Civil 1 Review Syllabus

  Now they are lumped together as ‘illegitimate. ’ Thus, spurious children are given rights. 2. Different solutions to old problems †¢ Example: Change in river course 3. Clarification of old provisions †¢ Example: Under the old Civil Code, there were only void and voidable contracts. With the addition of unenforceable and rescissible contracts, the NCC provides clarification 4. Certain subjects omitted †¢ Examples: The dowry has been omitted; certain leases have also been omitted. The NCC is far from perfect. There are structural defects.Certain things which should be in the preliminary section are found elsewhere. An example of this is the vices of consent. Why are they found in contracts? They are relevant in all juridical transactions. Another example is the topic of degrees of relationship. This is found only in succession. Degrees of relationship are relevant in other books too. Finally, why is tradition found in the law on sales? Tradition is not o nly important in sales. Rather, tradition is a mode of acquiring ownership. PRELIMINARY TITLE I. Effect and Application of Laws Art. 1.This Act shall be known as the â€Å"Civil Code of the Philippines. † Art. 2. Laws shall take effect after fifteen days following the completion of their publication in the Official Gazette, unless it is otherwise provided. This Code shall take effect one year after such publication. †¢ ‘This code shall take effect 1 year after such publication. ’ The SC in the case of Lara vs. Del Rosario that the one year should be counted from the date of actual release and not the date of issue. †¢ Executive Order No. 200 supersedes Article 2 regarding the time of effectivity of laws. EXECUTIVE ORDER NO. 00 PROVIDING FOR THE PUBLICATION OF LAWS EITHER IN THE OFFICIAL GAZETTE OR IN A NEWSPAPER OF GENERAL CIRCULATION IN THE PHILIPPINES AS A REQUIREMENT FOR THEIR EFFECTIVITY WHEREAS, Article 2 of the Civil Code partly provides that â₠¬Å"laws shall take effect after fifteen days following the completion of their publication in the Official Gazette, unless it is otherwise provided . . . †; WHEREAS, the requirement that for laws to be effective only a publication thereof in the Official Gazette will suffice has entailed some problems, a point recognized by the Supreme Court in Tanada, et al. vs. Tuvera, et al. (G. R. No. 3915, December 29, 1986) when it observed that â€Å"[t]here is much to be said of the view that the publication need not be made in the Official Gazette, considering its erratic release and limited readership†; WHEREAS, it was likewise observed that â€Å"[u]ndoubtedly, newspapers of general circulation could better perform the function of communicating the laws to the people as such periodicals are more easily available, have a wider readership, and come out regularly†; and WHEREAS, in view of the foregoing premises Article 2 of the Civil Code should accordingly be amended so the laws to be effective must be published either in the Official Gazette or in a newspaper of general circulation in the country; NOW, THEREFORE, I, CORAZON C. AQUINO, President of the Philippines, by virtue of the powers vested in me by the Constitution, do hereby order: Sec. 1.Laws shall take effect after fifteen days following the completion of their publication either in the Official Gazette or in a newspaper of general circulation in the Philippines, unless it is otherwise provided. Sec. 2. Article 2 of Republic Act No. 386, otherwise known as the â€Å"Civil Code of the Philippines,† and all other laws inconsistent with this Executive Order are hereby repealed or modified accordingly. Sec. 3. This Executive Order shall take effect immediately after its publication in the Official Gazette. Done in the City of Manila, this 18th day of June, in the year of Our Lord, nineteen hundred and eighty-seven. †¢ ‘15 days following’ – does this mean on the 15th or 16th day? The law is not clear. †¢ Under Article 2, publication in the Official Gazette was necessary.Now, under E. O. No. 200, publication may either be in the Official Gazette or a newspaper of general publication. †¢ ‘unless otherwise provided’ refers to when the law shall take effect. It does not mean that publication can be dispensed with. Otherwise, that would be a violation of due process. †¢ General Rule: Laws must be published in either the Official Gazette or a newspaper of general circulation. †¢ Exception: The law may provide for another manner of publication. Different manner meaning: 1. Not in Official Gazette or newspaper of general circulation; or Example: Read over the television or the radio (provided that the alternative is reasonable) 2.Change in the period of effectivity †¢ ‘publication’ means making it known; dissemination. It doesn’t have to be in writing. †¢ ‘Change period of effecti vity’ – the gap between publication and effectivity should be reasonable under the circumstances. †¢ Before publication, cannot apply the law whether penal or civil (Pesigan vs. Angeles) Why? How can you be bound if you don’t know the law. †¢ Requirement of publication applies to all laws and is mandatory. Art. 3. Ignorance of the law excuses no one from compliance therewith. †¢ Ignorantia legis neminem excusat (Ignorance of the law excuses no one). †¢ This is a necessary rule for all civilized society.Otherwise it would be impossible to enforce the law. It is very hard to determine whether or not a person really does not know the law. Without this rule, there would be anarchy. The law sacrifices occasional harshness to prevent universal anarchy. †¢ There are potential methods to mitigate the severity of Article 3 – Articles 526 (3), 2155, 1334. * †¢ In Kasilag vs. Rodriguez, the SC said that the possession of the antichretic credit as possession in good faith since a difficult question of law was involved – antichresis. In this case, the parties were not very knowledgeable of the law. †¢ Article 3 applies only to ignorance of Philippine law. It does not apply to foreign law.In Private International Law, foreign law must be proven even if it is applicable. Otherwise, the courts will presume the foreign law to be the same as Philippine law. Art. 4. Laws shall have no retroactive effect, unless the contrary is provided. †¢ Lex de futuro judex de preterito (The law provides for the future, the judge for the past). †¢ Retroactive law – one which creates a new obligation and imposes a new duty or attaches a new disability with respect to transactions or considerations already past. †¢ General Rule: Law must be applied prospectively. †¢ Exceptions: 1. If the statute provides for retroactivity. Exception to the exception: a. Ex post facto laws b. Laws which impair the obl igation of contracts 2.Penal laws insofar as it favors the accused who is not a habitual criminal, even though at the time of the enactment of such law final sentence has already been rendered. 3. Remedial laws as long as it does not affect or change vested rights. 4. When the law creates new substantive rights unless vested rights are impaired. 5. Curative laws (the purpose is to cure defects or imperfections in judicial or administrative proceedings) 6. Interpretative laws 7. Laws which are of emergency nature or are authorized by police power (Santos vs. Alvarez; PNB vs. Office of the President) Art. 5. Acts executed against the provisions of mandatory or prohibitory laws shall be void, except when the law itself authorizes their validity. †¢ A mandatory law is one which prescribes some element as a requirement (i. e. wills must be written – Article 804(; form of donations – Article 749†¢) †¢ A prohibitory law is one which forbids something (i. e. , j oint wills – Article 818() †¢ General Rule: Acts which are contrary to mandatory or prohibited laws are void. †¢ Exceptions: 1. When the law itself authorized its validity (i. e. , lotto, sweepstakes) 2. When the law makes the act only voidable and not void (i. e. , if consent is vitiated, the contract is voidable and not void) 3. When the law makes the act valid but punishes the violator (i. e. , if the marriage is celebrated by someone without legal authority but the parties are in good faith, the marriage is valid but the person who married the parties is liable) 4.When the law makes the act void but recognizes legal effects flowing therefrom (i. e. , Articles 1412 & 1413() Art. 6. Rights may be waived, unless the waiver is contrary to law, public order, public policy, morals, or good customs, or prejudicial to a third person with a right recognized by law. †¢ What one can waive are rights and not obligations. Example, a creditor can waive the loan but the d ebtor may not. †¢ There is no form required for a waiver since a waiver is optional. You can waive by mere inaction, refusing to collect a debt for example is a form of waiver. †¢ Requisites of a valid waiver (Herrera vs. Boromeo) 1. Existence of a right 2. Knowledge of the existence of the right 3.An intention to relinquish the right (implied in this is the capacity to dispose of the right) †¢ General Rule: Rights can be waived. †¢ Exceptions: 1. If waiver is contrary to law, public order, public policy, morals or good customs 2. If the waiver would be prejudicial to a 3rd party with a right recognized by law. (e. g. , If A owes B P10M, B can’t waive the loan if B owes C and B has no other assets. ) †¢ Examples of waivers which are prohibited: 1. Repudiation of future inheritance 2. Waiver of the protection of pactum commissorium 3. Waiver of future support 4. Waiver of employment benefits in advance 5. Waiver of minimum wage 6. Waiver of the right t o revoke a will Art. 7.Laws are repealed only by subsequent ones, and their violation or non-observance shall not be excused by disuse, or custom or practice to the contrary. When the courts declared a law to be inconsistent with the Constitution, the former shall be void and the latter shall govern. Administrative or executive acts, orders and regulations shall be valid only when they are not contrary to the laws or the Constitution. †¢ Article 7 is obvious because time moves forward. †¢ Only subsequent laws can repeal prior laws either through: 1. A repealing clause 2. Incompatibility of the subsequent and prior laws †¢ The violation of a law is not justified even if: 1. No one follows the law (i. e. nonpayment of taxes) 2. There is a custom to the contrary †¢ The 2nd par. of Article 7 is judicial review in statutory form. Art. 8. Judicial decisions applying or interpreting the laws or the Constitution shall form a part of the legal system of the Philippines. à ¢â‚¬ ¢ This is a new provision taken from common law. Under the civil law tradition, the court merely applies the law. However since the Philippine legal system is a combination of civil law and common law, courts apply statutes as well as resort to the doctrine of precedent. Art. 9. No judge or court shall decline to render judgment by reason of the silence, obscurity or insufficiency of the laws. Art. 10.In case of doubt in the interpretation or application of laws, it is presumed that the lawmaking body intended right and justice to prevail. †¢ What if the law is silent? The court should render a decision based on justice as stated in Article 10. Art. 11. Customs which are contrary to law, public order or public policy shall not be countenanced. †¢ What if customs are not contrary to law? The custom would be countenanced. However, this does not mean that the custom would have obligatory force. Art. 12. A custom must be proved as a fact, according to the rules of evidenc e. †¢ The law doesn’t specify the cases when custom is relevant in litigation. But in case custom is relevant, it should be proven. †¢ Commentators say that custom is important in cases involving negligence.For example, if a kalesa in Manila is by custom supposed to have rattan baskets to prevent people from slipping, if a person slips because there is no rattan basket, then he can sue for negligence. Art. 13. When the laws speak of years, months, days or nights, it shall be understood that years are of three hundred sixty-five days each; months, of thirty days; days, of twenty-four hours; and nights from sunset to sunrise. If months are designated by their name, they shall be computed by the number of days which they respectively have. In computing a period, the first day shall be excluded, and the last day included. †¢ Article 13 has been superseded by Executive Order No. 292 (the Revised Administrative Code of 1987) – Book 1,  §31. Sec. 31. Legal Pe riods. â€Å"Year† shall be understood to be twelve calendar months; â€Å"month† of thirty days, unless it refers to a specific calendar month in which case it shall be computed according to the number of days the specific month contains; â€Å"day,† to a day of twenty-four hours; and â€Å"night,† from sunset to sunrise. †¢ Under E. O. No. 292, a year is now equivalent to 12 calendar months and not 365 days. Under Article 13 leap years are not considered. For examples, in order to make a will, one has to be 18 years old. But if you use Article 13, one loses 4 to 5 days if you don’t count the leap years. E. O. No. 292 is better than Article 13 since it is more realistic. †¢ There should have been a definition of hours.That definition is relevant for labor law. According to Professor Balane, an hour should be defined as 1/24 of a calendar day. If you use the definition that an hour is equal to 60 minutes, then we would have to define minu tes, then seconds, and so on. It would be too scientific. II. Conflicts of Law Provisions Art. 14. Penal laws and those of public security and safety shall be obligatory upon all who live or sojourn in the Philippine territory, subject to the principles of public international law and to treaty stipulations. †¢ Two principles: 1. Territoriality General Rule: Criminal laws apply only in Philippine territory. Exception: Article 2, Revised Penal Code. ( 2.Generality General Rule: Criminal laws apply to everyone in the territory (citizens and aliens) Exceptions: In these instances, all the Philippines can do is expel them a. Treaty stipulations which exempt some persons within the jurisdiction of Philippine courts (e. g. , Bases Agreement) b. Heads of State and Ambassadors (Note: Consuls are subject to the jurisdiction of our criminal courts. ) Art. 15. Laws relating to family rights and duties, or to the status, condition and legal capacity of persons are binding upon citizens of the Philippines, even though living abroad. †¢ Theories on Personal Law: 1. Domiciliary theory – the personal laws of a person are determined by his domicile 2.Nationality theory – the nationality or citizenship determines the personal laws of the individual †¢ Under Article 15, the Philippines follows the nationality theory. Family rights and duties, status and legal capacity of Filipinos are governed by Philippine law. †¢ General Rule: Under Article 26 of the Family Code, all marriages solemnized outside the Philippines in accordance with the laws in force in the country where they were solemnized and valid there as such, is also valid in the Philippines. †¢ Exception: If the marriage is void under Philippine law, then the marriage is void even if it is valid in the country where the marriage was solemnized . Exception to the exception: 1. Article 35, 2, Family Code Art. 35.The following marriages shall be void from the beginning: (2) Those solemn ized by any person not legally authorized to perform marriages unless such marriages were contracted with either or both parties believing in good faith that the solemnizing officer had the legal authority to do so; 2. Article 35, 3, Family Code Art. 35. The following marriages shall be void from the beginning: (3) Those solemnized without license, except those covered the preceding Chapter; Even if the foreign marriage did not comply with either s 2 and 3 of Article 35, Philippine law will recognize the marriage as valid as long as it is valid under foreign law. Art. 16, 1. Real property as well as personal property is subject to the law of the country where it is stipulated. †¢ Lex situs or lex rei sitae governs real or personal property (property is subject to the laws of the country in which it is located). †¢ In Tayag vs.Benguet consolidated, the SC said that Philippine law shall govern in cases involving shares of stock of a Philippine corporation even if the owner i s in the US. Art. 16, 2. However, intestate and testamentary successions, both with respect to the order of succession and to the amount of successional rights and to the intrinsic validity of testamentary provisions, shall be regulated by the national law of the person whose succession is under consideration, whatever may be the nature of the property and regardless of the country wherein said property may be found. †¢ This is merely an extension of the nationality theory in Article 15. †¢ The national law of the decedent regardless of the location of the property shall govern.Thus, the national law of the decedent shall determine who will succeed. †¢ In Miciano vs. Brimo, the SC said that the will of a foreigner containing the condition that the law of the Philippines should govern regarding the distribution of the properties is invalid. †¢ In Aznar vs. Garcia, what was involved was the renvoi doctrine. In this case, the decedent was a citizen of California who resided in the Philippine. The problem was that under Philippine law, the national law of the decedent shall govern. On the other hand, under California law, the law of the state where the decedent has his domicile shall govern. The SC accepted the referral by California law and applied Philippine law (single renvoi). Problem: What if the decedent is a Filipino domiciled in a foreign country which follows the domiciliary theory? According to Professor Balane, one way to resolve the situation is this – Philippine law should govern with respect to properties in Philippine while the law of the domicile should govern with respect to properties located in the state of domicile. Art. 17. The forms and solemnities of contracts, wills, and other public instruments shall be governed by the laws of the country in which they are executed. When the acts referred to are executed before the diplomatic or consular officials of the Republic of the Philippines in a foreign country, the solem nities established by Philippine laws shall be observed in their execution.Prohibitive laws concerning persons, their acts or property, and those which have for their object public order, public policy and good customs shall not be rendered ineffective by laws or judgments promulgated, or by determinations or conventions agreed upon in a foreign country. †¢ Lex loci celebrationis (formal requirements of contracts, wills, and other public instruments are governed by the country in which they are executed) †¢ There is no conflict between the 1st of Article 16 and the 1st of Article 17 since they talk of 2 different things. †¢ Thus, the formal requirements of a contract involving real property in the Philippines must follow the formal requirements of the place where the contract was entered into. However, if what is involved is not the formal requirements, then the law of the place where the properties (whether real or personal) are located shall govern. Art. 18.In matte rs which are governed by the Code of Commerce and special laws, their deficiency shall be supplied by the provisions of this Code. III. Human Relations Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith. Art. 20. Every person who, contrary to law, willfully or negligently causes damage to another, shall indemnify the latter for the same. Art. 21. Any person who willfully causes loss or injury to another in manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage. Art. 22.Every person who through an act of performance by another, or any other means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same to him. Art. 23. Even when an act or event causing damage to another’s property was not due to the fault or negligence of the defendant , the latter shall be liable for indemnity if through the act or event he was benefited. Art. 24. In all contractual, property or other relations, when one of the parties is at a disadvantage on account of his moral dependence, ignorance, indigence, mental weakness, tender age or other handicap, the courts must be vigilant for his protection. Art. 25.Thoughtless extravagance in expenses for pleasure or display during a period of acute public want or emergency may be stopped by order of the courts at the instance of any government or private charitable institution. Art. 26. Every person shall respect the dignity, personality, privacy and peace of mind of his neighbors and other persons. The following and similar acts, though they may not constitute a criminal offense, shall produce a cause of action for damages, prevention and other relief: (1) Prying into the privacy of another’s residence; (2) Meddling with or disturbing the private life or family relations of another; (3) I ntriguing to cause another to be alienated from his friends; (4) Vexing or humiliating another on account of his religious beliefs, lowly station in life, place of birth, physical defect, or other personal condition. Art. 27.Any person suffering material or moral loss because a public servant or employee refuses or neglects, without just cause, to perform his official duty may file an action for damages and other relief against he latter, without prejudice to any disciplinary administrative action that may be taken. Art. 28. Unfair competition in agricultural, commercial or industrial enterprises or in labor through the use of force, intimidation, deceit, machination or any other unjust, oppressive or highhanded method shall give rise to a right of action by the person who thereby suffers damage. Art. 29. When the accused in a criminal prosecution is acquitted on the ground that his guilt has not been proved beyond reasonable doubt, a civil action for damages for the same act or omi ssion may be instituted. Such action requires only a preponderance of evidence.Upon motion of the defendant, the court may require the plaintiff to file a bond to answer for damages in case the complaint should be found to be malicious. If in a criminal case the judgment of acquittal is based upon reasonable doubt, the court shall so declare. In the absence of any declaration to that effect, it may be inferred from the text of the decision whether or not the acquittal is due to that ground. Art. 30. When a separate civil action is brought to demand civil liability arising from a criminal offense, and no criminal proceedings are instituted during the pendency of the civil case, a preponderance of evidence shall likewise be sufficient to prove the act complained of. Art. 31.When the civil action is based on an obligation not arising from the act or omission complained of as a felony, such civil action may proceed independently of the criminal proceedings and regardless of the result o f the latter. Art. 32. Any public officer or employee, or any private individual, who directly or indirectly obstructs, defeats, violates or in any manner impedes or impairs any of the following rights and liberties of another person shall be liable to the latter for damages: (1) Freedom or religion; (2) Freedom of speech; (3) Freedom to write for the press or to maintain a periodical publication; (4) Freedom from arbitrary or illegal detention; (5) Freedom of suffrage; 6) The right against deprivation of property without due process of law; (7) The right to a just compensation when private property is taken for public use; (8) The right to the equal protection of the laws; (9) The right to be secure in one’s person, house, papers, and effects against unreasonable searches and seizures; (10) The liberty of abode and of changing the same; (11) The privacy of communication and correspondence; (12) The right to become a member of associations or societies for purposes not contra ry to law; (13) The right to take part in a peaceable assembly to petition the Government for redress of grievances; (14) The right to be a free from involuntary servitude in any form; (15) The right of the accused against excessive bail; 16) The right of the accused to be heard by himself and counsel, to be informed of the nature and cause of the accusation against him, to have a speedy and public trial, to meet the witnesses face to face, and to have compulsory process to secure the attendance of witness in his behalf; (17) Freedom from being compelled to be a witness against one’s self, or from being forced to confess guilt, or from being induced by a promise of immunity or reward to make such confession, except when the person confessing becomes a State witness; (18) Freedom from excessive fines, or cruel and unusual punishment, unless the same is imposed or inflicted in accordance with a statute which has not been judicially declared unconstitutional; and (19) Freedom of access to the courts. In any of the cases referred to in this article, whether or not the defendant’s act or omission constitutes a criminal offense, the aggrieved party has a right to commence an entirely separate and distinct civil action for damages, and for other relief.Such civil action shall proceed independently of any criminal prosecution (if the latter be instituted), and mat be proved by a preponderance of evidence. The indemnity shall include moral damages. Exemplary damages may also be adjudicated. The responsibility herein set forth is not demandable from a judge unless his act or omission constitutes a violation of the Penal Code or other penal statute. Art. 33. In cases of defamation, fraud, and physical injuries a civil action for damages, entirely separate and distinct from the criminal action, may be brought by the injured party. Such civil action shall proceed independently of the criminal prosecution, and shall require only a preponderance of evidence. Ar t. 34.When a member of a city or municipal police force refuses or fails to render aid or protection to any person in case of danger to life or property, such peace officer shall be primarily liable for damages, and the city or municipality shall be subsidiarily responsible therefor. The civil action herein recognized shall be independent of any criminal proceedings, and a preponderance of evidence shall suffice to support such action. Art. 35. When a person, claiming to be injured by a criminal offense, charges another with the same, for which no independent civil action is granted in this Code or any special law, but the justice of the peace finds no reasonable grounds to believe that a crime has been committed, or the prosecuting attorney refuses or fails to institute criminal proceedings, the complaint may bring a civil action for damages against the alleged offender.Such civil action may be supported by a preponderance of evidence. Upon the defendant’s motion, the court may require the plaintiff to file a bond to indemnify the defendant in case the complaint should be found to be malicious. If during the pendency of the civil action, an information should be presented by the prosecuting attorney, the civil action shall be suspended until the termination of the criminal proceedings. Art. 36. Pre-judicial questions, which must be decided before any criminal prosecution may be instituted or may proceed, shall be governed by rules of court which the Supreme Court shall promulgate and which shall not be in conflict with the provisions of this Code

