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Capital expenditures of U.S. public firms, relative to total assets, decrease by more than a half from 1980 to 2012. The decline is pervasive across industries and firms of different characteristics. The decline is not explained by time variation in industry composition in the economy, firms’ changing investment opportunities or financial conditions, corporate lifecycle, or public listing cohorts. It is related to the widespread transformation of production technology – firms rely more on intangible capital instead of fixed assets in production over the past three decades. As a result, the sensitivity of capital expenditure to investment opportunities decreases. Our examination of the international data suggests that economic globalization also facilitates the transformation of production technology. Our findings reflect a shift in the relative importance of physical and intangible capital in firm production and have important implications for how we think about and measure corporate investment.

This study considers how individuals determine at what ratio they will invest in two different types of education. The first type contributes to the development of labor skills, while the other does not. We refer to the former as human capital investment and the latter as unproductive investment, which improves test scores but has no beneficial effect on students' human capital. We formulate an overlapping‐generations economy in which the rich and poor households invest in both types of education. We find that the ratio of human capital investment to unproductive investment is lower in the economy with medium size of the wage differentials. In a dynamic analysis, we identify two patterns of stable steady states for the dynamics of the wage differentials, namely, no‐inequality and high‐inequality steady states. