Global Warming: The Overlooked Man-Made Disaster Essay

Man-made disasters are the consequence of technological or human hazards. Examples include stampedes, fires, transport accidents, industrial accidents, oil spills and nuclear explosions/radiation. War and deliberate attacks may also be put in this category. As with natural hazards, man-made hazards are events that have not happened, for instance terrorism. Man-made disasters are examples of specific cases where man-made hazards have become reality in an event. Global warming Global warming is one of the most overlooked and ongoing man-made disasters — one that will have the greatest long-term impact on humanity. Excessive amounts of greenhouse gases, particularly CO2, introduced into the atmosphere have increased average global temperatures forecasting a number of dire consequences. Impacts from rising sea levels, desertification, and damage from intense super storms like Hurricane Katrina have already created some of the first groups of climate-change refugees and some estimate that number to rise to 150 million by 2050. But even if you’re skeptical of the science, the excessive amount of carbon made has released into the atmosphere has started a dangerous problem with ocean acidification. As the oceans absorb more carbon, it’s turning into carbonic acid and decreasing dissolved oxygen concentration making some oceanic environments uninhabitable. With our own reliance on seafood, this in turn has threatened humanity’s own abi lity to feed itself. Together tackling global warming and ocean acidification are the biggest challenges man has created for itself and most living creatures on the planet. Global warming is the rise in the average temperature of Earth’s atmosphere and oceans since the late 19th century and its projected continuation. Since the early 20th century, Earth’s mean surface temperature has increased by about 0.8 Â °C (1.4 Â °F), with about two-thirds of the increase occurring since 1980.[2] Warming of the climate system is unequivocal, and scientists are more than 90% certain that it is primarily caused by increasing concentrations of greenhouse gases produced by human activities such as the burning of fossil fuels and deforestation.[3][4][5][6] These findings are recognized by the national science academies of all major industrializednations. Plant Trees Reduce Fossil Fuel Use Conserve Water Reduce Waste

Intro to Philosophy Essay

The word philosophy itself means â€Å"the love of wisdom. † Philosophy stands for doing the right thing or being a â€Å"just† person. Philosophy also means to see things for what they truly are and not what they may seem to be. A philosopher’s life is a lifelong quest to find the meaning of things beyond their physical appearance. The Ring of Gyges is a ring that a man puts on and becomes invisible. When he does wrong he is not blamed, he gets away with it. Once a man puts this ring on he can be unjust without punishment. In the second book of The Republic Adimantus argued that the unjust life is happier than the unjust. His argument was that a just man can go without now and enjoy heaven in the afterlife while an unjust man will go without nothing and still enjoy the benefits of the after life. Through the eyes of a philosopher there are two worlds, the visible world and the intelligible world. In the visible you can see things and judge them from what you actually see. If a person sees a flower one could judge that it is a beautiful flower. However, the person is judging this flowers beauty on its physical appearance and their claim is merely an opinion rather than true knowledge. In â€Å"The Allegory of the Cave† men are chained inside of a cave. All they can see is the shadows that are formed on the wall in front of them. The people inside of the cave believe that the shadows that are being cast on the wall is reality. When one of the men is unchained and brought to the outside world at first he is blinded by the sun and cannot see clearly. The man can only see the shadows of the objects in front of him, this can be perceived as the images of physical objects. When his eyes adjust he can see more than the shadows, he can see the physical objects themselves. When the man goes back inside of the cave to tell the others what he has seen he again cannot see clearly because his eyes have not adjusted. The others in the cave laugh claiming that the sun has ruined his eyes. For a period of time he cannot decipher what the shadows on the wall are imitating. They don’t believe what the man is telling them. In Plato’s Analogy of the Divided Line the four stages of cognition, which represent the levels of existence, are explained. The first two stages, the good and the sun, represent the visible world. The third and fourth stages, knowledge and opinion, represent the intelligible world. These stages are represented in â€Å"The Allegory of the Cave. † Without the sun’s light we would not be able to see anything at all. The sun allows us to see the flower that we perceived as beautiful. Without the suns light we would not be able to see or perceive any of the physical objects that exist. The sun is perceived as the things that we see. The sun also allows for all living life on earth. Without the sun all life on Earth would diminish. Without the sun we could not perceive anything at all. 1. A person can only understand something once they have reached the highest level of cognitive activity. One must acquire the Form of Good before they can truly understand something. Images and assumptions are not enough support to truly understand the meaning of something. The images the prisoners in the cave saw and the assumptions they made about what they thought they could be are only their opinions. Although they were able to identify the shadows on the wall as what they thought they were it is not enough to truly know what they are, the identities given to the shadows by the prisoners is merely their opinion. In â€Å"Phaedo† Socrates claims that our soul is attached to our body. Our body acts as a vessel only operating because of the soul inside. According to Socrates our body holds us back from perceiving things for what they truly are and therefore a philosopher should desire death because it enables them to continue their quest of reality. 2. Socrates viewed death as a purification of the body that allows us find pure wisdom. Socrates explained how our souls are glued to our bodies and only when they are unfastened by death is a person able to experience wisdom in its purest state. The body distracts us from finding the truth because it requires maintenance. The body allows us to feel pain and emotions like love, fear and hunger. Socrates admits that philosophers are more or less practicing for death and should embrace it when it comes for them. â€Å"And will he who is a true lover of wisdom, and is persuaded in like manner that only in the world below he can worthily enjoy her, still repine death? Will he not depart with joy? Surely, he will, my friend, if he be a true philosopher. For he will have a firm conviction that there only, and nowhere else, he can find wisdom in her purity. † (Phaedo pg. 65) Socrates believes that philosophy is good because it enlightens us to what things actually are rather than what they’re perceived to be. Philosophy is what brings the unchained man outside of the cave. It pushes us to go into the unknown, which we at one point we thought we knew. Once we realize what things actually are we also realize that we had no idea what they really were before. The man in the cave that once thought that the only reality was the shadows on the wall now realizes that the shadows weren’t reality at all. Socrates was formally charged because he didn’t worship the gods recognized by the states and for corrupting the youth of Athens. The informal charges against Socrates was asking questions that were unusual, or outside of the box. â€Å"Socrates is an evil-doer, and a curious person, who searches into things under the earth and in heaven, and he makes the worse appear the better cause; and he teaches the aforesaid doctrines to others† p. 21 Apology The oracle of Delphi told Socrates that he was the wisest man. Socrates refused to accept this statement and went searching for a wiser man than himself. In search of a wiser man than himself, Socrates talked with many people including politicians, poets and craftsmen who claimed to be wise. Socrates found them to not be wise because they thought they knew things that they did not. Socrates proclaimed himself as wise because he knew that he did not know. Socrates exposed the false wisdom of the men who were thought to be wise. Naturally these men held much resistance and hostility towards Socrates. These negative feelings contributed to Socrates’ trial. Socrates refutes Meletus’ statement that he doesn’t believe in any god, that he is an atheist. Socrates does this by confirming that he does in fact believe in supernatural activities, such as his inner voice that told him he was the wisest man, and therefore is not an atheist. Socrates states that wealthy young men, enjoy following him around and listening to him question people. It’s entertaining for them. These men, who think they are wise but aren’t, then go out and try to do this on their own. When the people they question get angry instead of being angry with themselves, become angry with Socrates. They accuse Socrates of filling the young men’s head with nonsense. When asked about what Socrates teaches they don’t know and then use claims already made against philosophers against Socrates. Socrates then asks Meletus who he thinks an improver of the youth is. Meletus claims that the law is an improver of the youth, such as judges and senators. Socrates then proclaims that everyone in the state is an improver of the youth except himself. Meletus agrees to this statement. Socrates states that he must either not corrupt the youth or unintentionally corrupt the youth because good do their neighbors good, and evil do them evil. If he had corrupted someone, in theory, they should have harmed him by now. In Socrates’ last defense he says, â€Å"For if you kill me you will not easily find another like me, who, if I may use such a ludicrous figure of speech, am a sort of gadfly, given to the state by God; and the state is like a great and noble steed who is tardy in his motions owing to his very size, and requires to be stirred into life. I am that gadfly which God has given the state, and all day long and in all places am always fastening upon you, arousing and persuading and reproaching you. † (31-32) Socrates is attempting to demonstrate to the people of the city that there is more to their life than what meets the eye. Without philosophers such as himself they will continue to live the life they’re living with no desire to search for more. They will continue to accept the shadows on the wall as their reality. There are three parts to the soul. These three parts consist of the rational, high spirit and the appetitive. The rational portion of the soul is the part of us that seeks knowledge of wisdom. According to Plato the rational should rule the soul. The high spirit consists of the angry and prideful part of the soul that defends and aids the rational. The high spirit avoids shame. The final part of the soul, the appetitive, is the part of the soul that desires. While some desires are necessary, others are not. If not restrained by the rational, the appetitive portion of the soul can over rule all other parts. In addition to the three parts of the soul there are also three parts of the city. These three parts are the gold, silver and the bronze. The golds are the guardians, the silvers are the enforcers of the laws (helpers), and the bronzes are the merchants and tradesmen. The city virtue of wisdom resides within the gold’s, the guardians. In order to posses civic wisdom one must know how the city operates and how all parts of the city are connected. The knowledge of how the city runs and operates allows the city to operate at the highest level. The city virtue of bravery and justice resides with the silvers, the enforcers of laws. Civic bravery is the defined as the Silvers upholding their education about what things are and are not to be feared and in what order as ordered to them by the Golds. Civic justice refers to sticking to your own work whether you are a moneymaker, helper, or guardian. It’s considered unjust to work outside of your boundaries. The city virtue of temperance exists within the bronze citizens, the merchants and tradesmen, of the city. The civic temperance is the agreement (harmony) between the three sections (gold, silver and bronze) as to who should rule and who should obey. The personal virtue of wisdom is housed by ones rational portion of the soul. Personal wisdom consists of knowing all parts of the soul and how they are connected to one another. The ultimate goal of personal wisdom is keeping the soul as healthy and as balanced as possible. Personal bravery and justice is contained within the high-spirit part of the soul. The High-Spirit of the soul is to preserve the education of what is and is not to be feared. The Rational tells the High-Spirit in which order things are to be feared or not feared. The personal virtue of justice minds it’s own within each part of the soul. The appetitive portion of the soul houses the personal temperance virtue. The personal temperance works in agreement between the three portions of the soul as to who should rule and who should obey. The advantage of philosophy with respect to the state is the efficiency. Everyone has jobs that relate well to their attributes. You cannot be a gold (guardian) without first experiencing being a bronze and then a silver. In order to be a gold one must possess knowledge of all three parts of the city. This ultimately leaves the best most knowledgeable citizens in charge of the city. The advantage of philosophy in regards to the individual is the balance between all parts of the soul. All parts of the soul are important to understand and the rational helps us inherit the wisdom needed to understand these aspects of the soul. One who constantly indulges in the appetitive portion of the soul will be overcome by it. When a person posses wisdom they know when a desire is necessary rather than unnecessary. Students and states that pursue philosophy are better off than the ones who don’t because of the level of intelligence they hold. When a student or state has the knowledge of all the levels of either the civic or individual level they’re more likely to excel in their job. Without philosophy there would be no need to extend one’s boundaries and explore the unkown. Socrates was the man in the cave who managed to break free from his chains and see the world beyond the cave. His accusers, the men still chained inside of the cave, refused to accept what Socrates was trying to show them. If they accepted what Socrates was trying to prove it would be a harsh reality for all they ever knew would diminish. Life outside of the cave is unknown. It’s far less scary to continue their life believing that the shadows on the wall are all that there is. Works Cited Plato, and Benjamin Jowett. The Trial and Death of Socrates: Four Dialogues. New York: Dover Publications, 1992. Print. Plato, H. D. P. Lee, and M. S. Lane. The Republic. London: Penguin, 2007. Print.

