Fair Value Reporting Advantages and Disadvantages

Fair Value Reporting Advantages and Disadvantages Discuss the pros and cons of fair value reporting for investors? Why has this trend emerged, and how does asset value volatility seen during and since the Global Financial Crisis effect your views on this? There have been many debates in previous decades amongst the investors, users of the financial statements, on whether fair value accounting is worth being used. According to IFRS 13, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (ACCA, 2016). Usage of fair value has advantages, however, it has disadvantages as well. This essay will discuss how fair value is more advantageous than disadvantageous and how it is carried out. It will also examine how fair value led Lehman Brothers, an American investment bank, into bankruptcy during the global financial crisis and why the trend of fair value has emerged in the recent decades. As historical cost loses relevance with the passing of time, it is more appropriate to use fair value reporting as it considers current market prices and conditions. This provides investors with the most relevant estimates of the value of business (Gjorgieva-Trajkovska et al., 2016), and timely information which is important for making investing decisions (McEnally, 2007). Penman (2007) states that fair value accounting reports assets and liabilities through an economists view and therefore reports economic income the change in fair value of net assets on the balance sheet. This is of interest to investors as they can make predictions of future earnings based on current information (Marra, 2016). On the other hand, Sundgren (2013) claims that there will also be fluctuations in fair values, leading to uncertainty of future inflows. Although this poses a disadvantage towards certain stakeholders, it is helpful to investors as high fluctuations could indicate high risk, which may rewar d them with high returns. Another advantage of fair value reporting is the reliability and transparency of the method. More transparency means that the investors are able to get an insight into the real value of the company. This allows investors to make more informed decisions that will benefit the business (Bigelow, n.d.). Fair value reporting is reliable as it can be checked in hindsight from available information about current and past market prices (Betakova et al., 2014). This is beneficial for the investors as it means that they can be confident that their decisions are correct and that the finances of the business will not suddenly change. Bubble prices can be an issue for investors as it may mislead them into making poor investing decisions. There is plenty of empirical evidence to show that bubble prices exist (Ryan, 2008). These price bubbles, according to Penman (2007), are introduced into financial statements through the usage of fair value accounting. He goes on to say that this causes bubble gains to reflect on the income statement, and these may, falsely, show the company as being healthy which could lull investors into a false sense of security. These bubbles also result in the investor receiving ineffective financial statements which will impair their decision making. An example of this would be where investors pay prices that far exceed their own valuation (Scheinkman and Xiong, 2003). This would make it tough for investors to earn a reasonable return on their investments. However, the research fails to consider the difficulties locating price bubbles or how investors can prevent themselves from being misled . It also fails to consider that bubble prices show the current trading price, albeit inflated, and therefore show the true value of the investment according to current prices. When there is illiquidity in a market, fair value is called mark to model accounting. Ball (2006) explains that when this occurs, market prices are not accurate as firms try to find an approximate value for the assets. He continues by stating that this can let managers easily manipulate values according to their own preferences affecting the reliability of financial statements. Betakova et al. (2014), argues that measurement procedures of fair value create loopholes and this means that prices can be written as vastly different from what they really are, which again allows manipulation. The fair value of assets and liabilities is derived from the 3 level hierarchy of inputs. According to IFRS 13, the highest priority is given to level 1 inputs the quoted price of assets and liabilities that are traded in the active market. Laux et al. (2010) state that assets or liabilities should be marked to market, which means that the quoted price has to be used to determine its fair value as it is the best approximation of how much an asset would be sold for (Magnan, 2009). IFRS also emphasises that the price to be used has to be those of an orderly transaction to ensure that it is not a forced transaction in order to maintain its representability. An example of level 1 valuation would be listed stocks or bonds. In cases where an asset does not have an active market, level 