Personality

Theories of Corporate Personality MANAS AGARWAL 5th Semester BA LL. B (B) School of Law Christ University Bangalore INDEX * Research Methodology * Introduction * The Common Law Perspectives * Fiction Theory * Concession Theory * The Purpose Theory * Bracket Theory * Realist Theory * Why Corporations? * Corporate Personality And Limited Liability Cases: * Macaura v. Northern Assurance Co. * Lee v. Lee’s Air Farming * Salomon v. Salomon & Co. ACKNOWLEDGEMENT I Manas Agarwal of B. A. LL. B (Hons. ) is really grateful to Ms. Fincy V, without whose help and corporation this project would not have been possible.

I am also grateful to the National Law School India University (N. L. S. I. U) Library staff and the Knowledge Centre, Christ University staff, whose cooperation is appreciable. I think this kind of assignments lead to the overall development of the students and I am looking forward to take up such assignments in future. RESEARCH METHODOLOGY • SCOPE AND FOCUS: – This research paper essentially seeks to study and criticise the different theories of corporate personality considering the jurisprudential conflicts. • RESEARCH OBJECTIVES: – The principal objective of our research is to study and criticise the different theories of corporate personality and the concepts under it. * Another objective of our research is to find conflicts between the various theories relying on various judgments. • RESEARCH QUESTIONS: – * What is the difference between various theories of corporate personalities. * The meaning and limits of a corporate personality. • METHOD OF ANALYSIS: – This project has its basis on the following methods of analysis:- DESCRIPTIVE: – The first task is to comprehensively study and critize the jurisprudential theories of corporate personalities.

ANALYTICAL: – Further these concepts and observations can be analyzed. The valuable knowledge that is gained from studying the commentaries must be used to understand the evolution of the theories and the law itself in terms of some cases. • MODE OF CITATION :- The researcher(s) has used a uniform mode of citation in this paper. Introduction There is an interesting conflict between philosophic theories as to the nature of corporate personality and the insurgent demand of economic forces for a further recognition of those form of organisation which seem so essential to modern life.

The grant of legal personality is clearly within the gift of the state, for it may be refused to natural persons. In the case of natural person, however, it is clear that law grants legal personality to a physical entity existing in space and possessing what (for lack of better term) we describe as human personality. While philosophy may find difficulty in analyzing or describing the real nature of human personality, few of us doubt that we exist, and we compensate for our defective analysis by an intuitive understanding of our own nature which, however inadequate it may be, at least gives a substratum on which to build.

As far as legal personality is concerned, there is no very significant difference between that granted to human beings and that to non-human beings such as groups or other entity. The decision of House of Lords in Salomon v A Salomon & Co. Ltd had a lasting influence in corporation law. It is often credited with the principle of separate legal entity of the corporation distinct from the members. Though there is no doubt that the Salomon case had play a significant role in company law, the decision in this case was hardly the origin of the separate legal entity principle.

The legal entity of beings other than the human has long been recognized prior to 1897, in which the Salomon case was decided. The jurisprudence theories on juristic person had been established since the early Roman law to justify the existence of legal person other than the human. The State, religious bodies and education institutions had long been recognized as having legal entity distinct from the members. The acceptance of the corporate personality of a company basically means that another non-human entity is recognized to assume a legal entity. This can be seen from the many theories of jurisprudence on corporate personality.

Majority of the principal jurisprudence theories on corporate personality contended that the legal entity of the corporation is artificial. The fiction, concession, symbolist and purpose theories supported the contention that existence of corporation as a legal person is not real. It only exists because the law of the state recognized it as legal person and it is recognized either for certain purpose or objectives. The fiction theory, for example, clearly stated that the existence of corporation as a legal person is purely fiction and that the rights attached to it totally depend on how much the law imputes upon it by fiction.

The Common Law Perspectives Generally, there are two types of person which the law recognized, namely the natural and artificial person. The former is confined merely for human beings while the latter is generally referred to any being other than human being which the law recognized as having duties and rights . One of the most recognized artificial persons is the corporation. Legal scholars, particularly the jurists, have always explored the issue on the recognition of corporation as a legal person.

In the study of jurisprudence, the separate legal personality of corporation is based upon theories, which are concentrated upon the philosophical explanation of the existence of personality in beings other than human individuals. W. Friedman stated that: “All law exists for the sake of liberty inherent in each individual; therefore the original concept of personality must coincide with the idea of man. ” Even though there are many theories which attempted to explain the nature of corporate personality, none of them is said to be dominant.

It is claimed that while each theory contains elements of truth, none can by itself sufficiently interpret the phenomenon of juristic person. Nonetheless, there are five principal theories, which are used to explain corporate personality, namely, the fiction theory, realist theory, the purpose theory, the bracket theory and the concession theory. Fiction Theory The fiction theory holds that corporations are simply legal fictions, created and sustained by an act of the state. They are endowed with corporate personality simply because this is a convenient form through which the natural persons behind the corporation may conduct their business.

According to this theory, the legal personality of entities other than human beings is the result of a fiction. Hence, not being a human being, corporation cannot be a real person and cannot have any personality on its own. Originally, the outward form that corporate bodies are fictitious personality was directed at ecclesiastic bodies. The doctrine was used to explain that the ecclesiastic colleges or universities could not be excommunicated or be guilty of a delict as they have neither a body nor a will. The famous case of Salomon v A Salomon Co Ltd is a proof of the English court adoption of the fiction theory.

In this case, Lord Halsbury stated that the important question to decide was whether in truth an artificial creation of the legislature had been validly constituted. It was held that as the company had fulfilled requirements of the Companies Act, the company becomes a person at law, independent and distinct from its members. Despite its instrumental conception of the corporation, the fiction theory still affords a sufficient basis for according corporations legal rights. Indeed, it is on the basis of the fiction that corporations are persons that they possess the legal rights they do, such as private property rights.