Limitatitons of the Accounting Code of Ethics

Professional values, ethics, and attitudes. (AC 423) Group Assignment QUESTION: With the advantage of hindsight, what advice would you have given the Enron Board to avoid the 2001 disaster? GROUP MEMBERS 1. Augustine KuparaR082559R 2. Tonderai NyamadzawoR082987G 3. Simbarashe ChakaR089613J 4 Brighton Nzvuvu R089824H 5. Walter DangerR082990X 6. Simon ChigwandaR075968L 7. Ashley MurisaR082991Y 8. Frank Garatsa R082988H 9. Presely NheweyembwaR076037L 10. Peter DonaldR055241G 11. Shingirayi GweteR089773H BACKGROUND Enron Corporation was formed in 1985 from a merger of Houston Natural Gas and Internorth, Enron Corp.By early 2001, Enron had grown into the 7th largest U. S. Company, and the largest U. S. buyer/seller of natural gas and electricity. It was heavily involved in energy brokering, electronic energy trading, global commodity and options trading, etc. in 2001 Enron started to show major signs of trouble by announcing a huge third-quarter loss of $618 million. On October 22, 2001, the Securities and Exchange Commission (SEC) began an inquiry into Enron’s accounting practices and later that year the company filed for Bankruptcy.Key investigations revealed many shortcomings which include the use of complex & dubious accounting schemes to reduce Enron’s tax payments; to inflate Enron’s income and profits; to inflate Enron’s stock price and credit rating; to hide losses in off-balance-sheet subsidiaries; to engineer off-balance-sheet schemes to funnel money to themselves, friends, and family; to fraudulently misrepresent Enron’s financial Enron also used complex dubious energy trading schemes for instance the â€Å"Death Star† Energy Trading Strategy which was aimed at taking advantage of a loophole in the market rules governing energy trading in California.This essay will attempt to advice the Enron Board to avoid the 2001 disaster with the advantage of hindsight by focusing on the major areas in the paragraphs which fol low RECOMMENDATIONS THE BOARD OF DIRECTORS AND ITS FIDUCIARY DUTIES The Board, as the head of the organization is supposed to execute its duties and roles professionally and make sure that the company is run efficiently and effectively. It’s supposed to exercise oversight over all the operations of the organization.These duties includes adopting of corporate strategy, annual budget and formal organisational structure, ensuring that risk management structures are in place, the company is complying with the relevant laws and regulations and that adequate controls are in place, to exercise oversight over management operations, to act as a communication channel between management and shareholders and to ensure that financial information of the organisation is reliable and credible. There is need to ensure that the board is properly structured so that t it adds value to the organization.This means that it was supposed to have a chair, at least one the members is financially litera te and some of its members are non-executive directors. This would ensure that an independent perspective is brought into the board’s operations that would bring experience and expertise to the board The board supposed to follow its code of conduct in carrying out their duties. This ensures that all the activities it undertakes are in the best interest of the shareholders not themselves.For example, in carrying out their duties, all the board members are supposed to exhibit due care and diligence, to be honest and loyal, to exercise confidentiality on the organizational information and to disclose any conflict of interest. Some of the board members had financial interests in the Special Purpose Entities (SPEs) making large profits but they did not disclose this conflict of interest to the board. This would compromise their objectivity and independence in carrying out their duties.Some of the members of the board were not exercising due care and diligence in their operations. They were aware of the unethical and risky business operations that were taking place within the organisation but they took no action and did not bring it to the attention of the board. These included transactions through SPEs and the paying of unauthorised bonuses to senior officials. They even connived with the auditors to structure and perform some of the illegal transactions that were aimed at falsifying the performance and position of the organisation.The board is also supposed to have other special subcommittees that are aimed at enhancing the operations of the board in areas that need special attention. These include the Audit Committee that is aimed at overseeing the internal and external audit functions and the Remuneration Committee that will be responsible for the salaries and allowances of managers and other senior officials. The role of a company’s board of directors is to oversee corporate management to interests of shareholders.However, in 1999 Enron’s b oard waived protect the conflict of interest rules to allow chief financial officer Andrew Fastow to create private partnerships to do business with the firm? Transactions involving these partnerships concealed debts and losses that would have had a significant impact on Enron’s reported profits. Enron’s collapse raises the issue of how to reinforce directors’ capability and will to challenge questionable dealings by corporate managers. Specific questions involve independent or â€Å"outside† directors. Stock exchange rules require that a certain percentage of board members be unaffiliated with the firm and its management. ) Should the way outside directors are selected be changed or regulated? Directors are elected by shareholders, but except in very unusual circumstances these are â€Å"Soviet-style† elections, where management’s slate of candidates receives nearly unanimous approval. Should there be restrictions on indirect compensation i n the form of, say, consulting contracts or donations to charities where independent board members serve?Should the personal liability of directors in cases of corporate fraud be increased? Do the rules requiring members of the board’s audit committee to be â€Å"financially literate† ensure that the board will grasp the innovative and complex financial and accounting strategies employed by companies like Enron. Several of the auditor reform bills cited above would require the audit committee of a corporation’s board of directors to take a more active role in the selection and supervision of audit work.Enron should have kept an element of professionalism; the board of directors should show independence in decision making. The company must not have any close relationship whatsoever with its auditors. A strict and good system of corporate governance should have been set out , which sets out a clear system of duties of each director. They should have set out a syst em of segregation of duties that sees each director have an independent duty. AUDIT COMMITTEE Any effective audit committee must have been in place at Enron comprising of purely independent non-executive directors.Members should have an understanding of internal control system and financial and sustainability reporting experience. This committee reviews the accounting practices and approve the financial statements as integrated reporting. Thus the financial reports of Enron would not have been allowed to be published before the approval of the Audit Committee. Review the effectiveness of the internal control environment as well as oversight over the internal and external audit.The Audit Committee recommend to the Board of Directors the engagement, removal and liaise the terms and remunerations with the external auditor. The issue of non-audit services, it is also the responsibility of the committee to define the policy and approve the contracts. Hence the pure independent audit comm ittee it would have not allow Arthur Andersen to exercise multiple roles at Enron. Reports Management are received and reviewed to check whether in line with the approved internal Audit plan and the quality and effectiveness of the external audit function.Risk management is also pivotal in this committee so as to champion the fraud awareness. As an internal auditor, Sherron Watkins should have not directed her anonymous letter to the chairman of the board, Kenneth Lay but to the committee which oversee the internal control system. The Chief Accounting Officer, Richard A Causey who was getting money through the Special Purpose Entities had been once an auditor at Arthur Andersen an issue which should have been closely examined. An effective Audit Committee consider confidential reporting to facilitate whistle blowing.Overall, Audit committee have a combined assurance role thus monitoring the relations between internal and external audit to reduce duplication efforts as well as enhanc es transparency. AUDITOR ROTATION. The Issue Of Auditor Rotation Is Of Significant To The Quality Of Financial Reports. Auditors Should Be Rotated Every Few Years To Prevent Long Term, Close Ties Between The Enron And The Arthur Andersen Firm. Arthur Andersen is the firm that audited Enron’s books from its inception in 1985 (it was also global crossing auditor).Also there was questionable movement of personnel from between the two companies Richard A Causey, the Chief Accounting Officer had come to Enron after working on Enron audits for Andersen this creates a strong relationship, Familiarity threats and it is easy to can collude with Andersen in perpetuating fraudulent activities. Time should be put at least three years before a member can join Enron from auditing firm. Long term audit client relationships significantly increase the like hood of an unqualified opinion or significantly reduce the auditor’s willingness to qualify the audit reports.Mandatory audit rotat ion is ideal in maintaining the value of an audit for both the internal and external users. Although recurring auditors have got an advantage to Enron of that they will be auditing the business they know very well its environment and internal controls thereby reducing the chances of the auditor making an audit risk which is the risk that the auditor will give a wrong opinion that the financial statements are not materially misstated when in actual fact they are materially misstated. , however the disadvantages seemingly outweigh the costs of retaining the audits.According to Wallace, 1980 and De Angelo (1981) audit quality is a market assessed joint probability that an auditor will both discover a breach in the client’s accounting system and report the breach. According to Shockley (1982) a long auditor client relationship can have the effect of complacency, lack of innovation, less rigorous audit procedures and a learned confidence in the client may arise after long associat ion with the client. It also gives auditor time to develop a close relationship with the client in this case Enron employees..After a number of years there is some kind of turning point in the auditor and client relationship which can be detrimental to the auditor’s independence. Before the decision to rotate there is need to assess the quality of the audit client and this can be done in the following ways according to Shockley and Holt 1983, firstly the perceptions of users should be analysed, the pricing of the audit services has to be analysed and in this case Andersen’s firm was receiving a greater percentage of its revenue from Enron hence there is dependent on the company.The nature of the audit opinion has to be analysed it has a greater impact on the reliance with which we can place to the auditing firm. COMPLIANCE TO ACCOUNTING STANDARDS AND REGULATIONS The Enron was involved several accounting issues, one concerns the creation of special purpose entities (SPE s), these were established for the special purpose of covering Enron`s losses and there were also being used to transfer debts outside of the company and would not show up on the balance sheet at year end . The SPEs were supposed to be independent companies however they were headed by Enron former employees, and backed, ultimately, by Enron stock.The second issue was that Enron was also involved in other accounting scandals for example Enron took advantage of the limitations in the standards governing the energy business therefore over valued assets and selling some of decreasing assets to the SPEs at huge mark-ups and there realising the profits in the financial statements. As a resulted of these accounting misappropriations, Enron produced favourable financial statements leading to unapproved bonuses being claimed by employees and directors also providing themselves with obscenely generous stock option grants.The Securities and Exchange Commission (SEC) governs the activities of c ompanies registered on the New York stock exchange. Enron`s management should follow the regulations stated by SEC and also to prepare its financial statement according to the generally accepted accounting principles (GAAP). The accounting information produced by Enron should have been restated to show a fair financial