History of Tobacco Laws

History of Tobacco Laws Coffins of Black In 1775, Percivall Pott, a surgeon at St. Bartholomews Hospital in England, noticed a marked rise in cases of scrotal cancer in his clinic. His patients were mostly chimney sweeps, who spent a lot of time in contact with grime and ash. He noted that the minute invisible particle of soot could be found under their skin for days, and that scrotal cancer bust out of a superficial skin wound called a soot wart. Based on these observations, Pitt suspected that it was the chimney soot that caused the scrotal cancers. That would mean that the cancer was potentially preventable. But removing the carcinogen was perhaps difficult to achieve. But with the embarrassing plight of chimney sweeps exposed, social reformers sought to create laws to regulate the occupation. The Chimney Sweepers Act was passed in 1788 to prevent master sweeps from using children under eight. In 1834, the age was increased to fourteen. By 1875, the use of young climbing boys was forbidden. In 1761, an amateur scientist in London, John Hill, claimed that he had found one carcinogen tabacco could cause lip, mouth, and throat cancer. In England, tobacco was rapidly escalating into a national addiction. Cigarette smoking soon spread through Europe and across the Atlantic to the United States. As cigarette consumption became a national addiction, it would be difficult to discern an association with cancer. The Emperors Nylon Stockings In the United Kingdom, government statisticians alerted the Ministry of Health in January 1947 that an unexpected epidemic of lung cancer was emerging in the country: Lung cancer morbidity had increased fifteen-fold in the prior two decades. In February, the ministry asked the Medical Research Council to organize a conference of experts to study this inexplicable rise of lung cancer rates and to find the cause. The experts at the conference pointed to every breathable form of toxin except cigarette smoke. Without any consensus, the council appointed Austin Bradford Hill, an eminent biostatistician, to devise a systematic study to identify the risk factor for lung cancer. Hill recruited Richard Doll, a 36-year-old medical researcher who had no experience in performing a study of this scale. *** In the United States, a medical student name Ernst Wynder encountered a case of 42-year-old man who died of cancer of the airways of the lung. The man was a smoker with tar-stained bronchi and soot-blackened lungs. Wynder had never seen such a case before, so he applied to the medical school for money to study the connection between smoking and lung cancer. But he was bluntly told that the effort would be futile. He wrote to the U.S. Surgeon General, but was told that he could prove nothing. So Wynder approached his mentor Evarts Graham, the great heart surgeon in St Louis. Graham was a heavy smoker and didnt believe the connection between cancer and smoking. But he agreed to help Wynder with the study in part to disprove the link and lay the issue at rest. The Case-Control Studies In St Louis, Wynder and Graham followed a simple method. They recruited a group of lung cancer patients and a control group without cancer and asked them about their smoking habits. They used smokers to nonsmokers ratio within each group to determine the smoking-cancer connection. In the UK, Doll and Hill followed a similar method in their study. They asked social workers in the hospital to interview the two groups of patients in and around London. To counteract biases, they included other questions such as how often they eat fried fish into the survey. By May 1, 1948, the result of their study was: The one and only statistical association with lung cancer was cigarette smoking. They published their study in September 1956. Meanwhile, Wynder and Graham in St Louis had also arrived at the same conclusion. The published their studies a few months earlier. The Prospective Cohort Study It might appear that Doll, Hill, Wynder and Graham proved the link between lung cancer and smoking. But they had proved something else. In a case-control study, the risk is estimated post hoc by asking lung cancer patients whether they had smoked. The interviewer could have unconsciously probed lung cancer patients about their smoking habits more aggressively than control group. In the early 1940s, an Oxford geneticist named Edmund Ford faced a similar notion. The solution was to follow a cohort to capture the change over time. Doll and Hill followed Fords work with deep interest. There was a centralized registry of all doctors in Britain that could be used for a cohort study. Every time a doctor in the registry died, the registrar was noticed with a detail description of the cause of death. On October 31, 1951, Doll and Hill sent out survey letters to about 60,000 doctors. About 41,000 of them responded. Doll and Hill used the data to create a master list, dividing it into smokers and nonsmokers. Each time a death was reported, they found out the cause of death from the registrars office. Between October 1951 and March 1954, 789 deaths were reported, and 36 were attributed to lung cancer. All these 36 deaths had occurred in the smokers category, showing a strong correlation between lung cancer and cigarette smoking. A thief in the Night In 1956, the percentage of smokers in the US adult population had reached an all-time peak of 45 percent. Cigarette sales had climbed to stratospheric heights and the tobacco industry had transformed their advertising by targeting their advertising to selected segments of the population. By the early 1960s, an average American consumed eleven cigarettes per day, nearly one for each waking hour. In the mid-1950s, public health organizations in America were undisturbed by the link between tobacco and cancer. But the tobacco industry was worried that the link would scare consumers away. In 1953, three years before Dolls prospective study was public, the heads of several tobacco companies met in New York to prepare a counterattack. They saturated the news media in 1954 with an advertisement titled A Frank Statement, obfuscating facts and creating doubts about the connection between lung cancer and tobacco. They had already formed a committee called Tobacco Industry Research Committee (TIRC) to act as an intermediary between the hostile academy, the embattled tobacco industry, and the confused consumer. The director of the committee was Clarence Cook Little, who the Laskerites had deposed as president of ASCC. Little was a strong proponent that lung cancer was hereditary. Studies had shown a strong correlation between smoking and lung cancer. But correlation, Little argued, could not be equated with cause. To counter that argument, Bradford Hill prepared a list of nine criteria that could prove a causal relationship. No single item in that list proved causality, but scientists could pick criteria from the list to strengthen or weaken the causal relationship. In the February 1957, Evart Graham died from bilateral bronchogenic carcinoma. Two weeks before he died, Graham wrote to his friend Alton Ochsner: à ¢Ã¢â€š ¬Ã‚ ¦bilateral bronchogenic carcinoma sneaked up on me like a thief in the nightà ¢Ã¢â€š ¬Ã‚ ¦You know I quit smoking more than five years ago, but the trouble is that I smoked for 50 years. In 1954, in a book entitled Smoking and Cancer, Graham had wondered whether it was time for the US Public Health Service to at least issue a statement of warning. A Statement of Warning In the summer of 1963, a team of three men visited the laboratory of Oscar Auerbach in East Orange, New Jersey. Oscar Auerbach was a lung pathologist who believed that cancer grew from a precursor lesion precancer to its full-blown form slowly, and methodically, over a long period of time. Long before lung cancer became symptomatic, he found, the lung tissues contained layers of precancerous lesions in various stages of development. He had recently completed a monumental study comparing lung specimens of nonsmokers and smokers, which was considered a landmark in the understanding of the genesis of lung cancer. The three visitors were William Cochran, Peter Hamill, and Emmanuel Farber. They were three of the ten-member advisory committee appointed by the US surgeon general. The   mandate (of the committee) was to review the evidence connecting tobacco to cancer so that the surgeon general could issue an official report. US Surgeon Generals Report In 1961, the