What would be the impact of a world dominated by female political Essay

What would be the impact of a world dominated by female political leaders - Essay Example More importantly, the discipline of the political science, the study of the female leaders in such setting as in political grounds can adequately shade light not solely on gender or even leadership but also on the elites within politics in general. In a general sense, it can easily be understood how power is attained in particular contexts, which could even lead to more generalizable theories within the leadership setting in the world (Kassem, 2013). For instance, when the political experts evaluate and examine the factors that generally affect the male leaders they definitely discover that it is indeed quite difficult to isolate the impacts of the single variables or even in distinguishing a single factor from another one. In a few respects, the feminist analysis clearly enhances the understanding of the political leadership. The feminist perspectives generally paint an alternative view of women as the national leaders although it as well points to the larger lessons from the general study of leadership. In the recent past, the status of the women in the field of politics has captured the advanced imagination of the spectators around the world. From research, a little is known on the women politicians because much of it tends to focus mostly on the women in the legislative and not in the executive offices. A reason for that is directly related to greater success that the female leaders globally have been keen on obtaining the legislative slots as opposed to the executive (Krook, 2010). Nearly, over the last half century the women have significantly made advances in the labor force participation, education, and in the political activism throughout the world. The gender gaps however still are experienced in the low-income nations although they are quite smaller than in the previous decades. In the high and the middle-income countries, many of the gaps have consistently been reversed. Women have been found overtaking men in most areas of

Religion and Violence Research Paper Example | Topics and Well Written Essays - 1250 words

Religion and Violence - Research Paper Example Only intensive and concrete planning, prevention and interventions can help to reduce violence caused by religious extremism and misinterpretation of holy doctrines in adverse ways. Thesis Statement: The purpose of this paper is to investigate religion and violence by examining the historicity of religious violence, the ways religions promote or oppose violence, and effective initiatives to support inter-religious harmony. There are four historical moments that reveal the origins of religious violence. The first is associated with the diffusion of world religions during the 4th to 7th centuries of the Christian era. Christianity became the dominant religion of Europe through displacement of the religions native to the continent, and through the officialization of the new religion in the Roman empire. While Christianity spread to Ethiopia in Africa and to South Asia, Hinduism spread to Indonesia, Buddhism to China, Korea and Japan from India. By the beginning of the 8th CE, Islam covered Spain and the Arab world, and went to Sind in the Indian subcontinent. â€Å"Much violence was involved in the transcontinental spread of the world religions†2. Although most of the pre-colonial spread of religion was associated with political conquest and physical violence, this was not always the rule. For example, violence did not characterize the spread of Hinduism. Christianity scarcely used violence in spre ading to South Asia. King Ashoka converted to Buddhism, unable to bear the carnage of the Kalinga war, and propagated the religion through peaceful means. The second historical moment was colonialism characterized by racial superiority and cultural conquest through the â€Å"civilizing mission†. This was in addition to political and economic domination, and was charged with religious violence. â€Å"The European missionaries did not even recognize the religions of the New World as religion†3, not even as human beings. Not only were the First Nations not allowed their cultural identity, they were physically liquidated. The people of Africa were considered as primitive, without history and without religion. Hence it was thought to be necessary to convert them to Christianity in large numbers. However, in the case of Islam, they put up a stiff resistance, resulting in violent conflicts between the two imported religions. Today, the leading religion of 50 percent of the Af rican states is Christianity, the other main religion being Islam, thereby relegating native religions to the background. In the Orient composed of the three great civilizations of China, India and Egypt, dominant religions prevailed, related to Buddhism, Hinduism and Islam respectively. Therefore, the scope of Christianizination of these regions through colonialism was limited. The third historical moment is that the European model of the nation-state has been endorsed by religious nationalists in most parts of the world, establishing political hegemony by the religious majority, and the cultural assimilation of the religious minorities into the â€Å"nation†. The diasporic Jewish community in Europe which was economically prosperous, were the object of European wrath through the holocaust4. The cold-war era which saw a rapid spread of the concept of the nation-state experienced great violence based on religion, by Christians. Homogenization that erases the cultural identity of peoples and nations is a violent process. The cold-war period which occurred for four decades, divided the world into three: the capitalist democracies of the world, the socialist one-party system of the second world, and the

The Epic Of Gilgamesh Essay Example | Topics and Well Written Essays - 1000 words

The Epic Of Gilgamesh - Essay Example Right from his birth, his adventures under the influence of Enkidu to his last days the readers find that there is always a divine connection in his actions and speeches. The relationship between Gilgamesh and gods can be compared with the relationship of Abraham and God in the Book of Genesis. In both the stories God has a sinifcant role to play in the development of the character. Epic of Gilgamesh goes on to prove that desire of God and destiny of man often comes in conflict. The clash between mortality and desired immortality heightens the tragedy of the epic poem. The prologue of the epic â€Å"Whoever you may be, governor, prince or anyone else, whom the gods may choose to exercise kingship† (George, xxxvi) comments that god has impartial view of mankind. In the poem Gilgamesh is portrayed with lot of glamor. The lines which denote his lordly appearnce and stature are: â€Å"Supreme over the kings, lordly in appearance/ he is the hero, born of Uruk, the goring wild bull†. (Kovacs, Tablet I) His appreciation is evident when it is said â€Å"Gilgamesh is awesome to perfection† His bravery and courage is reflected in the following lines: His physical greatness is complemented by his leadership abilities and his camaraderie with his fellow subjects; â€Å"He walks out in the front, the leader/ And walks at the rear, trusted by his companions/ Mighty net, protector of his people†. (Kovacs, Tablet I) The story of Epic of Gilgamesh is clasified into epsiodes namely a) the meeting of Gilgamesh and his friend Enkidu, b) encouter with fickle and voluptuos goddess Shamhat, c) journey through the Cedar forest, d) death of Enkidu and e) search for immortality. The journey through the Cedar forest has high importance because Gilgamesh and Enkidu duo kills the monster Humbaba and also defeat the Bull of Heaven. Ishtar, the goddess of sex and warfare supervises their combats. Companion’s death urges him towards quest for life of eternity. Utnapishtim offers him a chance to

Recruitment and Human Resource Management Essay

Recruitment and Human Resource Management - Essay Example The human resource management team then analyses these forms before inviting the qualified candidates for interviewing.   After the selection of the suitable candidate from the interviewees, the procedure of induction follows. Induction is a process that aims at familiarizing an employee with the organization’s processes and the nature of the job. A good induction process should be open and interactive, to make the new employee be acquainted with co-workers easily. The process should also be relevant and specific on the standards and rules that guide the operational framework of an organization. The process should be safe and considerate on the employee’s working conditions.   The period that the induction process takes depends on the size, nature, and standards of the organization and the job. The process, though not formal, is a good way to ensure that an employee blends into the organization comfortably. The employee will first meet and talk with fellow colleague s. This interaction process should be friendly and focused on the experiences of the new colleague. This process should be open to questions, and subsequent discussions on the nature of the organization.  Thereafter, the new employee is introduced to the rules of the organization. Organizational storytelling is a good way of instilling the organization’s principles to the employees (Taylor, 2011). The value of the hospitality industry in the UK is significant to the economic growth of the UK.

Representation and Stereotype of Women in Video Games Dissertation

Representation and Stereotype of Women in Video Games - Dissertation Example The portrayal of the woman in video games has always been a controversial topic. It is controversial because it reflects the negative sides of the woman. It is the major claim of those who protest against the stereotype of women that in video games women are presented in an unrealistic and exaggerated manner. The video games mostly contain the violence and sex together. The women are generally represented as a hyper-sexual character. The content of the dissertation thus shows that the girls as well as women are based on gender-stereotyped. Hence, it is quite common to see a woman with a typical figure and complexion and in a tight outfit. Keywords: videogames, women, portrayal, unrealistic hypersexual Executive Summary: This paper is based on the stereotype presentation of the women in video games. Women’s image in all types of media has always been just a sex symbol. Whatever the media would be, such as television, advertisements or any type of magazines and newspaper, the wo men cannot come out of the typical periphery which is drawn for them by the male dominated society. In media they are sometimes shown in a very humiliating manner. This research has discussed thoroughly on the same issue. The research paper is divided into four different chapters. First chapter is associated with problems and its setting. The researcher decided this kind of subject out of the concern of the portrayal of women in video games and their impact on the society, especially the adolescent young boys around whom the entire video industry is revolving. The women in video games are far from reality from all points of view such as their physical appearance and the role they played in the game. In the first chapter the introduction about the topic is given. Then the researcher has designed the problem related questions for discussion. There are five research questions to be discussed. The researcher then discusses about the significance of the problem and significance of his re search. The researcher here has discussed about the usefulness of his research in finding out the problem. In the next section the researcher deals with the significance of the study. For any research to be reached to its conclusion the hypotheses are necessary to form so that it can give a proper direction for the research. Here the researcher has taken the hypothesis that still the image of women in video games is stereotype and it has not changed. The women are shown either as a sex symbol or a passive and distressed object. After that the researcher discusses the scope of the study. There are many new concepts in the research paper so it is necessary to mention the definition of the terms used in the research paper. Here the researcher has given the definitions of various terms used in the research paper. The second chapter deals with the literature review. For the research it is very necessary to find out the related documents or any existing theory which can support the ideas of the researcher. The references have been collected from various sources such as books written on this same topic. Apart from that some previous research papers, articles, blogs, websites etc are also referred. The researcher has given thorough information about the collection and information which has been collected by the above mentioned sources. In the third chapter, the

