the external control of organization
Post on 29-Oct-2015
293 Views
Preview:
DESCRIPTION
TRANSCRIPT
-
7DEOHRI&RQWHQWV%DFN&RYHU7KH([WHUQDO&RQWURORI2UJDQL]DWLRQV$5HVRXUFH'HSHQGHQFH3HUVSHFWLYH,QWURGXFWLRQWRWKH&ODVVLF(GLWLRQ5HVRXUFH'HSHQGHQFHDV7KHRU\DQG0HWDSKRU&KDOOHQJHVDQG&ULWLTXHV6RPH1HZ'LUHFWLRQVIRU5HVRXUFH'HSHQGHQFH5HIHUHQFHV3UHIDFH&KDSWHU$Q([WHUQDO3HUVSHFWLYHRQ2UJDQL]DWLRQV,QWHUQDOYHUVXV([WHUQDO3HUVSHFWLYHVRQ2UJDQL]DWLRQV%DVLF&RQFHSWVIRUD&RQWH[WXDO3HUVSHFWLYH7KH5ROHRI0DQDJHPHQW6XPPDU\5HIHUHQFHV&KDSWHU2UJDQL]DWLRQDQG6RFLDO&RQWH[W'HILQHG&RPSHWLQJ'HPDQGV2UJDQL]DWLRQDO%RXQGDULHVDQGWKH3DUWLDO,QFOXVLRQRI3DUWLFLSDQWV2UJDQL]DWLRQDO(IIHFWLYHQHVV6XPPDU\5HIHUHQFHV&KDSWHU6RFLDO&RQWURORI2UJDQL]DWLRQV,QWHUGHSHQGHQFH7KH6RFLDO&RQWURORI2UJDQL]DWLRQDO&KRLFH(PSLULFDO([DPLQDWLRQVRI,QWHURUJDQL]DWLRQDO,QIOXHQFH6XPPDU\5HIHUHQFHV&KDSWHU7KH2UJDQL]DWLRQDO(QYLURQPHQWDQG+RZLWLV.QRZQ'LPHQVLRQVRIWKH(QYLURQPHQW
-
7KH,QWHUFRQQHFWHGQHVVRI2UJDQL]DWLRQV7KH(QDFWPHQW3URFHVV+RZ(QYLURQPHQWVDUH.QRZQ'HWHUPLQDQWVRIWKH(QDFWPHQW3URFHVV3UREOHPVLQ(QYLURQPHQWDO(QDFWPHQW7KH$VVHVVPHQWRI([WHUQDO'HPDQGV6XPPDU\5HIHUHQFHV&KDSWHU0DQDJLQJ(QYLURQPHQWDO'HPDQGV$GDSWDWLRQDQG$YRLGDQFH2UJDQL]DWLRQDO&RPSOLDQFH$YRLGLQJ,QIOXHQFHDVDQ2UJDQL]DWLRQDO5HVSRQVH0DQDJLQJWKH&RQGLWLRQVRI6RFLDO&RQWURO0DQDJLQJDQG$YRLGLQJ'HSHQGHQFH6XPPDU\5HIHUHQFHV&KDSWHU$OWHULQJ2UJDQL]DWLRQDO,QWHUGHSHQGHQFH&RQWUROOLQJWKH&RQWH[WRI&RQWURO3DWWHUQVRI9HUWLFDO0HUJHUV0HUJHUV:LWKLQWKH6DPH,QGXVWU\5HGXFLQJ&RPSHWLWLYH8QFHUWDLQW\'LYHUVLILFDWLRQ'HWHUPLQLQJ,QWHURUJDQL]DWLRQDO'HSHQGHQFH2UJDQL]DWLRQDO*URZWK6XPPDU\5HIHUHQFHV&KDSWHU7KH1HJRWLDWHG(QYLURQPHQW(VWDEOLVKLQJ&ROOHFWLYH6WUXFWXUHVRI,QWHURUJDQL]DWLRQDO$FWLRQ1RUPDWLYH&RRUGLQDWLRQRI,QWHUGHSHQGHQFH,QWHURUJDQL]DWLRQDO&RRSHUDWLRQ7KH&DVHRI-RLQW9HQWXUHV3DWWHUQVRI-RLQW9HQWXUH$FWLYLW\&RRSWDWLRQ7KH8VHRI,QWHUORFNLQJ%RDUGVRI'LUHFWRUV,QWHUORFNLQJ'LUHFWRUDWHVDQG&RPSHWLWLYH8QFHUWDLQW\6L]HDQG&RPSRVLWLRQRI&RUSRUDWH%RDUGVRI'LUHFWRUV
-
+RVSLWDO%RDUGVRI'LUHFWRUV2UJDQL]HG&RRUGLQDWLRQRI,QWHUGHSHQGHQFH$VVRFLDWLRQV&RDOLWLRQVDQG&DUWHOV6XPPDU\5HIHUHQFHV&KDSWHU7KH&UHDWHG(QYLURQPHQW&RQWUROOLQJ,QWHUGHSHQGHQFH7KURXJK/DZDQG6RFLDO6DQFWLRQ5DWLRQDOL]DWLRQRI3ROLWLFDO&KRLFH2UJDQL]DWLRQDO/HJLWLPDF\5HJXODWLRQ6WDWH0DQDJHPHQWRIWKH(FRQRPLF(QYLURQPHQW7KH2UJDQL]DWLRQDVD3ROLWLFDO$FWRU6XPPDU\5HIHUHQFHV&KDSWHU([HFXWLYH6XFFHVVLRQ$0HFKDQLVPIRU(QYLURQPHQWDO(IIHFWV$0RGHORI(QYLURQPHQWDO(IIHFWV2UJDQL]DWLRQDO&RQWH[WDQG,QWUDRUJDQL]DWLRQDO3RZHU([HFXWLYH6XFFHVVLRQDQG2UJDQL]DWLRQDO3RZHU([HFXWLYH'LVFUHWLRQDQG2UJDQL]DWLRQDO'HFLVLRQ0DNLQJ([HFXWLYH5HFUXLWPHQWDQG,QWHUILUP&RRUGLQDWLRQ6XPPDU\5HIHUHQFHV&KDSWHU7KH'HVLJQDQG0DQDJHPHQWRI([WHUQDOO\&RQWUROOHG2UJDQL]DWLRQV$5HVRXUFH'HSHQGHQFH3HUVSHFWLYH7KUHH0DQDJHULDO5ROHV'HVLJQLQJ([WHUQDOO\&RQWUROOHG2UJDQL]DWLRQV'HVLJQLQJ2UJDQL]DWLRQDO(QYLURQPHQWV2UJDQL]DWLRQDO)XWXUHV5HIHUHQFHV6XEMHFW,QGH[
- ,QGH[,QGH[B&,QGH[B',QGH[B(,QGH[B),QGH[B*,QGH[B+,QGH[B,,QGH[B-,QGH[B.,QGH[B/,QGH[B0,QGH[B1,QGH[B2,QGH[B3,QGH[B5,QGH[B6,QGH[B7,QGH[B8,QGH[B9,QGH[B:,QGH[B
- ,QGH[B.,QGH[B/,QGH[B0,QGH[B1,QGH[B2,QGH[B3,QGH[B4,QGH[B5,QGH[B6,QGH[B7,QGH[B9,QGH[B:,QGH[B
-
7KH([WHUQDO&RQWURORI2UJDQL]DWLRQV$5HVRXUFH'HSHQGHQFH3HUVSHFWLYHE\-HIIUH\3IHIIHUDQG*HUDOG56DODQFLN ,6%1;6WDQIRUG8QLYHUVLW\3UHVV
7KLVWH[WH[SORUHVKRZH[WHUQDOFRQVWUDLQWVDIIHFWRUJDQL]DWLRQVDQGSURYLGHVLQVLJKWVIRUGHVLJQLQJDQGPDQDJLQJRUJDQL]DWLRQVWRPLWLJDWHWKHVHFRQVWUDLQWV
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
-
%DFN&RYHU
$PRQJWKHPRVWZLGHO\FLWHGERRNVLQWKHVRFLDOVFLHQFHV7KH([WHUQDO&RQWURORI2UJDQL]DWLRQVKDVORQJEHHQUHTXLUHGUHDGLQJIRUDQ\VWXGHQWRIRUJDQL]DWLRQVWXGLHV7KHERRNUHLVVXHGRQLWVWKDQQLYHUVDU\DVSDUWRIWKH6WDQIRUG%XVLQHVV&ODVVLFVVHULHVLQFOXGHVDQHZSUHIDFHZULWWHQE\-HIIUH\3IHIIHUZKLFKH[DPLQHVWKHOHJDF\RIWKLVLQIOXHQWLDOZRUNLQFXUUHQWUHVHDUFKDQGLWVUHODWLRQVKLSWRRWKHUWKHRULHV
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
$ERXWWKH$XWKRUV
-HIIUH\3IHIIHULVWKH7KRPDV''HH,,3URIHVVRURI2UJDQL]DWLRQDO%HKDYLRUDWWKH6WDQIRUG*UDGXDWH6FKRRORI%XVLQHVV+LVUHFHQWSXEOLFDWLRQVLQFOXGH7KH.QRZLQJ'RLQJ*DS+RZ6PDUW&RPSDQLHV7XUQ.QRZOHGJHLQWR$FWLRQDQG+LGGHQ9DOXH+RZ*UHDW&RPSDQLHV$FKLHYH([WUDRUGLQDU\5HVXOWVZLWK2UGLQDU\3HRSOH
*HUDOG56DODQFLNZDVWKH'%.LUU3URIHVVRURI2UJDQL]DWLRQDWWKH*UDGXDWH6FKRRORI,QGXVWULDO$GPLQLVWUDWLRQDW&DUQHJLH0HOORQ8QLYHUVLW\
-
7KH([WHUQDO&RQWURORI2UJDQL]DWLRQV$5HVRXUFH'HSHQGHQFH3HUVSHFWLYH-HIIUH\3IHIIHUDQG*HUDOG56DODQFLN67$1)25'%86,1(66&/$66,&66WDQIRUG%XVLQHVV%RRNV$QLPSULQWRI6WDQIRUG8QLYHUVLW\3UHVV6WDQIRUG&DOLIRUQLD
&RS\ULJKWE\WKH%RDUGRI7UXVWHHVRIWKH/HODQG6WDQIRUG-XQLRU8QLYHUVLW\
$OOULJKWVUHVHUYHG
3ULQWHGLQWKH8QLWHG6WDWHVRI$PHULFDRQDFLGIUHHDUFKLYDOTXDOLW\SDSHU
/LEUDU\RI&RQJUHVV&DWDORJLQJLQ3XEOLFDWLRQ'DWD
3IHIIHU-HIIUH\7KHH[WHUQDOFRQWURORIRUJDQL]DWLRQVDUHVRXUFHGHSHQGHQFHSHUVSHFWLYH-HIIUH\3IHIIHUDQG*HUDOG56DODQFLNSFP6WDQIRUGEXVLQHVVERRNV2ULJLQDOO\SXEOLVKHG1HZ
-
WKHLUVHPLQDUVDQG\RXNQRZZKR\RXDUH:KHQ/HH%ROPDQWROGPHWKDWQRWRQO\ZDV7KH([WHUQDO&RQWURORI2UJDQL]DWLRQVKLJKO\FLWHGEXWXVHGFRSLHVZHUHVHOOLQJRQ$PD]RQIRU,ZDVLQVSLUHGWRPDNHWKHHIIRUWWRUHFODLPWKHULJKWVDQGVHHLIZHFRXOGJHWWKHERRNEDFNLQWRSULQW