American Cancer Society, the National Tuberculosis Association and the American Heart Association had sent a joint letter to President Kennedy urging him to appoint a national commission to investigate the link between tobacco and cancer. Kennedy assigned it to his surgeon general, Luther Terry. Terry appointed ten members to his advisory committee. Each member brought insight to a unique piece of the puzzle. Piece by piece, a consistent picture emerged. The committee found the relationship between smoking and lung cancer was one of the strongest in history. Luther Terry released his 387-page report on January 11, 1964. The report was released on a Saturday in part to minimize its effect on the stock market. It was front page news and a leading story on every television and radio stations in the United States and abroad. The FTC Action The Federal Trade Commission (FTC) was a federal agency whose mandate was to regulate advertisements and claims made by various products. Given the link between cigarettes and cancer, as acknowledged by the surgeon generals report, the FTC recommended that cigarette makers would need to acknowledge this directly in advertising their products. The FTC recommended to imprint the message into the product itself. Cigarette packages and all advertisements were to be labeled with Caution: Cigarette Smoking Is Dangerous to Health. It May Cause Death from Cancer and Other Disease. The proposed action from the FTC spread panic through the tobacco industry. Rather than being regulated by the FTC, the tobacco industry voluntarily requested regulation by Congress. In Congress, the FTCs recommendation was diluted as it changed hands from hearing to hearing, leading to an amended bill called the Federal Cigarette Labeling and Advertising Act (FCLAA) of 1965. It changed the FTCs warning label to Caution: Cigarette smoking may be hazardous to your health. The words cancer, cause, and deaths were removed from the original label. Battle on Cigarette Advertising In late 1966, a young attorney named John Banzhaf asked a local television station to provide airtime for anti-smoking announcements. The station refused. In the summer of 1967, Banzhaf filed a complaint with the FCC. The FCCs fairness doctrine required public media to provide free air time to opposing viewpoints on controversial issues. The FCC announced responded that its fairness doctrine applied to the request for anti-smoking announcements. With the FTC consent, Banzhaf sued the TV station. The suit went to trial in 1968. The court ruled that proportional airtime had to be given to pro-tobacco and anti-tobacco advertising. In February 1969, the FCC announced that they would rigorously police the proportional air time clause.   A barrage of anti-smoking advertisements appeared on television. In late 1970, faced with the daily brunt of negative publicity, tobacco manufacturers voluntarily withdrew cigarette advertising from broadcast media. Lawsuits Against Tobacco Manufacturers Rose Cipollone started smoking when she was a teenager in 1942. She tried to quit, but relapsed later with greater dependency. In her quest for the safe cigarette, she had switched brands and tried new filters periodically. In 1981, Cipollone was diagnosed with lung cancer. By August 1983, the cancer metastasized all over her body. She started chemotherapy, but had a poor response. She died on October 21, 1984 at age 58. Marc Edell, a New Jersey attorney, heard of Cipollones diagnosis in the summer of 1983. He sued for the Cipollones against three tobacco manufacturers whose products Rose had used Liggette, Lorillard, and Philip Morris. In previous lawsuits against the tobacco companies, the tobacco industry had all declared victory. Edell acknowledged that Rose Cipollone had read the warning labels and knew of the risks of smoking. But what matter was what the cigarette manufacturers knew, and how much of the cancer risk they had revealed to consumers. Edell asked the courts for unprecedented access to the internal files of the three tobacco companies. These documents showed that the tobacco companies knew smoking was linked to cancer, and the struggles within the industry to conceal the risks. In 1987, after four long years, the court decided that Rose Cipollone was 80 percent at fault. Only Liggett was liable for the remaining 20 percent, as Rose Cipollone smoked their cigarettes before the 1966 warning labels. Lorillard and Philip Morris got off without punishment. The jury awarded $400,000 in damages to Antonio Cipollone. Lawsuits by the States In 1994, Mississippi was the first state to sue the tobacco industry to recover its public healthcare outlays linked to smoking. Several other states soon followed. Faced with the prospect of defending multiple actions nationwide, the four largest cigarette makers proposed a global agreement in June 1997. In 1998, 46 states signed the Master Settlement Agreement with the four companies. Since 1998, an additional 47 cigarette makers have joined the agreement, making it one of the largest liability settlements in the United States.

Nonviolent movement

There is a wide-spread conception in the theory of nation-building that violence is an ultimate way to express disagreement and overcome injustice as well as fight a dictatorship. But the last century has proven the fallaciousness of this conception. Mahatma Gandhi and Martin Luther King Jr., Nelson Mandela and Dalai Lama and many others have shown that nonviolence can be more powerful force in defeating oppressive rulers and laws. Their lives and actions are examples how oppressors or unjust legislation may be defied by the force of word and soul rather than by the force of weapons. Gene Sharp summarizes the effectiveness of nonviolent actions with such words: â€Å"nonviolent action is possible, and is capable of wielding great power even against ruthless rulers and military regimes, because it attacks the most vulnerable characteristic of all hierarchical institutions and governments: dependence on the governed† (p. 18).Nonviolent action is an application of a very simple t ruth: people do not always do what they are told to do, and sometimes they do that which has been forbidden. When people refuse their cooperation, withhold their help, and persist in their disobedience and defiance, they do this to deny their opponents the basic human assistance and cooperation which any government or hierarchical system requires. If they do this collectively through their established independent social institutions or newly improvised groupings for a sufficient period of time, the power of that government will weaken and potentially dissolve.The world history has witnessed the cases when nonviolent means have been chosen over violence for religious or ethical reasons. In some cases, even when pragmatic political considerations were dominant in the choice of nonviolent struggle, the movement has taken on certain religious or ethical overtones. This was the case in the campaigns of the Indian National Congress for independence from Britain in the 1920s, 1930s, and 19 40s. Those struggles, often under Gandhi’s leadership, and also the civil rights campaigns in the 1950s and 1960s in the Deep South of the United States, under the leadership of Martin Luther King, Jr., are very important.Mohandas Karamchand  Gandhi, better known as Mahatma Gandhi, is the first name that comes to mind when one speaks of nonviolence in the 20th century. His charisma and his action not only had a profound effect on India’s modern history, but also provided firm basis for all future nonviolent struggles in the world. Gandhi’s political philosophy revolved around three key concepts: satyagraha (non-violence), sawaraj (home rule), and sarvodaya (welfare of all). Whereas satyagraha was essentially a tactic of achieving political ends by non-violent means, sawaraj and sarvodaya sought to encourage ideas of individual and collective improvement and regeneration. Such regeneration, Gandhi insisted, was necessary if India was to rediscover her enduring historical and religious self and throw off British rule. (Andrews, 1949)Perhaps Gandhi’s best-known act of civil disobedience, known as the second satyagraha (‘hold fast to the truth’) was Salt March that was taking place in 1930 from  12 March to 6 April. It expressed increasing frustration by Congress at its own impotence and, specifically, the British refusal to grant Dominion status to India. Gandhi chose the hated salt