Funny in Farsi Immigration Free Essays

America has often been called â€Å"The Land of the Free†, where opportunities are like the bounteous fish caught at sea; the catch may be large or small, may come sooner or later. Just as the Gold Rush prompted for many miners to come about, the promising opportunities have prompted for immigrants to pour into in America. Although this chance for a new beginning has vastly beckoned immigrants, there are sacrifices immigrants must make along with newfound chances. We will write a custom essay sample on Funny in Farsi Immigration or any similar topic only for you Order Now Succumbing to social alienation is one of the sacrifices that immigrants must make. In the memoir, Funny in Farsi, by Firoozeh Dumas, and the studies of Djuro J. Vrga on Differential Associational Involvement of Successive Ethnic Immigrations: An Indicator of Ethno-Religious Factionalism and Alienation of Immigrants, the depths of social alienation and its influence on immigrants are reviewed. Dumas’ memoir describes the experience of an Iranian growing up in America, whilst Vrga’s study is applied to different sociocultural aspects of life immigrants may encounter. Cultural differences in morality, ethics, values and political standings all play an substantial role when discussing social alienation. However, more often than so, the Americans are the social alienators while the immigrants are the socially alienated. Though Americans were once so to speak—immigrants, as if Americans are rotten crops from the harvests of heritage, immigrants are the freshly picked fruits of culture and tradition, and a batch of flawless tomatoes obviously stand out amongst the rundown veggies. Firoozeh Dumas highlights the awkward feelings entailed with social alienation as a theme throughout the memoir. Dumas recalls on several occasions how uneasy and disturbing it is to be singled out, â€Å"I cringed. Mrs. Sandberg, using a combination of hand gestures, started pointing to the map and saying, â€Å"Iran? Iran? Iran? † Clearly, Mrs. Sandberg had planned on incorporating us into the day’s lesson. I only wished she had told us that earlier so we could have stayed home. † (Dumas 6). Merely because it was a tad unusual to have an Iranian family join the community, Dumas’ teacher decided it would be perfectly normal to use people of a unique heritage for the lesson as though they were show-and-tell puppets when they are after all, people. Daily ‘encounters’ with other Americans through Dumas’ experiences epict how the lack of geographic knowledge has further contributed to alienation and its bond with immigrants, â€Å" Inevitably, people would ask us where we were from, but our answer didn’t really matter. One mention of our homeland and people would get that uncomfortable smile on their face that says, â€Å" How nice. Where the heck is that? † (Dumas 37). Despite the seemingly minor extent of social alienation found in Dumas’ more humorous examples, the isolation of cultures does occasionally meet with a rather unreasonable but inevitable high tide. As the Iranian Revolution took place, the media fed its always starving Americans with the news that Iranians had violently taken a group of Americans hostage, â€Å" For some reason, many Americans began to think that all Iranians, despite outward appearances to the contrary, could at any given moment get angry and take prisoners. (Dumas 39. ) This kind of media induced prejudice created an unsafe social environment for Iranians, ultimately forcing them to lie about their ethnicities, â€Å" My mother solved the problem by claiming to be from Russia or â€Å"Torekey. † (Dumas 39. Other than lying about one’s ethnicity, finding and keeping a job was nearly impossible during these sorts of times, â€Å" Even worse, with the turmoil in Iran, the value of my father’s pension dropped to the point of worthlessness. At fifty-eight, my father found himself unemployed and with no prospects. Nobody wanted to hire an Iranian. †(Dumas 117. ) Coinciding with the urgency of unemployment due to societal prejudices, Djuro J. Vrga’s views on the matter are quite blunt, â€Å" An immigrant must make two kinds of adjustments: (1) to his own ethnic group, and (2) to the larger ociety. † (Vrga 239. ) Without restriction to the Iranian Revolution, Dumas’ experience and Vrga’s analogy reveal a now unearthed concept that social alienation is composed of both a minority and a versing majority. All throughout her life, Firoozeh Dumas was forced to contend to a traditional upbringing contrary to the contemporary surroundings she lived in. These two opposing factors were the necessary ingredients creating the recipe for social alienation, whereas if Dumas were not Iranian and born purely American there would be a missing ingredient. Even in marital matters, Dumas faced the same kind of discouraging social issues, â€Å" Francois and I had agreed that we would be married both in the Catholic Church and in a traditional Persian ceremony. The tough part was finding a Catholic priest who would be willing to officiate at a mixed marriage. † (Dumas 145-146. ) The interracial circumstances binding the wedding like a serpent does its prey, Firoozeh Dumas consistently meets with American shortcomings. In 1977, Washington, D. C. , Iranians were invited to welcome the Shah, or Iranian leader, who was cheduled to meet Jimmy Carter, a newly elected president. Unfortunately, anti-Shah demonstrators interfered with the event, â€Å"The demonstrators had crossed the road. They were stampeding toward us waving sticks with nails driven into them. People were screaming and running. Instead of Iranian flags, the lawn was covered with bloody and injured Iranians. My parents and I ran and ran and ran. † (Dumas 113. ) The segregation of Iranians uprooted into a violent and gruesome scene, agreeable with Djuro J. Vrga’s perspective on such issues, â€Å"The ethnic group is a social system through which its members atisfy many of their social needs and express frustration resulting from unsatisfied expectations and aspirations in the larger society. (Vrga 239. ) The larger society in Dumas’ case was composed of the anti-Shah demonstrators, whom successfully destroyed a political event with their distaste for Iranians. Regardless of the many stages social alienation has set, it appears that time has an influential hand when it comes to deciding whether the stage will be a dandy garden, or a gloomy swamp. Funny in Farsi is a memoir that not only shows how growing up an immigrant can be, but how t affects one’s social standings in society. Djuro J.  Vrga’s Differential Associational Involvement of Successive Ethnic Immigrations: An Indicator of Ethno-Religious Factionalism and Alienation of Immigrants serves only further in accentuating the conditional aspects an immigrant must face. Though social alienation may be a recurring theme in Dumas’ memoir, it is truthful and consequently a recurring theme in possibly any immigrant’s life. Humorous indeed, it could be Funny in Any Language; there are no restrictions on where social alienation might pop up, but Dumas provides a great example nonetheless. How to cite Funny in Farsi Immigration, Essay examples

International Expansion Plans

Question: Describe about the International expansion plan. Answer: Introduction International expansion plan refers to the activities of the business undertaken by the company in several countries all over the world. It is more than just making investments in the regions outside the home country. The international expansion plan is mainly a guide to the expansion tips of an international business. The international expansion plan mainly refers to the strategies of the companies to expand in the new markets by professionally making the use of their potential. The international expansion plan mainly comprises of the strategies that includes the strategy of market entry (Verbeke 2013). The international expansion plan in this case is for a trading tobacco company in Arab and the name of the company is Prestige General Trading. This company was established in the year 2008 and it is a multinational organization with an international commodity trade house. This company mainly focuses on the production of tobacco, fertilizer, agriculture as well as metals (Channon and Jalland 2016). International Expansion of the company in Asia The strategy of Prestige General Trading Company is to expand its business and capture new prospects in Asia, Europe as well as north and South America. The company has a strong presence in the international market. As per the recent trends, the company desires to expand its trade in Asia. With nearly 280 million individuals who uses tobacco, China becomes the international tobacco market with nearly 60 percent of the population involved in smoking. The company will be able to gain if it is capable of expanding the market in China (Yao et al. 2014). Initial expansion of Prestige General Trading Prestige General Trading is a multi expanded general trading company which is located in various financial services which in turn represents various producers as well as financial institutions in the competitive market. Prestige General Trading continues the expansion of its Global Network of new supply channels with the help of joint ventures. The company is mainly engaged in the physical trading of the tobacco products. The initial expansion of the company has taken place in Singapore, Dubai, the USA as well as Europe. The company is known to operate via service centers and the branches which are located all over the world. The initial expansion of the company also includes the fact that the company has visualized in the world of aquariums. PGT is known to offer state-of-the-art aquarium solutions that range from big public aquariums to eye-catching business settings. PGT also offers unmatched commodities and services that include widespread experience in aquatic biology as well as engineering that is combined with strategic partnerships with global subject manufacturers. PGT is known to offer completely incorporated marketable as well as residential solutions for aquaria of various sizes all over the world. KPI of the company KPI or the key performance indicator is a set of quantifiable measure that is used by a company in order to gauge the performance of the company over a period of time. The progress of a company is generally determined by the KPI. The total annual sale of the company has been estimated to be 2.5 million USD. The percentage of export of the company is 45 percent. International Strategy that will help the company The international strategy will help the company to expand its business on the worldwide basis as it leads to a broad range of the business strategies. The international strategy will also help the company to get adapted to the domestic environment. Being a trading company, the main objective of the company is to lead to the growth of the company. The foreign operation will help the company to attract the executives who will help them to reduce their budget as well as to augment the profit (International Business Strategy - Reasons and Forms of Expansion into Foreign Markets 2013). Pricing strategy The pricing strategy that a trading company should undertake is the geographical pricing that will help the company to decide how to price its