Investigation of Select Financial Sector Organizations - Free Essay Example

Sample details Pages: 11 Words: 3253 Downloads: 2 Date added: 2017/06/26 Category Finance Essay Type Narrative essay Did you like this example? Strategic alliances and Mergers and Acquisitions (MA) are the dominant corporate strategies followed by organizations looking for enhanced value creation. The growing tendency towards mergers and acquisitions (MAs) world-wide, has been driven by intensifying competition. There is a need to reduce costs, reach global size, take benefit of economies of scale, increase investment in technology for strategic gains, desire to expand business into new areas and improve shareholder value. Don’t waste time! Our writers will create an original "Investigation of Select Financial Sector Organizations" essay for you Create order During the first wave (i.e., 1990-95), the Indian corporate houses seem to have been bracing up to face foreign competition while the second wave (i.e., 1995-2000) experienced a large presence of multinational firms [Beena 2000]. The third wave of MAs in India (2000-till date) is evident of Indian companies venturing abroad and making acquisitions in developed and developing countries and gaining entry abroad. The relative size of target and acquiring firm has also increased. The size differences between the bidder and target firms influence acquisition performance and large acquisitions would have a greater combination potential [Kitching 1967]. MAs also determined, to a large extent, the nature of foreign investment in the country during this period. MA comes in all shapes and sizes, and investors need to consider the complex issues involved in MA. The most beneficial form of equity structure involves a complete analysis of the costs and benefits associated with the deals. Corporat e restructuring including MAs have given rise to a host of important issues for business decisions, for public policy formulation and economic regulations. While business firms can grow both internally and externally, with increased global competition, it has become imperative for the business firms to grow inorganically that is externally. A look at the sectoral trends reflects that Indian financial sector is adopting inorganic strategies to grow its businesses. The Indian financial system comprises an impressive network of commercial banks (CBs), co-operative banks (CPBs), development finance institutions (DFIs) and non-banking financial companies (NBFCs). Researchers and economists have observed that due to smaller size, the Indian commercial banks may find it very difficult to compete with international banks in various facets of banking and financial services in the post 2009 scenerio. The entry of foreign banks was restricted earlier, but since 1991 a number of foreign banks have been allowed to operate in India. To enhance competition, foreign direct investment up to 74 per cent of ownership has been allowed in private banks and up to 20 per cent in nationalized banks. The banks have also been allowed to enter into insurance business either as joint venture participants or to take up strategic investment for providing infrastructure and services. Consequently, the number of foreign and private banks operating in India increased from 21 and 23 in 1991 to 33 and 30, respectively, in 2004. For the Indian financial sector organizations, one of the strategies to face the intense competition could be, to consolidate through the process of mergers and acquisitions. India is slowly but surely moving from a regime of large number of small banks to small number of large banks and larger the bank, higher its competitiveness and better prospects of survival appears to be the mantra for success. However, there is little published empirical literature on the impact of MAs in India. This study is an initial attempt to fill this void. The aim of this study is to find out the impact of mergers and acquisitions on corporate performance in Indian context particularly in relation to companies of financial sector. The rest of the paper is organized as follows. Section 2 discusses the present status of MA in India. Section 3 elaborates the related literature. Section 4 describes the data. Section 5 discusses the impact of value creation for the merged or acquiring firms before and after merger. Section 6 concludes with avenues for future research. 