However the fiction theory affords no basis for the recognition of moral rights of corporations. On the fiction view, “corporations, as creatures of the State, have only those rights granted them by the State. ” The personality the corporation enjoys is not inherent in it but as conceded by the state. Due to the close connection made in this theory as regards to relation of legal personality and the power of the state, fiction theory was claimed to be similar to the theory of sovereignty of state which is also known as the concession theory. Concession Theory

A group of persons wanting to create a corporation will have to execute documents and comply with requirements set by the state before being given corporate personality; merely a privilege; state may provide causes for which the privilege may be withdrawn. It maintains that the law is the only source from which the legal personality may flow. The law lays down certain conditions which creates the legal personality of a corporation. Corporate form is therefore a concession given by the state. The concession theory is basically linked with the philosophy of the sovereign national state.

It is said to be essentially a product of the rise of the national state at a time when there were rivals between religious congregations and organizations of feudal origin for the claim of national state to complete sovereignty. Under the concession theory, the state is considered to be in the same level as the human being and as such, it can confer on or withdraw legal personality from other groups and associations within its jurisdictions as an attribute of its sovereignty. Hence, a juristic person is merely a concession or creation of the state.

Concession theory is often regarded as the offspring of the fiction theory as it has similar claim that the corporations within the state have no legal personality except as it is conceded by the state. Exponents of the fiction theory, for example, Savigny, Dicey and Salmond are found to support this theory. Nonetheless, it is that while the fiction theory is ultimately a philosophical theory that a corporation is merely a name and a thing of the intellect, the concession theory is indifferent as regards to the question of the reality of a corporation in that it focuses on the sources of which the legal power is derived.

Dicey took the view that sovereignty is merely a legal conception which indicates the law-making power unrestricted by any legal limits. The Purpose Theory This theory is also known as the theory of Zweckvermogen. Similar to the fiction and concession theories, it declares that only human beings can be a person and have rights. Entities other human is regarded as an artificial person and merely function as a legal device for protecting or giving effect to some real purpose. As corporations are not human, they can merely be regarded as juristic or artificial person.

Under this theory, juristic person is no person at all but merely as a “subject less” property destined for a particular purpose and that there is ownership but no owner. The juristic person is not constructed round a group of person but based on the object and purpose. The property of the juristic person does not belong to anybody but it may be dedicated and legally bound by certain objects. This theory rationalized the existence of many charitable corporations or organizations, such as trade unions, which have been recognized as legal persons for certain purposes and have continuing fund.

It is also closely linked with the legal system which regard the institution of public law and the endowment of private law as legal personalities. Bracket Theory According this theory, a company consisting of its members or shareholders exists and it is inconvenient to refer always to all of them, a bracket is placed around them to which a name is given but in order to understand the real position we must remove the bracket. The real status is given in realist theory. Realist Theory On the realist view, the corporation is more than a legal fiction, and more than simply an agreement between its shareholders.

It is an autonomous institution with a demonstrable extra-legal existence, analogous in some respects to a self-governing state. Like the contract theory, the realist theory recognises that the shareholders of a corporation delegate the powers of control over their property to the corporation’s management so that the property can be pooled towards a unified purpose. Unlike under the contract theory, however, the shareholders are seen more as investors in the corporation than owners of it.

This is why managers owe fiduciary duties not simply to the shareholders, but to the corporate person as a whole. Of the three theories, only the realist theory seems capable in principle of supporting moral rights for corporations, because only it grants them a real social existence apart from the concession of the state or the agreement of their shareholders. However it seems that the realist theory of corporate personality has fallen out of favour amongst modern academic writers. This may be because it seems to accurately describe only a limited subset of corporations.

Many types of corporations which have assumed greater importance since the realist view gained prominence, including holding companies and trustee companies, sit uneasily within the realist framework. Nevertheless it is believed that the realist theory is potentially the most useful of the three set out above, so long as the subset of corporations to which it most accurately applies can be sufficiently delineated. By itself the theory seems incapable of providing any basis for such delineation. If the realist conception of the corporation is to be salvaged at all, its assumptions must be explicated by some other theory.

Why Corporations? The above survey of the theories of corporate personality has revealed no complete conception of the corporation which justifies the recognition of moral rights of corporate persons. To some extent, this is hardly surprising. Corporate personality is a legal concept based on purely commercial considerations: The concept of the juridical person is convenient to the conduct of business by providing for extended “life” and a limitation on liability, not to mention the right to own property and enter into contracts, which the law reserves to people.

But laws might be fashioned to give corporations the same power to own property and sign valid contracts without terming them persons. There is therefore no reason why the types of bodies (if any) which deserve to be endowed with collective rights should coincide with those organisations allotted the status of persons by the law for purely instrumental reasons. For instance, corporations are classified as legal persons, but partnerships are not. Yet there is no obvious reason why the mere act of incorporation by a partnership should endow it with moral rights which it did not possess before.

The intuition which many lawyers seem to possess that corporations do possess rights can be explained as a psychological response to the “unified normative vocabulary” with which natural and corporate persons are described. That is, the personification of the corporation leads lawyers to indiscriminately apply concepts to it which are rightly applicable only to natural persons. However although this may be a convenient mode of analysis, it is clearly not conceptually consistent for rights to be accorded to bodies corporate (and to no other collectivities) purely because they bear that designation.

Nevertheless, that is precisely what propose should be done. The rationale is that the present paper is not simply a normative, but also a descriptive study. It is apparent that corporate persons are already recognised as more appropriate bearers of rights than non-incorporated bodies under Australian law. It is for this reason that they have property and other common law rights which non-incorporated bodies lack. It is likely, therefore, that any extension of the rights recognised of collectivities under our law will employ this existing category.

To extend the recognition of rights to non-incorporated bodies would require the recognition of a third type of personhood hitherto unknown to the law. However desirable this may be, it is not a realistic proposal for law reform. Corporate Personality And Limited Liability Corporate personality refers to the fact that as far as the law is concerned a company personality really exists apart and different from its owners. As a result of this, a company can sue and be sued in its own name, hold its own property and crucially – be liable for its own debts.

