Decision- making case study Essay Example | Topics and Well Written Essays - 1250 words

Decision- making case study - Essay Example The Informed Decisions Toolbox (IDT) was developed to assist managers in efficient use of six key steps in evidence-informed decision making. These steps include: framing the management question, finding sources of information, assessing the accuracy of information, assessing the applicability of information, determining the actionability of the evidence and determining whether the information is adequate. The IDT allows managers to take control of the decision making process to enhance the performance of their organizations (Rundall et al., 2007). The issue arising due to the budget cut at Medicaid requires decision making based on careful consideration. Using information from â€Å"Informed Decisions Toolbox: Tools for Knowledge Transfer and Performance Improvement† we can determine which tools would be the most appropriate to use for decision making at Medicaid. The decision making process for Medicaid would begin with framing the question. Medicaid requires selection of the most optimum mix of medical services within the prescribed budget. For this we need to understand which services yield most benefit to the stakeholders including employees, regulatory agencies, patients and payers affected by our decision, and which services are most critical for our operations and which ones can be disposed of without having a tremendous impact on the organization and its stakeholders. This step would set the foundation based on which we can proceed towards seeking the best possible solution for the problem and yield maximum benefits for all concerned. This step would provide a clear definition of the issue and also highlight what information needs to be collected. The second step would require us to find appropriate sources of information. For the situation under discussion it would be beneficial to extract useful information from sources both external and internal. This stage would

Optical isomerism in Thalidomide Essay Example | Topics and Well Written Essays - 750 words

Optical isomerism in Thalidomide - Essay Example The tragedy which occurred due to thalidomide use led to very stringent testing requirement for pesticides and drugs before licensing. Initially, thalidomide was prescribed as effective painkiller and tranquilizer for insomnia, colds, coughs, and headaches. It was a very effective antiemetic inhibiting morning sickness, and this resulted into many pregnant women using thalidomide in order relieve their pregnancy symptoms. The relationship between the drug and defects in birth were suspected by Australian obstetrician, McBride William, and the German pediatrician, Lenz Widukind. This was later proven in 1961 by Lenz. Approximately 2500 thalidomide babies were born in Germany. The United States Congress constituted laws demanding safety tests during pregnancy before approving any drug. Other nations have passed similar laws too. This has seen thalidomide not sold or prescribed in several countries for decades1. The severe thalidomide impacts led to strict tests being carried out. The d rug was tested as a one single agent for treating multiple myeloma because of its ant angiogenesis activity during the research trials. Many studies have illustrated that thalidomide in combination with dexamethasone increases the rate of survival of the patients of multiple myeloma2. However, commercially produced drug differed from the one used during the research trials, and this resulted into other thalidomide effects. The commercially produced drug differed from that used in research trials in that during commercial productions, thalidomide was produced in combination with dexamethasone and melphalan, which is today the regimen most common for the patients who are newly diagnosed with multiple myeloma. This has seen the development of other side effects such as fatigue, polyneuropathy, venous thromboembolism (VTE), skin rush, or blood clot, which may result into myocardial infarction or stroke. Several scientists have made reviews on VTE relationship with thalidomide in multipl e myeloma diagnosed patients, and the results show that thalidomide administered without prophylaxis leads to a high rate of VTE (26%). Owing to this high VTE rates with thalidomide combined with doxorubicin or dexamethasone, which is commercially produces, a black box warning was given in 2006 in the United States to the thalidomide package showing that multiple myeloma patients receiving thalidomide-dexamethasone bay concurrently benefit from thromboembolism prophylaxis or aspirin. There has been production of other thalidomide derivatives such as lenalidomide and bortezomib3. The presence of optical isomers severely affects fetal development in pregnant women. Tests from the laboratory after the thalidomide disaster indicated that in some animals the 'R' isomer was an effective sedative, but the 'S' enantiomer was tetragenic. The presence of the optical isomers may also lead to phocomelia which is characterized by shortened limbs, or even complete absence. In addition, fetus may develop hypo plastic or external ear abnormalities, facial palsy, malfunctions of genitourinary and gastrointestinal tract, or even complete absent bones. Approximately 40% of such fetuses die after birth4. Conclusion To sum up, there is no acute toxicity in thalidomide and a fatal overdose may be impossible virtually. As a component of thalidomide, Citalopram has severe effects with the dosage of thalidomide. This is because Citalopram and peripheral

