Determinants Of Foreign Direct Investment In Pakistan - Free Essay Example

Sample details Pages: 11 Words: 3296 Downloads: 9 Date added: 2017/06/26 Category Statistics Essay Did you like this example? CHAPTER 1: INTRODUCTION Overview Globalization which gave birth to the concept of interdependence of countries and their economies is defined as the process through which regional economies, societies, and cultures have become integrated with the assistance of global network of trade, communication and transportation. This allowed the investors to invest or transfer their capital where ever they wanted which introduced the concept of Foreign Direct Investment. Issues: Since the recent financial crisis in Asia and Latin America, developing as well as newly industrialized countries have been advised to rely mainly on FDI for economic development and to supplement national savings by capital inflows. Developing countries in particular are in need of investment for their development and the investment amount in majority of cases is greater than the capital internally available. Therefore, FDI has emerged as most important source of generating capital required for development of emerging countries. Currently Foreign Direct Investment has become one of the major sources of economic development, modernization, employment, income growth, capital generation and a channel for the transfer and access to advance technologies as well as organizational and managerial skills. Recognizing this fact, developing countries try their level best to attract as much as of FDI as they can. But attracting FDI is not that much simple, it requires huge efforts on the part o f policy makers and government. Variety of factors is considered by an investor before making investment in a particular country. Those are labeled as determinants of FDI, and may vary from country to country. Pakistan is currently facing a huge shortfall of capital to finance its major development projects and to run the government operations smoothly. The country requires capital to fulfill the growing needs in defense, infrastructure, education and many other areas of critical importance to development. Don’t waste time! Our writers will create an original "Determinants Of Foreign Direct Investment In Pakistan" essay for you Create order 1.2 Problem statement The objective of this research is to identify the major determinants of the aggregate Inward FDI flow to Pakistan. 1.3 Hypothesis The research primarily focused on testing the following mentioned hypothesis: H1: Wage has negative impact on FDI. H2: GDP has positive impact on FDI. H3: Infrastructure expenditure has positive impact on FDI. H4: Taxes has negative impact on FDI. H5: Inflation has negative impact on FDI. H6: GDP per capita growth has positive impact on FDI. H7: Exchange rate has positive impact on FDI. H8: Interest rate has negative impact on FDI. 1.4 Outline of the Study 1.5 Definitions Users: This research will be useful for the national policymakers and government of Pakistan; it will allow them to improve the weak points present in the economy which discourage the FDI inflows to the country. CHAPTER 2: LITERATURE REVIEW A lot of research has already been conducted in the field of identifying the best determinants of Foreign Direct Investment by various researchers. Most of the research work conducted implies that the determinants of Foreign Direct Investment vary from country to country and from location to location. The purpose of this research is to find out the impact of Labor cost (Wage), Inflation (I),Interest rate (IR), Exchange rate (ER), Infrastructure expenditure (IE), Taxes (T), GDP and GDP per capita growth (GDPG) on Foreign Direct Investment (FDI) inflow in Pakistan. The study hypothesizes positive relationship between GDP, GDP per capita growth, Infrastructure expenditure and Exchange rate with FDI whereas Wage, inflation, Taxes and Interest rate relate negatively with FDI. Pursuing the same objectives Kok and Ersoy (2009) conducted study that made attempt to investigate the best determinants of FDI in developing countries. Study hypothesized and concluded that GDP, inflation, Trade, Gross capital formation, GDP per capita growth and communication (telephone) are positively related with FDI whereas inflation and total debt/ GDP had negative relationship. Barrel and Pain (1996) in their empirical studies found that FDI and both the acceleration and level of GNP were positively related. In addition unit labor cost and relative capital cost also had positive relationship with outward direct investment. Barrel and Pain et al suggest that in short run funds availability affects investment timing. This research is very much related to mine because it tried to identify the role played by demand and relative factor prices, both at home and abroad, and exchange rate expectations in determining the total level of foreign direct investment (FDI) by United States c ompanies. According to Janeba (2002) investment costs and government credibility has significant impact on the level of inward foreign direct investment, suggesting that MNCs would prefer to invest in politically stable countries. The research also concluded that when any politically unstable country has cost advantage over other countries MNC will invest efficient amount in that particular country and will hold excess capacity elsewhere. According to the Conventional wisdom lack of government commitment deters foreign investment in developing countries. Since countries differ in production costs and government credibility, this article explains the pattern of investment in a politically risky world. The research work done by Harvey (1990) focused on the