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Do market regulations reduce investment? Evidence from European regions. Regional Studies. This paper investigates the impact of market imperfections on non-farm business sector investment in European regions for 1995–2007, using dynamic panel and generalized method of moments (GMM) methods for estimating a Euler equation. The results show that barriers to entrepreneurship and to trade and investment decrease the productivity of capital, which has negative effects on European regions’ investment. Corruption leads to increased operational costs, creates uncertainty and thereby deters investment. Greater labour market regulation also means higher labour costs. Hiring and firing regulation and employment protection and legislation indicators increase the productivity of capital which has positive effects on regional investment.

This paper investigates the causal relationship between firms’ research and development expenditures (RD we find evidence for that firms’ R&D expenditures cause fixed capital investments, but we do not find evidence for the reverse effect. When additionally looking at innovation performance, R&D activities turn out to be complementary to fixed capital investment, in the sense that they markedly increase the expected return on investment. Thus, increasing research activity may not just be valuable for long-run economic growth but, via investment, may also give the economy a head start in times of a prolonged economic downturn.

The study of linkages of macroeconomics factors is prominent in order to understand how the economic cycle affects one another. These factors include interest rate, growth rate, saving and capital investment which are mutually correlated to stabilize the GDP. Part of this study, it will look upon the impact of investment which emphasize the efficiency of capital investment to the economic growth. Capital investment is one investment appraisal that gives impact to the economic growth. It is a long term investment and involve with large amount of capital to incorporate the development of private and public capital investment.

The close to zero interest rates past the economic crisis open possibility to directly test for loss aversion in framed field structured investment tasks. We use a Web-survey platform to compare the willingness to invest in LOSS-GAIN deposits that pay positive return G in favorable market conditions, but bring a loss L in the complementary states, to the valuation of parallel GAIN-ONLY deposits that pay small positive return G-|L| in the favorable scenario but bring zero return in the opposite case. While common models of choice predict that investors should refrain from LOSS-GAIN designs but may strongly approve the GAIN-ONLY, the participants rank the LOSS-GAIN significantly higher and show similarly strong willingness to invest in both versions. The results suggest that loss aversion may attenuate in retail structured investment, when small losses come with increased compensating gain possibilities.

Mining companies are dependent on the successful execution and operation of capital projects. The choice of which projects to pursue and which to put on hold is therefore a critical strategic decision. This chapter provides an overview of the assessment and financing of capital projects. The first step in this assessment is to prepare the project financials, that is, the projection of the free cash flow over the lifetime of the project. The next step is the calculation of the decision criteria, such as payback period, return on investment, net present value, and internal rate of return. The final step is to recommend a decision based on these criteria, as well as on other factors such as strategic fit and risk. Funding for the project can come from the company's own ability to raise capital through equity and debt means or to raise substantial debt through legal structures such as project finance and nonrecourse finance.

The objective of this paper is to determine which point of the business cycle offers investors the best reward to risk ratio in the stock market. Expected reward is defined as expected return in excess of the risk free rate, whereas risk is defined as the standard deviation of return. Thus, the expected reward to risk ratio is measured by expected return in excess of risk free rate relative to the standard deviation of return. Expected return in excess of the risk free rate and standard deviation of return are generated on a continuum of time periods and the GDP growth rate. The point where the expected reward to risk ratio peaks, would signify the best time for investment. Being able to identify this point could help investors in deciding the best time to invest as well as help firms in choosing a favorable time for raising equity capital. While most people think that the best time to invest is near the bottom, it is not clear whether the best time for investing is before, at, or after the economic trough. The interesting finding in our model is that the best time is after the point of the economic trough.

A loss sale of stock allows investors to take a capital loss deduction. However, it has always been unclear whether it is advisable for individual investors to engage in loss sales of stock to take advantage of the tax benefit. Indeed, determining at what point the investment becomes indifferent as it relates to short-term and long-term capital gains (losses) is the focus of this article. The authors use three important variables to develop a model to help investors reach a conclusion regarding the loss sale quandary: tax rate, life of investment, and capital-gain (loss) growth rate. The break-even equation used in this research identifies the relationship among these variables, and the resulting model enables investors to make an optimum choice between short-term and long-term investment strategies. Ultimately, the model shows that a short-term investment strategy is more preferable for a longer-life investment, with a lower short-term capital gain tax rate, and a higher capital-gain growth rate. In contrast, a long-term investment would favor a shorter-life investment, with a higher short-term capital-gain tax rate, and lower capital-gain growth rate. The article also applies the model to the current stock market downturn and sudden climb.

