Assets Total Current Assets 37,216.0 36,470.0 39,377.0 36,304.0 34,336.0

Property/Plant/Equipment, 96,468.0 91,780.0 78,610.0 68,858.0 63,690.0

Total – Net

Goodwill, Net 4,618.0 4,619.0 4,637.0 4,623.0 4,636.0

Intangibles, Net 0.0 0.0 0.0 0.0 0.0

Long Term Investments 21,158.0 20,920.0 20,477.0 18,552.0 17,057.0

Note Receivable - Long Term 2,282.0 2,413.0 2,194.0 2,203.0 1,686.0

Other Long Term Assets, Total 2,879.0 4,963.0 3,491.0 2,088.0 4,428.0

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Long Term Debt Capital Lease Obligations

Deferred Income Tax 11,521.0 11,539.0 12,170.0 11,647.0 11,262.0

Minority Interest 647.0 469.0 204.0 209.0 200.0

Other Liabilities, Total 24,198.0 24,403.0 19,456.0 15,749.0 14,553.0

Total Liabilities 72,707.0 74,517.0 71,698.0 63,693.0 63,157.0

Redeemable Preferred Stock 0.0 0.0 00 00 00

Preferred Stock - Non 0.0 0.0 0.0 0.0 0.0

Redeemable,

Common Stock 1,832.0 1,832.0 1,832.0 1,832.0 1,832.0

Additional Paid-In Capital 14,631.0 14,448.0 14,288.0 14,124.0 13,891.0

Retained Earnings 106,289.0 101,102.0 82,329.0 68,464.0 55,738.0

(Accumulated Deficit)

Treasury Stock - Common -26,168.0 -26,376.0 -18,892.0 -12,395.0 -7,870.0
Other Equity, Total -4,670.0 -4,358.0 -2,469.0 -3,090.0 -915.0

Total Equity 91,914.0 86,648.0 77,088.0 68,935.0 62,676.0

Total Liabilities & 164,621.0 161,165.0 148,786.0 132,628.0 125,833.0

Shareholders’ Equity

Total Common Shares 2,007.72 2,004.23 2,090.43 2,164.56 2,232.69

Total Preferred Shares 0.0 0.0 0.0 0.0 0.0

As shown in Table 1 above, the book value of all of the common stock for 2009 is $91,914 million ($164,621 - $72,707). And, the book value per share is $45.78 (91,914 / 2007.72 outstanding shares).

Book value of common stock may not provide a realistic amount because companies record assets based upon their historical values. Therefore, the market value might be (and usually is) different from the historical values recorded in the accounting books.

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Finally, a market measure such as price earnings ratio (P/E) ratio can be used to determine the value of common stock. The P/E ratio for the industry can be easily obtained from a publication such as Standard and Poor‘s. For example, the industry P/E ratio for Chevron is 9.6 which means that investors are willing to pay $9.6 for each dollar of earnings in this industry. Chevron Corporation‘s value of stock is $80.83 (9.6 * 8.42 earnings per share).

This notion of rational behavior and efficient-market hypothesis has been challenged by behavioral finance. It focuses on psychology of making financial decisions and acknowledges that people make biased and sentimental decisions. Therefore, the key concepts of behavioral finance which contribute to biased and irrational decision making should also be considered in making stock valuation decisions:

With regards to the stock valuation, an investor might view a stock undervalued if he/she first considered the stock when its market price was $75 and now the current market price is $40. Actually, the decline in market price from $75 to 40 does not necessarily mean that the stock is undervalued. It simply means that the investors are willing to pay $40 based upon the current expectations and information available to them. The investor should study the current information, conduct a thorough analysis, and carefully evaluate the stock before concluding that the stock is undervalued.

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Investors should evaluate each investment based upon its merit and without any preconceived notions. A thorough research should be conducted, information should be analyzed with an open mind, and decisions should be made based upon unbiased findings although investors might be very confident about their abilities to make good investing decisions. Mistakes are usually made if the facts are overlooked and decisions are made based upon some preconceived notions. For example, an investor knows that a security has been a good investment for a number of years but it does not necessarily mean that the same security is a good investment in current environment.