PACS Essay Example | Topics and Well Written Essays - 1000 words

PACS - Essay Example A PACS consists of at least one or more image acquisition devices (like Computed Tomography Scanners, Ultrasound Scanners, MRI), communication network, a long term storage device and an image review and/or post processing workstation, in other words PACS is used to run medical digital images. All these components enable following processes: image acquisition, image  communication, image storage, image display and image processing. All these processes act as pathways for PACS to improve the quality of diagnosis, extend the reach of services of an expert radiologist, higher efficiency and cost savings (Reiner and Siegel, 2002, 3). Since healthcare is a safety as well as security intense domain, these parameters cannot be compromised. Hence saving and archiving medical images without loosing quality (or information) has been a compelling need of the users of various users dealing with medical images. This concern of the clinicians have been appropriately addressed by a universal standard pertaining to digital medical imaging, this standard is termed as Digital Imaging and Communications in Medicine (popularly called DICOM). DICOM provides all the tools required for diagnostically correct processing and presentation of medical imaging data (Pianykh). DICOM takes care of data transfer, storage and display protocol that contains sets of standards. DICOM incorporates the following processes: Information Management System  Storage, Query/Retrieve,   Study Component, Query/Retrieve, Results Management, Print Management, Media Exchange. The DICOM Standard takes care of levels of the ISO OSI network model and enables the exchange of information on interchange media. DICOM currently defines an upper layer protocol (ULP) that is used over TCP/IP (independent of the physical network), messages, services, information objects and an association negotiation mechanism. These definitions ensure that any two implementations of a compatible set of services and

Brown vs. Board of Education Personal Statement Example | Topics and Well Written Essays - 750 words

Brown vs. Board of Education - Personal Statement Example It was the case of Oliver Brown that brought an end to many of the hardships that the blacks had faced over time. Oliver Brown’s daughter had to travel a long way to reach her black school although a school was located nearby and this made Brown file a suit against the Board of Education for the rights. The case was a breakthrough in the American history as the blacks were allowed to study with the whites and the process of integration started. This case was very important in the history of blacks as it ended a long feud between the two races. In my belief this case helped the blacks to reach a position in the history of United States which they would have never been able to. Rosa Parks Civil Rights Movement Rosa was an educated lady who took part actively in the civil rights movement. She played the role of ignition in the civil rights movement and was one of the first blacks to take a stand against the government. Rosa worked as a seamstress in Montgomery Fair Department Sto re. Buses in the mid twentieth century had some restrictions for the blacks. ... Three of the black passengers moved except for Rosa Parks who was later arrested and fined for her misconduct. It was this incident which finally broke out the black community and they launched a boycott against the Montgomery Bus Services. The boycott lasted for 381 days and it was quite successful as the segregation laws were lifted. In my opinion Rosa Parks played a pivotal role in reviving the integrity of the blacks in the region. She united the blacks and ignited a civil rights movement against the government. In my belief it was her because of whom the civil rights movement began for reviving the rights of the blacks. Twelve Angry Men Twelve Angry Men was a play directed by Reginald Rose which later on became a movie. The play revolves around a young man who is about to be charged for the murder of his father. In United States a jury consists of many judges who are to decide whether a person is guilty or not. If a unanimous vote for guilty comes up for the person then he is ac cused otherwise the trial is known as mistrial. In this case the sentence for being guilty would result in a death penalty. The jury of twelve members then sit in a room to decide whether the kid is guilty or not and most of them come to the conclusion that the person is guilty because all evidence points at it. Only one of the members decides to vote against it and a mistrial occurs. In my opinion the play points out to the way a judgment occurs in the trial. The personal feelings of the jury may come in the way when deciding about the person who is being tried. The play points out the irregularities in the system of justice and how it may lead to wrong convictions at the wrong

Entrepreneurship Essay Example | Topics and Well Written Essays - 2000 words - 1

Entrepreneurship - Essay Example Capable entrepreneurs try to learn in order to find, select, elaborate and communicate the necessity of several effective new opportunities that can create a successful business venture. Successful entrepreneurs generally describe the precious contribution of a new venture and propose a design of business model which can be prolonged by several potential competitive advantages. After the development of business model, the venture team develops a strategy or road map. This developed road map or strategy will help to commercialize the new developed products or services in the potential and competitive market place with a combination of several sustained and stabilized competitive advantages (Byers, Dorf and Nelson, 2012). Entrepreneurs play an important role in the economic development of a country. Entrepreneurs are key contributors to the new job growth and technological innovation. This essay will critically analyze the statement of Kalpan, JM and Warren. Literature Review & Critica l Analysis Entrepreneurship is an important economic growth driver of a country. ... According to several common myths, it can be stated that the entrepreneurs start their business with break-through invention and take uncalculated risks in order to accomplish business goals. According to Allen (2011), entrepreneurs should have effective and detailed business plan with broad research findings. Moreover, the entrepreneurs need to have sufficient financial resources and years of work experience (Allen, 2011, p.56). Taking uncalculated risk is the major objective of a successful entrepreneur while starting a new venture. According to Sahay (2009), there are several important driving forces that create potential opportunity for the new venture (Sahay, 2009, p.121). Securing sufficient capital is an important driving force. In the early stage of business development, the entrepreneurs need to secure business capital. They can think about several options like direct investment or investment through venture capitalist. In terms of investment through venture capitalist, the entrepreneurs should design an effective business plan that can attract the venture capitalists. Reformed securities regulation is another major driving force. It helps the entrepreneurs to find business capital for their new venture. Creating entrepreneurial networks and industry clusters can help the entrepreneurs to develop business contacts. Through this process the entrepreneurs can fill specific industry niches within the networks and clusters. This process is highly beneficial to entrepreneurs and economic development strategies. The entrepreneurs should take important management and financial guidance from several professional small business assistance entities as these lessons are effective for a new

Analyze an organizations media communication activities Essay Example for Free

Analyze an organizations media communication activities Essay The objective of this project is to analyze an organizations media communication activities. The work must use concepts, models, and theories to support and critical the companys website. It should be critically assess + evaluate and use strategy to analyze. The author should review it as a marketing professional specialist and knows how, when, and where the organization use digital media to communicate with its audience, customer, stakeholder, and public. Executive Summary: PO Cruises uses a maturity website to distribute and communicate (Fill, 2002). It is a fabulous website that uses a lot of tools from personal communications (PCs) to support their offline marketing (Hartley, 1999). Once customers surf its website, they could get information they need easily. The website becomes a distributed channel for the business. It is in the highest level of scenario 4 (Doren, 2000). Information on website is variety and useful that helps offline media and lures more customers to join the PO Cruises with rational exchange (Fill, 2002). PO Cruises Background PO Cruises is one of the cruises belonging to Carnival Corporation PLC. There are 13 distinct brands of cruises all over the world are operating by Carnival Corporation PLC; PO is one of them. PO is not as same as its name belongs to the PO group (Peninsula and Oriental steam Navigation Company); for it was demerged into Carnival public limited company on 23 October 2000, and has changed its name to Carnival Public limited company on 17 April 2003. PO Cruises now is the largest premium cruise brand in the United Kingdom. See the list as below. Carnival Corporation Princess Cruises Carnival plc PO Cruises were belong to Ocean Village PO Princess. Swan Hellenic Cruises plc AIDA PO Cruises Australia Carnival Cruise Lines Holland America Line Windstar Cruises Seabourn Cruise Line Costa Cruises Cunard Line AROSA Main Report: Marketing mix Product PO Cruises currently owns four types of ships Aurora, Oriana, Oceana and Adonia. Each of them gives different atmosphere and personality to customers. They are service, facility and quality oriented. Mostly, customers who are attracted to join PO Cruises are through travel agencies to get tickets no matter a set of schedule or connections with flights or another cruise. If customers who are interested in PO Cruises, PO Cruises also use different brochures to introduce its products to them. PO Cruises builds a marvelous introduction of its products on the website. There is a column of their ships in directories of its website introducing each of ships details by clicking any icon of them (Chaffey, 2000). There are also other links connecting to these four ships that makes customers easily check to PO Cruises ships (main products) whenever they want. The website builds a good cognitive environment to customers who are like ship, boat, cruise, and adventure. Most fantastically, customers could find what each deck looks like by 360i panoramic tour. After customers learn about these ships, they enable to feel more about these ships by fun stuff sector, which involved games, videos, and pictures (screensaver and wallpapers) to addict customers affective (Fill, 2002). Promotion PO Cruises is not a company which uses all of the marketing communication tools to communicate with its target audience, but it uses its promotion tools well to achieve its customer needs and to explore its market opportunities (Chaffey, 2000). 5 main elements of the promotional or communications mix of PO Cruises are analyzed as below (Fill, 2002): 1. Advertising (Off-line) PO Cruises has TV advertising displaying during summer time or the beginning of the year. Customers who havent seen the advertisement on TV could also enjoy the advertisement on PO Cruises website; to the Fun Stuff-Videos to view the version of its Sh-boom advertisement. Its an advertisement with affective (Fill, 2002). Besides TV advertising, PO Cruises posts its advertising on newspaper as well. (On-line). There are many agencies selling PO Cruises tickets on line; they help PO Cruises build a perfect advertisement system. If someone who is interested in cruises, they will easily find out the name of PO Cruises on many websites building by travel agencies. Customers are able to easily book a cruise through any ABTA travel agent; there are about 16 agents linking to PO Cruises and helping customers to book tickets in different areas. Although many websites all connecting to the name of PO Cruises, it is difficult for people who want to buy the ticket right through PO Cruises website. 2. Sales promotion (Off-line) (On-line) PO Cruises is targeted. It divides into consumers and the sales forces of both PO Cruises and its agents (Fill, 2002). The sales promotion PO Cruises uses is by the timing when customer book for their tickets. The earlier they book for cruises, the more discount they will have. It uses the method of price reductions to motive its sales in the early stage (Fill, 2002). PO Cruises also sets up the Portunus Club for customers who re-join to the PO Cruises. There are Ruby, Sapphire, and Gold tiers for different types of customers. Customers could get points for their discounts when they had joined the cruises and also discounts to any other consumption on the ship. The method builds customer royalty; it is referred to as a points accrual programme that helps the company keep customers loyalty for preventing them from moving to PO Cruises competitor (Fill, 2002). The Portunus Club has not only increased the amount of customers, but also maintained those current customers well (Raaij, 1998). 3. personal selling (Off-line) PO Cruises tickets are sold through personal selling or other travel agencies. Customers buying tickets can either from agencies or directly make a phone call to the PO Cruises as the telemarketing. It is a good method for the company itself uses lots of personal selling on promotes their ticket, for it is a method always interactive to customer and company. And Consumers may talk to and obtain answers from real persons or from machine interaction that helps PO Cruises directly being aware of what customers wants and what they need (Raaij, 1998). (On-line) On the website, customers who are interested in any trip and willing to join the tour could book on line by leaving the messages to the reservation team. Besides, its very easy for customers to find the ticket selling on website from different agencies in different areas, and then buy the ticket based on customer needs. 4. public relations (Off-line) The means of PR of PO Cruises is announcing news on newspapers. It mostly tells people about its schedules, timetables and its new ship or company information on travel pages or events column. PO Cruises owns a press center to run for its news. (On-line) Customers could also find out their news through news websites, travel agents or the websites connect to sailings, such as, what you need to about or scoop agents (two website names). Moreover, there are numbers of news PO Cruises showed to the public and listed on its own website. It is press centre in the company section. For people who are interested in to PO Cruises and want to know more about its reputation, besides company introduction, they could attain more information on this section. 5. direct marketing (Off-line) (On-line) PO Cruises uses direct marketing through ABTA agents and many other travel agencies where they sell cruises tickets. It connects to personal selling to use different types of tools to achieve the needs of customers. It uses e-mail (member confirm) and through post-mail (brochure sending) to directly send the information to customers. Â  Place PO Cruises, the Britains leading cruise operator, customer aboard its shipping at Southampton, UK or fly on a scheduled or PO Cruises charter flight to any of its 25 destinations all over the world. All ships cruise Europe in the summer, and in winter Aurora and Adonia embark on round the world cruises while Oceana and Oriana tour the Caribbean. Places are stabile in different places by annual schedules; depended on where customers plan to go abroad. The headquarters is in Southampton, but usually people usually book tickets at agencies instead of heading for PO Cruises office. If people who would like to book tickets online, they could go to www. pocruises. com or through links on any ABTA agents to buy tickets. Agents are viewed as the PO Cruises retailers. This method helps PO Cruises reach its sale targets by selling tickets to many other segments in different areas and places. The channel of its distribution is producer retailers consumers (Blythe, 1998). Price PO Cruises sets its price at the moment when customers buy tickets. The company uses different brochures to attract customer to join its cruises business. Customers could save as much as money if they book earlier according to the timetable set up by PO Cruises. Customers could save up to 5%~45% discounts for early booking, depending on availability, and its reward for those who book early. PO Cruises named it as pricebreakers. Besides, price differs from different cabin type and grade that customers choose. It is very easy for customers to find the price on the website or by the brochure which customers could also easily get by request online. * DRIP PO Cruises (model by Fill, 2002). PO Cruises communications have need to: Differentiates itself by it is one of the oldest cruises company which form of British to attract customers who enjoy in English style. Remind and reassure its customers by telling them that the leisure cruising business was started by PO in 1844. The step helps the company acquire trust from customers Oldest = standard = traditional (British) ? Inform the consumers by educating them that PO Cruises is the company with offering high quality but middle-low price to customers Persuade to the consumers that althouthg PO Cruises is the oldest company, it has most modern fleet of ships in the UK. Scenarios In order to know how a company created a website on line to present its own products through the internet, the company needs to define the level of commitment it wants to reach (Doren, 2000). There are 4 possible scenarios for promoting on the internet. PO Cruises is belonging to the highest level 4, because it offers on-line ordering of products and services. The product PO Cruises supplies to customer is not the tangible things that customers could touch but services and facilities on cruises. So the company tries to present its product through the website. PO Cruises uses web cam, lots of 360i panoramic tour and many of pictures on its website to interact with users. Moreover, there are images, screensavers and wallpapers of its 4 ships for customers to download. The usages of multimedia presentations also reach facilitation as a web promotion; it enables a more personal, one-on-one approach with the internet user (Doren, 2000). According to the four possible scenarios lists, PO Cruises does make a high extensive interaction with its customers through its website. The web site of PO Cruises may be high costs, but it could attract more customers order on line.