macroeconomic determinants of FDI in addition to variables relating to different industry groups and tries to identify the impact of these variables on the inward FDI flow of the recipient country and suggested that Exchange rate an d Sales to have significant impact on the foreign direct investment, whereas taxes did not have any significant role in explaining foreign direct investment. Following bit different framework research conducted by Rolfe, Ricks, Pointer and McCarthy (1993) made an attempt to check investorsà ¢Ã¢â€š ¬Ã¢â€ž ¢ investment decision on the basis of various investment incentives provided by countries in the Caribbean region. The study demonstrates that all inducements do not evenly plea to all investors. The investment characteristics would determine which incentives firm manager will prefer. According to the study incentives preferred by export firms differ from local market-oriented firms, firms starting operations in a new country have different incentive preferences than do firms interested in expanding or acquiring existing operations, incentive preferences sometimes differ by country of investment, incentives differ depending upon the products produced, large investors prefer different incentives than those preferred by smaller firms and incentive preferences can differ from year to year. In short the research concluded that incentive pref erences are a function of the type of investment, the countries involved, the market orientation of the investor, the type of product, the size of the investment, and the investment year. Terpstra and Yu (1988) tried to examine the impact of firm-specific advantages and locational factors on the foreign investment made by advertising agencies of U.S study focused on impact of host country market size, host country geographic proximity, firm size, firms international operations experience, oligopolistic reaction, and presence of home country customers abroad on FDI. The research depicted that U.S. advertising agencies prefer to invest in those foreign countries having large market size, did not discriminated countries on the basis of their geographic location, inclined to enter foreign market with bigger firm size, tended international expansion with increasing understanding of international operations, reacted oligopolistically while making foreign investment and followed client firms belonging to home country while going abroad. Additionally research found that oligopolistic reaction had stronger impact in 1984 compared to 1972, intensity of competition had significa nt impact on oligopolistic reaction and top agencies witnessed stronger impact of oligopolistic reaction. Study uses macroeconomic variables but more emphasis was given to various ratios relating to capital and labor, it also used à ¢Ã¢â€š ¬Ã…“The Heckscher-Ohlin Theoryà ¢Ã¢â€š ¬? which states that a country exports those commodities that intensively use the countrys relatively abundant factors and imports those goods using its scarce factors intensively. Results indicated that countries like U.S. imported goods whose production required higher capital to labor ratio than the goods exported and when the endowment ratio of capital/labor increased the ratio of capital for each worker in import-competing production to capital for each worker in export production declined (Baldwin 1979). Gopinath and Echeverria (2004) examined the relationship between foreign direct investment (FDI) and trade in a bilateral context, that is, home (source) countrys exports and FDI to a host (recipient) country are analyzed using a gravity-model approach. Results suggested that physical distance had negati ve impact on trade-FDI ratio, this caused nations to switch from export to FDI based manufacturing. Research also found GDP per capita to affect trade-FDI ratio positively and institutional quality strongly encouraged FDI, additionally FDI was also encouraged by regional trading agreements. The empirical study conducted by Goldberg and Kolstad (1995) stated that exchange rate instability contributed to production internationalization without depressing economic activity in the home country. Furthermore, exchange rate instability stimulated the share of investment activity located on foreign country. Exchange rate volatility did not have statistically different effects on investment shares when one distinguishes between periods where real or monetary shocks dominate exchange rate activity. Yin (1999) studied the effects of tax incentives on the structure of a domestic industry in terms of price, output, profit, and entry/exit, taking account of technology transfer through FDI. The study found that if the government of the host country provides more tax relief for foreign firms, it will raise total output and reduce price index which will encourage more foreign firms to enter the industry while certain existing host firms will have to exit. Research also suggested that government should be cautious in decreasing rate of taxes to attract FDI. Vita and Kyaw (2008) used empirically tractable structural VAR model of the determinants of capital flows and variance decomposition and impulse response analyses to investigate the temporal dynamic effects of shocks to push and pull factors on foreign direct investment and portfolio flows. Study suggested that variation in real variables representing economic activity for example domestic productivity and foreign output possess more power in explaining variability in investment flows to developing nations. This research developed structural VAR model to test relative importance of the determinants of disaggregated investment flows to developing countries. The study investigated the degree to which