies to determine the ones that are financially stable, and performing optimally to invest in. A majority of the investors will make their decision based on the overall working capital, asset performance, and capital structure of the company to determine the strength of the company’s balance sheet, and its investment quality (Dimitrov, 2011). Organizations that have a healthy capital structure, are the ones that have a low level of debt, and a high amount of equity. Such metrics are an indication of the investment quality of a company. The capital structure of a company is considered as a permanent type of funding, which contributes to the overall company’s growth and its overall assets.

Over the years, there has been arguments in line, and against the relevance of the capital structure on the overall valuation of the company. There are theories such as the Modigliani and Miller’s theory of capital structure, which states that the valuation of a firm is irrelevant to its capital structure (Habimana, 2015). In this study, the researcher is interested in determining whether, the capital structure of a company has a significant impact on its overall value. This will be determined by evaluating the prominent theories that are related to the capital structure (Tifow, & Sayilir, 2015). These are: the Modigliani and Miller’s theory of capital structure, the trade-off theory, and the pecking order theory.

The Modigliani and Miller’s Theory of Capital Structure

According to the Modigliani and Miller’s approach to the capital theory, there is the indication that the valuation of a firm is considered to be irrelevant to the capital structure of a company. This means that, whether a company is considered to be highly leveraged, or it has a lower debt component, it will have no impact on its overall market value. In this theory, there is the suggestion that the overall market value of a firm is dependent on its operating profits (Cheremushkin, 2011). To put it into perspective, according to the Modigliani-Miller theory, the overall market value of a firm is calculated based on the present value, and the future earnings of a firm, together with its underlying assets. It is an indication that when conducting the valuation of a firm, potential investors and businesses should not use the capital structure.

The logic of the Modigliani-Miller theory is based on the existing approaches that companies have in relation to financing their operations. Companies utilize only three strategies when they are raising the money to finance their operations, and to engage in the growth and expansion activities. These strategies are borrowing money by issuing bonds to the public, issue new stocks shares to their investors, and obtain loans from financial institutions (Cheremushkin, 2011). According to this theory, the option that a company selects to finance its operations and objectives will have no real effect on its overall market value.

Utilizing the Modigliani and Miller’s approach provides the indication that the overall value of a leveraged firm i.e. a company has a mix of debt and equity possesses the same value as an unleveraged company, which is a firm that has only used one financial funding option i.e. it has been financed by equity, if they have similar operating profits and future financial prospects (Nugroho, 2013). This means that in the event that an investor will purchase the shares of a leveraged firm, the cost will be similar as purchasing shares of an unleveraged firm.

An important point to note is that, when using the Modigliani and Miller approach, there are various assumptions that are made such as, in this situation, there are no taxes. Second, the overall transaction costs for purchasing, and selling the securities are nil. In addition to that, there is the need to have a symmetry of information. The investor in the two scenarios will have access to the same information as that of the corporation, which will ensure that the investor will behave in a rational manner (Welch, 2004). Other assumptions that will be made are: the overall cost of borrowing will be similar for both the investors and the companies, there are no flotation costs such as the underwriting of the commission, and no corporate dividend tax.

As has been stated, in the Modigliani and Miller approach, the assumption that is made is that there are no taxes. However, in reality, a majority of countries, tax companies. In this theory, there is the recognition that there are different tax benefits that are achieved, or accrued when by the overall interest payments. While the interest that is paid on the borrowed funds is considered to be tax deductible, this is not the case for the dividends that are paid on equity. The approach that is used in relation to the corporate taxes in this theory indicates that there are tax savings, and a change on the debt-equity ratio will have an overall effect on the Weighted Average Cost of Capital (WACC).

The Trade-Off Theory of Capital Structure

One of the primary assumptions that exists in the Modigliani and Miller theorem is that there are no taxes. To put it into perspective, the trade-off theory was built on the knowledge of the MM theoretical approach, but it takes into consideration, some of the cost effects of some of the assumptions such as the affects of the taxes, and the bankruptcy costs. An important point to note is that, while the M&M theorem can be used to indicate, or describe how a variety of the firms use their taxation to manipulate their overall profitability, and select their optimum debt level. However, it is important to point out that as the debt level of a company increases, there is the increased risk of a company being susceptible to bankruptcy.

In the trade-off theory, there is the recommendation that the optimal level of debt of a company is a situation in which its marginal benefits of the debt finance are equal to its marginal costs. This means that a company is in a better position of achieving its optimal capital structure by adjusting its debt and equity level, and balancing the overall tax shield and the financial distress cost. For the supporters of this theory such as, Myers (1977), there is the suggestion that the utilization of debt up to a specific level to offset the cost of the financial distress and interest tax shield. Fama and French (2002) pointed out that the ideal capital structure will be identified by the benefits of the debt tax deductibility of its overall interests, and the overall bankruptcy and agency costs.

Arnold (2008) provided an ideal explanation of how the increase in the debt capital in the relation to its capital structure has an impact on the overall valuation of a firm. In this case, as the debt capital of a company increases, the WACC of the firm will experience a decline until the point whereby a company will reach its optimal gearing level, and the overall cost of its financial distress increases in line with its overall debt level. This line of argument is supported by an earlier study that was conducted by Miller (1988) in relation to the optimal debt top the equity ratio of a company, which highlighted the highest possible tax shield that a company can be in a position to enjoy. An important point to note is that, according to Miller (1988), companies risk bankruptcy by because of an increased debt capital in its overall capital structure. The reason for this is that, in this theory, the cost of the debt of the company is associated with the direct and indirect costs of bankruptcy. The costs of bankruptcy include costs such as the legal and the administrative costs, as the direct costs, while the possibility of the company losing its valued customers, or clients is considered to be an indirect cost for the company.

Another important cost that is considered in this theory is the agency costs. There are direct and indirect costs that are associated with the agency costs that will mainly result from the principles and agents who are acting in their best interests. According to an earlier study that was conducted by Jenson (1986), the researcher argued that, the overall debt of a company can contribute to the reduction of its agency cost as the higher the debt capital, the greater the amount of money that will be used to service the debt. For the debt holders, they may instruct a company to engage in safe investments so that they can be able to recoup their debt. At this point, the debt holders are not concerned with the profitability of their investments in as much as they are considered with the ability of the company to pay its debts.

In the study by Brounen et al. (2005), it was argued that the presence of an optimal capital structure increases the overall shareholder wealth. In addition to that, the study findings by Brounen et al. (2005) provided an explanation that even with the maximization use of its debt capital to the full capacity, these companies face the risk of low probability of becoming bankrupt. In the study by Hovakimian et al. (2004), the study findings suggested that, the high profitability of the gearing indicated that when a firm’s tax shield is higher, then its possibility of becoming bankrupt decreases significantly.

The optimal capital structure selection of an organization should be designed in such a way that it would be easy to issue its debt capital, or its equity capital. The argument tat os provided in the trade-off theory suggests that all firms should have an optimal debt ratio, whereby the tax shield will be equal to the overall financial distress cost. The advantage of the use of this theory is that, it eliminates the impact of the overall information asymmetry.