Potential energy efficiency solutions are routinely identified by commercial and industrial energy programs across North America. While these recommendations can be impressive for their technical content, they often have disappointing implementation rates. One reason may be a failure to accurately demonstrate the business performance of these improvements. Such a discussion would require thinking of energy efficiency improvements not as “projects,” but as investments. Investment analysis seeks capital recovery as its goal. In simple terms, capital recovery is the result of wealth creating wealth; it describes how well assets work at creating new income. The fundamental metric for capital recovery measurement is the rate of return on capital. But that's not all. Rates of return can also describe the destruction of wealth. This is exactly what happens when a proposed investment in energy efficiency is rejected, allowing energy waste to accrue. The result is capital recovery in reverse. Rates of ret...

This paper analyzes the optimal capital budgeting mechanism when divisional managers are privately informed about the arrival of future investment projects. Consistent with field study evidence, an optimal allocation mechanism can include a stipulation that a capital request for discretionary investment will be declined with positive probability in the period after a significant investment was made even though this is ex post suboptimal. The model derives a number of empirical predictions regarding capital budgeting and the investment of financially constrained firms.

This paper examines whether the two-dimensional value investment strategy that incorporates both the value investment strategy and financial statement information can earn excess returns in the Korean stock market. The two-dimensional value investment strategy yields a return of 27.9 percent, which is 8.97 percent higher than the return provided by the simple value investment strategy. Thus, the result shows that the two-dimensional strategy is not only effective in the U. S. stock market, but also effective in emerging markets such as the Korean stock market. Furthermore, the two-dimensional value investment strategy shows that the higher return during a bear market demonstrates the strategy's protective ability.

Aggregate investment in the US economy displays a hump-shaped pattern in response to shocks, and the autocorrelation of aggregate investment growth is positive for the first few quarters, turning negative for the later quarters. This paper shows that this feature of the data is the natural outcome of a two-sector consumption/investment model designed and calibrated to reproduce plant-level evidence on capital accumulation.

PurposeThis research attempts to explain the decentralization of investment decision. To do so, it highlights the role of the internal capital market in the allocation of decision rights and control as a factor explaining the effectiveness of investment management. The authors aim to apply the theory of the organizational architecture to the investment decision to understand its complexity and its efficiency.Design/methodology/approachAn empirical test was realized on a sample of 63 Tunisian firms using the methods of canonical correlation and cross tabulations.FindingsEven if organizational complexity has a linear and negative impact (opposite sign to what is expected) on the investment decision decentralization, which creates value, it appears that there is a positive association with the uncertainty of the environment, and a negative one with the scarcity and sharing of financial resources between units on the internal capital market.Originality/valueThe authors show that the role played by the internal capital market in the value creating requires the setting of a centralized organizational structure.

This paper assesses the drivers of Foreign Direct Investment (FDI) and portfolio investment using simultaneous equations, which control for the correlation between the two components of private capital flows. The results show that in addition to infrastructure and financial development, capital control and economic growth significantly explain private capital flows in developing countries. The paper also highlights that the impact of financial development on portfolio investment is nonlinear. Indeed, lax monetary policy and excessive credit provision could weaken the financial system and significantly reduce portfolio investment flows in the long run.

The goal of the research presented in this paper is to examine economic efficiency of investments in agricultural land, to detect the most important factors influencing this, and to contribute successfully to the formulation of the answer to the question if and under which conditions this investment is justified. The analysis of economic efficiency of investments in agricultural land is based on dynamical methods for investment evaluation. Analyses have shown that investing in agricultural land amounting to 4,000.0 EUR per ha at discount rate of 4% would be more profitable than the amount which would be realised by external investment, but only when applying the 30 year investment horizon, because at the end of the 30 year of investment horizon, the amount of receipts, which is higher by 284.00 EUR than the amount realised by external investment of capital, what is not the case with the amount realised after the 10 year of investment horizon (577.00 EUR less). It is a consequence of realised rate of return on investment in agricultural land amounting to 4.39% for the 30 year and 0.04% for the 10 year investment horizons.

Building the business case for capital investment decisions is often thought of and analyzed from the perspective of revenue potential and retained earnings. Net present value techniques are employed to evaluate investment choices and arrive at go or no-go decisions. The focus on revenue potential is especially effective for deregulated industries, but less so for regulated companies.

Corporate investment is an important determinant of economic well-being. The existing literature identifies optimal investment size and timing without the possibility of debt financing, as well as the effect of debt financing on investment timing without the option to choose investment size. This paper contributes to the literature by identifying the optimal size, optimal timing and optimal financing for an investment when the firm controls all three decisions (as it usually does in practice). The investment size and investment trigger are generally positively related: when investment is delayed (accelerated) it is larger (smaller) in size, thus the overall effect on investment is ambiguous. However, when tax rate or bankruptcy cost is increased, the trigger rises and size falls, hence the effect on investment is unambiguously negative. The effect of debt financing on investment depends on the amount of debt used; with the optimal amount of debt, investment is delayed relative to the no-debt case, and this delay can be economically significant; however, the investment, when eventually made, will be larger in size. Overall, it is not appropriate to ignore either the firm’s ability to choose investment size or its option to use debt financing, when modeling the investment decision.

The “Great Recession” of 2007–2009 (Rampell 2009) had a devastating impact on personal finances, causing households to retrench by limiting spending and reducing indebtedness. One positive outcome—evaluated by some—has been a rise in the widely cited “personal saving rate” from historic lows set in the middle of the decade. This paper evaluates the reasons for the rebound in the saving rate by undertaking a new examination of the determinants of household saving. Extending previous work and making use of data inclusive of the turbulent 2000s decade, the analysis finds support for an inverse relationship between the personal saving rate and the return to home equity. New in the research is a similar finding of an inverse relationship between the personal saving rate and the return to household investment in human capital. The results are used to make alternative forecasts of the personal saving rate through 2020. The path of the household human capital return is found to be a key determinant of these forecasts.

The quantitative features of human capital externalities are not fully understood. Although static externalities are estimated in some studies, learning externalities remain mostly unestimated. By calibrating a growth model, this article provides an estimate of learning externalities. The calibration uses an equilibrium condition that equates private returns on physical capital and human capital. The results suggest that sizable learning externalities exist, even in a conservative setup. The estimated social rate of return on human capital is 9.0%, compared to the private rate of return, 6.6%. Therefore, human capital externalities are an important source of economic growth.

The paper is oriented to the area of management and decision making of company owners and managers. The absolute synthetic performance criterion Economic Value Added represents the criterion of the residual income and managerially measured profit. Concrete questions must be solved with the ascertainment of this financial criterion as for example how correctly to measure capital costs, how to determine the right amount of the investment capital and return on investment capital, eventually return on assets, or how to work with the time horizon in the measurement of Economic Value Added, because this criterion should be presented also as the important tool of the transformation of strategic targets on tactical time periods and to lower structural levels of investment and profitability responsibility centers. Economic Value Added should serve as one of criteria of investment decision and as criterion of the appraisal of managerial decision making, because just managers are responsible for the economical process and results of the main operating activities.

Feng and Geltner describe a field demonstration of a new technique for property-level performance attribution based on the since-acquisition internal rate of return of the investment. The internal rate of return is parsed among the components of initial yield, cash flow change, and yield change, each of which (along with the overall internal rate of return) is compared against a NCREIF-based custom benchmark for each property over the same investment horizon.Among these three, cash flow change particularly reflects the investor’s property-level operational management over the holding period. The analysis is then applied across the Client Fund’s entire property portfolio to derive diagnostic indications about the strengths and weaknesses of the Fund’s investment management. The technique is applied to 42 institutional-quality property investments from acquisition through disposition spanning 1983–2008. In this case, the Client Fund is found to show strength (relative to NCREIF peers) in acquisition, but relative weakness in long-term post-acquisition operational management at the property level. The authors also find wide dispersion in outcomes at the property level, with a clear management pattern in the outlier, most successful cases of superior property-level operational management. Hence, improving property-level operational management emerges in the example portfolio as a key to better overall investment performance. Feng and Geltner speculate that this pattern may often be the case in large institutional funds due to their financial strength, which draws a first look at the best deals, but is offset by disadvantages in subsequent long-run operational management and disposition.

PurposeMany countries have experienced, or are experiencing, urbanization. One such example is China. Even though the large‐scale rural‐urban migration seems chaotic on the surface, there are certain underlying forces driving individual decisions. The purpose of this paper is to provide some understanding of the relationship between human capital, migration, and occupational choices.Design/methodology/approachThe paper starts with an overlapping generations model. Human capital plays various roles across different occupations – it does not affect the income of farmers, it affects income of workers linearly, and it has increasing returns in rural non‐farm business. The paper then derives income profiles for individuals with heterogeneous human capital, and finds the human capital thresholds of occupations. The paper calibrates the model to China, and simulates the model to answer two questions: how does an improving human capital distribution affect rural wages, quantities of migrants and return migrants? How does a fast‐growing urban wage rate affect rural wages, quantities of migrants and return migrants?FindingsFirst, depending on the initial human capital level, policies aiming to enhance human capital may have different impacts on migration. If the initial human capital level is low, these policies will yield more permanent migrants; on the contrary, if the initial human capital is at a relatively high level, then a shrinking permanent migrant class with a growing entrepreneur class can be expected. This results in an inverted U‐shaped relation between the initial human capital level and the size of the permanent migrant class. Second, even though the non‐farm business of return migrants helps raise rural wages, the income inequality between rural and urban areas is not eliminated and migration is persistent. Third, borrowing constraints limit the size of rural non‐farm businesses and slow down the development of rural industry. The fourth and final point is that, migration costs discourage labor mobility and reduce the quantities of both permanent migrants and entrepreneurs.Originality/valueThis is an original paper on this subject.