2 fair value measurement should be used. This is when the valuation inputs are directly or indirectly observable but do not fall under Level 1 (Magnan, 2009). Level 2 inputs, the net replacement cost, includ e quoted prices for similar assets or liabilities in active or non-active markets, and other relevant market data like the yield curves (Sundgren, 2013). For example, Petrobras issued a bond which is not traded. However, if there is an active market for a Valero Energy bond that is similar, the price of the Valero Energy bond can be used as level 2 input to value the Petrobras bond. Finally, the least priority is given to level 3 inputs, which are unobservable inputs. It is the least accurate as it is based on model assumptions. An example of level 3 measurement is when there is no observable input to value the Petrobras bond, then the value of the bond can be estimated by discounting its future cash flows. As a result, the reliability is reduced due to the subjectivity of the discount rate. Fair value is argued to be more appropriate, compared to historical cost, when level 1 valuation is used as it only allows minimal manipulation. However, during 2008, many companies overvalued t heir assets by using the level 3 measurement, contributing to the global financial crisis. Furthermore, there is an advantage in valuing certain assets using historical cost over fair value, like property, plant and equipment. This is because historical cost results in a more consistent calculation of depreciation. Moreover, under fair value, assets would need to be revalued frequently due to changing market conditions and this would impose additional costs to the organisation (Christensen and Nikolaev, 2013). Fair value was a dominant force in the financial crisis and exacerbated its severity (Cai-xia and Chi, 2010). Huizinga and Laeven (2009) note that fair value is procyclical and therefore intensifies the phases in the economic cycle. They expressed that banks were materially impacted due to the contrast between market and book values. Lehman Brothers was an American investment bank, founded in 1850, and was the fourth-largest investment bank in the United States. Its bankruptcy in 2008 was a prominent event in magnifying the repercussion of the financial crisis (Acharya and Richardson, 2009). One of the pivotal reasons for this collapse was due to the high leveraging (Lehner, 2016). Lehman disguised this from stakeholders by utilising fair value accounting and creative accountancy. The incentive behind such manipulations would be the benefit pressurised managers derive by camouflaging vulnerabilities in the organisation. This is proved by the movement of the leveraging ratio from 23.7 :1 in 2003 to 30.7:1 in 2007 (SEC Info, 2007) which signifies a high level of risk to investors. In addition, Azadinamin (2012) mentions that accounting standards, due to their defects, enable management to misrepresent financial information for momentary monetary rewards. He states further that Lehman window dressed the financial statements, using fair value, to present healthy looking balance sheets which assisted in concealing a major complication negative cash flows. Magnan (2009) states that As of November 30, 2007, 75.1% of assets measured at fair value were measured according to level 2 or level 3 inputs. This indicates that Lehman generally did not use the more reliable level 1 values. In addition, the proportion of assets valued using level 2 or 3 increased to 81.7% the following year. This shows the speed at which reliability in the accounting method was reduced. It is backed up by the empirical evidence provided by Magnan which shows that the movement from level 1 to lev els 2 and 3 was done intentionally so that they were able to report assets too highly and hide losses. He goes on to explain that fair value provides beneficial information to investors when assets trade in deep and efficient markets but are less useful when the markets are less liquid. One of the key reasons for the fall was the lack of liquidity caused by banks securing themselves, due to the financial crisis, by asking Lehman to pay off their debts. In addition, even though Lehman had a huge asset base, they lacked assets which could quickly be sold for cash (Brunnermeier, 2009). Apart from the ongoing financial crisis, another aspect that increased the speed of the collapse was the unrealised gains and losses brought about by the usage of fair value accounting (Magnan, 2009). For example, Hughes (2008) mentions that Lehman Brothers showed a $400m gain from fair-valuing its own liabilities. As no other firm wished to buy Lehman, in its state at the time, they declared bankruptcy on the 15th of September 2008 and this was quoted as the largest bankruptcy in the history of the United States (Mamudi, 2008). Therefore, fair value accounting without adequate additional disclosure is neither fair nor a good reflection of the value that is at risk (Magnan, 2009). To summarise, whilst relevance and reliability are the primary qualities of the usefulness of a financial report, there is a constant debate on the trade-off between these qualities when fair value measurement is adopted. Fair value is known to be relevant as it uses the current market price, however, it sacrifices its reliability as level 2 and level 3 inputs are used. The value of relevance and reliability is equally important because relevant information that has no reliability would mean nothing to the investors (Sing and Meng, 2005). In contrast, Hitz (2007) notes that fair value would be reliable if there was an actively traded market but the problem arises when there is not. He also remarks that usage of historical cost is falling whereas fair value accounting is on the rise. The reason for this is because fair value provides more timely and comparable information than amounts that would be reported under other alternative accounting approaches (Laux and Leuz, 2009). Furthermo re, they add to this by saying that fair value accounting recognises losses earlier than other methods of accounting and this makes it much more difficult to hide problems in the corporation which, if left to grow, would make crises more severe. However, we have seen that even through the use of fair value accounting, as in the case of Lehman Brothers, fair value accounting was a significant player behind the crisis of 2008. Wallison (2008) argues that fair value causes instability among financial institutions, although the title of the journal suggests that he would be taking a biased stance towards the topic. Moreover, the usage of fair value accounting causes volatility due to constantly changing prices. This concerned banks during the financial crisis due to the enormous write-downs caused by falling asset prices. However, Enria et al. (2004) argue that volatility provides information to investors regarding the risks of their investment. We believe that solely utilising fair val ue has pitfalls and therefore companies should adopt an integration between historical cost and fair value to eliminate the weaknesses of each. Nonetheless, we conclude that investors still prefer fair value accounting despite the disadvantages and the trade-off because it represents the true economic condition of assets and liabilities. References: ACCA, 2016. A framework for determining fair value? [Online]. Available from: http://www.accaglobal.com/gb/en/student/exam-support-resources/professional-exams-study-resources/p2/technical-articles/ifrs13.html [Accessed 08/03/17] Acharya, V.V. and Richardson, M., 2009. Causes of the financial crisis. Critical Review, 21(2-3), pp.195-210. Azadinamin, A., 2012. The bankruptcy of Lehman Brothers: Causes of Failure recommendations going forward. Swiss Management Center. Ball, R., 2006. International Financial Reporting Standards (IFRS): pros and cons for investors. Accounting and business research, 36(sup1), pp.5-27. Betakova, J., Hrazdilova-Bockova, K. and Skoda, M., 2014. Fair value usefulness in financial statements. DAAAM International Scientific Book, pp.433-448. Bigelow, L. The Advantages Of Fair Value Vs. The Equity Method. The Finance Base. Available from: http://thefinancebase.com/advantages-fair-value-vs-equity-method-3255.html [Accesses 02/03/2017] Brunnermeier, M.K., 2009. Deciphering the liquidity and credit crunch 2007-2008. The Journal of economic perspectives, 23(1), pp.77-100. Cai-xia, H.E. and Chi, Z.H.A.N.G., 2010. Fair value accounting under financial crisis. Journal of Modern Accounting and Auditing, 6(6), p.59. Christensen, H.B. and Nikolaev, V.V., 2013. Does fair value accounting for non-financial assets pass the market test?. Review of Accounting Studies, 18(3), pp.734-775. Enria, A., Cappiello, L., Dierick, F., Grittini, S., Haralambous, A., Maddaloni, A., Molitor, P.A., Pires, F. and Poloni, P., 2004. Fair value accounting and financial stability. Hitz, J.M., 2007. The decision usefulness of fair value accounting-a theoretical perspective. European Accounting Review, 16(2), pp.323-362. Hughes, J., 2008. Fair value can flatter to deceive on your own debt. Financial Times, 24(07), p.2008. Huizinga, H. and Laeven, L., 2009. Accounting discretion of banks during a financial crisis. Laux, C. and Leuz, C., 2010. Did fair-value accounting contribute to the financial crisis?. The Journal of Economic Perspectives, 24(1), pp.93-118. Lehner, O.M. ed., 2016. Routledge Handbook of Social and Sustainable Finance. Routledge. Magnan, M.L., 2009. Fair value accounting and the financial crisis: messenger or contributor?. Accounting Perspectives, 8(3), pp.189-213.. Mamudi, S. 2008. Lehman folds with record $613 billion debt [Online]. New York: Market Watch. Available from: http://www.marketwatch.com/story/lehman-folds-with-record-613-billion-debt [Accessed 08/03/2017]. Marra, A., 2016. The Pros and Cons of Fair Value Accounting in a Globalized Economy: A Never Ending Debate. Journal of Accounting, Auditing Finance, 31(4), pp.582-591. McEnally, R., 2007. Fair Value Financial Reporting. CFA Magazine, 18(1), pp.25-26. Penman, S.H., 2007. Financial reporting quality: is fair value a plus or a minus?. Accounting and business research, 37(sup1), pp.33-44. Ryan, S.G., 2008. Fair value accounting: Understanding