The Wizord Of Oz Symbolizing The Gilded Age :: essays research papers

The story ( The Wonder World of OZ ) written by Frank Baum is filled with symbolism. Symbolism a style of writing using symbols and indirect suggestion to express ideas, emotions, people etc. The story gives a lot of symbols relating to the gilded age in American history which took place from 1880– 1900. The main symbols are: Dorothy, the Land of Oz, lion, Emerald City, flying monkeys. The first person the story talks about in the story is Dorothy. She’s a girl that comes form Kansas and was carried by a tornado. In the story when the reader first meet Dorothy he finds out that she is very curios, and straight forward. Dorothy in the story represents the average farmers in Kansas. On the other hand the tornado represents the change that has come up on farmers â€Å" The Industrial Age.† Therefore the story creates a comparison between Dorothy and her new challenge getting back home and the farmer’s industrialization problem and fall of crop prices. The Land of Oz was a whole new area, which acted like a whole new country. I had it’s own system. Dorothy was scared of it she didn’t know the laws and how the people acted. To me I think The Land of Oz symbolizes the Western US. That is because the Western US’s lacking of power and it has no voice, they only follow the east. The Land of Oz is closely related to the Western US due to the fact that they are only under the wizard’s rule and that the people have no voice. The munchkins organize themselves in order for them to get rid of the witch. And so did the westerners they created Alliances so they can get rid of problems much faster and much easier. The loin in the story has no courage and is seeking courage form the wizard in order for him to be the king of the jungle. He tries to scare people or even hurt them but he cant. The lion creates a direct comparison with William J. Bryant. This is because when William Bryant tried to solve the problem that was going on in the US Treasury by improving the treasury with free gold. Both the lion succeeds in protecting his forest and so does Bryant by receiving a higher rank in office, and becoming more popular. Another straight comparison is Emerald City.

Ethics in Practice Case: Is There a Market for a Sustainable Hamburger? Essay

Coperate Citizenship: Social Responsibility, Responsiveness, and Performance â€Å"Ethics in Practice Case† Is There a Market for a Sustainable Hamburger? 1)Is the world ready for a socially responsible hamburger? Yes, I believe the world or at least the United States is ready for a socially responsible hamburger chain such as â€Å"Bugerville†. Any company that can be socially responsible but still produce a good product should be an example for other business not doing the same. How much would I be willing to pay assuming the burgers really taste good? I guess the amount I would be willing to pay would be somewhere market average or above just because they are socially responsible by buying local meat with no additives and powering their business with local treadmill power versus McDonald’s who has not taken the extra step to improve on their social responsibility. 2)What tensions among its economic, legal, ethical, and philanthropic responsibilities do you think are most pressing to â€Å"Burgerville†? Out of all the issues I believe â€Å"Burgerville† would have economic responsibility pressing them the most considering the prices might be a bit higher than others just because the go above and beyond the legal, ethical, philanthropic responsibilities. I do not believe this would be a pressing issue to the point of any major concern. 3)Does â€Å"Burgerville† sound like a business that might work in Oregon and Washington, but maybe not elsewhere? No, I believe it could be a business that would work and do well in several other places in the United States. It may not be able to use wind power in every state for instance, but they could make substations like solar panels instead, given the various resources and locations. What is the future of â€Å"Burgerville†? I personally believe the future of â€Å"Burgerville† is very bright because we as a society are holding businesses to higher standards and considering their socially responsible and a good company to work for they should expand rapidly.

Hamlet, By William Shakespeare - 2573 Words

Throughout Hamlet, William Shakespeare’s eloquence and use of thematic imagery helps convey Hamlet’s state of mind as troubled and ambiguous, establishing him as a tragic hero whose feelings of death are nothing short of an enigma. From the opening scene with the ominous apparition to the brutality of the final scene, death is seemingly portrayed further than that of its simplistic physical nature. Hamlet’s thought provoking and introspective nature causes him to analyze death on different levels, ways that are much more profound. Hamlet’s acceptance of death is gradual but very much evident in the play, as his idle nature transitions to one of cowardice and eventually determination and resolve. As the reader is introduced to Hamlet, it is evident that he is tortured by grief from the death of his father and the much too premature, incestuous marriage of his mother with Claudius. Following his meeting with his father’s ghost, readers are able t o see Hamlet’s attitude towards suicide and the afterlife in his â€Å"To be or not to be† soliloquy. He knows that he must avenge his father’s murder, but is paralyzed by his inaction and instability. Ensuing his fourth soliloquy, Hamlet legitimately develops a fixation on the certainty of death. He is cognizant of death’s