The Pecking Order Theory

In a perfect capital market that was proposed in the M&M theorem, the management under the pecking order theorem prefer to utilize the internally generated funds, over the externally generated funds. In accordance with the pecking order theory, there is the belief that the management of a company will want to use the money that the company generates for investments that will promote its growth, as opposed to the use of finances, or funds that are obtained from loans, and other external funds. In line with this theory, in an ideal company, the management will first use its internal funds, and in case they are not enough, it will result in the issuance of debt, and as a final resort, it will issue equity capital for its business operations.

According to the Pecking order theory, a firm will most likely resort to borrowing funds, in the event that its internally generated funds are considered to be not sufficient to fulfil their current investment needs. This argument is supported by the study by Myers (2001) who noted that the debt ratio of a company normally reflects its cumulative figure in line with its external financing, and that companies that experience a higher profit and growth opportunities mainly use less, or significantly lower debt capital. In the event that a company does not have current investment opportunities, then its profits will be retained to avoid its future external financing.

In an earlier study that was conducted by Harris and Raviv (1991) they suggested that the capital structure decisions are meant to reduce, or eliminate the inefficiencies that are caused by the information asymmetry between the potential investors and the company. This was supported by Myers (2001) who suggested that the information asymmetry that exists between the insiders and the outsiders in a company setting, and its overall separation of the ownership of a company is one of the main reasons as to why a majority of the companies tend to avoid the capital markets. In another study that was conducted by Frydenberg (2004), the researcher provides the explanation that the debt issue of a company is an indication of its confidence in the market where it operates in such a manner that the management of the company is not afraid, or deterred in its ability to engage in debt financing. Frank and Goyal added that because of agency conflict between the management, the owners and the outside investors, the pecking order as proposed in this theory is highly likely to occur.

To put it into perspective, the overall studies in relation to the pecking order theory have failed to show the significance of the this theory in accurately determining a company’s overall capital structure. However, there are certain aspects of the study i.e. the capital structure that are best described by the use of the pecking order theory in comparison to the trade-off theory such as the preference of the company’s management to use internal funds for its investments and therefore reduce its likelihood to accumulate debts, that may increase the likelihood of the company stating that it is bankrupt. However, the short-comings of this theory have contributed to the formulation of other theories such as market timing theory.

Conclusion

All the three theories that have been discussed in this paper are meant to provide a better understanding of the capital structure decision of companies. In particular, the Modigliani and Miller theory indicates that the capital structure should be considered irrelevant when conducting the overall valuation of the company. It was developed to show the relationship between the debt and equity of a company. However, this theory was considered insufficient because of its assumptions, which cannot exist in the real world such as tax free companies. The trade off theory was developed to indicate the importance of the tax shield advantage and the value maximization through the engagement of the optimal debt to the equity mix. In addition to that, the pecking order theory shows the approach that the company uses to raise funds. The first approach is to use internal funds before proceeding to use external funds.

The differences in the capital structure theories is their approach on providing explanations on the significance of the taxes, information and agency costs on investments and overall valuation of the company. Although the three theories offers a unique insight of the capital structure and its impact on the valuation of the company, the theories are not perfect, or do not offer valid explanations that can be accepted by the economists and potential investors who want to assess the overall value of a company. This is an indication of the need to have a more comprehensive assessment on the impact of the capital’s structure on the overall value of the firm.

References

Arnold, G. (2008). Corporate Financial Management. 4th ed. Harlow: Prentice-Hall.

Brounen, D., De Jong, A., & Koedijk, K. (2005). Capital structure policies in Europe: Survey evidence. Journal of Banking & Finance, 30(5), 1409-1442. https://doi.org/10.1016/j.jbankfin.2005.02.010Cheremushkin, S. V. (2011). undefined. Capital Structure and Corporate Financing Decisions, 151-169. https://doi.org/10.1002/9781118266250.ch9Dimitrov, V. (2011). Capital structure and firm risk. Capital Structure and Corporate Financing Decisions, 59-73. https://doi.org/10.1002/9781118266250.ch4Fama, E. F., & French, K. R. (1999). Testing tradeoff and pecking order predictions about dividends and debt. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.199431Frank, M. Z., & Goyal, V. K. (2007). Tradeoff and pecking order theories of debt. In: Eckbo, B.(Ed.). Handbook of Corporate Finance: Empirical Corporate Finance. Amsterdam: North-Holland, pp.135-202.

Frydenberg, S. (2004). Determinants of Corporate Capital Structure of Norwegian Manufacturing Firms, Trondheim Business School Working Paper No. 1999:6. https://doi.org/10.2139/ssrn.556634.

Habimana, O. (2015). Capital structure and financial performance: Evidence from firms operating in emerging markets. International Journal of Academic Research in Economics and Management Sciences, 3(6). https://doi.org/10.6007/ijarems/v3-i6/1383HARRIS, M., & RAVIV, A. (1991). The theory of capital structure. The Journal of Finance, 46(1), 297-355. https://doi.org/10.1111/j.1540-6261.1991.tb03753.xHovakimian, A. (2006). Are Observed Capital Structures Determined by Equity Market Timing?, The Journal of Financial and Quantitative Analysis, 41(1), (Mar., 2006), 221-243. https://doi.org/10.1017/S0022109000002489.

Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305-360. https://doi.org/10.1016/0304-405x(76)90026-xMiller, M. H. (1988). The Modigliani-Miller propositions after thirty years. Journal of Economic Perspectives, 2(4), 99-120. https://doi.org/10.1257/jep.2.4.99Myers, S. C. (2001). Capital structure. Journal of Economic Perspectives, 15(2), 81-102. https://doi.org/10.1257/jep.15.2.81Nugroho, A. B. (2013). Proving modigliani and Miller theories of capital structure: The research on Indonesia’s cigarette companies. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3393045Tifow, A. A., & Sayilir, O. (2015). Capital structure and firm performance: An analysis of manufacturing firms in Turkey. Eurasian Journal of Business and Management, 3(4), 13-22. https://doi.org/10.15604/ejbm.2015.03.04.002Welch, I. (2004). Capital structure and stock returns. Journal of Political Economy, 112(1), 106-132. https://doi.org/10.1086/379933

Accounting for Intangible Assets

Name:

Institution:

Question: Do you agree or disagree with the managing director’s views and provide an explanation for why he may have taken the view that he has.

Answer:

I agree with the views of the managing director. He is of the option that non-capital spending in the course of that year has actively contributed to the development of intellectual capital in the company. The reason that may have made him view the spending in this light is because non-capital spending does not meet the capital expenditure criteria. Non-capital expenditure always has a lower cost as well as shorter but useful lifespan. It is an intangible expenditure that contributes a lot in making a company develops.

The managing director also suggests that he expects further increases in market value in the future. In this regard, he does not expect any amortization of the total capitalized amounts in the company. The main reason that might have prompted this opinion is that the market value of the company exceeds the company’s book value by far. Thus, this has led to value addition towards the company and need to be capitalized in total as intellectual capital.

There is a firm confidence in the managing director that all the projects that are ongoing in the company will be concluded in a successful manner. Though the projects have not reached the commercial stage yet, completion will be a simple task. This is because the company is not operating on a loss. The other factor that might have prompted him to assume this is because the value of the company has increased. Non-capital spending has been lower than capital spending thus ensuring that the company’s financial muscle is still strong.

Reference

Penman, S. H. (2009). Accounting for intangible assets.