position of the company. The SPEs should be liquidated no further transactions should be carried out between Enron and its related parties. In correcting its transactions Enron should other external auditors other than Arthur Andersen.These investigations should be carried confidentially so as to protect the manage the situation and also to protect Enron`s reputation. COMPENSATION TO EXECUTIVES AND OTHER PERSONNEL Effects of over paying directors it is results in directors losing focus of their core business, that acting their stewardship and accountability functions . Through good corporate governance directors via the agency theory are responsible to the shareholder s. Directors are independent form management; they are responsible for making sure management are carrying out their fiduciary duties.However if they are over compensated they are more likely to be inclined to favour management over shareholders, as they is a rise of a self-interest threat With no proper monitoring of the board through a remuneration committee, overpaying results bad corporate governance which affect the companies risk management. It results in problems not been brought to light, allowing them not been addressed. As directors ignore their duties and focus on short term profits and rather than maximising company growth in the long term, this reduces their ability to focus on strategic issues and establishment of unrealistic standards of performance.Decision-making is greatly affected as they will be they will be destruction of the authority line by the two boards who will be responsible for the overall well being of the company. As decision making will have been affe cted corporate and accounting practises will greatly be affected, which will increase the chances of fraud and error. These might include recording profits earlier and recognising expenses late. Overpaying also results in changes in the ethical culture of the organisation, as the board can select bad managers to run the business because they will be sharing a common perception.Which is lack of concern for long run of the business? Rather the advice would be for Enron to have a director’s board which contains an equal mix of executive and non-executive directors. This would be to ensure independence and accountability at the highest level, this also reduces self-interest threats . It allows for a board which separates itself from the management of the business Rotation of members at frequent intervals to allow for reduction in familiarity threats if members of the board stay for too long ,e. . more than five years they might become familiar with the management Establishment of remuneration committee which monitors the payment of executives, this ensures that directors are paid according to the tasks performed and not for unnecessary duties INDEPENDENCE Independence is when one makes decisions honestly and truthfully both in fact and in appearance and avoids internal and external pressures which may influence the outcome of a decision under review.The Enron scandal showed a number of independency issues being overlooked by the management of the company and instead concentrated on fraudulent profit making strategies which should have been avoided. These fraudulent activities involved the management of the company and their external auditors (Arthur Andersen), the company’s lawyers, consultants and lenders. The advice that l would have given to the management of Enron concerning independent issues was that they should have at first allowed every employee to exercise his or her duties without influence from anyone either internally or external.The man agement of Enron should have exercised their duties of stewardship to their principles without paying much attention to their excessive and self-centred interest of maximising wealth at the expense of their shareholders. The actions by Mr Ken Lay of forcing all employees to book their corporate travel through his sister’s travel agency was nowhere near independency but only self-interest and greed to accumulate wealth. The board members should have critically analysed the source of the monies they were receiving so as to find facts to justify the revenues.Instead they were only concerned about their packages and approved every idea the management would put before them without taking into consideration the effects of such decisions. This was a clear threat to the board’s independency since they were to choose on whether to be ethical or satisfy their insatiable need for wealth. These high earnings were also received by most of the company’s executives, finance, l egal and accounting professionals and they made them to overlook the questionable accounting practices which were yielding these huge packages.The management also needed to take note of their auditor’s operations when carrying out his mandate, there was need to segregate duties between auditing and non-auditing services. Arthur Andersen should have been engaged to one assignment only of auditing and leave the non-auditing services to other so that independent decisions could be made. The board should have rotated their auditors after a reasonable period of time to avoid familiarity and some associated threats to independence.There was need for the board to also discuss the issues of their auditor’s remuneration and other packages they offered so that they could match with the current market trends this would reduce the auditor’s dependency and force them to report any anomalies within the operations of the company. Role of Sell-Side Analysts Sell-side analysts h ave received considerable criticism for failing to provide an earlier warning of problems at Enron.On October 31, 2001, just two months before the company filed for bankruptcy, the mean analyst recommendation listed on First Call (which compiles and distributes analyst recommendations) for Enron was 1. 9 out of 5, where 1 is a â€Å"strong buy† and 5 is a â€Å"sell. † Even after the accounting problems had been announced in October 2001, reputable institutions such as Lehman Brothers, UBS Warburg and Merrill Lynch issued â€Å"strong buy† or â€Å"buy† recommendations for Enron. Analysts should have not been slow to recognize the problems at Enron.The analysts should not have financial incentives to recommend Enron to their clients. Investment banks earned more than $125 million in underwriting fees from Enron in the period 1998 to 2000, and many of the financial analysts working at these banks received bonuses for their efforts in supporting investment banking. Sell-side analysts must be independent and avoid any self-interest threats which may arise. Corporate Culture Enron has been described as having a culture of arrogance that led people to believe that they could handle increasingly greater risk without encountering any danger.According to Sherron Watkins, â€Å"Enron’s unspoken message was, ‘Make the numbers, make the numbers, make the numbers—if you steal, if you cheat, just don’t get caught. If you do, beg for a second chance, and you’ll get one. ’† Enron’s corporate culture did little to promote the values of respect and integrity. These values were undermined through the company’s emphasis on decentralization, its employee performance appraisals, and its compensation program. Each Enron division and business unit was kept separate from the others, and as a result very few people in the organization had a â€Å"big picture† perspective of the companyâ₠¬â„¢s operations.Accompanying this emphasis on decentralization were insufficient operational and financial controls as well as â€Å"a distracted, hands-off chairman, a compliant board of directors, and an impotent staff of accountants, auditors, and lawyers. † Jeff Skilling implemented a very rigorous and threatening performance evaluation process for all Enron employees. Known as â€Å"rank and yank,† the annual process utilized peer evaluations, and each of the company’s divisions was arbitrarily forced to fire the lowest ranking one-fifth of its employees.Employees frequently ranked their peers lower in order to enhance their own positions in the company. Enron’s compensation plan â€Å"seemed oriented toward enriching executives rather than generating profits for shareholders† and encouraged people to break rules and inflate the value of contracts even though no actual cash was generated. Enron’s bonus program encouraged the use of non -standard accounting practices and the inflated valuation of deals on the company’s books. Indeed, deal inflation became widespread within the company as partnerships were created solely to hide losses and avoid the consequences of owning up to problems.Conclusion In conclusion, one can see that a variety of perspectives can be applied to the Enron scandal which could have averted the 2001 disaster. If those charged with the governance of the entity had taken necessary steps in line with what is outlined in this essay, the corporation would not have collapsed. However even if Enron and its outside accountants and lawyers had done nothing improper, the sudden collapse of such a large corporation would suggest basic problems with the U. S. ystem of securities regulation, which is based on the full and accurate disclosure of all financial information that market participants need to make informed investment decisions. The overarching issue raised by Enron is how to improve the q uality of information available about public corporations. References * Bob Lyke. CRS Report RS21120, Auditing and its Regulators: Proposals for Reform After Enron. * JOINT COMMITTEE ON TAXATION, 2003 Report of investigation of Enron corporation and related entities regarding federal tax and compensation issues, and policy recommendations McLean, Bethany. 2001. â€Å"Is Enron Overpriced? † Fortune. * Paul D. Miller, Brief History of Enron (accessed 27 November 2012) http://www. freegrab. net/enronhist. htm * Paul M. Healy and Krishna G. Palepu, (2003) The Fall of Enron * Powers, William C. , Raymond S. Troubh and Herbert S. Winokur. 2002. â€Å"Report of Investigation by the Special Investigative Committee of the Board of Directors of Enron Corp. † * Steven C. Currall Marc J. Epstein 2003. Lessons From the Rise and Fall of Enron * Watkins, S. , 2002. Email to Eron Chairman Kenneth Lay,

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International Marketing - Essay Example The initial hypotheses all have a flaw in that they attempt to generalize without recognizing the various implications of the specifics of differing businesses. An example of how the differing products will have different results can be seen in the example of attempts by the Czech and CEE automotive production companies when they experienced a collapse. The strategy required that the quality of components be increased while the costs of production be decreased in order to effectively compete in the West. While the strategy worked sufficiently for some of the companies, specifically, it did not work for a truck manufacturer named Tatra (Pavlinek 2008, 232). There are a variety of elements that are pertinent to the success of an export expansion strategy and to suggest that the strategy can be generalized creates a somewhat flawed premise. However, the results of the study disprove the first hypothesis in that the firms using export expansion strategy do not differ in their level of exports. Therefore, the generalization that is made is revealed through analysis of the data to show that the idea of a broad statement about the strategies used by firms does not take into consideration the specific elements of a business that makes their strategizing needs unique. In looking at the second hypothesis, a distinction is made between perceived growth and actual growth, stating that the managers had a perception that they had better than average growth, while their statistical relevancy did not necessarily reveal this to be true. The second hypothesis was also partially rejected because the data did not support its premise. The researchers do not reject the third hypothesis. They find an odd anomaly that top managers of the diversification strategy group perceived that their profitability exports was higher than their domestic sales, while other strategy

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Science Fiction, Technology, and Our Modern World - Essay Example The brain in a vat scenario depicts a situation where all beliefs we hold about the world would presumably be false despite the fact that they are justified. Brain in a vat argument presents a situation where a removed human brain placed in a life-sustaining fluid and connected to computers that provide exactly the same impulses as the body. The computers effectively create a virtual reality. The person with the disembodied brain continues to have a perfect life without a relationship with the object of the real world. The person will not be able to discover the reality of their simulated world thus transferring my consciousness to a computer would make no difference, I will not mind. Q2. Metaphysics is concerned with the fundamental nature of reality whose hypothesis may claim the truth underlying physics. It may also say a thing about our mind’s nature or creation of the world. Matrix hypothesis is regarded as a metaphysical proposition with all the three elements. These are the reality underlying physics, nature of our minds and the creation of the world. Each of these elements is coherent, and cannot be ruled out conclusively and none of them is a skeptical hypothesis. Matrix and metaphysical hypotheses are similar in three-part version. The fundamental computation of the physical processes, the separation of our cognitive systems from physical processes while interacting with these processes and lastly the physical reality created outside the physical space. One may make various objections. For instance, one might argue that the matrix hypothesis implies a computer simulation where physical process exists but not simply that the physical processes themselves exist. Matrix hypothesis seeks to create consciousness in minds, which may or may not be fully aware that they are living in a simulation. Q3. Computer games and simulations are interactive multimedia whose