7KLVUHSXEOLFDWLRQZRXOGQRWKDYHEHHQSRVVLEOHZLWKRXWWKHHQWKXVLDVWLFVXSSRUWDQGDVVLVWDQFHRI%LOO+LFNVDQG.DWH:DKORIWKH6WDQIRUG8QLYHUVLW\3UHVV6RILD6DODQFLN-HUU\VGDXJKWHUJUDFLRXVO\SURYLGHGKHUDSSURYDOIRUWKHYHQWXUHDQG+XVH\LQ/HEOHELFLDQG&\G&RPEVKHOSHGLQP\ORFDWLQJ6RILDLQWKHILUVWSODFHDVZHOODVSURYLGLQJWKHLURZQZRUGVRIHQFRXUDJHPHQW
0XFKKDVFKDQJHGLQWKHSDVW\HDUVVLQFH7KH([WHUQDO&RQWURORI2UJDQL]DWLRQVZDVILUVWSXEOLVKHG)RUWKHSDVW\HDUV,KDYHEHHQIRUWXQDWHEH\RQGPHDVXUHWRWHDFKDW6WDQIRUGV*UDGXDWH6FKRRORI%XVLQHVVZKHUH,DPVXUURXQGHGE\DPD]LQJDQGUHPDUNDEOHFROOHDJXHVZKRPHDQVRPXFKWRPH6LQFH-DQXDU\WKHUHLVDZRQGHUIXOQHZDGGLWLRQWRP\OLIH.DWKOHHQZKRPDNHVHYHU\GD\DVSHFLDOGHOLJKW:KDWHYHU,KDYHEHHQDEOHWRDFFRPSOLVKLWLVEHFDXVHRIKHUORYHVXSSRUWDQGLQVSLUDWLRQ
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
-HIIUH\3IHIIHU6WDQIRUG&DOLIRUQLD
-
,QWURGXFWLRQWRWKH&ODVVLF(GLWLRQ7KH([WHUQDO&RQWURORI2UJDQL]DWLRQVKDGWKUHHFHQWUDOWKHPHVHDFKRIZKLFKUHSUHVHQWHGVRPHZKDWRIDFKDQJHLQGLUHFWLRQIRUWKHILHOGRIRUJDQL]DWLRQVWXGLHVDWWKHWLPHRILWVSXEOLFDWLRQ2QHZD\RIDVVHVVLQJWKHLPSDFWRIWKHERRNWKHHYROXWLRQRILWVLGHDVRYHUWLPHDQGH[SORULQJLWVSRVLWLRQLQWKHILHOGWRGD\LVWRLQYHVWLJDWHKRZWKHVHWKUHHWKHPHVKDYHXQIROGHGRYHUWKHVXFFHHGLQJ\HDUVLQERWKHPSLULFDOUHVHDUFKDQGVXEVHTXHQWWKHRUL]LQJ
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
-
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
-
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
-
2WKHU7KHRULHVRI2UJDQL]DWLRQVDQG(QYLURQPHQWV7KHVVDZWKHHPHUJHQFHRIWZRRWKHULPSRUWDQWWKHRULHVWKDWIRFXVHGRQRUJDQL]DWLRQVDQGWKHLUHQYLURQPHQWVSRSXODWLRQHFRORJ\HJ+DQQDQDQG)UHHPDQDQGLQVWLWXWLRQDOWKHRU\HJ0H\HUDQG5RZDQ7KHUHRULJLQDOO\ZHUHDQGWRVRPHH[WHQWVWLOODUHLPSRUWDQWWKHRUHWLFDOGLIIHUHQFHVDPRQJWKHWKHRULHVDOWKRXJKUHVRXUFHGHSHQGHQFHWKHRU\DQGLQVWLWXWLRQDOWKHRU\KDYHJURZQVRPHZKDWFORVHUWRJHWKHURYHUWLPH2QHZD\RIFRPSDULQJDQGFRQWUDVWLQJWKHWKHRULHVLVWREULHIO\H[SORUHKRZHDFKGHDOVZLWKWKHWKUHHIRFLRIHQYLURQPHQWDOGHWHUPLQLVPVWUDWHJLFFKRLFHDQGWKHFRQQHFWLRQEHWZHHQH[WHUQDOFRQVWUDLQWVDQGLQWHUQDOG\QDPLFV
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
7KHVHWKUHHGLIIHUHQFHVPHDQWKDWWKHUHLVPXFKPRUHRIDSODFHIRUVWUDWHJLFFKRLFHLQUHVRXUFHGHSHQGHQFHWKHRU\DVRPHZKDWLURQLFIDFWJLYHQWKHXVHRISRSXODWLRQHFRORJ\LQXQGHUVWDQGLQJFRUSRUDWHVWUDWHJ\HJ%XUJHOPDQ+RZHYHULQGXVWULDORUJDQL]DWLRQHFRQRPLFVDQRWKHUSHUVSHFWLYHHPSOR\HGWRXQGHUVWDQGEXVLQHVVVWUDWHJ\HJ3RUWHU
-
DOVRKDVVRPHRIWKLVIODYRURIHQYLURQPHQWDOGHWHUPLQLVP7KHHPSKDVLVLQHDUO\LQGXVWULDORUJDQL]DWLRQHFRQRPLFVFRQFHSWLRQVRIVWUDWHJ\PRVWO\ZDVRQEHLQJLQWKHULJKWLQGXVWU\DQGRQFHLQWKDWLQGXVWU\H[FHSWIRUGHFLGLQJRQZKHWKHUWRFRPSHWHRQWKHEDVLVRIGLIIHUHQWLDWLRQRUFRVWRUJDQL]DWLRQDOGHFLVLRQVZHUHTXLWHFLUFXPVFULEHGGHDOLQJPRVWO\ZLWKHQWU\DQGH[LWLQWRPDUNHWV+RZHYHUSDUWLFXODUO\LQODWHUZRUN3RUWHULQFRUSRUDWHGPRUHSRVVLELOLWLHVIRURUJDQL]DWLRQDODFWLRQZLWKDQLQFUHDVHGIRFXVRQLQWHUQDOSURFHVVHV
$IRXUWKGLIIHUHQFHLVWKDWSRSXODWLRQHFRORJ\EHFDXVHRILWVVWXG\RIELUWKDQGGHDWKSURFHVVHVZKLFKRFFXURYHUWLPHLVPRUHH[SOLFLWO\ORQJLWXGLQDOWKDQPRVWHPSLULFDOVWXGLHVLQWKHUHVRXUFHGHSHQGHQFHWUDGLWLRQ+RZHYHUWKHUHLVQRWKLQJLQKHUHQWO\VWDWLFLQUHVRXUFHGHSHQGHQFHSUHGLFWLRQVDQGDVQRWHGDERYHWKHUHLVDG\QDPLFDVSHFWWRDUJXPHQWVDERXWFKDQJHVLQRUJDQL]DWLRQVDQGHQYLURQPHQWVRYHUWLPHLQUHVSRQVHWRWKHDFWLRQVRIWKHIRFDODQGRWKHURUJDQL]DWLRQV
7KHILIWKGLIIHUHQFHLVWKDWSRSXODWLRQHFRORJ\LVODUJHO\VLOHQWDERXWWKHFDXVHVRILQWHUQDORUJDQL]DWLRQDOG\QDPLFVVXFKDVFRQWHVWVIRUSRZHUOHDGHUVKLSVXFFHVVLRQDQGVLPLODULVVXHV,QWKHRU\RIFRXUVHVXFKSURFHVVHVFRXOGEHPRGHOHGXVLQJDQDWXUDOVHOHFWLRQORJLFEXWZLWKIHZH[FHSWLRQVHJ%DUQHWWDQG&DUUROOSRSXODWLRQHFRORJ\KDVUHPDLQHGWUXHWRLWVQDPHIRFXVHGSULPDULO\RQWKHG\QDPLFVRIRUJDQL]DWLRQDOSRSXODWLRQVHJ&DUUROODQG+DQQDQ
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
7KHFRJQLWLYHDSSURDFKIRFXVHVRQWKHDFWRUVVKDUHGIUDPHZRUNVRILQWHUSUHWDWLRQZKLFKDOORZWKHPWRDFTXLUHDFRPPRQGHILQLWLRQRIWKHVLWXDWLRQ7KHQRUPDWLYHFRQFHSWLRQLVPRUHHYDOXDWLYHLQQDWXUHDQGOHJLWLPDF\WDNHVRQDPRUDOWRQHGRLQJZKDWRWKHUVH[SHFWDVDSSURSULDWHIRURQHVUROH7KHUHJXODWLYHYLHZORRNVWRIRUPDODQGLQIRUPDOUXOHVDVFRQVWUDLQLQJDQGUHJXODUL]LQJEHKDYLRUDQGOHJLWLPDF\FRQVLVWVLQFRQIRUPLQJWRWKRVHUXOHV'DYLVDQG*UHYH
1RWHWKHDEVHQFHRIUHVRXUFHLQWHUGHSHQGHQFHLQWKHGLVFXVVLRQVRIZKHUHFRQVWUDLQWVRULJLQDWH0RUHRYHUHDUO\LQVWLWXWLRQDOWKHRU\ODUJHO\QHJOHFWHGLVVXHVRISRZHUDQGLQWHUHVWVWKDWZHUHSURPLQHQWLQUHVRXUFHGHSHQGHQFHHJ'L0DJJLR,WZDVDVLILQVWLWXWLRQDOUXOHVDQGVRFLDOH[SHFWDWLRQVKDGDOLIHRIWKHLURZQUDWKHUWKDQEHLQJWKHPVHOYHVWKHRXWFRPHVRIFRQWHVWVDPRQJYDULRXVVRFLDODFWRUVWU\LQJWRPROGWKH
-
LQVWLWXWLRQDOHQYLURQPHQWWRWKHLUDGYDQWDJH,QWKDWVHQVHHDUO\YHUVLRQVRILQVWLWXWLRQDOWKHRU\WHQGHGWRGRZQSOD\WKHSRWHQWLDOIRUVWUDWHJLFFKRLFHIRURUJDQL]DWLRQVWRDFWLYHO\VKDSHWKHLUHQYLURQPHQWVVHHLQJVRFLDOUXOHVDQGQRUPVDVWDNHQIRUJUDQWHGDQGWKHUHIRUHOHVVPDOOHDEOH0RUHUHFHQWO\KRZHYHULQVWLWXWLRQDODFFRXQWVKDYHEURDGHQHGWRLQFRUSRUDWHWKHLGHDRIFRQWHVWVRYHUOHJLWLPDF\QRUPVDQGYDOXHVDQGWKHSRVVLELOLW\RIFKDQJLQJWKHQRUPDWLYHRUGHUWKURXJKVWUDWHJLFDFWLRQVDQGLQWHUDFWLRQVHJ6FRWWHWDO