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Moral Development Reflect

Moral education is becoming a major topic in all communities. People are educated on social problems affecting the society and the way they can be prevented or avoided. The major issue in this case is who has the biggest role in issuing moral education to the community. While who is obligated to deliver moral education to the community is a concern, people and various sectors or institutions have various roles to play in moral education. The responsibility of schoolteachers is to teach children and teenagers on morality and educate them on the moral issues that can benefit them and the society. The role of the school is to create a perfect environment in ensuring that the subject and knowledge gets to the targeted audience. The school offers the services and good environment for offering education on moral education through practicing the set rules in a fair decision-making process.

Moral education is increasingly being offered due to the many cases of moral crisis in the community and the nation as a whole. The education is being raised to tackle social problems such as juvenile violence and crime, suicide, as well as teen pregnancy. Not all of these social problems are associated with morality but some are complex in origin. Moral education seeks to address mainly moral problems facing the society. In identifying the moral problems, taking note of how each affects the society need to be based on individual opinion but hardly on informed opinions. The Piaget’s theory focuses on children’s moral lives and states that development starts from action in that people have to interact with environment to gain knowledge. Children have rules when playing, which is part of morality. Fair rules are considered to be within a system but not rules originating from outside the system like the case of marble games according to Piaget. However, some external rule creates fairness within a system since those created within the system could favor some individuals creating unfairness and immorality. The theory also argues on children understanding on rules. Young children understand little about rules but older people know almost everything about rules and that children start from heteronomous moral reasoning stage. In this stage, children are obedient to authority and rules caused by children nature of being cognitive and egocentrism whereby they can project their thoughts as well as wishes on others. Again, children have social relationships to adult in relative ways and most of them consider power be initiated from above. Schools need to emphasis on cooperative decision-making, nurturing moral, and problems solving under the governance of common rules and fairness. The theory hardly advocates for proper moral education but asserts that morality is learned through interaction.

Kohlberg’s theory talks of moral development through education and that moral development happens in levels broken into stages. In the first level, one avoids to break rules in fear of being punished with no consideration of others. This grows to create value in actions with consideration of the society in taking any action in the second level. In the final level, people reason based on principles but hardly on the rules or norms of the society.

Moral education is against these theories asserting that morality is learned and practiced. Individual improve on morality based on the moral education they have learned in school. However, the truth is that morality can best be acquired through practical interaction with others and environment. At the same time, morality grows in individuals as they advance on their capacity to reason. It therefore follows that moral education plays little or insignificant role in shaping people’s moral values in the society but only helps people understand the society in which they can practice morality based on what they have learned through interaction and their reasoning maturity.

Module Reflections

Name of student

Institution

MODULE REFLECTIONS

Reading this module has enabled me to grow more into being a professional nurse. It has imparted skills in me that will enable me to practice from a professional point of view. I have appreciated the basis of theory in nursing and its contribution to the development of the profession. After reading the module, I am confident when applying nursing theory in the aspect of the profession, such as teaching in the clinical area, research and, as well, patient care. One other aspect I have found very interesting is learning out the tenets of evidence-based practice. This is a very vital area of modern nursing. Learning about this has given me the required confidence in the clinical area. Learning about the professional basis of practice has been very helpful for me. I am now able to confidently stand before a group of nurses and address them professionally, and present myself with the professional principles required in order to set a role model. This wouldn’t have been possible without the concepts of professional practice that I have learned in this module.

Professional ethics is a very vital aspect of the profession. I connect to the recommendations made by Marrs and Lowry (2006) concerning integration of good personal values to patient’s care. They advise empathizing with the patient instead of only sympathizing with them. I have been able to advance in this area of practice through my interactions with this module. Additionally, I have appreciated the principles of holistic care giving. This has set my basis for me to initiate research in the area of holistic care giving, which has been a very passionate area for me. I am also purposing to apply these skills on holistic care to the clinical area, so that I can better the care I give to patients in the clinical area. Lastly, research is very necessary for nursing. This module, especially the seminars, has enabled me to develop my research skills to a very advanced level.

The combination of knowledge from the recommended articles and the seminars in the module is coming out very well in shaping one to a model of professionalism in the practice of nursing. I have enjoyed reading the modules so much, this has aroused me into reading them frequently and has enabled me make good progress. I am almost through with them all, and I plan to review all of them again before the deadline. They have helped me to find my place in nursing, and I believe by the time I review them for the second time I will emerge a very professional nurse.

Reference

Marrs, J., & Lowry, L. W. (2006). Nursing theory and practice: connecting the dots. Nursing Science Quarterly, 19(1), 44-50.

REFLECTION TO POST 1: THE CONCEPTS: STRESS/BURN OUT By B.P.

Dear B.P,

Good post there concerning a concept and its relevance to the practice of nursing, and nursing research. I interacted with this word when I was doing my first research article, and I was required to explain the conceptual framework. At first I was at ease but the explanations given by Chinn and Kramer (2011) helped me a lot in getting the gist concerning conceptual framework in nursing research. I concur with your observation, based on your analysis of these two studies, that the concept should be well selected, and its relevance to nursing research be outlined. In the future, our nursing profession will gain the place it deserves in the society, courtesy of professional interpretation and application of concepts.

Concerning your discussion on stress and burnout as brought out by your two selected authors, let me first point out that you have brought it out very well, and I agree you have interacted thoroughly with the modules. Concerning the article by Ifagwazi (2006), I will admit here that we share opinion concerning this article. Her research is very systematic towards application of conceptual frameworks. I particularly liked it because I work in a hospice, and psychological burnout is a common phenomenon among workers in such a setting. Severally, I have witnessed verbalizations of my colleagues concerning psychological burnout. In addition, the way in which Ifeagwazi (2006) links concepts to hypothesis is impressive.

Further, I share your sentiments concerning the organization and the focus of Ifeagwazi’s work. It is paramount that research in nursing adds value to the already existing literature. It should also contribute to bettering the tenets of professional, and ethical practice. After reading Ifeagwazi’s article, I recommended it to my colleagues at the workplace because I felt her study was very relevant to the setting I work. In my future research work, I purpose to dedicate some study to stress and burnout among staff. I feel am learning a lot through these interactions, which I need to share with the generations to come.

References

Chinn, P. A. & Kramer, M. K. (2011). Integrated theory and knowledge development in nursing (8th ed). St. Louis, MO: Elsevier Mosby.

Ifeagwazi, C. M. (2006). The influence of marital status on self-report of symptoms of psychological burnout among nurses. Omega, 54(4), 359-373.

 

REFLECTION TO SECOND POST: CONCEPTUAL ANALYSIS OF QUALITY OF LIFE:

Dear J.D

I have loved your article about quality of life so much. This is particularly on the aspect of the connection between the quality of life and health. I agree that the two are related, and one contributes to the other. I was concerned with this article particularly because I work in a hospice care setting, where the two concepts apply very well. In my place of work, I deal with chronically ill patient. Improving the quality of life for these clients means a lot to them. In essence, the whole concept of care in my setting involves giving priority to health with the aim to improving the patient’s quality of life. I have enjoyed reading your reflection on Plummer and Mohlzahn (2009) on their article that is based on quality of life. You argue that quality nursing care, which focuses on the whole person, contributes to improving a person’s quality of life, through enabling them to live a healthy life. You also point out that the quality nursing care should focus on the individual as a whole, and not the condition of the individual. I would like to introduce the term holistic to explain my understanding of this concept of care.