goods to the diverse customers. The pricing strategy will help the company to decide whether they will charge a higher price to the distant customers in order to cover the cost of shipping or they will charge a lower price so as to gain additional profit as well as business (Danziger et al. 2014). Modes of Entry The mode of entry that will be beneficial for the company is joint venture and licensing. Since, it is a tobacco company licensing will authorize the company in the target country to use the property of a licensor. In order to get the right to use the insubstantial property in the target market, the company needs to pay a fee to get the license (Boon and Liang 2015) With the help of joint ventures, Prestige General Trading continues the expansion of its Global Network of new supply channels. Joint venture mode of entry will help the company to stay up to date about the latest movement in the market and it will also help the company to make smarter investment decision. The joint venture will help the company to build an equal position and an executive voice in the foreign country (Block and Walter 2012). The year 2014 was a significant year for the Chinese market and as a result, China became the China Global Demographic. China comprises of 25 different groups of market which in turn is characterized by unique climate as well as expansion and wealth. As per the reports, in the past few years it has been recorded that more and more Chinese started to travel the world for the purpose of business. Planned outcomes The outcome will be that the company will be able to gain by adopting the geographical pricing strategy as well as the licensing and joint venture mode of entry. Conclusion It can be concluded that Prestige General Trading is a multinational organization with an international commodity trade house. It has also been concluded that the pricing strategy that the company should undertake is the geographical pricing that will help the company to decide how to price its goods to the diverse customers. As per the recent trends, the company desires to expand its trade in Asia where it has been found that China is the international tobacco market with nearly 60 percent of the population involved in smoking. The mode of entry that will be helpful for the Prestige General Trading Company is joint venture and licensing. Joint venture mode of entry will help the company to stay up to date about the latest movement in the market. However, licensing will authorize the company in the target country to use the property of a licensor. References Ajami, R., Cool, K., Goddard, J.G. and Khambata, D.M., 2014.International business: Theory and practice. Routledge. Block, J.H. and Walter, S.G., 2012. National culture and modes of entry into entrepreneurship.Available at SSRN 2027864. Boon, B.T.L. and Liang, T.W., 2015. Firms Marketing Mix Effectiveness and Modes of Entry in the Host Countries. InProceedings of the 1998 Academy of Marketing Science (AMS) Annual Conference(pp. 474-474). Springer International Publishing. Channon, D.F. and Jalland, M., 2016.Multinational strategic planning. Springer. Danziger, S., Hadar, L. and Morwitz, V.G., 2014. Retailer pricing strategy and consumer choice under price uncertainty.Journal of Consumer Research,41(3), pp.761-774. International Business Strategy - Reasons and Forms of Expansion into Foreign Markets. (2013). Poland: Katarzyna Twarowska, p.2. Verbeke, A., 2013.International business strategy. Cambridge University Press. Yao, T., Jiang, N., Grana, R., Ling, P.M. and Glantz, S.A., 2014. A content analysis of electronic cigarette manufacturer websites in China.Tobacco control, pp.tobaccocontrol-2014.

Types of Diction Flashcard

Types of Diction

Developmental Profile of a Preschool Child Essay Example

Developmental Profile of a Preschool Child Essay Example Developmental Profile of a Preschool Child Paper Developmental Profile of a Preschool Child Paper a Developmental Profile of a Preschool Child specifically aged Four to Five old ages and the appropriate Toys. The cognitive and physical abilities of a kid aged between four and five ( kindergartners ) will be discussed and five recommended playthings have been chosen to develop their necessary accomplishments. I have chosen this age group as I believe that information in this period is important as kids are come ining primary school in the undermentioned twelvemonth. It has been stressed that learning Begins long before they attend school, through household, equals and playthings ( Vygotsky, p. 32, 1978 ) . This is why 1 must understand past research carried out kid development and the plaything which support this patterned advance. The Cognitive Profile of a Preschool kid specifically Four to Five twelvemonth old At this phase, the kid is less egoistic where they can comprehend a state of affairs from another s point of view ( Bee A ; Boyd, 2006 ) . The kid besides additions understanding of theories of head, tested by the false belief experiment, which is seeing the universe from another s point of position and developing causality ( Bergen, 2002 ) . Children are able interpret experiences which make an impact on their beliefs. They besides play make-believe by inventing symbols, for illustration, a kid uses apparels coppices to do a train ( Astington, Harris A ; Olson, 1989 ) . At this age, the kid is unable to finish formal thought, for illustration they can non follow strict regulations to take part in board games. Childs are still challenged by preservation which refers to understanding mental imagination and their rotary motion ( Piaget A ; Barbel, 1971 ) . Since a kid normally grasps the construct of preservation by the age of five, utilizing Vygotsky s theory stresses that playthings could heighten this idea, specifically degree of proximal development, Proximal development stresses the capableness that a kid can achieve through supervising of friends and household ( Vygotsky, 1971 ) .. Language development is critical where kids typically learn 10 new words a twenty-four hours ( Boyd A ; Bee, p.191, 2008 ) . It is necessary that kids can develop classs where new information can be filed ; this is known as fast function ( Boyd and Bee, 2008 ) . Piaget provinces that kids encompass centration where the kid can merely think of one variable at clip , for illustration all life and non life animate beings are distinguished by motion ( Boyd A ; Bee, p.185, 2008 ) . Furthermore gender consciousness is established ; blending with similar gender and the associated plaything. However it has been found that misss are more likely to traverse the gender boundary as they are influenced to prosecute in make-believe drama instead than agentic drama ( Etaugh A ; Bridges, 2005 ) . Recommended Toys for Four- Five Year Olds. Extensive research has recognised that drama is a cardinal portion of kids s growing in footings of rational, motor and personal and societal development ( Website ) . Many activities are learned through drama, for illustration, find, concentration, creativeness, developing motor and societal accomplishments. The chief types for a kindergartner are societal drama, constructive drama, energetic and make-believe drama ( Goldstein, 2009 ) . First Toy ; Fisher- Price Medical Kit The doctor-patient functions will help a kid in doing sense of their ain world. The physician s setup and consciousness of their ain organic structure parts leads to linguistic communication acquisition. Besides the playthings are colorful and will help a kid s all right motor accomplishments. Second plaything ; Play-doh Fun with Food Meal Makin Kitchen This plaything assists fanciful drama where the kid can feign to cook a mealtime and is symbolic of existent life. This is a sociable plaything so that the kid will interact with others, which can take to societal and linguistic communication accomplishments. Besides the kid can larn their colorss and develop classs in footings of forms. The construct of preservation can be understood and force their degree of proximal development. Play-doh would besides develop motor accomplishments in footings of turn overing the drama ut, keeping different cookery utensils etc. Third Toy ; Music-to-Go Digital Music Player Book Dora the Explorer This plaything increases kids riming and develops phonological consciousness, which assists reading and composing in primary school. The kid can larn and sing along to the 20 popular vocals. The book is colorful and a kid can prosecute by forcing buttons and listening to the vocals. It besides provides a good theoretical account for misss as Dora stresses misss to prosecute in agentic drama and supports find. Fourth Toy ; Huffy Toy Story 16 inch motorcycle The out-of-door motorcycle can develop arm and leg musculuss, assist co-ordination and ocular spacial consciousness. This motorcycle is a good bargain as the stabilizers can be taken off and be used up to eight old ages. This plaything besides is male child orientated which stresses gender penchant at this age, nevertheless there is a girl manner of this motorcycle. Fifth Toy ; Fisher-Price Smart Fit Park This game electronic indoor game ; supports both cognitive and physical promotion for illustration, activities invoke running, jumping, skiping and leaping on the mat with your pes and custodies in order to come on in the game. The kid will develop accomplishments in numeracy, letters, place forms and is comparatively gender impersonal. This plaything can be used in advanced old ages as spelling, add-on and minus are considered. The kid s attending span is improved due to uninterrupted inducements ( Babycenter, 2008 ) . Discussion The first plaything invokes function drama which assists sociable talk. It can cut down egocentricism as the kids must play harmonizing to a function so they listen and respond in the peculiar state of affairs. It has been found that take parting in fanciful dramas can help coaction of address, for case the betterment signifier collective soliloquies to sociable talk ( Piaget A ; Barbel, 1971 ) . Assimilation allows new information into specific scheme for illustration go toing the physicians. The chief intent of this plaything is to cut down egocentricism and do the kid more socialized. The play-doh urges the kid to hold on preservation and fanciful drama. Play doh assists the theory of preservation where the same measure of play-doh can be long or short but it still consists of the same sum. The 3rd plaything helps linguistic communication development as phonological consciousness is polar at this phase, riming improves the kid s ability to interrupt down words. In clip, at the optimum age, they can larn to read and compose at a faster gait ( Boyd A ; Bee, 2006 ) . The 4th plaything is chiefly related to one s physical development nevertheless it leads to a kid bettering their balance and aware of their ocular spacial consciousness. The kid has more control over the motorcycle and can force a batch faster ( Oswalt, 2008 ) . The 5th plaything collaborate both cognitive and physical development where the kid learns forms, coloring material, and develop new mental scheme as a consequence. This plaything enhances one time cognition of centration as the kid must concentrate on a figure of variables, for illustration winning the race, forcing the right button on the mat ( Boyd A ; Bee, 2006 ) .