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Qualatative and Quantitative Analysis - Assignment Example It was a form of an informal interview based on a standard set of questions. Most of the questions were open ended which required that I give my own in-depth opinion on particular aspects of the soft drink. This predominantly involved giving my perception and feelings about the product. For example, they wanted my opinion on whether I loved, hated, or was indifferent with regards to the soft drink. I do not believe the findings of this qualitative evaluation process were either valid or effective. This is for the following reasons; first the manner in which the respondents were selected was subjective in nature. I was picked to be an interviewee based on the fact that I had with me a soft drink from another company. That is, I was purposely picked, this would lock out other prospective respondents who would be also invaluable in reflecting the true perception of the populace towards the soft drink. Secondly, the questions asked were open ended. This makes data interpretation difficult and leaves the interpretation of the results at the discretion of the researcher, which might result to biased conclusions. Thirdly, the number of respondents interviewed was few in number. This would make it difficult to make any inference of the results to the general population. The findings of the evaluation were never shared with me, as the researcher considered them a part of the soft drinks’ company competitive strategy. However, as a form of compensation for my willingness to be part of the survey, I was given additional bottles of the soft drink to share with my friends. In the 1st set of variables, the trend and pattern which can be observed is that as the days go by, consecutively, the respective temperature rises. That is, the earlier months have lower temperatures but as the year progresses so does the temperature. In the 2nd set of variables, the pattern being notice is, as the price of gasoline per gallon increases so does the price of oil

Euthanasia (Mercy Killing) Essay Example for Free

Euthanasia (Mercy Killing) Essay The topic I chose is Euthanasia (mercy killing) should be permitted in cases of terminally ill patients. Euthanasia is from the Greek word to die well. In other words, a good death. Some people call it the act of killing a person who suffers from a mental or physician condition. Mercy Killing, is another name for it. Euthanasia (mercy killing) or physician-assisted suicide/PAS, is a confusing and heart-wrenching issue for many. We are all likely to face difficult end-of-life choices at some point, whether for ourselves or for a loved one. I know for me that this is a very hard decision, as much as I would like to be support Euthanasia or physician-assisted suicide/PAS, I could not allow this to be done because of the moral issues and it’s against what GOD stands for. One shot is all it takes to kill a loved adored family member. But is an injection of death a good way to die? With lack of judgment and a bad day someone could be killed. Euthanasia or physician-assisted suicide/PAS is putting people to sleep just like you would put to sleep your dog when he gets too old. Where do we draw the line between murder and helping patients? Is a doctor putting patience to sleep considered murder? Who makes that decision? I watched my sister suffer with pancreatic cancer from the time that she was diagnosed until she passed away. Every time she went for her chemotherapy treatments and returned home, she was sick to the point that she just stopped going places and doing things with the family. I can remember the call that I received from my niece, when they had left the doctor’s office and he had inform them, that there was nothing else that they could do. The cancer has spread through the stomach lining. At that point my sister made the decision to stop the chemotherapy and the doctor put her and family in touch with Hospice. I can still remember the comment that was made by the nurse, â€Å"we are here to make her comfortable living with cancer not to help her die†. By legalizing assisted suicide could send us down a road from which there is no return. We can do far more to aid suffering patients by improving pain management and mental health care through legislative reform than we can by legalizing their self-destruction. I did not expect to get the results that I did receive on Euthanasia (mercy killings) or physician-assisted suicide/PAS. I would like to say that the split was 30/70, which was very surprising to me because I was thinking that the split would have been 50/50. After taking the survey, I found out that most people are against Euthanasia (mercy killings). Based on the comments that I received from my survey, regarding mercy killings and how it was against GOD’s commandments, while others stated that people should not have to suffer and be in pain all their life if there is n o cure for their disease. But just think is an injection of death a good way to die? With lack of judgment and a bad day someone could be killed and how do you bring them back or even live with it. As much as we do not want to see our love ones suffer and be in pain, I just don’t believe I could go through Euthanasia with any of my family members. As much as I may love them I can’t have their death on my hands. Euthanasia (mercy killings) or physician-assisted suicide/PAS, is a decision that you will have to live for the rest of your life. Even though that love one may be suffering and in pain, can you really honestly say that you could be responsible for helping them to die and is this something that you will be able to live with yourself for the rest of your life. Its important to understand the distinction between the terms assisted suicide and euthanasia. The former describes a situation where the doctor (or some other agent) provides the means for a patient to commit suicide, but the patient follows through on the final act himself. Euthanasia, on the other hand, is carried out from beginning to end by a doctor on the patients behalf. In the wake of the Schiavo case, there was much debate over the question of care for the severely handicapped or terminally ill, and what exactly those appropriate levels of care were. At the base level is ordinary care—generally speaking, that which any prudent person would administer in similar circumstances. It could include keeping the room at a comfortable temperature, providing attentive human contact, and ensuring that the patient has enough to eat and drink. Ordinary care is considered mandatory by the Catholic Church. Proportionate treatment (or proportionate means), which is also mandatory, is any medical action that meets all of the following three criteria: (1) It has a reasonable chance of curing the patient or assisting with the cure; (2) it does not carry a significant risk of death; and (3) it does not, in and of itself, present an excessive burden. For example, a sterile blood transfusion during surgery would be considered proportionate treatment, as the risk and burden involved are relatively low compared with its curative potential. Disproportionate means, on the other hand, are not mandatory. If any treatment would present an excessive burden—in terms of finances, emotions, religious beliefs, or the pain of the procedure—or fail to offer a reasonable chance of curing the patient, it is optional. Withdrawing disproportionate treatment is an act that, according to Dr. Kathleen Foley, former chief of pain service at Memorial Sloan-Kettering Cancer Center, respects [the] patie nts autonomous decision not to be battered by medical technology (Competent Care for the Dying Instead of Physician-Assisted Suicide, New England Journal of Medicine). There comes a time when continued attempts to cure are neither compassionate, wise, nor medically sound. Palliative care refers to the alleviation of pain or other symptoms, though some expand the definition to include the provision of mental, emotional, and spiritual support. A caregiver is required to offer palliative care—or at least pain management—as far as he is able, but it is not mandatory for a patient to accept. In fact, as Pope John Paul II said in The Gospel of Life, it is even licit to relieve pain by narcotics, even when the result isa shortening of life, if no other means exist. The issue of artificial nutrition and hydration is not fully defined; the question is currently being examined by the Magisterium, but the most recent pronouncement came from John Paul II himself in March 2004, when he stated that it is immoral to remove a feeding tube from anyone in a persistent vegetative state, calling it euthanasia by omission. Outside of a vegetative state, however, there are situations where a feeding tube would become burdensome and thus constitute disproportionate care—as in the case of a person dying from advanced stomach cancer—so these decisions must be made prudently on a case-by-case basis. For more information on this issue, visit www.euthanasia.com. For frequent updates on current court cases and legislation, checkwww.internationaltaskforce.org, and www.lifenews.com/bioethics.html. Once youve been armed with the latest facts and information, youre ready to begin the discussion. Strategy No. 1: Oppose the Status Quo of End-of-Life Pain Management First, we must recognize a basic truth: Patients in our medical system often have insufficient access to pain relief. Therefore, its vital to support increased patients rights, including access to health insurance, a choice in doctors, the latitude to see an independent specialist, open access to all of ones personal medical records, and the right to use palliative treatments. Its equally important to support the right of doctors to manage their patients pain properly without fear of government interference and prosecution. The issue of pain is an emotionally striking one, so its comforting to know that pain can be controlled. According to a report by the New York State Task Force on Life and the Law titled When Death Is Sought: Assisted Suicide and Euthanasia in the Medical Context, Modern pain relief techniques can alleviate pain in all but extremely rare cases. In fact, according to Dr. Eric M. Chevlen, the director of palliative care at St. Elizabeth Health Center in Youngstown, Ohio, 90 [percent] of cancer patients in pain can have dramatic relief with relatively simple oral therapies. Dr. Chevlen is also the author of the book Power Over Pain: How to Get the Pain Control You Need (International Task Force, 2002), a useful resource for those suffering due to a lack of proper palliative care. The American Pain Foundation estimates that with todays technology, close to 98 [percent] of all pain problems can be relieved or reduced. But most doctors have never actually studied pain in any detail. According toPain Net Inc., Of all pain practitioners, fewer than 10 [percent] are proficient in more than eight out of 130+ diagnostic or therapeutic procedures relative to pain. For this reason, its important to advocate a greater focus on pain in medical schools and continuing-education courses in pain management for all medical doctors, especially those frequently involved in end-of-life situations. We can also urge recognition for patients rights to see pain-therapy specialists (which some health-care plans are trying to restrict). What cannot be accepted is the notion that assisted suicide is a form of comfort care. Dr. Gregory Hamilton, the chair of Physicians for Compassionate Care, put it bluntly in an article in the Oregonian: Comfort care results in a comfortable patient; assisted suicide results in a corpse. Emphasize the Need to Diagnose and Treat Depression One of the chief arguments for PAS appeals to the American ideal of autonomy. The desire for self-determination resonates strongly with many Democrats, and they believe that the denial of these rights is un-American. Of course, a love of personal freedom is not unique to Democrats, and its easy for anyone to agree that we should have the freedom to live our lives as we see fit. But that freedom must come with restrictions. For example, child pornography is illegal in America—even in the privacy of ones home—and no judicious person would consider it a permissible use of our freedom. Clearly, Americans acknowledge the need to limit certain behaviors. The question is, what actions should be permitted or restricted? The issue of autonomy assumes that the person attempting to exercise his personal freedom can make decisions in a rational manner. But in fact, when it comes to requests for PAS, rational decision-making is rarely in play. Suicidal feelings in a person who has been diagnosed with a terminal illness are no different from those experienced by someone