It is this concept that enables limited liability for shareholders to occur as the debts belong to the legal entity of the company and not to the shareholders in that company. Corporate legal personality arose from the activities of organisations such as religious orders and local authorities which were granted rights by the government to hold property and sue and be sued in their own right and not to have to rely on the rights of the members behind the organisation. Over time the concept began to be applied to commercial ventures with a public interest element such as rail building ventures and colonial trading businesses.

However, modern company law only began in the mid-nineteenth century when a series of Companies Acts were passed which allowed ordinary individuals to form registered companies with limited liability. The way in which corporate personality and limited liability link together is best expressed by examining the key cases:- Salomon v Salomon ; Co. Mr Salomon carried on a business as a leather merchant. In 1892 he formed the company Salomon ; Co. Ltd. Mr Salomon, his wife and five of his children held one share each in the company.

The members of the family held the shares for Mr Salomon because the Companies Acts required at that time that there be seven shareholders. Mr Salomon was also the Managing Director of the company. The newly incorporated company purchased the soletrading leather business. The leather business was valued by MrSalomon at ? 39,000. This was not an attempt at a fair valuation; rather it represented Mr Salomon’s confidence in the continued success of the business. The price was paid in ? 0,000 worth of debentures (a debenture is a written acknowledgement of debt like a mortgage – see Chapter 7) giving a charge over all the company’s assets (this means the debt is secured over the company’s assets and Mr Salomon could, if he is not repaid his debt, take the company’s assets and sell them to get his money back), plus ? 20,000 in ? 1 shares and ? 9,000 cash. Mr Salomon also at this point paid off all the sole trading business creditors in full. Mr Salomon thus held 20,001 shares in the company, with his family holding the six remaining shares. He was also, because of the debenture, a secured creditor.

However, things did not go well for the leather business and within a year Mr Salomon had to sell his debenture to save the business. This did not have the desired effect and the company was placed in insolvent liquidation (i. e. it had too little money to pay its debts) and a liquidator was appointed (a court appointed official who sells off the remaining assets and distributes the proceeds to those who are owed money by the company, see Chapter 16). The liquidator alleged that the company was but a sham and a mere ‘alias’ or agent for Mr Salomon and that Mr Salomon was therefore personally liable for the debts of the company.

The Court of Appeal agreed, finding that the shareholders had to be a bona fide association who intended to go into business and not just hold shares to comply with the Companies Acts. The House of Lords disagreed and found that- the fact that some of the shareholders are only holding shares as a technicality was irrelevant; the registration procedure could be used by an individual to carry on what was in effect aone-man business a company formed in compliance with the regulations of the Companies Acts is a separate person and not the agent or trustee of its controller.

As a result, the debts of the company were its own and not those of the members. The members’ liability was limited to the amount prescribed in the Companies Act – i. e. the amount they invested. The decision also confirmed that the use of debentures instead of shares can further protect investors. Macaura v Northern Assurance Co. Mr Macaura owned an estate and some timber. He agreed to sell all the timber on the estate in return for the entire issued share capital of Irish Canadian Saw Mills Ltd.

The timber, which amounted to almost the entire assets of the company, wasthen stored on the estate. On 6 February 1922 Mr Macaura insured the timber in his own name. Two weeks later a fire destroyed allthe timber on the estate. Mr Macaura tried to claim under theinsurance policy. The insurance company refused to pay outarguing that he had no insurable interest in the timber as the timber belonged to the company. Allegations of fraud were also made against Mr Macaura but never proven. Eventually in 1925 theissue arrived before the House of Lords who found that:

The timber belonged to the company and not Mr Macaura Mr Macaura, even though he owned all the shares in the company, had no insurable interest in the property of the company just as corporate personality facilitates limited liability by having the debts belong to the corporation and not the members, it also means that the company’s assets belong to it and not to the shareholders. More modern examples of the Salomon principle and the Macaura problem can be seen in cases such as Barings Plc (In Liquidation) v Coopers ; Lybrand (No. 4) [2002] 2 BCLC 364.

In that case a loss suffered by a parent company as a result of a loss at its subsidiary (a company in which it held all the shares) was not actionable by the parent – the subsidiary was the proper plaintiff. In essence you can’t have it both ways – limited liability has huge advantages for shareholders but it also means that the company is a separate legal entity with its own property, rights and obligations. Lee v Lee’s Air Farming Mr Lee incorporated a company, Lee’s Air Farming Limited, in August 1954 in which he owned all the shares. Mr Lee was also the sole ‘Governing Director’ for life.

Thus, as with Mr Salomon, he was in essence a sole trader who now operated through a corporation. Mr Lee was also employed as chief pilot of the company. In March 1956, while Mr Lee was working, the company plane he was flying stalled and crashed. Mr Lee was killed in the crash leaving a widow and four infant children. The company as part of its statutory obligations had been paying an insurance policy to cover claims brought under the Workers’ Compensation Act. The widow claimed she was entitled to compensation under the Act as the widow of a ‘worker’.

The issue went first to the New Zealand Court of Appeal who found that he was not a ‘worker’ within the meaning of the Act and so no compensation was payable. The case was appealed to the Privy Council in London. They found that: the company and Mr Lee were distinct legal entities and therefore capable of entering into legal relations with one another as such they had entered into a contractual relationship for him to be employed as the chief pilot of the company he could in his role of Governing Director give himself order as chief pilot.

It was therefore a master and servant relationship and as such he fitted the definition of ‘worker’ under the Act. The widow was therefore entitled to compensation. Separate legal personality and limited liability are not the same thing. Limited liability is the logical consequence of the existence of a separate personality. The legal existence of a company (corporation) means it can be responsible for its own debts. The shareholders will lose their initial investment in the company but they will not be responsible for the debts of the company.

Just as humans can have restrictions imposed on their legal personality (as in the case of children) a company can have legal personality without limited liability if that is how it is conferred by the statute. CONCLUSION person is not artificial or fictitious but real and natural. The realist also contended that the From the discussion on jurisprudence theories of corporate personality by G. W Paton, it is observed that main arguments lie between the fiction and realist theories.