A second component of prospect theory is a poor estimation of probabilities of events. There is tendency to overweight small probabilities and underweight likely probabilities. For example, most investors would prefer a 100% chance of gaining $1,000 to a 50% chance of gaining $2,000 and a 50% chance of gaining 0 Dollars although the expected value of both events is the same. This phenomenon may also explain the popularity of lotteries where the probabilities of huge gains are relatively small.

From investors‘ perspective, they should be aware of these human behavioral tendencies and should not allow them to overshadow the facts. If a security is continuing to decline, it might be a good idea to sell the security, cut losses, and find a better investment. There is no need to wait unless there are clear expectations based upon facts that the security might perform better in future. Similarly, investors should not rush into cash their gains for securities performing well unless there are clear indications of decline. Also, probabilities should be weighted appropriately in making investment decisions.

Herd Behavior: Many investors overlook rational decision making and make decisions based upon what everyone else is doing. This is especially the case when a large group is doing something which creates the belief that everyone cannot be wrong. For example, people invested in internet-related companies in late 1990s and the dotcom companies incurred losses. Another recent example is investments in housing market although there were warnings about real estate meltdown.

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Investors should remember that all of their funds whether earned by dividends, interest, or from employers are theirs and have been earned. And, all of the funds should be used to create an efficient portfolio which provides reasonable returns based upon a reasonable level of risk.

Hindsight bias refers to the belief that past events were predictable and obvious. Many people claimed that the dotcom companies were doomed to fail after the companies failed although tremendous investments were made before they actually went down. Similarly, many people asserted that the real estate meltdown was inevitable after the fact although these securities were very popular when the housing market was performing well.

The lessons for investors from these observations are that they should not allow their personal bias and beliefs to overshadow the facts although it is easier said than done. They should rely on appropriate research and analysis.

Overreaction and Availability Bias: Investors tend to overreact towards new information. For example, it is not unusual for an initial public offering (IPO) to overshoot (investors are overly optimistic) during the first day of trading and then settle down to a more realistic price in the next few days. Similarly, investors might be overly optimistic and pessimistic about changes in the management of a company.

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Investors should take a long-term perspective and evaluate securities based upon their merits. There is nothing wrong in considering IPOs, expecting a better performance from a new management, or contemplating securities with recent good performance. But, the final decisions should be based upon long-term objectives and whether the securities will be helpful in achieving the objectives.

Behavioral finance provides insight into human behavior and acknowledges that people make biased and sentimental decisions from time to time. The key concepts of behavioral finance which include anchoring, overconfidence, prospect theory, herd behavior, mental accounting, confirmation and hindsight bias, overreaction and availability bias have been discussed in this paper.

Now, the question is how should investors use the knowledge provided by modern finance and behavioral finance that would lead to optimal investment decisions? The answer is that investors should start with the models and techniques provided by modern finance. Then, they should carefully review the research and analysis techniques keeping in mind the key concepts of behavioral finance. For example, a proposal investment in a company‘s stock can be evaluated using the constant-growth model. Then, the analysis should be reviewed for any anchoring (whether the benchmarking is correct), overconfidence (whether the analysis is based upon facts or personal preferences), prospect theory (whether there is a tendency to be overly loss averse), herd behavior (whether the analysis is unbiased and free from following an individual or a group), mental accounting (whether all of the funds have been treated similarly), and the overall analysis is free and above from any bias such as confirmation and hindsight bias, and overreaction and availability bias.

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Bondt, Werner De., Muradoglu, Gulnur, Shefrin, Hersh, and Staikouras Sotiris K.