who isnt terminally ill. Depression, family conflict, hopelessness, feelings of abandonment—these are the conditions that lead to suicidal thoughts, regardless of ones physical state. According to the British Journal of Psychiatry and the New York State Task Force, between 93 and 95 percent of those contemplating suicide have a diagnosable mental disorder, most commonly severe depression. Is mental disorder also in play for the terminally ill who request suicide? One study in the American Journal of Psychiatry reported, All of the patients who had either desired premature death or contemplated suicide were judged to be suffering from clinical depressive illness; that is, none of those patients who did not have clinical depression had thoughts of suicide or wished that death would come early. The New York State Task Force report states that depression accompanied by feelings of hopelessness is the strongest predictor of suicide for both individuals who are terminally ill and for those who are not. It is depression or other mental illness, not ones physical condition, that makes a person suicidal. Pain plays an obvious part in this—diagnosable anxiety and depression, for example, are higher in cancer patients with pain. Not only is uncontrolled pain an important risk factor for suicide, in that it contributes to hopelessness and depression, but depression and anxiety can often augment the patients experience of pain. This brings us back to the need for pain therapy. The New York State Task Force report notes that the notion of competence to make treatment decisions, or the capacity to make a particular decisionpresumes that the patient is not clinically depressed. In the presence of clinical depression, there can be no true autonomy, no ability to make a rational decision or a clear, objective request for death. The good news is that mental illness, once diagnosed, is treatable. In a 1992 article for American Medical News suicidologist Dr. David C. Clark observed that depressive episodes in the seriously ill are not less responsive to medication than episodes in those who are not. The same opinion is held by Dr. Joseph Richman, former president of the American Association of Suicidology, who wrote in a letter to the editor of the Journal of Suicide and Life-Threatening Behaviour, Effective psychotherapeutic treatment is possible with the terminally ill. And in testimony to the New York State Task Force in 1992, Dr. William Breitbart of the Memorial Sloan-Kettering Cancer Center agreed, reporting that more than 80 percent of their patients diagnosed with major depression can be treated effectively. The New York State Task Force report puts the number even higher, saying treatment for depression resulted in the cessation of suicidal ideation for 90 percent of patients. Finally, its important to remember that the desire for suicide is often transient. In a study published in the Journal of the American Medical Association, the cases of 886 people who were rescued from attempted suicides were followed over a five-year period. At the end of those five years, only 34 had since taken their own lives. Where there is depression, there is no true autonomy. Treating patients for pain and depression, as well as other mental illnesses, can eliminate suicidal desires by giving the patient more control. In that way, we can help them achieve self-determination instead of self-destruction. Strategy No. 3: Oppose Discrimination Against the Disabled and the Poor If any one element has stopped PAS bills and ballot measures from becoming the law of the land, it has been the public efforts of activist groups for the disabled such as Not Dead Yet. While groups like the former Hemlock Society (now named Compassion and Choices) were founded on the belief that some lives were not worth living and that they were doing a service to the disabled by expanding their autonomy to include a right to die, this kind of attitude actually betrays a prejudice against the disabled—one that would inevitably make the right to die a duty to die. This sort of prejudice is already seen on the opposite end of the spectrum in the abortion debate. Dr. Anthony Vintzileos, a board member of the American Institute of Ultrasound Medicine, estimated in a May 2005 article for the New Jersey Record that 90 percent of women who receive a prenatal diagnosis of Down syndrome for their children choose to abort. People with disabilities are considered to have no real quality of life, nothing to contribute, and nothing to live for. The poor are also potential targets. Already receiving substandard medical care, the impoverished will be the last to ask for a second opinion, the first to see themselves as worthless, and the most likely to be dismissed as having nothing to contribute to society. If an authority figure were to counsel a poor person to ease the financial burden of medical care on his family through PAS, it would be difficult to say no. Democrats largely identify themselves as friends of the underdog and protectors of the weak. What better way to open their eyes to the injustice of PAS than by pointing out the potential for victimization of the disabled and poor at the hands of an often profit-driven health-care industry? Strategy No. 4: Examine Data from Europe At this point, your interlocutor will likely argue that Doctors would never do that, or that there should be guidelines to make sure that this victimization could never take place. The best response is simply to have a look at euthanasia in Europe (including its legal form in the Netherlands). Many familiar with the history of euthanasia recognize that the idea was a natural outgrowth of social Darwinism, where the strong survive and the weak are left behind. According to the New York State Task Force report, The practice of mass murder in Nazi Germanybegan with the active killing of the severely ill, and built upon earlier proposals advanced by leading German physicians and academics of the 1920s. Like policies currently advocated in the United States, these proposals were limited to the incurably ill, and mandated safeguards such as review panels. R. J. Lifton, author of The Nazi Doctors: Medical Killing and the Psychology of Genocide, is quoted in the report as saying that the phrases life unworthy of life and killing as a therapeutic imperative were vital in soothing the publics conscience when it came to the Nazi program of genocide: The medicalization of killing—the imagery of killing in the name of healing—was crucial to that terrible step. Its ironic that the Netherlands—whose doctors once refused the Nazis genocidal agenda—is now the site of the most extensive assisted suicide and euthanasia program in the world. Though euthanasia was not legalized in the Netherlands until 2002, it was commonly practiced well before then, with almost no danger of prosecution for the doctors performing it. The International Task Force on Euthanasia and Assisted Suicide reports that, according to the Dutch government–sponsored Remmelink Report examining death rates in Holland from 1990: †¢ 2,300 people died through voluntary euthanasia †¢ 400 died through assisted suicide †¢ 1,040 died through involuntary euthanasia—euthanasia was performed without the patients knowledge or consent, even though 72 percent of those patients had never indicated any desire for it †¢ 8,100 died from a deliberate overdose of pain medication to hasten the patients death, though in 61 percent of these cases the patient gave no consent. Of the estimated 130,000 deaths in Holland in 1990, 9.1 percent were the direct result of assisted suicide or euthanasia. And given that these numbers were voluntarily provided by doctors at a time when euthanasia was still technically illegal, its likely that the actual number of deaths through euthanasia was even higher. According to a February 1999 article in the Journal of Medical Ethics, almost 59 percent of euthanasia cases in Holland in 1995 went unreported, in clear violation of the guidelines in place. However, not a single Dutch doctor was prosecuted under the criminal charges of euthanasia, assisted suicide, or anything related. Euthanasia was technically illegal but not prosecuted in the Netherlands for more than a decade. Today, those over 16 can be euthanized for any reason; in certain circumstances, those as young as twelve can opt for euthanasia. Currently, the Netherlands is considering allowing euthanasia for infants, though some Dutch doctors have openly admitted to euthanizing infants already. Those who believe there is no slippery slope need to take another look. And while some may argue that the situation in the Netherlands at least offers patients more options when faced with end-of-life decisions, the reality is just the opposite. Hospice care—palliative centers that make up an important component of end-of-life treatment—is practically nonexistent in Holland. England, for example, had 183 hospices in 1999. The Netherlands, with a quarter of Englands population, had only three. Clearly, with such easy access to euthanasia, little effort is expended to offer alternatives to end-of-life pain management when its not as cost-effective as a quick death. What does this have to do with the United States? Dr. Herbert Hendin, executive director of the American Suicide Foundation, made the connection clear in his 1996 testimony before Congress, wherein he declared that Dutch patients and doctorssee assisted suicide and euthanasia, intended as an unfortunate necessity in exceptional cases, as almost a routine way of dealing with serious or terminal illness. The [American] public has the illusion that legalizing assisted suicide and euthanasia will give them greater autonomy. If the Dutch experience teaches us anything, it is that euthanasia enhances the power and control of doctors who can suggest it, not give patients obvious alternatives, ignore patients ambivalence, and even put to death patients who have not requested it. This is the safety that guidelines provide, as both history and current events have borne out. If we were to open the doors to PAS in the United States, a brave new world of involuntary euthanasia would be inevitable. Strategy No. 5: Oppose Profiteering by Managed-Care Providers If assisted suicide were legalized, managed-care providers would inevitably embrace it as a money-saving technique. The New York State Task Force report states that under anysystem of health care deliveryit will be far less costly to give a lethal injection than to care for a patient throughout the dying process. A 1998 study conducted by Dr. Daniel P. Sulmasy in the Archives of Internal Medicine found that doctors who are cost-conscious and practice resource-conserving medicine were six times more likely to write illegal, lethal prescriptions for their terminally ill patients. Dr. Diane Meier, a former advocate of assisted suicide, said in a 1998 New York Times article, Legalizing assisted suicide would become a cheap and easy way to avoid the costly and time-intensive care needed by the terminally ill. Substantiating this claim is the fact that Oregons Medical Assistance Program (OMAP) for the poor moved to provide physician-assisted suicide to its recipients as soon as the Death with Dignity Act was passed in 1997. Only 18 months later, the OMAP announced plans to cut back on pain medication coverage for the same population. Hospice care has also suffered—the International Task Force reports that one Oregon insurance company has a paltry $1,000 cap on in-home hospice care. With the cost of a lethal overdose running about $35, there would be little motivation to pay any more for palliative treatment. If this is how a liberal, Democratically controlled state government behaves, is there any doubt how profit-minded managed-care providers would react if assisted suicide were legalized throughout the United States? We would begin to see a new stratification of society, where the under-insured would be advised to settle for assisted suicide, while those with better insurance could get the medical assistance they needed. According to the International Task Force, If policies or laws permitting assisted suicide are approved, assisted suicide could become the only type of medical treatment to which certain people—those who are members of minority groups, those who are poor, or those who have disabilities—would have access. The last to receive health care would be the first to receive assisted suicide. The Dead End of Assisted Suicide Legalizing assisted suicide could send us down a road from which there is no return. We can do far more to aid suffering patients by improving pain management and mental health care through legislative reform than we can by legalizing their self-destruction. Euthanasia, in practice, almost inevitably becomes eugenic in nature, which is an affront to the disabled and a serious threat to the lives of the poor and unwanted. Further, the decriminalization of assisted suicide and euthanasia in Europe has produced horrific results that no sane nation would want to imitate. Its a noble impulse that drives Americans to help those struggling through illness and decline, but we cant let the desire to ease anothers suffering lead us to believe that there are quick fixes or easy answers in euthanasia. Instead, we must respond with love, prayer, and compassion—not with murder. As John Paul II wrote in Evangelium Vitae, True compassion leads to sharing another persons pain; it does not kill the person whose suffering we cannot bear.