2. The Present status of MA in India During the last decade, there has been a sharp increase in the number of mergers and acquisitions in India. The largest MA transactions involving an Indian company until now are depicted in Table 1. India has experienced upward trend in outbound deals (Figure 1). It is expected that in next decade (2010-2019), global MA deals by Indian industries is likely to more than treble and the domestic consumption oriented businesses like telecommunication and healthcare will throw up global scale Indian companies. Even as the economic slowdown has impacted overall merger and acquisition (MA) activity in Asia Pacific, India along with Japan and China is among the top five countries in the region with the highest number of MA deals in the first three months of 2009. India is among the top countries in the region in terms of MA activity in the first quarter of 2009 even as deals saw a 72 percent decline from the same period a year ago. PricewaterhouseCoopers lists India amongst the top three emerging markets to watch out for over the next 18 months, in terms of attractiveness for deals (Alaganandan et.al, 2009). According to global consultancy firm Grant Thornton, the total number of MA deals announced in January 2009 stood at 18 with a total announced value of USD 970.85 million against 63 deals amounting to USD 1.66 billion in January 2008. Indian Industries announced more billion dollar MA deals in 2008 compared to the previous year when the markets were on a bull run. Although involving the m ega $10 billion plus deals of last year, Tata Corus and Vodafone-Hutch were missing in 2008, there were however other large size transactions which kept the Indian -bankers busy. HDFC banks acquisition of Centurion Bank of Punjab was the lone large domestic MA deal in 2008. Marking the largest-ever deal in the Indian pharmaceutical industry, Japanese drug firm Daiichi Sankyo in June 2008 acquired the majority stake of more than 50 per cent in domestic major Ranbaxy for over Rs 15,000 crore ($4.5 billion). The deal created the 15th biggest pharmaceutical company globally, and is Indias 4th largest MA deal to date. Insert Table-1, Figure-1 here MA research has also peaked during the last decades and the research material on different aspects of MAs is extensive. In our paper, we have reviewed literature covering motives of MA and specifically the impact of MA on financial viability of the companies. Despite the empirical evidence on MA in general, very little is known on how they have performed in financial-based industries. Therefore, our paper attempts to fill the void by evaluating the financial performance of MAs particularly of financial sector companies in India , before and after merger and to assess its impact in terms of value creation for the merged or acquiring firms. 3. Extant Work and Hypothesis Development Extensive research is available in context to MA. It has been observed that they primarily cover nature of mergers in terms of their management, profitability and efficiency of merging companies, operating and financial synergies, post-merger operating performance of acquiring firms and comparison of pre- and post merger financial ratios in India (Table A). Insert Table A Here The above body of work has provided considerable knowledge on MAs concepts, and scholars have proposed additional research into many issues. But bulk of research has been in the context of U.S and European industries. At this juncture, it is pointed out that it is important to also study industries in context to India. In this paper we find out the impact of mergers and acquisitions on corporate performance in Indian context particularly in relation to companies of financial sector. Studies by Surjit, 2002; Swaminathan, 2002; Arora, 2003 have guided the methodology employed in the paper. Surjit, 2002 carried out an analysis of 20 merging firms to compare the pre and post takeover performance, applying a set of eight financial ratios. He found that profitability and efficiency of merging companies declined in the post takeover period. Swaminathan, 2002 studied the sample of five companies and found that four of the five acquiring firms improved operating and financial synergies (measured through financial ratios). In a recent survey article, Bruner (2002) summarizes the findings of 130 studies conducted during 1971-2001. The results of the studies that focused on short-term returns suggest that tar get shareholders earn significantly positive abnormal returns and that bidders earn zero risk-adjusted returns. The combined returns of bidders and targets are positive. Arora, 2003 examined the post merger performance of merged companies using the value added metrics of corporate performance such as EVA, MVA and RONW. Drawing on the existing evidence we thus state our two hypotheses as: Ho: There is no significant difference between the financial performance of the companies before and after the merger that is Ho: ÃÆ'Ã… ½Ãƒâ€šÃ‚ ¼ = 0. Ha: There is a significant difference between the financial performance of the companies before and after the merger that is Ha: ÃÆ'Ã… ½Ãƒâ€šÃ‚ ¼ ÃÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã‚ °Ãƒâ€šÃ‚   0. 