the issues raised by the credit crunch. Council of Institutional Investors, (July, 2008), pp.1-24. Scheinkman, J.A. and Xiong, W., 2003. Overconfidence and speculative bubbles. Journal of political Economy, 111(6), pp.1183-1220. Sing, T.Y. and Meng, S.C., 2005. Fair value accounting-relevance, reliability and progress in Malaysia. University College Sedeya International. Sundgren, S., 2013. Is fair value accounting really fair? A discussion of pros and cons with fair value measurement. The Finnish Journal of Business Economics, 62(3-4), pp.242-250. Trajkovska, O.G., Temjanovski, R. and Koleva, B., 2016. FAIR VALUE ACCOUNTING-PROS AND CONS. Journal of Economics, 1(2). Wallison, P.J., 2008. Fair value accounting: A critique. Financial Services Outlook. LEARNING LOG SUMMARY (maximum 1 page using Aerial 12-point with at least 1cm margins) Suggested content: What did you learn from the assignment both technically and in terms of working together as a group? We learnt about what caused the global financial crisis to occur and the impact it had on various financial institutions We gained a deeper understanding on the faults in fair value accounting which also shows why historical cost was so prevalent We learnt how to allocate work between the members of the group as well as set realistic deadlines What strategy as a group did you follow in tackling the assignment task? Making sure everyone was involved in writing each paragraph so that we received various different viewpoints Having frequent meetings and discussions in order to compare our research and decide on which points we should include within our paragraphs What problems did you face and how did you overcome them? Understanding what was required of the question. We overcame this ask question to the lecturer and finding out, through research, about other topics that could be included in each paragraph What went well? Coordination was good since we kept in touch with each other frequently Everyone kept to their deadlines and provided what was required of them when needed What, in retrospect, would you have done differently, why and how? In the beginning we took time to assign research topics and research took a while as we were all new to it. However, later on we were able to increase the pace as we became more proficient. If, however, we had been able to start off at this pace, the work would have been more evenly distributed over the weeks rather than being skewed towards the deadline Where did you locate most of your sources? Google University of Bath library Google Scholar LOG OF GROUP MEETINGS (complete a maximum of 1 page for each meeting) Meeting 1 Date of Meeting 23 Feb 2017 (Thursday) Attendees Ben Maitland Kylie Siow Gavriella Kafkalia Sidharth Ranjith Name of Absentees Agenda and tasks completed Decide on days of meeting every week (Tentatively Tuesday 1-2pm Friday 12.30-2pm) Talked about the structure of the essay Agreed items Structure of Essay Introduction Pros and Cons of FV 3rd of March How its carried out 10th March Example of FV during Financial Crisis 10th March Conclusion Tasks to be completed by next meeting Find points for pros and cons of fair value Date of next meeting 28 Feb 2017 (Tuesday) Meeting 2 Date of Meeting 28 Feb 2017 (Tuesday) Attendees Ben Maitland Kylie Siow Gavriella Kafkalia Sidharth Ranjith Name of Absentees Agenda, items agreed on and tasks completed Allocation of points for the first paragraph pros and cons of fair value accounting to investors Tasks to be completed by next meeting Full paragraph of pros and cons of fair value Date of next meeting 3 March 2017 (Friday) Meeting 3 Date of Meeting 3 March 2017 (Friday) Attendees Ben Maitland Kylie Siow Gavriella Kafkalia Sidharth Ranjith Name of Absentees Agenda and tasks completed Compiled the first paragraph Talk about the next 2 points Global financial crisis How fair value is carried out Allocate points to each person Tasks to be completed by next meeting Find points for the financial crisis and how fair value is carried out Date of next meeting 7 March 2017 (Tuesday) Meeting 4 Date of Meeting 7 March 2017 (Tuesday) Attendees Ben Maitland Kylie Siow Gavriella Kafkalia Sidharth Ranjith Name of Absentees Agenda and tasks completed Choose which points to write about and discuss how to evaluate it. Tasks to be completed by next meeting Finish the paragraphs how FV is carried out and the example during financial crisis Date of next meeting 10 March 2017 (Friday) Meeting 5 Date of Meeting 9 March 2017 (Thursday) Attendees Ben Maitland Kylie Siow Gavriella Kafkalia Sidharth Ranjith Name of Absentees Agenda and tasks completed Completed all body paragraphs Tasks to be completed by next meeting Introduction and Conclusion Date of next meeting 14 March 2017 (Tuesday) Meeting 6 Date of Meeting 15 March 2017 (Wednesday) Attendees Kylie Siow Gavriella Kafkalia Sidharth Ranjith Name of Absentees Ben Maitland (However did send his share of the work by e-mail) Agenda and tasks completed Completed introduction and draft for conclusion Tasks to be completed by next meeting Complete full paragraph for conclusion and make some changes for body paragraphs Date of next meeting 16 March 2017 (Thursday) Meeting 7 Date of Meeting 16 March 2017 (Thursday) Attendees Kylie Siow Gavriella Kafkalia Sidharth Ranjith Name of Absentees Ben Maitland (However did send his share of the work by e-mail) Agenda and tasks completed Worked on conclusion Date of next meeting 18 March 2017 (Saturday) Meeting 8 Date of Meeting 18 March 2017 (Saturday) Attendees Ben Maitland Kylie Siow Gavriella Kafkalia Sidharth Ranjith Name of Absentees Agenda and tasks completed Made some changes to body paragraphs Finalised the whole essay