Mergers and Acquisitions: Indian Banking Consolidation

Mergers and Acquisitions: Indian Banking Consolidation Globally it has been found that the mergers and acquisition have become one of the major ways to corporate restructuring which has also struck the financial services industry which has experienced merger waves leading to the emergence of huge banks and financial institutions. The main reason for mergers is intense competition among the companies in the same industry which put focus on economies of scale, efficiency in cost and profitability. Some other factors leading to the mergers is the too big to fail principle followed by the authorities. In few countries like Germany, weak banks were forcefully merged to avoid the problem financial distress arising out of bad loans and erosion of capital funds. Several academic studies have analyzed merger related gains in banking and these studies have adopted two approaches. The first approach deals with evaluating the long term performance of the merger by analyzing the accounting information such as return on assets, operating costs and eff iciency ratios. A mergers is considered to have led to improved performance if the the change in the accounting based performance is superior to the changes in the performance of the comparable banks that were not involved in the merger activity during that period. Another approach is to analyze the gains in stock price of the bidder and the target company around the announcement of the merger. In this approach the merger is assumed to create value if the combined value of the bidder and target banks increase on the announcement of the merger and the consequent and the stock prices reflect the potential value of the acquiring banks. The objective of this paper is to present a panoramic view of merger trends in India and to ascertain two important perceptions of stake-holders, shareholders and managers and to discuss dilemmas and other issues of this topic of Indian banking. Review of Literature for impact of mergers The two important issues which are examined by various academic studies relating to bank mergers are: impact of mergers on the operating performance and efficiency of the banks Impact of mergers on the market value of the equity of both bidder and the target banks. Cornett and Tehranian (1992) and Spindit and Tarhan (1992) provided evidence for increase in post-merger operating performance. However the studies of Berger and Humphrey (1992), Piloff (1996) and Berger (1997) did not find any evidence in increase in post-merger operating performance. Berger and Humphrey (1994) also reported that most of the studies that examined pre-merger and post-merger financial ratios found no impact on operating cost and profit ratios. The reasons for mixed evidence are: lag between completion of merger process and the realization of benefits of mergers, sample selection and the methods adopted in the financing of mergers. Further, the financial ratios may be misleading indicators of performance because they do not take into account for product mix or input prices. On the other hand researches may also could have confused scale and scope efficiency gains with what is known as X-efficiency gains. Recent studies have explicitly employed frontier X-efficiency met hods to identify the X-efficiency benefits of bank mergers. Few studies have also analyzed the potential benefits and scale economies of mergers. Landerman (2000) explored diversification benefits to be had from banks merging with non banking financial service firms. Simulated mergers of US banks and non-bank financial service firms demonstrated that diversification of banks into insurance business and securities brokerage is optimal for reducing the probability of bankruptcy for bank holding companies. Wheelock and Wilson (2004) found that expected merger activity in US banking industry is positively related to management rating, size of the bank, competitive position and geographical location of banks and is negatively related to market concentration. The second issue determined was the analysis of merger gains in terms of the gains in stock price performance of the bidder and the target banks on announcement of merger. In this case a merger is expected to create value only if the combined value of the bidder and target companies increases after the declaration of the merger. However a lot of studies have failed to find any direct relationship between the merger and the gains in performance or in shareholder wealth. But there are reasons for mixed evidence as a merger announcement also takes in to account the way the deal is financed .If equity offerings are used it may be interpreted as overvaluation by the issuer. Therefore the negative announcements returns to the firms that are bidding can be attributed to the negative signalling which is completely unrelated to the value which is created by the merger. Returns to the bidders companies shareholders is greater when the merger is totally financed with cash than in mergers in whi ch financing is done through equity offering. There is one more problem with this event study analysis as if there is a consolidation wave going on; mergers are anticipated by stockholders and analyst. Potential candidates for the mergers are highlighted and made popular by the financial press and the stock market analysts. In these cases the event study analysis may fail. Therefore an analysis of mergers across the world and a literature review does not provide strong evidence on the benefits gained by banks in the mergers in the banking industry. Also the findings of the literature also contrast with the findings of the consultants who find a considerable cost savings and operational efficiency achieved through mergers. The reasons why academic study do not find cost benefits and the consultants highlight this fact are Consulates may study a potential cost savings which may not materialize They tend to highlight potential cost saving activities and the economist study all the activities. They tend to be biased towards successful cases and ignore the unsuccessful ones. They tend blow up the benefits achieved while the benefits may be miniscule if accounted on a relative terms. The academic studies provide motivation for the examination and evaluation of two important issues pertaining to the mergers and acquisition to the Indian banking. Do mergers help in improving the operational performance and result in cost savings However in India most of the mergers are forced by the central bank in order to protect the interest of the depositors and avoid financial distress therefore the above mentioned reason is rarely found in the mergers activities. Do merger provide abnormal gains and returns to the acquirer and the target banks upon the declaration Consolidation Trends Observed in India Improving the operational performance and cost efficiency has always been a priority in Indian banking sector and has been a major issue of discussions in the policy formulation by the government of India in the consultation and with the central bank (Reserve Bank of India). Several committees have also been formed in order to suggest structural changes to achieve this objective. Some of the major committees formed are Banking Commission, 1972 Chairman R.G Saraiya, 1976 chairman : Manubhai Shah Committee for the functioning of public sector banks, 1978 chairman : James S Raj These committees have suggested the restructuring of the Indian banking system with an objective to improve the process of credit delivery and also suggested the idea of having around 3 to 4 large banks which have a pan India presence and the rest of the bank should be present at the regional level. The major thrust on consolidation started with the Narasimham committee in 1991. It emphasised and embarked upon consolidation and merger in order to make the Indian banks huge in size and also comparable to the global banks. A second Narasimham committe was also formed in 1998 which suggested mergers and consolidation among the strong banks in public as well as private sector and also with other financial institutions, NBFC (Non Banking Financial Companies). Now we will have a look at some of the recent trends in consolidation in Indian banking. Restructuring of weak Indian Banks Amongst other routes government of India has adopted mergers as a means to achieve restructuring of the Indian banking system. Many banks which are small in size and are weak are merged with other banks which are stronger and are larger to protect the interest of the depositors and also to avoid financial distress. These types of mergers can be termed as forced mergers. Hence when a banks shows symptoms of sickness like increasing size of NPAs, reduction in the net worth and substantial decline in capital adequacy ratio, RBI forces moratorium under the section 45(1) of the Banking Regulation act 1949 for a specified period on the activities and the operations of the working of the sick bank. In this period a strong bank is identified and asked to prepare and present a scheme of merger with the weak bank. In this case the acquirer banks takes hold of all the assets of the weak bank and ensures the depositors of their money in case they want to withdraw. The mergers which took place in the pre-reform period fall into this category. In the post reform period 21 mergers have taken place out of which 13 are forced mergers where RBI has intervened. The main reason for these mergers was the protection of the depositors interest and avoids the financial distress. Mergers which took place voluntarily Apart from forced mergers there have been few mergers in which expansion, diversification and growth were the major motives and in which RBI did not intervene or force. The first merger of this kind took place in 1993 when the Times Bank was acquired by HDFC bank which was followed by acquisition of Bank of Madura by the ICICI Bank. The latest of these is merger of Lord Krishnan Bank with Centurion Bank of Punjab. Although in all these deals the target bank suffered with low profitability, Increase in NPA and lack of alternate revenues in order to provide cushion for capital adequacy but these mergers were not forced. There was no regulatory intervention in these mergers however the motives behind these mergers may not necessarily be scale of economies and achieving market power. For instance ICICI bank acquired bank of Russia with a motive of entry in to Russia although it just had one branch. SBI acquired 51% stake in Mauritian Bank through Indian Ocean International Bank which wil l be integrated with the State Bank of Indias International business as a subsidiary. Integration of Financial Services and Achieving Universal Banking Model Several developmental financial institutions have been formed over a period of time in India in order to improve the efficiency of allocation of resources to different segments of the economy. However because of the flexibility given by the RBI to the banks in the credit delivery process the banks have increased and diversified their loan portfolio to various areas such as project finance, long-term loans, and other specialised sector lending. This is the reason why DFIs have become redundant. A working capital group (1998) was appointed by RBI which has recommended the universal model of banking by exploring the possibility of mergers between various sets of financial entities based on economical considerations. Similarly in the private sector ICICI merger with its subsidiary bank and IDBI (industrial Development Bank of India) was incorporates as a public sector bank which acquired private sector bank IDBI bank in 2004. In order to provide integrated financial services and achieve operation efficiencies many public sector banks have acquired their subsidiaries, for instance Andhra Bank acquired its housing finance subsidiary Andhra Bank Housing Finance LTD, Bank of India acquired BOI finance Ltd and BOI Asset Management Company Ltd. Acquisition of similar types took place in the private sector as well. Alignment of Operations of Foreign Banks with Global Trends As the Parent banks went under reconstruction process their parts operating in India also started restructuring. For example, Standard Charted Grindlay bank was formed due to acquisition of ANZ Grindlay by the Standard Charted Bank. Similarly due to acquisition of two Japanese banks like Sakura Bank and Sumitomo Bank Ltd the Indian operations of Sakura Bank were merged with Sumitomo Bank in 2001.Forign banks were permitted to enter into merger and acquisition transaction with any of the private sector bank in India with a condition that the overall investment limit limit will be 74 per cent after the second phase of WTO commitments which commenced in April 2009. This may lead to further consolidation in the Indian banking sector. Merger and Consolidation of Cooperatives, RRBs and UCBs Small banks present in India apart from other banks are co-operative banks, Regional Rural Banks (RRBs) and Urban Co-operative Banks (UCBs). These are formed for fulfilling the credit requirements of agriculture, small traders and SSI and other rural economic activities. All of these institutions are suffering from bad loans, operational inefficiencies, and Poor recovery of loans. This proved to be a barrier for further lending and financial intermediation. A committee formed under Jugdish Capoor suggested voluntary amalgamations or merger of these co-operatives based on various criterias like economies of scale, especially in areas where the operations of these banks have become unviable and there are no more in a position to supply credit to agriculture sector. 