Essay about Ethnocentrism - 968 Words

Webster’s dictionary defines ethnocentrism as â€Å"The tendency to evaluate other groups according to the values and standards of ones own ethnic group, especially with the conviction that ones own ethnic group is superior to the other groups.† When first reading this definition, one would naturally agree that ethnocentrism does exist in our world and society, often confusing it with patriotism. However, many do not realize that ethnocentrism is, has been, and continues to be a leading cause for violence in America. Different ethnic groups such as African Americans and Native Americans have suffered through years of violent crimes against them because of the white man’s ethnocentric views of themselves when compared with other races and†¦show more content†¦Throughout the history of our great nation, over and over again, the white man has bullied the Native Americans. They have ultimately been pushed off land that originally belonged to them and been al lotted meager portions of land to live on which the government (run by the white man) has felt that they have little use for (reservations). Looking passed the fact that the Native Americans have been stripped of their land, these feelings of white Ethnocentrism throughout America’s history has also caused great violence against the Native Americans, massacring them time and time again and diminishing their population to only a minute percentage of what it once was. For example, in the final defeat of the American Indian in 1890, known as the Massacre at Wounded Knee, nearly 300 Lakota men, women, and children - old and young - were massacred in a highly charged, violent encounter with U.S. soldiers because the soldiers incorrectly perceived a ritual ghost dance as a war dance. Native American corpses of men, women, and children laid still and lifeless in the dirt on that cold December night all due to the ethnocentric beliefs of the white man. nbsp;nbsp;nbsp;nbsp;nbsp;The Native Americans only cover chapter 1 of white supremacy and ethnocentrism as a means of breeding violence in America throughout its history. When the Native American’s did not work as slaves for the white settlers because of their lackShow MoreRelatedEthnocentrism And Cultural Relativism : Ethnocentrism950 Words   |  4 PagesEthnocentrism and Cultural relativism are two concepts similar, but different. Ethnocentrism and Cultural relativism both share a similar practice of trying to understand other beliefs and cultures, but they are both hugely different. See Ethnocentrism is having the belief that one’s country and culture is the best and is the right way to go and that you are right and everyone else is wrong. While Cultural relativism is understanding other cultures, countries, and their beliefs. I believe I am aRead MoreEssay on Ethnocentrism and Cultural Relativism667 Words   |  3 PagesPlease define and compare and contrast ETHN OCENTRISM and CULTURAL RELATIVISM. Discuss how you have experienced OR witnessed both concepts in our American Society. Ethnocentrism is viewing your own culture as more superior than any other culture, that all other groups are measured in relation to one’s own. Ethnocentrism can lead to cultural misinterpretation and it often distorts communication between human beings. + while cultural relativism is the concept that the importance of a particularRead MoreEthnocentrism : The World s Leading Super Power1067 Words   |  5 PagesWhat is ethnocentrism, the definition is evaluation of other cultures according to preconceptions originating in the standards and customs of one s own culture. Which is broken down to mean the higher valuing of one’s self culture nature and origin compared to others. This can be expressed in action and words, as Americans we exude we are number one. As the world’s leading super power we have become full of our self and almost to the point of narcissism. All over the world people flock to our shoresRead MoreHuman Behavior, Ethnocentrism, And Cultural Relativism1466 Words   |  6 Pagesobjects, institutions and factors that contribute to social change and understanding of human behavior. In studying human behavior, ethnocentrism and cultural relativism will be examined as these concepts expose the authors (McDo nnell 2016). Male domination will also be considered while examining these concepts as an important trait in the Afghan society. Ethnocentrism is an idea supported by a mixture of beliefs that one’s own culture is superior to any other culture. The ideas, foreign ways, andRead MoreEthnocentrism Prevalent in some University Campus1919 Words   |  8 PagesIn my observation of Walla Walla University I have seen ethnocentrism being a prominent part of the campuss culture. Ethnocentrism is a commonly used word in circles where ethnicity, inter-ethnic relations, and similar social issues are of concern. The definition of ethnocentrism is the belief that ones culture and way of life are superior of other groups. This causes judging among different groups and assumptions that there are inferior groups to your own. The roots of the word are ethnic andRead MoreEthnocentrism Is A Basic Attitude Expressing The Belief That One? S Own Culture Essay1731 Words   |  7 PagesETHNOCENTRISM Ethnocentrism is a basic attitude expressing the belief that one?s own ethnic group or one?s own culture is superior to other ethnic groups or cultures, and that one?s cultural standards can be applied in a universal manner. The term was first used by the American sociologist William Graham Sumner (1840?1910) to describe the view that one?s own culture can be considered central, while other cultures or religious traditions are reduced to a less prominent role. Ethnocentrism is closelyRead MoreEssay about Napoleon in Egypt772 Words   |  4 Pagesnot a European provides an alternative viewpoint to the events that happened in Egypt as opposed to the accounts that have been read and taught by Europeans. Although the article is a different perspective it does show strong cultural bias and ethnocentrism towards the French people from the eyes of the Egyptians. The article shows bias in the tone it is written, the unkindness used to mock the French and the incomplete tales of the battles that took place. The writings of Al-Jabarti show significanceRead MoreThe Theory Of Management And Management1294 Words   |  6 Pagestheir purchases. Just as the Contingency Model of leadership depends on two factors (Mitchell et al., 1970; Greer Plunkett, 2003), using a contingency approach with brand purchasing depends on two factors as well. These factors are consumer ethnocentrism, a reflection values in support of local products, and global connectedness, which notes their views and understanding of the world (Strizhakova Coulter, 2015, p. 4). Both factors are similar to the two factors of character and situation whenRead MoreThe Failure of Disney Paris2387 Words   |  10 Pagesdistribution methods were still within Disney’s control. Accommodating these, with the uncontrollable elements after careful consideration could have given them a better start leaving them more prepared for any surprises. 3. What role does ethnocentrism play in the story of EuroDisney s launch? Whenever management relies too heavily on past experience in the home market for guidance abroad, errors proving fatal to the international venture often result. According to Ricks, Fu and Arpan (1974)Read MoreEthnocentrism1047 Words   |  5 Pages(Ethnocentrism vs. Cultural Relativism) As a Sociologist, should we practice Cultural Ethnocentrism or Cultural Relativism? We must first understand the two distinct theories regarding perception of outside cultures: Ethnocentrism and Cultural Relativism. Ethnocentrism is judging another culture solely by the values and standards of ones own culture.[1] The ethnocentric individual will judge other groups relative to his or her own particular ethnic group or culture, especially with concern