Blackened Soul :: essays research papers

America is said to be the land of opportunity, the land of freedom. Much of that freedom is used for expression, which most of it comes from writing. Many great writers have been a part of our history, sharing their creative thoughts, ideas, and opinions with everyone. Nathaniel Hawthorne and Edgar Allen Poe are two writers who come to mind. In his stories, such as â€Å"The Minister’s Black Veil† and â€Å"Young Goodman Brown,† Hawthorne shows how he believes that man is always living in denial of their true condition, and that pride keeps them separated from everyone, including God. Poe, on the other hand, expresses his ideas of mankind in a slightly different way. In two of his pieces, â€Å"The Tell-Tale Heart† and â€Å"The Black Cat,† Poe explains in a dark manner how humans have a conscience with two sides, the â€Å"life instinct† and the â€Å"death instinct.† Seeking to do violence is what the so-called â€Å"death instinctà ¢â‚¬  does, and Poe was the first to ever believe this. Both authors have attempted to describe the darker side of human nature. Many questions arise when reading Poe and Hawthorne’s pieces, most of which can only be answered through analysis. Nathaniel Hawthorne’s story â€Å"The Minister’s Black Veil† is a great example of humankind’s struggle with evil. This story revolves around pride, which is an inherent evil of humans, as Hawthorne believed. The black veil worn by Reverend Hooper represents the evil of humans, which essentially separates people from everyone, including God. Hooper decides to teach the people this very fact by wearing a black veil over his face. To show the people that they are prideful and sinful becomes a trickier task than he believed. The people responded in a frightened manner, such as Goodman Gray who, on page 104, cried, â€Å"Our parson has gone mad!† This clearly shows that Gray, along with the other people, missed Hooper’s point in wearing the black veil. But the congregation wasn’t alone in their misinterpretations, and soon Hooper realizes that he needs to be taught himself, so he believes that he must wear the veil for the rest of his life . He realizes his mistake when, on page 107, it says, â€Å" At that instant, catching a glimpse of his figure in the looking glass, the black veil involved his own spirit in the horror with which it overwhelmed all others.† He finally realizes he is just like the rest when he noticed his reflection with the veil covering his face. Blackened Soul :: essays research papers America is said to be the land of opportunity, the land of freedom. Much of that freedom is used for expression, which most of it comes from writing. Many great writers have been a part of our history, sharing their creative thoughts, ideas, and opinions with everyone. Nathaniel Hawthorne and Edgar Allen Poe are two writers who come to mind. In his stories, such as â€Å"The Minister’s Black Veil† and â€Å"Young Goodman Brown,† Hawthorne shows how he believes that man is always living in denial of their true condition, and that pride keeps them separated from everyone, including God. Poe, on the other hand, expresses his ideas of mankind in a slightly different way. In two of his pieces, â€Å"The Tell-Tale Heart† and â€Å"The Black Cat,† Poe explains in a dark manner how humans have a conscience with two sides, the â€Å"life instinct† and the â€Å"death instinct.† Seeking to do violence is what the so-called â€Å"death instinctà ¢â‚¬  does, and Poe was the first to ever believe this. Both authors have attempted to describe the darker side of human nature. Many questions arise when reading Poe and Hawthorne’s pieces, most of which can only be answered through analysis. Nathaniel Hawthorne’s story â€Å"The Minister’s Black Veil† is a great example of humankind’s struggle with evil. This story revolves around pride, which is an inherent evil of humans, as Hawthorne believed. The black veil worn by Reverend Hooper represents the evil of humans, which essentially separates people from everyone, including God. Hooper decides to teach the people this very fact by wearing a black veil over his face. To show the people that they are prideful and sinful becomes a trickier task than he believed. The people responded in a frightened manner, such as Goodman Gray who, on page 104, cried, â€Å"Our parson has gone mad!† This clearly shows that Gray, along with the other people, missed Hooper’s point in wearing the black veil. But the congregation wasn’t alone in their misinterpretations, and soon Hooper realizes that he needs to be taught himself, so he believes that he must wear the veil for the rest of his life . He realizes his mistake when, on page 107, it says, â€Å" At that instant, catching a glimpse of his figure in the looking glass, the black veil involved his own spirit in the horror with which it overwhelmed all others.† He finally realizes he is just like the rest when he noticed his reflection with the veil covering his face.

Deconstruction of an Advertisement Essay

Each day we are inundated with thousands of advertisements which contribute to shaping and defining our world views. As a capitalist society ads are crucial to attract the attention of the consumer. They are everywhere, whether it be a billboard, a commercial or a radio announcement, advertising reaches out and touches almost everyone living in our modern world. The effectiveness of an advertisement campaign has a huge influence on the purchaser. Ads are carefully constructed to appeal to the consumer in order to sell a product and to make a profit. An effective ad appeals to the emotion of the consumer as â€Å"80% of decisions are influenced by â€Å"dormant† emotions in the subconscious. †(†¦ ) through the ingenious construction of ad campaigns a consumers purchases are greatly influenced. The CK one ad campaign for the Calvin Klein brand is an excellent of the example of the thought and assembly needed in order to create an effective advertisement. Through the deconstruction of the CK one ad found in the April 2011 issue of Elle Canada it will be shown why the ad was created, how it’s used to grab the attention of its target audiences, and the use of hidden messages and social issues that are being expressed. The target audience of the CK One ad is clearly directed towards women as it appears in a magazine called Elle! Elle Canada has a 90% female readership (†¦ ) whose ages generally range from a younger segment to a middle segment (18 to 34 and 35 to 54). Elle Canada has a large age demographic due to the fact that their articles encompass a broad audience and the magazine contains ads that focus on the younger market as well as advertisements focusing on middle aged women. Although Elle Canada has a large readership age range, the CK One ad seems to be targeting more directly the 18-24 and 24-35 age range. The advertisement incorporates a focus on social media and a ‘rebellious’ look which is often directed towards the younger market. Young people who are still questioning authority and who are still defining themselves will see the dark eye makeup and lassiez-fair ‘detached’ attitude of the model and feel attracted to the ad. Furthermore the ads target audience is aimed towards 18-34 year olds because it uses ‘technology’ to capture the audiences attention. The model is ‘trapped’ in the CK One box and in order to get in the box, the bottom left hand corner of the ad tells you that you can â€Å"Download the App at CKONE. COM†. The ad is definitely towards the 18-34 age group because ‘getting in the CK box’ with a rebellious young woman is ridiculous notion unless you’re a young person with very little responsibility. Finally, although the spending power of the older age groups is greater (Diversity: Targeting the Ever-Changing Marketplace, p35) it is trendy to market to and advertisers remain youth obsessed. The targeted income level for this advertisement seems to be for those from the middle-middle, or upper-middle class. Calvin Klein is an iconic American brand that is moderately expensive and is featured in respected magazines. The median income of and Elle Canada reader is around $70 000 (†¦ ) therefore is it logical to assume that Calvin Kline is directing its ads at those who are willing to spend a little more. This advertisement would also be directed towards the Emulator-Achiever or Emulator groups. Emulators are young and impressionable people who will buy products to help them fit in (Duncan, p75). Emulators would be attracted to this ad because it offers the chance to fit in and join the CK One box; all you have to do is download the app! On another note, this ad would also be directed towards Emulator-Achievers because this group feels more comfortable with uptown brands such as Tiffany, Gucci or Stella Mcarthy and Calvin Klein is a very well known and respected American Brand. This brand offers prestige and it fits in with typical ideas of American wealth. Finally it appears that this advertisement is slightly more targeted for Caucasian’s. The model is Caucasian and there isn’t a single background model or object indicating the inclusion of any other racial groups. Although minorities represent a huge market and are predicted to exceed 1. 