In “Holistic nursing: A handbook of practice”, Montgomery and Keegan (2008) write that the nurse must focus on the client as a complex system of units, and not just focusing on the condition or the illness of the client. Some of our colleagues in the practice of nursing have left the principles of care, because they are not practicing holistic care. I am a witness that; only the practice of nursing that is holistic will improve a client’s quality of life, thus contributing fully to their healthy living. While approaching nursing, it is important to approach it with a view to improving a patient’s condition of living, rather than focusing on treating the illness alone.

References

Montgomery, B. D., & Keegan, L. (2008). Holistic nursing: A handbook for practice (2nd ed). Sudbury, MA: Jones & Bartlett Learning.

Plummer, M and Molzahn, A (2009) Quality of life in contemporary nursing theory: a concept analysis. Nursing Science Quarterly Vol 22

REFLECTION TO POST THREE: KNOWLEDGE AD CLINICAL PRACTICE

Dear K.B.

I loved your article so much that I had to review it again and again. I am an advocate of knowledge in nursing. I hold the same belief you are expressing here thorough the articles you are discussing. We cannot practice nursing without knowledge, and we cannot practice without adding to what we know. The basis of the profession is the body of knowledge for that profession. Nursing should be taken to the place it belongs I society. For it to get there, nurses must develop a culture of adding value to their practice through research. I particularly identify with the views of Doering (1992), which nursing has to gain power through developing a very comprehensive body of knowledge that distinguishes it from other professions. Even though we have made some steps towards this realization, we have not yet achieved the ultimate goal. Desiring knowledge by a good number of nurses will help us to get there.

I also found interesting the part about bridging knowledge to clinical practice. This is another area of practice where nurses make a mistake. As you have observed, I agree that the propositions of Guiliano (2003) must be so much put into consideration in the practice of nursing. He proposes the integration of the measurements that will better nurse care. I find it that nurses have made a mistake in that; there are those nurses who have so much specialized in studying, while others have so much specialized I clinical practice. I feel that there is need for be a balance so that the nursing professionals can practice in the clinical area, and get a chance to utilize their knowledge on patient care. Similarly, the practicing nurses need to spend some time with books and research, so that they can better their practice of evidence-based nursing.

References

Doering, L. (1992). Power and knowledge in nursing: A feminist’s poststructuralist view. Advances in Nursing Science, 14(4).

Guiliano, K. K. (2003). Expanding the use of empiricism in nursing: can we bridge the gap between knowledge and clinical practice? Nursing Philosophy, 4(1), 44-52.

REFLECTION ON FOURTH POST: PATIENT-CENTERED CARE.

Dear D.H,

I have loved your article so much because it touches on the very foundation of nursing care. Nursing cannot achieve its objective about care if the patient will not be allowed to judge and decide the care they want. Your observations, even according to the two articles agree with the propositions of Stewart (2001), that the patient should be given all the space and freedom to guide their care. Also, I identify with your observation that patient-centered care ought to be multidisciplinary. The members of the multidisciplinary care team need to direct their focus to the progress of the patient. Your observation concerning the article by Hasse (2013) reflects what the module on theories and concepts has been emphasizing, that we must empower the patient in order to produce good results. According to Steward (1992), patient-centeredness has been challenged by many aspects like hospital-centeredness, where the institution focuses on making money from the patients. In other settings, the management has focused on staff, and they have not invested in measuring outcomes from the patient’s perspective. Some have been distracted by the need to employ technology. Sometimes the application of technology limits patient centered care. Even though there is the need to incorporate technology to clinical practice, it should be emphasized that patient-provider contact should be a priority.

References

Hasse, G. L. (2013). Patient-Centered Care in Adult Trauma Intensive Care Unit. Journal of Trauma Nursing, 20(3), 163-165. 

Stewart, M. (1992). Towards a global definition of patient-centered care. British Medical Journal, 322(7284), 444-445.

REFLECTION TO POST FIVE: END OF LIFE DECISIN MAKING.

Dear S. P

Thank you for this article. I love the way you articulate issues here. I particularly love it because it is directly touching my current field of practice. In hospice care, we deal so much with end of life care. The issue of decision-making is key in end of life-care, just as you have mentioned. Your articulation of the role of nurses in supporting the patients at this particular time comes out very well. This appears one of the hardest aspects of nursing practice. The nurse has to support the dying patient, the family and the self. Since we are human, we are also affected by a patient’s death when it occurs. Many people, however, and the profession as well expect that the nurse takes the role of a supporter. Since it is part of nursing care, we have to effect it with the precaution that it requires. According to Thacker (2008), nurses stand at the best position to support patients and families during the end of life care.

I would want to add two things that concern end of life care, and in regard to your post. Firstly, your observation concerning the limitation of the role of the nurse in the setting is very vital. Even though both Thacker (2008) and Thelen (2008) agree that nurses are at the best position to support patients at the end of life care, they also express sentiments that the nurse’s role is limited by the fact that decisions are made by the physician. This is an area I feel needs to be reviewed in order to support patients fully at the end of life care. Secondly, culture needs to be considered in end of life care. Phillip and Charles (2003) argue that cultural differences dominate the aspect of decision-making at the end of life. Some cultures empower the patient to make a decision. Other cultures will demand that a decision be made by the family. Still, others trust the physician with decision-making. Culture thus, is a very important component of end-of-life care.

References

Phillip, L. D., & Charles, L. S. (2003). Cultural differences at the end of life. Critical Care Medicine, 31(5), 354-357.

Thacker, S. K. (2008). Nurses’ advocacy in end-of-life nursing care. Nursing Ethics, 15(4), 174-185.

Thelen, M. (2005). End-of-life decision making in intensive care. Critical Care Nurse, 25(6), 28-37.

Module Three Worksheet

Student’s Name

Institutional Affiliation

Course Tittle

Professor’s Name

Date

Question 1

The term plural executive denotes an executive branch whereby the functions have been distributed among a number of mostly elected officeholders instead of existing in a single individual, the Governor. Texas uses a plural executive which signifies the authority of the Governor are limited and shared between other government executives. There is no one government in Texas that is exclusively in charge of Texas Executive Branch. The Texas constitution of 1876 was made with an intention in mind to limit executive authority in the nation (Gathman, 2019). It was attained by creating the plural executive. Seven chosen officials share executive power to make sure no single person had a lot of executive supremacy. Those who make up the plural executive include the Governor, commissioner of the general land office, comptroller of public accounts, lieutenant governor, and attorney general.

Texas uses the plural executive to have common confidence and cooperation between the executive and the legislature. As specified in Article 4 of the Texas constitution, the plural executive influence Texas government since it guarantees that every affiliate of the plural executive has a self-governing base of power. It safeguards against the concentration of power. It diffuses the functions of the executive among many offices.      