The main purpose of this paper is to investigate whether capital investment can affect stock price momentum. We provide empirical evidence that momentum strategies tend to be more profitable for stocks with large capital investment or investment changes. We present a simple explanation for our empirical results and show that our finding is consistent with the behavioral finance theory that characterizes investors’ increased psychological bias and the more limited arbitrage opportunity when the estimation of firm value becomes more difficult or less accurate.

M any contemporary management approaches call for an increase in transparency in the activities of management and staff. This is a dramatic shift from the days when the carrot-and-stick approach to management was an executive’s most reliable tool to move an organization forward. But how much transparency is needed, and at what point can such transparency compromise the organization in terms of its competitive position—or its liability exposure? How will efforts in transparency be rewarded for the healthcare executive who has the courage to become the champion for change? The numerous issues that come to bear on this matter call for leaders to approach transparency with caution, diligence, and, ultimately, compassion. Embracing transparency enables an organization to conform to market expectations while satisfying the demands of regulators. However, there’s a better reason to make this commitment. The single greatest argument for increased transparency is that it reveals improvement opportunities in the organization. If hospital executives don’t identify these opportunities, they risk a false sense of security and a blind spot to emerging threats. An organization that fully embraces transparency can undertake the important work of performance improvement—not only doing things right, but doing the right things. Calls for transparency are not limited to the healthcare industry; Federal Reserve Chairman Ben Bernanke conducted the first press conference in the bank’s history on April 27 of this year. Unfortunately, many healthcare cultures aren’t prepared for a shift to transparency. Transparency exposes both good and poor performance, and employees who fear punishment will not readily heed the call for increased reporting of performance measures. Moreover, employees will be reluctant to expose their peers if it leads to scrutiny of performance. How do healthcare executives overcome these barriers?

In this paper, we empirically investigate the impact of information technology (IT) investment on firm return and risk financial performance, emphasizing the moderating role of the firm boundary strategies of diversification and vertical integration. Our results indicate a sharp contrast between the direct and interactive effects of IT on both the return (profitability) and risk (variability of returns) dimensions. Although the direct effect of IT capital is to increase firm risk for a given level of return, we find that suitable boundary strategies can moderate the impact of IT on firm performance in a way that increases return and decreases risk, at the margin. This interaction effect is strongest in service firms, in firms with high levels of IT investment intensity, and in more recent time periods. Our results are robust to alternative proxies for firm risk, including an ex ante risk measure (variability of analysts' earnings estimates), and alternative risk-return specifications. Put together, our results provide new insights into how IT and firm boundary strategies interact to affect the risk and return performance of firms.

This article employs a real options approach to investigate the determinants of an optimal capital structure in real estate investment. An investor has the option to delay the purchase of an income-producing property because the investor incurs sunk transaction costs and receives stochastic rental income. At the date of purchase, the investor also chooses a loan-to-value ratio, which balances the tax shield benefit against the cost of debt financing resulting from a higher borrowing rate and a lower rental income. An increase in the sunk cost or the risk of investment will not affect the financing decision, but will delay investment. An increase in the income tax rate or a decrease in the depreciation allowance will encourage borrowing and delay investment, while an increase in the penalty from borrowing, a decrease in the investor's required rate of return, or worse real estate performance through borrowing, will discourage borrowing and delay investment.

Firms' first-order conditions imply that stock returns equal investment returns from the production technology. Much applied work uses the adjustment cost technology, which implies that the realized return is high when the investment-capital ratio is high. This paper derives, for an arbitrary stochastic discount factor, the investment return implied by the putty–clay technology. The combination of capital heterogeneity and irreversibility creates a novel channel for return volatility. The investment return is high when the ratio of investment to gross job creation is low. Empirically, the putty–clay feature helps account for U.S. stock market data.