deviations in foreign direct investment and portfolio flows are caused by variety of push and pull factors across different time horizons. Chen, Chen and Ku (2004) analyzed the pattern of local linkages in foreign direct investment (FDI), treating such local linkages as an investment in local relationships research found that Taiwanese investors in the US are more active in the search of local linkages compared to counterparts in China and Southeast Asia. Research found investors in a producer-driven network are more active in building local linkages than their counterparts in a buyer-driven network. In addition large firms are more active than small firms in pursuing local linkages because of their larger capacity to absorb the risks involved in network integration and their ability to apply relational capital on a larger volume of exchanges. Entry mode also makes a difference to local linkage: FDI taking the form of a joint venture leads to more local linkages than FDI in the form of a wholly owned subsidiary. Amongst the various local linkages, employment of local workers is always the priority undertaking, followed by linkages to local suppliers, local subcontractors and local RD capabilities. Studying the impact of FDI on aspects of domestic economies, including international trade, gross fixed capital formation (GFCF), employment, productivity, the balance of payments and overall welfare Hejazi and Pauly (2003) found that FDI was motivated by market access and factor price differences, and on the role of intra-firm trade. According to the research prediction of whether growth in outward FDI will increase or decrease domestic GFCF is not possible. Therefore, comparisons of such growth relative to growth in inward FDI can be a misleading indicator for policy makers. Since the impact of FDI on domestic GFCF depends on the underlying motivation for investment, and not simply on the growth in outward relative to inward FDI, the results are of interest to all countries. The implication of results stated that rapid growth in outward FDI, relative to inward growth, should not be considered as a negative development, and may reflect success. Chen (1996) suggested that potential for market share extension (MARKET) affects FDI, labor cost (WAGE) does not affect FDI, foreign investors seem to have taken advantage of the western regionà ¢Ã¢â€š ¬Ã¢â€ž ¢s mineral and energy resource abundance regardless of its lower allocative efficiency, interregional railroad connections are important in the foreign investorsà ¢Ã¢â€š ¬Ã¢â€ž ¢ locational choice and foreign investors may not locate near innovative domestic Chinese industries in the eastern and middle regions. The significance of the results obtained is that, the location of FDI seems to have been influenced by the existence of good transportation linkages, technological filtering and, to some extent, by the potential for market-share extension. Locational choice does not seem to have been influenced by consideration of labour cost differences or differences in allocative efficiency. According to the neoclassical growth model, labor growth and technological progress are considered as exogenous, inward Foreign Direct Investment(FDI) will lead to increase in the investment rate and which will ultimately lead to increase in the growth of per capita income but the growth effect will not last in the long run (Hsiao and Hsiao, 2006). Papanek (1973) showed significant negative impacts of different types of capital on national savings. Grounded on a sample of 85emerging countries, Papanek found that foreign capital displaced domestic savings. Precisely, the research exhibited that foreign aid, private investment and other capital crowded out national savings, and a reduction in domestic savings could lead to further increase on the dependency on foreign capital. The empirical studies of Cushman (1985) based U.S. bilateral FDI outflow and inflow data concluded that exchange rate variability had positive relation with set of flows. Connor (1983) conducted research which focused on inward as well as outward flow of FDI. The study divided country specific advantages into three categories FDI Probability, FDI Propensity and FDI Penetration and their impact on FDI. Larudee and Koechlin (1999) research focuses on the wages or labor costs and productivity in terms of production costs as the determinants of FDI. This research uses sweatshop labor argument which relies implicitly on the simplistic trade theory assumption that all firms in a country have access to the same technology. But both MNE theory and abundant evidence assert the contrary: an MNE affiliate derives its labor productivity in significant measure from the firm-specific advantages it brings with it. The differential between source and host country in average manufacturing wage should therefore be an independent determinant of FDI flows. CHAPTER 3: PROPOSED METHODOLOGY 3.1 Method of Data Collection The secondary data necessarily required to perform the research was gathered from the official sites of The World Bank and The State Bank of Pakistan. Additionally, some of the required data was abstracted from the book Statistical Supplement and Yearly Book both being published under the supervision of State Bank of Pakistan. 3.2 Sample Size The data used for the purpose of research was 30 years annual data of the variables used in research. Data of all the variables belonged to period starting from fiscal year 1980 to fiscal year 2010. 