Alabama Agricultural and Mechanical University - 995 Words

Alabama AM is better known as Alabama Agricultural and Mechanical University. This is a historically black university. Alabama AM is located just a few miles from where the originally was built in Normal AL. Its first president, Dr. William Hooper Council, an ex-slave, established this university. In 1875 Alabama officials used the Morrill Act of 1862 that allowed state government to establish schools for black teachers and students. Alabama AM University was one of seventeen new land-grant black institutions established under the Morrill Act. When the doors of the school swung open in 1875 the name was Huntsville Normal School and was located in downtown Huntsville, Alabama. The school consisted of only 61 students and 2 teachers. In 1878 the school developed an industrial education program, and due to the success of the program the school petitioned to change its name to State Normal and Industrial School in Huntsville. The Alabama Legislature approved their request and also rose the funding from 1,000 dollars to 4,000 dollars per year. Under the second Morrill Act in 1890, the university received government funded land for the first time. Having this land allowed students to study agriculture and mechanical studies. In 1896 the name was renamed the State Agricultural and Mechanical College for Negroes. In 1919, institution became recognized as a junior college and was renamed again as the State Agricultural and Mechanical Institute for Negros. After a whole 2Show MoreRelatedEssay on George Washington Carver1242 Words   |  5 Pageseducation led him to several communities in Missouri and Kansas Later he moved to Fort Scott, Kansas to attend High school. In 1890, to Indiana, Iowa were he enrolled at Simpson College to study piano and painting. In 1891 he got admission in Iowa State University and gained his BS in 1894 and MS in 1897 in Bacterial Botany and Agriculture. 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DML –Dried Malunggay (Moringa oleifera) Leaves CHAPTER 2 REVIEW OF RELATEDRead MoreEmergence of the Globally Integrated Business World5953 Words   |  24 Pagesinternational business affects their daily lives. Some will recognize that companies like Nissan have design facilities and manufacturing operation in the United States, but will be surprised to learn that Sodexho, a cafeteria operator for many universities, is a French company; or that many supermarket chains have been acquired by foreign operators (Stop and Shop by the Dutch Ahold, Trader Joe’s by the German Albrechts). The point to drive home is that our consumption patterns are already very dependentRead Moretexas constution11227 Words   |  45 PagesConvention met in Austin from September 6 to November 24, 1875. The vast majority of the conventioneers were Democrats. Although a fair number had participated in previous conventions, not one had participated in the 1868-1869 Convention. 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Principles of Finance Free-Samples for Students-Myassignmenthelp

Questions: 1.Examine the share price history and history of traded volumes over the past five years, Identifying the main causes of changes in the share price during this period. Based on its stock price, do you think the company has performed well over the past five years?2.Calculate the Market Capitalisation of the company as of the end of fiscal year of 2016. Do you think the stock is under-priced or over-priced?3.What is the mix of debt and equity financing? What types of debt and Equity are currently used? Does current Financing Strategy highlight any impending risks? Critically evaluate the financing policy adopted by the company.4.If you had $10,000 savings, would you invest in this Business? Why or why not? Discuss. Answers: Introduction: Slater Gordon Limited is among Australias leading national consumer law firms. The very mission of the company is to provide affordable access to high quality legal services on a consistent basis. The history of the company reflects back to a small room in which the foundation of the business was laid down by Mr. William (Bill) Slater and Hugh Gordon who initiated the service union for workplace entitlements and claims in the Australian Railway Unions Unity Hall Building on Bourke Street in Melbourne in 1935. Though Hugh Gordon lost his life in the Second World War during an aircraft encounter by German night fighters, his name is still included in the business due to his gratuitous contributions. Bill Slater laid the foundation by introducing an act in the Parliament as an Attorney General and welcomed the footprints of Workmen Compensation Act. However, he died in 1960 leaving behind the huge responsibility of managing the firm to its partners. His death was a huge grief for the n ation but the firm kept on working in the direction of legal welfare to people (Media.slatergordon.com.au 2017). The beginning of legal services in United Kingdom is much earlier. It dates back 25 years to the 1920s where Mr. Russell Jones and Walker laid the foundation (as the company was known at that time). This firm was also determined to provide justice to workers and other people with the help of prevalent laws and landmarked a successful career through winning numerous cases (Media.slatergordon.com.au 2017). Today Slater Gordon Limited has marked its name as a leading consumer law firm in Australia as well as United Kingdom. It employs around 1210 people covering 54 locations throughout Australia and around 3130 people covering 25 locations in the United Kingdom. Its head office is in London. Further, its activities are not confined to workmen laws and entitlements but have grown to specialist legal services in wide range of areas. The areas cover liability and compensation law, general services like family and relationship laws, wills, estate development and planning etc. with over 70 year history in dealing with cases for socially and economically disabled. The major cases involve commercial and professional negligence cases as well as estate negligence litigations. It is also involved in a number of class actions and recently won the recovery case of survivors of drug thalidomide which caused several children severely handicapped leading to permanent disablement in the 1960s (Media.s latergordon.com.au 2017). 