tax as the object of his campaign. At the time, the Indian government maintained a monopoly over the manufacture of salt, an essential basic commodity which was thus heavily taxed. Those using their own salt, e.g. if they were living close to the sea, were subject to heavy punishment.The 61-year-old Mahatma started the 240-mile-long march from Sabarmati to the coastal town of Dandi together with seventy-eight of his followers. He was joined by thousands along the way, in a march that received vast international and national attention. When the protesters marched on to a government salt depot, he was arrested, as were between 60,000 and 90,000 other Indians in subsequent months, as well as the entire Congress leadership. Gandhi was released and called off the campaign in March 1931 following the Gandhi–Irwin Pact, which allowed Gandhi to participate in the second Round Table Conference, and symbolically permitted the production of salt for domestic consumption.From the 1920s to early 1940s, he led a series of passive resistance campaigns in pursuit of Swaraj, which redefined the character of Indian nationalism. He sought tolerance between Hindus and Muslims and the eradication of caste untouchability. In January 1948 he was assassinated by a Hindu fanatic for his pro-Muslim sympathies. Gandhi’s insistence that means were more important than the ends distinguished him from other great political leaders of the twentieth century.Since his death Gandhi has become the source of inspiration for non-violent poli tical movements such as the Civil Rights Movement in the USA. Desmond Tutu in the article A Force More Powerful a Century of Nonviolent Conflict rightfully points out: â€Å"The leaders who opted for nonviolent weapons often learned from resistance movements of the past. Indian nationalist leader Mohandas Gandhi was inspired by the Russian Revolution of 1905. The Rev. Martin Luther King, Jr. and other African American leaders traveled to India to study Gandhi’s tactics.† (Tutu, 2000) Non-cooperation was a major tactic employed by Gandhi when he felt the state had become immoral or unjust. In the King movement, such action was called boycott, the most effective nonviolent tactic employed in the movement to abolish discrimination in public transportation in Montgomery, Alabama.The justification for such action lies in the fact that rejection is as much of an action as acceptance. Thus, King, like Gandhi, while emphasizing the necessity of courage, utilized the boycott to achieve rejection of unjust laws regulating public transportation and public lunch counters. The net effect of the various expressions of the nonviolent protest, especially the boycott, strike, demonstration and jail, was to draw one’s opponent off balance, hoping thereby to change his mind. (Smith, p.58) Nonviolence, therefore, was not a sign of weakness or of a lack of courage. Quite the contrary, King believed that only the strong and courageous person could be nonviolent. He advised persons not to get involved in the civil rights struggle unless they had the strength and the courage to stand before people full of hate and to break the cycle of violence by refusing to retaliate.King just as Gandhi emphasized the need to prepare for action. The Civil Rights Movement initiated by Martin Luther King, Jr. succeeded in mobilizing massive nonviolent direct action. Innovative tactics included economic boycotts, beginning with the yearlong boycott of a bus company in Montgomery, Alabama, begun in December 1955 and led by Martin Luther King, Jr.; sit-in demonstrations; and mass marches, including a massive mobilization of whites and blacks in the August 1963 March on Washington, which culminated in King’s â€Å"I have a dream† speech, and protest marches led by King that met with police violence in Selma, Alabama, in January 1965.The goal of these protests was to overthrow the entire system of racial segregation and to empower African Americans by seizing the franchise. Participants of the Civil Rights Movement were often beaten and brutalized by southern law enforcement officials, and thousands were arrested and jailed for their protest activities. Some leaders and participants were killed.Nevertheless, an endless stream of highly visible confrontations in the streets, which contrasted the brutality and the inhumanity of the white segregationists with the dignity and resolve of black protesters, made the cause of black civil rights the major i ssue in the United States for over a decade during the 1950s and 1960s. The nation and its leaders were forced to decide publicly whether to grant African Americans their citizenship rights or to side with white segregationists who advocated racial superiority and the undemocratic subjugation of black people.In conclusion it would be relevant to provide a brief revision of the similarity and differences the detection of which was purpose of this analysis. The parallels between Gandhi and Martin Luther King are self-evident. This preliminary look at Gandhi and King’s activity gives us the understanding that nonviolent movement cannot be limited by time frames or specific location. It rather needs a leader with strong character, resilience and ability to persuade people. The two leaders preferred nonviolence at a time when their people were being oppressed. Both struggled against the yoke of white oppression. Like Gandhi, King valued the power of nonviolent political action in keeping with the spirit of Gandhi’s satyagraha. King’s role in organizing the Montgomery bus boycott enabled him to emerge as the creator of a strategy of civil disobedience that earned for the civil-rights movement in the United States unprecedented media coverage, new forms of public recognition, and greater access to political power.Though both agreed that nonviolence is successful tactics on condition that every individual is committed to truth and justice, Gandhi tended to lay stress upon the necessity of personal suffering when participating in nonviolent movement, an attitude that to some extent was less aggressive than King’s emphasis on self-sacrifice. Moreover, Gandhi claimed that to achieve the goals through nonviolence one needs patience and non-cooperation and King believed that it is a certain degree of confrontation that is necessary to accomplish change. One more difference between Gandhi and King lies in the paradigm of their activity.While Gand hi was concerned about social injustice suffered by Indian people, King’s concerns bore upon racial discrimination of African Americans in the USA. And probably the most striking difference is the result of their struggle. While Martin Luther King’s ideas after his death were followed through by his followers and found an echo in common American’s heart, Gandhi was criticized that his tactics unnecessarily delayed the departure of the British, precipitated the partition of India, and led to the Hinduization of Congress because of his over-emphasis on religion. Few of Gandhi’s ideas were put into practice by independent India.While both of them deserve respect and admiration, it is possible to recognize that their approaches to the practice of nonviolence later grew strong one as opposition, the other as protest. Gandhi and King help us to believe that peaceful resolution of a conflict will live up to its promise.References:Andrews, C. F. Mahatma Gandhiâ⠂¬â„¢s Ideas.   London: Allen & Unwin, 1949McCarthy, R. and Sharp, G., eds., Nonviolent Action: A Research Guide. New York, 1997Sharp, G. The Role of Power in Nonviolent Struggle. Monograph Series, No. 3. The Albert Einstein Institution, 1990Smith, Kenneth and Zepp, Ira. Search for the Beloved Community: The Thinking of Martin Luther King. Valley Forge: Judson Press, 1974.Tutu, Desmond. â€Å"A Force More Powerful a Century of Nonviolent Conflict†. Social Education. (64):5, 2000

Corporate Governance and Financing Decisions by Saudi Companies