Quarterly Earnings Forecasting Decisions by Family Firms

Quarterly Earnings Forecasting Decisions by Family Firms Quarterly Earnings Forecasting Decisions by Family Firms and the Market Reaction to Them Abstract We study the disclosure incentives for family firms by examining the characteristics of their quarterly earnings forecasts and analysts and investors responses to them. Forecasts offered before the fiscal quarter-end (guidance) by SP 500 family firms are generally more specific and timely than those offered by SP 500 non-family firms, particularly when they convey bad news or confirm analysts current expectations. Further, family firm guidance elicits a stronger response from both analysts and investors. While many of these differences largely disappear when the forecasts are offered after the quarter-end but before the earnings announcement itself (preannouncements), family firm preannouncements still tend to be more specific when they contain bad news. These more specific preannouncements also generate a significantly stronger response from analysts. Overall, our results suggest that large, visible family firms use manager-generated earnings forecasts to create a more transparent i nformation environment, and that these forecasts are likely to be most useful in reducing information asymmetry and agency costs when they are issued as guidance. Key Words: Management earnings forecasts, family firms, preannouncements, earnings warnings. Data Availability: Data are available from the sources listed in the text. Introduction. Family firms are generally defined as companies that are significantly influenced by founding family members or their descendants, through large shareholdings and/or operational control.[1] Anderson and Reeb (2003a, 2003b) report that family members hold approximately 18% of the equity of the family firms in the SP 500, on average, and control 45% of the CEO positions. In addition, family members often hold seats on the board of directors or are part of upper-level management in these firms (â€Å"Family Inc.†, Business Week, November 10, 2003). The structure inherent in these family firms gives rise to different agency problems than those in firms with much greater separation of ownership and control. Specifically, the family firm structure significantly limits the agency problems that arise from the separation of ownership and control (often referred to as Type I agency problems) while exacerbating those that arise in the conflict between controlling and non-controlling shareholders (often referred to as Type II agency problems, see Ali et al. 2007, Chen et al. 2007, Wang 2006 and Anderson and Reeb 2003a). It is well known that the second type of agency problem can be partially mitigated by frequent and transparent disclosure. However, it is also possible that reputational concerns may arise from the long-term nature of family members investment in their firm, mitigating this problem and reducing the need for more frequent and transparent disclosure (Wang 2006). The purpose of this paper is to add to our understanding of these competing incentives for differential disclosure by examining the characteristics of quarterly earnings forecasts issued by the management of family firms and the response of sell-side analysts and investors to them. Recent accounting research that examines mandatory financial disclosures by family firms suggests that reputational concerns alone may not be sufficient: Characteristics of family firms mandatory financial reports are consistent with their being used to mitigate the agency problem between controlling and non-controlling shareholders. More specifically, Ali et al. (2007) and Wang (2006) show that large family firms offer higher quality financial reports as evidenced by lower discretionary accruals, greater ability of earnings to predict cash flows and larger earnings response coefficients. In addition, Ali et al. (2007) find that family firms in the SP 500 are more likely to voluntarily issue earnings forec asts during periods of earnings declines. However, they also find that family firms are less forthcoming in their disclosures about corporate governance. In a paper that was written concurrently with ours, Chen et al. (2007) study the frequency of voluntary disclosures (earnings and non-earnings forecasts and conference calls) from a larger sample of firms that includes the SP 500, SP MidCap 400 and SP SmallCap 600 in the five years before the enactment of Regulation Fair Disclosure (Reg FD). They also find that family firms are more likely to issue bad-news earnings warnings but overall make fewer forward-looking disclosures than non-family firms, and conclude that their results are consistent with family owners having a longer investment horizon and better monitoring of management, characteristics that obviate the need for greater disclosure. This paper contributes to the growing literature on the disclosures of family firms by studying one of the most informative and common types of voluntary financial disclosures—the companys own forecasts of its quarterly earnings per share—and sell-side analysts and investors responses to them. More specifically, we examine the characteristics of these disclosures (forecast specificity, surprise and accuracy), and the impact they have on important market indicators—professional analysts earnings estimates and stock prices. Thus, our analysis is designed to provide additional evidence on the relation between ownership structure and the quality of the firms information environment and, in particular, complements the existing empirical evidence on the characteristics and informativenesss of mandatory financial disclosures made by family and non-family firms (Ali et al. 2007 and Wang 2006). As noted above, we focus on a particular type of voluntary disclosure, managements forecasts of quarterly earnings per share, and do so for two reasons. First, prior research indicates that these forecasts are highly value-relevant—and more value-relevant than management forecasts of annual earnings per share (Pownall et al. 1993, Baginski and Hassell 1997). As a result, we believe that the quarterly forecasts are particularly well-suited for examining the different incentives family and non-family firms face in their attempts to control Type I and II agency problems, respectively. For example, higher quality forecasting by family firms (in terms of their forecasts being more specific, timely and accurate) is consistent with such firms creating a more transparent information environment and reducing a potentially severe Type II agency problem. Second, we are able to use a non-stock-price measure of the news in these management forecasts in our empirical work, which allows us t o more effectively analyze the markets perception of the differential information content in the forecasts made by family and non-family firms.[2] We also separate our sample of forecasts into guidance (i.e., forecasts made prior to the end of the quarter) and preannouncements (i.e., forecasts made after the quarter ends but before earnings are released). We do this because the forecast horizon associated with preannouncements is very short, sometimes a matter of two or three weeks, and because much of the uncertainty regarding the forthcoming earnings number is resolved by the fiscal quarter end for most, if not all, firms, regardless of whether or not they are controlled by a family. Thus, the Type II agency problem in family firms, if it dominates the Type I agency problem, is more likely to be mitigated through the provision of guidance than preannouncements. This leads us to hypothesize that the characteristics of guidance, but not preannouncements, are systematically related t o family-firm status, and that analysts and investors will react differently to the guidance, but not to preannouncements, issued by family firms, holding all else constant.[3] We test our hypotheses on the quarterly earnings forecasts made between 1998 and 2006 by the family and non-family firms in the SP 500 index, as identified by Business Week (November 10, 2003) and contained in the First Call Company Issued Guidance (CIG) database. There are two aspects of our sample that should be highlighted. First, our sample firms are among the largest, most stable and most visible in the U.S. As a result, our results may not generalize to smaller, less visible family firms such as those included in Chen et al.s (2007) sample. Second, our sample period spans the implementation of Reg FD. Thus, we provide evidence that complements the pre-Reg-FD evidence in Chen et al. (2007) and the limited post-Reg-FD evidence in Ali et al. (2007). The results of our empirical tests generally indicate that the guidance provided by family firms is of higher quality than that provided by non-family firms. In particular, after controlling for other influencing factors, we find that the family firms in our sample provide significantly more specific guidance (in terms of forecast form and narrowness of forecast range) than non-family firms, especially when conveying bad news or offering confirmatory guidance. We also find that family firms use guidance to make smaller average adjustments to the markets estimate of the upcoming quarterly earnings than non-family firms, especially when conveying bad news. This is consistent with their being more timely in offering corrections to analysts estimates. More importantly, we find some evidence of a stronger and quicker response by analysts (as measured by the number of subsequent earnings estimate revisions and the speed with which they occur) to the guidance issued by family firms, and str ong evidence of a significantly greater investor response (as measured by announcement-period abnormal stock returns) to the guidance issued by family firms. These findings, taken together, indicate that guidance is more informative and more useful to the market when it is issued by a family firm. They are also consistent with family firms using guidance to create a more transparent information environment, which therefore, complements the finding of higher quality financial reporting by family firms in Ali et al (2007) and Wang (2006). Consistent with our expectations, we find little evidence of differences in the characteristics of preannouncements issued by family and non-family firms, although there is some (weak) evidence of family-firm preannouncements being more specific when they contain bad news.[4] Also consistent with our expectations, we find no evidence of a differential stock price response to preannouncements made by family and non-family firms, although we do find that analysts response more strongly to family-firm preannouncements, especially when they contain bad news. These results, when considered with the guidance results discussed above, suggest that family firms produce higher quality earnings forecasts than non-family firms, particularly when they are offered as guidance or contain bad news, and that their guidance is more informative and useful to investors and analysts. Thus, our paper provides evidence of family firms using management-generated earnings forecasts to create a more transpare nt information environment. Our paper contributes to two bodies of research: the growing literature on disclosures by family firms, as noted before, and the established literature on management forecasts. While our paper is most closely related to Ali et al. (2007), Chen et al. (2007) and Wang (2006), who examine the mandatory financial disclosures of family firms and the frequency of their voluntary disclosures, we also complement Anderson et al.s (2006) analysis of other dimensions of disclosure transparency. Anderson et al. (2006) find that family firms are significantly more opaque than non-family firms as measured by a summary statistic that captures the effects of trading volume, the bid-ask spread, analyst following and analyst forecast errors. Taken together, the evidence in Anderson et al. (2006) and our paper suggest that certain types of transparent disclosures appear to be better suited than others to mitigating the agency problem that arises between controlling and non-controlling owners. The literature on management forecasts is more mature and, as a result, guides much of the structure for our analysis. Consequently, we follow prior work by Ajinkya and Gift (1984), Baginski and Hassell (1990, 1997), Bamber and Cheon (1998), Baginski et al. (2002, 2004), Ajinkya et al. (2005) and others, in designing our tests. In a recent paper, Hirst et al. (2007) provide a review of this literature and propose a framework for continued research in this area. They observe that choices concerning the characteristics of management earnings forecasts are not yet well understood and suggest that additional work addressing this issue is needed. Our contribution to the literature on management forecasts is to analyze the differential impact of Type I and Type II agency problems on the characteristics of management earnings forecasts provided by family and non-family firms, including the time of their release, as well as the market and analyst reactions to them. Thus, we add to the initia l evidence on the underlying reasons for providing management forecasts in different forms and with different specificity—and on their impact of the stock prices of family and non-family firms. Finally, our results on confirmatory guidance support and extend the results in Clement et al. (2003). The rest of the paper is organized as follows. In Section 2, we review of the relevant literature and develop hypotheses. In Section 3, we describe our sample and data, and in Section 4, we present the empirical tests. We offer concluding remarks in Section 5. 