How does changing the ways in which we connect to others offer us new, Essay

How does changing the ways in which we connect to others offer us new, positive possibilities How does it affect us negatively - Essay Example There are plenty of ways to connect nowadays, though the old traditional one is coming face to face for a conversation – it enables the fullest effect and the most genuine emotions. However, it is often impossible because of the distance, lack of time or other factors. Nowadays, technologies offer the mankind a thousand options and opportunities – for work, shopping, entertainment and communication. One doesn’t need travel to another part of the country or even the world to see and talk to his/her relatives as it is now possible to call them on the phone, e-mail them or write on Facebook. Keeping in touch with friends is also much easier via social networking technologies, and prompt professional communications are guaranteed as cellphones, faxes and computers are always at your fingertips. In general, technology has been playing a significant role in our lives recently, and its importance continues to increase. Growing popularity of the World Wide Web make us mo re and more addicted to the new ways of communication and connecting to people. In fact, our entire social life beginning with childhood is now dominated by technological means of communication, which produces a complex and dubious effect on us. Technologies as new ways of connecting to people may either offer opportunities or impose difficulties on people, and this issue is considered in works of Sherry Turkle and Adam Gopnik. Adam Gopniks essay, â€Å"Bumping into Mr. Ravioli†, offers a look at the issue of overwhelming technologies, perpetual busyness caused by them and the state of suspension in communication between people. Turkle elaborates on related ideas in her book, â€Å"Alone Together† (the fragment of which was offered for reading), promoting the idea that technologies crowd our lives overwhelming us and making us tired of life they make possible. Thus, technological means of communication and connection to the outer world produce an ambiguous mixed effect on

FLSA Essay Example | Topics and Well Written Essays - 500 words - 1

FLSA - Essay Example According to this act overtime is defined as "time actually spent in worked after a prescribed threshold.† This Act give exemptions to some of the employees from its provision of minimum wage and overtime pay as well as it also exempts some particular employees only from its provision of the overtime. As these exemptions are defined narrowly, Suzy should have to contact the Wage and Hour Division office in the local area in order to check whether or not the terms and conditions would support her complaint. There are only some issues drawn in here, which can be considered under the guidelines of Department of Labor. From en entirely legal point of view, the former employer currently offering the benefits must bargain with the participants of the insurance plan, or a fair percentage must be considered. Since completely abandoning the policy may result in financial distress to a lot of employees as mentioned by the HR, an alternative plan must be sought that the company may pursue keeping in view the financial condition of the company as well as that of its employees. In order to have a better decision, employees may be involved and suggestions may be welcomed from the employees and the overall financial condition of the company may be conveyed to them, so that a better understanding may result of the

Stock Price Reaction To Annual Earnings Announcements

Stock Price Reaction To Annual Earnings Announcements Any decision carried out by the management of any organization needs adequate, accurate and precise information, on the basis of that information the management procures their analysis and undertake decision. If decision to be taken involves any financial aspect, this increases the scope and accuracy of the information. Financial decisions require adequate and accurate information; therefore, it is important that the behaviour of individual market is investigated for informed financial decision making, Oguzusy and Guiven (2003). In this respect many theories were presented. One of them is about the market efficiency which is termed as efficient market hypothesis (EMH). The concept of market efficiency had been anticipated at the beginning of the century by Bachelier (1900) in his dissertation. Fama (1970) classified market efficiency in three categories namely, weak form, semi strong form and strong form of efficiency; weak form of efficiency which defines as one cant earn abnormal return by doing technical analysis of the market or of a particular stock. Technical analysis means predicting future prices by studying historical prices of a particular share or a market. The Second form of efficient market hypothesis (EMH) is semi-strong form of efficiency. This form of market efficiency makes impossible for an investor to earn extra return on security by knowing the publicly available information; this includes companys financial results, any particular event or news which affects the company the share prices adjust rapidly with these new publicly available information therefore excess return cant be earn by trading on that information. The last form of efficient market hypothesis (EMH) is the strong form of efficiency and can be define as share prices reflects all public and private information (insider information) and consequently it is not possible for a stock holder to earn extra return on the basis of these information. According to efficient market hypothesis (EMH) the stock prices in an efficient market fully reflect their investment value Ajayi, Mehdian Perry (2004). The security pricing process instantaneously impound the available information in an efficient market and it is not possible to beat an efficient market that by using data mining, trading strategy or by any technical analysis to get consistently abnormal returns. Efficient market hypothesis (EMH) assumed that (1) All investors have cost-less access to currently available information about the future. (2) They are good analysts; and (3) They pay close attention to the market process and adjust their holdings appropriately. Many models including Augmented Dickey Fuller (ADF) unit root test, variance ratio test (VR), Ljung Box Q-statistics, and Durbin Watson‘d statistics have been based on this concept of informational efficiency of capital markets. However the late seventies and the eighties brought in evidences questioning the validity and highlighting various anomalies related to the Stock market efficiency. There are many focused studies that demonstrate the possible trading strategies yielding abnormal rates of return using the historical data and publicly available information ruling out the efficacy of markets. The empirical studies evidencing the inefficiency are broadly related to the following: (1) The low price-earning (P/E) effect: Researches show that stocks with low price earning (P/E) ratios earned more for investors, which is contradictory to Efficient Market Hypothesis (EMH). Fama and French (1995) found that market and size factors in earnings help explain market and size factors in returns. (2) The small firm and neglected firm effects: Banz (1981), Reinganum (1981) and other researchers show the size or small-firm effect in stock return. Their analysis support the evidence that small firm with low capitalization can earn higher returns than the large firm with large capitalization. (3) Market over and under reaction: DeBondt and Thaler (1985, 1987) present evidence that is consistent with stock prices over reacting to current changes in earnings. They report positive (negative) estimated abnormal stock returns for portfolios that previously generated inferior (superior) stock price and earning performance. This could be construed as the prior period stock price behaviour over reacting to earnings developments (Bernard, 1993). (4) The January effect: The January effect in stock returns was documented by many researchers. Their analysis suggested that January has a highest return as compared to other months. January effect was first discovered by Rozeff and Kinney (1976) for US stock markets. Later other researchers like Gultekin and Gultekin (1983), Chang and Pinegar (1986) documented the same result for other countries stock markets. (5) The week day effect: This refers to the observation that stocks return are not independent of the day of the week effect. A notable anomaly is the Monday effect in daily stock returns, which suggests that stock returns are significantly lower or negative on Mondays relative to other week days. This ‘Monday effect has been extensively examined not only in U.S. asset markets but in international markets as well, for example French (1980), Lakonishok and Levi (1982), Mehdian Perry (2001) and Lakonishok Smidt (1988). In week day effect the last trading day that is Friday was characterized with a positive return and the first trading day that is Monday is characterized with a low or negative return. Later this