5 trillion in buying power, ( Diversity: targeting the ever changing market) Calvin Klein still uses mainly Caucasian models. Despite the fact that the ad features a white woman it could still be directed to a variety of racial groups because the model doesn’t necessarily represent a stereotypical white american girl; almost anyone can be a rebellious youth regardless of your ethnicity. Although her beauty and figure represent the social ideal her ebellious look is not necessarily the ‘norm’ and therefore enables more people to relate to it. Determining the target audience enables us to better interpret and understand the construction of an advertisement. Based on a target market, advertisers use eight main elements to create an ad that speaks to the heart. Ads that create emotional appeal are based on these eight elements; models, setting, copy, sound, color, point of view and details (Dun can, p77). In terms of the CK One ad, the model that was chosen was a young white attractive looking female. The model is in black lingerie and she is in a sexual pose. There is a hyper-sexualization of the model as her cleavage is very prominent and being pushed up against her bra. The models hair and makeup are messy with a ‘bed head’ look which suggest rebelliousness and late night partying which is considered both fun and exciting. Finally the facial expression of the model suggests a sexual and confident attitude. More over the model is very slim and her skin is flawless, her face is clear and her hair is blonde. The ‘perfection’ of the models skin and face reflect the ideals of society. Despite the models dark makeup and ‘bed head’ look she is our societies ideal with her blonde hair and beautiful figure. These ideals that the ad is promoting are completely unrealistic for the average female and it creates body image issues and warps both female and males idea about what an average person should look like. Furthermore through the continual use of impossibly beautiful models our society becomes body obsessed and through this many women and men experience body image issues. The CK One ad has been specifically and ingeniously positioned to promote the preferred reading. Most notable is the is the models physical position within the ad; her body, more specifically her cleavage, is framed between her hands which are pressed against the screen. The positioning of the models hands also frames the word, fuck, which has been discreetly positioned within the ad. The F is seen by the table which is cut off by the models buttocks, the U is seen in the models cleavage and the CK is to the right of the model, at chest level. Furthermore, through the technical code of camera angles the model is close-up with a slight low angle. These technical codes suggest power and intimacy with the model. The Ck One ad could be promoting their products by relating the suggested feelings of power and sexuality with the purchase of the product. The oppositional reading who be through a critical point of view that it is impossible to obtain any type of lasting feeling with a purchase of a material item. As for the captions, they are the only thing that has any coloring which draws attention to them. The most noticeable caption in big bold lettering that says CK One _Jeans_Underwear_Fragrance_ which is right next to the models cleavage. This caption is necessary to inform the reader what is being advertised because the model is only wearing plain black underwear it would be likely to assume that it was the only product. On the bottom left-hand corner of the Ad is says â€Å"Get in the CKONE box >>Download the app at CKONE. com† this caption really allows us to tie in the key concepts of the ad. The Calvin Klein ad also employs a font that ads to the incorporation of digital media. Lastly the fifth line of writing on the bottom left-hand corner says â€Å"Scan Ad to Reveal More† which could be referring to the hidden message (the word fuck) within the ad. Through the captions is it’s very clear that this Calvin Klein ad is trying to incorporate digital media and sex with the purchase of there products. In terms of the coloring of the advertisement, it is very unique because it supposed to represent screen to a computer or gaming device. The coloring is mostly black and white apart from the bright green which is used to draw attention to the captions. The color green is generally a calming color which represents wealth and well-being however it can also be used to symbolize envy or jealousy. The use of green indicates that Calvin Klein is a desired brand. Furthermore the green coloring is also placed just above the models forehead, this use of specific placement of the color could indicate 1st level cropping in which a models forehead is removed. By covering the top part of the models head with a different color advertisers objectify the model and remove any signs of her intelligence. On another note, the lighting that is used is artificial however it ties in with the setting. The setting is white relatively bare room, which is the ‘Ck One box’. The only furnishings are a stool, a table, two wooden boxes and game console. There is also a door with a visible knob; this indicates that the model is trapped in the ‘box’, however it is an exclusive place that you can get into- if you purchase the product and download the app. However this is where the oppositional reading come in; through the download of an ‘app‘ you will not enter the Ck one box you will not become a gorgeous model. The Ck One ad is trying to promote digital media therefore the