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
-
5HVRXUFH'HSHQGHQFHDV7KHRU\DQG0HWDSKRU$VRIWKHVSULQJRIWKHUHZHUHFLWDWLRQVWR7KH([WHUQDO&RQWURORI2UJDQL]DWLRQV0RUHRYHUWKHUHZDVOLWWOHHYLGHQFHWKDWWKHSDFHRIFLWDWLRQWRDERRNDOPRVW\HDUVROGZDVGLPLQLVKLQJ)RULQVWDQFHIURPWRWKHUHZHUHFLWDWLRQVZKLOHIURPWRWKHUHZHUHFLWDWLRQV6RPHRIWKHWRWDOFLWDWLRQVUHFHLYHGVLQFHWKHERRNVSXEOLFDWLRQLQKDGEHHQUHFHLYHGLQWKHPRVWUHFHQWWHQ\HDUSHULRG
2QWKHRQHKDQGRQHPLJKWLQWHUSUHWWKHVHGDWDDVUHIOHFWLQJWKHVXFFHVVRIUHVRXUFHGHSHQGHQFHLGHDV
-
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
-XVWVXFKDUHSOLFDWLRQDQGH[WHQVLRQZDVXQGHUWDNHQE\)LQNHOVWHLQZLWKUHVSHFWWRPHUJHUV+LVDQDO\VLVIRXQGWKDWUHVRXUFHGHSHQGHQFHUHVXOWVZHUHUHSOLFDWHGXVLQJPRUHUHFHQWGDWD+RZHYHUXVLQJPRUHVRSKLVWLFDWHGDQDO\WLFDOPHWKRGVDQGOHVVDJJUHJDWHGGDWDILQHUJUDLQHGLQGXVWU\FDWHJRUL]DWLRQVUHGXFHGWKHPDJQLWXGHRIUHVRXUFHGHSHQGHQFHHIIHFWV)LQNHOVWHLQIRXQGQRHYLGHQFHWKDWUHVRXUFHGHSHQGHQFHHIIHFWVKDGGLPLQLVKHGRYHUWLPHLQIDFWVRPHRIWKHVWURQJHVWILQGLQJVHPHUJHGIRUWKHWKUHHPRVWUHFHQWWLPHSHULRGV)LQNHOVWHLQDOVRIRXQGWKDWFRQGLWLRQVRIDQWLWUXVW
-
HQIRUFHPHQWDIIHFWHGWKHDELOLW\RIUHVRXUFHLQWHUGHSHQGHQFHWRSUHGLFWSDWWHUQVRIPHUJHUV
2UJDQL]DWLRQDO(IIRUWVWR0DQDJH(QYLURQPHQWDO&RQVWUDLQW
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
+RZ(QYLURQPHQWDO&RQVWUDLQW$IIHFWV,QWHUQDO2UJDQL]DWLRQDO
-
'\QDPLFV
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
7KLVTXLFNRYHUYLHZRIWKHEDVLFSUHPLVHVRIUHVRXUFHGHSHQGHQFHWKHRU\LQGLFDWHVWKDWVXSSRUWLQJHYLGHQFHKDVFRQWLQXHGWRDFFXPXODWH+RZHYHUWKHUHLVPXFKOHVVV\VWHPDWLFVWXG\RIUHVRXUFHGHSHQGHQFHSUHGLFWLRQVWKDQWKHUHPLJKWEHDQGVHFRQGLQYHU\IHZFDVHVDUHUHVRXUFHGHSHQGHQFHSUHGLFWLRQVWHVWHGDJDLQVWDOWHUQDWLYHV7KHUHIRUHLQVSLWHRIRUSHUKDSVEHFDXVHRIWKHZLGHVSUHDGDFFHSWDQFHRIUHVRXUFHGHSHQGHQFHORJLFPXFKHPSLULFDOZRUNUHPDLQVWREHGRQH
-
&KDOOHQJHVDQG&ULWLTXHV,QWKH\HDUVVLQFH7KH([WHUQDO&RQWURORI2UJDQL]DWLRQVZDVSXEOLVKHGDQXPEHURIWKHRUHWLFDOFKDOOHQJHVDQGFULWLTXHVKDYHDSSHDUHG6RPHUHVHDUFKHUVKDYHDUJXHGWKDWUHVRXUFHGHSHQGHQFHZLWKLWVIRFXVRQWUDQVDFWLRQDOLQWHUGHSHQGHQFHRYHUORRNVRWKHULPSRUWDQWHQYLURQPHQWDOHIIHFWVRQRUJDQL]DWLRQV7KLVPXVWFHUWDLQO\EHWUXHDVQRZKHUHGLG6DODQFLNDQG,FODLPWKDWUHVRXUFHLQWHUGHSHQGHQFHDFFRXQWHGIRUHYHU\WKLQJDERXWRUJDQL]DWLRQV
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
$WKLUGFULWLTXHRIUHVRXUFHGHSHQGHQFHFRPHVIURPWKRVHZKRDUJXHWKDWLQWKHFRQWHPSRUDU\ZRUOGWKHSRZHURIWKHILQDQFLDOPDUNHWVDQGLQFUHDVLQJO\ERXQGDU\OHVVSURGXFWLRQSURFHVVHVKDVPDGHWKHVRUWVRIDFWLRQVDQGVWUDWHJLFFKRLFHVGHVFULEHGLQ7KH
-
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
7KLVLVQRWWRVD\WKDWUHVRXUFHGHSHQGHQFLHVZLOOQHFHVVDULO\SUHGLFWRUH[SODLQZKDWRFFXUUHGZHQHHGWRGRWKHHPSLULFDODQDO\VHVWRDQVZHUWKDWTXHVWLRQ%XWDWILUVW
-
JODQFHFRUSRUDWHEHKDYLRUFDQEHPRUHUHDGLO\H[SODLQHGE\UHVRXUFHGHSHQGHQFHLGHDVWKDQE\LGHDVRIHIILFLHQWPDUNHWVRUHYHQLQYHVWRUFDSLWDOLVP,QWKHHQGPDQDJHUVVHHPHGWRKDYHSOHQW\RIGLVFUHWLRQWRERWKHQULFKWKHPVHOYHVHQJDJHLQPHUJHUVDQGRWKHUWUDQVDFWLRQVWKDWGLGQRWEXLOGHFRQRPLFYDOXHDQGWRXVHWKHLUSRZHUWRLQIOXHQFHWUDQVDFWLRQVWRFRQVWUDLQWKHLQGHSHQGHQFHRISUHVXPDEO\LQGHSHQGHQWHQWLWLHVVXFKDVDFFRXQWLQJILUPVEDQNVDQGHYHQVRPHPLJKWDUJXHIHGHUDOUHJXODWRU\DXWKRULWLHVVXFKDVWKH6HFXULWLHVDQG([FKDQJH&RPPLVVLRQ
-
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
FODVVLFZRUNVDUHIUHTXHQWO\GHVFULEHGDVRIWHQFLWHGEXWUDUHO\UHDG7KLVDFFRXQWVIRUWKHVXUSULVHWKDWUHDGHUVRIWHQH[SHULHQFHZKHQWKH\DFWXDOO\JREDFNDQGUHDGVXFKZRUNV7KHIDFWWKDWFODVVLFZRUNVLQDILHOGDUHRIWHQFLWHGDQGGLVFXVVHGZLWKRXWEHLQJFDUHIXOO\UHDGRUUHDGDWDOOVXJJHVWVWKHSRVVLELOLW\WKDWWKHVHZRUNVFDQEHFRPHVRFLDOFRQVWUXFWLRQV
,WLVTXLWHOLNHO\WKDWWKLVLVWRVRPHH[WHQWWKHIDWHWKDWKDVEHIDOOHQ7KH([WHUQDO&RQWURORI2UJDQL]DWLRQV7RUHPHG\WKLVSUREOHPWKURXJKRXWWKLVFKDSWHUDQGLQZKDWIROORZV,SURYLGHVRPHVXJJHVWLRQVIRUVSHFLILFUHVHDUFKWKDWPLJKWEHGRQHWKDWZRXOGPRUHGLUHFWO\DQGSUR[LPDWHO\HQJDJHUHVRXUFHGHSHQGHQFHWKHRU\
)LQNHOVWHLQVHIIRUWWRH[SORUHWKHVFRSHRUERXQGDU\FRQGLWLRQVRIUHVRXUFHGHSHQGHQFHGRHVWKHHIIHFWYDU\RYHUWLPHDUHWKHUHLPSDFWVRIGLIIHUHQWSXEOLFSROLF\UHJLPHVUHSUHVHQWVRQO\DVPDOOEHJLQQLQJWRZKDWRXJKWWREHDPXFKODUJHUV\VWHPDWLFHIIRUWWRH[DPLQHUHVRXUFHGHSHQGHQFHLQFRQWH[W)RULQVWDQFHZHKDYHVHHQLQVRFLDOSV\FKRORJ\WKDWPDQ\WKHRULHVRIFRJQLWLRQZLWKWKHLUDVVXPSWLRQRILQGLYLGXDOLVPDUHFXOWXUDOO\VSHFLILFDQGWKDWSKHQRPHQDVXFKDVWKHIXQGDPHQWDODWWULEXWLRQHUURUWKHWHQGHQF\WRRYHUDWWULEXWHFDXVDWLRQWRLQGLYLGXDOVGLVDSSHDUVLQRWKHUFRXQWULHVHJ0RUULVDQG3HQJ5HVRXUFHGHSHQGHQFHDQGIRUWKDWPDWWHURWKHUWKHRULHVRILQWHURUJDQL]DWLRQDOUHODWLRQVHJ%XUWEHJLQZLWKDQHPSKDVLVRQWKHIRFDORUJDQL]DWLRQDQGKRZWKDWRUJDQL]DWLRQPDQHXYHUVWRREWDLQDGYDQWDJH3HUKDSVLQPRUHFROOHFWLYLVWFXOWXUHVSUHGLFWLRQVRIUHVRXUFHGHSHQGHQFHZRXOGQRWEHVXSSRUWHGRUZRXOGORRNGLIIHUHQWWKDQWKH\GRLQFXOWXUHVLQZKLFKFRPSHWLWLRQDQGWKHVHHNLQJRIFRPSHWLWLYHDGYDQWDJHDQGUHVRXUFHDFFXPXODWLRQDUHHPSKDVL]HG
6WXG\LQJWKHDGRSWLRQRIWKHPXOWLGLYLVLRQDOIRUP$UPRXUDQG7HHFHIRXQGSHUIRUPDQFHHIIHFWVLQLWLDOO\EXWQRWVXEVHTXHQWO\ZKHQDGRSWLRQZDVPRUHFRPSOHWH,QDVLPLODUZD\LWPD\EHWKDWWKHHIIHFWLYHQHVVRIVWUDWHJLHVRIFRRSWDWLRQIRUHQKDQFLQJRUJDQL]DWLRQDOSHUIRUPDQFHZRXOGGLPLQLVKDVVXFKVWUDWHJLHVEHFDPHPRUHZLGHO\DGRSWHGDQGLPSOHPHQWHG+RZHYHUDVDOUHDG\QRWHGLQRUGHUWRH[DPLQHWKLVSKHQRPHQRQZHZRXOGQHHGPRUHVWXGLHVRIWKHFRQVHTXHQFHVRIRUJDQL]DWLRQDOHIIRUWVWRPDQDJHHQYLURQPHQWDOGHSHQGHQFH