2. Literature Review and Hypothesis Development Family firms are defined in the academic literature as firms in which founders or their descendants exercise control either because they are significant shareholders or because they are part of top management or the board of directors. Not only are family firms common in Europe and Asia (see, for example, LaPorta et al. 1999, Claessens et al, 2000, Gomez-Mejia et al. 2001 and Faccio and Lang 2002), they comprise approximately one-third of the SP 500 in the U.S. (Anderson and Reeb 2003a).[5] Further, family members ownership stakes are significant: Anderson and Reeb (2003a) report that in the SP 500, family members hold, on average, 18% of the voting shares in their companies. A large literature on family firms has recently developed in accounting and finance, much of it focused on the differences in agency problems that arise in family and non-family firms.[6] Of particular interest to us are the agency problems arising from (1) the separation of ownership and control, and (2) the conflict between controlling and non-controlling shareholders.[7] The papers that examine these conflicts generally argue that (1), referred to as the â€Å"Type I† agency problem in Ali et al. (2007), is less important for family firms because of the unusually close alignment of owners and management in those firms when compared to non-family firms (e.g., Ali et al. 2007, Chen et al. 2007, Wang (2006).[8] They also argue that the tight linkage between some owners and control in family firms exacerbates (2), referred to as the â€Å"Type II† agency problem in Ali et al. (2007), in which family members transfer wealth to themselves to the detriment of other sharehol ders. As is well known, such agency problems can be partially mitigated by frequent and transparent disclosure, suggesting that family firms are more likely to offer a variety of mandatory and voluntary disclosures whose implications are clearer to market participants.[9] In contrast, Wang (2006) suggests that family firms may not face a more severe Type II agency problem if the long-term nature of their investment is well understood by the market. In essence, he argues that long-term investors are less likely to exploit agency problems for short-term gain—thus, family firms may not need to resort to greater frequency or transparency of disclosures. Ali et al. (2007) and Wang (2006) empirically test these competing predictions by comparing aspects of the accounting disclosures made by family and non-family firms. Both find that earnings quality is higher for family firms, especially when a founder CEO is in place. Thus, both provide some evidence consistent with family firms mitigating their Type II agency problems—or responding to the demands of the users of financial statements—with higher quality disclosures. More specifically, Ali et al. (2007) document lower discretionary accruals and greater earnings persistence for SP 500 family firms compared to SP 500 non-family firms. In addition, they find that the association between earnings and stock returns is higher for the family firms. Similarly, Wang (2006) finds that SP 500 founding family firms have lower abnormal accruals, greater earnings informativeness and less persistence in transitory loss components in earnings. He extends this analysis by considering th e effect of the percentage of common stock owned by family members on the magnitude of the Type II agency problem. Interestingly, he finds that the relation is nonlinear: When founding family ownership is above (approximately) 60%, the quality of the earnings reported by non-family firms exceeds that of family firms. Ali et al. (2007) also provide some evidence inconsistent with family firms mitigating their more severe Type II agency problem through the use of disclosures: They observe that family firms are less forthcoming about their corporate governance practices and that when they employ a dual class share structure, earnings quality is lower relative to when they do not have such a structure. Another method for testing whether family firms mitigate the potentially more severe Type II agency costs—or respond to financial statement users demand for high quality accounting information—through greater frequency and transparency of disclosures is to examine the issuance of management earnings forecasts by family and non-family firms. Complicating this is the litigation argument proposed by Skinner (1994) and Kasznik and Lev (1995) which suggests that the use of earnings warnings will vary positively with the litigation risk that the firm faces, and inversely with the severity of the firms Type I agency problem (Ali et al. 2007). However, since the Type II agency problem is expected to be more severe and the Type I agency problem less severe in family firms (Ali et al. 2007), family firms would be expected to provide management forecasts to mitigate both types of agency problems, holding litigation risk constant. The relative severity of the Type II agency problem further suggests that family firms earnings forecasts will be of higher quality (i.e., more specific, timely and accurate), and that market participants (e.g., sell-side analysts and investors) will respond more strongly to them. Ali et al. (2007) provide initial evidence in favor of this hypothesis when they observe that family firms are more likely to provide earnings warnings (i.e., guidance that warns of a forthcoming earnings decline) than non-family firms. In a more recent paper, however, Chen et al. (2007) provide evidence that family firms make fewer voluntary disclosures than non-family firms. They collect ownership and founding family information from several sources to identify family firms in the SP 1500 and find that family firms are (1) 8.1% less likely to provide management forecasts of all kinds (i.e., annual and quarterly earnings, revenues, cash flows, etc.), and (2) less likely to hold conference calls as well. They also find, however, that family firms are more likely than non-family firms to issue bad-news earnings warnings. Chen et al. (2007) conclude that these results, when considered collectively, indicate that family firms owners prefer less disclosure because of their long investmen t horizon and effective monitoring of managers, but that their concern with reducing litigation costs results in an increased likelihood of bad news earnings warnings. In this paper, we hope to add to our understanding of the relative importance of the competing incentives studied in previous work by examining (1) the characteristics of management forecasts of quarterly earnings per share (both guidance, which is offered prior to the end of the quarter, and preannouncements, which are offered after quarter-end but before the actual earnings announcement) of family and non-family firms, and (2) the response of sell-side analysts and investors to those forecasts. In particular, we hope to add to our understanding of the disclosure choices of family firms by determining whether their own earnings forecasts are more specific, timely and accurate, consistent with family firms providing higher quality disclosures—and whether those forecasts are viewed as being of higher quality by market participants as measured by their response to the disclosure. We also separate our forecasts into guidance and preannouncements under the assumption that any fami ly-firm effect will be more likely to be observed in guidance because of the longer horizon over which the forecasts can be made. More specifically, in the case of preannouncements, there is a very short forecast horizon (e.g., a few weeks beyond the end of the quarter) and so we do not expect large differences in timeliness of the preannouncements between family and non-family firms. Further, because much of the uncertainty about the earnings numbers is resolved by quarter-end, differences in the specificity of preannouncements between family and non-family firms, if any, are likely to be small. Finally, motives to provide preannouncements are likely to be dominated by the litigation argument proposed by Skinner (1994) and Kasznik and Lev (1995).[10] If this is the case, differences in characteristics of voluntary earnings forecasts, and in market participants responses to them, are likely to be concentrated in guidance. As in prior research, we recognize that because of competing forces, whether the guidance of family firms is of higher quality is an empirical question. Thus, our formal hypotheses regarding guidance are non-directional, as in Chen et al. (2007) and Wang (2006): H1: The specificity, timeliness and content of earnings guidance is systematically related to whether the firm is classified as a family firm. H2: Sell-side analysts and investors responses to earnings guidance is systematically related to whether the issuing firm is classified as a family firm. 3. Sample and Data. Our sample is comprised of 4,130 management quarterly earnings guidance announcements issued between 1998 and 2006 by the family and non-family firms in the SP 500 as identified by Business Week in its November 10, 2003, issue. Business Week defines a family firm as â€Å"†¦any company where founders or descendants continue to hold positions in top management, on the board, or among the companys shareholders.† To identify family firms, Business Week relies on the methodology developed by Anderson and Reeb (2003a, 2003b) as well as their advice and the help of Spencer Stuart as they â€Å"†¦examined regulatory filings, company Web sites and corporate histories† to ensure significant family involvement in the company. (For details, see â€Å"Defining Family,† Business Week, November 10, 2003, p. 111.) Before proceeding, we want to highlight certain aspects of our sample. First, because the Business Week classification pertains to only SP 500 firms, the fi rms in our sample are among the largest, most stable and most profitable companies in the U.S. As a result, our findings might not extend to mid- or small-cap companies. Second, our reliance on the Business Week classification means that we do not form a new sample of family and non-family firms each year. However, as Ali et al. (2007) note, family firm status is sticky, and thus misclassifications due to changing firm status will most likely bias against our finding significant results. Third, Business Weeks classification scheme is designed to identify firms that are controlled by a family without relying on a single proxy for control, such as ownership share. As a result, it captures features of family firms, beyond simply having large blockholders, that are likely to exacerbate Type II agency problems. Fourth, by using Business Weeks classification, which is based on the â€Å"standard† developed by Anderson and Reeb, our results are more easily compared to many prior res ults. Finally, while we recognize that Business Week might not accurately classify every firm, both types of classification errors (i.e., misclassifying firms without significant family control as family firms, and misclassifying firms with significant family control as non-family firms) limit our ability to detect differences in the forecasts of family and non-family firms and therefore bias against our finding significant results. We form our sample by first gathering all forecasts of quarter-ahead earnings made between 1998 and 2006 by the SP 500 as of June 2003 from the First Call Company Issued Guidance (CIG) database. We lose 1,994 of the original 7,694 observations because of unavailability of (1) necessary Compustat and CRSP data, (2) actual earnings per share and other analyst forecast data from First Call, and (3) observations with multiple actual earnings per share numbers. After deleting stale forecasts (those made before the prior quarters earnings announcement date), we retain all â€Å"guidance† observations (forecasts made at the same time as or after the prior earnings announcement and at or before the quarter end, N = 4,332). We trim the sample to mitigate the effect of outliers as follows. First, we eliminate the top and bottom one-half percent of the management forecast errors in each sample, the top and bottom one-half percent of the forecast surprises in each sample, the top and bott om one-half percent of the three-day cumulative abnormal returns in each sample and finally, the top and bottom one-half percent of return volatility ratios in each sample—and retain the union of the remaining observations. (These variables are defined in the Appendix and will be discussed in detail later.) We then eliminate 62 firm quarter observations whose stock price is less than $5 as of the beginning of the quarter. This results in a final sample of 4,130 guidance announcements. One-hundred-and-forty six of the 177 family firms identified by Business Week (82.5%) provide guidance during our sample period as compared to 240 of the 323 non-family firms in the SP 500 (74.3%). [11] Before turning to the empirical analysis, we note for the reader that the management guidance we gather from the CIG database is not split-adjusted whereas the analysts estimates and reported earnings per share in the main First Call file are (further, they are rounded to the nearest penny). An I/B/E/S unadjusted data file is available but unfortunately, we would lose a significant number of observations if we were to use it. Consequently, to keep the sample size as large as possible and still allow for comparability, we split-adjust the management guidance from the CIG file using the split-adjustment procedures used for the analysts estimates and reported earnings per share in the First Call file.