(Fall 2008). Behavioral Finance: Quo Vadis? Journal of Applied

Finance 18, 2, 7-21. Brigham, Eugene F. and Ehrhardt Michael C. (2008). Financial Management:

Theory and Practice. Ohio: Thomson South-Western. Brown, R. and Sarma N. (2007), CEO Overconfidence, CEO Dominance, and

Corporate Acquisitions. Journal of Economics and Business, 59(5), 358-379. Chandra, Abhijeet and Sharma, Dinesh. (2010, March-June), Investment

Management by Individual Investors: A Behavioral Approach. IUP

Journal of Behavioral Finance, 7(1/2), 7. Gitman, Lawrence J. (2009). Managerial Finance. San Francisco: Pearson

Prentice Hall. Krishnan, Ramesh and Beena, Fatima. (2009, September–December),

Measurement of Conformity to Behavior Finance Concepts and

Association with Individual Personality, IUP Journal of Behavioral

Adaptive Market Hypothesis. Journal of Investment Consulting, 7(2),

21-44. Marte, Jonnelle. (2009, October, 25), Find Your Financial Style – and Avoid Its

Pitfalls. Wall Street Journal, 1. Mitchell, Donna. (2010, September). Wealth Management Psych Out;

Behavioral Finance has moved from theory to practice, informing tools

and techniques for connecting with wealthy clients. Financial Planning,

40(9), 72. Mittal, M. and Vyas R. K. (2008), Personality Type and Investment Choice: An

Empirical Study, The Icfai University Journal of Behavioral Finance,

5(3), 6-22. Park, Cheonsik and Kim, Hyunseok. (2009, December), The Effect of

Managerial Overconfidence on Leverage. International Business and

429-437. Smith, D. (2008, June). Moving from an Efficient to a Behavioral Market

Hypothesis. Journal of Behavioral Finance, 9(2), 51-52.

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Journal of Business and Behavioral Sciences Vol 23, No 1; Spring 2011

TROY Univeristy

ABSTRACT

Hostile racial environment is an important issue in the workplace. In fact, cases filed with the EEOC now outnumber sexual harassment charges. Few studies have examined the courts‘ interpretation of the harassment guidelines based on the rules set forth by the Supreme Court in 1998. This article reviews over 200 cases and provides guiding principles and recommendations for practitioners.

Harassment has been recognized as a violation of the Civil Rights Act under Title VII since the late 1970‘s (Twomey, 2007). In 1980, the Equal Employment Opportunity Commission (EEOC) propagated guidelines regulating sexual harassment in the workplace (29CFR1604.11). The courts generally utilize these guidelines when evaluating other types of harassment such as racial harassment (Ford v. Minteq, 2009; Jordan v. City of Cleveland, 2006).

Interestingly, while sexual harassment receives the overwhelming amount of attention from a media and scholarly perspective (Bennett-Alexander, 2007; Twomey, 2007), race-based charges actually comprise 36 % of all Civil Rights violations as compared to 30% for sex based cases (EEOC, 2009). Moreover, in 2009, racial harassment complaints with the EEOC totaled 50% of all harassment charges versus 41% for sexual harassment (EEOC, 2009). Over the last 11 years, racial harassment cases have risen at about a 20% annual rate versus a 20 percent decline over the same period for sexual harassment litigation (EEOC, 2009).

Correspondingly, there has been a dearth of research on court interpretation of the harassment guidelines as they pertain to racial harassment. Given that racial harassment litigation represents a sizeable amount of the EEOC caseload, is rising at a significant rate, and is very costly to organizations, it

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would be useful to review the recent case law interpreting the EEOC regulations on the subject. In particular, the review should focus on the area where there is the most confusion and litigation--hostile environment.

Consequently, a LEXIS-NEXIS key word search was conducted that yielded over 200 cases since the Supreme Court set forth its hostile environment guidelines in Faragher v. City of Boca Raton (1998). The authors focused primarily on cases at the appeals court level rather than the district level because the former are more settle and accepted. Over 100 usable cases were identified and examined for guiding principles as to the circumstances that constitute an illegal racially charged workplace. The few district court cases cited are the most recent and illustrate current trends or particular facets of the case law. Cases cited are representative or highlight special issues/circumstances that assist in determining the hostile environment threshold. Recommendations for administrators and legislators are provided.