The fiction theory claimed that the entity of corporation as a legal person is merely fictitious and only exist with the intendment of the law. On the other hand, from the realist point of view, the entity of the corporation as a legal law merely has the power to recognize a legal entity or refuse to recognize it but the law has no power to create an entity. Referring to the English company law case law, it can be seen that in most cases, the court adopted the fiction theory. Salomon v A Salomon Co Ltd is the most obvious example.

It is also observed that fiction theory provide the most acceptable reasoning in justifying the circumstances whereby court lifted the corporate veil of corporation. If the entity of the corporation is real, then the court would not have the right to decide the circumstances where there is separate legal entity of the corporation should be set aside. No human being has the right to decide circumstances whereby the entity of another human being should be set aside. Only law has such privilege.

Nonetheless, the realist contention that the corporation obtain its entity as a legal person not because the law granted it to them but because it is generated through its day to day transaction which are later accepted and recognized by law also seem acceptable. Bibliography * A Text Book of Jurisprudence, 2nd Ed, by G. W. Paton * Corporate personality in the 20th century edited by Ross Grantham * Manupatra. com * Legalservicesindia. com * Westlaw. com ——————————————– [ 1 ]. Cf. A. Kocourek, Jural Relations (2nd ed. ), 57. [ 2 ]. Stokes, M. “Company Law and Legal Theory” in Twining, W. ed). Legal Theory and the Common Law. Basil Blackwell, Oxford, 1986, 155, 162. [ 3 ]. Salomon v A Salomon & Co Ltd [1897] AC 22 [ 4 ]. First National Bank v Bellotti (1978) 435 US 765 [ 5 ]. Mark, G. Op. cit. 1472. [ 6 ]. cf. Mills v Mills (1938) 60 CLR 150 [ 7 ]. Woytash, J. “We Must Stop Viewing Corporations as People” (1978) 64 ABAJ 814 [ 8 ]. Dan-Cohen, M. Rights, Persons, and Organizations. University of California Press, Berkeley, 1986, 5. [ 9 ]. Salomon v Salomon & Co. [1897] AC 22 [ 10 ]. Macaura v Northern Assurance Co. [1925] AC 619 [ 11 ]. Lee v Lee’s Air Farming [1961] AC 12

Take a look at the material on sensation seeking on page 286 (Ch. 11). Do you consider yourself a sensation seeker? Why or why not? What are the advantages and disadvantages of your level of sensation seeking? I am not a sensation seeker because I prefer peace and happiness. I am the type of person that likes to see the same people and have a routine to follow which I feel comfortable in. The advantages of my level of sensation seeking are that I am more likely to find peace and happiness compared to someone who has a higher level of sensation seeking.

The disadvantages might be people calling me boring and not having as much fun as I should be having. How would you rate your own achievement motivation? Why? In what ways is this an advantage to you? In what ways is it a disadvantage? I would rate my own achievement motivation very high. I say this because I fit all of the descriptions mentioned in the book and I enjoy excelling in the things I do. When I have an easy task in front of me I find it boring but when I have a difficult task I tend to feel worried because I might do poorly.

This is an advantage because I know it pushes me to do better in all of the things I do in my life. It is a disadvantage because my self-esteem can be lowered when I don’t do well on something and it might also affect those around me. What did you learn about yourself from reading about the trait theories of personality? I learned that I have the following traits: Openness, Conscientiousness and Agreeableness. I am opened to new ideas, self-disciplined, sociable, talkative and affectionate.

I am a weird mix because I am opened to new ideas but I tend to like routines and being comfortable with my surroundings. At the same time I am sociable, talkative and affectionate which is kind of weird. To better explain I am a junior accountant at a commercial real estate company who sits in a cubicle all day but I am very outgoing and talkative like a salesperson. I always get compliments from people for being so outgoing while being an accountant which is a weird thing. What did you learn about yourself from reading the other theories of personality? List and explain at least three things. ) I now know I am aware of my actions which is something I never really thought about before. I also learned that I am a person who enjoys doing things for the thrill that comes from doing things instead of doing things for the outcome. I also learned that I am self-disciplined which is something I never paid attention to before either. These are great things I learned about myself from reading the theories of personality which I would of never thought of before.

How will you use this material on personality to improve your relationships (personal and/or professional)? I will use this information in order to better understand myself and other in both my personal and professional life. I know no two people are alike and now I can manage to speak to them and treat them based on their personality so they feel comfortable. I will also use this material to better understand myself and my way of thinking in order to excel at the things I do.

Character Analysis As we all known that the characters leading peoples’ behaviors and thought. In terms of characters influenced by environment and nurture, on the one hand, people do not believe that characters will affect when their make decision, one the other hand, characters will also determine peoples’ job position or the levels of life in the future. Now, let us talk about why characters are important in our life. Regardless of you believe that or not, characters are your label and when you fall in trouble or something happened that characters will make you predict your act.

Even you are meeting new people, through the details when you are taking about that will help you making the levels about the person quickly. In fact, all of the details are reflect of peoples’ characters so that we are making character analysis everyday. In this essay I would like talk about my own characters and analysis it. Initially, I will talk about my own positive characters. By the way, my name is Mouzhi-young and my name was given to me by my grandfather. He want to me become an intelligence and ambition person. Of course, young is my family name.

I am an easy-going man and I pleasure help others. When my friends get in trouble I always the first man is selected to. On the other hand I think my good quality consist by will power. The thing that I am decided I never give up. That means I will try my best to do. Sometimes my friends think I am a paranoia. Contrary, I also have some negative characters. Partly because of my name, my parents want to me become a useful and successful man so that they have too much wish for me. When I was a child, they ask for me attend a lot of course in the free time.

I do don’t know why am I have to spend so much time to study. Then, I guess I hate study and I absolutely acknowledge that the real things are do what you want to do. So I guess I am an idealist. The reason is I do don’t care about others mind and I just care about myself. I won’t put myself in trouble. I think it is not selfish and it is the prefect way to protect myself. Similarly, I pleasure help my friends and I always do that. It is sometimes I just don’t know how to deal with the relationship with other people so that I make the opposite way to do that is try to diminish communication with others.