1. Examining the share price history and history of traded volumes over the past five years, identifying the main causes of changes in the share price: Slater Gordon was the first among the various law firms, which got them listed in the stock exchanges. The firm has a long list of legendary victories against many blue chip companies. However, the successful lawyers though accomplished in establishing in a legal giant but could not execute it well in the hedge funds. The main concern among the investors is whether the firm is able to execute what it plans for and the available knowledge and equipment is adequate for bearing the load of possible heavy risk if the market does not turns out positive (Media.slatergordon.com.au 2017). The share price history of Slater Gordon is much like a roller coaster. Since, the firm was first to get itself listed in the stock exchange, it got a good response initially with a positive moving market value. Then the ever-expanding plans of the firm posed some danger to the life of its shares in the market especially when compared to those of competitors with much equipment to back up their market position (Media.slatergordon.com.au 2017). Figure 1: Depicting the share price movement of Slater and Gordon Limited (Source: Reuters Australia 2017) The overall share price movement of Slater and Gordon Limited for 5 years could be identified from the above figure. In addition, rapid increment in share price of the company is already seen during the 2012 fiscal year. However, after the stock touched the price level of 8 to stated to decline with a price level of 0.09. This rapid decline in shares mainly occurred after the announcement of the fiscal years annual report. The overall announcement of loss incurred by the company in 2016 fiscal year mainly declined its share price. The decline in share price mainly resulted from the strong selling, which was conducted by banks to recover their debts from the company. This discounted prices offered by the bank on share price of Slater and Gordon Limited mainly forced its share price to free fall. Palmer and Palmer (2017) stated that overall share price movement mainly portrays the The following events incurred, which led to the decline in its overall share price. Slater Gordons books were found erroneous leading to a sharp decline in the share price of the company. The suspicions lead to a routine review of the books of the company by ASIC. The Chief Financial Officer of the company Mr. Wayne Brown departed after serving the company for 12 years. His departure news came as a negative slung for the company. In the end of year 2015, there was an announcement of slower earnings of the company for the beginning of year 2016. This announcement again lead to fall in share prices however, the management later on confirmed of earning well in future. Due to constant fall in the share price of the company, it was removed from ASX 100. A leading law firm Maurice Blackburn launched a class action against the company. Purchase of worth $1.3 billion professional services wing of UK firm Quindell. The purchased wing was investigated to be involved in fraudulent activities and had been directed to restate its accounts earlier (Ju, Leland and Senbet 2014). Over the year 2016, it has twice altered its accounts relating to 2014 and 2015, the earnings guidance has dropped and some accounting standards are changed altogether. These changes have played a very important role in the $2bn plunge in its share value. Figure 2: Depicting the price volume movement of Slater and Gordon Limited (Source: Reuters Australia 2017) Moreover, the overall surge in volume could only be witnessed in 2016, where maximum of the shareholders stated to sell its shares in the market. In addition, after the announcement of the fund conducted by the company the share price volumes has rapidly surged, which indicates the low share price quoted by the company over the period of time. Watson (2015) stated that share price volume mainly indicates the overall price action trend of a company. The company reported a loss of nearly $1 billion for the first half of the financial year 2016. The companys shares are worth less than 30c, creating a loss for the investors. Once, the companys shares moved to $8 each which are now generating losses of around $2 billion for the investors. Further, the rivals of the company are generating more class actions inching themselves more closer to the business level of the company. The current manager of the company, Mr. Andrew Grech has also been talked out for resignation. Before the acquisitio n of Quindells professional services division, which is now known as Slater Gordon Solutions, the company had $563m of work under way on its books (Reuters Australia 2017). However, the vendor business had $420m, calculating a total work value of $983m. However, by the end of June, that number of impending cases under the business of the company and its value dropped to $826m. Nevertheless the latest accounts depicts that the company now thinks its real value was just $677m, showing a discrepancy of $149m. Almost 80 per cent of the difference of $149m related to Slater Gordons existing business, which had nothing to do with Quindell. In other words, the work valued at $118m had totally disappeared which was expected to turn into cash one day. According to the law firms, the reason for this difference is the adoption of a more conservative approach for preparation of its accounts. Late last year, it long time auditor, the company for Ernst Young ditched Pitcher Partners and the for mer were bought under investigation by the Australian Securities Investments Commission. Thus, a successful story of accomplished lawyers is slowly turning out to be a world of poorly executed deals during the move of making themselves worlds largest plaintiff legal firm (Media.slatergordon.com.au 2017). 2. Calculating the market capitalisation of the company as of 2016 and stating whether it is under-priced or over-priced: Growth Year Dividend Growth 2013 0.07 2014 0.08 14.29% 2015 0.09m 12.50% Current growth rate 12.50% Current Dividend 0.09 Risk free rate 2.68% SP 200 SGH Average 0.03556184% -0.38427611% Covar 0.000101298 std (SP200) 0.0070 Beta 2.085870272 cost of equity 0.035557275 DI 0.10125 Theoretical Stock Price 3.54 Actual Stock Price 0.09 Table 1: Depicting valuation of Slater and Gordon Limited (Source: As created by the author) From the overall evaluation of table, theoretical share price of Slater Gordons has mainly derived, which could in turn help in identifying the over value or undervalue condition of the company. The current theoretical share price of the company is mainly account for 3.54, while the current share price is mainly derived at 0.09, which indicates undervalued condition of the company. This only indicates that share price of the company is relatively higher than the actual share price of the company. The market capitalisation of the company in 2015 was mainly at 79,285,500 (Media.slatergordon.com.au 2017). The market capitalisation of the company has mainly resulted in the declining share price obtained by the company at the end of 2016. The evaluation of table 1 mainly helps in identifying relative growth in Share price, which could be obtained by Slater and Gordon Limited. However, the current decline in the overall profits of the company has many escalated and lunch with the overall share price. This decline in overall share price is due to the unstable financial condition of Slater and Gordon Limited during 2016. The litigation against the company is mainly provided the base for the decline in share price, which instigated new lows to form for the company. Watson (2015) mentioned that use of dividend discount model Emilia loves investors to identify or gauge into the current share price valuation of the company and determined whether it is overvalued undervalued. On the contrary, Palmer and Palmer (2017) argued that Use of only dividend discount model could not allow investors to identify risk involved in investment, which might hamper investment capital of the investors. 3. Depicting mix of debt and equity financing, the types of debt and equity currently being used, and does current financing strategy highlights any impending risks: The company in 2013 has ma the net debt of 683.3, while its net assets are mainly depicted at 305.1. In addition, the overall equity that is been used by the company, There contrition recorded by the company is mainly at 1,116,048,000 equity share value. In addition, the company mainly used equity and normal share issues, as the only instrument in collecting capital from its equity financing. Figure 3: Depicting the price volume movement of Slater and Gordon Limited (Source: Media.slatergordon.com.au 2017) The above figure mainly depicts the relevant loans and debts that is been accumulated by the company over the period of 2016 fiscal year. The accumulation of bad debts is mainly conducted by the bank to ensure high-end availability of funds to support its activities. The company uses both short term and long-term borrowings to support its activities and reduce shortage of funds. On the other hand, Kemp et al. (2016) criticises that high-end accumulation of loans might hamper the overall financial condition of the company. Slater and Gordon Limited has mainly used Debt to support its overall operations the company issued shares as a Collateral for the Debt accumulation Process. This increased issuance of shares to the debt holder may be increased. The debt is mainly Accumulated by banks which during 2016 resulted in a massive sell in is shares. The main problem that was conducted by Slater and Gordon Limited was the high accumulation of debt without adequate research. The company coul d have reduced debt accumulation and conducted ethical operations, which might have decreased the overall insolvency condition. Ju, Leland and Senbet (2014) mentioned that use of adequate Dept accumulation mainly allows companies to improve their solvency condition where maximum of the activities are supported by equity funding. On the other hand, Kemp et al. (2016) criticises that some of the companies use high accumulation for reducing any kind of tax that need to be paid to the government. 4.Depicting whether $10,000 investment in this business is viable or not: The investment in Slater Gordons is not advisable, as the companys overall stock has declined over the level of 9 cents and might not produce any kind of return from investment. The overall share price of the company mainly decreased due loss incurred by the company in 2016 and there is no dividend paid in 2016 fiscal year due to the high loss imposed by the company in fiscal year. After seeing the overall the accumulation and volatile financial condition of Slater Gordons It is mainly advisable not to invest $10,000 into the business. The company is not able to provide any dividend for the year, 2016 and 17, which increases the chance of dividend decline. Furthermore, the use of adequate Dept and equity capital structure of the company in improving its current financial condition. The company obtains the burden of higher interest will increases the overall cost and reduces the profit in 2016. Watson (2015) mentioned that use of adequate debt measures could eventually help the company in improving its operational capability and reduce cash outflow. Conclusion: The overall assignment mainly focuses in identifying the investment opportunity, which could help investors in increasing the return from investment. Slater Gordons Is main evaluated in the assignment to identify relevant financial condition of the company. for the more the use of dividend discount model is conducted to identify the current overvalue undervalue condition of the company. From the ore evaluation it could be identified that Slater Gordons is currently under financial crunch where it sales have dropped rapidly due to a news regarding its ethics. Moreover, the current financial condition of the company is relatively not adequate from an investment perspective. Thus, from the overall evaluation it could be identified that financial position of the company is not adequate investment risk is relatively higher and my temper investment capital. Reference: Reuters Australia. (2017).${Instrument_CompanyName} stock quote, ${Instrument_CompanyName} company overview | Reuters Australia. [online] Available at: https://au.reuters.com/finance/stocks/overview?symbol=SGH.AX [Accessed 9 May 2017]. Palmer, D. and Palmer, D. (2017).Banks dump Slater debt. [online] Theaustralian.com.au. Available at: https://www.theaustralian.com.au/business/companies/banks-dump-slater-gordon-new-lenders-eye-debttoequity-scheme/news-story/671d3a74bbc9babb91944ba56c6d82de [Accessed 9 May 2017]. Media.slatergordon.com.au. (2017). [online] Available at: https://media.slatergordon.com.au/slater-and-gordon-annual-report-2015.pdf [Accessed 9 May 2017]. Kemp, S., Chan, M., Chen, Z., Fetchenhauer, D., Helton, W.S. and Steiniger, T., 2016. Psychological factors in investment choice between shares, bank deposits, and residential real estate in New Zealand, Hong Kong, and Germany. Watson, L., 2015. What's the deal with preference shares?: investment insights.Personal Finance Newsletter,2015(414), pp.8-9. Ju, N., Leland, H. and Senbet, L.W., 2014. Options, option repricing in managerial compensation: Their effects on corporate investment risk.Journal of Corporate Finance,29, pp.628-643.