HOSTILE ENVIRONMENT REGULATIONS

Racial harassment rules (Robertson v. Aon, 2010; Jorden v. City of Cleveland, 2006) are derived from the sexual harassment guidelines issued by the EECO in 1980 (29CFR1604.11).

Sexual harassment is defined under the EEOC guidelines as ―unwelcome
sexual advances, requests for sexual favors, and other verbal or physical
conduct of a sexual nature…when (1) submission to such conduct is
made either explicitly or implicitly a term or condition of an individual‘s
employment, (2) submission to or rejection of such conduct by an
individual is used as the basis for employment decisions affecting such
individual, or (3) such conduct has the purpose or effect of unreasonably
interfering with an individual‘s work performance or creating an
intimidating, hostile, or offensive working environment‖

(29CFR1604.11).

In Meritor Savings v. Vinson (1986), the Supreme Court upheld the EEOC guidelines and distinguished between quid pro quo and hostile environment claims. It is the third definition that deals with hostile environment cases that is the subject of this article.

In Faragher v. City of Boca Raton, the Supreme Court summarized the factors from several other Supreme Court decisions (Harris v. Forklift Systems, 1993; Meritor Savings v. Vinson, 1986) to be considered in determining hostile environment claims filed under Title VII (Faragher v. City of Boca Raton, 1998) and are applied to racial harassment cases(Ford v. Minteq, 2009). First, it must ―be both objectively and subjectively offensive, one that a reasonable person would find hostile or abusive‖ (Faragher v. City of Boca Raton, at 286). Second,

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The Supreme Court pointed out that ―Title VII does not prohibit genuine but innocuous differences in the ways men and women routinely interact with members of the same sex and the opposite sex. Simple teasing, offhand comments, and isolated incidents (unless extremely serious) will not amount to discriminatory changes in the terms and conditions of employment‖ (Faragher v. City of Boca Raton, at 286). In fact, the Supreme Court had previously made clear in Meritor Savings v. Vinson that no one is guaranteed a pristine work environment whether the conduct be sexual or racial or some other type of harassment protected under Title VII (Meritor Savings v. Vinson, 1986). The Faragher Court decision underscored this point when it said that the guidelines when properly applied would filter out ―the ordinary tribulations of the work place, such as the sporadic use of abusive language, gender-related jokes, and occasional teasing (Faragher v. City of Boca Raton, at 286). Nonsexual racist behavior is not covered by the guidelines. However, these cases do occur.

Even though nonracist behavior can be boorish and unprofessional and at times may rise to the level of workplace bullying (O‘Moore & Lynch, 2007), it is still unprotected activity. For example, in Bledsoe v. State of Tenn,. an African-American secretary filed a harassment charge after two years of management moving her office to the basement, failing to complete a number of her annual performance reviews, being disciplined for minor infractions, and being placed at the bottom of the organizational chart (Bledsoe v. State of Tenn., 2010). Nevertheless, none of these actions were based on race and the district court issued a summary judgment for the defense. Similarly, in Robertson v. Aon, an administrative assistant claimed that she was racially harassed because she was ostracized by her co-workers and received a bad performance review for substandard work. However, the claim was denied because there were no race based insults or epithets directed at her (Robertson v. Aon, 2010). Also, a lessening of job duties is not harassment when there is no change in pay or title, and it cannot be demonstrated that the action was taken because of the employee‘s race (Austin v. City of Montgomery, 2006).

In another case, Reba Carter v. New Venture Gear, Inc., an hourly worker was called a ―bitch‖ told to ―get out we do no want you here‖; She was also kicked in the back and endured many other childish pranks (Reba Carter v. New Venture Gear, Inc., at 6). While she was sure that they were all race related, testimony revealed that horseplay was common in the workplace but was not directed at a particular race nor was the conduct race related. The case was

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