[12] 4. Empirical Analysis. 4.1. Univariate Analysis. We present descriptive statistics for the guidance announcements, firm-specific characteristics and variables relating to analysts and stock returns in Table 1. We also include the results of two-sample t-tests and Wilcoxon signed rank sum tests for each variable. As noted before, we provide a list of variables and their definitions in the Appendix. We begin with forecast characteristic metrics designed to help us understand the differences, if any, in the specificity, timeliness, frequency and content of the earnings forecasts offered by the management of family and non-family firms. We present descriptive statistics first for the form of the forecast (an indicator of specificity) as measured by Forecast Form. As is well known, forecasts in the CIG database take one of several forms, which we code in the following manner: If the forecast is a specific earnings per share number (a point forecast), it is coded as 4; if it is a range of possible earnings per share numbers (a range forecast), it is coded as 3; if it consists of a one-sided directional forecast (either a maximum or minimum forthcoming earnings per share number), it is coded as 2; and if it contains no quantitative information (a qualitative forecast), it is coded as 1.[13] Note that our coding scheme is designed so that a higher value of Forecast Form indicates a mo re specific forecast. To further examine forecast specificity, we focus next on Forecast Width for range forecasts, which measures the difference between the maximum and minimum earnings per share figures offered in the forecast. (A narrower width indicates a more specific forecast.) In later tests, we include point forecasts as forecasts with a width of zero. To examine forecast timeliness, we use Forecast Horizon which is the number of calendar days from the management forecast date until the end of the quarter. More days in the forecast horizon indicate more timely forecasts. Finally, we form Annual Frequency and Quarterly Frequency variables, which measure the number of annual and quarterly management forecasts for each of our sample firms in the CIG database from 1994 through 2006, scaled by the total number of possible forecasting years (for Annual Frequency) or quarters (for Quarterly Frequency) to date. The descriptive statistics and statistical tests for Forecast Form provide initial evidence consistent with family firms issuing significantly more specific guidance than non-family firms. In particular, Forecast Form has slightly higher numerical values, on average, for family firms (p = .028, using the Wilcoxon test).[14] To further explore the potential differences, we examine the frequency distributions of the forms that guidance takes, as presented in Figure 1. As is obvious from the figure, range forecasts are by far the most common form of guidance for both family and non-family firms, making up nearly two-thirds of all guidance in our sample. Further, both family and non-family firms offer approximately 89% of their guidance as point or range forecasts. However, family firms offer relatively more of the more specific point forecasts (28% versus 23% for non-family firms) and relatively fewer of the less specific range forecasts (61% versus 66% for non-family firms).[15] Conver sely, guidance in the form of qualitative statements or minimum/maximum earnings per share numbers is unusual in our sample, regardless of the type of firm examined. The small number of qualitative forecasts in our First Call sample is inconsistent with Hutton et al. (2003) and Miller (2002), who find a substantially larger number of such forecasts when hand-collecting their samples than are included in the First Call database. (Anilowski et al. 2006 also suggest that First Call is more likely to include quantitative forecasts than qualitative ones.) This suggests that our sample is most likely incomplete and most representative when only quantitative forecasts are considered. For these reasons and because many tests require that we restrict attention to point and range forecasts, we will generally focus our discussion on point and range forecasts only. As just noted, range forecasts are the most common type of guidance in our sample. While it is clear from Figure 1 that non-family firms issue more range forecasts as guidance than family firms, Table 1 indicates that those issued by family firms are significantly narrower, as measured by Forecast Width (p = .000 for both the Wilcoxon and the two-sample t tests). This finding, when considered with the preliminary evidence of greater usage of point forecasts by family firms, suggests that guidance issued by family firms is generally more specific than that issued by non-family firms, consistent with H1. The next two forecast c Quarterly Earnings Forecasting Decisions by Family Firms Quarterly Earnings Forecasting Decisions by Family Firms Quarterly Earnings Forecasting Decisions by Family Firms and the Market Reaction to Them Abstract We study the disclosure incentives for family firms by examining the characteristics of their quarterly earnings forecasts and analysts and investors responses to them. Forecasts offered before the fiscal quarter-end (guidance) by SP 500 family firms are generally more specific and timely than those offered by SP 500 non-family firms, particularly when they convey bad news or confirm analysts current expectations. Further, family firm guidance elicits a stronger response from both analysts and investors. While many of these differences largely disappear when the forecasts are offered after the quarter-end but before the earnings announcement itself (preannouncements), family firm preannouncements still tend to be more specific when they contain bad news. These more specific preannouncements also generate a significantly stronger response from analysts. Overall, our results suggest that large, visible family firms use manager-generated earnings forecasts to create a more transparent i nformation environment, and that these forecasts are likely to be most useful in reducing information asymmetry and agency costs when they are issued as guidance. Key Words: Management earnings forecasts, family firms, preannouncements, earnings warnings. Data Availability: Data are available from the sources listed in the text. Introduction. Family firms are generally defined as companies that are significantly influenced by founding family members or their descendants, through large shareholdings and/or operational control.[1] Anderson and Reeb (2003a, 2003b) report that family members hold approximately 18% of the equity of the family firms in the SP 500, on average, and control 45% of the CEO positions. In addition, family members often hold seats on the board of directors or are part of upper-level management in these firms (â€Å"Family Inc.†, Business Week, November 10, 2003). The structure inherent in these family firms gives rise to different agency problems than those in firms with much greater separation of ownership and control. Specifically, the family firm structure significantly limits the agency problems that arise from the separation of ownership and control (often referred to as Type I agency problems) while exacerbating those that arise in the conflict between controlling and non-controlling shareholders (often referred to as Type II agency problems, see Ali et al. 2007, Chen et al. 2007, Wang 2006 and Anderson and Reeb 2003a). It is well known that the second type of agency problem can be partially mitigated by frequent and transparent disclosure. However, it is also possible that reputational concerns may arise from the long-term nature of family members investment in their firm, mitigating this problem and reducing the need for more frequent and transparent disclosure (Wang 2006). The purpose of this paper is to add to our understanding of these competing incentives for differential disclosure by examining the characteristics of quarterly earnings forecasts issued by the management of family firms and the response of sell-side analysts and investors to them. Recent accounting research that examines mandatory financial disclosures by family firms suggests that reputational concerns alone may not be sufficient: Characteristics of family firms mandatory financial reports are consistent with their being used to mitigate the agency problem between controlling and non-controlling shareholders. More specifically, Ali et al. (2007) and Wang (2006) show that large family firms offer higher quality financial reports as evidenced by lower discretionary accruals, greater ability of earnings to predict cash flows and larger earnings response coefficients. In addition, Ali et al. (2007) find that family firms in the SP 500 are more likely to voluntarily issue earnings forec asts during periods of earnings declines. However, they also find that family firms are less forthcoming in their disclosures about corporate governance. In a paper that was written concurrently with ours, Chen et al. (2007) study the frequency of voluntary disclosures (earnings and non-earnings forecasts and conference calls) from a larger sample of firms that includes the SP 500, SP MidCap 400 and SP SmallCap 600 in the five years before the enactment of Regulation Fair Disclosure (Reg FD). They also find that family firms are more likely to issue bad-news earnings warnings but overall make fewer forward-looking disclosures than non-family firms, and conclude that their results are consistent with family owners having a longer investment horizon and better monitoring of management, characteristics that obviate the need for greater disclosure. This paper contributes to the growing literature on the disclosures of family firms by studying one of the most informative and common types of voluntary financial disclosures—the companys own forecasts of its quarterly earnings per share—and sell-side analysts and investors responses to them. More specifically, we examine the characteristics of these disclosures (forecast specificity, surprise and accuracy), and the impact they have on important market indicators—professional analysts earnings estimates and stock prices. Thus, our analysis is designed to provide additional evidence on the relation between ownership structure and the quality of the firms information environment and, in particular, complements the existing empirical evidence on the characteristics and informativenesss of mandatory financial disclosures made by family and non-family firms (Ali et al. 2007 and Wang 2006). As noted above, we focus on a particular type of voluntary disclosure, managements forecasts of quarterly earnings per share, and do so for two reasons. First, prior research indicates that these forecasts are highly value-relevant—and more value-relevant than management forecasts of annual earnings per share (Pownall et al. 1993, Baginski and Hassell 1997). As a result, we believe that the quarterly forecasts are particularly well-suited for examining the different incentives family and non-family firms face in their attempts to control Type I and II agency problems, respectively. For example, higher quality forecasting by family firms (in terms of their forecasts being more specific, timely and accurate) is consistent with such firms creating a more transparent information environment and reducing a potentially severe Type II agency problem. Second, we are able to use a non-stock-price measure of the news in these management forecasts in our empirical work, which allows us t o more effectively analyze the markets perception of the differential information content in the forecasts made by family and non-family firms.