28 RRBs were consolidated into 9 new RRBs in September 2005.A high powered committee on Urban Co-operative Banks (1999) recommended that UCBs which are sick should be liquidated in a time bound manner as the operation of lar ge number of financially sick banks is devastating for UCBs and also for the interest of depositors. Due to this more mergers are expected in the future and RBI also has taken a lot of new initiatives for restructuring of banks including the issuance of guidelines in May 2005. Shareholders Perception of Merger As stated above the Indian banking sector has experienced two types of mergers – focussed and voluntary mergers. Forced mergers were initiated by RBI and their main objective was to protect the interest of the depositors and prevent financial distress of the banks. Whenever a bank showed symptoms of sickness like huge NPA levels, erosion of net worth etc, RBI intervened and merged the weak bank with a stronger one by force. Thus we can form a hypothesis that in case of forced mergers the target banks shareholders will gain abnormally with the declaration. The second type of merger is voluntary type where the motivation behind the merger is to achieve cost reduction, increase in size, diversification, strategic entry into a market. In these cases the acquired banks reaped the benefit of branch network and customer clientele of the banks acquired. In these cases both the acquirer bank and the target bank must have had benefit out of the merger. In this paper the mergers between 1993 to 2006 are considered. There were 21 mergers out of which only five were voluntary. These are mainly mergers of private sector banks with other private sector banks. Two cases are conversion of financial institution to commercial bank where the objective was to form a universal bank model which offers a wide range of financial services. Ina study conducted which is presented in this paper six cases of forced mergers were selected for the purpose of analysis as in other cases the target banks were not listed and the size of the banks were much lower than the acquirer banks therefore these cases are of less merit for further analysis. In this study the wealth effects of almost all the banking mergers during the period 1999-2006 is analyzed. The event study analysis used in this analysis is very straight forward and conventional. The merger period consist of four days prior and four days after the event. The reason for taking such window is to analyze the change in wealth of the shareholder around the day of the declaration on the merger. Daily adjusted closing prices of stocks and the market index is taken for the analysis. The abnormal returns are calculated as follows. ARit= Rit – [a + BRm] Here Rit: daily return on firm ‘i on day ‘t Rmt is the return on the bench mark index a and B are the regression parameters. The abnormal return is calculated for both the acquirer and the target firm and the significance of these values are tested by finding standard error and the t-value : Analysis of Research Results In forced mergers case the stockholders of target banks have not achieved any significant returns on the declaration of the merger. However in the case of Nedungadi Bank, the stockholder did gain significant on the 2nd day of the announcement but after that no abnormal returns were found. In the case of GTB the stockholders had deeply discounted the merger. As it was a case of serious case of bank failure the merger did give a confidence to the depositors but the merger declaration did not provide any abnormal returns. United bank did gain marginally on the announcement but it was not significant statistically. Thus the hypothesis that target banks shareholders welcome merger announcement as a safety net can be rejected. The shareholders of the acquirer bank lost their market value of equity. In case of ICICI bank, it was signalled as an emergence of a large private sector bank and hence due to which the banks shareholders expectations go up with significant increase in the returns. In other cases of acquisition the acquirer bank lost on merging with the weak banks. Hence in all the forced mergers neither the acquirer bank nor the target bank gained on declaration of the merger and the stockholders of the acquirer bank lost wealth as the announcement of the merger was taken as a negative signal. It is argued that merger of weak banks with strong ones is essential for restructuring of banking system and also a step in the consolidation of the banking sector. But in almost all the mergers it was found that the target banks for the merger were determined at the time when they were at the verge of getting collapse. The acquirer bank which was forced by RBI was left with no option but to accept the proposed merger. It is recommended that RBI should pursue Prompt corrective action system and should determine the weak banks on the basis of some defined criterias so that the acquirer bank can choose the target banks on the strategic issues which benefit all the parties . Abnormal Returns of Target Banks Abnormal returns of Bidder banks In case of voluntary mergers it can be seen that the target banks have obtained higher returns that the acquirer banks. Both the acquirer and the target banks stockholders benefitted on declaration of the merger. Therefore the stock market welcomed the merger which will lead to growth and efficiency aspects of the merged entity and benefitted the shareholders of both the banks. For instance in the case of acquisition of times banks by HDFC bank it was viewed as a positive signal by the shareholders of both the bank. At the time of the merger the Times Bank was crippled with increasing NPAs and low profitability, the acquisition by the HDFC bank gave relief to the depositors of the Times Bank. On the other hand HDFC bank emerged as the largest private sector bank by gaining from the retail portfolio of the Times Bank. In case of BOM acquisition by the ICIC bank the BOM gained the advantage of being able to provide services like Treasury management, cash management services to its cust omers and ICICI bank increased its size by acquiring BOM and reached the position of large private sector banks in 1999. At the announcement of the merger there was a steep rise in the gains which was reaped by the BOM shareholders however the stockholders of ICIC bank did not get any significant returns. In all the even study analysis revealed that neither the acquirer bank nor the target bank stock holders have perceived any potential gain on the declaration of the mergers. Hence the share holders who are important stakeholders of the banking companies did not consider the mergers as a signal of improving health, economies of scale and the market power of banks. Managers take on the Mergers Managers provide highest priority to the merger of the two public sector banks which provides a signals the banking sectors view on the need for consolidation of public sector banks. Managers do not prefer the merger of bank and NBFCs or financial services entities There are some issues which are needed to be taken care of while proposing a merger of banks according to the managers Valuation of the Loan portfolio of the target bank This is one of the main factor which is needed to be considered at the time of the merger. As in the management of the credit portfolio the accounting and the exposure norms suggested by the RBI are the same which helps in figuring out the book value of loans easily. However Indian banks have adopted divergent practices in rating the borrowers, loan pricing and maintenance of collateral securities therefore a detailed audit of the loan portfolio, cash flow generation and collaterals is very essential in order to get an opinion on the value of the loan portfolio of the target bank. Valuation of Intangible assets The valuation of the assets of the banks is a very critical factor for the success of any merger or consolidation. The tangible assets of the bank are loans, investment part apart from other fixed assets like buildings, ATMs and the IT infrastructure the bank owns. A commercial bank also holds a lot of intangible assets like clientele based on core deposits, safety value contracts, computer softwares, human resources, brands and goodwill. Determining the inherent strength of the bank based on the valuation of the intangible assets is also very important. Determination of the value of equity Determining the value of the target banks assets, liabilities and valuation of its equity value is the major aspect of a merger process. Various approaches can be used like dividend discount model, cash flow to equity model and excess return model. However banks have totally different operations than a normal manufacturing firm as they are highly leveraged because they have more than 90% of the resources as borrowed or as debt and banks are highly regulated institutions and regulatory instruction have vast implication in asset and income recognition. Interest rates volatility, regulatory capital adequacy ratios and restriction on dividend pay put ratios also have influence on the earnings of the banks. Human Resource Issues It is the most complicated issue in the merger process.HR issues like the service condition, strategy for rewarding people, employee relation, benefit plans and compensation, provision of pension, law suits and the trade union actions are very critical for the viability of the merger and the deal to go through. Cultural Issues This is also a critical issue in the pre-merger and post merger period. It is central to an organizational environment and recognizing cultural friction is very difficult as it results in various problems such as poor productivity, riff in the top management, increase in the turnover rates, delays in the integration process and failures in realizing the projected synergies. Information Technology platform integration In todays banking banks are highly dependent on the information technology. It has become a key strategic issue due to the impact it has on the operation of the bank. A significant portion of the synergy depends on the information technology integration. Divergent IT platforms and software systems have proven to be major constraints in the consolidation. Customer Retention Customers also major stakeholders of banks and are needed to be communicated properly about the merger and the customers of the target bank should be attended with utmost care. Various studies have shown that firms borrowing from target banks are very likely to lose their relationship with the bank on its merger.