interesting study was also carried out on other countries stock markets and the researchers found out the same result, but still few studies has been done on emerging Asian stock markets. Karachi Stock Exchange (Kse) The Karachi Stock Exchange abbreviated as KSE is a stock exchange based in Karachi, Pakistan. It was founded in 1947 and is countrys largest and oldest stock exchange, with both Pakistani and overseas listings. It is also the second oldest stock exchange in South Asia. From its inception in 1947, it has done an amazing progress. In 1950s, only 05 companies listed and 90 members were there on the exchange and at the end of 2007 the number of listed companies increased by 666 which make a total of 671 listed companies and the member on the exchange goes up from 90 to 200 during these years. Its current premises are situated in the heart of Karachis Business District, on Stock Exchange Road. History KSE is the biggest and most liquid exchange. It was recognized worldwide for performing well in 2002 by Business Week magazine. US newspaper, USA Today, termed Karachi Stock Exchange (KSE) as one of the best performing bourses in the world. As of December 20, 2007, 671 companies were listed with the market capitalization of Rs.4364.312 billion (US$ 73 Billion) having listed capital of Rs.717.3 billion (US$ 12 billion). In the same year, the KSE 100 Index reached its ever highest value and closed at 14,814.85 points. Trading Time The trading hours are from 9:45am to 2:15pm on weekdays and 9:30am to 1:30pm on Friday. Growth The beginning of the exchange was very low with an index of 50 shares only. As the market grew, a delegate index was needed. On November 1st, 1991 the KSE-100 index was introduced and till present it is the most generally accepted measure of the exchange. The need to reconfirm for all share indexes was felt in 1995 and to provide the beginning of index trading in future. And this was achieved on 29th of August, 1995, constructing all share indexes and introduced on 18th of September, 1995. Foreign interests were very active on KSE in 2006 and the interest continued in 2007 also. According to the estimates given by State Bank of Pakistan, foreign investment in capital markets total about US$523 Million. According to a research analyst in Pakistan, around 20% of the total free float in KSE-30 Index is held by foreign participants. There is a plan to build high rise building for the KSE as a new direction to future investments. The decision was taken by the board of directors, Karachi stock exchange (KSE). Disputes between investors and members of the Exchange are resolved through deliberations of the Arbitration Committee of the Exchange. Kse – 100 Index Karachi Stock Exchange 100 Index (KSE-100 Index) is a benchmark and stock index used to compare prices overtime. In determining representative companies to compute the index, companies with the highest market capitalization are selected. To ensure full market representation, the company with the highest market capitalization from each sector is also included. The list of 100 companies listed in Karachi Stock Exchange is presented in Table # 01. The Karachi Stock Exchange (KSE) has also launched the KSE-30 Index with base value of 10,000 points, implemented from September 1, 2006. The main feature of this index is that it based only on the free-float of shares, rather than on the basis of paid-up capital which differ it from the other indices. Unlike the Karachi Stock Exchange (KSE) which represents total return of the market, KSE-30 index is adjusted for dividends and right shares. That is, when a company announces a dividend, the other indices at Karachi Stock Exchange (KSE) are not reduced for that amount of dividend. Whereas KSE-30 Index is adjusted for dividends and right shares only Table # 01 List of 100 Companies listed In Karachi Stock Exchange – 100 Index No. Company Name No. Company Name 1 Pakistan Refinery 51 Pakistan Telecom. Co.Ltd 2 EFU General Ins 52 Sui North Gas 3 Pakistan Reinsur 53 New Jubilee Insurance 4 EFU Life Assurance 54 Mybank Limited 5 Dawood Herc. 55 WorldCall Telecom 6 Ist.Capital Securities 56 D.G.Khan Cement 7 Mari Gas 57 Pakistan State Oil 8 Siemens Pakistan 58 PICIC Growth 9 Bata (Pakistan) 59 Fauji Cement 10 Adamjee Insurance 60 Standard Chartard Bank 11 Attock Refinery 61 IGI Insurance 12 Jahangir Siddiqque Co. 62 Sui South Gas 13 Pak.National Shipping Corp. 63 Karachi Electric Supply Corp. 14 Bank Al-Falah 64 Shell Pakistan 15 Meezan Bank 65 Wazir Ali 16 Bannu Woollen 66 Samin Textiles 17 JS Global Cap. 67 Bestway Cement 18 Rafhan Maize 68 Maple Leaf Cement 19 Habib Metro Bank 69 Pioneer Cement 20 Nestle Pakistan 70 Javedan Cement 21 Pakistan Elektron 71 Fazal Textile 22 Lucky Cement 72 Pak.PTA Ltd. 23 Pakistan Tobacco 73 ABN AMRO Bank 24 MCB Bank 74 NIB Bank 25 Bank AL-Habib 75 Bosicor Pakistan 26 Pakistan Petroleum 76 Saudi Pak Bank 27 Attock Petroleum 77 Pakistan Cement 28 Engro Chemical 78 Agriautos Industries 29 National Refinery 79 AL-Ghazi Tractors 30 ICI Pakistan 80 Allied Bank 31 Colgate Palmolive 81 Arif Habib Securities 32 Abbott (Lab) 82 Askari Bank 33 Habib Bank Ltd 83 Atlas Honda 34 Attock Cement 84 Kot Addu Power Company 35 Azgard Nine 85 Lakson Tobacco 36 Bank of Punjab 86 National Bank of Pakistan 37 Fauji Fertilizers Bin 87 Nishat Mills 38 Fauji Fertiliz 88 Oil and Gas Development 39 Faysal Bank 89 Orix Leasing 40 Ghani Glass 90 Pakistan International Airlines 41 GlaxoSmith 91 Packages Limited 42 Habib Modarba 92 Pak Oilfields 43 Habib Sugar 93 Pak Services 44 Hub Power 94 Pak Suzuki 45 Ibrahim Fibres 95 Pakistan Intn`l Container Ter. 46 Indus Motor 96 Soneri Bank 47 International Industries limited 97 Thal Limited 48 JS Investment 98 UniLever Pakistan 49 Kohinoor Energy 99 Unilever Foods 50 Cresent Commercial Bank 100 United Bank (Source: Karachi Stock Exchange) History The index was launched in late 1991 with a base of 1,000 points. By 2001, it had grown to 1,770 points. By 2005, it had skyrocketed to 9,989 points. It then reached a peak of 12,285 in February 2007. KSE-100 index touched the highest ever benchmark of 14,814 points on December 26, 2007. The graph of last 10 years of KSE growth and index points is shown. The graph clearly shows the progress and continuous increment. Free Float Index: In order to introduce a free float index that is representative of the market, the KSE- 30 Sensitive Index was implemented with effect from September 1, 2006. The need for a market representative free float index was long felt as the capitalization weighted KSE 100 Index strongly tilted to a few scripts. Free float is based on the proportion of shares readily available for trading to the total shares issued and excludes the locked in shares. The criterion for the selection of scripts on KSE-30 index was revised on 15 February 2007 in line with international best practices to include the impact cost as a measure to gauge the liquidity of scrip. This study is about testing the semi-strong form of Efficient Market Hypothesis (EMH) on the annual earnings announcement for the selected companies, listed on Karachi Stock Exchange (KSE) by using event study methodology (Fama et al. 1969; and Brown and Warner 1980, 1985).; Following this chapter the study is divided into six more chapters, they are; (1) Chapter two includes detailed Research aims and objectives, it also comprises of main problem and their sub problems; hypotheses of the study are also being discussed in this chapter. (2) In the third chapter, Review of relevant theoretical and empirical research has been done. In this chapter we have concluded that what has been done so far in this area of study both theoretically and empirically. (3) Fourth chapter covers Research methodology, data sources and method of sampling for the data. Methodology includes formulae and tests which are being used to test semi-strong form of efficient market hypothesis (EMH) on Karachi Stock Exchange (KSE). (4) Fifth chapter includes Research results and/or findings with supporting evidence. (5) Sixth chapter includes the research conclusions. (6) The seventh and the last chapter comprise of Recommendations; made with the help of Research results and/or findings. Scope And Limitation Of The Study The material in this dissertation to the best of my knowledge do not contain any previously published or written documents by another person except where due acknowledgement is made in the research itself. If any errors found in the calculations made for this research that will be the sole responsibility of the writer. Statement Of Ethics And Originality Due to time constraint and non availability of the companys earnings announcement data from the Karachi stock exchange web site before 2004 the study is being carried out for just three years which includes 2005, 2006 and 2007. Moreover during the period of study which is year 2005, 2006 and 2007 there are few companies eliminated due to the non availability of the required data to carry out the calculations. Due to the limited availability of econometrics experts for guidance irrespective of the new sophisticated models for event studies, conventional models were used in