inevitability and comes to accept it and sees the futility in living in fear and desperation. Upon Hamlet’s introduction, one can observe his fragile character and obviously distressed state of mind. In Act 1,Show MoreRelatedHamlet, By William Shakespeare880 Words   |  4 PagesWilliam Shakespeare is praised as the pioneering English poet and playwright whose collection of theatrical works is regarded as the greatest artistic value throughout the history of English literature. Shakespeare delved into the spiritual and mental component of humanity and the consequences that arise from this human spirit when it is disputed. The most famous revenge tragedy play, Hamlet, is an excellent illustration of Shakespeare’s philosophical study of human nature. In Hamlet, the arguableRead MoreHamlet, By William Shakespeare899 Words   |  4 PagesWilliam Shakespeare, author of Hamlet, was a well-known author in the 1500s and is still popular today. He was born on April 24, 1564 in London, England. Although there were no birth records at that time, it shows he was baptized one year prior to that, which leads us to believe his birthday was in 1564 because children were normally baptized a year after their birth. Shakespeare’s writing style was very different than others at that time. He used many metaphors and rhetorical phrases, and most ofRead MoreHamlet, By William Shakespeare996 Words   |  4 PagesHamlet, written by William Shakespeare, with out a doubt holds the most famous soliloquy in English history spoken by Hamlet in Act III, scene i, lines 57-90. This soliloquy holds much importance to the play as a whole because it ties together the reoccurring themes of suicide and Hamlet’s inaction portrayed by Shakespeare. Hamlet poses a problem, which is the driving force of the play: â€Å"To be or not to be?†(III.i.57). Shakespeare uses this logical question asked by Hamlet to drive out his underlyingRead MoreHamlet, By William Shakespeare1178 Words   |  5 Pages In William Shakespeare’s play Hamlet, the protagonist suffers from struggles with major characters, especially with the women in his life. While reading the play Hamlet, Hamlet appears to be a disillusioned man. Throughout the play, Shakespeare has only casted two females: Gertrude and Ophelia. Gertrude is defined to be incestuous, naà ¯ve and cold-hearted. On the other side, Ophelia is characterized to be ignorant, innocent and fearful. After the quick marriage of his mother and evil uncle, Hamlet’sRead MoreHamlet, By William Shakespeare1308 Words   |  6 PagesHamlet is arguably one of the greatest tragedies in all of literature and when most people think of tragic plays, they think of none other than the one who wrote it, William Shakespeare. This classic story of revenge excites it’s readers with its main character, Prince Hamlet, who goes through the unique human-like process of revenge that is often overlooked. Many other stories rely heavily on the logi c of good people doing good things and bad people doing bad things just for the sake of their natureRead MoreHamlet, By William Shakespeare Essay1453 Words   |  6 PagesHamlet by William Shakespeare explores many aspects of mankind--death, betrayal, love, and mourning. Out of these, the most prominent theme in this play is death in the form of suicide. The main character, Hamlet, finds himself questioning the quality of life and the uncertainty of the afterlife once he discovers news of his father s death and the corruption in the kingdom that follows. Ophelia, Hamlet’s lover, is found dead later in the plot and is presumed to have committed suicide. In Hamlet’sRead MoreHamlet, By William Shakespeare1146 Words   |  5 PagesA character so complex, enticing and fascinating, his name is Hamlet. We are all Hamlet, and that, is the argument. Hamlet is an enigmatic character with many flaws. These flaws are the ones that prove similarities between us and him. A play so popular and significant is due to its huge relevance to us as a society. In the play Hamlet, William Shakespeare uses Hamlet’s character and metaphor to demonstrate that when one is left alone to their thoughts, these thoughts overtake reason. ConsequentlyRead MoreHamlet by William Shakespeare1456 Words   |  6 PagesThe play Hamlet, by William Shakespeare, takes place in a time where the impossible was a part of the lives of everyday people. Occurrences that people in the modern time would believe unbelievable. Yet, with just a quill and parchment Shakespeare’s is able to connect the past and present by weaving a plot with skill that is still unparalleled to this day. The play Hamlet this exceeds this expectation by revealing depth of Hamlets, the protagonists, character personality through the useRead MoreHamlet, By William Shakespeare1920 Words   |  8 PagesIn the play Hamlet by William Shakespeare, the character Hamlet must deal with both external and internal conflict. Hamlet encounters many struggles and has trouble finding a way to deal with them. With so many corrupt people in his life, Hamlet feels as if there is no one that he can trust and begins to isolate himself from others. A result from this isolation leads Hamlet to become melancholy. Hamlet struggles with suicidal thoughts, wants to kill King Claudius, and is distraught over his mother’sRead MoreHamlet, By William Shakespeare846 Words   |  4 Pagesalways been a contemplative topic. In Hamlet, the main character Hamlet thinks to himself about suicide. Hamlet was written by William Shakespeare. Shakespeare wrote Hamlet between 1599 and 1602. William Shakespeare is one of the greatest playwrights in history. Hamlet is about Prince Hamlet of Denmark who is trying to find out about the death of his father after his father s ‘ghost’ comes to him telling him it was his uncle who had killed him. While Hamlet contemplates suicide he gives his famous