Private Equity Firms

What is the private equity firm? A Private equity firm can be defined as a company that invest huge amounts of capital known as the private equity fund in the stakes of a private firms. In other words, private equity firms invest in classified equities of working companies through application of various investment strategies. From the definition, private equity means capital that is not traded in the stock exchange markets (Bruining et al. 593).Advertising We will write a custom research paper sample on Private Equity Firms specifically for you for only $16.05 $11/page Learn More In most cases, private equity firms raise private equity capital from institutional investors and devote the capital in public firms that face delisting from the stock exchange through buyouts. Private equity capital is normally used in the expansion of working capital of the acquired firm, make acquisitions, finance research and development as well as new technologies. In addit ion, the private equity capital can be invested in strengthening the balance sheet of an acquired company. As indicated, private equity firms are often institutional and recognized investors committed to long-term returns on investments. Since private equity firms invest in companies that are almost collapsing, they often require longer periods for the acquired firms to turn around in order to start earning back investments. In most cases, private equity firms normally apply venture capital, leveraged buyouts as well as capital growth as the investment tactics (Bruining et al. 595). Leveraged buyouts are the situations where private equity firms invest in a nearly collapsing public firm risking delisting from the stock exchange market. Leveraged buyouts involve purchasing huge debts of the firm with the hope of reselling once financial conditions have improved. The injected funds are used to improve financial statements as well as prospects of the firm. Essentially, Private equity f irms are perceived as the sponsoring companies since they provide funds for investments. In other words, private equity firms support other companies through the provision of financial assistances. In most cases, private equity firms normally raise funds, which they invest in private equities depending on the applied investment strategy. How and when did private equity firms first started? Prehistory of private equity firms Investments in private companies can be traced back to the beginning of industrial revolution when investors were involved in private acquisitions and mergers.Merchant bankers in the financial industry were often involved in making small investments on privately held companies. In addition, financial institutions were acquiring other firms particularly in the mining industry as well as other profitable firms in public sectors (Chemmanur et al. 4039).Advertising Looking for research paper on business economics? Let's see if we can help you! Get your first pa per with 15% OFF Learn More Such acquisitions were equated to the current industrial buyouts where private equity firms buy large public corporations that are nearly collapsing. In fact, the buyouts and acquisitions continued throughout the first half of the 20th Century before the development of the current venture capital. In addition, the first half of the 20th Century was characterized by legal limitations on banks and other financial institutions that constrained the transactions involving private acquisitions (Chemmanur et al. 4039). Moreover, such regulations restricted the flow of capital from the merchant banks to the private firms. In fact, the private equity firms started to come into existence after the denunciations of financial regulations that put limitations on the flow of capital. Besides, the lifting of the regulations also led to the emergence of venture capital. Venture capital provided funds as well as other factors that contributed to the growth of pri vate equity firms particularly after the Second World War. The emergence of private equity firms Private equity firms emerged in 1940s when the development and growth of venture capital and leveraged buyouts were at the peak. In fact, the venture capital and leveraged buyouts were considered part of the private equity firms. Davila, Foster and Gupta argue that the growth and development of venture capital and leveraged buyouts also led to the development of private equity firms 691. The venture capital provided funds that were greatly required at the time for the development of private equity firms. In addition, leveraged buyouts were part of the capital markets where institutional investors used to participate in the establishments of private equity firms. Even though venture capital and leveraged buyouts grew and developed in analogous and unrelated paths, they offered suitable market for the establishment of the private equity firms (Bruining et al. 595). Private equity industry developed particularly in 1946. The established and well-structured venture capital market during the time led to the development of private equity firms. The venture capital provided the much needed funds as well as technical expertise in the management of private equity firms (Bruining et al. 595). The establishment of venture capital brought to an end the shortage of funds that was required for the development of private equity firms.Advertising We will write a custom research paper sample on Private Equity Firms specifically for you for only $16.05 $11/page Learn More As indicated, the widespread of equity firms particularly after the Second World War was due to organized private equity market. However, during the period, the equity market was still underdeveloped resulting into the shortage of sources of long-term financing for private equity firms. Due to this inadequacy, the private sector took the opportunity to develop new markets for private e quity firms. The markets offered cheap and long-term sources of capital for existing and newly established firms (Bruining et al. 595). In addition, the new sources of funds established novel grounds for the startup of new equity firms. Essentially, developments of the equity markets that provided long-term and cheap funds resulted in mushrooming of new equity firms. In addition, the private sector was responding to an economy that had increased funds particularly from the released wealthy military inductees. In fact, there was need for large firms to absorb such capital. In order to come up with such firms, a private sector that would attract large institutions was required. During this time, technical and managerial skills to manage the funds were also inadequate (Chemmanur et al. 4039). The American Research and Development Corporation (ARDC) was established in 1946 to research on equity firms and their markets as well as to provide adequate advice on ways through which such firm s could be developed. In addition, the ARDC was also tasked with the responsibility of raising funds for investments in