This article assesses the contribution of the various industrial sectors to the growth of the British equity market in the 1825–70 period. It also provides estimates of the rates of return on these industrial sectors in this period. The article then proceeds to examine whether differences in rates of return across the various sectors can be explained by risk or other financial factors. One of the main findings is that the relatively high rates of return in the banking, insurance, and miscellaneous sectors appear to be in some measure explained by the presence of extended liability and uncalled capital.

PurposeThe purpose of this paper is to identify possible reasons for insurance companies' scant interest in real estate as investment asset in Poland. The authors attempt to determine the impact of real estate investment on insurance companies' profitability.Design/methodology/approachAfter collecting the aggregated data about insurance companies' financial results for the period 2000‐2008 the authors analyzed the relationship between real estate investment and profitability indicators such as return on assets (ROA), return on equity (ROE) and return on sales (ROS). This approach reflected the shareholders' point‐of‐view. Subsequently, the same kind of analysis was carried out to investigate the impact of real estate investments on the insurance companies' return on technical activity (RTA) and return on investment activity (RIA). These indicators are meant to assess business performance from the point‐of‐view of insured persons.FindingsThe analysis revealed some negative correlations: real estate investments may reduce the profitability of insurance companies. If this is true, the unwillingness of insurance companies to purchase property would not be surprising. Yet, this conclusion should be accepted with caution.Research limitations/implicationsDue to the short study period and changes in legal classification of investment categories, the available data were very imperfect and the study results may not be perceived as undisputable, hence, it is felt that further research is needed.Originality/valueThe paper is original, as previously no such research has been conducted in Poland.

To date, investment risk has largely been the Cinderella of Defined Contribution (DC) investment default design – at least in the growth phase of the journey – with its more glamorous sister, investment return, tending to steal the limelight. But all this has changed in the wake of the recent financial market turmoil. Investment risk is now fast becoming the belle of the ball. Part of the reason behind this relative neglect of investment risk is the fact that it has not really been fully understood or defined in an appropriate way for DC savings. Taking a long-term, perhaps over 30–40 years, view and modelling the level and variability of outcomes has generally always suggested that the price of managing risk has always been too great for the benefit that it brings. Lifestyling has traditionally been the medicine for dealing with investment risk, which is fine in the run up to retirement, although lifestyle programmes and glide-path designs can be greatly improved where the additional complexity can outweigh the operational cost that it brings. Traditionally, however, lifestyling has done little to manage risk for those members who are not in this pre-retirement phase of their life. In this short opinion piece, we go back to basics and redefine investment risk in a DC context, suggesting new DC-specific measures to help us get a handle on investment risk, and exploring how DC plan fiduciaries can assess how much risk should be built into a default investment programme and how a defaulting member's exposure to that risk can be more effectively managed over their DC journey. We hypothecate that DC plan fiduciaries have a vital role to play and that they need to subtly, but quite fundamentally change the way that they approach the setting of their default investment strategy – focusing more on understanding their membership, its retirement outcome objectives, its investment return needs and its investment risk tolerances, as well as focusing more on managing the default programme more proactively against some clear strategic objectives.

One of the fundamental aims of economic policies is to increase capital accumulation in terms of investment that is necessary to maintain a desirable and sustainable growth rate in the developing countries. The majority of empirical studies show that per capita GDP growth, foreign trade, capital flows, external debt, public sector borrowing requirements, inflation and interest rate are the main determinants of investment rate. Recently, there is an increasing emphasis on the role of the financial sector in this process, since a financial system, in essence, mobilizes saving to investment. In particular, it can be argued that a well-functioning and developed financial system may efficiently mobilize available resources for investment. Therefore, the aim of this study is to investigate whether financial development has contributed to an increase in investment in Turkey. To reach an empirical and firm conclusion, an investment function, including the traditional potential determinants along with financial development, is estimated by utilizing the developments in the time series econometrics in terms of unit root tests that allow structural breaks and co-integration for the period 1970-2009 in Turkey.

The problems of e-commerce investment have been a chronic painful agony, due to its large investment, low profits and long payback periods, etc. In this work, we deeply study e-commerce profits, analyze the investment patterns and establish investment recovery matrices. We also propose the great product matrix concept for solving continues investment, in an attempt to find an optimal solution to maximize the investment profits.

Many new nursing leaders assuming deanships, assistant deanships, or interim deanships have limited education, experience, or background to prepare them for the job. To assist new deans and those aspiring to be deans, the authors of this department offer survival tips based on their personal experiences and insights. They address common issues, challenges, and opportunities that face academic executive teams, such as negotiating an executive contract, obtaining faculty lines, building effective work teams, managing difficult employees, and creating nimble organizational structure to respond to changing consumer, healthcare delivery, and community needs. The authors welcome counterpoint discussions with readers.