4. Data and Methodology a. Sample Description This empirical study analyses the financial data of selected merging firms in the period 2000-2008. In order to evaluate the financial performance of the merging firms in the long run, at least three years financial data is required. Therefore, 2003, 2004 and 2005 are considered as the event years to identify the MA deals in India and to compare the financial performance of the cases pre merger and post merger during 2000-2008. The pre merger years taken for comparison are from 1st April, 2000 to 31st March, 2003 and years 1st April, 2005 to 31st March, 2008 are taken as post merger years (figure A). The data is collected from various sources; CMIE database PROWESS, newspapers, magazines and journals. Insert Figure A Here In all 491 (all industries) mergers took place during the event period. Our study concentrated on the financial sector companies. The sample under study includes 17 companies in financial sector (Table B). The financial data for these 17 companies is collected for six years i.e. for three years pre merger and three years post merger period (average of three years) using Prowess database of Centre for Monitoring Indian Economy (CMIE). In order to test the hypothesis Wilcoxon Signed Rank Test is used for four parameters. These are: Overall profitability parameters from Return to Equity Shareholders point of view, return on net worth and earning per share are calculated. Liquidity parameters- current ratio is measured Solvency parameters debt to equity is calculated Overall efficiency parameters- profit before tax and profit before tax to total income Insert Table B Here b. Wilcoxon Signed Rank Test Methodology Wilcoxon Signed Rank Test is a non-parametric statistical hypothesis test for the case of two related samples on a single sample. The Wilcoxon signed rank test compares the median of a single column of numbers against a hypothetical median. The raw figures were obtained for the above said parameters and signed rank test is carried out to assess the difference in the performance between pre-merger and post-merger. In our study XA denotes pre-merger and XB denotes post-merger. The Wilcoxon signed rank test computes W ± and the number of signed ranks is designated as ns/r that is equal to number of XA XB pairs (that is number of companies) minus the number of pairs for which XA- XB=0. The test statistic z is computed and probabilities observed are compared with desired level of significance (0.05) to accept or reject null hypothesis. 5. Empirical Results I. Overall profitability parameters (Return to Equity Shareholders) In the present study Return to Equity for shareholders is measured with the help of two ratios: Return on Net Worth and Earning Per Share. The use of both these ratios presents a broad picture of a companys efficiency, financial viability and its ability to earn returns on shareholders funds and capital employed. Return on Net Worth (RONW) RONW measures the rate of return on the shareholders equity of the owners. It measures the companys efficiency of using the capital (shareholders funds) entrusted to it and generating profits. The average amount of net worth of financial sector (Table 2) companies after merger was higher than that of pre merger period. Major observations in Table 2  · Out of 17 merger cases of financial sector, 11 merging firms showed a positive sign, i.e. increase in RONW and 6 merging firms showed decline in net worth. Among the sample, 3 merging firms showed negative net worth during post merger period. In the next step, we perform non-parametric (Wilcoxon) test to verify whether there is difference between the pre and post merger efficiencies. The result seems to be consistent with our null hypothesis at 5% level of significance (z = 1.051.64) with p value 0.29370.05 (2-tail test) and 0.14690.05 (1-tail test). Therefore, for financial sector companies we accept the null hypothesis and observed the difference between pre and post merger RONW to be not statistically significant. Insert Table-2 here Earning Per Share (EPS) In order to get true idea of return on investment owner should evaluate his investment returns not on the basis of the dividend received, but on the basis of the EPS i.e. earnings per share. The more the EPS better are the performance and prospects of the company. Major observations in Table 3 The EPS of merged company during pre and post merger periods given in Table 3 can be interpretated as:  · It is interesting to note that among the sample of 17 merging cases, 15 merging firms indicate increase in EPS and only 2 merging firms showed decrease in average of three year of EPS during post merger period when comparing with pre merger performance of same cases.  · Also out of 17 merging cases, EPS of 9 firms increased more than fifty per cent during post merger period as compared to pre merger performance of the companies.  · 2 merging firms having negative value, showed an increase in EPS during post merger period but it was observed that inspite of increase in amount of EPS the value was still negative. We also find that the null hypothesis is rejected as z=3.091.64 at significance level of 5% and the difference is statistically significant at two tail test (p value=0.002) and one tail test (p value=0.001). Hence, we find that there is a significant correlation between financial performance and the MA deal. Insert Table-3 here II. Liquidity parameters Liquidity ratios measure the short term solvency i.e. the firms ability to pay off current dues. In the present study current ratio is used to check the liquidity of the firm. Current Ratio In a sound business, a current ratio of 2:1 is considered an ideal one. A very high ratio will result in idleness of funds and therefore, is not a good sign. On the contrary, a low ratio would mean inadequacy of working capital. Major observations in Table 4 The results of the current ratio of sample merging firms before and after merger have been presented in Table 4.  · Among the 17 merging cases, 7 merging firms showed increase in current ratio and 10 merging firms showed decrease in current ratio.  · In the case of Laxminarayan Investment Ltd. current ratio increased from 1 times to 10 times (approx.), showing a huge increase in working capital, it can be interpreted that the firm may have idle funds available as current assets, which increased relatively with greater speed than current liabilities. By running Wilcoxon test null hypothesis is proved for financial sector companies as z=1.011.64 at 5% level of significance and difference between pre and post merger current ratio position is not statistically significant as inferred by p value (2-tail)=0.3125 and p value (1-tail)=0.1562. Insert Table-4 here III. Solvency parameters Solvency parameters indicate the ability of an enterprise to meet its long term indebtedness (obligations). In this study debt-equity ratio is used to measure the solvency position. Debt-Equity ratio The debt to equity ratio is worked out to ascertain soundness of the long term financial policies of the firm. A higher ratio indicates a risky financial position while a lower ratio indicates safer financial position. The debt to equity ratio of sample merged companies during pre and post merger period of financial sector is exhibited in Table 5. Major observations in Table 5  · Out of 17 merging firms, there was increase in debt to equity ratio of 11 merging firms, which means that debt (leverage) in the firm increased. It is important to note that the average increase in the value of 4 firms over three year was small.  · 2 firms out of 17 merging cases showed decline in debt to equity ratio. As per the results from the Wilcoxon test we reject the null hypothesis for financial sector companies with z=2.461.64 at 5% level of significance. The difference is statistically significant as p value = 0.0069 (1-tail test and p value = 0.0139 (2-tail test). Insert Table-5 here IV. Overall efficiency parameters The main objective of business is to earn profit. Therefore, efficiency in business is measured by profitability. Thus, a measure of profitability is the overall measure of efficiency. To check the overall efficiency of the merging cases, profit before tax, profit after tax and profit before tax to total income are calculated. Profit before tax (PBT) Profit before tax, or PBT, measures the profits of the companies before paying corporate taxes. Table 6 depicts PBT of the merging cases in financial sector and can be interpreted as follows: Major observations in Table 6  · It is interesting to know that all 17 merging cases taken under study have shown increase in the profit before taxes.  · Among these 17 merging cases, 5 companies had negative profits before taxes during pre merger period but it is observed that during post merger period the average of three years profit before taxes was positive. It can be interpretated as good sign for the companies going for merger. Insert Table-6 here Profit before tax to Total income Profit before tax (PBT) to total income is the relationship between profit before tax and total income incurred by the business. The results of PBT to total income of sample merging firms before and after merger of financial sector companies have been presented in Table 7. Major observations in Table 7  · It was observed that out of 17 merging cases in financial sector, 11 firms showed increase in PBT to total income and 6 firms showed decline in ratio. When we perform non-parametric Wilcoxon signed rank test, the results for PBT were found to be inconsistent with the null hypotheses and we reject the same as z = 3.61 at 5% significance level and p value =0.0002 (1-tail) and 0.0003 (2-tail). On the other hand the results of PBT to total income were found to be consistent with the null hypothesis at z = 1.43 at 5% significance level and p value = 0.0764 (1-tail) and 0.1527 (2-tail). Insert Table-7 here 6. Conclusion With the series of MA taking place in financial sector in India more than half of the merging firms showed improved financial performance in the post merger time period as compared to the pre merger period. Our study produced several interesting findings. First, earning available to shareholders and debt to equity ratio showed a significant change in pre and post merger financial position of the companies. Second, contrary to our expectations, we found the change in the return on net worth, liquidity position and profit before tax to total income of the companies to be not statistically significant. Overall, the result of the study indicate that in most of the MA cases, in the long run the acquiring firms were able to generate value creation in one or the other form, that is higher cash flows, cost cutting and greater market power, however in spite of improved financial performance sixty four per cent of cases showed increased debt to equity ratio. It is also significant to note that profit before tax in all the merging cases has shown a positive trend for both financial sector companies.