Corporate Governance and Financing Decisions by Saudi Companies Ali Al-Nodel College of Economy and Administration, Qassim University, P. O. Box 4667, Burydah 51412 Al-Qassim, Saudi Arabia. Email: [email  protected] edu. sa Khaled Hussainey Ain Shams University, Egypt Accounting & Finance Division Stirling Management School Stirling University Stirling FK9 4LA United Kingdom Email: Khaled. [email  protected] ac. uk 1 Abstract Purpose: This paper aims to contribute to the corporate governance literature in emerging economies by examining the effect of some corporate governance mechanisms on financing decisions in Saudi Arabian listed companies.Methodology: A multiple regression model is used to examine the association between financing decisions and corporate governance mechanisms for a sample of 37 listed Saudi companies. In particular, we examine the effect of board size; ownership concentration and corporate governance reporting on the debt-to-equity ratio. Corporate governance reporting is measured by the content analysis approach. Findings: After controlling for companies’ profitability and their growth opportunities, we found that both board size and ownership concentration are positively associated with debt-to-equity ratio.Research limitations: We limit our analysis to a small sample of firms that use the internet to communicate corporate governance information between October 2005 and January 2006. Practical implications: The findings suggest that managers are likely to choose higher financial leverage when they have stronger corporate governance (large number of directors on the board and higher ownership concentration). However, we did not find any statistical association between corporate governance disclosure and debt-to-equity ratio.This suggests that firm’s asymmetric information is not an important driver of the financing decision of Saudi Arabian companies. This might be due to the nature of the Saudi business environment. Orig inality: We strongly believe that this paper provides a novel contribution to the existing literature as we are the first to examine this issue in Saudi Arabia. Keywords: Corporate governance, financing decisions, emerging economies, Saudi Arabia. Paper type: Research paper. 2 1. IntroductionThis paper aims to contribute to the corporate governance literature by examining the effect of corporate governance characteristics on financing decisions in Saudi Arabian listed companies. In particular, it examines the effect of board size; ownership concentration and corporate governance reporting on the debt-to-equity ratio. The investigation of these research issues in Saudi business environment could extend prior research and give different explanations to those carried out in more developed countries Research related to determinant of corporate capital structure is a well established part of the accounting and finance research.Modigliani and Miller (1958) is the first to study this area of research. They also provided another study in the same area of research after modifying some assumptions such as relaxing the prefect market assumptions and considering corporate tax into their models (Miller and Modigliani, 1963). In their later study, they suggested that firm value will be enhanced if the level of debt increases because interest rate is a tax deductible and consequently companies would enjoy debt tax shield when funding their activities by long-term debt. Further accounting and finance research studies were more expressive.Those researches were concentrated on examining some determinants of corporate capital structure. For example, the association between board size and capital structure decisions have been suggested by a number of empirical studies (see for example Mehran 1992, Berger et al. 1997, Wiwattanakantang 1999, Wen et al. 2002, Du and Dia 2005, Abor and Biekpe 2005 and Al-Najjar and Hussainey 2010a and 2010b). Another determinant of capital structure decision which received significant attention is the ownership concentration (see for example Wiwattanakantang 1999, and Al- 3 Najjar and Hussainey 2010a and 2010b).More recently, number of studies have, also, investigated the association between asymmetric information and corporate decisions (see for example Li and Zhao, 2006 and Bharath et al. 2009). The results of these research studies suggest that firm value will be enhanced if the level of debt increases, board size and ownership concentration are associated with capital structure decisions and firms with higher levels of information asymmetric are more likely to use debt in financing their activities than equity. Unfortunately, the results of these research studies cannot be generalized for number of reasons.First, these results provided mixed evidence. For example, Mehran (1992), Berger et al. (1997), and Abor and Biekpe (2005) found a significant negative association between the size of the board of directors and debt-to-eq uity ratios, while Jensen (1986) found a positive association between higher debt ratios and larger board size. Further, other researchers found that there is no significant association between board size and debt-to-equity ratios (i. e. Wiwattanakantang, 1999; Wen et al. , 2002; and Al-Najjar and Hussainey, 2010). A second reason for the difficulty behind generalizing the results of these esearch studies are that the majority of them were carried out in most developed countries such as U. S and European continental. More precisely, in developing countries the conclusions of this line of research are likely to be challenged due to the business environmental differences between those of developed and those of developing countries. In another words, in a different business environment such those of the Middle Eastern countries, there are significant environmental factors that may affect corporate capital structure decisions.Hove (1986 and 1990) asserted the importance of political, ec onomical, and social systems on corporate decisions. 4 Third reason for the difficulty of generalising the evidence of prior research examining determinants of corporate capital structure is that there are very limited numbers of studies that have examined determinants of capital structure in developing countries and even fewer such studies may be found in the Middle East countries, leaving significant doubt about the applicability of these evidence in the business environment of Middle east countriesAccordingly, a natural area of extending the lines of the accounting and finance research related to determinant of corporate capital structure decisions is to explore other drivers of corporate capital structure decisions and to consider suggested drivers within a different business environment. In the present paper, we aim to examine the degree to which corporate governance affect the financing decisions of Saudi Arabian listed companies. We focus only on three corporate governance me chanisms.These are board size; ownership concentration and corporate governance reporting. The main reasons for concentrating on these issues are the possibility of making comparison with other studies because these are the most studied issues in the literature, the availability of data regarding these issues1, and the importance of advising regulators whom are more concern about these issues in the process of regulating corporate governance in Saudi Arabia.To help us in focusing on a group of firms that report corporate governance information on their websites, we utilised a sample of 37 companies listed in Saudi Stock Market in January 2006. This was based on a recent paper by Hussainey and Al-Nodel (2008) who collected their sample from Saudi listed companies’ websites 1 Cost of capital is an important factor in corporate capital structure decisions; however data for capital structure was not available. 5 etween October 2005 and January 2006 representing a total number of 77 companies listed in the Saudi Stock Exchange at that time. We found that both board size and ownership concentration are positively associated with the debt-to-equity ratio. However, we did not find a significant association between corporate governance reporting and the debt-to-equity ratio. The findings seem to suggest that managers are likely to choose higher financial leverage when they have stronger corporate governance (large number of directors on the board and higher ownership concentration).However, firm’s asymmetric information seems to be not a driver of the financing decision of Saudi Arabian companies. A possible explanation is that decisions relate to capital structure are affected by the Islamic view of financing which prohibits interests and in turn to the public view who disrespects such practice. This is enhanced by the weakness of the business reporting practice in Saudi Arabia which could provide pave for a different mean of getting information by parti es related to loan agreements.The results of this paper may be of use to the Saudi Arabian Capital Market Authority (SACMA, thereafter) who issued a guidance in 2006 that recommends all listed companies to disclose corporate governance information to the public. This would help SACMA to explore the attitude of companies to voluntarily report corporate governance rather than being enforced to do so. The paper proceeds as follows. Section 2 reviews prior research on the determinants of corporate capital structure. In Section 3, a description of the Saudi business environment is provided.Sections 4 and 5 discuss the development of the research hypotheses and the research model. Section 6 is the data description. The 6 main regression results are presented in Section 7. Section 8 concludes and suggests areas for future research. 