equities. Moreover, ARDC was to provide training on the private equity management skills needed for the success of private equity firms. ARDC was majorly formed to boost private equity investments and became the first institution to raise capital and invest in equity. In addition, ARDC took advantage of floating funds from wealthy individuals. The corporation tapped the floating funds and invested in other areas including mergers and acquisitions that were equally profitable. Besides, ARDC invested in venture capital and was credited as the architecture of the current ventures capital (Chemmanur et al. 4039). The growth and development of private equity firms from 1946-1980 The growth and development of private equity firms were at a slow progress in the first 36 years since the establishment of private equity firms. In fact, small volumes of private investments, u ndeveloped private firms’ management as well as unpopularity of private equity firms marked the period (Chemmanur et al. 4039). The smaller volumes in the private equity investments were due to lack of awareness among the institutional investors.Advertising Looking for research paper on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More In fact, institutional investors in the early 1960s and 70s were not aware of the presence of private equity firms. Essentially, most of the institutional investors lacked adequate information concerning the operations of private equity firms. In addition, scarce skills and capital required for the success of private equity firms lacked (Chemmanur et al. 4039). What are the main functions of private equity firms in the economy? Attracting investment funds Like most large firms in the economy, private equity firms have greater roles to play in the economy. Private equity activities normally began by successfully attracting investable funds. In other words, the major function of private equity firm is to attract funds that can easily be invested in the economy (Achraya et al. 368). Offering alternative investment opportunities to the investors Private equity firms offer alternative investment prospects particularly where some sectors of the economy perform poorly. Moreover, while attr acting investable funds, the private equity firms provide ways through which investors can allocate part of their investments in comparatively complicated, long-term investments. Probably, sectors where investors can apportion their finances for enduring repayment range from pension funds to sovereign wealth funds. In these areas, individual investors are assured of their long-term benefits through appropriate management practices that private equity firms offer. Investments in small, medium and large enterprises Private equity firms offer capital to firms of various sizes within the economy. In addition, private equity firms offer funds to all companies in different stages of their life cycle. In fact, firms that are in infant stages can easily get soft loans in private equity firms. Additionally, Small and Medium Enterprises (SMEs) can also seek expansion capital from equity markets. Most importantly private equity firms normally fund firms that are just about to be liquidated. Be sides funding, such firms are also provided with managerial skills as well as other incentives that would enable their continuity. Moreover, family businesses that need succession arrangement also seek assistance from private equity firms (George et al 215). Private equity firms provide managerial functions One of the major functions of private equity firms is the provision of managerial expertise. Industries in which private equity firms invest have increased benefits from the function. In fact, firms that are managed by private equity companies normally benefit from improved information arrangement as well as enhanced business control capacities. In addition, private equity firms have the capability of introducing performance-based incentives aimed at enhancing performance of the invested companies. Further, private equity firms management tends to have increased control of novel management approaches and provides extensive value added post-investment support. Increased capital in vestments The attraction of investments funds into the economy leads to increased investable funds into the economy. The private equity firms have the capability of attracting investable funds, which increase capital that can be used by other businesses from various sectors of the economy. Statistics indicate that private equity firms have attracted over $250 billion for investment capital in the last financial year (George et al 215). In market-based economy such as US, the private sector is perceived to be the major driver of economic growth. As such, private equity firms play critical roles in attracting and increasing capital for investment in the private sector. Therefore, private equity firms fuel economic intensification through the provision of investment funds. In addition, private equity firms facilitate increased private sector investments thereby inspiring economic growth New business creation and sustainable investments The funds invested by the private equity firms res ult in the creation of new businesses, which in turn lead to the generation of new jobs. In addition, private equity firms invest in businesses that are almost being bankrupt thereby ensuring their long-term sustainability. Such firms are critical for the growth of the economy (Cressy et al. 661). Besides, sustaining the firms also mean maintaining the existing jobs as well as increasing the prospect of creating novel employment. Essentially, private equity firms promote the creation of new business through the provision of capital and management advice. In addition, through maintaining the existing firms, private equity firms contribute to the preservation of employment opportunities. Besides sustenance and creation of businesses as well as jobs, private equity firms are also a source of positive externalities. Positive externalities are benefits enjoyed by the third parties. In fact, increasing the knowledge base particularly in management and entrepreneurship increases multiple b enefits that can only be described as positive externalities. Improved management methods Private equity firms have the capability of improving the managerial skills of various companies in which they have invested. In fact, the private equity management often has constructive influences on the performance procedures in terms of profitability and growth on firms in which they have invested (Chemmanur et al. 4040). In addition, private equity firms have the capability of ensuring that firms that are collapsing are provided with financial and management impetus in order to enhance their productivity. Through such measures, private equity firms ensure the survivability of firms across various sectors in the economy. Besides, firms having succession planning challenges often seek assistance from private equity firms. Private equity firms provide appropriate