[2] We also separate our sample of forecasts into guidance (i.e., forecasts made prior to the end of the quarter) and preannouncements (i.e., forecasts made after the quarter ends but before earnings are released). We do this because the forecast horizon associated with preannouncements is very short, sometimes a matter of two or three weeks, and because much of the uncertainty regarding the forthcoming earnings number is resolved by the fiscal quarter end for most, if not all, firms, regardless of whether or not they are controlled by a family. Thus, the Type II agency problem in family firms, if it dominates the Type I agency problem, is more likely to be mitigated through the provision of guidance than preannouncements. This leads us to hypothesize that the characteristics of guidance, but not preannouncements, are systematically related t o family-firm status, and that analysts and investors will react differently to the guidance, but not to preannouncements, issued by family firms, holding all else constant.[3] We test our hypotheses on the quarterly earnings forecasts made between 1998 and 2006 by the family and non-family firms in the SP 500 index, as identified by Business Week (November 10, 2003) and contained in the First Call Company Issued Guidance (CIG) database. There are two aspects of our sample that should be highlighted. First, our sample firms are among the largest, most stable and most visible in the U.S. As a result, our results may not generalize to smaller, less visible family firms such as those included in Chen et al.s (2007) sample. Second, our sample period spans the implementation of Reg FD. Thus, we provide evidence that complements the pre-Reg-FD evidence in Chen et al. (2007) and the limited post-Reg-FD evidence in Ali et al. (2007). The results of our empirical tests generally indicate that the guidance provided by family firms is of higher quality than that provided by non-family firms. In particular, after controlling for other influencing factors, we find that the family firms in our sample provide significantly more specific guidance (in terms of forecast form and narrowness of forecast range) than non-family firms, especially when conveying bad news or offering confirmatory guidance. We also find that family firms use guidance to make smaller average adjustments to the markets estimate of the upcoming quarterly earnings than non-family firms, especially when conveying bad news. This is consistent with their being more timely in offering corrections to analysts estimates. More importantly, we find some evidence of a stronger and quicker response by analysts (as measured by the number of subsequent earnings estimate revisions and the speed with which they occur) to the guidance issued by family firms, and str ong evidence of a significantly greater investor response (as measured by announcement-period abnormal stock returns) to the guidance issued by family firms. These findings, taken together, indicate that guidance is more informative and more useful to the market when it is issued by a family firm. They are also consistent with family firms using guidance to create a more transparent information environment, which therefore, complements the finding of higher quality financial reporting by family firms in Ali et al (2007) and Wang (2006). Consistent with our expectations, we find little evidence of differences in the characteristics of preannouncements issued by family and non-family firms, although there is some (weak) evidence of family-firm preannouncements being more specific when they contain bad news.[4] Also consistent with our expectations, we find no evidence of a differential stock price response to preannouncements made by family and non-family firms, although we do find that analysts response more strongly to family-firm preannouncements, especially when they contain bad news. These results, when considered with the guidance results discussed above, suggest that family firms produce higher quality earnings forecasts than non-family firms, particularly when they are offered as guidance or contain bad news, and that their guidance is more informative and useful to investors and analysts. Thus, our paper provides evidence of family firms using management-generated earnings forecasts to create a more transpare nt information environment. Our paper contributes to two bodies of research: the growing literature on disclosures by family firms, as noted before, and the established literature on management forecasts. While our paper is most closely related to Ali et al. (2007), Chen et al. (2007) and Wang (2006), who examine the mandatory financial disclosures of family firms and the frequency of their voluntary disclosures, we also complement Anderson et al.s (2006) analysis of other dimensions of disclosure transparency. Anderson et al. (2006) find that family firms are significantly more opaque than non-family firms as measured by a summary statistic that captures the effects of trading volume, the bid-ask spread, analyst following and analyst forecast errors. Taken together, the evidence in Anderson et al. (2006) and our paper suggest that certain types of transparent disclosures appear to be better suited than others to mitigating the agency problem that arises between controlling and non-controlling owners. The literature on management forecasts is more mature and, as a result, guides much of the structure for our analysis. Consequently, we follow prior work by Ajinkya and Gift (1984), Baginski and Hassell (1990, 1997), Bamber and Cheon (1998), Baginski et al. (2002, 2004), Ajinkya et al. (2005) and others, in designing our tests. In a recent paper, Hirst et al. (2007) provide a review of this literature and propose a framework for continued research in this area. They observe that choices concerning the characteristics of management earnings forecasts are not yet well understood and suggest that additional work addressing this issue is needed. Our contribution to the literature on management forecasts is to analyze the differential impact of Type I and Type II agency problems on the characteristics of management earnings forecasts provided by family and non-family firms, including the time of their release, as well as the market and analyst reactions to them. Thus, we add to the initia l evidence on the underlying reasons for providing management forecasts in different forms and with different specificity—and on their impact of the stock prices of family and non-family firms. Finally, our results on confirmatory guidance support and extend the results in Clement et al. (2003). The rest of the paper is organized as follows. In Section 2, we review of the relevant literature and develop hypotheses. In Section 3, we describe our sample and data, and in Section 4, we present the empirical tests. We offer concluding remarks in Section 5. 2. Literature Review and Hypothesis Development Family firms are defined in the academic literature as firms in which founders or their descendants exercise control either because they are significant shareholders or because they are part of top management or the board of directors. Not only are family firms common in Europe and Asia (see, for example, LaPorta et al. 1999, Claessens et al, 2000, Gomez-Mejia et al. 2001 and Faccio and Lang 2002), they comprise approximately one-third of the SP 500 in the U.S. (Anderson and Reeb 2003a).[5] Further, family members ownership stakes are significant: Anderson and Reeb (2003a) report that in the SP 500, family members hold, on average, 18% of the voting shares in their companies. A large literature on family firms has recently developed in accounting and finance, much of it focused on the differences in agency problems that arise in family and non-family firms.[6] Of particular interest to us are the agency problems arising from (1) the separation of ownership and control, and (2) the conflict between controlling and non-controlling shareholders.[7] The papers that examine these conflicts generally argue that (1), referred to as the â€Å"Type I† agency problem in Ali et al. (2007), is less important for family firms because of the unusually close alignment of owners and management in those firms when compared to non-family firms (e.g., Ali et al. 2007, Chen et al. 2007, Wang (2006).[8] They also argue that the tight linkage between some owners and control in family firms exacerbates (2), referred to as the â€Å"Type II† agency problem in Ali et al. (2007), in which family members transfer wealth to themselves to the detriment of other sharehol ders. As is well known, such agency problems can be partially mitigated by frequent and transparent disclosure, suggesting that family firms are more likely to offer a variety of mandatory and voluntary disclosures whose implications are clearer to market participants.[9] In contrast, Wang (2006) suggests that family firms may not face a more severe Type II agency problem if the long-term nature of their investment is well understood by the market. In essence, he argues that long-term investors are less likely to exploit agency problems for short-term gain—thus, family firms may not need to resort to greater frequency or transparency of disclosures. Ali et al. (2007) and Wang (2006) empirically test these competing predictions by comparing aspects of the accounting disclosures made by family and non-family firms. Both find that earnings quality is higher for family firms, especially when a founder CEO is in place. Thus, both provide some evidence consistent with family firms mitigating their Type II agency problems—or responding to the demands of the users of financial statements—with higher quality disclosures. More specifically, Ali et al. (2007) document lower discretionary accruals and greater earnings persistence for SP 500 family firms compared to SP 500 non-family firms. In addition, they find that the association between earnings and stock returns is higher for the family firms. Similarly, Wang (2006) finds that SP 500 founding family firms have lower abnormal accruals, greater earnings informativeness and less persistence in transitory loss components in earnings. He extends this analysis by considering th e effect of the percentage of common stock owned by family members on the magnitude of the Type II agency problem. Interestingly, he finds that the relation is nonlinear: When founding family ownership is above (approximately) 60%, the quality of the earnings reported by non-family firms exceeds that of family firms. Ali et al. (2007) also provide some evidence inconsistent with family firms mitigating their more severe Type II agency problem through the use of disclosures: They observe that family firms are less forthcoming about their corporate governance practices and that when they employ a dual class share structure, earnings quality is lower relative to when they do not have such a structure. Another method for testing whether family firms mitigate the potentially more severe Type II agency costs—or respond to financial statement users demand for high quality accounting information—through greater frequency and transparency of disclosures is to examine the issuance of management earnings forecasts by family and non-family firms. Complicating this is the litigation argument proposed by Skinner (1994) and Kasznik and Lev (1995) which suggests that the use of earnings warnings will vary positively with the litigation risk that the firm faces, and inversely with the severity of the firms Type I agency problem (Ali et al. 2007). However, since the Type II agency problem is expected to be more severe and the Type I agency problem less severe in family firms (Ali et al. 2007), family firms would be expected to provide management forecasts to mitigate both types of agency problems, holding litigation risk constant. The relative severity of the Type II agency problem further suggests that family firms earnings forecasts will be of higher quality (i.e., more specific, timely and accurate), and that market participants (e.g., sell-side analysts and investors) will respond more strongly to them. Ali et al. (2007) provide initial evidence in favor of this hypothesis when they observe that family firms are more likely to provide earnings warnings (i.e., guidance that warns of a forthcoming earnings decline) than non-family firms. In a more recent paper, however, Chen et al. (2007) provide evidence that family