3.4 Research Model developed FDI= ÃŽÂ ± + ÃŽÂ ²0GDP + ÃŽÂ ²1GDPG à ¢Ã¢â€š ¬Ã¢â‚¬Å" ÃŽÂ ²2Wage- ÃŽÂ ²3I + ÃŽÂ ²4ER + ÃŽÂ ²5IE à ¢Ã¢â€š ¬Ã¢â‚¬Å" ÃŽÂ ²6T à ¢Ã¢â€š ¬Ã¢â‚¬Å" ÃŽÂ ²7IR +  µ Where FDI = Net amount of Foreign Direct Investment received by Pakistan Wage = Annual wages paid to a worker, I = Inflation, IR = Interest rate, ER = Exchange rate (ER), IE = Infrastructure expenditure, T = Taxes, GDP, GDPG = GDP per capita growth rate. 3.3 Statistical Technique Multiple Regression was the statistical technique which was applied to test the hypothesis developed in research. This technique was applied because both the dependent variable and independent variables were scale and under this situation the prediction power of regression analysis is stronger as compared with the other statistical techniques available. CHAPTER 4: RESULTS 4.1 Findings and Interpretation of the results The results drawn by applying Multiple Regression analysis were as follows: Table: 4.1 ANOVA Model Sum of Squares df Mean Square F Sig. 1 Regression 2.524E39 4 6.310E38 1426.142 .000a Residual 1.106E37 25 4.424E35 Total 2.535E39 29 The Anova table explains the model fit, the F-test is statistically significant, which means that the model is statistically significant, as the sig. value in the Anova table is less than .05 therefore the model fit is good and regression can be applied on the data. Table: 4.2 Model Summary Model R R Square Adjusted R Square Std. Error of the Estimate Durbin-Watson 1 .998a .996 .995 6.65146E17 2.744 The model summary table explains what amount of variance in the dependent variable is explained by the independent variables. The value of R-square is .996 which means that approximately 99.6 % of the variance of SQDFDI is accounted for by the model and only .04 % of the variance remains unexplained. Independent variables were square of Infrastructure Expenditure (PSDP Fund), Interest Rate (IR), Inflation (I) and Exchange Rate (ER) and the dependent variable was Square of Net Foreign Direct Investment (SQDFDI). Table: 4.3 Coefficients Model Unstandardized Coefficients Standardized Coefficients t Sig. Collinearity Statistics B Std. Error Beta Tolerance VIF 1 (Constant) -9.595E17 7.703E17 -1.246 .224 Inflation -8.806E16 3.960E16 -.037 -2.224 .035 .640 1.562 Interest Rate 2.047E17 6.261E16 .045 3.270 .003 .920 1.086 Exchange rate -5.646E16 9.021E15 -.125 -6.259 .000 .440 2.273 IE 1.654E8 3349513.619 1.094 49.392 .000 .356 2.809 The co-efficients table shows the significance of individual independent variable in explaining the dependent variable. In the final model square of Infrastructure Expenditure (PSDP Fund), Interest Rate (IR), Inflation (I) and Exchange Rate (ER) were the statistically significant variables. The effect of Inflation (b= -8.806, p=.035) is significant and its coefficient is negative indicating that the greater the inflation rate, the lower the Foreign Direct Investment. The value of beta indicates that 1 unit increase in inflation will decrease FDI by 8.806 units. Similarly, the effect of Interest Rate (b= 2.047, p=.003) is significant and its coefficient is positive indicating that the greater the value of interest rate, the higher the amount of FDI received. The value of beta indicates that 1 unit increase in interest rate will increase FDI by 2.047 units. Next, the effect of Exchange Rate (b= -5.646, p=.000) is significant and its coefficient is negative indicating that the greater t he exchange rate, the lower the amount of FDI. The value of beta indicates that 1 unit increase in exchange rate will decrease FDI by 5.646 units. Finally, the effect of Infrastructure Expenditure (b= 1.654, p=.000) is significant and its coefficient is positive indicating that the greater the amount spent by government on infrastructure, the higher the amount of FDI the country will receive. The value of beta indicates that 1 unit increase in amount of infrastructure expenditure will lead to an increase of 1.654 units in FDI. Empirical Model Developed FDI = 1.654 Infrastructure Expenditure + 2.047 Interest Rate 5.646 Exchange Rate 8.806 Inflation 4.2 Hypothesis Assessment Summary H. # Hypothesis ÃŽÂ ² Sig. Result H1 Wage has negative impact on FDI Nil H2 GDP has positive impact on FDI H3 Infrastructure expenditure has positive impact on FDI 1.654 .000 Accept H4 Taxes has negative impact on FDI H5 Inflation has negative impact on FDI -8.806 .035 Accept H6 GDP per capita growth has positive impact on FDI H7 Exchange rate has positive impact on FDI -5.646 .000 Reject H8 Interest rate has negative impact on FDI 2.04 .003 Reject CHAPTER 5: DISCUSSION, CONCLUSION, IMPLICATIONS AND FUTURE RESEARCH 5.1 Conclusion Foreign direct invest being the most important factor in the development of developing countries likewise Pakistan. From recent years there has been great fight going on among LDCà ¢Ã¢â€š ¬Ã¢â€ž ¢s from all over the world to attract higher amount of FDI to fuel their economic growth. This research was intended to find out the impact of macroeconomic variables including GDP, GDP per capita growth rate, Interest rate, Inflation rate, Wage rate, Exchange rate, Tax rate and Infrastructure expenditure (PSDP fund) on the inflow of Foreign Direct Investment in Pakistan. The relationship between wage rate (W) and FDI could not be established because insufficient data was available on the annual wage rate in the country. GDP, GDP per capita growth rate and Tax rate were statistically insignificant in contributing in the final model. The most significant variables in the model were Inflation rate and Exchange rate; both had negative relation with FDI inflow having beta of -8.806 and -5.646 re spectively. Interest rate and Infrastructure expenditure (PSDP fund) were positively related with FDI inflow having beta of 2.047 and 1.654 respectively. 5.2 Discussion 5.3 Implications and Recommendations 5.4 Future Research

The war on terrorism in Afghanistan has been the longest...