this study despite the fact they have less predictive power than the other latest models. Aims, Objectives And Hypothesis Of The Study The following are the Aims Objectives of the study: To check whether the Semi-Strong form of Efficient Market Hypothesis (EMH) is valid for Karachi Stock Exchange` 100 – 100 Index (KSE – 100 Index). To examine the stock market reaction (KSE) to Annual Earnings Announcements. Problems The research is comprises with one main problem which is further divided into three sub problems each problem has its own hypothesis and to be solved separately. Main Problem Test whether semi-strong form of efficiency exists on Karachi Stock Exchange (KSE) or not. Sub Problem – One Whether the annual earnings announcement affect complete on the day of announcement? We will calculate the normal return and the expected return and if it is close to zero; we will say that the annual earnings announcement affect complete on the day of announcement Sub Problem – Two Share holders could not earn extra return; before, and after the announcement. We would first take the average of abnormal return and then cumulate the average abnormal return. In case where the AARs and the CAARs are closed to zero we will conclude our results that, investor or the share holder are not able to earn abnormal return by trading on event which is earnings announcement. Sub Problem – Three The Average Abnormal Returns (AARs) are random. We used Runs test to analyze the randomness in the behavior of Average Abnormal Returns (AARs). To check whether the average abnormal returns occur by chance or not, we carried out Runs test. In case where the observed numbers of runs are significantly different from the expected number of runs, we will conclude our finding as Average Abnormal Returns (AARs) do not occur randomly. Alternatively, if these results were not statistically significant, we say that Average Abnormal Returns (AARs) do occur randomly. We carried out runs test on Average Abnormal Returns (AARs) before and after the event day and also for the event window. Hypothesis Since the study empirically examine the Karachi Stock Exchange`s 100 Index reaction to Annual Earnings Announcement and the hypothesis being tested are: Hypothesis For Sub Problem One HO: Our null hypothesis for sub problem – one is that the stock prices reactions in response to the annual earnings announcement complete on the announcement day in addition to that, abnormal returns can`t be earn by the investors on stocks by trading on stocks after the announcement day. HO: Rit = AR = 0 H1: Rit = AR For testing above hypothesis we compute the estimated return for the event window and then compare it to the actual return, the estimated return will be calculated by using following equation; E (Rit) = ÃŽ ±i + ÃŽ ²i Rmt Under the null hypothesis if the estimated return of a stock is closed to zero we will accept the null hypothesis and if it is not than we will reject our hypothesis and bring to a close; that announcement do affect on returns. Hypothesis For Sub Problem Two HO: Our null hypothesis for sub problem – two is that returns are close to zero for average abnormal returns and their respective cumulative average abnormal returns for the selective securities in the study HO: AAR ≈ CAAR = 0 H1: AAR ≈ CAAR To test the above hypothesis first we will calculate the average abnormal return (AAR) and then cumulative average abnormal return (CAAR) with the help of the following formulae; For Average Abnormal Return ÃŽ £ ARit AAR it = i=1 . N Where, i = the number of securities in the study; N = total number of securities. t = the days surrounding the event-day For Cumulative Average Abnormal Return K CAARt = ÃŽ £ AARit Where, t = -30,0, +30. t = -30 If the average abnormal return and the cumulative average abnormal return are close to zero than we accept our null hypothesis otherwise we will reject it. 2.2.3 Hypothesis for Sub Problem – Three HO: Our null hypothesis for sub problem – three is that the difference between the no. of positive and negative average abnormal returns as not significant and they occur randomly. HO: Z = 0 H1: Z The null hypothesis of the test is that the observed series is a random series. A run is defined by Gibbons (1985), as â€Å"A succession of identical symbols which are followed or preceded by different symbols or no symbol at all† The run test is another approach to test and detect statistical dependencies (randomness). The number of runs is computed as a sequence of the price changes of the same sign (such as; + +, , 0 0). When the expected number of run is significantly different from the observed number of runs, the test rejects the null hypothesis that the daily returns are random. The run test converts the total number of runs into a Z statistic. For large samples the Z statistics gives the probability of difference between the actual and expected number of runs. The Z value is greater than or equal to + 1.96, reject the null hypothesis at 5% level of significance (Sharma and Kennedy, 1977). Literature Review There have been a lot of studies conducted on Efficient Market Hypothesis (EMH), a concept; developed by Fama (1960) and divided capital market into three parts on the basis of its efficiency namely weak, semi-strong and strong form. For the event study, which is linked with semi – strong form of market efficiency; below first we discuss the theoretical foundations and after that, the empirical evidence. Theoretical Foundations The origins of the Efficient Market Hypothesis (EMH) can be traced back to the work of two individuals, Eugene F. Fama (1960) and Paul A. Samuelson (1960). Remarkably, they independently developed the same basic concept of market efficiency from two rather different research agendas. These differences would drive them along two distinct trajectories leading to several other breakthroughs and milestones, all originating from their point of intersection, the Efficient Market Hypothesis (EMH). The EMH state that in an efficient market where many well-informed and intelligent investors operates, the stock price imitates all the existing information and no other information or analysis can be used to earn abnormal returns. The arguments of Fama (1965) form the theoretical foundation for the Efficient Market Hypothesis (EMH), which persuasively reasons that in an efficient and active market consisting of many well-informed investors, equity prices will appropriately reflect the effects of information based on present and future expected events. The strong form of the hypothesis asserts that the current market prices fully reflect all private (insider) and public information. In other words, insiders shouldn`t be able to earn excess returns from privileged asymmetric information. The strong form of the hypothesis represents an absolute standard, and in practice, market demonstrates only a certain degree of efficiency. Efficient Market Hypothesis (EMH) claims that speculative market prices fully and immediately reflect all available relevant information. Fama categorised information as: publicly available information, information that eventually becomes public, insider information. Event studies are used in tests of Efficient Market Hypothesis (EMH) to ask whether prices incorporate information fully on the day that the information is revealed. If Efficient Market Hypothesis (EMH) holds, the information about the event should be incorporated into prices before or on the day of the event itself. There should be no impact on returns after the event â€Å"There was little evidence on the central issues of corporate finance, now we are overwhelmed with results, mostly from event studies† (Fama, 1991, p. 1600) Event study analyses are typically used for two different purposes firstly as a test of semi-strong form market efficiency; and secondly as, assuming that the market efficiency hypothesis holds, as a tool for examining the impact of some event on the wealth of firms shareholders. Event studies measure security price changes in response to events. A single event study typically analyzes the average security price reaction to instances of the same type of event experienced by many firms. For example, the event could be the announcement of a merger. The event date can vary from one security to another in the same study, with dates measured in event time. Event studies have been used in a large variety of studies, including [mergers and acquisitions], earnings announcements, debt or equity issues, corporate reorganizations, investment decisions and corporate social responsibility MacKinlay (1997), McWilliams Siegel (1997). Empirical Evidence The debate about efficient markets has resulted in hundreds and thousands of empirical studies attempting to determine whether specific markets are in fact efficient and if so to what degree. Many novice investors are surprised to learn that a tremendous amount of evidence supports the Efficient Market Hypothesis (EMH). Since the late 1960s, the enormous study in the finance and accounting literature has recognized evidence of relationship between accounting reports and market reactions. Fama (1970) described an efficient market as having prices that â€Å"fully reflect† all available information. Beaver (1981) offers a definition of market efficiency based on the information distribution when investors have mixed beliefs. Accounting reports probably are one of the sources of public information. Ball Brown (1968) examine the relationship between the accounting reports stock prices . Their results show that the market reacts to unexpected earnings as though the market participants had access to the good or bad news prior to the availability of this news to the market. They estimate that only 10 to15 percent of the market reaction takes place during the announcement month. Using another approach, similar results are also found in the work of Ball and Brown (1968) they examined price changes surrounding the announcement of a firms annual earnings and found that the stock market reacts quickly to annual earnings announcements. Ball (1992) and Bernard Thomas (1989) and (1990), documented significant delays in the adjustment of stock prices to quarterly earnings announcements. Developed countries of the world such as the USA, the UK, and Australia, etc. the amounts of researches on Efficient Market Hypothesis are extensive. Fama, Fisher, Jensen and Roll (1969) conducted the first study on semi-strong form of Efficient Market Hypothesis (EMH). They examined the behaviour of abnormal returns at the announcements of stock splits and found that the market reaction is significant prior to the stock split announcement. Jordan (1973) assessed the behaviour of security prices surrounding the quarterly earnings announcements and found that stock market is efficient in the semi-strong form. In Asia until now some researches has been done. Kong, S. and Taghavi, M. (2006) study the Effect of Annual Earnings Anno Stock Price Reaction To Annual Earnings Announcements Stock Price Reaction To Annual Earnings Announcements Any decision carried out by the management of any organization needs adequate, accurate and precise information, on the basis of that information the management procures their analysis and undertake decision. If decision to be taken involves any financial aspect, this increases the scope and accuracy of the information. Financial decisions require adequate and accurate information; therefore, it is important that the behaviour of individual market is investigated for informed financial decision making, Oguzusy and Guiven (2003). In this respect many theories were presented. One of them is about the market efficiency which is termed as efficient market hypothesis (EMH). The concept of market efficiency had been anticipated at the beginning of the century by Bachelier (1900) in his dissertation. Fama (1970) classified market efficiency in three categories namely, weak form, semi strong form and strong form of efficiency; weak form of efficiency which defines as one cant earn abnormal return by doing technical analysis of the market or of a particular stock. Technical analysis means predicting future prices by studying historical prices of a particular share or a market. The Second form of efficient market hypothesis (EMH) is semi-strong form of efficiency. This form of market efficiency makes impossible for an investor to earn extra return on security by knowing the publicly available information; this includes companys financial results, any particular event or news which affects the company the share prices adjust rapidly with these new publicly available information therefore excess return cant be earn by trading on that information. The last form of efficient market hypothesis (EMH) is the strong form of efficiency and can be define as share prices reflects all public and private information (insider information) and consequently it is not possible for a stock holder to earn extra return on the basis of these information. According to efficient market hypothesis (EMH) the stock prices in an efficient market fully reflect their investment value Ajayi, Mehdian Perry (2004). The security pricing process instantaneously impound the available information in an efficient market and it is not possible to beat an efficient market that by using data mining, trading strategy or by any technical analysis to get consistently abnormal returns. Efficient market hypothesis (EMH) assumed that (1) All investors have cost-less access to currently available information about the future. (2) They are good analysts; and (3) They pay close attention to the market process and adjust their holdings appropriately. Many models including Augmented Dickey Fuller (ADF) unit root test, variance ratio test (VR), Ljung Box Q-statistics, and Durbin Watson‘d statistics have been based on this concept of informational efficiency of capital markets. However the late seventies and the eighties brought in evidences questioning the validity and highlighting various anomalies related to the Stock market efficiency. There are many focused studies that demonstrate the possible trading strategies yielding abnormal rates of return using the historical data and publicly available information ruling out the efficacy of markets. The empirical studies evidencing the inefficiency are broadly related to the following: (1) The low price-earning (P/E) effect: Researches show that stocks with low price earning (P/E) ratios earned more for investors, which is contradictory to Efficient Market Hypothesis (EMH). Fama and French (1995) found that market and size factors in earnings help explain market and size factors in returns. (2) The small firm and neglected firm effects: Banz (1981), Reinganum (1981) and other researchers show the size or small-firm effect in stock return. Their analysis support the evidence that small firm with low capitalization can earn higher returns than the large firm with large capitalization. (3) Market over and under reaction: DeBondt and Thaler (1985, 1987) present evidence that is consistent with stock prices over reacting to current changes in earnings. They report positive (negative) estimated abnormal stock returns for portfolios that previously generated inferior (superior) stock price and earning performance. This could be construed as the prior period stock price behaviour over reacting to earnings developments (Bernard, 1993). (4) The January effect: The January effect in stock returns was documented by many researchers. Their analysis suggested that January has a highest return as compared to other months. January effect was first discovered by Rozeff and Kinney (1976) for US stock markets. Later other researchers like Gultekin and Gultekin (1983), Chang and Pinegar (1986) documented the same result for other countries stock markets. (5) The week day effect: This refers to the observation that stocks return are not independent of the day of the week effect. A notable anomaly is the Monday effect in daily stock returns, which suggests that stock returns are significantly lower or negative on Mondays relative to other week days. This ‘Monday effect has been extensively examined not only in U.S. asset markets but in international markets as well, for example French (1980), Lakonishok and Levi (1982), Mehdian Perry (2001) and Lakonishok Smidt (1988). In week day effect the last trading day that is Friday was characterized with a positive return and the first trading day that is Monday is characterized with a low or negative return. Later this interesting study was also carried out on other countries stock markets and the researchers found out the same result, but still few studies has been done on emerging Asian stock markets. Karachi Stock Exchange (Kse) The Karachi Stock Exchange abbreviated as KSE is a stock exchange based in Karachi, Pakistan. It was founded in 1947 and is countrys largest and oldest stock exchange, with both Pakistani and overseas listings. It is also the second oldest stock exchange in South Asia. From its inception in 1947, it has done an amazing progress. In 1950s, only 05 companies listed and 90 members were there on the exchange and at the end of 2007 the number of listed companies increased by 666 which make a total of 671 listed companies and the member on the exchange goes up from 90 to 200 during these years. Its current premises are situated in the heart of Karachis Business District, on Stock Exchange Road. History KSE is the biggest and most liquid exchange. It was recognized worldwide for performing well in 2002 by Business Week magazine. US newspaper, USA Today, termed Karachi Stock Exchange (KSE) as one of the best performing bourses in the world. As of December 20, 2007, 671 companies were listed with the market capitalization of Rs.4364.312 billion (US$ 73 Billion) having listed capital of Rs.717.3 billion (US$ 12 billion). In the same year, the KSE 100 Index reached its ever highest value and closed at 14,814.85 points. Trading Time The trading hours are from 9:45am to 2:15pm on weekdays and 9:30am to 1:30pm on Friday. Growth The beginning of the exchange was very low with an index of 50 shares only. As the market grew, a delegate index was needed. On November 1st, 1991 the KSE-100 index was introduced and till present it is the most generally accepted measure of the