2. Literature Review Although the relationship between corporate governance and capital structure has been the subject for an extensive research in developed co untries2, a limited research has been carried out to investigate the issue in business environment of developing countries.The association between board size and capital structure decisions have been well established in prior accounting and finance research. In particular, Mehran (1992), Berger et al. (1997), Wiwattanakantang (1999), Wen et al. (2002), Du and Dia (2005), Abor and Biekpe (2005) and Al-Najjar and Hussainey (2010a and 2010b) examined the association between board size and corporate capital structure decision, but the results are mixed. Mehran (1992), Berger et al. (1997), and Abor and Biekpe (2005) reported a significant negative association between the size of the board of directors and debt-toequity ratios.However, Jensen (1986) revealed a positive association between higher debt ratios and larger board size. Other researchers found that there is no significant association between board size and debt-to-equity ratios (Wiwattanakantang, 1999, Wen et al. , 2002, Al-Naj jar and Hussainey, 2010). 2 Examples include the UK (see, for example, Demirag 1998; Ezzamel and Willmott 1993; Writer 2001; Vinten 2001), The Netherlands (Groot, 1998), and Canada (Elloumi and Gueyie, 2001). Other researchers compared the corporate governance practice between developing countries.For instance, Vinten (2000) compared the corporate governance practice between the UK and the US. Another comparative study is Charkham (1994) which found significant differences in the corporate governance practices in five countries: Japan, Britain, France, the United States and Germany. 7 Ownership concentration is considered as one of the key determinants of capital structure decision. Wiwattanakantang (1999) reported that managerial shareholdings have consistent positive influence on family-owned firm leverage.In addition, Al-Najjar and Hussainey (2010a) found that insider ownership is positively and significantly associated with the debt-to-equity ratio. However, Al-Najjar and Hussai ney (2010b) did not find the expected significant results. A relatively recent and growing number of studies have investigated the association between asymmetric information and corporate decisions (see Li and Zhao, 2006 for more details). For example Bharath et al. (2009) used a novel information asymmetry index and examined the extent to which information asymmetry is a determinant of capital structure decisions.They found that information asymmetry affects capital structure decisions of US companies. In particular, they found a significant positive association between information asymmetry and debt-to-equity ratio. In other words, their results suggest that firms with higher levels of information asymmetric are more likely to use debt in financing their activities than equity. On the other hand, other research found that voluntary disclosure is negatively related to asymmetric information. For example, Hussainey et al. 2003) found higher levels of voluntary disclosure reduce info rmation asymmetry between the firm and investors and hence increase investors' ability to better anticipate future earnings. Research investigating corporate governance in developing countries is much beyond in considering the impact of issues of corporate governance on corporation capital structure. A review of research investigating issues of corporate governance revealed that most such research approach the issue whether to describe the state of 8 orporate governance from an official perspective or from the perspective of what should the practical applications of its principles be. For example, Al-Motairy (2003) explored the state of corporate governance practices in Saudi Arabia. He concluded that there is a vital need for (1) a review of these regulations to reflect the current practices of corporate governance, (2) the issuance of guidance for best practices for management and financial affair in corporations and (3) the establishment of an organisation to accelerate the adopt ion of best practices of corporate governance.Similarly, Fouzy (2003) evaluated the practices of corporate governance’s principles in Egypt. He recognised the development in Egyptian official regulations toward the application of best practices of corporate governance. He then argued that these developments are not met enough by Egyptian companies in their practical applications. Another example is the study which was carried out by Oyelere and Mohammed (2005) investigating the practices of corporate governance in Oman and how it is being communicated to stakeholders.They recommend enhanced regulation and communication for the Omani stock market to keep pace with the international developments. Finally, a research paper by the Centre for International Private Enterprise (CIPE, 2003) examined the corporate governance practice in four Middle Eastern countries (Egypt, Jordan, Morocco, and Lebanon). It found that corporate governance practice is approached differently by each cou ntry depending on the sophistication of the financial market in each country. The research paper further provided several 9 ecommendations to improve the application of the principles of corporate governance in the region as a whole. The impact of the corporation attitude toward their corporate governance on their financing decisions needs further investigation giving the unique of the Saudi business environment and the mixed results of the accounting and finance research relating to the determinants of corporate capital structure. This is evident by the unique aspects of the business environment of Saudi Arabia which will be discussed in the following paragraph. 3.Saudi business environment This section provides a general description of the environment of the Saudi business practices. The discussion will be directed to the most important environmental factors, as suggested by the literature. The main aspects of the Saudi business practices that will be discussed are the social, eco nomical, and political systems. Also, some highlights will be given to the 1965 Company Law that regulates the practice of Saudi businesses and the guidance of corporate governance issued by SACMA in 2006 which regulates corporate governance reporting.As a conservative society, a significant number of Saudis are adherent to Islamic values such as avoiding loan interests. This does not mean there is no such type of transactions but to mean that the majority of Saudis do not openly accept such transactions. Saudi society is also characterized by the impact of the personality and power of particular individuals, the role of family and friend relationships over regulations, privilege given to personal relationships over tasks, and the existence of a high level of secrecy (Al-Rumaihi 1997; Al-Nodel 2004). 0 The economy of Saudi Arabia is an oil-based economy and government exercises strong controls over major economic activities. Since the discovery of oil in 1938, oil revenue represents the biggest contribution to the economy. In 1990s, it accounted for around 35% of nominal GDP, about 75% of government revenues, and 85% of export receipts (Economist Intelligence Unit, 2003). Table 1 presents the country’s budgetary revenues, expenditures and net surplus or (deficit) for the last three years.Insert Table 1 here Similar to most developing countries, Saudi businesses are characterized by the domination of family businesses, the deep involvement of the government in the private sector, and the existence of a number of foreign-owned and controlled companies based on joint venture agreements with domestic companies. Al-Nodel (2004) reported that joint-stock companies represent only 1. 