Question 2

Upon comparing the similarities and differences in power between the Texas Speaker of the House and the Lieutenant Governor, the Lieutenant governor can make appointments to committees and also assign bills to the committee of his choice. On the other hand, the speaker maintains order, appoints members of all standing committees, and appoints how many on the standing committee before the Rule of seniority takes over. The speaker is also responsible for appointing the conference committee. The Lieutenant Governor serves as the chairman of legislature budget and legislature council. He also serves as a vice-chairman of the legislative audit committee and legislature education board. The speaker functions as the legislative budget board’s vice-chairman and is an affiliate of the legislature redistricting board. 

The Constitution of Texas limits or restricts government power. This standard is recognized as limited government. Most of the limits protect the citizens of Texas civil rights. The Governor’s limitations comprise of appointed power (Morrow, 2020). Those who are appointed as governors serve six-year duration, and new governors are never able to fire appointees of the preceding government.

Question 3

There are four federal district courts, trial courts, a state court of appeals in Texas, a state supreme court, and both limited and general jurisdiction. They all serve different purposes. There are 94 district courts, one Supreme Court, 13 circuit courts, and all over the nation. Courts in the federal structure-function in a different way in several methods than national courts. 

In order to serve as a judge in theses courts, one must be a United States citizen and a resident of Texas. An individual should also be between the ages of 25 and 75 years and licensed to practice law in the States. An individual ought to be a practicing judge for at least four years. One should also be the resident of his/her respective judicial district for at least two years. These courts’ duties in that they are responsible for the effective administration of the judicial branch and they authorized to promulgate rules of administration not changeable with the regulations of the State as might be essential for the uniform and efficient administration of justice in the various courts. These courts play a role in administrative decision-making.

Question 4

The three types of states courts include appeal courts, general trial courts, and a state supreme court. Lower courts normally rule on minor cases, including civil cases involving small amounts of money and misdemeanor criminal cases and Judges do hearings in these courts devoid of a jury. District courts are the primary trial courts in Texas. The trial courts are the most numerous, including over 500 county courts, 450 state district courts, over 900 municipal courts, and over 800 Justice of the Peace courts.

In Texas, there are certain types of the court that the legislator can create. The legislative courts’ examples include the Court of Federal Claims, the United States Tax Court, the Court of Appeals for the Armed Forces, the Court of Appeals for Veterans Claims, and federal district courts. The state courts hear all the cases not mainly selected for federal courts. The same way as the federal courts interpret federal laws. State courts interpret state laws. Every State gets to establish and interpret its laws.

Question 5

There are some aspects of the Texas Legislature that assist the legislature in providing services. In Texas, just like the Congress and a number of other states, the lawmaking procedure consists of four major stages: introduction, committee action, floor action, and enrollment. The Texas legislature comprises two different chambers, a 150 member House of Representatives and 31 house of the senate (Morrow, 2020). The state representatives and senators are chosen from single-member localities to work on two-year terms and four-years, respectively. The legislature of the State of Texas is their lawmaking body. Its main function is to pass laws, provide for the well-being, health, environment, education, and financial and overall well-being of Texas citizens. The effect of low pay, redistricting, ad person cost of running for office make the position undesirable and hinders it

Reference

Gathman, A. E. (2019). Divided Plural Executives: Examining the Where, the Why, and the Do They Even Matter (Doctoral dissertation).

Morrow, J. (2020). There Is Only One Texas Constitution.

Moral Distress

Contents

TOC o “1-3” h z u HYPERLINK l “_Toc378180546” Introduction PAGEREF _Toc378180546 h 1

HYPERLINK l “_Toc378180547” Impacts of moral distress PAGEREF _Toc378180547 h 2

HYPERLINK l “_Toc378180548” Ways of improving the level of moral distress at the work place/Hospital PAGEREF _Toc378180548 h 2

HYPERLINK l “_Toc378180549” Conclusions PAGEREF _Toc378180549 h 3

IntroductionThe state in which people experience the psychological disequilibrium, or any discomforts that affects their physical health, anxiety and those results which are anguished by making decisions which are moral but which do not go hand in hand with the stated moral behaviors are said to be moral distress. It can also be defined as an experience of people to know what is acceptable, that is, the right things which people should do in order to pursue courses of actions which are right.

There are related factors at work places such as in hospitals which does not cause moral distresses to the nurses. For example in cases where nurses do not allow things like terminating ventilators to ill people or anyone, by doing so, the nurse would have lacked the moral distress by putting terminating ventilators to ill people. Moral distress can only result from any nurse who is not acting on her own moral belief, as well as, suffering from inaction (Smith.2008).

According to Moyet, the care of ill patients typically requires integrations of technical skills, which are, very high with psychological as well as spiritual support to patients also to the families. The care mostly presents the nurses with critical challenges of making a proper morals or ethics decisions. Many concerns have been spoken out in nursing literature as well as general media, which talks about, the shortages of nurses in the healthcare system (Moyet, 2008)..

Impacts of moral distressMoral distress has some significant consequences which includes stress, other significant consequences are a consequence in job dissatisfaction, burnout, as well as departure from places of work, although no information are available about moral distress that affects the nursing care quality. Moral distress has got some impact on people hence in order to avoid distress, there should be stress reducing techniques which when are used positively it can have positive effects but if the nurses has very poor coping skills it can reflect in stress reducing the techniques that they are using.

Moyet reports that there are pictures which are mixed in regarding the impacts of moral distress, about the moral distress particularly on the provision of care and findings suggesting that moral distress does not have negative impacts on care and other people suggesting that the moral distress can only result in nurses. Moyet on the other hand came into conclusions that moral agony leads to many nurses resigning from their work places (Moyet, 2008).

Ways of improving the level of moral distress at the work place/HospitalFor the last four decades, many evidences have shown that the work of nursing has been a stressful work to the nurses. Stresses affect nurses’ health, the well-being of people, and the job satisfaction, the negatively impacts in many organizations in terms of absenteeism, psychological, emotional stress, and turnover. Stress mostly results when nurses are exposed to unclear moral situations, also when nurses are prevented from carrying out some tasks which they were supposed to have done or carried out.

Moral distress in the working places such as hospitals can be improved by observing the source of distress in work related places, and ways in which observing the symptoms of the distress within the team members. Hence nurses who work in various hospitals should be aware that the moral distress is something which is present. Another way of improving the level of the moral distress at the work place is by affirming the distress and commitments to take care of it. On the other hand, one should try to validate their feelings, as well as, perceptions with other people in the organization.

Moral distress at the work place can be improved by identifying the sources of distress. The sources of distress can either be a personal distress or may come from the entire environment. Nurses should make sure that they determine all the severity of their distress, and to contemplate their readiness to act on them, this is where the nurses recognize that there are issues, but they still take the risks of changing the stated action, on the other hand, they should analyze the risks and benefits of the moral distress.

Lastly, the level of moral distress can be improved by getting prepared to act. This is by preparing personally as well as professionally by taking action. After a person is done with the action stated, the nurses should be ready of taking the action by implementing the strategies of initiating the changes that are desired.

ConclusionsIn summary, the nurses who are taking care of the ill people have got intense plus frequent experiences of the moral distress. The idea of providing the aggressive care to all patients is not expected to be advantaged from the critical care as it is the main source caused by the moral distress. The critical care nurses should identify a significant and a wide-ranging implication to moral distress which extends well, in retention and beyond the job satisfaction. Moral distress sometimes tends to be a serious issue in the workplace as well as deserving an urgent plus extended attention (Masters, 2012).