Environmental Pollution Simulation Review and Summary Essay

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Question: Discuss about the Decision Making for Concepts, Techniques, and Extensions. Answer: Introduction: Decision-making tool assists the organization in identifying the activities needed to take place for any decision and executing them. With the help of these tools, organization is able to determine the roles required to be played by an individual. Analysis of two decision tools are done by comparing the possible results of the tools. The selected tools of decision-making is used to solve the problems faced by healthcare organizations in Saudi Arabia. Two decision-making tools selected for discussion are Delphi techniques and decision tree. Problems faced by healthcare organizations have been solved using the selected techniques. Effective decision-making is critical for the survival of organization (Anderson et al., 2015). Discussion: Analysis of decision is about the evaluation of cost effectiveness of different treatment options available and select between the available options. Decision analysis has been utilized for evaluating the cost effectiveness of many clinical options available such as laparoscopic sterilization, hysteroscopic, HIV screening and sentinel lymph node biopsy. Decision tools would assist the healthcare organizations in selecting among the available treatment options based on their cost effectiveness (Betsch Haberstroh, 2014). Decision tree are the tools that is used by organization ion selecting among the alternative course of actions. It is represented by a tree shaped diagram, which is used to show a statistical probability or a course of action. Structure of tree depicts how one choice leads to other and branches is indicative of the fact that options available are mutually exclusive. It is used by clinical managers to graphically represent the actions need to be taken and relating them to future events. Cost of different treatment options are assessed under the decision tree by adding up the various consequence of different treatment options available to healthcare (Hartman et al., 2014). Adjusted cost of any single decision is nothing but the monetary cost of each consequence multiplied by their probability. Difference between the costs of different options is obtained by dividing the difference between various options total effects. Primary outcome of cost effectiveness of options is yield by the in cremental cost effectiveness ratio. In order to decide the most effective treatment options, it is necessary to establish a point at which the decision is made superior to other using cost differentials. Decision tree are helpful in avoiding framing bias (Hunink et al., 2014). Therefore, using this tool of decision-making, organization would be able to make a choice among the most cost effective treatment options. This would solve the problem of increasing ballooning with rising cost of healthcare. A quantitative Delphi analysis are related to panel size and questionnaire designs. In order to gain consensus in this paradigm, the technique used is obtaining an agreement level (Yu, 2013). Other rating techniques are also used to reach the consensus. Here, the consensus is about using the most cost effective treatment options. Rating techniques includes the ranking elements for importance and mean calculation for identification of most important to the least important elements. In addition to this, likert type scales are used for determining which elements should be used and which should not be used. Structuring of the questionnaires, number of participants and types of question forms the basis of nature of analysis (Romiszowski, 2016). All the responses are placed on an equal footing using this method. Irrelevant information are discarded, summarize and filtered using this method. Delphi technique is a method, which is used to estimate the outcome and likelihood of future events. This process is regarded as unique because it uses a written process to a series of questionnaires. A set of multiple questionnaires is prepared, which the individuals are asked to respond. After a group reaches a consensus, process comes to end. If required, the responses can be kept anonymous. It can be seen from the above discussion that Delphi technique are considered to be effective than Decision tree in determining the cost effectiveness of different treatment options. The distinct characteristics of Delphi method is contributed by its usefulness as an instrument of research in policy decision making and forecasting for a long range. This technique enable the healthcare organizations to have a sense of ownership by translating it into a more effective and efficient resolution to a problem. It would be better to adopt Delphi technique in choosing among the available alternatives as it helps in the improvement of decision making process accuracy by making use of controlled feedback and eliminating logistical impediments of face to face meetings (Oshima Emanuel, 2013). Delphi technique helps in obtaining primary source of effectiveness of data. Adopting the Delphi technique would be a better option in determining and choosing selected options as it helps in reaching the collective options and expressing in terms of statistical score. Delphi technique is considered to be more effective than decision tree because the process of applying framework of decision tree to clinical decision making are time consuming and inclusion of clients within the process is not always appropriate. Decision tree offers a method of assigning numerical approach for supporting complex decision-making (Kaner, 2014). However, a common approach is offered by using decision tree that assist the professionals in examining various options available to them in depth. Conclusion: Decision making in healthcare organizations should be made through the implementation of wide variety of decision-making tool, techniques and through intensified planning. Effective decision-making techniques should assure objectivity and eliminate all the personal biases and predetermined judgments. It should also satisfy the needs of management of organization by bringing about the most appropriate decisions. It is recommended to adopt Delphi technique for taking decision concerning cost effectiveness of different treatment options available to healthcare organizations. Healthcare organizations adopts the decision-making techniques based on the types of situation. The current situation concerns with selection of the most cost effective options for treating its patients. In this regard, it is recommended from the above analysis and discussion that Delphi technique would be the suitable option for taking decision. Reference: Anderson, D. R., Sweeney, D. J., Williams, T. A., Camm, J. D., Cochran, J. J. (2015).An introduction to management science: quantitative approaches to decision making. Cengage learning. Betsch, T., Haberstroh, S. (Eds.). (2014).The routines of decision making. Psychology Press. Hartman, L. P., DesJardins, J. R., MacDonald, C., Hartman, L. P. (2014).Business ethics: Decision making for personal integrity and social responsibility. New York: McGraw-Hill. Hunink, M. M., Weinstein, M. C., Wittenberg, E., Drummond, M. F., Pliskin, J. S., Wong, J. B., Glasziou, P. P. (2014).Decision making in health and medicine: integrating evidence and values. Cambridge University Press. Kaner, S. (2014).Facilitator's guide to participatory decision-making. John Wiley Sons. Oshima Lee, E., Emanuel, E. J. (2013). Shared decision making to improve care and reduce costs.New England Journal of Medicine,368(1), 6-8. Romiszowski, A. J. (2016).Designing instructional systems: Decision making in course planning and curriculum design. Routledge. Yu, P. L. (2013).Multiple-criteria decision making: concepts, techniques, and extensions(Vol. 30). Springer Science Business Media.