bare setting could be used to represent whats behind your screen when you download the app. The limited settings also enable us to focus more closely on the model and the attitude she is giving. Gender representation also plays a key role the preferred reading of this Ad. Although the model is selling lingerie there is an irrelevant sexualization of the model ( Duncan, p. 46) The bra and panties that are being advertised are relatively plain and not the focal point of the ad; instead the ad is marketing the models body. The models cleavage is pouring out of her bra which actually distracts the audience from the bra itself, instead readers are led to believe that this lingerie will help them have the ‘perfect’ body. Furthermore, as mentioned previously, the ad also includes dismemberment. The presence of the green color above the models forehead which suggests objectification. Also the models legs are cut off below the knee which causes the reader to mostly focus on the core body of the model. This greatly objectives the model and females as a whole in advertising. Furthermore, there is also a bit of clowning present because majority of people do not stand in such a contorted position as the stance of the model. Although the model isn’t necessarily in a foolish or silly position her stance certainly is unnecessarily contorted in order to appear more sexual. These gender representations lead to the final conclusion that women are sexual objects to be looked at and played with (Duncan p. 48) All the elements used to construct the ad lead us to the general meaning of the ad: Sex. The meaning is so clear that it is even explicitly written within the ad. The models ‘look’ establishes the preferred reading. The preferred interpretation is that through the purchase of the CK One clothing line you will gain confidence and become sexually appealing while being fun and rebellious. Advertisers use body obsession and female insecurities to help sell products because through the preferred reading consumers believe that will look like the model through the purchase of the product (Duncan p14-15). This leads to us the oppositional reading, it is completely impossible and unrealistic to think that through the purchase of a product you will automatically you will automatically become beautiful and sexualy appealing. The reality is that most photographs of models have been retouched and realistically even the models don’t look as good in real life. Calvin Klein has always used a variety of controversial ads ranging from pictures of a half-naked Kate Moss to an ad featuring young children wearing only Calvin Klein underwear. Shock advertising is used in order to generate more press and more profits. The Ck One is not an exception with its use of the subliminal message featuring the word fuck it is a clear example of shock advertising. Ultimately the theme of the ad comes down to rebellious sex. The CK One ad uses a variety of different elements in order to sell its products. First it employs the use of stereotypical gender representations. Although the model is in a ‘powerful’ position as she is staring directly at the camera and looking slightly downwards, she still in an overly sexual stance with very little clothes on. The models brain has been covered with a different color giving off the impression that she is laking intelligence. The model is beautiful and has a ‘perfect’ body. The advertisers played upon female insecurities and there desire for perfection in order to attract customers and make a profit. Another aspect that the advertisers used to attract attention to the ad was the rebellious look and the incorporation of digital media. The ad gives false promises that through the purchase of Calvin Klein clothing you will be a sexy, young rebel who fits in to the CK One box. Consumers should alway be aware of the image a brand is trying to portray and the affect it has on its target audience. Advertisers are trying to sell a message and our consumer society should be aware of how the advertisements shape and impact our everyday lives.

The Human And Social Consequences Of Trafficking - 3089 Words

‘The human and social consequences of trafficking are compelling. From physical abuse and torture of victims to the psychological and emotional trauma†¦ the impact on individuals and society is clearly destructive and unacceptable’ (UN.GIFT, 2008). This suggests that controlling human trafficking and protecting victims who have experienced traumatic events that are associated with being trafficked should be the priority for government officials nationwide. This however has only recently become the case for some select countries around the world. Estimating the global scope of human trafficking is extremely difficult due to factors which will be discussed throughout this assignment however trafficking does affect most countries around the world. It is estimated that between 600,000 and 800,000 people are trafficked across international borders each year with 50% of these individuals being children (Stop the Traffik, 2014). 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