5HVRXUFHGHSHQGHQFHSUHGLFWVWKDWRUJDQL]DWLRQVZLOODWWHPSWWRPDQDJHWKHFRQVWUDLQWV
-
DQGXQFHUWDLQW\WKDWUHVXOWIURPWKHQHHGWRDFTXLUHUHVRXUFHVIURPWKHHQYLURQPHQW+RZHYHUWKHWKHRU\LVODUJHO\VLOHQWFRQFHUQLQJZKLFKRIWKHYDULRXVFRRSWLYHVWUDWHJLHVRUJDQL]DWLRQVZLOOXVHDQGKRZWKHXVHRIWKHVHVWUDWHJLHVYDULHVRYHUWLPHDQGRWKHUFLUFXPVWDQFHV+DXQVFKLOGDQG%HFNPDQGLGVWXG\ZKHWKHUFRPSOHPHQWDU\VRXUFHVRILQIRUPDWLRQDIIHFWHGWKHLPSDFWRILQWHUORFNVRQEHKDYLRUEXWGLGQRWVWXG\ZKHWKHUFRPSOHPHQWDU\VRXUFHVRILQIRUPDWLRQRUFRRSWLYHUHODWLRQVDIIHFWHGWKHVWUXFWXUHRUSUHYDOHQFHRILQWHUORFNV
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
3URYLGLQJDGHWDLOHGURDGPDSRIZKDWDUHVRXUFHGHSHQGHQFHDSSURDFKWRSXEOLFSROLF\
-
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
-
5HIHUHQFHV$OOHQ037KH6WUXFWXUHRI,QWHURUJDQL]DWLRQDO(OLWH&RRSWDWLRQ,QWHUORFNLQJ&RUSRUDWH'LUHFWRUDWHV$PHULFDQ6RFLRORJLFDO5HYLHZ
$PEXUJH\7/'.HOO\DQG:3%DUQHWW5HVHWWLQJWKH&ORFN7KH'\QDPLFVRI2UJDQL]DWLRQDO)DLOXUH$GPLQLVWUDWLYH6FLHQFH4XDUWHUO\
$UPRXU+2DQG'-7HHFH2UJDQL]DWLRQDO6WUXFWXUHDQG(FRQRPLF3HUIRUPDQFH$7HVWRIWKH0XOWLGLYLVLRQDO+\SRWKHVLV%HOO-RXUQDORI(FRQRPLFV
%ODX30([FKDQJHDQG3RZHULQ6RFLDO/LIH1HZ
-
5HVHDUFK
&KLOG-2UJDQL]DWLRQ6WUXFWXUH(QYLURQPHQWDQG3HUIRUPDQFH7KH5ROHRI6WUDWHJLF&KRLFH6RFLRORJ\
&KULVWHQVHQ&07KH,QQRYDWRUV'LOHPPD:KHQ1HZ7HFKQRORJLHV&DXVH*UHDW)LUPVWR)DLO%RVWRQ+DUYDUG%XVLQHVV6FKRRO3UHVV
&KULVWHQVHQ&0DQG--%RZHU&XVWRPHU3RZHU6WUDWHJLF,QYHVWPHQWDQGWKH)DLOXUHRI/HDGLQJ)LUPV6WUDWHJLF0DQDJHPHQW-RXUQDO
'DYLV*)$JHQWVZLWKRXW3ULQFLSOHV"7KH6SUHDGRIWKH3RLVRQ3LOO7KURXJKWKH,QWHUFRUSRUDWH1HWZRUN$GPLQLVWUDWLYH6FLHQFH4XDUWHUO\
'DYLV*)DQG+5*UHYH&RUSRUDWH(OLWH1HWZRUNVDQG*RYHUQDQFH&KDQJHVLQWKHV$PHULFDQ-RXUQDORI6RFLRORJ\
'DYLV*)DQG'0F$GDP&RUSRUDWLRQV&ODVVHVDQG6RFLDO0RYHPHQWVDIWHU0DQDJHULDOLVP5HVHDUFKLQ2UJDQL]DWLRQDO%HKDYLRU9RO
'DYLV*)DQG060L]UXFKL7KH0RQH\&HQWHU&DQ1RW+ROG&RPPHUFLDO%DQNVLQWKH866\VWHPRI*RYHUQDQFH$GPLQLVWUDWLYH6FLHQFH4XDUWHUO\
'L0DJJLR3-,QWHUHVWDQG$JHQF\LQ,QVWLWXWLRQDO7KHRU\,Q/*=XFNHUHG,QVWLWXWLRQDO3DWWHUQVDQG2UJDQL]DWLRQV&DPEULGJH0$%DOOLQJHU
'RZOLQJ-DQG-3IHIIHU2UJDQL]DWLRQDO/HJLWLPDF\6RFLDO9DOXHVDQG2UJDQL]DWLRQDO%HKDYLRU3DFLILF6RFLRORJLFDO5HYLHZ
(PHUVRQ503RZHU'HSHQGHQFH5HODWLRQV$PHULFDQ6RFLRORJLFDO5HYLHZ
)LQNHOVWHLQ6,QWHULQGXVWU\0HUJHU3DWWHUQVDQG5HVRXUFH'HSHQGHQFH$5HSOLFDWLRQDQG([WHQVLRQRI3IHIIHU6WUDWHJLF0DQDJHPHQW-RXUQDO
)OLJVWHLQ17KH,QWHURUJDQL]DWLRQDO3RZHU6WUXJJOH7KH5LVHRI)LQDQFH3HUVRQQHOWR7RS/HDGHUVKLSLQ/DUJH&RUSRUDWLRQV$PHULFDQ6RFLRORJLFDO5HYLHZ
)ULHGODQG5DQG'3DOPHU3DUN3ODFHDQG0DLQ6WUHHW%XVLQHVVDQGWKH8UEDQ3RZHU6WUXFWXUH$QQXDO5HYLHZRI6RFLRORJ\
*UDQRYHWWHU0(FRQRPLF$FWLRQDQG6RFLDO6WUXFWXUH7KH3UREOHPRI
-
(PEHGGHGQHVV$PHULFDQ-RXUQDORI6RFLRORJ\
*XODWL5DQG0*DUJLXOR:KHUH'R,QWHURUJDQL]DWLRQDO1HWZRUNV&RPH)URP"$PHULFDQ-RXUQDORI6RFLRORJ\
+DPEULFN'&DQG3$0DVRQ8SSHU(FKHORQV7KH2UJDQL]DWLRQDVD5HIOHFWLRQRI,WV7RS0DQDJHUV$FDGHP\RI0DQDJHPHQW5HYLHZ
+DQQDQ07DQG*5&DUUROO'\QDPLFVRI2UJDQL]DWLRQDO3RSXODWLRQV'HQVLW\&RPSHWLWLRQDQG/HJLWLPDWLRQ1HZ
-
0H\HU-:DQG%5RZDQ,QVWLWXWLRQDOL]HG2UJDQL]DWLRQV)RUPDO6WUXFWXUHDV0\WKDQG&HUHPRQ\$PHULFDQ-RXUQDORI6RFLRORJ\
0L]UXFKL06:KDW'R,QWHUORFNV'R"$Q$QDO\VLV&ULWLTXHDQG$VVHVVPHQWRI5HVHDUFKRQ,QWHUORFNLQJ'LUHFWRUDWHV$QQXDO5HYLHZRI6RFLRORJ\
0L]UXFKL06DQG/&)HLQ7KH6RFLDO&RQVWUXFWLRQRI2UJDQL]DWLRQDO.QRZOHGJH$6WXG\RIWKH8VHVRI&RHUFLYH0LPHWLFDQG1RUPDWLYH,VRPRUSKLVP$GPLQLVWUDWLYH6FLHQFH4XDUWHUO\
0L]UXFKL06DQG/%6WHDUQV$/RQJLWXGLQDO6WXG\RIWKH)RUPDWLRQRI,QWHUORFNLQJ'LUHFWRUDWHV$GPLQLVWUDWLYH6FLHQFH4XDUWHUO\
0RUULV0:DQG.3HQJ&XOWXUHDQG&DXVH$PHULFDQDQG&KLQHVH$WWULEXWLRQVIRU6RFLDODQG3K\VLFDO(YHQWV-RXUQDORI3HUVRQDOLW\DQG6RFLDO3V\FKRORJ\
2FDVLR:3ROLWLFDO'\QDPLFVDQGWKH&LUFXODWLRQRI3RZHU&(26XFFHVVLRQLQ86,QGXVWULDO&RUSRUDWLRQV$GPLQLVWUDWLYH6FLHQFH4XDUWHUO\
3DOPHU'%URNHQ7LHV,QWHUORFNLQJ'LUHFWRUDWHVDQG,QWHUFRUSRUDWH&RRUGLQDWLRQ$GPLQLVWUDWLYH6FLHQFH4XDUWHUO\
3DOPHU'33'-HQQLQJVDQG;=KRX/DWH$GRSWLRQRIWKH0XOWLGLYLVLRQDO)RUPE\/DUJH86&RUSRUDWLRQV,QVWLWXWLRQDO3ROLWLFDODQG(FRQRPLFV$FFRXQWV$GPLQLVWUDWLYH6FLHQFH4XDUWHUO\
3HUURZ&'HSDUWPHQWDO3RZHUDQG3HUVSHFWLYHLQ,QGXVWULDO)LUPV,Q01=DOGHG3RZHULQ2UJDQL]DWLRQV1DVKYLOOH719DQGHUELOW8QLYHUVLW\3UHVV
3IHIIHU-D6L]HDQG&RPSRVLWLRQRI&RUSRUDWH%RDUGVRI'LUHFWRUV7KH2UJDQL]DWLRQDQG,WV(QYLURQPHQW$GPLQLVWUDWLYH6FLHQFH4XDUWHUO\
3IHIIHU-E0HUJHUDVD5HVSRQVHWR2UJDQL]DWLRQDO,QWHUGHSHQGHQFH$GPLQLVWUDWLYH6FLHQFH4XDUWHUO\
3IHIIHU-F,QWHURUJDQL]DWLRQDO,QIOXHQFHDQG0DQDJHULDO$WWLWXGHV$FDGHP\RI0DQDJHPHQW-RXUQDO
3IHIIHU-6L]H&RPSRVLWLRQDQG)XQFWLRQRI+RVSLWDO%RDUGVRI'LUHFWRUV$6WXG\RI2UJDQL]DWLRQDO(QYLURQPHQW/LQNDJH$GPLQLVWUDWLYH6FLHQFH4XDUWHUO\
3IHIIHU-7KH$PELJXLW\RI/HDGHUVKLS$FDGHP\RI0DQDJHPHQW5HYLHZ
-
3IHIIHU-0DQDJLQJZLWK3RZHU%RVWRQ+DUYDUG%XVLQHVV6FKRRO3UHVV
3IHIIHU-DQG+/HEOHELFL([HFXWLYH5HFUXLWPHQWDQGWKH'HYHORSPHQWRI,QWHUILUP2UJDQL]DWLRQV$GPLQLVWUDWLYH6FLHQFH4XDUWHUO\
3IHIIHU-DQG31RZDN-RLQW9HQWXUHVDQG,QWHURUJDQL]DWLRQDO,QWHUGHSHQGHQFH$GPLQLVWUDWLYH6FLHQFH4XDUWHUO\
3LVNRUVNL0-DQG%$QDQG0RQH\&DQW%X\0H/RYH5HODWLRQDODQG1RQ5HODWLRQDO5HVRXUFHVLQWKH)RUPDWLRQRI9HQWXUH&DSLWDO6\QGLFDWHV:RUNLQJSDSHU*UDGXDWH6FKRRORI%XVLQHVV6WDQIRUG8QLYHUVLW\
3RGROQ\-0$6WDWXV%DVHG0RGHORI0DUNHW&RPSHWLWLRQ$PHULFDQ-RXUQDORI6RFLRORJ\
3RUWHU0(&RPSHWLWLYH6WUDWHJ\7HFKQLTXHVIRU$QDO\]LQJ,QGXVWULHVDQG&RPSHWLWRUV1HZ
-
3UHVV
7KRUQWRQ3+DQG:2FDVLR,QVWLWXWLRQDO/RJLFVDQGWKH+LVWRULFDO&RQWLQJHQF\RI3RZHULQ2UJDQL]DWLRQV([HFXWLYH6XFFHVVLRQLQWKH+LJKHU(GXFDWLRQ3XEOLVKLQJ,QGXVWU\$PHULFDQ-RXUQDORI6RFLRORJ\
8VHHP0,QYHVWRU&DSLWDOLVP+RZ0RQH\0DQDJHUVDUH&KDQJLQJWKH)DFHRI&RUSRUDWH$PHULFD1HZ
-
3UHIDFH7KLVERRNLVDERXWKRZRUJDQL]DWLRQDOHQYLURQPHQWVDIIHFWDQGFRQVWUDLQRUJDQL]DWLRQDQGKRZRUJDQL]DWLRQVUHVSRQGWRH[WHUQDOFRQVWUDLQWV,WLVDOVRDJXLGHWRGHVLJQLQJDQGPDQDJLQJRUJDQL]DWLRQVWKDWDUHH[WHUQDOO\FRQVWUDLQHG
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
,QWKHILUVWFKDSWHUWKHWKHPHVDQGLGHDVWREHXVHGWKURXJKRXWWKHERRNDUHLQWURGXFHG:HDOVRSUHVHQWVRPHUHDVRQVZK\WKHH[WHUQDOSHUVSHFWLYHLVQRWPRUHZLGHO\DGRSWHGIRUXQGHUVWDQGLQJRUJDQL]DWLRQDOEHKDYLRU:HGHILQHVRPHSRVVLEOHUROHVIRUPDQDJHPHQWE\LQWURGXFLQJWKHLGHDVRIPDQDJHUVDVV\PEROVPDQDJHUVDVDGDSWHUVWRVRFLDOFRQVWUDLQWVDQGPDQDJHUVDVPDQLSXODWRUVRIWKHLURUJDQL]DWLRQDOHQYLURQPHQWV
,QWKHVHFRQGFKDSWHUZHH[DPLQHRUJDQL]DWLRQVDVFRDOLWLRQVRILQWHUHVWVWKDWIDFHDQHQYLURQPHQWRIFRPSHWLQJIUHTXHQWO\FRQIOLFWLQJGHPDQGVDQGWKDWQHHGUHVRXUFHVIURPWKDWHQYLURQPHQW%RXQGDULHVDUHGHILQHGLQWHUPVRIVXUYLYDOIRUH[DPSOHWKHDELOLW\WRDWWUDFWDQGPDLQWDLQUHVRXUFHV
&KDSWHU7KUHHLOOXVWUDWHVKRZWKHVRFLDOFRQWURORIRUJDQL]DWLRQVFRPHVDERXW7KHEDVLFFRPSRQHQWVRIFRQWUROWKHIDFWRUVWKDWSURYLGHH[WHUQDOFRQVWUDLQWRYHURUJDQL]DWLRQDODFWLRQVDUHHQXPHUDWHGDQGGHVFULEHG7KHIUDPHZRUNRIVRFLDOFRQWUROLVLOOXVWUDWHGXVLQJDQHPSLULFDOVWXG\RIWKHDXWRQRP\RI,VUDHOLPDQDJHUVDQGWKHUHVSRQVHRI8QLWHG6WDWHVGHIHQVHFRQWUDFWRUVWRDIILUPDWLYHDFWLRQSUHVVXUH
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
-
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
,QH[DPLQLQJWKHH[WHUQDOFRQWURORIRUJDQL]DWLRQVDQGRUJDQL]DWLRQDODGDSWDWLRQVDQGUHVSRQVHVRQHPXVWQRWQHJOHFWWKHPHFKDQLVPWKDWSURGXFHVRUJDQL]DWLRQDODFWLRQ7KLVWRSLFLVWKHIRFXVRI&KDSWHU1LQHLQZKLFKH[HFXWLYHUHFUXLWPHQWDQGVXFFHVVLRQDUHH[DPLQHGDQGUHODWHGWRWKHRUJDQL]DWLRQVFRQWH[WDQGWRDGDSWDWLRQDQGFKDQJH7KHERRNFRQFOXGHVZLWKDUHYLHZRIWKHUHVRXUFHGHSHQGHQFHSHUVSHFWLYHVRPHIXUWKHUDQDO\VLVRIWKHUROHVRIPDQDJHPHQWDQGWKHLPSOLFDWLRQVRIWKLVSHUVSHFWLYHIRURUJDQL]DWLRQDOGHVLJQDQGSUHGLFWLQJRUJDQL]DWLRQDOIXWXUHV
:HKDYHDWWHPSWHGWRGHYHORSDWKHRUHWLFDOSHUVSHFWLYHWKDWRIIHUVQHZLQVLJKWVIRUDQDO\]LQJRUJDQL]DWLRQVDQGWRDVVHPEOHHPSLULFDOHYLGHQFHFRQVLVWHQWZLWKWKLVSHUVSHFWLYH7KHERRNLVLQWHQGHGDVDVSXUWRIXUWKHUUHVHDUFKRQVRFLDOFRQVWUDLQWDQGH[WHUQDOFRQWURO
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
-HIIUH\3IHIIHU
*HUDOG56DODQFLN
-
&KDSWHU$Q([WHUQDO3HUVSHFWLYHRQ2UJDQL]DWLRQV7KHFHQWUDOWKHVLVRIWKLVERRNLVWKDWWRXQGHUVWDQGWKHEHKDYLRURIDQRUJDQL]DWLRQ\RXPXVWXQGHUVWDQGWKHFRQWH[WRIWKDWEHKDYLRUWKDWLVWKHHFRORJ\RIWKHRUJDQL]DWLRQ7KLVSRLQWRIYLHZLVLPSRUWDQWIRUWKRVHZKRVHHNWRXQGHUVWDQGRUJDQL]DWLRQVDVZHOODVIRUWKRVHZKRVHHNWRPDQDJHDQGFRQWUROWKHP2UJDQL]DWLRQVDUHLQHVFDSDEO\ERXQGXSZLWKWKHFRQGLWLRQVRIWKHLUHQYLURQPHQW,QGHHGLWKDVEHHQVDLGWKDWDOORUJDQL]DWLRQVHQJDJHLQDFWLYLWLHVZKLFKKDYHDVWKHLUORJLFDOFRQFOXVLRQDGMXVWPHQWWRWKHHQYLURQPHQW+DZOH\
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
-
2YHUYLHZ0RVWERRNVDERXWRUJDQL]DWLRQVGHVFULEHKRZWKH\RSHUDWHDQGWKHH[LVWHQFHRIWKHRUJDQL]DWLRQVLVWDNHQIRUJUDQWHG7KLVERRNGLVFXVVHVKRZRUJDQL]DWLRQVPDQDJHWRVXUYLYH7KHLUH[LVWHQFHLVFRQVWDQWO\LQTXHVWLRQDQGWKHLUVXUYLYDOLVYLHZHGDVSUREOHPDWLF+RZPDQDJHUVJRDERXWHQVXULQJWKHLURUJDQL]DWLRQVVXUYLYDOLVZKDWWKLVERRNLVDERXW
2XUSRVLWLRQLVWKDWRUJDQL]DWLRQVVXUYLYHWRWKHH[WHQWWKDWWKH\DUHHIIHFWLYH7KHLUHIIHFWLYHQHVVGHULYHVIURPWKHPDQDJHPHQWRIGHPDQGVSDUWLFXODUO\WKHGHPDQGVRILQWHUHVWJURXSVXSRQZKLFKWKHRUJDQL]DWLRQVGHSHQGIRUUHVRXUFHVDQGVXSSRUW$VZHVKDOOFRQVLGHUWKHUHDUHDYDULHW\RIZD\VRIPDQDJLQJGHPDQGVLQFOXGLQJWKHREYLRXVRQHRIJLYLQJLQWRWKHP
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
7KHIDFWWKDWRUJDQL]DWLRQVDUHGHSHQGHQWIRUVXUYLYDODQGVXFFHVVRQWKHLUHQYLURQPHQWVGRHVQRWLQLWVHOIPDNHWKHLUH[LVWHQFHSUREOHPDWLF,IVWDEOHVXSSOLHVZHUHDVVXUHGIURPWKHVRXUFHVRIQHHGHGUHVRXUFHVWKHUHZRXOGEHQRSUREOHP,IWKHUHVRXUFHVQHHGHGE\WKHRUJDQL]DWLRQZHUHFRQWLQXDOO\DYDLODEOHHYHQLIRXWVLGHWKHLUFRQWUROWKHUHZRXOGEHQR
-
SUREOHP3UREOHPVDULVHQRWPHUHO\EHFDXVHRUJDQL]DWLRQVDUHGHSHQGHQWRQWKHLUHQYLURQPHQWEXWEHFDXVHWKLVHQYLURQPHQWLVQRWGHSHQGDEOH(QYLURQPHQWVFDQFKDQJHQHZRUJDQL]DWLRQVHQWHUDQGH[LWDQGWKHVXSSO\RIUHVRXUFHVEHFRPHVPRUHRUOHVVVFDUFH:KHQHQYLURQPHQWVFKDQJHRUJDQL]DWLRQVIDFHWKHSURVSHFWHLWKHURIQRWVXUYLYLQJRURIFKDQJLQJWKHLUDFWLYLWLHVLQUHVSRQVHWRWKHVHHQYLURQPHQWDOIDFWRUV
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
7KLVIDFWWKDWWKHZRUNHUVZHUHGUDZQIURPDQDOPRVWOLPLWOHVVODERUSRRORIVWXGHQWVORRNLQJIRUDQ\NLQGRISDUWWLPHHPSOR\PHQWZDVQRZKHUHWREHIRXQGLQWKHVWXGHQWVGLVFXVVLRQRIWKHRSHUDWLRQRIWKHUHVWDXUDQW