References

Masters, K. (2012). Nursing theories: a framework for professional practice. London: Jones & Bartlett Learning.

Moyet, L. J. (2006). Nursing diagnosis: application to clinical practice (11th ed.). New Yolk: Lippincott Williams & Wilkins.

Smith, M. J., & Liehr, P. R. (2008). Middle Range Theory for Nursing (2nd ed.). New York: Springer Pub. Co..

Capitalism and Socialism

Student’s Name

Institution

Capitalism and Socialism

Socialism is an economic and political model of social organization which dictates that the factors of production, exchange, and distribution are equally owned and regulated by the community. On the other side, capitalism is a political and economic structure where the private entities own the factors of production and control the nation’s trade for individual beneficiaries. These factors of production include capital goods, natural resources, labor, and entrepreneurship. With socialism, democracy prevails where the owner can be acquired either through the democratic election of a government or through public corporation where everyone inclusively owns the shares. The case is different with capitalism where labor is individually owned apart from slavery incidences where one’s labor is owned by someone else. Socialism and capitalism are discussed to a profound extent in consideration of their pros and cons as well as their benefits to the society.

To begin with is socialism where its advantages and disadvantages to the nation are precisely elaborated. First, let us look at the pros. With socialism, there is no labor exploitation as the workers themselves own the production means. The profit is distributed evenly to the workers according to their contribution, and the system also recognizes those people in the society that cannot work by providing them with their basic needs. Socialism is a valuable tool to eradicate poverty in the nation as there is no discrimination and people have equal rights to access education and health services (Lockley, 2017). Everyone has the freedom to work at what he or she is best at and enjoys. For instance, there can be higher compensation for the tedious jobs that people are not willing to do to make them worthwhile. Also, the preservation of natural resources is for the betterment of the whole society.

The disadvantages of socialism as a political and economic system of an organization are as follows. The most degrading demerit of this system is the dependency on the cooperative nature of people to work. This can work well in a community portraying competitiveness buy not a cooperative one as the competitive people will find ways of disturbing and conquering the society for individual gains. Socialism does not encourage innovativeness as it does not give rewards to the competitive and entrepreneurial individuals. Another criticism of socialism is that the delegated power or the government who have the authority to represent the civilians can abuse its mandate by claiming power for its benefits.

On the other side, let us look at the merits and demerits of capitalism as an economic and political system of governance. To start with the advantages, capitalism provides the best prices for the best products because consumers’ willingness to pay willingness to pay will be high on the things they most want. The law of demands plays an active role in determining commodity prices companies improve product qualities as an effective way of maximizing profit. Capitalism significantly boosts economic growth as there is an inherent recompense for innovation. Therefore, it encourages the invention of different products as well as more competent production techniques.

The demerits of the capitalism control system are as follows. It is not responsible for those people who do not have competitive skills which include the children, the physically disabled and the elderly. Therefore, the government has put in place policies that greatly value the family entity. Capitalism does not enhance equality. Thus, the marginalized will not have opportunities to access facilities such as medication and education. The valuable skills will only be of benefit to the individual owners but not the society (Therborn, 2016). The externalities such as climate change and pollution are not considered in capitalism where the adverse impacts are felt bt the public as a whole but not the individuals who exploit natural resources.

Regardless of the merits and demerits of socialism and capitalism discussed above, both ideologies have social benefits to the society. Socialism is a beneficial tool to a nation as it encourages equality in the community as a useful measure of eradicating poverty. Even though socialism has vast social benefits to the society than capitalism, capitalism plays a vital role in enhancing giving back and unity among the private owners and the community where their premises are allocated as a way of providing conducive production environment and market to some extent.

References

Lockley, P. (2017). Capitalism and Socialism. The Oxford Handbook of Nineteenth-Century Christian Thought, 264.

Therborn, G. (2016). What does the ruling class do when it rules?: state apparatuses and state power under feudalism, capitalism and socialism. Verso Books.

Student’s Name

Professor

Course

Date

Accounting for Slavery

Slavery was business that was profitable and admired by the enslavers. It was a business that was supported by the system for economic purposes and rules and regulation were laid down to ensure the business succeeded. For many people, this was against the rights of the people who were enslaved and forced to work in plantation farms with little or no return on their side. However, for other people, it was the slaves who developed the nation thus, it was a necessary business. There are a lot of documents and scholarly articles which have been fronted to explain how the slavery business was conducted in West Indies and the South in the United States. One thing that is evident is the records that the slave masters used to keep to track down the productivity of the slaves in their farms. In particular, the accounting records that the slave owners used to keep mirrors the modern accounting that corporate companies and organizations are keeping. One of the compelling records that enslavers used to keep is the double-entry books of accounting. This was precisely to allow them analyze and do comparison on the productivity of the slaves. In the modern accounting, organizations and individuals keep double-entry system to record their transactions and keep track of the money they receive and what they spend. However, the modern accounting is more scientific but that does not take away the contribution of the enslavers’ records in the modern accounting.

Accounting for Slavery is a book that delves into the slavery business and the organized structure that had been laid down to guarantee the success of the slavery business. Rosenthal discusses the structures of the slavery business which had three distinct tiers. The slave owners ranked top on the tier with overseers and attorneys who were project managers. The structures discussed by Rosenthal mirrors the modern corporations which has hierarchy of people working in different positions. The author begins her narration by highlighting the historical challenges that the slaves went through in the hands of their masters. Further, Rosenthal explains some of the events that affected plantation operation including the rebellion that was orchestrate by a group called maroon in Jamaica. Although plantation owners were enslaving people to work in their farms for profit, the author narrates that they also had their own share of challenges from rebellious groups. The author goes on to explain the tactics that the farm owners were using to maximize the output from the slaves. Slaves were required to work and ensure they produce as much as possible and those who could not give the best were punished. According to Rosenthal, slaves were branded and tortured as an incentive to force them to maximize their output. This was against the rights of the slaves and the author analyses some of the human rights abuses that were orchestrated by the enslavers. From the author’s narration, it is clear that slaves were being forced to labor against their will. The slaves who tried fighting for their rights were labeled, tortured and some were killed.

Further, the author narrates the collusion that the authorities had with the slave-owners. Every slave-owner was required to give their laborers codes that would identify them and where they were going as they carry out their activities. These codes were also necessary to ensure that the slave-owners maintained the accurate records on the productivity of every slave. Although enslavers had already developed the practices of coding their slaves, the local authorities authorized them to ensure all slaves had codes and this complimented their accounting activities. There is a clear parallelism on what was happening during the slavery and the modern accounting practices. The modern accounting practices requires accountants to code the books of accounts to ensure they track every activity in their businesses. Rosenthal further explains how enslavers furthered their interests in Britain by colluding with the British parliament to ensure that there were laws in place that would protect their interests. Through the laws that were passed by British Parliament, the slavers secured the interest of protecting the market for their sugar and other commodities. Still, these laws outlawed the dumping of products in the designated markets for the enslavers. They also lobbied the British parliament to pass laws that would prevent the abolition of slavery. From the author’s narration, it is evident that the British government assisted the slave-owners to continue suppressing the slaves and using them for their personal gains. The coding of slaves was also against the rights of the slaves and the British government supervised these activities without questioning the atrocities that were meted on the slaves. Although enslavers kept records of their slaves for their accounting purposes, Rosenthal argues that these records was also important to the local enforcement agencies who oversaw how slaves were performing in the plantation farms. The enslavers were required to administer punishment gradually and keep records on the same and this acted as a mitigating factor that regulated how slaves were punished by their masters.