Reviewing the large body of works in Dividend Pricing - Free Essay Example

Sample details Pages: 13 Words: 3938 Downloads: 3 Date added: 2017/06/26 Category Finance Essay Type Analytical essay Did you like this example? For past 40 years, a large body of works on the ex-dividend day price behavior of stocks have demonstrated that the price drop in most cases is only partial, decreasing by less than the full dividend amount. Researchers have proposed three competing theories to explain this empirical preference for capital gains over dividends. These include the existence of tax-induced clienteles (Elton Gruber, 1970), short-term trading (Kalay, 1982) and discreteness of stock prices due to minimum tick-sizes (Bali Hite, 1998). Don’t waste time! Our writers will create an original "Reviewing the large body of works in Dividend Pricing" essay for you Create order Although the partial price drop is well established as an empirical regularity, the explanation of this behavior is still very much an unresolved issue. In this chapter, we will discuss these three competing theories in theoretical part and we will compare them critically. Then, in empirical part, we will go through the latest researches to show the research gap and construct research hypothesizes. 2.2 Theoretical Literature 2.2.1 Tax-Induced Clienteles Miller and Modigliani (1961) show that, in the context of perfect markets, with no taxation and no transaction costs, dividend policy is irrelevant. In this context, investors are indifferent between dividends or capital gains, and the price of the stock should go down by the full amount of the dividend on the ex-dividend day. (H. M. Miller Modigliani, 1961) Although Miller and Modigliani (1961) accept the existence of dividend clienteles, they argue that if the distribution of payout ratios corresponds exactly to the distribution of investor preferences, then the case is no different to the case of perfect markets, where it is irrelevant whether investors receive dividends or capital gains. Each firm will tend to attract its own clientele, consisting of investors that prefer its payout ratio. Black and Scholes (1974) propose that firms, knowing that there are preferences for differing types of dividend yields, will adjust their dividend policies as necessary to satisfy such de mand. Farrar and Selwyn (1967) observe that the unfavorable fiscal treatment of dividends over capital gains implies that firms should not pay dividends because investors would prefer the higher after tax returns associated with capital gains. Brennan (1970) develops this line of work and reaches similar conclusions. (Black Scholes, 1974) (Farrar Selwyn, 1967) (Brennan, 1970) Given the wide variety of investors present in markets, there is no doubt that there is differing preferences caused by any given fiscal framing. Several researches at that time tried to answer this question whether, by observation of real data, this clientele effect can be empirically detected. Elton and Gruber (1970) establish a relationship between stock price behavior on the ex-day and the tax levied on the marginal stockholder. In a market with rational arbitrage, the price drop should reflect the relative after-tax value of dividends and capital gains for the marginal stockholder. This implies that t he marginal investors income tax rate can be inferred simply by observing the price drop on the ex-day. The equilibrium condition is: Where is the stock price on the cum-dividend day, is the stock price on the ex-dividend day, is the stock price when bought, is the dividend, is the dividend tax rate and is the capital gains tax rate. From Eq. we obtain: Elton and Gruber (1970) find that, on average, the stock price drop is less than the dividend amount, which is consistent with the tax on dividends being higher than the tax on capital gains, in the period covered by their study. They also find a statistically significant positive relationship between the right hand side of Eq. , both with dividend yield and payout ratio. Barclay (1987) confirms the results of Elton and Gruber (1970), while Schlarbaum et al. (1978) find very little evidence of this type of relationship using individual investor data from a brokerage firm. After the 1986 tax reform act in the US that equalized t axes on dividends and capital gains, Michaely (1991) finds that the ex-day price drop remained below one contrary to the tax-induced clientele hypothesis. (Barclay, 1987) (Schlarbaum, Lewellen, Lease, 1978) (Roni Michaely, 1991) 2.2.2 Short Term Trading Around the Ex-Day Several papers study the effect of dynamic trading strategies around the ex-dividend day. These strategies imply that investors trade around the ex-dividend day in order to avoid or to capture the dividend, depending on their preferences for dividend or capital gain. Kalay (1982) shows that the price drop is bounded by transaction costs: Where, and is the expected cost of a round trip transaction. Only within the boundaries defined by transaction costs in Eq., where there are no arbitrage opportunities, would it be possible to infer tax-clienteles effect exists. Beyond those limits, the price drop would reflect only the effects of arbitrage trading. Miller and Scholes (1982) present a similar argument. (M. H. Miller Scholes, 1982) Eades et al. (1984) study the behavior of prices around the ex-dividend day and show the existence of abnormal returns on days other than