There is important example about myself that I don’t feel like make other people clearly know about me. By my side, I afraid that other known about me too much on account of I am not good at explain and I also hate explain. I never ever try to know about others secrets, so I am wish other people would give me a free. After that, I guess I am too emotional and sensitive. I will profile every thing in my life. It is means I crazy about figure everything it out. g

A Report on Positive Thinking “How to cultivate it” Positive Thinking Introduction: Positive thinking is a mental attitude. A positive mind anticipates happiness, joy, health and a successful outcome of every situation and action. A negative mind on the other hand, suffers grief, depression, discomfort and failure. Positive thinking actually means approaching life’s challenges with a positive outlook. It does not necessarily mean avoiding or ignoring the bad things; instead, it involves making the most of potentially bad situations, trying to see the best in other people, and viewing yourself and your abilities in a positive light.

Some researchers often frame positive thinking in terms of explanatory style. Your explanatory style is how you explain why events happened. People with an optimistic explanatory style tend to give themselves credit when good things happen, but typically blame outside forces for bad outcomes. They also tend to see negative events as temporary and atypical. On the other hand, individuals with a pessimistic explanatory style often blame themselves when bad things happen, but fail to give themselves adequate credit for successful outcomes. They also have a tendency to view negative events as expected and lasting.

As you can imagine, blaming yourself for events outside of your control or viewing these unfortunate events as a persistent part of your life can have a detrimental impact on your state of mind. Positive thinkers are more apt to use an optimistic explanatory style, but the way in which people attribute events can also vary depending upon the exact situation. For example, a person who is generally a positive thinker might use a more pessimistic explanatory style in particularly challenging situations, such as at work or at school. How to cultivate positive thinking: ) Persistence: Once a negative thought enters our mind we have to be aware of it and endeavour to replace it with a constructive one. The negative thought will try again to enter our mind, and again we have to hammer it out. It is as if there are two pictures before us, and we have to look at one of them and disregard the negative one. Persistence will eventually teach our mind to think positively and ignore negative thoughts. b) Affirmations: Affirmation is a process through which we assure ourselves that out thoughts and actions are on the right path.

When we try to review our actions as per the right principles of proper growth of our personalities, we feel assured. Our faith in right thinking and action is an affirmation. c) Concentration: With a view to create an ambience conducive to our growth individually and collectively, we have to stay focused on right goals and proper objectives. Every thought must be logically connected with pointed action. To achieve this we must develop the power of concentration. d) Will power: Will power is the strength of our infinite mind.

Human mind has great potential. We need to awaken our mind to lead us towards our decided goals. Hard work and firm faith in our endeavours will enhance our will power. e) Self-discipline: With a view to keep our will power unwavering we must set certain rules of our behavior and follow these rules without compromise. This is called self-discipline. To keep ourselves positive in thoughts and consequent actions, self-discipline is a must. f) Equilibrium of mind: Human mind is like a wind. It wavers when it gets a chance to waver.

Sometimes it is overblown with joy and sometimes it is down with depression. Sometimes it is victimized with love positive mind balances all the extremes and stays equiposed. Benefits of Positive Thinking There are several benefits of positive thinking like 1. Formation of constructive attitude: Positive thinking helps us ascertain the plus side of good actions. It helps us find out the merits in others by virtue of which we became acceptable in every society. 2. Confidence-building: Positive thinking builds our self-esteem and self-worth.

It helps the process of self-actualization which boosts our confidence level. 3. Success-orientation: Positive thinker is success-oriented. He/she never doubts his/her actions. A positive thinker faces adverse situation with courage and confidence which leads him to ultimate success 4. Logical thinking: A positive thinker never thinks at random. He analyses every thought minutely, thinks about the pitfalls of putting it into action and chalks out an action plan accordingly. 5. Ability to face failure: A positive thinker is never pessimistic.

Even if he suffers a setback he doesn’t become nervous. On the other hand he analyses the failure factors and tries to improve them. 6. Ability to rectify mistakes: A positive thinker is like a lion who always looks back his track. If he deviates, he immediately corrects his wrongs. 7. Attainment of mento-physical soundness: A positive thinker gives equal weightage to the fitness of his body and mind. 8. Development of the sense of equality: A positive thinker treats everyone with equality which gives him the required peace of mind.

TAKE-HOME ESSAY #2 Psy 2300, Fall 2012 •The second take-home essay will be worth 20 points. You may use your textbook, D2L resources, and class notes. You may NOT collaborate with fellow students! •Essays must be double-spaced, with 1-inch margins and a reasonable font size (e. g. , 12 point). •PLEASE CAREFULLY PROOFREAD YOUR ANSWERS FOR CLARITY & TYPOS; excessive proofreading errors will result in a deduction of points, as will a failure to follow the formatting requirements above! •The essay should be 1-3 pages long and organized into coherent paragraphs. Please organize your essay according to the subdivisions provided (a, b, c, etc. ). You do not need to use a formal essay format (introduction, body, conclusion). •Please use your own words whenever possible. If you feel you must quote from class notes or the textbook, cite the source properly. •You may answer any ONE of the three questions provided. If you answer more than one, only the first one will be graded. •Essays are DUE in the Dropbox by 9:59 p. m. on Friday, November 9th. 1. Compare and contrast the Big Five with EITHER Eysenck’s model OR Tellegen’s model (i. . , identify similarities and differences). If you choose Tellegen, focus on the three higher-order traits; just refer to the primary scales as examples if applicable. Think about how the models were derived as well as the meaning of the traits themselves. Then discuss which of the three trait models covered in class you prefer and whether you think any important aspects of personality are left out of the three models. Make sure you JUSTIFY your choice of favorite model by presenting at least two distinct reasons. 2.

Consider what it means to be high in the traits of Extraversion and Neuroticism (separately). Then make connections between each trait and current concern theory. Specifically, address how being high in these traits might influence: •Which types of goals people pursue •How their goal pursuits affect them (emotionally and cognitively) •How they progress through the incentive-disengagement cycle when a goal is blocked What I’m looking for here is a thoughtful discussion of how being high in E and being high in N might affect people’s motivational processes, using concepts from Klinger’s current concern theory.