14% of the total number, and account for less than 40% of the total capital of the registered businesses.Since the type of businesses is mostly small to medium size companies, there was an apparent need for more foreign investors and involvement of the government in the private sec tor to carry some important activities which cannot be carried out or provided by local companies. This has left the country with significant number of foreign-owned and controlled companies based on joint venture agreements with domestic companies and significant involvement of government in some major business activities (Presley, 1984; Aba-Alkhail, 2001).The political system of Saudi Arabia is a monarchy, headed by the King. Within the political system, there are three legislative bodies, which have the authority to initiate and/or approve policies, regulation or rules: the Council of 11 Ministers, the Consultative Council, and various individual Ministries (Al-Amari, 1989; Al-Rumaihi, 1997). The legal system of Saudi Arabia is derived from Islamic law (Shariah; Alqur’an Alkareem and Sunna Alsharifah3), and coded laws for a number of specific fields, such as commerce, tax and labour.Al-Amari (1989) reported that Islamic law prevails in legal disputes. Two of the most impor tant aspects of the Islamic values relating to corporate financing are that Islamic law prohibits loan interests whether giving or taking by individuals or business institutions and obligation of Zaket4 which should be giving, calculated based on the capital of the business or individual, and given to specific groups as mentioned by Alqur’an Alkareem and Sunna Alsharifah.Taxes duty is imposed on non-Saudi or Gulf States companies operate in Saudi Arabia. There are some differences between Zaket and Taxes whether on whom to impose, the manner of collection, or calculation. For example, Zaket is based on the wealth of the business with some specific deductions for specific items as indicated by Shariah; Alqur’an Alkareem and Sunna Alsharifah, while Tax is based on the net income with some deduction according to the law of Taxes. The 1965 Company Law regulates the practice of businesses in Saudi Arabia.It sets conditions for several aspects of businesses such as legal fra meworks through which business companies can be established, the registration requirements, minimum capital to be maintained, number of partners, number of directors, accounts, the 3 Alqur’an Alkareem is the Holly book of Islam and Sunna Alsharifah is the interpretations, speeches and actions of prophet Mohamed Peace be up on him. Alqur’an Alkareem and Sunna Alsharifah provide the main of Islamic instructions. 4 Zaket is a financial religious duty and represents the third pillar.Alqur’an Alkareem and Sunna Alsharifah explain to Muslim the compliance with the Zaket duty. 12 annual audit of the accounts, and so on. Shinawi and Crum (1971) asserted that the origin of the 1965 Saudi Company Law goes back to the British Companies Act of 1948. The similarity between the 1965 Saudi Company Law and the UK acts issued in 1948, 1967 and 1976 was also reported by Kahlid (1983). The reporting requirements which are imposed by the 1965 Company Law represent the only rules th at should be observed.It requires the issuance of a balance sheet, a profit and loss account, and a report on the company’s operations and financial position every fiscal year. It further stipulates that all corporations and limited liability companies must issue annual financial statements audited by an independent auditor licensed to practice by the Saudi Ministry of Commerce and Industry. Similar to stock markets in developing countries, the Saudi stock market is new and small. In 1984, the Royal Decree No. 81230 was issued as an attempt to officially regulate the stock exchange (Abdeen and Dale, 1984; El-Sharkawy, 2006).Under this Royal Decree, the Saudi Arabian Monetary Agency (SAMA) was given actual control over the stock exchange through national commercial banks. The significant change was in 2003 when the Saudi Arabian Capital Market Authority (SACMA) was established to oversight the exchange of Saudi stocks (Ramady, 2005). This period observed significant increase o f the number of listed companies, regulations for the market in general and reporting in specific. Table 2 compares some key numbers of the Saudi stock market between 1996- 2005. Insert Table 2 here 13For example, in 2006 SACMA issued a draft for reporting requirements of corporate governance for listed companies. The draft provides recommendations of the criteria for the best corporate governance practice that should listed companies counsel. It has covered to some extent the main five principles issued by the Organization for Economic Co-operation and Development (OECD): the rights of shareholders, the equitable treatment of shareholders, the role of stakeholders in corporate governance, disclosure and transparency, the responsibility of the board of directors.According to the recommendations of SACMA, listed companies are required to report to SACMA about their compliance with the criteria of corporate governance as issued by SACMA or reasons for uncompliance if any. The disclosu re contains, for example, the board of directors’ functions, responsibilities, formation, committees of board of directors; audit committee; Nomination and Remuneration Committee; Meetings of the Board and Remuneration and Indemnification of Board Members5.Finally, SACMA asserted that the criteria for the best corporate governance practice mostly constitutes the guiding principles for all listed companies unless any other regulations, laws or rules require such requirement. 4. Research hypotheses To examine the effect of corporate governance characteristics on financing decisions in Saudi Arabian listed companies we formulated three research hypotheses; 5Detailed information about these regulations is discussed in the following articles (SACMA, 2006): Article 9: Disclosure in the Board of Directors’ Report; Article 10: Main Functions of the Board of Directors; Article 11: Responsibilities of the Board; Article 12: Formation of the Board; Article 13: Committees of the B oard; Article 14: Audit Committee; Article 15: Nomination and Remuneration Committee; Article 16: Meetings of the Board; Article 17: Remuneration and Indemnification of Board Members. 14 he effect of board size; ownership concentration and corporate governance reporting on the debt-to-equity ratio as following. Board size hypothesis Given that prior research investigating the association between board size and debt-to-equity ratios gave mixed result (see section 2), we also revisited this research area and examined the association between board size and capital structure for Saudi Arabian companies. We set the following first research hypothesis for the impact of board size on capital structure:H1: Ceteris paribus, there is a relationship between board size and debt-to-equity ratio. Ownership concentration hypothesis Given the results of the prior research are – to some extent – mixed, we also revisited this research area and examined the association between ownership concentration and capital structure for Saudi Arabian companies. We set the following second research hypothesis for the impact of ownership concentration on capital structure: H2: Ceteris paribus, there is a relationship between ownership concentration and debt-to-equity ratio. Corporate governance reportingTo examine the role of the information environment on capital structure decision in Saudi Arabian companies, we used a corporate governance voluntary disclosure index as a measure of a firm’s information environment and set the 15 following third research hypothesis for the impact of corporate governance reporting on capital structure: H3: Ceteris paribus, there is a relationship between corporate governance reporting and debt-to-equity ratio. 5. Model Development In order to test the above hypotheses, we regress debt-to-equity ratio on some corporate governance characteristics and some control variables.The study will investigate the following model: Levit = ? + ? ? X it + ? it Where: Levit is defined as long term debt to equity ratio; ? is the intercept. ? ? is the slope coefficient estimates of regressors. X it is the corporate governance variables (and control variables) for firm i at time t. Dependent variable: The dependent variable ( Levit ) is defined as the long term debt to equity ratio. Independent variables: We have three independent variables and two control variables. We identified three types of corporate governance variables: 1) Board size (BOARD): This represents the number of executive and non executive directors on the board. (2) Ownership concentration (OWNERSHIP): This represents the total percentage of the company’s shares that owned by owners. 