the ex-day, which is contrary to the tax-induced clientele hypothesis. The results of Kalay (1982) are consist ent with the findings of Karpoff and Walking (1988), who detect a significant relationship between ex-day returns and transaction costs. Lakonishok and Vermaelen (1986) confirm the presence of short-term traders in the market around the ex-dividend day, detectable because of high or abnormal volumes. Michaely and Vila (1996) set out an inverse relation between transaction costs and abnormal volume. The evidence of abnormal volumes around the ex-day is contrary to the clientele models. Naranjo et al. (2000) re-examine and extend the work of Eades et al. (1984) and find that the high-yield stock ex-day returns were highly influenced by corporate dividend capture. (Eades, Hess, Kim, 1984) (Karpoff Walkling, 1988) (Lakonishok Vermaelen, 1986) (R. Michaely Vila, 1996) (Naranjo, Nimalendran, Ryngaert, 2000) 2.2.3 Market Microstructure Arguments The discreteness argument presented by Bali and Hite (1998) focuses on the multiple ticks of price changes as compared with the continuity of dividends. Because the price changes are discrete in most cases they cannot equal the dividend amount. The authors argue that the market systematically rounds the price drop down to the nearest tick and this causes the price to drop by less than the dividend amount. Dubofsky (1992) argues that an ex-dividend premium below one may be explained by mechanical rules imposed by the NYSE and AMEX for the ex-day adjustment of open limit orders to buy stock. (Dubofsky, 1992) The transition of ticks in US markets from 1/8 to 1/16 ticks and then to decimalization in 2001 provided an excellent opportunity to test the theory of Bali and Hite (1998). The reduction of ticks and the progressive elimination of discreteness should result in a price drop on the ex-day increasingly closer to one. Cloyd et al. (2006) refute the discrete pricing hypothesis and find new evidence consistent with long-term tax-induced clienteles. The price discreteness of Bali and Hite (1998) has been also refuted by Jakob and Ma (2004) and Graham et al. (2003). (Cloyd, Oliver Zhen, Connie, 2006) (Graham et al., 2003; Jakob Ma, 2004) 2.2.4 Comparison and conclusion Among these three theories that explained above, the microstructure theory is fully refuted. Because although after 2001 stock prices were decimalized, price drop ratio abnormality still exist in US market as Cloyd at al. (2006) proved. So, the price discreteness could not be a good explanatory reason. Short term trading theory also faced with several shortcomings. Transaction cost plays an important role to provide arbitrage opportunity. Therefore, this theory just can be apply for stocks which amount of dividend is high enough to compensate transaction cost and provide arbitrage opportunity on ex-date. In result, short term theory has its` own limitation and cannot generalize to all stocks and markets. Tax-clientele theory apparently is the first and more reliable theories while discussed first time by Miller and Modigliani (1961) on dividend area. Elton and Gruber (1970) extend this theory for the first time to explain price behavior on ex-date. Most of researchers confirm the result of Elton and Gruber (1970), while others only find very little evidence of this type of relationship. It is apparent that research methodology and sampling play an important rule to investigate tax-clientele theory. However, most of researchers find consistent results with Elton and Gruber (1970). Moreover, Withworth and Rao (2010) expand this research for a period of more than 80 years and find the same result. Moreover, they investigate the stability of this theory for two different period of time and approved the tax-clientele theory. In summary, we high light and confirm Borges (2008) point of views as follow: ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¦ different theories have not been very successful at explaining this regularity. At best, the evidence is still mixed as to the existence of tax-clienteles and, in most cases, is inconsistent with the discreteness hypothesis. By this deliberation, we select tax-clientele theory as our research framework and try to overco me its` shortcoming by introducing strategic ownership as a moderating variable. The reason behind it will be discussed in empirical literature review while we evaluate the latest researches critically. 2.3 Empirical Literature Review In this part we start with Elton and Gruber (1970) who founded Tax-Clientele theory on ex-dividend date pricing explanation. Then we review and criticize other related researches which tried to proved or refute this theory to show their difference and shortages. Consequently, we express how this research could fill these gaps and deficits and help the explanatory power of tax-clientele theory. As explained in theoretical literature, Elton and Gruber (1970) establish a relationship between stock price behavior on the ex-day and the tax levied on the marginal stockholder. In a market with rational arbitrage, the price drop should reflect the relative after-tax value of dividends and capital gains for the marginal stockholder. This implies that the marginal investors income tax rate can be inferred simply by observing the price drop on the ex-day. The equilibrium condition is: Where is the stock price on the cum-dividend day, is the stock price on the ex-dividend day, is the sto ck price when bought, is the dividend, is dividend tax rate and is the capital gain tax rate. From Eq. we obtain: Elton and Gruber (1970) hypothesize that high tax bracket investors will