Another important aspect that the author explains in her narration is the plantation accounting that slave-owners adhered to in their activities. There were complete ledgers which indicated the productivity level of every slave. There was also the record of sticks that the slaves were using to account for the livestock under their watch. It is critical to note that there were people who ran the campaigns for abolition of slavery and the accounting records that the slave-owners were keeping was vital in proving their case of abolition. According to Rosenthal, the records kept by the slave-owners detailed how the productivity was lost as a result of slavery. Further, these records also detailed how some slaves lost their lives due to the torture they went through in the hands of their masters.

The author further analyzes how slaves were valued like commodities in the market. Every slave was assessed based on their value and productivity. Rosenthal analyzes the rating system that was used by the slave master which indicates that they were valued and devalued depending on their productivity. The author uses accounting terms in her narrative like depreciation of slaves depending on their productivity. Slaves who were not productive because of their ill health or age were depreciated and the value reduced significantly. Equally, slaves who were not obeying their master were also depreciated. Looking at the narrator’s explanation on how humans were valued and traded, it is evident that the basic human rights was not obeyed. The final part of the Accounting for Slavery book discloses the effects of Civil War and Reconstruction on the slaves and their masters. Although the slave masters relinquished their lands, they had the best bargaining power compared to the slaves. Most of them were learned and they negotiated for better terms. The slaves did not have the negotiation skills and the agreement they signed was influenced by the powers of the people who were in authority. One of the things that makes the book interesting to read and get the history of slavery Rosenthal’s use of primary sources to gather the evidence presented.

In conclusion, Accounting for Slavery provides a lot of insight on the history of slavery and how the authorities colluded with the slave-owners to make fortunes out of the slave trade. The book also brings an interesting aspect of accounting that existed during slavery. Although most of their records were not aligned with the scientific requirements of accounting that is experienced in the modern accounting rules, there is a lot of similarities. During the slave trade, slave-owners were keeping double entry records which is currently practiced by accountants in organizations. Therefore, it is evident that most of the accounting rules that are practiced in contemporary world were borrowed from the slave trade and plantation farms. It is critical to note that the records that the slave-owners were keeping were vital in abolition of slavery. The abolitionist used these records to persuade the leadership of the British government to abolish slavery. These records had details of the atrocities that had been meted on the slaves and the abolitionist had sufficient grounds to persuade the government to abolish slavery. It is a great book with details from the primary sources and this proves its credibility.

Work Cited

Rosenthal, Caitlin. Accounting for slavery: Masters and management. Harvard University Press, 2019.

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Capitalism in ‘The Rocking-Horse Winner’

Money has come to control every aspect of our lives. People want to drive the latest cars, wear fashionable and expensive clothes, take their children to the best schools and live in the most exclusive neighbourhoods. The world around us emphasizes material wellbeing over any other aspect of life, such as core human values. As long as one is wealthy, they are respected and adored by many. This shallow concentration on material possessions had driven many to live a life they cannot afford, eventually ending in disaster. David Lawrence’s short story, ‘A Rocking Horse Winner,’ is a classic example of the detriments of concentrating on material possessions over the wellbeing of people. Hester, one of the main characters in the story, shows how capitalism and material motivations have destroyed our society, exemplified in the death of her son Paul.

Capitalism is an economic system that encourages private ownership of property, with profit as the primary motivation behind the production of goods and services. Most countries in the world use this economic system in contrast to socialism that focuses more on social programs to benefit the larger population. Under capitalism, every individual or group wants to earn more money, even at the expense of others. One of the disadvantages of capitalism is excessive materialism and consumerism. Competitive capitalist systems encourage people to focus on power, money and achievement rather than relationships and community values. The result of this is money becoming more important while people and relationships become less important. One problem with this is that the more money and possessions a person has, the more they desire. Although people imagine that when they can live a comfortable life, they will be satisfied, the truth is that they will crave more. This fact could not be more true, as shown in the short story ‘The Rocking-Horse Winner.’

The story is told from the third-person view by an omniscient narrator. Paul is the main character in the story, a young boy living with his mother, father, sisters and servants in their family home. Although the family appears to have a good life, we learn that most of it is pretentious as the family can hardly afford their lifestyle. Paul explains that their house always whispers, “There must be more money, there must be more money!” (Lawrence 2). This statement shows that the family always needed more money to satisfy their material needs. Paul once asked his mother why they didn’t own a car, and his mother replies that it’s because they are poor. Their poverty comes from the fact that Paul’s father is unlucky. From that point, Paul is determined to find the source of luck so that his family can stop being poor.

True to his intentions, Paul found his source of luck betting on horses competing in derbies. He learns more about horses from Basset, the gardener who helps him make bets and keeps the proceeds from him. Paul’s uncle named Oscar senses the boy’s keen interest in horses and asks him more about it. Oscar is astounded at Paul’s revelation and also takes advantage of Paul’s accurate predictions to make money for himself. Paul plans to give his mother a thousand pounds annually so their house would stop whispering (Biswas 11). Unfortunately, his mother was unsatisfied with five thousand pounds, and the house whispered more than ever. Eventually, determined to make more money, Paul rides his horse till he gets delirious and eventually dies, but not without making one final successful bet, earning his family eighty thousand pounds.

Hester, Paul’s mother, is to blame for Paul’s death. Paul died of an obsession with getting more money for his family to live a more comfortable life free of debt. The young boy was aware of his family’s dire situation with money, telling his uncle, “You know people send mother legal papers for money we owe, don’t you, uncle?” (Lawrence). He began gambling on horses to make money for his mother and free them from their debts. However, Paul’s efforts caused a lot of stress on him. He would spend hours on his rocking horse, where he would discover the winning horses. On the final night when he died, Paul overexerted himself on the horse as he knew his family needed even more money.

Hester is to blame for Paul’s death because her insatiable appetite for money and material goods drove Paul into desperation. The family had a social position to keep up, even though they could not afford it (Lawrence 1). The author of the story writes how the house seemed to whisper about the need for more money constantly. Hester was dissatisfied with her life and lack of money and tried her hand at different things but earned very little. Concerned for their family’s situation, Paul started gambling and made a significant amount of money, enough to keep them comfortable. He planned to anonymously give his mother a thousand pounds annually, but she demanded all of it at once. She used this money to purchase even more material possessions, and the money soon ran out. Paul realized that he had to get even more money to satisfy his mother. Hester’s obsession with money and material possessions forced Paul into an obsession with his gift of prediction, and it eventually killed him.

Although Hester is guilty of Paul’s death, she was motivated by capitalism and class structures. Hester felt the need for her family to maintain a specific position in society even though their incomes could not sustain their lifestyle. People in a particular social position are expected to live in specific neighbourhoods, drive certain cars, send their children to certain schools and associate with those from their social class. Hester and her husband’s desire to keep up appearances to belong to a social class drove them into debt and desperation. Even when Paul earned five thousand pounds, Hester spent all of it on material possessions, mainly because she wanted to be seen as wealthy and be accepted into a higher social class (Xiaoying 5). The class system is a byproduct of capitalism, where acceptance is based on wealth and material possessions. Capitalism focuses on material possession, shown by Hester’s obsession with money and disregard for her children’s wellbeing. Even at Paul’s deathbed, she was unmoved, demonstrated by the phrase “his mother sat beside him, feeling that her heart had also been turned into a stone” (Lawrence). Had Hester and her husband lived within their means, Paul would never have died.