It may help to refer to the low ends of these traits to provide a contrast with the high ends (e. g. , “unlike introverts, when extraverts pursue a goal… ”). 3. If you’d like to be a little creative, tell a “story” about a person with a particular configuration of traits. Specifically, choose AT LEAST THREE of the Big Five OR Tellegen’s primary traits (if you choose Tellegen, make sure to pick one trait from each higher-order factor). The person can be purely hypothetical or based on someone you know; I even had students discuss the fictional characters Dwight (from “The Office”) and Borat!

Describe how that person typically behaves based on how they score on the three traits you select. For example, “Ralph” might be high C, low N, and medium O. What might Ralph’s behavior patterns be like? His interpersonal relationships? His goal pursuits? Would his trait configuration lead to any particular problems in his life? What I’m looking for is a clear understanding of the traits you choose and the ability to APPLY those traits to a realistic scenario in which the traits can interact with each other. Have fun! [NOTE:I have a sample full-credit essay posted on D2L to help with this option! ]

People’s motivations vary from person to person.  It is the way a person thinks and acts, their personality that makes them unique.  There are many theories concerning the type of energy that initiates behavior, what causes people to think and act in certain ways. Different psychological theories have been developed concerning why people act the way they do.  A biological theory, states that peoples motivations are primarily based off of their biological makeup (Britannica Encyclopedia, 2008).

For example, if someone was depressed, or upset, it would most likely be blamed on a chemical imbalance in the brain, and could be corrected with medication.  Another theory developed concerning people’s motivations is called psychosocial theories. Psychosocial theories refer to one’s psychological development, and there interaction in a social environment. Basically psychosocial theories determine that people’s personalities are based primarily off of their interactions with others (Britannica Encyclopedia, 2008).

The development of interactionism was first linked to the work of the German theorist Max Weber.  Interactionism, like psychosocialism, is primarily based on a person’s social interaction with others. Interactionism is linked to the concept of the American dream, pertaining to the individual having the power to change society, and indeed history from below, rather than being manipulated from above. Interactionism basically, is the study of how individuals act within society.

Motivation can easily be defined as that which gives purpose and direction to behavior.  Ella’s motivation can be accounted for by a biological theory of motivation, meaning that Ellis motivation is primarily directed by biological factors. Ella is primarily influenced by her biological makeup, which would include any balances or imbalances in dopamine, serotonin, or other chemicals released in the brain that affect mood and behavior. I find it interesting to note that in some cases, defense attorneys are asking judges to omit criminals, suggesting that their clients have a genetic predisposition for violent or impulsive behavior (Weiss, 2008).

I would speculate that Ellas’s source of motivation would be chemicals, or medications, probably relying heavily on prescriptions to accommodate her various psychological needs. In my own opinion, Ella’s source of motivation would be prescription drugs, caffeine, or other commodities that she thinks will help her focus more intently on her goals. Ella’s motivation would differ from that of Marcelo’s or Masoko’s. Ella’s motivation is primarily driven by biological factors, as Marcelo’s and Masoko’s are driven by social interactions with others. The effort that Ella would put forth when trying to obtain a promotion would be that of changing biological factors of herself to better accustom herself to the necessities of her occupation.

I feel that, instead of changing biological factors about themselves, Marcelo’s and Masoko’s approach would be that of social interaction. I think that due to Marcelo and Masoko’s differences in belief concerning motivational behavior, Ella will rely on exterior means to motivate herself for her promotion, Marcel and Masoko are primarily focused on getting to know others in their field, networking with individuals in order to obtain the information necessary for the promotion. I think that it is unrealistic to have a biological approach concerning motivation, in many instances; mood altering drugs taken on a daily basis can often do more harm than good to the individual.  Although I do agree that in some instances, chemical imbalances can take place that need to be corrected, I do not believe that it is always the correct solution.

Marcelo’s source of motivation would be primarily driven by social interaction with others.  Due to his acceptance of a psychosocial theory for motivation, Marcelo will be more likely to source his information off of that obtained from others in his occupation. Marcelo’s approach would differ from Ella’s approach primarily do to the social factors involved. Ella will rely primarily on biological aspects to accomplish her goal and obtain the promotion desired, while Marcelo will primarily use the eight developmental stages developed by Eric Erickson when trying to accomplish his goals.

Eric Erickson articulated eight stages that take place from infancy to adulthood, centering on the first and most important stage, which is the individual questioning the trustworthiness of his reality, or environment.  I think that would be a first step for Marcelo when making friends, will be to develop a relationship of trust with them. A difference in Marcelo’s approach to accomplishing his goals, and that of Masoko’s approach, is that Masoko will tend to be more self reliant, as Marcelo will be more socially reliant.

Masoko’s source of motivation will be focused primarily from within rather than without. Although Masoko’s interactionist approach will rely on information gained from social gatherings, he will also rely on strength within himself.  Interaction theories have grown in the latter half of the 20th century, having its roots here in America.  Max Weber, a German theorist, promoted that nothing in society is determined, and that people can break free of being labeled (Encarta Encyclopedia, 2008). When comparing Masoko’s approach to that of Ella’s, Ella will be more apt to rely on medications, and other chemical therapies, as Masoko will rely on social interaction with others, and will- power from within. Another difference in Masokos approach to sourcing his motivation will be his own self-reliance, rather than just relying on social interaction with others, like Marcelo.

Although Ella, Macelo, and Masoko’s approach to obtaining the motivation needed for the upcoming promotion are all valid and interesting theories, I think the right answer is uniting a bit of each theory. I don’t think that motivation should be sourced from any one theory, but rather a series of theories used at appropriate moments in time. I think that if they would have used principles of each theory in order to source there motivation, they would be far more successful. When building an individual who has a realistic combination of motivating theories, Sam, I would say that biological factors that should be included would be; developing a diet in which a daily multi vitamin is taken and a healthy diet is enforced.