The war on terrorism in Afghanistan has been the longest war in the history of the United States of America, the war that nobody wanted is finally coming to an end. Ever since the September 11th attack on the twin towers in the heart of New York, the United States has led a 13 year long war on terrorism in the war-torn country, Afghanistan. The ending of the war is a major turning point in the history of America and Afghanistan. The ending of the war will be the greatest test on the people of Afghanistan to see how they will take their country into their own hand and decide its fate. The future of Afghanistan is that it will not be stable enough to run on its own due to the high level of poverty, high levels of corruption and limited†¦show more content†¦Afghanistan will remain unstable due to its high levels of poverty and once the high poverty levels decrease the instability of the country will also decrease. Corruption in Afghanistan tends to run in every which way, from the country’s massive heroin production industry and exportation, to government officials taking bribes and finally to the everyday bribes of the average citizen. Due to the high levels of corruption in Afghanistan, corruption will always be a major factor to consider when predicting the outcome of the country’s future success. According to Transparency International, a global civil organization leading the fight against corruption, Afghanistan has been rated 175/177 out of the 177 countries around the world involved in the organization’s research as highly corrupt. â€Å"Afghanistan is categorized as Highly Corrupt† (Transparency International), but what is the meaning of corruption really? Corruption is a dishonest or fraudulent conduct by those in power, typically involving some sort of bribery. 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Depiction of Female Characters in Shakespeare’s Othello Free Essays

â€Å"It is their husbands’ faults, if their wives do fail†. Othello, a play about race, power and gender is one of the best works of Shakespeare, and highlights few of the major societal issues of his time. On the one side is Othello, who is caught in his racial inferiority, fighting the prejudices his society has heaped upon him. We will write a custom essay sample on Depiction of Female Characters in Shakespeare’s Othello or any similar topic only for you Order Now And on the other side is Desdemona, who has transgressed her gender lines to marry the Moor, but is ultimately pushed into the sphere of submission and obedience – the traditional place where a woman should keep herself. We are made to wonder then: Whose tragedy is Othello really about and who was the real victim, Othello for his racial inferiority or Desdemona for her gender? If Othello makes himself appear to be a victim of Iago’s plans, confessing â€Å"nought I did in hate, but all in honor†, then he had too had once made Desdemona his victim. And not Desdemona alone, the other two women in the play, Emilia and Bianca face similar consequences. Emilia is another chaste, obedient and loyal wife to Iago – the malignant conniver, worser than Desdemona, she is never treated as a wife. And the last Bianca is, in fact, a fallen woman – a prostitute. The treatment of women in the play and the assumptions made about them removes the curtains drawn and triggers the single question in the minds of the readers – How true is the depiction of women in the play, and did Shakespeare’s society treat women in the same manner? As a matter of fact, seventeenth century England did not reserve a grand place for women, and feminist writings on women’s deplorable lives have come up mostly during Shakespeare’s time. This paper will study the three women characters and emit some light on the injustice faced by them and how they have been mere projections of male prejudices – they are assumed to be what men think them to be. The protagonist of the play is the beautiful, fair-skinned Venetian Desdemona. As her name would stand to mean ‘ill-fated’, Desdemona proves to be the most-affected victim of Iago, as until Othello comes to smother her, she was unaware of the cruel game played against her. Innocently in love ith Othello, she has been extremely loyal and supportive to her husband. When the play first introduces Desdemona, she is a different person from what she will become in Cyprus. Bold in her approach and almost fearless, she does not resemble the Venetian women of seventeenth century; by leaving her father’s house and marrying the Moor, thus committing miscegenation she takes her first step in redefining her role as a ‘woman’. She confirms Othelloâ₠¬â„¢s speech and accepts Othello as her husband. With her cunning, she smartly handles the situation and adeptly performs her â€Å"divided duty† – to her father for â€Å"life and education†, and to Othello for being her husband and companion; she admits her wifely behavior descending from her ‘mother’, who had also once preferred her husband to her father. Her love is not affected by Othello’s racial difference as she could overlook Othello’s physical ugliness and fall in love with the man inside him; she saw Othello’s â€Å"visage in his mind†. She also subverts feminism by unflinchingly asserting her sexuality and her love affair with Othello, and firmly says, â€Å"I did love the Moor to live with him†, and decides to follow him to Cyprus. That is the only time we see Desdemona’s vigor to stand for her defense. The shift of the play from Venice to Cyprus is not just spatial, it also has symbolic overtones. As from then onwards, Desdemona is reallocated to the position she tried to transgress, although in a different form – this time, playing a wife. Without any relatives or acquaintances, in Cyprus Desdemona is all on her own and all the more vulnerable. Her marriage becomes a scandal, â€Å"not in her failure to receive her father’s prior consent but in her husband’s blackness. That blackness- the sign of all that the society finds frightening and dangerous- is the indelible witness to Othello’s permanent status as an outsider†, and to convince him the truth in Desdemona’s love is impossible. Being a self-fashioner, he is always in need of symbols and signs to believe in Desdemona’s idea about him as her hero. First, her confirmation speech becomes the symbol of her love, then, to continue the trust-game Othello gives her a handkerchief – his ancestral property, received from his mother, who in her turn had received it from an old witch as a blessing to her marital life. The appearance of the handkerchief is believed to be a white cloth with a red strawberry imprinted on it. Symbolically it represents the bedspread