In summary, money should never be the primary motive behind any actions as it leads to heartlessness and unethical behaviour. Paul died due to his struggle to get his mother more money, though she was never satisfied. The adults in the story all took advantage of a child to earn even more money. In the end, Paul suffered for their greed and lost his life. Sadly, the situation in the short story has become a norm in today’s world. Motivated by capitalistic ideologies, people work to get more and more money, even if they do so in unethical ways. The story is a lesson on the danger of idealizing money and material wealth over anything else. Hester and the other adults in the story should have protected Paul, but they took advantage of him for the money he earned them. Works Cited

Biswas, Uma. ““There Must Be More Money!” Employing the Gothic Economy in DH Lawrence’s The Rocking Horse Winner.” Our Vision: 11.

Lawrence, David Herbert. The rocking-horse winner. Dramatic Publishing, 1966.

Xiaoying, Wu. “The Causes of Paul’s Death in” The Rocking-horse Winner.” Journal of Anshun University (2012): 05.

Accounting Changes in Air Methods Corporation(Author’s name)

(Institutional Affiliation)

Discuss the primary reason for the restatement and the impact to the financial results for the company you selected.

Air Methods Corporation is the largest company dealing in the air transportation of medical supplies in the world. The company announced on 22 December 2011 that it had completed the restatement of its financial statements covering the year ended in December 2010 and for the first three quarters of year 2011. The corporation indicated that it had filed amended quarterly and annual reports for the applicable years with the exchange commission (SEC). The corporation specifically filed a 10-K/A form for the fiscal year that ended on 31 December 2010 in addition to a 10 Q/A form for the quarters that ended on 31 March, 30 June and 30 September 2011 (Air Methods Corporation, 2011).

The company, as previously disclosed, restated its financial statements after it received some guidance from the SEC concerning the appropriate GAAP interpretation of the ASC 840-10-25-14 that affected the presentation of the company’s aircraft leases. The implications of this financial restatement were within the ranges that the company had disclosed previously. As it follows, the company is now current with its filling requirements as stipulated by the SEC. The corporation expects to regain compliance with the appropriate and applicable NASDAQ listing regulations promptly with the filings restated (Air Methods Corporation, 2011).

Discuss management responsibility to the investors and stakeholders for the financial restatement.

Restating financial statements usually leads to a wide range of market responses, but in most cases, the market tends to have negative reactions towards such news. However, on the positive light, restatements of finances usually pin point which items were reported inappropriately in the original statement. This correction makes it possible for investors and other stakeholders and users of the financial statement to study the marginal essentiality of such items on the operations of the company and market cap (Cross, Robinson, Salhus & Zepralka, 2004).

Generally, restatements reflect negatively on the management and give stakeholders and shareholders the impression or idea that the management is incompetent or knowingly trying to defraud them. Previous studies have indicated that restatements are directly related to a decrease in the value of the company, a decline in the future earnings and an inflated cost of capital. The first most common immediate response to financial restatements is a considerable drop in the stock price of the concerned company and market capitalization. It is, therefore, the responsibility of the management to assure investors and shareholders that there is no foul play in the restatement of the financial statements. It is also the responsibility of the management to restore investor confidence in the company’s stock, and ensure that the value of the company’s stock is restored and improved (Cross, Robinson, Salhus & Zepralka, 2004).

Discuss what changes you would expect the company leadership to make related to internal controls, accounting principles, or other initiatives, as a result, of the need to restate the financial statements.

The self- regulatory structure prevails on the corporate governance concept. Directors and managers of a public company are responsible for making sure that the content and preparation of financial statements accurately and fully depict the financial condition of the company and the results of all its activities. However, the audit committee and the internal auditor of the public company play critical roles in oversight. The key role of the corporate board of directors is to direct and oversee the management of the corporation and uphold the interests of its investors and shareholders. The internal auditors offer another check on the control systems and operations of the company. Independent auditors usually provide additional protection in connection with all public corporations and numerous other entities (Hribar & Jenkins, 2004).

All public corporations are registered with SEC and are required to audit their financial statements using independent auditors. Although the management of a public company is responsible for the content and preparation of the financial statements of the company, the independent external auditor has a role of auditing the statements according to the GAAS. The purpose of an audit is to present reassurance that the financial statements of a company are shown fairly in all respects and in accordance to GAAP (Hribar & Jenkins, 2004).

Independent audits ensure public confidence that financial statement issuers are reliable and ensure an efficient market for securities of public companies. This sense of confidence and assurance only takes place if reasonable investors see auditors as expert and independent professionals who have no curiosity about the audited entities or other conflicting interests. Investors and other entities expect these professionals to bring about independence, integrity, professional competence and objectivity to the reporting process of the finance, and to prevent the issuance of financial statements that are misleading. There are number of ways the management can use to scrutinize the company’s financial statements to lead to restatements (Hribar & Jenkins, 2004).

One of these processes begins with leads to errors, which can be found through press reports, surveillance activities, or investor complains. Leads that are promising have a potential to become inquiry matters, which are then conducted to evaluate and determine whether an investigation is required. If the inquiry leads to evidence that merits an investigation, the enforcement staff is required to carry it out by reviewing trading data, records and books and other relevant information. The results from the investigation are what determines the next causes of action, whether a civil action or an administrative proceeding (Hribar & Jenkins, 2004).

Discuss the impact to the trustworthiness of the company’s leadership team based on the need to restate the financial statements

As already mentioned, restating of financial statements have numerous negative implications for the value of the stock of the concerned public company. Studies have shown that most of the restatement announcements lead to the loss of millions of dollars in the market capitalization segment, and the stock price, on average, of a company making an initial financial restatement fell by more than 18 percent from sixty trading days prior to through sixty trading days after the restatement. These studies have found that during a period of 6 months, the total loss of capitalization of markets of restating companies more than doubled to more than 240 billion dollars (Palmrose, Richardson & Scholz, 2004).

Not only so financial restatement announcements seem to have a negative impact on the stock prices of a company, but there also seems to be evidence suggesting that these announcements and the questions that arise about certain accounting practices of the company may have negative impacts on overall confidence of the investor. Investor confidence is not easy to quantify because it cannot be directly measured and because investors consider a wide variety of factors before making investment decisions. Nevertheless, numerous studies indicate that financial restatements will have a negative effect on the confidence of investors and the value of the company’s stock (Palmrose, Richardson & Scholz, 2004).

References

Air Methods Corporation. (2011). Air Methods completes restatement of financial statements. Yahoo Finance. Retrieved from http://finance.yahoo.com/news/Air-Methods-Completes-pz-1347935173.html

Cross, M.B., Robinson, E., Salhus, K. & Zepralka, J. (2004). Restatements of Financial Statements: Selected Legal and Accounting Issues. The Newsletter of the Committees on the Federal Regulation of Securities, 9 (1).

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