on average generally prefer to hold low dividend yielding stocks, to avoid the consequences of taxes, while low tax bracket investors will on average generally prefer to hold high dividend yielding stocks since taxes have a smaller impact on the after-tax value of dividend income. This theory is commonly referred to as the clientele effect. Empirically, Elton and Gruber (1970) document that on average, the securities of dividend paying stocks decline less than the amount of differential taxation on dividends and capital gains. Elton and Gruber (1970) also find that the implied tax bracket decreases when the dividend payout increases, which they interpret to imply that: (1) high tax bracket investors own low dividend yielding stocks; (2) low tax bracket investors own high dividend yielding stoc ks; and (3) corporations (who are taxed more on capital gains than they are on dividends), will prefer high dividend yielding securities. This, they argue, provides evidence of a tax-induced clientele effect. Eades, Hess and Kim (1984) investigate ex-dividend day returns of several taxable and non-taxable distributions by investigating the pricing behavior for five days on each side of the ex-dividend day which they define as the ex-dividend period. Their results are quite surprising and cast considerable doubt on the clientele or tax hypothesis interpretation of ex ­-day pricing behavior. Their paper contributes to the ex-dividend day literature by looking at four different dividend distributions. First, ex-dividend day returns for taxable cash distributions are observed to be positive and significant, which is consistent with the hypothesis that dividends are taxed more heavily than capital gains. Second, ex-dividend day returns for preferred stocks are negative and sign ificant; since corporations dividend tax rates are less than their capital gains tax rates, and they tend to be the largest clientele of preferred stock, one would expect a negative ex-day return as reported. Third, non-taxable stock dividends and splits are priced on the ex ­-day as if they are fully taxable. This result is puzzling, particularly if returns are caused by tax effects. In this case one would expect to find no ex-day premium for non-taxable distributions. Finally, non-taxable cash dividends are priced as if they receive a tax rebate. This result casts further doubt on the tax interpretation of ex-day pricing behavior. To help explain the conflicting results, Eades, Hess and Kim (1984) investigate several explanations of the ex-day period anomaly. In particular, they examine the possibility of errors in data, day of the week effects, dividend announcement effects, the impact of infrequent trading, and non-normality of returns. None of the proposed explanations a re capable of explaining the curious ex-dividend day results; however their research eliminates possible reasons for the documented ex- ­dividend day anomaly. Poterba (1986) also finds interesting results associated with the ex- ­dividend day when he examines the Citizens Utilities Co. Citizens Utilities is unique since it has one class of common stock which pays stock dividends and another which pays taxable cash distributions. Poterba (1986) finds that the cash dividends ex-day price decline is less than the dividend amount, while the price of the stock paying stock dividends declines on the ex-day by nearly the full amount of the dividend. Clearly the disparity between the ex-day dividend valuation and the observed prices of the two shares is consistent with previous explanations of dividend distributions Poterba (1986) offers the following explanations for his results, the first of which he himself admits may be weak. First, he argues, investors may value cash d ividend income more than stock dividends particularly when transaction costs are high. Second, he argues that investors may value certain firm attributes which are correlated with cash dividend payments. This may explain why firms pay cash dividends even though investors value cash dividends less than comparable capital gains. (Poterba, 1986) Barclay (1987) investigates the ex-day behavior of stock prices before income taxes exist. Looking at data between the years 1900 to 1910, Barclay finds that stock prices fell on average by the full amount of the dividend. This evidence is consistent with the hypothesis that investors value dividends and capital gains equally in the pre-tax period, and that the differential taxation of dividends and capital gains has since caused investors to discount the value of taxable cash dividends in relation to capital gains. Michaely (1991) tests for the validity of the tax-clientele effect and explicitly compares his findings to those of Elton an d Gruber (1970) and Kalay (1982). As a competing hypothesis, Michaely (1991) argues that the existence of short term traders and corporate traders dominates the market and thus affects the ex-dividend day return. In other words, he expects to find a premium greater than one on the ex-dividend day, whereas Elton and Gruber and Kalay (1982) find a premium less than and equal to one, respectively. Michaely (1991) terms his hypothesis the corporate-trading hypothesis. Michaelys analysis (1991) is unique in the sense that he identifies and eliminates two sources of heteroskedacity found in the premium, where the premium is defined as the ratio of the price change between the last cum-day and the ex-day to the amount of the dividend. When the premium is adjusted to correct for heteroskedacity, Miachaely (1991) finds a negative abnormal return, particularly among high yield securities. Since corporations may prefer dividends over capital gains, this result provides evidence that corpora te and short term trading on the ex-dividend day affect price behavior. In fact, Michaely (1991) finds no evidence of an adverse tax effect since he finds a negative premium. 