16 (3) Corporate governance reporting (DISCLOSURE): This is calculated as the number of sentences that include at least one corporate governance related information. Control variables: (1) Profitability (PROF): we used return on total assets as a measure for firms’ profitab ility. (2) Growth opportunity (MB): we used share price to book value ratio as a measure for firm’s growth opportunity. . Data Our data collection is based on a recent paper by Hussainey and Al-Nodel (2008). This helped us to focus on a group of firms that report corporate governance information on their websites. We focused on firms that disclose information through internet because prior research argued that internet reporting is one of the most important sources of voluntary disclosure and this source is more likely to complement published annual reports (Aly et al, 2010). Hussainey and Al-Nodel (2008) collected their sample from Saudi listed companies’ websites between October 2005 and January 2006.At that time, the total number of companies listed in the Saudi Stock Market was 77 representing eight sectors: agriculture, services, cement, industrial, banks, electrical, telecommunication and insurance. They used TADAWUL website (www. tdwl. net) and Google website (w ww. google. com) to access every company's website. They deleted some companies from their analysis for a number of reasons. These include 11 firms without websites; one firm with a website under construction and one firm with a restricted website. This reduced their sample to 64 companies. We also further excluded 27 firms because of missing corporate 7 governance and accounting information. This led to a sample of 37 listed firms for the current study. Data on debt-to-equity ratio, Board size, ownership concentration, profitability and price-to-book value ratio were collected from TADAWUL website. Following Hussainey and Al-Nodel (2008), we used the content analysis approach to measure the number of sentences that contain corporate governance information. Accordingly we used the corporate governance disclosure index developed by Hussainey and AlNodel (2008) to analyse the content of every company's website. 7.Empirical Results This section discusses the descriptive analysis, the c orrelation analysis and the empirical results. Descriptive analysis Table 3 shows the descriptive analysis (mean, minimum, maximum and the standard deviation). It shows that on average the number of directors on board in Saudi Arabia companies is around 8, with a minimum of 4 members and a maximum of 11 members. Mean ownership concentration is 35. 6 and the mean corporate governance disclosure is 5 sentences with a minimum of zero corporate governance sentence and a maximum of 21 corporate governance sentences.A broad range of variation in financial variables is also evident in our sample. The debt-to-equity ratio ranges from 0 to 97 with a mean of 24. 52 and a standard deviation of 32. 576. The return on total assets ratio ranges from -37. 3 to 71. 74 with a mean of 8. 8535 and a standard deviation of 13. 81767. The share price to book value ratio ranges from 0 to 21 with a mean of 5. 03 and a standard deviation of 5. 336. On 18 average, our sample covers large firms as the mean fi rm size is 23240077. 81.Finally, our sample covers nine sectors as follows: Banks (9 firms), Chemical (8 firms); Cement (6 firms); Retailers (2); Energy (I firm); Agriculture (7 firms); Telecommunication (2 firms); Advertising (1 firm) and Insurance (1 firm). Insert table 3 here Table 4 shows the correlation analysis. The correlation between each of the independent variables is not too high. The highest correlation found between corporate governance disclosure and share price to book value ratio (MB) is 43. 5, which is acceptable. This confirms that no multicollinearity problem exists between the independent variables. Insert table 4 hereTable 5 shows our empirical results. It shows that the coefficient estimate on board size is positive significant with a p-value of 0. 059 (see model 4). This is consistent with Jensen (1986) who also found a positive association between higher debt ratios and larger board size. Our finding indicates that larger board size puts Saudi Arabian firms i n a good position to finance their activities by using debt. This is consistent with the fact that higher quality of corporate governance improves companies’ financial performance (Bhagat and Bolton, 2008) and hence leads increase the ability of the company to obtain debt.Liang and Zheng (2005) provided an explanation for this positive sign. They argued that boards with a large board size are more likely to have a difficulty in getting an agreement because of different and conflict opinions and views. Accordingly, firms with large number of directors on board might not choose equity financing which requires high transaction cost to resolve communication and coordination dilemma. In addition, they argued that 19 directors would choose debt for financing their activities because this source of finance will not dilute the equity of current shareholders and change their current position.This leads us to accept hypothesis 1. Table 5 also shows that the coefficient estimate on owne rship concentration is positive significant with a p-value of 0. 005 (see model 4). This result is consistent with Wiwattanakantang (1999) Al-Najjar and Hussainey (2010a). This indicates that when the total percentage of the company’s shares is concentrated internally, managers will prefer to use debt to finance their companies’ activities. This is because – as mentioned in Liang and Zheng (2005) – debt will not dilute the equity of current shareholders and change their current position.This leads us to accept hypothesis 2. Insert table 5 here Finally, corporate governance disclosure as a proxy for asymmetric information between managers and investors is expected to be negative and statistically significant. However, Table 5 shows that the coefficient estimate of DISCLOSURE variable is positive, indicating that firms with higher levels of corporate governance disclosure (less information asymmetry) has higher debt-toequity ratio. This finding is statistic ally insignificant and not consistent with prior research. This leads us to reject hypothesis 3. . Conclusion The aim of this paper was to examine the effect of corporate governance mechanisms on capital structure for Saudi Arabian listed companies. Our results show that the corporate capital structure decisions in Saudi Arabia is driven by some of the same corporate governance determinates suggested in prior research. Based on 20 a sample of 37 Saudi Arabian listed companies, our results show that the number of directors on boards and ownership concentration are the main drivers of Saudi companies for capital structure decisions.Our results, however, show that corporate governance reporting was not an important driver of Saudi companies for capital structure decisions. This might be due in part to the nature of the Saudi business environment where there is a weak reporting requirement of the practice of corporate governance in the country. This fact could have encourage parties to loan agreements approach different means to get the needed information rather than the traditional reporting mechanisms which is likely to be practical in a small community of businesses.This is also likely to be affected by the characteristics of Saudi society whereas the impact of the personality and power of particular individuals, the role of family and friend relationships prevail over regulations, and tasks, and the existence of a high level of secrecy. The main limitation of the study is that it did not cover the whole market so the sample may not be representative of the population of Saudi companies. This, however, is justified by the nature of the study, which relied on the availability of data needed. Further recheck was carried for companies which are not included.We found that these companies are in general small and less likely to affect the results. 