Sam should also utilize the sociological principles of the psychosocial theory of motivation. Sam should gain a lot of his insight from interacting with others. Lastly, Sam should take the self reliant aspects of the interactionist theory of motivation. Sam, being confident in his own abilities, healthy, and socially interactive, will be able to effectively communicate his ideas to his peers, and make a positive impression on his employer in order to obtain the desired promotion. I think that the motivational theories will interact with each other in a positive way. I think that the important thing is balance, having too much of anything is never a good thing. The positive aspects of each theory should be integrated, health and fitness from the biological aspect, social interaction from the psychosocial aspect, and lastly, self reliance from the interactions aspect.

References

Weiss, R (2008) DNA Tests Offer Deeper Examination of Accused the Washington Post; retrieved on April 21, 2008 from http://www.washingtonpost.com/wp-dyn/content/article/2008/04/19/AR2008041902225.html?sub=new

DETECTION OF FRAUD (A Study on the Relations of Fraud Detection, Redress and Reporting by Auditors, Protecting against Fraud Detection: the Case of Auditors and the Effect of Auditors Personality) Prepared by:- _________________________________________________________________________ PREFACE The objective of this assignment is to promote critical thinking on to what extent auditors comply with auditing standards once they encounter fraud and auditors’ compliance on managing fraud, the debate on auditors’ negligence when it comes to fraud and the side effects of fraud detection towards personality.

A selection of three articles that were chosen in identifying and subsequently analyse the impact of fraud towards an individual, group or within an organisation. The three articles are:- * Protecting against Detection: The Case of Auditors and Fraud? * Fraud detection, redress and reporting by auditors, * Fraud Risk Assessment and Detection of Fraud: The Moderating Effect of Personality. The objective for this assignment is to aim on the relationship between the auditors’ ability to assess fraud risk and the ability to detect the likelihood of fraud.

Also, this study considers the overall trend of development and the prospects for future changes regarding the auditor’s fraud detection responsibilities. INTRODUCTION Most of the individuals feel that auditors fail to comply with some important elements of fraud standards. Fraud represents a significant and challenging issue throughout the accounting profession practically almost everywhere in the world.

Dramatic financial scandals often takes place as soon after companies received apparent “green light” from their auditors have kept the issue of fraud and the responsibility for its detection closely relate to auditors in particular. Auditors are required by the auditing standards to provide reasonable assurance that the financial statements are free from any misstatements. Inability to accomplish so particularly fraud may expose the auditors to litigation. The detection of fraud is the most important portion of the auditor’s duties.

Therefore, auditors should assiduously cultivate this branch of their activities. (Dicksee, 1990). Whenever there is a sudden alarm and collapse within the company, people tend to assume that the auditors negligently failed to spot something was wrong and the auditors failed to solve the issue. Detection of fraud is no longer the principal audit objective but rather the subsidiary to the determination of the truth and fairness of corporate financial statements.

This development in stated audit objectives is often portrayed as a process of natural, uncontroversial evolution in which professional guidance came to meet changing public expectations and circumstances (Tricker, 1982). The growth in the size of business, the assumption of corporate management of a greater responsibility for fraud detection and a broad acceptance of the increasingly uneconomic nature of audit-based fraud detection are usually identified as the main causes of the changing nature of audit responsibilities (CACA, 1986).

CENTRAL ISSUES & PROBLEMS When it comes to redress, it relates to the auditee taking measures situations where fraud has been detected. Given the existing standards on the role of auditors in fraud situations, the existence performance gap in this context can be due to several factors, including the lack of knowledge or competence on how to act once corporate fraud is detected, lack of care in following protocol or the lack of independence of the auditor possibly because conflicting of interest.

Given the sensitive nature of fraud reporting towards the society’s expectations, compliance with fraud standards is crucial nowadays. 56% from recent surveys said that expectations of auditors rely on the auditor’s duty to detect fraud, while 42% believed that it is the responsibility to search actively for fraud (Steen, 1990). The issue of fraud is very essential for public accountants and auditors because litigation actions may be taken against them should they not be able to detect fraud during the conduct of the audit.

Take for example when Xerox was sanctioned for overstating earnings by US$3 billion, its auditor KPMG was liable for US$22 million in penalties (Ettradge, Sun, Lee & Anandarajan, 2005). The present scenario is an extension whereby study shown that the effect of the auditors’ ability to assess fraud risk on their ability to detect the likelihood of fraud. High fraud risk scenario, the auditors’ ability to assess fraud risk has positive effect on their ability to detect the likelihood of fraud, whereas in a low fraud risk scenario not.

Adding to that study, another factor which is the personality may affect the ability to detect the likelihood of fraud. The study predicts that there might be other factor that affects the auditor’s job performance that is in the ability to detect the likelihood of fraud. LITERATURE REVIEW The present study predicts that personality might have only moderating effect on the fraud detection ability.

The present study illustrates and examines Big-5 factors of personality that are neuroticism, extraversion, conscientiousness, openness to experience and agreeableness because these factors are the basic dimensions of personality and it is predominantly viewed that many personality traits are subsumed under these five categories. This shows that personality does influence job performance and by investigating the moderating affects of the personality factors on the relationship between the auditors’ ability to assess fraud risk and their ability to detect the likelihood of fraud.

Attribution Theory This theory suggests that the level of future expected performance, in a particular task depends mainly on the particular causes to which prior success or failure in the same task is attributed. This theory is appropriate because there is a need to assess the causal attribution of the auditors’ performance, i. e: ability to detect the likelihood of fraud. With this study, the level of the future expected liability to detect the likelihood of fraud is attributed by the auditors’ prior ability to assess the level of fraud risk.

Five-factor Theory 1. Neuroticism as a personality trait * This study shows that auditors who are high on neuroticism will not be able to perform effectively in their job as compared to those who are low on neuroticism, because those with high neuroticism tend to show negative attitudes. With such attitudes demonstrate, the auditors may not be able to appropriately detect the likelihood of fraud. In any fraud situation, high on neuroticism would diminish the relationship between the ability to assess the risk and the ability to detect fraud altogether. . Extraversion as a personality trait * When a person is experiencing positive emotions, it may influence them to perform well in their job. In any risk situation, high on extraversion would have positive influence on the relationship between the auditors’ ability to assess fraud risk. 3. Conscientiousness as a personality trait * Individuals with high level of conscientiousness may be able to perform well in the job because of the characters such as organized and reliable are important facets for carrying out the audit work. 4.