Has the Change in Stereotype of Accoutants Benefited the Profession free essay sample

It is evident that, over the past 20 years, the stereotype of accounts has changed dramatically. Factors such as; more women entering the accounting profession, advances in technology, and also globalisation have all played their parts in changing the stereotype of accountants for the better. More women entering the workforce has led to increased job competition and social evolution that has changed the typical personality and behavioral attributes of accountants. Advances in technology have brought about greater efficiency, accuracy, accountability, and performance in the accounting profession, and has also led to greater access to accounting. Globilisation has also given rise to a significant change in the role and duties of accountants over the last three decades, with the stereotype shifting from just a local business to multinational accounting firms. This paper will discuss how the stereotype of accountants has changed and how this has affected the profession over the past 20 years. One of the major contributing factors to the change in stereotype of accountants is the increasing number of women entering the workforce and the profession over the past 20 years. The stereotypical accountant historically has been viewed typically as a male who is precise, methodical, conservative and of boring joyless character. (Friedman et al, 2001; Jeacle, 2008). In the last 20 years, several factors have helped change this stereotype of an accountant. One significant factor is the increase of women entering the accounting profession. By the late 1980’s women accounted for about 50% of all new employees entering the accounting profession, however of that 50% only 2% of these females were reaching the senior management or partner roles in any of the big 6 accounting firms (Maupin, 1993). The large increase of women into the workforce and specifically the accounting profession in the last 20 years, inspired researchers to find out what, if any, effects this has had on the accountant stereotype that has existed for the last 50 years. Research was carried out to determine the effect the increase of women have had on the accounting profession and why senior management and partnership roles were held disproportionately to that of which they are entering the profession (Maupin, 1993). Research conducted by Raffield amp; Coglitore (Unknown) showed that different personality traits and behavioural patterns were significant in the influence they had on the advancement in the accounting industry. They conducted a survey on male and female accountants to examine the different personality traits and behavioural patterns that the respondents believed to be the most important in allowing them to advance in the profession(Maupin, 1993; Raffield et al, Unknown). The results showed that males and females had very different views on which traits were significant in advancing their career. Males ranked 5 masculine traits and 2 feminine traits as being significant, where women rated 3 masculine and 8 feminine in being significant (Raffield et al, unknown). Although males mainly ranked masculine traits as the most important traits the results show that feminine traits are beginning to have an influence in the industry. This shows that the stereotype that existed years ago has significantly changed. Although slowly, the accounting profession is starting to benefit from its changed stereotype, with a stereotype now that is one of more diverse personality and behaviour it will attract many new and creative people. Another significant factor that is changing the accounting profession is that with the increase of both males and females, competition for employment is greater than in recent times which have helped increase the standard of professional accountants (Flegm, 1996). This has led to accountants changing the way the work, previously accountants were reclusive, quiet and passive males but with the increase of women into the accounting profession this has changed and accountants are now expected to be more socially inclined, adventurous and outgoing (Jeacle, 2008). Changes and advances to technology is another factor that has had a considerable impact on the stereotype of accountants. The impact of technology will become a severe problem for us if we do not deal with it before it deals with us, said by Ronnie Rudd, who is the chair of National Association of State Boards of Accountancy form 1995 to 1996. The business climate has changed over the past 20 years, which has led to the critical issue that the accounting profession must be regulated and must also change. In the nineties, most accountants used pencils to create paper spread sheets and ledgers, and several accountants shared a few adding machines and a mechanical calculator (Schnur, 2008). Now every accountant has their own computer, and enter and store their data electronically. The new technology can create file returns and reports via internet when possible, sending clients’ documents immediately, and any errors can by fixed by one quick keystroke (Schnur, 2008). It became much simpler for accountants to keep track of information on a minute-by-minute basis and completely eliminated most mistakes. This has led to greater efficiency and accountability, and has changed the face of accounting considerably. Technology has changed accounting practice, and also brings about significant advantages (Anonymous, 2011). The advantages have led to the improved efficiency of accountants, continued growth in the accounting profession, and have also simplified the accounting practice. For example, the same tax return took accountants upwards of two hours just a few years ago, whereas now it only takes 15 minutes (Anonymous, 2011). Technology has allowed the accounting profession to