of a married woman, with her virginal blood-stains on it, and also becomes the symbol of Desdemona’s chastity, purity and her loving, civilizing sexual power. With the loss of it she loses Othello’s trust, and as Carol Neely puts it – â€Å"The handkerchief is lost literally and symbolically not because of the failure of Desdemona’s love but because of Othello’s loss of faith in that love†; love is not sustained through symbols and signs but through conviction. This brings out the frail nature of Othello’s love for Desdemona, held not by his heart but by the handkerchief. Othello’s fear of being deceived and cuckolded rises from the flaw that is inherent in him; the self that would never grow out of the uncertainties for being racially inferior looks upon Desdemona as the’ strumpet’. A chaste wife, being killed by her husband because he lacked self-identity and the power to recognize the devil inside him is universally acknowledged as the most appalling crime committed against an innocent woman. Another woman is Emilia, wife to Iago and the only companion of Desdemona in Cyprus. As the play progresses, she emerges from a common maid to a heroic individual. Dismissing Iago’s complains about Emilia’s noisiness Desdemona says: â€Å"Alas! She has no speech†. Desdemona seems right until the middle of the play. Emilia has no existence apart from her â€Å"instrumentality to the plot†. She passes the handkerchief to Iago, unaware of his plans: â€Å"what he will/ Heaven knows not I. / I nothing but to please his fantasy†. Emilia is heard speaking elaborately only in Act IV, scene iii also termed the ‘willow scene’, which stages the conversation between Desdemona and Emilia. In this scene, Emilia comes across as a realist with her ideas like: â€Å"The world’s a huge thing: it is a great price / For a small vice† and when she says that wrong and right are relative terms, and wrongs can easily be transformed into right by the power-wielders. The most striking words are when she says that a husband is liable for his wife’s infidelity, as their neglect or envy or suspicion egg on the woman to commit treachery. According to Gayle Greene: â€Å"Emilia’s is a perspective to which we wholly ascribe, entrenched as it is in a material reality, but her vision complements Desdemona’s and represents some of the bawdy and toughness that Desdemona lacks†. He further continues saying Emilia’s clarity of ideas can be attributed to her social class: she has never been adulated, she is no one’s jewel and has remained clear-eyed and without illusions. Although she did nurture her husband’s fantasies like Desdemona. However, her previous error, unknowingly committed can be easily forgiven because of her sorority ties with Desdemona. She has not only been a friend in Desdemona’s loneliest times, but also becomes her voice in Act V, scene ii after her death: â€Å"O. the more angel she, /And you the blacker devil! † Like Desdemona, she too faces disillusionment about the man she has tied knots with on realizing Iago’s misdeeds, pronounced by her diversely inflected reiterations of â€Å"my husband†. Desdemona, even on her death-bed made her last attempt to protect Othello from his guilt by replying â€Å"Nobody, I myself† to Emilia’s â€Å"Who hath done this deed? † and spells her last words of loyalty â€Å"Commend me to my kind lord†. Emilia inverts her role as a wife and commits herself to her duties as a loyal maid to her mistress: â€Å"’Tis proper I obey him – but not now. / Perchance, Iago, I will ne’er go home†, until she is abruptly dispatched by a stab from Iago. Of the two women in the play, two are killed by their husbands after being despised as whores; the third woman, Bianca is actually a whore. She survives not through her own endeavor to appropriate herself to fit in the men’s world, but simply because â€Å"she is not central enough to be pulled into Iago’s plot†. Women here are objects of men’s â€Å"horrible fancies’, fancies which are â€Å"projections of their own worst fears and failings†. They are either silent spectators throughout their lives, never retaliating, or else immediately silenced if they ever make an attempt to over-rule men’s scheme of things. Bibliography: 1. G.K Hunter’s ‘Murdering Wives in Othello’. 2. www.guttenberg.com/Othello 3. www.projectmuse.com/Othello and Desdemona 4. Introduction and Chosen essays from Norton edition. How to cite Depiction of Female Characters in Shakespeare’s Othello, Papers

Disclosure Of Goodwill Impairment Testing -Myassignmenthelp.Com

Question: Discuss About The Disclosure Of Goodwill Impairment Testing? Answer Introducation The main objective of this study is to make analysis and evaluation of various aspects of impairment testing for Forge Group Limited. It needs to be mentioned that the testing of impairment takes place when the marketing value of an assets shows less than the reported value in the financial statements (Ramanna and Watts 2012). From the analysis of the annual report of the company, it can be observed that the company has used goodwill for the purpose of impairment testing. The analysis of the annual report also shows that the company has their business goodwill in each of the groups cash generating units that is expected to be beneficial for the company. Forge Group Limited does the testing of the cash generating units of goodwill on an annual basis or more frequently when the company gets the indication that the particular asset may be impaired. In case there is any loss of impairment in goodwill, the company uses to recognize it in the profit of loss in the comprehensive income stat ement (Ji 2013). The analysis of the annual report of Forge Group Limited shows that the company uses a specific technique for impairment testing. In Forge Group Limited, goodwill originated from the business combination is considered as intangible assets. There is not any provision for amortizing the goodwill but to test them when there is any indication of impairment (Aschfal, Evertz and Oliver 2013). As a part of this testing, the allocation of goodwill is done among the companys cash generating units. With the help of goodwill testing, the company use to determine the recoverable amount of each cash generating units and it is done with the help of value-in-use calculation. The value-in-use calculation is done based on the present value of the cash flow projections over a period of three years. The discount of the cash flows is done with the use of a post-tax nominal discount rate that is based on the companys weighted average cost of capital after the adjustments of risks and cash generating unit s. At the time of carrying on the impairment testing, business organizations incur certain amount of expenses that is considered as impairment expenditures. There is not any exception of this fact in case of Forge Group Limited (Khairi, Laili and Tran 2012). From the analysis of the annual report of Forge Group Limited, it can be observed that the company has not incurred any expenditure related to the testing of impairment in the year 2013. However, it can be seen that the company recorded $224,000 as impairment loss in the year 2012. The analysis of the annual report of Forge Group Limited also shows that the company has recorded $582,000 and $267,000 as provision for impairment of trade receivables in the year 2013 and 2012 respectively. These are the expenditures related with impairment testing in Forge Group Limited. It is required for the business organizations to make certain important assumptions at the time of conducting the impairment testing. In case of the impairment testing of Forge Group Limited, the presence of certain assumptions can be seen. These key assumptions are discussed below: For the projection of cash flows, the company uses to factor long-term sustainable growth rates into the valuation models based on the comparability to the market and industry average. The basis of modeling is average post-tax discount rate specific to the cash generating units (Olante 2013). From the used discount rates, the estimation of the management related with the time value of money can be done along with the risk associated with each of the cash generating units. The use of the weighted average cost of capital is used for the determination of the discount rates for each cash generating units. Forge Group Limited has made the assumption of the required growth rate and discount rate for the testing of goodwill. For Forge Group Construction, the assumed growth rate and discount rate is 5.0% and 15% respectively. On the other hand, for Forge Group Power, the assumed growth rate and discount rate is 5.0% and 15% respectively. As per the assumptions made by the management of Forge Group Limited, the calculation for value-in-use is based on the approved budget for each cash generating units. In these budgets, the use of weighted average growth rate can be seen for the projection of revenue. The calculation of cost is done by considering the historical gross margins along with the estimated weighted average rate of inflation over the periods. The assumptions related with the discount rates are done based on the nominal post-tax rate after adjusting them with the risk associated with the cash generating units (Amiraslani, Iatridis and Pope 2013). From the above analysis, it can be seen that Forge Group Limited has done their impairment testing as per the required accounting regulations. From the analysis of the annual report of Forge Group Limited, it can be observed that there is not any subjective discretion in the process of allocation and impairment testing of goodwill and it implies that the company has not carried out the impairment testing in any opportunistic manner. The impairment testing of the goodwill in Forge Group Limited has been done in the presence of appropriate discount rate along with future amount of cash flows. Thus, it can be said that that is not any subjectivity that can influence the impairment testing outcome (Darrough, Guler and Wang 2014). The most interesting aspect in the goodwill impairment testing of Forge Group Limited is the making of right set of assumptions along with the allocation of goodwill in the cash generating units. It can be observed that the company has provided all the justifications along with the clarifications regarding goodwill impairment testing in the notes of financial statements. The surprising aspect of the impairment testing is the review of assets on an annual basis in order to check the presence of impairment (Bepari, Rahman and Mollik 2014). After the assessment of the impairment testing of Forge Group Limited, it can be observed that the company follows the standards of AASB 9 for the impairment testing and the allocation of the impaired assets in the cash generating units. In addition, from this analysis, one can get effective insight about the process of impairment testing carried out by the large business organizations. Apart from this, proper insight can be obtained about the matter that the companies have started to use the new accounting model for impairment testing that is based on the anticipated credit losses instead of incurring the credit losses (Hamberg and Beisland 2014). Fair value refers to a basis for the valuation of the assets and liabilities of the companies. More specifically, fair value measurement is considered as a standard as the price that would be received from the sale of any assets or the price that needs to be paid for the transfer of a liability will be based on the date of measurement. It implies that the business organizations are required to consider the market value of the assets and liabilities at the time of doing transactions related with the selling or buying (Glaum et al. 2013). As per the current accounting standard, it is the obligation to the lessees and lesser to make the necessary classification related with the operating lease and capital lease of their businesses. The current accounting standard provides the companies with the choice of disclosing the information related to lease under the liability and asset section for a brief period of time. There is not any obligation for the operating lease as well as the capital lease to disclose them in the company balance sheet. For this reason, companies get the option to present the lease information in the balance sheet (Collins, Pasewark and Riley 2012). Companies state the information related with the total amount of liabilities in their balance sheet; but the understatement can be seen in case of lease as it is not mandatory for the companies to disclose the lease information. It can be happened that the companies have huge amount of lease liabilities that are more than the total liability of them and still, it cannot be observed from the balance sheet. For this reason, the investors will not be able to access sufficient amount of information about the assets and liabilities of the companies from the balance sheet that will make the investors depictive about the financial position of the companies (Jackling, Howieson and Natoli 2012). The earlier standard of lease made it obligatory for the companies to only record the information about capital lease in the company balance sheet. For this reason, there was lack of disclosure for the users of financial information and investors in gaining