firms make fewer voluntary disclosures than non-family firms. They collect ownership and founding family information from several sources to identify family firms in the SP 1500 and find that family firms are (1) 8.1% less likely to provide management forecasts of all kinds (i.e., annual and quarterly earnings, revenues, cash flows, etc.), and (2) less likely to hold conference calls as well. They also find, however, that family firms are more likely than non-family firms to issue bad-news earnings warnings. Chen et al. (2007) conclude that these results, when considered collectively, indicate that family firms owners prefer less disclosure because of their long investmen t horizon and effective monitoring of managers, but that their concern with reducing litigation costs results in an increased likelihood of bad news earnings warnings. In this paper, we hope to add to our understanding of the relative importance of the competing incentives studied in previous work by examining (1) the characteristics of management forecasts of quarterly earnings per share (both guidance, which is offered prior to the end of the quarter, and preannouncements, which are offered after quarter-end but before the actual earnings announcement) of family and non-family firms, and (2) the response of sell-side analysts and investors to those forecasts. In particular, we hope to add to our understanding of the disclosure choices of family firms by determining whether their own earnings forecasts are more specific, timely and accurate, consistent with family firms providing higher quality disclosures—and whether those forecasts are viewed as being of higher quality by market participants as measured by their response to the disclosure. We also separate our forecasts into guidance and preannouncements under the assumption that any fami ly-firm effect will be more likely to be observed in guidance because of the longer horizon over which the forecasts can be made. More specifically, in the case of preannouncements, there is a very short forecast horizon (e.g., a few weeks beyond the end of the quarter) and so we do not expect large differences in timeliness of the preannouncements between family and non-family firms. Further, because much of the uncertainty about the earnings numbers is resolved by quarter-end, differences in the specificity of preannouncements between family and non-family firms, if any, are likely to be small. Finally, motives to provide preannouncements are likely to be dominated by the litigation argument proposed by Skinner (1994) and Kasznik and Lev (1995).[10] If this is the case, differences in characteristics of voluntary earnings forecasts, and in market participants responses to them, are likely to be concentrated in guidance. As in prior research, we recognize that because of competing forces, whether the guidance of family firms is of higher quality is an empirical question. Thus, our formal hypotheses regarding guidance are non-directional, as in Chen et al. (2007) and Wang (2006): H1: The specificity, timeliness and content of earnings guidance is systematically related to whether the firm is classified as a family firm. H2: Sell-side analysts and investors responses to earnings guidance is systematically related to whether the issuing firm is classified as a family firm. 3. Sample and Data. Our sample is comprised of 4,130 management quarterly earnings guidance announcements issued between 1998 and 2006 by the family and non-family firms in the SP 500 as identified by Business Week in its November 10, 2003, issue. Business Week defines a family firm as â€Å"†¦any company where founders or descendants continue to hold positions in top management, on the board, or among the companys shareholders.† To identify family firms, Business Week relies on the methodology developed by Anderson and Reeb (2003a, 2003b) as well as their advice and the help of Spencer Stuart as they â€Å"†¦examined regulatory filings, company Web sites and corporate histories† to ensure significant family involvement in the company. (For details, see â€Å"Defining Family,† Business Week, November 10, 2003, p. 111.) Before proceeding, we want to highlight certain aspects of our sample. First, because the Business Week classification pertains to only SP 500 firms, the fi rms in our sample are among the largest, most stable and most profitable companies in the U.S. As a result, our findings might not extend to mid- or small-cap companies. Second, our reliance on the Business Week classification means that we do not form a new sample of family and non-family firms each year. However, as Ali et al. (2007) note, family firm status is sticky, and thus misclassifications due to changing firm status will most likely bias against our finding significant results. Third, Business Weeks classification scheme is designed to identify firms that are controlled by a family without relying on a single proxy for control, such as ownership share. As a result, it captures features of family firms, beyond simply having large blockholders, that are likely to exacerbate Type II agency problems. Fourth, by using Business Weeks classification, which is based on the â€Å"standard† developed by Anderson and Reeb, our results are more easily compared to many prior res ults. Finally, while we recognize that Business Week might not accurately classify every firm, both types of classification errors (i.e., misclassifying firms without significant family control as family firms, and misclassifying firms with significant family control as non-family firms) limit our ability to detect differences in the forecasts of family and non-family firms and therefore bias against our finding significant results. We form our sample by first gathering all forecasts of quarter-ahead earnings made between 1998 and 2006 by the SP 500 as of June 2003 from the First Call Company Issued Guidance (CIG) database. We lose 1,994 of the original 7,694 observations because of unavailability of (1) necessary Compustat and CRSP data, (2) actual earnings per share and other analyst forecast data from First Call, and (3) observations with multiple actual earnings per share numbers. After deleting stale forecasts (those made before the prior quarters earnings announcement date), we retain all â€Å"guidance† observations (forecasts made at the same time as or after the prior earnings announcement and at or before the quarter end, N = 4,332). We trim the sample to mitigate the effect of outliers as follows. First, we eliminate the top and bottom one-half percent of the management forecast errors in each sample, the top and bottom one-half percent of the forecast surprises in each sample, the top and bott om one-half percent of the three-day cumulative abnormal returns in each sample and finally, the top and bottom one-half percent of return volatility ratios in each sample—and retain the union of the remaining observations. (These variables are defined in the Appendix and will be discussed in detail later.) We then eliminate 62 firm quarter observations whose stock price is less than $5 as of the beginning of the quarter. This results in a final sample of 4,130 guidance announcements. One-hundred-and-forty six of the 177 family firms identified by Business Week (82.5%) provide guidance during our sample period as compared to 240 of the 323 non-family firms in the SP 500 (74.3%). [11] Before turning to the empirical analysis, we note for the reader that the management guidance we gather from the CIG database is not split-adjusted whereas the analysts estimates and reported earnings per share in the main First Call file are (further, they are rounded to the nearest penny). An I/B/E/S unadjusted data file is available but unfortunately, we would lose a significant number of observations if we were to use it. Consequently, to keep the sample size as large as possible and still allow for comparability, we split-adjust the management guidance from the CIG file using the split-adjustment procedures used for the analysts estimates and reported earnings per share in the First Call file.[12] 4. Empirical Analysis. 4.1. Univariate Analysis. We present descriptive statistics for the guidance announcements, firm-specific characteristics and variables relating to analysts and stock returns in Table 1. We also include the results of two-sample t-tests and Wilcoxon signed rank sum tests for each variable. As noted before, we provide a list of variables and their definitions in the Appendix. We begin with forecast characteristic metrics designed to help us understand the differences, if any, in the specificity, timeliness, frequency and content of the earnings forecasts offered by the management of family and non-family firms. We present descriptive statistics first for the form of the forecast (an indicator of specificity) as measured by Forecast Form. As is well known, forecasts in the CIG database take one of several forms, which we code in the following manner: If the forecast is a specific earnings per share number (a point forecast), it is coded as 4; if it is a range of possible earnings per share numbers (a range forecast), it is coded as 3; if it consists of a one-sided directional forecast (either a maximum or minimum forthcoming earnings per share number), it is coded as 2; and if it contains no quantitative information (a qualitative forecast), it is coded as 1.[13] Note that our coding scheme is designed so that a higher value of Forecast Form indicates a mo re specific forecast. To further examine forecast specificity, we focus next on Forecast Width for range forecasts, which measures the difference between the maximum and minimum earnings per share figures offered in the forecast. (A narrower width indicates a more specific forecast.) In later tests, we include point forecasts as forecasts with a width of zero. To examine forecast timeliness, we use Forecast Horizon which is the number of calendar days from the management forecast date until the end of the quarter. More days in the forecast horizon indicate more timely forecasts. Finally, we form Annual Frequency and Quarterly Frequency variables, which measure the number of annual and quarterly management forecasts for each of our sample firms in the CIG database from 1994 through 2006, scaled by the total number of possible forecasting years (for Annual Frequency) or quarters (for Quarterly Frequency) to date. The descriptive statistics and statistical tests for Forecast Form provide initial evidence consistent with family firms issuing significantly more specific guidance than non-family firms. In particular, Forecast Form has slightly higher numerical values, on average, for family firms (p = .028, using the Wilcoxon test).[14] To further explore the potential differences, we examine the frequency distributions of the forms that guidance takes, as presented in Figure 1. As is obvious from the figure, range forecasts are by far the most common form of guidance for both family and non-family firms, making up nearly two-thirds of all guidance in our sample. Further, both family and non-family firms offer approximately 89% of their guidance as point or range forecasts. However, family firms offer relatively more of the more specific point forecasts (28% versus 23% for non-family firms) and relatively fewer of the less specific range forecasts (61% versus 66% for non-family firms).[15] Conver sely, guidance in the form of qualitative statements or minimum/maximum earnings per share numbers is unusual in our sample, regardless of the type of firm examined. The small number of qualitative forecasts in our First Call sample is inconsistent with Hutton et al. (2003) and Miller (2002), who find a substantially larger number of such forecasts when hand-collecting their samples than are included in the First Call database. (Anilowski et al. 2006 also suggest that First Call is more likely to include quantitative forecasts than qualitative ones.) This suggests that our sample is most likely incomplete and most representative when only quantitative forecasts are considered. For these reasons and because many tests require that we restrict attention to point and range forecasts, we will generally focus our discussion on point and range forecasts only. As just noted, range forecasts are the most common type of guidance in our sample. While it is clear from Figure 1 that non-family firms issue more range forecasts as guidance than family firms, Table 1 indicates that those issued by family firms are significantly narrower, as measured by Forecast Width (p = .000 for both the Wilcoxon and the two-sample t tests). This finding, when considered with the preliminary evidence of greater usage of point forecasts by family firms, suggests that guidance issued by family firms is generally more specific than that issued by non-family firms, consistent with H1. The next two forecast c