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OF TRANSACTIONS (THOUSAND)) 284 460 377 438 498 605 1,034 3,763 13,320 46,607 TRADED STOCK (MILLION) 138 314 295 528 555 692 1,736 5,566 10,298 12,281 Source: TADAWUL website accessed on 29th September 2006 26 MARKET VALUE ($MILLIAR ) 46 59 43 61 68 73 75 157 306 650 INDEX 1,531 1,958 1,413 2,029 2,258 2,430 2,518 4,438 8,206 16,713 Table (3) Descriptive Statistics ; Industry Classification a) Descriptive Statistics N Minimum Maximum Mean Std. Deviation Lev 37 0 97 24. 52 32. 576 Board 37 4 11 7. 89 1. 822 Ownership 36 .0 82. 7 35. 550 27. 7875 PROF 37 -37. 30 41. 74 8. 8535 13. 81767 MB 37 .00 66. 87 9. 9181 10. 56721 Total assets 37 0 Disclosure 37 0 136950480 23240077. 81 21 b) Industry Classification Sectors Number of firms Banks 9 Chemical 8 Cement 6 Retailers 2 Energy 1 Agriculture 7 Telecommunication 2Advertising 1 Insurance 1 27 5. 03 3. 888E7 5. 336 Table (4) Correlation analysis Disclosure Board Ownership Lev MB PROF 1. 000 .077 .246 .301 .435** -. 139 .649 .149 .070 .007 .410 37 37 36 37 37 37 Pearson Correlation .077 1. 000 .234 .395* .083 .212 Sig. (2-tailed) .649 .170 .016 .626 .207 Disclosure Pearson Correlation Sig. (2-tailed) N Board N 37 37 36 37 37 37 .246 .234 1. 000 .504** . 097 .064 .149 .170 .002 .574 .711 36 36 36 36 36 36 Pearson Correlation .301 .395* .504** 1. 000 .109 -. 062 Sig. (2-tailed) .070 .016 .002 .520 .716 37 37 36 37 37 37 .435** .083 .097 .109 1. 000 -. 019 .007 626 .574 .520 37 37 36 37 37 37 Pearson Correlation -. 139 .212 .064 -. 062 -. 019 1. 000 Sig. (2-tailed) .410 .207 .711 .716 .910 37 37 36 37 37 Ownership Pearson Correlation Sig. (2-tailed) N Lev N MB Pearson Correlation Sig. (2-tailed) N PROF N **. Correlation is significant at the 0. 01 level (2-tailed). *. Correlation is significant at the 0. 05 level (2-tailed). 28 .910 37 Table (5) Regression analysis 5. 1 Model summary R Square Adjusted R Square 1 .617 a .380 .277 28. 002 2 .616b .379 .299 27. 565 3 .602c .363 .303 27. 492 4 .576d .332 .291 27. 726 Model R Std. Error of the Estimate a.Predictors: (Constant), PROF, MB, Ownership , Board , Disclosure b. Predictors: (Constant), PROF, Ownership , Board , Disclosure c. Predictors: (Constant), Ownership , Board , Disclosure d . Predictors: (Constant), Ownership , Board 29 5. 2 ANOVA analysis e ANOVA Sum of Squares df Mean Square F Sig. Regression 14436. 181 5 2887. 236 3. 682 .010a Residual 23524. 187 30 784. 140 Total 37960. 368 35 Regression 14405. 109 4 3601. 277 4. 739 .004b Residual 23555. 258 31 759. 847 Total 37960. 368 35 Regression 13774. 798 3 4591. 599 6. 075 .002c Residual 24185. 570 32 755. 799 Total 37960. 368 35 Regression 2592. 380 2 6296. 190 8. 190 .001d Residual 25367. 988 33 768. 727 Total 37960. 368 35 Model 1 2 3 4 a. Predictors: (Constant), PROF, MB, Ownership , Board , Disclosure b. Predictors: (Constant), PROF, Ownership , Board , Disclosure c. Predictors: (Constant), Ownership , Board , Disclosure d. Predictors: (Constant), Ownership , Board e. Dependent Variable: Lev 30 5. 3 Coefficient estimates Coefficients Unstandardized Coefficients Model a Standardized Coefficients t Sig. -1. 839 .076 .315 2. 079 .046 .181 .400 2. 619 .014 1. 064 1. 032 .174 1. 031 .311 MB -. 101 .507 -. 0 32 -. 199 .844 PROF -. 311 .352 . 132 -. 886 .383 -39. 272 20. 901 -1. 879 .070 Board 5. 669 2. 696 .312 2. 102 .044 Ownership .475 .178 .401 2. 672 .012 Disclosure .971 .906 .159 1. 072 .292 PROF -. 315 .346 -. 134 -. 911 .369 -38. 586 20. 831 -1. 852 .073 Board 5. 185 2. 637 .285 1. 967 .058 Ownership .466 .177 .393 2. 630 .013 Disclosure 1. 113 .890 .182 1. 251 .220 (Constant) -35. 046 20. 814 -1. 684 .102 Board 5. 196 2. 659 .286 1. 954 .059 Ownership 4 .519 .173 .438 2. 990 .005 21. 252 5. 721 2. 752 .474 Disclosure 3 -39. 090 Ownership 2 Std. Error Board 1 B (Constant) (Constant) (Constant) a. Dependent Variable: Lev 31 Beta

Oasis Theory and the Origins of Agriculture

The Oasis Theory (known variously as the Propinquity Theory or Desiccation Theory) is a core concept in archaeology, referring to one of the main hypotheses about the origins of agriculture: that people started to domesticate plants and animals because they were forced to, because of climate change. The fact that people changed from hunting and gathering to farming as a subsistence method has never seemed like a logical choice. To archaeologists and anthropologists, hunting and gathering in a universe of limited population and plentiful resources is less demanding work than plowing, and certainly more flexible. Agriculture requires cooperation, and living in settlements reaps social impacts, like diseases, ranking, social inequality, and division of labor. Most European and American social scientists in the first half of the 20th century simply didnt believe that human beings were naturally inventive or inclined to change their ways of life unless compelled to do so. Nevertheless, at the end of the last Ice Age, people did reinvent their method of living. What Do Oases Have to Do With the Origins of Agriculture? The Oasis Theory was defined by Australian-born archaeologist Vere Gordon Childe [1892-1957], in his 1928 book, The Most Ancient Near East. Childe was writing decades before the invention of radiocarbon dating and a half-century before the serious collection of the vast amount of climatic information that we have today had begun. He argued that at the end of the Pleistocene, North Africa and the Near East experienced a period of desiccation, a period of an increased occurrence of drought, with higher temperatures and decreased precipitation. That aridity, he argued, drove both people and animals to congregate at oases and river valleys; that propinquity created both population growth and a closer familiarity with plants and animals. Communities developed and were pushed out of the fertile zones, living on the edges of the oases where they were forced to learn how to raise crops and animals in places that were not ideal. Childe was not the first scholar to suggest that cultural change can be driven by environmental change--that was American geologist Raphael Pumpelly [1837-1923] who suggested in 1905 that central Asian cities collapsed because of desiccation. But during the first half of the 20th century, the available evidence suggested that farming appeared first on the dry plains of Mesopotamia with the Sumerians, and the most popular theory for that adoption was environmental change. Modifying the Oasis Theory Generations of scholars beginning in the 1950s with Robert Braidwood, in the 1960s with Lewis Binford, and in the 1980s with Ofer Bar-Yosef, built, dismantled, rebuilt, and refined the environmental hypothesis. And along the way, dating technologies and the ability to identify evidence and timing of past climate change blossomed. Since then, oxygen-isotope variations have allowed scholars to develop detailed reconstructions of the environmental past, and a vastly improved picture of past climate change has been developed. Maher, Banning, and Chazen recently compiled comparative data on radiocarbon dates on cultural developments in the Near East and radiocarbon dates on climatic events during that period. They noted there is substantial and growing evidence that the transition from hunting and gathering to agriculture was a very long and variable process, lasting thousands of years in some places and with some crops. Further, the physical effects of climate change also were and are variable across the region: some regions were severely impacted, others less so. Maher and colleagues concluded that climate change alone cannot have been the sole trigger for specific shifts in technological and cultural change. They add that that doesnt disqualify climatic instability as providing the context for the long transition from mobile hunter-gatherer to sedentary agricultural societies in the Near East, but rather that the process was simply far more complex than the Oasis theory can sustain. Childes Theories To be fair, though, throughout his career, Childe didnt simply attribute cultural change to environmental change: he said that you had to include significant elements of social change as drivers as well. Archaeologist Bruce Trigger put it this way, restating Ruth Tringhams comprehensive review of a handful of Childe biographies: Childe viewed every society as containing within itself both progressive and conservative tendencies which are linked by dynamic unity as well as by persistent antagonism. 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