This paper analyzes the determinants of financial capital flows in Korea, which provides an intriguing case for examining the volatility of such flows as an almost fully opened capital market. Our empirical analysis finds both pull and push factors have significantly affected all three types of foreign capital flows- foreign equity investment, foreign bond investment and foreign other-type investment- in Korea, though the relative importance of each factor varies by sample period and type of financial capital. First, the determinants of capital inflows changed substantially following the 1997 currency crisis. The impact of push factors on foreign investment strengthened, rendering the Korean stock and bond market more susceptible to external shocks. Second, the global financial crisis, which increased global financial instability and preference for safe assets, appears to have had a negative effect on other-type investment. However, fThis paper analyzes the determinants of financial capital flows in Korea, which provides an intriguing case for examining the volatility of such flows as an almost fully opened capital market. Our empirical analysis finds both pull and push factors have significantly affected all three types of foreign capital flows- foreign equity investment, foreign bond investment and foreign other-type investment- in Korea, though the relative importance of each factor varies by sample period and type of financial capital. First, the determinants of capital inflows changed substantially following the 1997 currency crisis. The impact of push factors on foreign investment strengthened, rendering the Korean stock and bond market more susceptible to external shocks. Second, the global financial crisis, which increased global financial instability and preference for safe assets, appears to have had a negative effect on other-type investment. However, foreign equity investment showed a quick recovery in the wake of global financial crisis. Third, the effects of capital account liberalization on capital flows appear more complicated than expected. Korea's opening up of the stock market to foreign investors in 1992 did not usher in foreign equity investment. The liberalization of foreign portfolio investment after the 1997 crisis produced a significant effect on equity, but not on bond investment. Still, how to stabilize capital flows amid more deeply integrated domestic and foreign financial markets is another matter.

This paper brings to light and discusses a systemic issue in the calculation and display of relative return information as currently seen on some of the most prominent finance websites; income-generating events such as dividends and interest are not included in relative return calculations and all comparative return graphics. The resulting ranking of the securities, based on such incomplete returns, is essentially meaningless from a total return perspective, yet they are being served to millions of investors every day. This could lead to the formation of a possible availability heuristic and an optical bias against fixed-income and other income generating assets. This problem has gone unnoticed for many years with no discussion of the topic either in the academic or practitioner press. The ready availability of such unclear or inaccurate information from sources generally perceived to be credible can, in this age of do-it-yourself portfolio management, have serious and damaging financial consequences to the unsuspecting investor. The paper also shows the effect of this return differential on the calculation of the asset correlation matrices and the subsequent effect on the resulting asset-weight vectors that are used to generate Markowitz style mean-variance portfolios. The visual discrepancies are then supported by the application of the Gibbons, Ross and Shanken [1989] W-test for portfolio efficiency. The authors’ proposed correction, based on elementary finance, fixes the problem.

This work studied the relationship between foreign private investment (FPI), capital formation and economic growth. Given the likely simultaneity between FPI, capital formation and growth, we used the two-stage least squares (2SLS) method of estimation to examine the nexus between these variables using Nigerian data. We found that foreign private investment has a negative impact on capital formation in Nigeria. We also found that both foreign private investment and capital formation, in addition to other factors, significantly determine economic growth in Nigeria. The study finds that the long-run impact of capital formation, and foreign private investment on economic growth is larger than their short-run impact. There is, thus, a long-run equilibrium relationship among the variables as the error correction term is significant, but the speed of adjustment is small in both models. The 2SLS estimates are very close to the OLS estimates suggesting that OLS estimates are consistent and unbiased. Hence, endogeneity was not a problem in the estimated models. There is, therefore, no simultaneity between GDP growth and capital formation model. These findings, therefore, have some policy implications as discussed in the work.

The main purpose of this study is to investigate the relative advantages and disadvantages of first-mover hypotheses by examining the role of entry timing in the announcement effects of corporate capital investment. Our empirical results suggest that those firms first announcing their capital investment will experience greater share-price effects than the followers in the same industry. In addition, the financial analysts tend to revise upward their announcement-period earnings forecasts for those capital investment announcers, suggesting that announcements of capital investment convey positive information about the earnings prospects of the announcing firms. Furthermore, analysts' revisions of earnings forecasts subsequent to such announcements are more favorable for leading-announcer firms than the followers. Overall, our findings provide fully support for the first-mover advantages hypothesis, indicating the importance of the entry timing when announcing a corporate capital investment.