better understanding regarding the uncertainty about the origination of cash flow from lease activities. Thus, in the previous lease standards, there was lack of qualitative as well as quantitative aspects in gaining required information about leases in the financial statements of the companies. Due to this, the firms used to fail in attaining the desired financial results. More importantly, the lack of information leads to less realistic presentation of liabilities and assets related with lease (Weil, Schipper and Francis 2013). Under the current accounting standard, there is not any obligation on the companies in recording the lease information in the balance sheet; but it is the obligation on the companies to make the timely payment of these leases. It implies that the business organizations are underestimating the liabilities of their business by not including the leas liabilities in the balance sheet. In addition, it needs to be mentioned that there are number of lease liabilities that are responsible for creating major difference between the recorded amount of total liabilities in the balance sheet and the liabilities existed in off-balance sheet record. For this p particular reason, the total amount of debt in the balance sheet stands 66 times lower than the liabilities recorded as per off-balance sheet (Street 2012). It can be seen that the airline companies have made lease of huge amount of planes and there is not any obligation on them to record these leases in the company balance sheet as per the previous lease standard. As per the earlier lease standard, companies have made the classification of leases based on historical cost and have recorded them based on off-balance sheet system (Huerta, Petrides and Braun 2013). For this reason, huge difference can be seen in the liability position of the airlines companies that are making the lease of large amount of planes and the companies that are purchasing the planes. Due to this, he difference can be seen in the financial position of the companies on off-balance sheet basis. For this reason, the investors face great difficulties in determining the actual financial position of the airline companies. In addition, there were contrasting results due to the presence of financial leverage and operational activities. The presence of numerous number of criticism can be seen in the new introduced standard of lease accounting and for this reason, there will not be many popularity of this new lease accenting standard. Under this standard, there will be considerable change in leases in the balance sheet that would create impact on the leverage situation and thus, there will be increase in the cost of the company. It needs to be mentioned that this new lease standard has brought complexities in the process of lease accounting and cost reporting. For this reason, it is the obligation on the companies to update their financial system in order to improve the process of lease disclosure. For this reason, companies will be required to incur more amounts of costs that will lead to the unpopularity of this lease standard (Gordon et al. 2013). The companies will be able to present the financial information in a better manner in the presence of new leasing standard. Thus, there will be both qualitative as well as quantitative information about lease in the balance sheet of the companies. Moreover, investors will be able to gain better understanding about the financial position of the companies. The reflection of enough information about assets and credits risks will be there in the financial statements. All these aspects would be helpful in increasing the transparency of financial information and position of the companies (Weil, Schipper and Francis 2013). References Amiraslani, H., Iatridis, G.E. and Pope, P.F., 2013. Accounting for asset impairment: a test for IFRS compliance across Europe.London, UK: Centre for Financial Analysis and Reporting Research, Cass Business School. Standards, Regulations, and Financial Reporting, pp.199-223. Aschfalk-Evertz, A. and Oliver, R., 2013.Goodwill impairment testing according to IFRS in the United Kingdom: An empirical analysis of the discount rates used by the thirty largest FTSE 100 companies(No. 75). Working Papers of the Institute of Management Berlin at the Berlin School of Economics and Law (HWR Berlin). Bepari, M.K., Rahman, S.F. and Mollik, A.T., 2014. Firms' compliance with the disclosure requirements of IFRS for goodwill impairment testing: Effect of the global financial crisis and other firm characteristics.Journal of Accounting and Organizational Change,10(1), pp.116-149. Collins, D.L., Pasewark, W.R. and Riley, M.E., 2012. Financial reporting outcomes under rules-based and principles-based accounting standards.Accounting Horizons,26(4), pp.681-705. Darrough, M.N., Guler, L. and Wang, P., 2014. Goodwill impairment losses and CEO compensation.Journal of Accounting, Auditing Finance,29(4), pp.435-463. Glaum, M., Schmidt, P., Street, D.L. and Vogel, S., 2013. Compliance with IFRS 3-and IAS 36-required disclosures across 17 European countries: company-and country-level determinants.Accounting and business research,43(3), pp.163-204. Gordon, E.A., Greiner, A., Kohlbeck, M.J., Lin, S. and Skaife, H., 2013. Challenges and opportunities in cross-country accounting research.Accounting Horizons,27(1), pp.141-154. Hamberg, M. and Beisland, L.A., 2014. Changes in the value relevance of goodwill accounting following the adoption of IFRS 3.Journal of International Accounting, Auditing and Taxation,23(2), pp.59-73. Huerta, E., Petrides, Y. and Braun, G.P., 2013. Translation of IFRS: Language as a barrier to comparability.Research in Accounting Regulation,25(1), pp.1-12. Jackling, B., Howieson, B. and Natoli, R., 2012. Some implications of IFRS adoption for accounting education.Australian Accounting Review,22(4), pp.331-340. Ji, K., 2013. Better late than never, the timing of goodwill impairment testing in Australia.Australian Accounting Review,23(4), pp.369-379. Khairi, K.F., Laili, N.H. and Tran, D.M., 2012. Disclosure quality of goodwill impairment testing: a disclosure index. Olante, M.E., 2013. Overpaid acquisitions and goodwill impairment lossesEvidence from the US.Advances in Accounting,29(2), pp.243-254. Ramanna, K. and Watts, R.L., 2012. Evidence on the use of unverifiable estimates in required goodwill impairment.Review of Accounting Studies,17(4), pp.749-780. Street, D.L., 2012. IFRS in the United States: If, when and how.Australian accounting review,22(3), pp.257-274. Weil, R.L., Schipper, K. and Francis, J., 2013.Financial accounting: an introduction to concepts, methods and uses. Cengage Learning.