-
NHHSFRPSHWLWLRQWRDPLQLPXPDQGWRPDLQWDLQDVWHDG\IORZRIVXSSOLHVWRVHUYHDYLUWXDOO\FDSWLYHPDUNHW,IWKHZRUNHUVZHUHXQVDWLVILHGLWZDVQRWRQO\EHFDXVHWKH\GLGQRWOLNHWKHRUJDQL]DWLRQVSROLFLHVLQWKHDEVHQFHRIDQ\EDVHRISRZHUDQGZLWKIHZDOWHUQDWLYHMREVWKHZRUNHUVKDGQHLWKHUWKHRSWLRQRIYRLFHQRUH[LW+LUVFKPDQ
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
7KH(QYLURQPHQWDV7UHDWHGLQWKH6RFLDO6FLHQFHV
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
$VLQWKHFDVHRISROLWLFDOVFLHQFHVRPHWKHRULVWVZULWLQJDERXWRUJDQL]DWLRQDOEHKDYLRUKDYHUHFRJQL]HGWKDWWKHRUJDQL]DWLRQVFRQWH[WVKDSHVWKHDFWLYLWLHVDQGVWUXFWXUHVRIIRUPDORUJDQL]DWLRQV.DW]DQG.DKQDUJXHGIRUWKHQHFHVVLW\RIYLHZLQJRUJDQL]DWLRQVDV
38-2
-
RSHQV\VWHPVDQG3HUURZIRUFHIXOO\LOOXVWUDWHGWKHDQDO\WLFDOEHQHILWVWREHJDLQHGE\FRQVLGHULQJWKHHQYLURQPHQWRIWKHRUJDQL]DWLRQLQDGGLWLRQWRLWVLQWHUQDORSHUDWLQJFKDUDFWHULVWLFV%HQGL[VKRZHGKRZLGHRORJLHVVKDSHGWKHXVHRIDXWKRULW\LQRUJDQL]DWLRQVDQG:HEHUSURSRVHGDWKHRU\RIHFRQRPLFGHYHORSPHQWWKDWKHOGWKHUHOLJLRQRIDFRXQWU\WREHFULWLFDO+HVXJJHVWHGWKDWWKHGHYHORSPHQWRIPHUFDQWLOHFDSLWDOLVPGHSHQGHGRQDOHJLWLPDWLQJLGHRORJ\ZKLFKVWUHVVHGKDUGZRUNDQGGHOD\HGJUDWLILFDWLRQVXFKDVWKDWSURYLGHGE\3URWHVWDQWLVPDVFRQWUDVWHGZLWK&DWKROLFLVP
(FRQRPLVWVZHUHHYHQPRUHH[SOLFLWLQJLYLQJFULWLFDOLPSRUWDQFHWRWKHFRQWH[WRIRUJDQL]DWLRQVEXWWKH\WHQGHGWRWDNHWKHHQYLURQPHQWDVDJLYHQ&RPSHWLWLRQLVDFULWLFDOYDULDEOHGLVWLQJXLVKLQJEHWZHHQWKHDSSOLFDELOLW\RIPRGHOVRIPRQRSRO\ROLJRSRO\LPSHUIHFWFRPSHWLWLRQRUSHUIHFWO\FRPSHWLWLYHEHKDYLRU7KHVWXG\RIROLJRSRO\LVH[SOLFLWO\WKHVWXG\RILQWHURUJDQL]DWLRQDOEHKDYLRUHJ3KLOOLSV:LOOLDPVRQ)HOOQHU$QGWKHVWXG\RIDQWLWUXVWSROLF\LPSOLFLWO\UHFRJQL]HVWKHIDFWWKDWRUJDQL]DWLRQVGRPDNHHIIRUWVWROLPLWRURWKHUZLVHPDQDJHWKHFRPSHWLWLYHQHVVRIWKHLUHQYLURQPHQWV
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
-
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
-
DVNHGWRPDNHSHUIRUPDQFHHYDOXDWLRQVRIWKHWZRVXERUGLQDWHV7KHVXSHUYLVRUHYDOXDWHGVXERUGLQDWH$DVOHVVWUXVWZRUWK\WKDQ%DQGUHFRPPHQGHGWKDW$EHZDWFKHGPRUHFORVHO\7KHVXSHUYLVRULQRWKHUZRUGVDVVLJQHGWRVXSHUYLVHRQHVXERUGLQDWHPRUHWKDQDQRWKHUFDPHWREHOLHYHWKDWKLVVXSHUYLVLRQZDVERWKQHFHVVDU\DQGDFFRPSOLVKHGVRPHWKLQJ:KHQLQGLYLGXDOVDVVXPHDQRUJDQL]DWLRQDOUROHWKH\FDPHWREHOLHYHWKDWWKHLUSHUIRUPDQFHRIWKHUROHLVKDYLQJWKHLQWHQGHGHIIHFWDQGWKDWWKLVHIIHFWMXVWLILHVWKHUROH
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
7KHLQWHUQDOSHUVSHFWLYHWHQGVWRFRQVLGHUWKDWSUREOHPVFDQEHVROYHGE\FKDQJLQJHOHPHQWVZLWKLQWKHRUJDQL]DWLRQZLWKRXWUHJDUGWRWKHLUFRQWH[WXDOEDVLV&RQVLGHUWKHFXUUHQWSUREOHPRIPRWLYDWLQJZRUNHUVWRHQJDJHLQPHQLDODQGERULQJWDVNV7KHSUREOHPVHHPVWREHWKDWSHRSOHDUHOHVVZLOOLQJWRHQJDJHLQVXFKZRUNDVHYLGHQFHGE\DEVHQWHHLVPWXUQRYHUDQGORZTXDOLW\RUTXDQWLW\RXWSXW7KHPRVWFRPPRQVROXWLRQDGYRFDWHGIRUWKLVSUREOHPLVMREUHGHVLJQWRUHPRYHWKHRIIHQGLQJDVSHFWVRIWKHWDVNVHJ+DFNPDQDQG2OGKDP,WLVDW\SLFDOO\LQWHUQDOVROXWLRQEDVHGRQWKH
41-3
-
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
7KH,PSRUWDQFHRI,QGLYLGXDOVLQ2UJDQL]DWLRQV
7KHEDVLFLPSRUWDQWTXHVWLRQRIKRZPXFKRIWKHYDULDQFHLQRUJDQL]DWLRQDODFWLYLWLHVRURXWFRPHVLVDVVRFLDWHGZLWKFRQWH[WDQGKRZPXFKZLWKLQGLYLGXDOVKDVEHHQLQIUHTXHQWO\DGGUHVVHG3IHIIHUQRWHGYDULRXVWKHRUHWLFDOUHDVRQVIRUH[SHFWLQJWKDWLQGLYLGXDOVZRXOGKDYHOHVVHIIHFWRQRUJDQL]DWLRQDORXWFRPHVWKDQZRXOGDQRUJDQL]DWLRQVFRQWH[W)LUVWKHDUJXHGWKDWERWKSHUVRQDODQGRUJDQL]DWLRQDOVHOHFWLRQSURFHVVHVZRXOGOHDGWRVLPLODULW\DPRQJRUJDQL]DWLRQDOOHDGHUV7KLVPHDQVWKDWWKHUHLVDUHVWULFWLRQRQWKHUDQJHRIVNLOOVFKDUDFWHULVWLFVDQGEHKDYLRUVRIWKRVHOLNHO\WRDFKLHYHSRVLWLRQVRILPSRUWDQFHLQRUJDQL]DWLRQV6HFRQGHYHQZKHQDUHODWLYHO\SURPLQHQWSRVLWLRQLQWKHRUJDQL]DWLRQKDVEHHQDFKLHYHGWKHGLVFUHWLRQSHUPLWWHGWRDJLYHQLQGLYLGXDOLVOLPLWHG'HFLVLRQVPD\
-
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
7KHFRQGLWLRQVXQGHUZKLFKWKHUHZRXOGEHPRUHRUOHVVDGPLQLVWUDWLYHHIIHFWLVDQLPSRUWDQWLVVXHDQGWKHWKHRUHWLFDOSHUVSHFWLYHGHYHORSHGLQWKLVERRNZLOOVXJJHVWVRPHDQVZHUV%XWLWLVIDLUWRVWDWHWKDWEDVHGRQWKHSUHVHQWO\DYDLODEOHUHVHDUFKHYLGHQFHWKHUHLVPXFKOHVVHYLGHQFHIRUSURIRXQGDGPLQLVWUDWLYHHIIHFWVWKDQLVUHIOHFWHGLQWKHSUHGRPLQDQFHRIDQLQWHUQDORULHQWDWLRQLQWKHOLWHUDWXUHRQRUJDQL]DWLRQV
-
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
2UJDQL]DWLRQDO(IIHFWLYHQHVV
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
7KHHIIHFWLYHQHVVRIDQRUJDQL]DWLRQLVDVRFLRSROLWLFDOTXHVWLRQ,WPD\KDYHDEDVLVLQHFRQRPLFFRQVLGHUDWLRQVDVZKHQDQLQGLYLGXDOGHFOLQHVSXUFKDVHRIDSURGXFWEHFDXVHLWLVSULFHGWRRKLJK7KHFRQFHSWLVQRWUHVWULFWHGKRZHYHUWRGHFLVLRQVWKDWDUHHFRQRPLFDOO\PRWLYDWHG5DWKHULWUHIOHFWVERWKDQDVVHVVPHQWRIWKHXVHIXOQHVVRIZKDWLVEHLQJGRQHDQGRIWKHUHVRXUFHVWKDWDUHEHLQJFRQVXPHGE\WKHRUJDQL]DWLRQ
2UJDQL]DWLRQDOHIILFLHQF\LVDQLQWHUQDOVWDQGDUGRISHUIRUPDQFH7KHTXHVWLRQZKHWKHUZKDWLVEHLQJGRQHVKRXOGEHGRQHLVQRWSRVHGEXWRQO\KRZZHOOLVLWEHLQJGRQH(IILFLHQF\LVPHDVXUHGE\WKHUDWLRRIUHVRXUFHVXWLOL]HGWRRXWSXWSURGXFHG(IILFLHQF\LVUHODWLYHO\YDOXHIUHHDQGLQGHSHQGHQWRIWKHSDUWLFXODUFULWHULDXVHGWRHYDOXDWHLQSXWDQGRXWSXW%HFDXVHHIILFLHQF\LQYROYHVGRLQJEHWWHUZKDWWKHRUJDQL]DWLRQLVFXUUHQWO\GRLQJH[WHUQDOSUHVVXUHVRQWKHRUJDQL]DWLRQDUHRIWHQGHILQHGLQWHUQDOO\DVUHTXHVWVIRUJUHDWHUHIILFLHQF\%\QRWTXHVWLRQLQJWKHRUJDQL]DWLRQVEDVLFDFWLYLWLHVDQGRSHUDWLRQVWKHVWUXFWXUHRIFRQWURODQGLQIOXHQFHZLWKLQWKHRUJDQL]DWLRQFDQPRUHHDVLO\EHPDLQWDLQHG0RUHRYHUHIILFLHQF\LVDPDQDJHULDOSUREOHPZKLFKLVSHUFHLYHGDVEHLQJLQKHUHQWO\PRUHWUDFWDEOH