Cada vez mais é percebida uma nítida ascensão do nível de exigência que os administradores recebem para maximização do retorno do capital investido pelos acionistas. Nesse sentido, os gestores de marketing devem buscar gerar valor às empresas onde atuam e, para isso, a avaliação dos investimentos na área é fundamental. Com a finalidade de contribuir com os estudos que estabelecem a relação entre marketing e a gestão baseada em valor, no presente artigo foi demonstrada uma possibilidade de se avaliar os resultados provenientes das atividades de comunicação de marketing a partir da proposta de indicadores que relacionam os investimentos em comunicações e as vendas da empresa com a análise da criação de valor nas organizações. A partir de uma proposta inicial de indicadores, considerando o embasamento da literatura revisada sobre métricas em marketing, a pesquisa de campo, exploratória, ocorreu envolvendo entrevistas em profundidade que permitiram validar e incrementar o estudo junto a alguns especialistas da área de marketing, finanças corporativas e planejamento estratégico. Além das entrevistas, a pesquisa de campo envolveu, também, a elaboração de um estudo de caso para ilustrar a aplicação dos indicadores propostos já revisados conforme os resultados das entrevistas. Como resultado, foi demonstrada a possibilidade de serem aplicados indicadores para a avaliação do plano de comunicação de marketing de maneira a analisar a criação de valor proveniente das ações do plano, principalmente relacionados ao lucro operacional das empresas. A partir do exemplo de aplicação dos indicadores observou-se que, apesar das ações de comunicação de marketing terem alavancado o lucro operacional da empresa em 0,034%, essas ações não contribuíram para que houvesse a criação de valor ao negócio da empresa. Portanto, juntamente com os indicadores também foram propostos parâmetros para se avaliar a criação de valor a partir do nível de investimento em comunicações de marketing em um determinado período analisado.DOI: 10.5585/remark.v9i2.2170, It is currently being observed that there is a steep increase in the level of demand for administrators to maximize their return of capital invested by shareholders. Furthermore, marketing managers must attempt to increase the value of various companies, and, for that, the evaluation of the investments in the field is paramount. With the objective of contributing to the studies establishing the relationship between marketing and value-based management, this study demonstrated the possibility of evaluating the results originating from the marketing communication activities, based upon a proposition of indicators that could relate communication investments and the company’s sales with the analysis of value within organizations. Beginning with the initial proposal of utilising indicators, and considering the body of literature on marketing metrics, this exploratory field research involved in-depth interviews with specialists in the fields of marketing, finance and corporative and strategic planning. Besides the interviews, the field research also involved the elaboration of a case study to illustrate the usage of the proposed indicators, accordingly revised derived from the interviews. As a result, it was demonstrated that the possibility of applying indicators to the evaluation of a marketing communications plan through the analysis of the creation of value descending from the actions taken by the plan, especially those relating to a company’s operational profit. The example of the usage of indicators allowed us to observe that, although the marketing communications actions levered a company’s operational profit, in 0.034% of cases studied, these actions did not contribute to the increase in value of the company’s business. Therefore, together with these indicators, parameters were also proposed to evaluate the addition of value based on the level of investment in marketing communications throughout a pre-determined analysed period.

The article reports estimates of the private rate of return to Economics, Law and Business degrees using the same methodology as applied to four earlier Census years in an earlier article. It shows that investment in these degrees generates a good return for individuals, although the return has declined somewhat since 2001 for Economics and Law. Of the three degrees studied here, an Economics degree generates the highest return for men. For women the rates of return estimated were lower than for men and the rate of return on a Law degree was the highest. This pattern reflects the smaller proportion of female Economics graduates in full-time employment and the lower median incomes of those in full-time employment. In the light of the continuing decline in completions in Economics, this article offers some evidence of the positive monetary benefits of completing an Economics degree which can be used to encourage students to study more Economics.

As the nineteenth century progressed, more capital was needed to finance industry and businessmen found that they were increasingly unable to raise the funds required from a small pool of family, friends and acquaintances. The introduction of limited liability in 1855 provided a solution to this problem and share ownership became increasingly widespread. The purpose of this article is to analyse the shareholders of Denbighshire coal companies in terms of their occupation, geographical location and motives for ownership, and also to examine whether their shareholdings gave them a reasonable return on investment.