Openness to experience as a personality trait * An auditor is more open to experience; he/she should be more able to detect the likelihood of fraud. Possessing traits such as intellectually curious, behaviorally flexible and nondogmatic in attitude and values can be considered as essential to conduct risk. 5. Agreeableness as a personality trait * Auditor who demonstrates high level of agreeableness in his/her personality such as cooperativeness, trustfulness and adaptability would make them more competent in performing the jobs.

METHODOLOGY The information pertaining to the study on the role of auditors in fraud cases, survey was conducted among audit partners of Dutch firms. The questionnaire contained three questions which were:- 1. Questions relating to the features of the fraud cases auditors had experienced in the period. 2. Questions on the reporting and redress of the fraud cases 3. Questions on the perceived role of auditor in the redress process. The overall respond is satisfactory, especially considering the sensitive nature of the study.

Secondly, in the study of the personality traits, two levels of ability to assess fraud risk and two levels of each dimension of personality factor. The factors of personality are neuroticism, extraversion, conscientiousness, openness to experience and agreeableness. The study also practicing the independent auditors registered in Malaysia, designated as audit partner or audit manager who are attached to the auditing firms in Malaysia. FINDINGS Most auditors who do have experience eliminated fraud believe that fraud detection and process are often significant in order to minimize risk.

Auditors reporting of fraud according to the fraud standards and regulations are defined as below. 1. Reporting to management. – As soon as auditors detect fraud or receive signals that could interpret as such, the auditor needs to report this to management in writing. 2. Reporting to the supervisory Board. – auditing standards explicitly required certain types of fraud to be reported in writing to the supervisory board such as cases of management fraud, cases of material fraud, and cases whereby management refuses to redress the fraud. 3.

The redress process. – when the auditor has detected fraud and management has not yet taken appropriate steps to redress the effects of fraud, the auditor is required to demand that the fraud be redressed, i. e. the consequences of the fraud have to be rectified as far as possible and recurrence needs to be prevented. 4. Auditor resignation. – The auditing standards allowed auditor to resign from the assignment of the fraud but required the auditor to resign if the case of material fraud was not redressed. 5. External reporting of fraud. Finally, the auditing standards state that when material fraud discovered during a statutory audit has not been redressed by the audit client within a reasonable time frame, the auditor is not only required to resign from the engagement, but also to notify the dedicated government agency. Such procedure also plus the expansion of auditor’s fraud detection responsibilities by assuming of willingness to play more active role in assessing and reporting on the adequacy of the company’s system and internal controls.

Matters that should take into consideration when considering the disclosure is justified in the public interest may include: * Fraud irregularities is likely to result in material gain or loss that effect a large number of people, * The extent to which non-disclosure of fraud is likely to enable it to be repeated with impunity, * Whether there is general management ethos within the entity of flouting the law and regulations, * The weight of evidence and the auditor’s assessment of the likelihood that fraud has been committed. CONCLUSION

In attempting to interpret and understand changing audit responsibilities, there would appear to be much to be gained by moving beyond traditional rationalizations of a profession responding directly to public demands. Various changes can be regarded as reflective of the conflicting, political nature of a self-regulated accounting profession and the outcomes dependent on the profession’s pursuit of professional interests and the profession’s attempts to manage the interplay between its own interests and any competing public duties and obligations.

It is right to acknowledge that public expectation that auditors should report suspected fraud was reasonable. It is recommended that auditors should be given greater encouragement to report whatever that is necessary and fit in reporting fraud detection. Additionally, it emphasized the role of internal control in the prevention and detection of fraud and suggested that where there was a legal responsibility for internal control systems, auditors should have a formal duty to report on their adequacy.

Changes in the law would have a statutory duty to report suspected fraud at the same time. It stated that auditors should be left at “liberty to report cases of fraud to the authorities without statutory backing” and that any change in the current position could be accomplished through revising the ethical guidance to auditors on professional conduct. Auditors have the duties to the rest of the community of which they are part and they owe to the community a more compelling duty which must on occasion take first place.

Public expectation must be given full weight in all matters (Accountancy Age, 12 December 1985). In developing auditing guidance concerning to fraud, three considerations have proved dominant: * The relative responsibilities of management and auditors for the prevention and detection of fraud, other illegal acts and irregularities and errors; * The conduct of an audit in order to have a reasonable expectations of detecting significant misstatements; * The action to be taken when errors are discovered.

With respect to the prevention and detection, all proposed guidance has emphasized the paramount responsibility of management, with the auditor’s responsibility being couched consistently in terms of materiality and the truth and fairness of the financial statements. The role of auditors is to properly plan, perform and evaluate his/her audit work so as to have a reasonable expectation of detecting material misstatements in the financial statements, whether they are caused by fraud, irregularities or errors.

LIMITATIONS Auditors in any circumstances have no duty to act as an informer to the extent where it would jeopardise or destroy the trust and confidentiality on which it felt that auditing depended. The use of word “informer” indicates a somewhat dismissive attitude to the possibility of breaking the confidential relationship with the management or public’s expectation.

Considerable resistance among auditors to the ideas that they should accept a general responsibility to detect fraud or extend their reporting responsibilities in the interest of the public. Whether changing audit responsibilities concerning detection of fraud come voluntarily or statutorily, such changes need to be based on greater awareness and continuing public investigation of the operation and capabilities of the audit function is this regard. Otherwise, it would anticipate that the position in the future will be with nfortunate, be little different in the roles and responsibilities of the accountancy profession towards the public interest. REFERENCES 1. Fraud Detection, Redress and Reporting by Auditors by Harold Hassink, Roger Meuwissen and Lauren Bollen. 2. Protecting against Detection: The Case of Auditors and fraud? By Christopher Humphrey and Stuart Turley. 3. Fraud Risk Assessment and Detection of Fraud: The Moderating Effect of Personality by Nahariah Jaffar, Hasnah Haron, Takiah Mohd Iskandar and Arfah Salleh.