7KHGLIIHUHQFHEHWZHHQHIILFLHQF\DQGHIIHFWLYHQHVVFDQEHLOOXVWUDWHGHDVLO\,QWKHODWH
-
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
2UJDQL]DWLRQDO(QYLURQPHQW
7KHH[WHUQDOEDVLVIRUMXGJLQJRUJDQL]DWLRQDOHIIHFWLYHQHVVPDNHVWKHFRQFHSWRIHQYLURQPHQWLPSRUWDQW7KHFRQFHSWRIHQYLURQPHQWKRZHYHULVHOXVLYH,QRQHVHQVHWKHHQYLURQPHQWLQFOXGHVHYHU\HYHQWLQWKHZRUOGZKLFKKDVDQ\HIIHFWRQWKHDFWLYLWLHVRURXWFRPHVRIWKHRUJDQL]DWLRQ3ULPDU\VFKRROVDUHDSDUWRIRWKHURUJDQL]DWLRQV
HQYLURQPHQW7KXVZKHQSULPDU\VFKRROVIDLOWRWHDFKUHDGLQJDQGJUDPPDUSURSHUO\VRPHRUJDQL]DWLRQVPD\EHDIIHFWHGPRUHWKDQRWKHUV$QRUJDQL]DWLRQZKLFKGRHVQRWUHTXLUHSHRSOHWRUHDGDVSDUWRIWKHLUWDVNPD\EHPLQLPDOO\DIIHFWHG2WKHURUJDQL]DWLRQVPD\IHHOSURIRXQGHIIHFWVDVLQWKHFDVHRIXQLYHUVLWLHVZKLFKIRXQGWKHPVHOYHVVSHQGLQJPRUHDQGPRUHUHVRXUFHVWHDFKLQJEDVLFUHDGLQJJUDPPDUDQGPDWKHPDWLFVVNLOOV(YHQPRUHDIIHFWHGZHUHSXEOLVKHUVZKRIRXQGLWQHFHVVDU\WRUHZULWHPDQ\RIWKHLUWH[WERRNVDWDVHYHQWKRUHLJKWKJUDGHUHDGLQJOHYHO7KH$VVRFLDWLRQRI$PHULFDQ3XEOLVKHUVKDGWRUHYLVHWKHSDPSKOHW+RZWR*HWWKH0RVW2XWRI
-
FKDQJH
3HUKDSVRQHRIWKHPRVWLPSRUWDQWLQIOXHQFHVRQDQRUJDQL]DWLRQVUHVSRQVHWRLWVHQYLURQPHQWLVWKHRUJDQL]DWLRQLWVHOI2UJDQL]DWLRQDOHQYLURQPHQWVDUHQRWJLYHQUHDOLWLHVWKH\DUHFUHDWHGWKURXJKDSURFHVVRIDWWHQWLRQDQGLQWHUSUHWDWLRQ2UJDQL]DWLRQVKDYHLQIRUPDWLRQV\VWHPVIRUJDWKHULQJVFUHHQLQJVHOHFWLQJDQGUHWDLQLQJLQIRUPDWLRQ%\WKHH[LVWHQFHRIDGHSDUWPHQWRUDSRVLWLRQWKHRUJDQL]DWLRQZLOODWWHQGWRVRPHDVSHFWVRILWVHQYLURQPHQWUDWKHUWKDQRWKHUV2UJDQL]DWLRQVHVWDEOLVKVXEXQLWVWRVFUHHQRXWLQIRUPDWLRQDQGSURWHFWWKHLQWHUQDORSHUDWLRQVIURPH[WHUQDOLQIOXHQFHV2UJDQL]DWLRQDOSHUFHSWLRQDQGNQRZOHGJHRIWKHHQYLURQPHQWLVDOVRDIIHFWHGEHFDXVHLQGLYLGXDOVZKRDWWHQGWRWKHLQIRUPDWLRQRFFXS\FHUWDLQSRVLWLRQVLQWKHRUJDQL]DWLRQDQGWHQGWRGHILQHWKHLQIRUPDWLRQDVDIXQFWLRQRIWKHLUSRVLWLRQ,IWKHFRPSODLQWGHSDUWPHQWLVORFDWHGLQWKHVDOHVGLYLVLRQWKHIORZRILQIRUPDWLRQPD\EHLQWHUSUHWHGDVSUREOHPVZLWKWKHPDUNHWLQJDQGSURPRWLRQRIWKHSURGXFW,ILWLVORFDWHGLQWKHSXEOLFUHODWLRQVGHSDUWPHQWWKHFRPSODLQWVPD\EHVHHQDVDSUREOHPLQFRUSRUDWHLPDJH,IWKHIXQFWLRQZHUHORFDWHGLQWKHSURGXFWLRQGHSDUWPHQWWKHFRPSODLQWVPLJKWEHLQWHUSUHWHGDVSUREOHPVRITXDOLW\FRQWURORUSURGXFWGHVLJQ6LQFHWKHUHLVQRZD\RINQRZLQJDERXWWKHHQYLURQPHQWH[FHSWE\LQWHUSUHWLQJDPELJXRXVHYHQWVLWLVLPSRUWDQWWRXQGHUVWDQGKRZRUJDQL]DWLRQVFRPHWRFRQVWUXFWSHUFHSWLRQVRIUHDOLW\
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
46-2
-
SHUVRQDOYLVLWWRDXQLYHUVLW\UHVHDUFKJURXSRQHPRQWKDIWHULWKDGUHFHLYHGDODUJHJUDQWWRVWXG\WKHLPSDFWRIOHDGLQWKHHQYLURQPHQW6DODQFLNDQG/DPRQW(WK\OKDGOHDUQHGRIWKHSURMHFWIURPFRQWDFWVLQWKHJRYHUQPHQW$VWKHSURMHFWVPDMRUREMHFWLYHZDVWRGHWHUPLQHWKHLPSDFWRIOHDGRQWKHHQYLURQPHQWVRWKDWSROLFLHVUHJDUGLQJWKHPDQXIDFWXUHVDOHDQGGLVWULEXWLRQRIOHDGPLJKWEHDVVHVVHGWKHSURMHFWZDVRIREYLRXVFRQFHUQWR(WK\O
+RZDQRUJDQL]DWLRQOHDUQVDERXWLWVHQYLURQPHQWKRZLWDWWHQGVWRWKHHQYLURQPHQWDQGKRZLWVHOHFWVDQGSURFHVVHVLQIRUPDWLRQWRJLYHPHDQLQJWRLWVHQYLURQPHQWDUHDOOLPSRUWDQWDVSHFWVRIKRZWKHFRQWH[WRIDQRUJDQL]DWLRQDIIHFWVLWVDFWLRQV
&RQVWUDLQWV
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
&RQVWUDLQWVRQEHKDYLRUDUHRIWHQFRQVLGHUHGWREHXQGHVLUDEOHUHVWULFWLQJFUHDWLYLW\DQGDGDSWDWLRQ+RZHYHULQPRVWFDVHVDFWLRQLVQRWSRVVLEOHZLWKRXWFRQVWUDLQWVZKLFKFDQIDFLOLWDWHWKHFKRLFHDQGGHFLVLRQSURFHVV&RQVLGHUDQXQGHUJUDGXDWHVWXGHQWDWWHPSWLQJWRGHFLGHRQDFRXUVHRIVWXG\IRUDJLYHQVHPHVWHU$WDODUJHXQLYHUVLW\WKHUHPD\EHKXQGUHGVRIFRXUVHVDQGLIWKHUHZHUHQRFRQVWUDLQWOLWHUDOO\PLOOLRQVRISRVVLEOHSURJUDPFRPELQDWLRQVFRXOGEHFRQVWUXFWHG'HFLGLQJDPRQJWKHVHPLOOLRQVRISURJUDPVZRXOGRIFRXUVHEHGLIILFXOWDQGWLPHFRQVXPLQJLIQRWLPSRVVLEOH)RUWXQDWHO\SURJUDPFKRLFHVDUHFRQVWUDLQHG)LUVWWKHUHPD\EHDOLPLWRQWKHQXPEHURIFRXUVHVDVWXGHQWLVDOORZHGWRWDNHDQGWKHQWKHUHLVWKHFRQVWUDLQWRIQRWEHLQJDEOHWREHLQWZRSODFHVDWWKHVDPHWLPH$WKLUGFRQVWUDLQWLVWKDWVRPHFRXUVHVDUHGHILQHGDVEHLQJDSSURSULDWHIRUFHUWDLQFDWHJRULHVRIVWXGHQWVXFKDVJUDGXDWHFRXUVHVRUIUHVKPDQFRXUVHVZKLOHRWKHUVKDYHQHFHVVDU\SUHUHTXLVLWHVWKDWOLPLWWKHLUEHLQJFKRVHQ)XUWKHUFRQVWUDLQWVDUHDGGHGE\JHQHUDOXQLYHUVLW\UHTXLUHPHQWVDQGWKHQUHTXLUHPHQWVSDUWLFXODUWRWKHVWXGHQWVRZQGHSDUWPHQWDQGFKRVHQGHJUHHSURJUDP7KXVRXWRIPLOOLRQVRISRVVLEOHSURJUDPVRIVWXG\RQO\DIHZRSWLRQVZLOOEHIHDVLEOHSHUPLWWHGE\DOOWKHYDULRXVFRQVWUDLQWV,QVWHDGRIIDFLQJDGLIILFXOWLQIRUPDWLRQSURFHVVLQJWDVNWKHVWXGHQWQHHGFKRRVHRQO\DPRQJDYHU\OLPLWHGVHWRIDOWHUQDWLYHV
%HKDYLRULVDOPRVWLQHYLWDEO\FRQVWUDLQHGE\SK\VLFDOUHDOLWLHVE\VRFLDOLQIOXHQFHE\LQIRUPDWLRQDQGFRJQLWLYHFDSDFLW\DVZHOODVE\SHUVRQDOSUHIHUHQFHV$QGLQPDQ\FDVHVFRQVWUDLQWVFDQEHPDQLSXODWHGWRSURPRWHFHUWDLQEHKDYLRUV,QWKHVWXG\RIKXPDQ
-
EHKDYLRUZKHQDQH[SHULPHQWHUGHVLJQVDQH[SHULPHQWDOVLWXDWLRQKHSUHVXSSRVHVWKDWKHKDVLPSRVHGHQRXJKFRQVWUDLQWVRQWKHVLWXDWLRQVRWKDWPRVWLQGLYLGXDOVZLOOEHKDYHDVKHSUHGLFWV,QDVLPLODUIDVKLRQWKHEHKDYLRURIODUJHUVRFLDOXQLWVVXFKDVJURXSVDQGIRUPDORUJDQL]DWLRQVLVJHQHUDOO\FRQVWUDLQHGE\WKHLQWHUHVWVRIRWKHUVJRYHUQPHQWVFRQVXPHUVXQLRQVFRPSHWLWRUVHWF