exchange. The need to reconfirm for all share indexes was felt in 1995 and to provide the beginning of index trading in future. And this was achieved on 29th of August, 1995, constructing all share indexes and introduced on 18th of September, 1995. Foreign interests were very active on KSE in 2006 and the interest continued in 2007 also. According to the estimates given by State Bank of Pakistan, foreign investment in capital markets total about US$523 Million. According to a research analyst in Pakistan, around 20% of the total free float in KSE-30 Index is held by foreign participants. There is a plan to build high rise building for the KSE as a new direction to future investments. The decision was taken by the board of directors, Karachi stock exchange (KSE). Disputes between investors and members of the Exchange are resolved through deliberations of the Arbitration Committee of the Exchange. Kse – 100 Index Karachi Stock Exchange 100 Index (KSE-100 Index) is a benchmark and stock index used to compare prices overtime. In determining representative companies to compute the index, companies with the highest market capitalization are selected. To ensure full market representation, the company with the highest market capitalization from each sector is also included. The list of 100 companies listed in Karachi Stock Exchange is presented in Table # 01. The Karachi Stock Exchange (KSE) has also launched the KSE-30 Index with base value of 10,000 points, implemented from September 1, 2006. The main feature of this index is that it based only on the free-float of shares, rather than on the basis of paid-up capital which differ it from the other indices. Unlike the Karachi Stock Exchange (KSE) which represents total return of the market, KSE-30 index is adjusted for dividends and right shares. That is, when a company announces a dividend, the other indices at Karachi Stock Exchange (KSE) are not reduced for that amount of dividend. Whereas KSE-30 Index is adjusted for dividends and right shares only Table # 01 List of 100 Companies listed In Karachi Stock Exchange – 100 Index No. Company Name No. Company Name 1 Pakistan Refinery 51 Pakistan Telecom. Co.Ltd 2 EFU General Ins 52 Sui North Gas 3 Pakistan Reinsur 53 New Jubilee Insurance 4 EFU Life Assurance 54 Mybank Limited 5 Dawood Herc. 55 WorldCall Telecom 6 Ist.Capital Securities 56 D.G.Khan Cement 7 Mari Gas 57 Pakistan State Oil 8 Siemens Pakistan 58 PICIC Growth 9 Bata (Pakistan) 59 Fauji Cement 10 Adamjee Insurance 60 Standard Chartard Bank 11 Attock Refinery 61 IGI Insurance 12 Jahangir Siddiqque Co. 62 Sui South Gas 13 Pak.National Shipping Corp. 63 Karachi Electric Supply Corp. 14 Bank Al-Falah 64 Shell Pakistan 15 Meezan Bank 65 Wazir Ali 16 Bannu Woollen 66 Samin Textiles 17 JS Global Cap. 67 Bestway Cement 18 Rafhan Maize 68 Maple Leaf Cement 19 Habib Metro Bank 69 Pioneer Cement 20 Nestle Pakistan 70 Javedan Cement 21 Pakistan Elektron 71 Fazal Textile 22 Lucky Cement 72 Pak.PTA Ltd. 23 Pakistan Tobacco 73 ABN AMRO Bank 24 MCB Bank 74 NIB Bank 25 Bank AL-Habib 75 Bosicor Pakistan 26 Pakistan Petroleum 76 Saudi Pak Bank 27 Attock Petroleum 77 Pakistan Cement 28 Engro Chemical 78 Agriautos Industries 29 National Refinery 79 AL-Ghazi Tractors 30 ICI Pakistan 80 Allied Bank 31 Colgate Palmolive 81 Arif Habib Securities 32 Abbott (Lab) 82 Askari Bank 33 Habib Bank Ltd 83 Atlas Honda 34 Attock Cement 84 Kot Addu Power Company 35 Azgard Nine 85 Lakson Tobacco 36 Bank of Punjab 86 National Bank of Pakistan 37 Fauji Fertilizers Bin 87 Nishat Mills 38 Fauji Fertiliz 88 Oil and Gas Development 39 Faysal Bank 89 Orix Leasing 40 Ghani Glass 90 Pakistan International Airlines 41 GlaxoSmith 91 Packages Limited 42 Habib Modarba 92 Pak Oilfields 43 Habib Sugar 93 Pak Services 44 Hub Power 94 Pak Suzuki 45 Ibrahim Fibres 95 Pakistan Intn`l Container Ter. 46 Indus Motor 96 Soneri Bank 47 International Industries limited 97 Thal Limited 48 JS Investment 98 UniLever Pakistan 49 Kohinoor Energy 99 Unilever Foods 50 Cresent Commercial Bank 100 United Bank (Source: Karachi Stock Exchange) History The index was launched in late 1991 with a base of 1,000 points. By 2001, it had grown to 1,770 points. By 2005, it had skyrocketed to 9,989 points. It then reached a peak of 12,285 in February 2007. KSE-100 index touched the highest ever benchmark of 14,814 points on December 26, 2007. The graph of last 10 years of KSE growth and index points is shown. The graph clearly shows the progress and continuous increment. Free Float Index: In order to introduce a free float index that is representative of the market, the KSE- 30 Sensitive Index was implemented with effect from September 1, 2006. The need for a market representative free float index was long felt as the capitalization weighted KSE 100 Index strongly tilted to a few scripts. Free float is based on the proportion of shares readily available for trading to the total shares issued and excludes the locked in shares. The criterion for the selection of scripts on KSE-30 index was revised on 15 February 2007 in line with international best practices to include the impact cost as a measure to gauge the liquidity of scrip. This study is about testing the semi-strong form of Efficient Market Hypothesis (EMH) on the annual earnings announcement for the selected companies, listed on Karachi Stock Exchange (KSE) by using event study methodology (Fama et al. 1969; and Brown and Warner 1980, 1985).; Following this chapter the study is divided into six more chapters, they are; (1) Chapter two includes detailed Research aims and objectives, it also comprises of main problem and their sub problems; hypotheses of the study are also being discussed in this chapter. (2) In the third chapter, Review of relevant theoretical and empirical research has been done. In this chapter we have concluded that what has been done so far in this area of study both theoretically and empirically. (3) Fourth chapter covers Research methodology, data sources and method of sampling for the data. Methodology includes formulae and tests which are being used to test semi-strong form of efficient market hypothesis (EMH) on Karachi Stock Exchange (KSE). (4) Fifth chapter includes Research results and/or findings with supporting evidence. (5) Sixth chapter includes the research conclusions. (6) The seventh and the last chapter comprise of Recommendations; made with the help of Research results and/or findings. Scope And Limitation Of The Study The material in this dissertation to the best of my knowledge do not contain any previously published or written documents by another person except where due acknowledgement is made in the research itself. If any errors found in the calculations made for this research that will be the sole responsibility of the writer. Statement Of Ethics And Originality Due to time constraint and non availability of the companys earnings announcement data from the Karachi stock exchange web site before 2004 the study is being carried out for just three years which includes 2005, 2006 and 2007. Moreover during the period of study which is year 2005, 2006 and 2007 there are few companies eliminated due to the non availability of the required data to carry out the calculations. Due to the limited availability of econometrics experts for guidance irrespective of the new sophisticated models for event studies, conventional models were used in this study despite the fact they have less predictive power than the other latest models. Aims, Objectives And Hypothesis Of The Study The following are the Aims Objectives of the study: To check whether the Semi-Strong form of Efficient Market Hypothesis (EMH) is valid for Karachi Stock Exchange` 100 – 100 Index (KSE – 100 Index). To examine the stock market reaction (KSE) to Annual Earnings Announcements. Problems The research is comprises with one main problem which is further divided into three sub problems each problem has its own hypothesis and to be solved separately. Main Problem Test whether semi-strong form of efficiency exists on Karachi Stock Exchange (KSE) or not. Sub Problem – One Whether the annual earnings announcement affect complete on the day of announcement? We will calculate the normal return and the expected return and if it is close to zero; we will say that the annual earnings announcement affect complete on the day of announcement Sub Problem – Two Share holders could not earn extra return; before, and after the announcement. We would first take the average of abnormal return and then cumulate the average abnormal return. In case where the AARs and the CAARs are closed to zero we will conclude our results that, investor or the share holder are not able to earn abnormal return by trading on event which is earnings announcement. Sub Problem – Three The Average Abnormal Returns (AARs) are random. We used Runs test to analyze the randomness in the behavior of Average Abnormal Returns (AARs). To check whether the average abnormal returns occur by chance or not, we carried out Runs test. In case where the observed numbers of runs are significantly different from the expected number of runs, we will conclude our finding as Average Abnormal Returns (AARs) do not occur randomly. Alternatively, if these results were not statistically significant, we say that Average Abnormal Returns (AARs) do occur randomly. We carried out runs test on Average Abnormal Returns (AARs) before and after the event day and also for the event window. Hypothesis Since the study empirically examine the Karachi Stock Exchange`s 100 Index reaction to Annual Earnings Announcement and the hypothesis being tested are: Hypothesis For Sub Problem One HO: Our null hypothesis for sub problem – one is that the stock prices reactions in response to the annual earnings announcement complete on the announcement day in addition to that, abnormal returns can`t be earn by the investors on stocks by trading on stocks after the announcement day. HO: Rit = AR = 0 H1: Rit = AR For testing above hypothesis we compute the estimated return for the event window and then compare it to the actual return, the estimated return will be calculated by using following equation; E (Rit) = ÃŽ ±i + ÃŽ ²i Rmt Under the null hypothesis if the estimated return of a stock is closed to zero we will accept the null hypothesis and if it is not than we will reject our hypothesis and bring to a close; that announcement do affect on returns. Hypothesis For Sub Problem Two HO: Our null hypothesis for sub problem – two is that returns are close to zero for average abnormal returns and their respective cumulative average abnormal returns for the selective securities in the study HO: AAR ≈ CAAR = 0 H1: AAR ≈ CAAR To test the above hypothesis first we will calculate the average abnormal return (AAR) and then cumulative average abnormal return (CAAR) with the help of the following formulae; For Average Abnormal Return ÃŽ £ ARit AAR it = i=1 . N Where, i = the number of securities in the study; N = total number of securities. t = the days surrounding the event-day For Cumulative Average Abnormal Return K CAARt = ÃŽ £ AARit Where, t = -30,0, +30. t = -30 If the average abnormal return and the cumulative average abnormal return are close to zero than we accept our null hypothesis otherwise we will reject it. 2.2.3 Hypothesis for Sub Problem – Three HO: Our null hypothesis for sub problem – three is that the difference between the no. of positive and negative average abnormal returns as not significant and they occur randomly. HO: Z = 0 H1: Z The null hypothesis of the test is that the observed series is a random series. A run is defined by Gibbons (1985), as â€Å"A succession of identical symbols which are followed or preceded by different symbols or no symbol at all† The run test is another approach to test and detect statistical dependencies (randomness). The number of runs is computed as a sequence of the price changes of the same sign (such as; + +, , 0 0). When the expected number of run is significantly different from the observed number of runs, the test rejects the null hypothesis that the daily returns are random. The run test converts the total number of runs into a Z statistic. For large samples the Z statistics gives the probability of difference between the actual and expected number of runs. The Z value is greater than or equal to + 1.96, reject the null hypothesis at 5% level of significance (Sharma and Kennedy, 1977). Literature Review There have been a lot of studies conducted on Efficient Market Hypothesis (EMH), a concept; developed by Fama (1960) and divided capital market into three parts on the basis of its efficiency namely weak, semi-strong and strong form. For the event study, which is linked with semi – strong form of market efficiency; below first we discuss the theoretical foundations and after that, the empirical evidence. Theoretical Foundations The origins of the Efficient Market Hypothesis (EMH) can be traced back to the work of two individuals, Eugene F. Fama (1960) and Paul A. Samuelson (1960). Remarkably, they independently developed the same basic concept of market efficiency from two rather different research agendas. These differences would drive them along two distinct trajectories leading to several other breakthroughs and milestones, all originating from their point of intersection, the Efficient Market Hypothesis (EMH). The EMH state that in an efficient market where many well-informed and intelligent investors operates, the stock price imitates all the existing information and no other information or analysis can be used to earn abnormal returns. The arguments of Fama (1965) form the theoretical foundation for the Efficient Market Hypothesis (EMH), which persuasively reasons that in an efficient and active market consisting of many well-informed investors, equity prices will appropriately reflect the effects of information based on present and future expected events. The strong form of the hypothesis asserts that the current market prices fully reflect all private (insider) and public information. In other words, insiders shouldn`t be able to earn excess returns from privileged asymmetric information. The strong form of the hypothesis represents an absolute standard, and in practice, market demonstrates only a certain degree of efficiency. Efficient Market Hypothesis (EMH) claims that speculative market prices fully and immediately reflect all available relevant information. Fama categorised information as: publicly available information, information that eventually becomes public, insider information. Event studies are used in tests of Efficient Market Hypothesis (EMH) to ask whether prices incorporate information fully on the day that the information is revealed. If Efficient Market Hypothesis (EMH) holds, the information about the event should be incorporated into prices before or on the day of the event itself. There should be no impact on returns after the event â€Å"There was little evidence on the central issues of corporate finance, now we are overwhelmed with results, mostly from event studies† (Fama, 1991, p. 1600) Event study analyses are typically used for two different purposes firstly as a test of semi-strong form market efficiency; and secondly as, assuming that the market efficiency hypothesis holds, as a tool for examining the impact of some event on the wealth of firms shareholders. Event studies measure security price changes in response to events. A single event study typically analyzes the average security price reaction to instances of the same type of event experienced by many firms. For example, the event could be the announcement of a merger. The event date can vary from one security to another in the same study, with dates measured in event time. Event studies have been used in a large variety of studies, including [mergers and acquisitions], earnings announcements, debt or equity issues, corporate reorganizations, investment decisions and corporate social responsibility MacKinlay (1997), McWilliams Siegel (1997). Empirical Evidence The debate about efficient markets has resulted in hundreds and thousands of empirical studies attempting to determine whether specific markets are in fact efficient and if so to what degree. Many novice investors are surprised to learn that a tremendous amount of evidence supports the Efficient Market Hypothesis (EMH). Since the late 1960s, the enormous study in the finance and accounting literature has recognized evidence of relationship between accounting reports and market reactions. Fama (1970) described an efficient market as having prices that â€Å"fully reflect† all available information. Beaver (1981) offers a definition of market efficiency based on the information distribution when investors have mixed beliefs. Accounting reports probably are one of the sources of public information. Ball Brown (1968) examine the relationship between the accounting reports stock prices . Their results show that the market reacts to unexpected earnings as though the market participants had access to the good or bad news prior to the availability of this news to the market. They estimate that only 10 to15 percent of the market reaction takes place during the announcement month. Using another approach, similar results are also found in the work of Ball and Brown (1968) they examined price changes surrounding the announcement of a firms annual earnings and found that the stock market reacts quickly to annual earnings announcements. Ball (1992) and Bernard Thomas (1989) and (1990), documented significant delays in the adjustment of stock prices to quarterly earnings announcements. Developed countries of the world such as the USA, the UK, and Australia, etc. the amounts of researches on Efficient Market Hypothesis are extensive. Fama, Fisher, Jensen and Roll (1969) conducted the first study on semi-strong form of Efficient Market Hypothesis (EMH). They examined the behaviour of abnormal returns at the announcements of stock splits and found that the market reaction is significant prior to the stock split announcement. Jordan (1973) assessed the behaviour of security prices surrounding the quarterly earnings announcements and found that stock market is efficient in the semi-strong form. In Asia until now some researches has been done. Kong, S. and Taghavi, M. (2006) study the Effect of Annual Earnings Anno