2.3.1 Tax law Changes Although a complete understanding of the determinants of ex-dividend stock price behavior still eludes us, the essence of the best-known and most enduring of all theories is that different tax rates cause investors to value dividends and capital gains unequally. The works cited previously employ a wide variety of methodologies that have furthered our understanding, but there are few better opportunities to test theories about taxes than the natural experiment created by changes in a countrys tax laws. Therefore, the remainder of this subsection reviews most of the important works that have considered one or more tax law changes, whether in the U.S. or abroad. We then discuss some of their strengths and weaknesses, along with how this study advances knowledge in the area. We begin with Barclay (1987), who documents ex-day price behavior before and after the introduction of the Federal Income Tax in 1913. Using data from the Commercial and Financial Chronicle, Barclay finds that i s not only close to one but also stable across groups when stocks are sorted into quintiles by dividend yield. In a matched sample from the post-income tax era, is less than one and generally increases with dividend yield. These findings are clearly consistent with EG. While its uniqueness makes Barclays study (1987) extremely interesting, it does have one notable drawback. Specifically, his post-tax matched sample is drawn from the period 1962-1985. Although the Center for Research in Security Prices (CRSP) database makes it much easier to obtain these later prices, one cannot help but wonder how ex-day prices behaved immediately following 1913. Grammatikos (1989) examined ex-day price behavior before and after the Tax Reform Act (TRA) of 1984. The 1984 Act lengthened the time a corporation must hold the stock at risk from 16 to 46 days. If the corporation does not meet the minimum holding requirement, the dividend becomes ineligible for the inter-corporate dividend exclusion an d is instead taxed at the normal rate, thus eliminating the motivation for dividend capture altogether. Consistent with the added risk imposed on dividend capturers, ex-day returns rose on average after the Act, but not so much for stocks that could be hedged with options. (Grammatikos, 1989) Of all U.S. tax law changes, none has been more thoroughly researched with respect to its effect on ex-day pricing than the 1986 Tax Reform Act (TRA). The 1986 Act lowered ordinary personal and corporate income tax rates but eliminated preferential tax treatment of long-term capital gains. According to the EG model, either of these two changes should cause to rise (and ex-day returns to fall), and indeed most empirical investigations [e.g. Robin (1991), Lamdin and Hiemstra (1993), Koski (1996)] support this prediction. Probably the most notable dissenter is Michaely (1991), who finds that is not significantly different from one in any of the years 1986-1989 around the TRA, leading him to con clude that short-term traders are much more active now than in the time period studied by EG. (Koski, 1996; Lamdin Hiemstra, 1993; Robin, 1991) However, Bhardwaj and Brooks (1999) point out that Michaelys estimates may have been distorted by outliers. They are able to replicate his results, but after filtering out a small number of observations with other simultaneous distributions, excessively large positive or negative price drop ratios, and/or missing bid/ask prices on the cum- or ex-day, they find that in 1986 (i.e. before the TRA took effect) was on average less than one, positively correlated with the dividend yield, and negatively related to transaction costs, consistent with the integrated tax framework. (Bhardwaj Brooks, 1999) Ki (1994) results are mixed, as ex-day excess returns fall post-1986 for his NASDAQ sample but not for NYSE/AMEX securities. Finally, it is also worth pointing out that the 1986 TRA decreased tax heterogeneity, as it caused long-term investors and would-be arbitrageurs to view dividends and capital gains similarly. Michaely and Vila (1995) and Wu and Hsu (1996) support the general consensus that ex-day returns dropped following the 1986 reform, but consistent with prior arguments, they also find a significant reduction in ex-day volume as decreased heterogeneity reduced the incentive to trade. (Ki, 1994) (Roni Michaely Vila, 1995) (Wu Hsu, 1996) 2.3.2 Non-US Stock Markets Of course, studies of tax reforms need not be confined to the U.S. Tax law changes in the United Kingdom (UK) have provided several excellent opportunities to test the basic tax clientele model, and the evidence has been mostly supportive. While Poterba and Summers (1984) do not find a notable change in ex-day returns following the introduction of a capital gains tax in 1965, they do find a substantial drop following a 1973 reduction in the effective tax rate on dividends. Lasfer (1995) finds that ex-day returns decline following the 1988 Income and Corporation Taxes Act, which reduced the differential taxation of dividends and capital gains (similar to the 1986 TRA in the U.S.). (Poterba Summers, 1984) (Lasfer, 1995) Bell and Jenkinson (2002) study ex-day returns 30 months before and after the 1997 Finance Act (FA97), which removed pension funds preference for dividends over capital gains. Price drop ratios fell and ex-day returns rose following