advice on succession arrangement, which ensures long-term sustainability and growth. Greater innovation Private equity firms foster innovation through various activity outcomes in the economy. In fact, through the provision of improved managerial skills, firms become innovative and entrepreneurial. One of the ways through which innovation can be enhanced is through investments in research and development. Putting funds on development of new products enhances the innovative culture within the firm. Private equity firms not only fund research and development on new products and services but also other operation processes undertaken within the firm. Moreover, private equity firms invest in start-up firms that tend to be innovative. Increased productivity Private equity firms improve the productivity of businesses through various activities. In fact, there is a direct relationship between increased productivity and economic growth. Increased productivity results from efficient production as well as use of resources (Bruining et al. 601). Essentially, private equity firms promote measures that aid in the efficient p roduction and use of resources. The private equity firms provide improved management as well as advice on better resources utilization. One of the ways in which firms can improve their efficiency is through appropriate training on management. Acquiring better management skills particularly in efficient use of resources is one of the ways through which organizations improve their productivity, which translate into general economic growth. In addition, capital accumulation is encouraged through investments made on the fixed assets such as factories, housing units and production equipments. Private equity firms have large pools of capital that can be invested in such fixed assets. Such investments in fixed capital increase labor productivity. The provision of capital for investments in physical capital contributes hugely to the economic growth. Further, by supporting the formation of new businesses, increased employment opportunities are created. Substantial growth in the economy can o nly be realized when firms are capable of sustaining the creation of new employment opportunities. Enhanced competitiveness Firms with enhanced productivity have increased chances of being competitive at all levels in the market. The reason is that profits earned can be re-invested in other areas that provide the firm with increased competitive advantage. Besides, increased productivity contributes to economic competitiveness when it results in the amplification of firms’ competitiveness both at the local and global markets. Increased economic competitiveness ensures enlarged economic expansion. Essentially, private equity firms contribute to increased economic competitiveness through enhanced productivity. Besides, increased economic growth is directly associated with trade exports. Private equity firms encourage economic growth in a number of ways. First, private equity firms support export-oriented companies. Additionally, private equity firms augment the capability of exp ort-oriented companies to develop into worldwide markets. How do private equity firms operate and make profit? Private equity firms invest in classified equities of working firms through the application of various investment strategies. Actually, investment approaches of private equity firms encompass venture capital, leveraged buyouts and capital growth. Private equity firms are perceived as sponsoring companies since they provide funds for investments. In other words, private equity firms support other companies through the provision of financial assistances. In most cases, private equity firms normally raise funds, which they invest in private equities depending on the applied investment strategy. Essentially, private equity firms normally raise investment funds commonly referred to as the private equity capital from various financial institutions particularly pension funds and insurance companies to finance and sponsor investments. A fee is charged on every investment made. The fees charged together with prearranged share of profit are the earnings of private equity firms on the investments made. In other words, private equity firms get carried interests on every private equity fund put in investments. In most cases, private equity firms get hold of considerable minority position in some of the firms they have invested. Once the sizeable marginal position has been accomplished, private equity firms optimize the expected outcome of the invested capital. Initial Public Offerings (IPOs) are significant methods through which investment returns are conveyed back to the owner. Besides, private equity firms get returns on their investments when the firms they manage are sold through mergers and acquisitions. Recapitalizations are also applied in order to realize the gains though at minimal occasions. In the initial public offerings, shares of the firm are offered to be bought by the public through the capital markets particularly at various stock exchanges. The p ublic offering provides fractional and instantaneous realization of returns to the private equity firm, which is normally the sponsor. In addition, IPOs offer the private equity firms with markets in which they will later sell its shares. Through mergers and acquisitions, the firms being managed are sold out or merged with performing firms. Private equity firms realize the returns from sales proceeds. In the case of a merger, private equity firms have shares of profits made by the new firms that result from the mergers. One major characteristic of private equity firms is that they make long-term investments in less liquid assets and have direct influence on the operations of firms. In addition, private equity firms take charge of the firms’ operations in order to supervise any potential risks and accomplish the required development through long-term investments. What are some of the advantages of private equity firms in terms of disclosure and accounting regulations over othe r publicly-traded firms? Private equity firms operate like private companies. Therefore, private equity firms gain from the accruing benefits because of less restricted financial reporting and legal requirement. In other words, private equity firms are not exposed to stringent financial reporting and legal regulations. The less reporting requirement procedures have increased benefit to private equity firms. The benefits range from increased control of the decisions made to elimination of double taxation on their shareholders. Greater control of the firm’s decisions With reduced reporting requirements and substantially decreased pressures from shareholders and markets, private equity firms have increased flexibility in terms of operations. As such, private equity firms focus attention towards achieving long-term growth instead of quarterly earnings that are part of the financial reporting requirements in other publicly traded firms. In addition, due