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
-
7KH5ROHRI0DQDJHPHQW:HKDYHHPSKDVL]HGWKHLPSRUWDQFHRIFRQWH[WVRUVLWXDWLRQDOFRQWLQJHQFLHVDVGHWHUPLQDQWVRIRUJDQL]DWLRQDOEHKDYLRU:HKDYHDWWHPSWHGWRTXHVWLRQWKHLQWHUQDOSHUVSHFWLYHRIRUJDQL]DWLRQDOIXQFWLRQLQJDQGWKHFRQFRPLWDQWEHOLHILQWKHRPQLSRWHQFHRILQGLYLGXDODGPLQLVWUDWLYHDFWLRQ:HKDYHQRWKRZHYHUGHILQHGWKHUROHRIWKHPDQDJHURXWRIH[LVWHQFH,WLVLPSRUWDQWWRFRQFOXGHWKLVLQWURGXFWRU\FKDSWHUE\PDNLQJH[SOLFLWRXUYLHZRIWKHUROHRIWKHPDQDJHUZLWKLQWKHWKHRUHWLFDOSHUVSHFWLYHZHDUHGHYHORSLQJ
7KH6\PEROLF5ROHRI0DQDJHPHQW
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
7KHLGHDWKDWDGPLQLVWUDWRUVVHUYHV\PEROLFIXQFWLRQVLVQRWQRYHO0LQW]EHUJIURPGHWDLOHGREVHUYDWLRQVRIPDQDJHUVVSHFLILFDOO\OLVWHGV\PEROLFDFWLYLWLHVWKRXJKKHSOD\HGGRZQWKHLULPSRUWDQFH*DPVRQDQG6FRWFKKDYHQRWHGWKDWWKHILULQJRIEDVHEDOOPDQDJHUVDQGZHPLJKWDGGRWKHUPDQDJHUVLQDQGRXWRIVSRUWVLVDIRUPRIVFDSHJRDWLQJZKLFKRIFRXUVHUHTXLUHVDVFDSHJRDW2QHRIDPDQDJHUVOHJLWLPDWHUROHVLVWRVHUYHDVWKLVV\PERO
7KHV\PEROLFUROHRIDGPLQLVWUDWRUVLVRFFDVLRQDOO\FRQVWUXFWHGZLWKHODERUDWHULWXDODQGFHUHPRQ\7KHLQDXJXUDWLRQRIWKHSUHVLGHQWLVDQXQFRPPRQHYHQWLQYHVWHGZLWKSRPSDQGH[SHFWDWLRQ7KLVHYHQWKRXJKWKUHHPRQWKVHDUOLHUERWKYRWHUVDQGFRPPHQWDWRUVZHUHVD\LQJWKDWWKHUHZDVQRGLIIHUHQFHEHWZHHQWKHFDQGLGDWHV7KHULWXDOKRZHYHULVQHFHVVDU\
:K\RUJDQL]DWLRQVYDU\LQWKHULWXDOWKH\DVVRFLDWHZLWKWKHLURIILFHVRISRZHULVOLWWOHXQGHUVWRRG2QHSRVVLELOLW\LVWKDWPRUHFDUHDQGWURXEOHLVWDNHQLQVHOHFWLQJDQGLQVWDOOLQJRUJDQL]DWLRQDOOHDGHUVZKHQWKH\GRKDYHLQIOXHQFH$QRWKHUSRVVLELOLW\LVMXVWWKHUHYHUVH7KHYHU\LPSRWHQFHRIOHDGHUVKLSSRVLWLRQVUHTXLUHVWKDWDULWXDOLQGLFDWLQJJUHDWSRZHUEHSHUIRUPHG3HRSOHGHVLUHWREHOLHYHLQWKHHIIHFWLYHQHVVRIOHDGHUVKLSDQGSHUVRQDODFWLRQ:KHQLQIDFWDGPLQLVWUDWRUVKDYHRQO\PLQRUHIIHFWVLWPLJKWEHSODXVLEO\DUJXHGWKDWULWXDOP\WKRORJ\DQGV\PEROLVPZLOOEHPRVWQHFHVVDU\WRNHHSWKHLPDJHRISHUVRQDOFRQWURODOLYH:KHQWKHDGPLQLVWUDWRUUHDOO\GRHVPDNHDGLIIHUHQFHDQGUHDOO\GRHVDIIHFWRUJDQL]DWLRQDOSHUIRUPDQFHKLVHIIHFWZLOOEHREYLRXVWRDOODQGWKHUHZLOOEHOLWWOHQHHGWRPDNHDVKRZRISRZHUDQGFRQWURO,WLVRQO\ZKHQWKHDGPLQLVWUDWRUPDNHVOLWWOHRUQR
-
GLIIHUHQFHWKDWVRPHV\PERORIFRQWURODQGHIIHFWLYHQHVVLVQHHGHG
,WLVLQWHUHVWLQJWRQRWHWKDWWKHULWXDORIWKHLQDXJXUDWLRQRI$PHULFDQSUHVLGHQWVKDVJURZQRYHUWLPHDVWKHH[HFXWLYHEXUHDXFUDF\KDVJURZQ7KHSUHVLGHQWSHUVRQDOO\SUREDEO\KDVFRPHWRKDYHOHVVDQGOHVVHIIHFWRQWKHEDVLFRSHUDWLRQVRIJRYHUQPHQWZKLOHWKHULWXDOVDVVRFLDWHGZLWKWKHRIILFHKDYHLQFUHDVHGLQVFRSHDQGJUDQGHXU
7KDWPDQDJHUVVHUYHDVV\PEROVLVQRWWRGHQ\WKHLULPSRUWDQFH,PSRUWDQWVRFLDOIXQFWLRQVDUHVHUYHGE\WKHPDQLSXODWLRQRIV\PEROV7KHFDWKDUVLVDFKLHYHGE\ILULQJWKHXQVXFFHVVIXOIRRWEDOOFRDFKRUWKHFRPSDQ\H[HFXWLYHRUE\QRWUHHOHFWLQJVRPHSROLWLFDOILJXUHLVWRRUHDOWRGLVPLVVDVXQLPSRUWDQW7KRVHZKRUHPDLQLQWKHRUJDQL]DWLRQDUHOHIWZLWKWKHKRSHWKDWWKLQJVZLOOEHLPSURYHG$QGEHOLHILQWKHLPSRUWDQFHRILQGLYLGXDODFWLRQLWVHOILVUHLQIRUFHGDEHOLHIZKLFKHYHQLIQRWFRPSOHWHO\WUXHLVQHFHVVDU\WRPRWLYDWHLQGLYLGXDOVWRDFWDWDOO
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
6LQFHPRVWRUJDQL]DWLRQDOUHVHDUFKHUVKDYHDVVXPHGWKDWPDQDJHUVZHUHWKHFULWLFDOHOHPHQWLQDFWXDORUJDQL]DWLRQDORXWFRPHVWKHV\PEROLFUROHRIPDQDJHPHQWKDVEHHQYLUWXDOO\QHJOHFWHGH[FHSWIRUWKHEULHIPHQWLRQE\0LQW]EHUJ:HZRXOGDUJXHWKDWWKLVLVRQHRIWKHPRUHLPSRUWDQWIXQFWLRQVRIPDQDJHPHQWGHVHUYLQJRIPRUHH[SOLFLWHPSLULFDODWWHQWLRQ
7KH3RVVLELOLWLHVRI0DQDJHULDO$FWLRQ
6D\LQJWKDWPDQDJHUVDUHV\PEROVWREHKHOGDFFRXQWDEOHGRHVQRWVXJJHVWPDQ\SXUSRVHIXODFWLRQVIRUWKHP\HWWKHUHDUHPDQ\SRVVLELOLWLHVIRUPDQDJHULDODFWLRQHYHQJLYHQWKHH[WHUQDOFRQVWUDLQWVRQPRVWRUJDQL]DWLRQV&RQVWUDLQWVDUHQRWSUHGHVWLQHGDQGLUUHYHUVLEOH0RVWFRQVWUDLQWVRQRUJDQL]DWLRQDODFWLRQVDUHWKHUHVXOWRISULRUGHFLVLRQPDNLQJRUWKHUHVROXWLRQRIYDULRXVFRQIOLFWVDPRQJFRPSHWLQJLQWHUHVWJURXSV)RULQVWDQFHWKHUHTXLUHPHQWIRUFRPSDQLHVGRLQJEXVLQHVVZLWKWKHJRYHUQPHQWWRGHYHORSDQGSRVVLEO\LPSOHPHQWDIILUPDWLYHDFWLRQKLULQJSODQVIRUUHFUXLWLQJPLQRULWLHVDQGZRPHQGLGQRWVXGGHQO\PDWHULDOL]H7KLVFRQVWUDLQWKDVDOHQJWK\KLVWRU\DQGUHVXOWHGIURPWKHLQWHUDFWLRQRIDYDULHW\RIJURXSVDQGLQGLYLGXDOV7KHIDFWWKDWDFRQVWUDLQWH[LVWVLQGLFDWHVWKDWVXIILFLHQWVRFLDOVXSSRUWKDVEHHQPXVWHUHGWREULQJLWLQWRH[LVWHQFH,QWKHVRFLDOFRQWH[WRIRUJDQL]DWLRQVEHKLQGHYHU\FRQVWUDLQWWKHUHLVDQLQWHUHVWJURXSWKDWKDVPDQDJHGWRKDYHWKDWFRQVWUDLQWLPSRVHG6LQFHWKLVLVWKHFDVHWKHFRQVWUDLQWLVSRWHQWLDOO\
-
UHPRYDEOHLILWLVSRVVLEOHWRRUJDQL]HWKHVRFLDOVXSSRUWDQGUHVRXUFHVVXIILFLHQWWRUHPRYHLW
7KHVRFLDOFRQWH[WRIDQRUJDQL]DWLRQLVLWVHOIWKHRXWFRPHRIWKHDFWLRQVRIVRFLDODFWRUV6LQFHPDQ\FRQVWUDLQWVGHULYHIURPWKHDFWLRQVRIRWKHUVRQHLPSRUWDQWIXQFWLRQRIPDQDJHPHQWLVLQIOXHQFLQJWKHVHRWKHUVDVDPHDQVRIGHWHUPLQLQJRQHVRZQHQYLURQPHQW2UJDQL]DWLRQVIUHTXHQWO\RSHUDWHRQWKHLUHQYLURQPHQWVWRPDNHWKHPPRUHVWDEOHRUPRUHPXQLILFHQW2QHIXQFWLRQRIPDQDJHPHQWWKHQLVWRJXLGHDQGFRQWUROWKLVSURFHVVRIPDQLSXODWLQJWKHHQYLURQPHQW0XFKRIWKLVERRNZLOOGHVFULEHMXVWKRZRUJDQL]DWLRQVDWWHPSWWRLQIOXHQFHDQGFRQWUROWKHLUVRFLDOFRQWH[W
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
top related