manage its increased workload and client base, whilst being aware of the challenges of rapid growth and employing technology to overcome those obstacles. Technology also led to a change outside the profession, where individuals can keep track of their own money through online banking, software programs to do their own taxes, and automatic bill paying (Schnur, 2008). However, the advances in technology can also bring about great risk. The new technology brings various risks and challenges into accounting practice, such as accounting software being prey to sabotage and other forms of destructive action. In fact, more than 200 of the largest companies’ accounting environments are at significant risk in the event of a disaster. The new technology also creates security risk and privacy risk (Fox, 2009). Privacy risk can be defined as the risk that information will be compromised from internal and external threats. The major problem is the disclosure of he accounting information in new technology, for example, most companies use information technology outsourcing to cover demand for high upfront costs of equipment, network connectivity and personal reasons (Fox, 2009). By bringing in a third party the companies are increasing the risk of information safety and privacy, as it is uncertain whether that party can be fully trusted, and they are also taking on new risks associated with that party. Most security risks relate to the use of new technology for creative accounting (Fox, 2009). Creative accounting refers to accounting practices that may follow the letter of the rules of standard accounting practices, but certainly deviate from the spirit of those rules. Some accountants are using the new technology to create premature revenue recognition, extended amortization periods and understated operating liabilities (Mulford, 2009). Fraud is still possible, but this has led to new areas of accounting work, such as forensic accounting. However, the new computer programs can help track any attempts to initiate fraud. This area of accounting protection and investigation will continue to grow and evolve (Mulford, 2009). Another area that has led to a dramatic change in the stereotypes of accountants and the accounting profession is globalisation. Technological advances and deregulation have increased the ease of communication and made international accounting easier creating globalisation, which is continually making the business world smaller and more internationally cohesive. â€Å"Each day, it becomes harder for accountants everywhere to remain insulated from what goes on outside of their countries borders. (Khatibhave, 2011). Globalisation meant that outsourcing accounting internationally could in some cases be more effective; this shifted the stereotype of accountants from a local business to the existence of Multinational accounting firms. Although this did reduce the number of locally or nationally focused accountants they could never be completely replaced due to increased costs and genera l hands on nature of the accounting practice. In his key note speech the Tanzanian deputy minister of finance referred to globalisation’s effect on an accountant’s stereotype as a move from â€Å"office bean-counters, as a result of their skills, experience and abilities, to becoming natural leaders in the board room. † (Khatibhave, 2011). As they take charge of global audits for multinationals, they are becoming closer to mimicking a role of an advisor or entrepreneur rather than an office clerk. As the different countries accounting industries became more integrated it was clear that changes needed to be made and accounting standards were among the first aspects to be affected. Before international trade, each country had its own standards of accounting and accounts from the area were only ever scrutinised under their standards thus making them comparable and relevant to each other. International companies however, are examined and compared under a number of different standards, making international investment difficult. Although the standards are similar in most respects these minute differences can alter the overall perception of a company’s financial position. The introduction of these International Accounting Standards is moving accountants’ practices away from Generally Accepted Accounting Principle (GAAP). Globalisation has also distanced a company from its shareholders where internationally, they can be removed from the same economic, fiscal and legislative influences then the company itself. It has become the role of accountants to capture a picture of how the company has reacted and adapted to these external forces. Accountants have had to take on a lot more risk assessment, especially when auditing or assessing acquisitions and takeovers. Although accounting is based in the international language of numbers, language has become a larger barrier for new aged accountants. There has been significant transformation in the role and duties of accountants over the last three decades (Albrecht amp; Sack, 2000), where globalisation has given birth to a more specified form of accounting. Not only are multinational countries hiring accountants who specialise in a country’s dialect, but also in their tax and financial systems. It is evident that, numerous factors have led to a significant change in the stereotype of an accountant over the past 20 years. For the most part, changes such as; women entering the workforce, advances in technology, and globalisation have benefited the accounting profession and stereotype as a whole. Whilst there are elements of the above factors that have not benefited the accounting profession, such as, the advances in technology that have led to greater security and privacy risk, the benefits far outweigh the disadvantages brought about by the changes to the accounting profession.