FA97, especially for high-yield stocks, implying not only that taxes affect valuation but also that pension funds are the likely marginal investors for the securities used in the study. (Bell Jenkinson, 2002) While the UK evidence has been mostly compatible with EG, results from Canadian tax reforms have been less so. In spite of a 1971 tax law change that increased the value of dividends relative to capital gains, Lakonishok and Vermaelen (1983) find lower price drop ratios for securities on the Toronto Stock Exchange, which they attribute to another provision of the tax reform that reduces short-term trader profits. In a sample period (1970-1980) covering four different tax regimes, Booth and Johnston (1984) find that is consistently less than one. However, they are unable to draw conclusions in favor of the tax model because PDR does not increase with dividend yield as hypothesized. (Lakonishok Vermaelen, 1983) (Booth Johnston, 1984) 2.3.3 Other Securities and Non-Taxable Distributions While most ex-day pricing research has focused on taxable cash dividends on common stocks, one can also make inferences about existing theories by observing the price behavior of different securities and around other distribution types. Eades, Hess, and Kim (1984) document negative excess returns for preferred dividends, as might be expected for high-yield dividend capture targets. However, Stickel (1991) obtains conflicting results. In his sample of nonconvertible preferreds, he finds positive abnormal returns and volume on the ex-day, with returns declining for more liquid stocks. So far, this is consistent with a synthesized model where both long-term investors and short-term arbitrageurs influence prices around preferred dividends. Inconsistent with this framework, however, is Stickels finding that trading volume increases with liquidity for low-yield but not high-yield preferred. (Stickel, 1991) Preferred dividends are of course relevant to ex-day pricing theories, but it i s perhaps more interesting to compare observations around non-taxable distributions against those around the usual taxable dividends. Eades, Hess, and Kim (1984) and Grinblatt, Masulis, and Titman (1984) examine ex-day price behavior around stock dividends and splits, which are non-taxable. According to both the EG model and the short-term trading hypothesis, these studies should find ex-day price drops fully reflective of the dilution caused by additional shares. In fact, neither does. Eades et al.(1984) report that non-taxable stock dividends and splits are priced on ex-dividend days as if they are fully taxable. Oddly, Grinblatt et al.(1984) note higher positive ex-day returns for stock dividends than splits, possibly due to the added inconvenience investors face when dealing with odd lots. (Grinblatt, Masulis, Titman, 1984) Green and Rydqvist (1999) study a unique security, Swedish lottery bonds, to which special rules apply. Coupon payments on the bonds (distributed by lott ery) are not subject to income tax, but capital gains are taxed at the ordinary rate. Furthermore, the regulatory environment is not conducive to short-term arbitrage using these securities. Consistent with the EG tax model, Green and Rydqvist find that the bond price drops by about 130 percent of the distribution on the ex-coupon day, and that the bonds frequently trade at negative pre-tax yields. (Green Rydqvist, 1999) Elton, Gruber, and Blake (2005) examine two samples of closed-end funds. In one sample, distributions are not taxed (but capital gains are); in the other, distributions are taxed normally. As expected, market-adjusted price drop ratios are greater than one for the non-taxable distributions but less than one for the taxable sample. Price drop ratios for both samples also behave as predicted by the EG model following tax law changes in 1993 and 1997. Similarly, Milonas, Travlos, Xiao, and Tan (2002) examine taxable and non-taxable dividends in the Chinese stock ma rket and find price behavior mostly consistent with the tax theory. (Elton, Gruber, Blake, 2005) (Milonas, Travlos, Xiao, Tan, 2006)

The Vibrant and Unpredictable Era of the Gilded Age

The Gilded Age was one of the most vibrant and unpredictable eras in the history of America. It brought about a new wave of industrial and economic opportunities that allowed some to build massive businesses and fortunes, while other lower and middle class citizens struggled to survive. Some would go as far to say it created a war between the classes across American societies. Giants of industry, such as Andrew Carnegie and John D. Rockefeller, revolutionized how big business led to the rise of corporate America, but also how it leveled competition in the free-market. The Gilded Age offered America rapid economic growth and new technological products that created an economical boom. Yet, these advancements were created at the costs of exploiting industrial workers and farmers working long hours in dangerous conditions for low pay and the American people sought political and social reforms in an effort to rebalance the scale of power in the United States. During the Gilded Age, the American economy had shifted from a nation of small farmers and craftsmen to an economy transformed by railroads and telephone lines that stretched from coast to coast. Confronted by new models of economics and politics, unforeseen struggles caused farmers and laborers to fight for survival while emerging industrialists celebrated new wealth. This period of transition left much of the population without a voice. The wealthy seemed to be running the country without any advice from lower