to reduced shareholders exp ectations and approvals, private equity firms have the capability of making decisions and taking action without the approval of the shareholders. Increased benefits from Securities and Exchange Commission (SEC) exemptions The private equity firms are exempted from some of the Securities and Exchange Commission (SEC) filling requirements as well as other post-offering duties. In fact, private equity firms are exempted from some of the federal financial security regulations and obligations such as reporting on the shareholders’ discussions, investors’ conferences as well as research analysts’ discussions. Such regulations have been found to be costly, consuming much of the firms’ time and have negative effects on productivity. In fact, most public firms argue that the effects of SEC regulations on the productivity of the firms are unpredictable. The stringent disclosure requirements of SEC such as filling annual and quarterly reports are generally additiona l accounting and legal expenses. Therefore, exemptions from SEC regulations have drastically reduced accounting and legal costs for the private equity firms. Private equity firms reduces the cost of going public Private equity firms normally reduce various regulatory costs associated with going public. In fact, private firms going public usually go through a range of processes including restructuring as well as implementation of new accounting regulations and procedures. The restructuring process is designed to avoid possible issues that may come about due to SEC filing requirements. The restructuring process normally involves reforming the structure of the organization and capital, bookkeeping procedures and practices, material convention, equity participation policies as well as the employment conformities. In addition, detailed disclosure documents must also be prepared for the new investors. All the requirements are costly in terms of finance and time. Private equity firms spons oring public offerings are normally exempted from the detailed SEC requirements thereby reducing the costs of going public. Reduced chances of disclosing sensitive information Private equity firms are not required to disclose details of their operations. As such, the chances of revealing sensitive information that can be used by the competitors are reduced. In fact, non-disclosure of the operations and financial outlook of private equity firms are added competitive advantage over other publicly traded firms. Competitors can use the information to point on the weaknesses, which can be used to reduce the firms’ reputations as well as erode the clients and shareholders confidence particularly during the financial turmoil. Free from shareholders activism In most cases, regulations require that the financial institutions as well as hedge funds buy over 50% stake in any public firm. Buying over 50% stake mean that the financial institutions can gain control over the operations of t he business. As such, the majority shareholder can influence the sales as well as any considerable restructuring. In fact, public firms that have been taken over by these financial institutions and hedge funds risk losing their entire stake. Since the requirement does not apply to private equity firm, they normally gain minority stake on firms they have invested. In fact, the firms do not risk losing their stakes to the private equity firms. However, private equity firms gain executive control in order to manage potential risks and realize long-term growth and development of the firm. Is private equity firm the same as the private equity fund? Private equity firms and private equity funds are normally being confused to mean the same thing. In fact, private equity firm and private equity fund have been used interchangeably in most of the scholarly articles. However, the two terms are different. Essentially, private equity firms are companies that make long-term investments on both pr ivate and public corporations through the application of various strategies (Cressy et al. 649). Researches indicate that private equity firms commonly apply investment approaches that range from venture capital to capital accumulation. On the other hand, private equity funds are finances that private equity firms invest on other companies. Besides, private equity funds are a pool of capital that private equity firms collect from institutional and retail investors in order to put in long-term investments through the application of various investments approaches. The private equity funds earn profits or interests for the private equity firms. In other words, private equity firms earn a carried interest on every private equity fund that is put in investments (Cressy et al. 649). What are some of the well-known private equity firms and where are they located Consistent with most current rankings of private equity firms, the most popular and largest equity firms range from the Carlyle g roup to Bain Capital. The leading firms often make large purchases in form of buyouts. In other words, well known private equity firms invest directly on the companies instead of trading in private equity asset category. According to the current categorization, the well-known private equity firms include the Carlyle group, which is situated in Washington DC, Kohlberg Kravis Roberts based in New York as well as Goldman Sachs Principal Investments Group that is also based in New York. Also in the top position in terms of trading volumes include Blackstone Group headquartered in New York, TPJ Capital, which is based on both Texas and California and Bain Capital based in Boston, Massachusetts. Works Cited Achraya, Viral, Olivier Gottschalg, Moritz Hahn and Conor Kehoe. â€Å"Corporate Governance and Value Creation: Evidence from Private Equity.† Review of Financial Studies, 26.2 (2013), 368–402. Print. Bruining, Hans, Ernst Verwaal and Mike Wright. â€Å"Private equity an d entrepreneurial management in management buy-outs.† Small Business Economics, 40.3 (2013), 591–605. Print. Chemmanur, Thomas, Karthik Krishnan and Debarshi Nandy. â€Å"How Does Venture Capital Financing Improve Efficiency in Private Firms? A Look Beneath the Surface.† Review of Financial Studies, 24.12 (2011), 4037–4090. Print. Cressy, Robert, Federico Munari and Alessandro Malipiero. â€Å"Playing to their strengths? Evidence that specialization in the private equity industry confers competitive advantage.† Journal of Corporate Finance, 13.4 (2007), 647–669. Print. Davila, Antonio, George Foster and Mahendra Gupta. â€Å"Venture capital financing and the growth of startup firms.† Journal of Business Venturing, 18.6 (2003), 689–708. Print. George, Gerard, Jonathan Wiklund and Shaker Zahra. â€Å"Ownership and the Internationalization of Small Firms.† Journal of Management, 31.2 (2005), 210–233. Print. This research paper on Private Equity Firms was written and submitted by user Brotherhood of Evil Mutants to help you with your own studies. 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