In today"s uncertain economic environment, economic risk is inherent in making large investments on manufacturing facilities. It is, therefore, practically meaningful to divide investment over multiple periods, reducing the risk of investment. Then, the cash-flow over the entire planning horizon would comprise positive inflow and negative outflow. In this case, in general, evaluation by internal rate of return (IRR) is not feasible, because multiple IRRs are involved. This paper deals with a problem of evaluating profitability, as well as risk, of investment alternatives made in multiple times of investment over the entire horizon. Typically, an additional investment is required after the initial one, for expanding manufacturing capacity or other reasons. The paper pays attention to a unit cash-flow over two periods, decomposing the total cash-flow into a series of unit cash-flow patterns. It is easy to evaluate profitability of a unit cash-flow by using IRR. The total cash-flow can be decomposed into the series of two types of unit cash-flows: an investment type one (negative-positive) and the borrowing type one (positive-negative). This paper, therefore, proposes a method in which only the borrowing type unit cash-flow is eliminated in the series by converting total cash-flow using capital interest rate. Then, a unique IRR can be obtained and the profitability is evaluated. Thus, the paper extends the method of IRR so that it may help decision making in complicated cash-flow pattern observed in practice.

This paper mainly develops a joint theory of public capital, inequality, and growth, in a two-sector growth model that yields complete analytical solutions. Public capital plays an important role in long-run growth through enhancing productivity and complementing the accumulation of private inputs. Under certain conditions, it could also have important implications for income inequality dynamics. Inequality is bad for growth, when the credit market is imperfect and there is a diminishing marginal rate of return on private investment. Certain public services and investment may benefit the poor more than proportionally and thus improve the distribution of income, and hence, improve economic growth through an indirect channel. The key mechanism linking the distribution of income to public capital is its disproportional effect on the economy that affects factor shares of capital. The paper also studies the determination of optimal tax.

We simulate results from a simple real options model to provide insight into the value-growth stock return anomaly. In our model, firms possess either single (“value” firm) or multiple (“growth” firm) investment opportunities. Our model predicts that growth firms: (1) invest sooner, (2) exhibit greater continuity in capital expenditure over time, (3) have lower book-to-market ratios, and (4) generate lower rates of return than value firms.

This paper uses the framework of an OLG economy for an analysis of the dynamic interaction between the precision of information about individual skills, investment in education, human capital accumulation, and social welfare. The human capital of an individual depends on both his (subjectively) random ability and his investment in education. Individual investment in education is financed through a loan contract with income-contingent terms of repayment. Investment decisions are based on public signals (test outcomes) which screen all agents for their abilities. We find that better information, which allows more efficient screening, enhances aggregate human capital formation but may, at the same time, stifle aggregate investment in education. Moreover, social welfare may increase or decline depending on the transformation technology and on the relative measure of risk aversion. (C) 2009 Elsevier B.V. All rights reserved.

Recent years have seen an expansion in the work on the attitudes, beliefs and preferences of those middle-class groups that have accompanied the return of capital to many North American and western European city centres and their surrounding urban suburbs. Yet despite this, it is argued that there is little research linking gentrification to wider processes of social transformation, particularly debates over housing market decision-making, the balancing of work and life, and the gender division of labour within the household. It is to examining the interaction of these aspects of everyday life in a gentrifying area that this paper turns, using the example of Chorlton, a southern urban suburb of Manchester. © 2010 Urban Studies Journal Limited.

This paper provides a human capital theory‐based explanation for the presence of a permanent component in earnings levels as well as individual heterogeneity in earnings slopes. We incorporate uncertainty about the future rental rates of human capital into a life‐cycle human capital investment model and obtain an earnings equation implied by the solution to the worker's optimal investment decision. While heterogeneous growth stems from individual heterogeneity in the ability of human capital production, permanent errors are induced by the response of optimal investments to transitory rental rate shocks. We empirically show that both components are present.

The idea that capital flows accelerate and decelerate in response to differential rates of return on real investment is common to virtually all of economic theory. This paper examines the nature of this process, especially the relationship between returns in the stock market and returns on real investment. Shaikh (1998) makes the case that the rate of return on new physical (real) investment is the “required” rate of return for the stock market and that competitive forces produce a rough equalization between these two rates of return, what he terms “turbulent arbitrage.” In contrast to neoclassical theories of perfect competition, with its notions of perfect information and convergence to a uniform rate of return, the notion of “turbulent arbitrage” is a dynamic process that requires a tendency toward convergence as well as the constant differentiation of profit rates (Botwinick 1993). Data on rates of return at the country, industry, and firm level for Japan, Germany, the United Kingdom, and the United States are analyzed and correlated with Shaikh’s “incremental rate of return on real investment” which, it is argued, is the target of the equalization process. Statistical and econometric tests based on time series methods and pooling techniques support the hypothesis that the rate of return on equity prices is linked to the incremental return on real investment. In addition, this association is examined for two industries—steel and retail trade—across these same four countries. Global and domestic equity markets are found to be significantly correlated with the incremental returns for the steel industry but not for the retail trade sector. JEL classification: G15, F02, C33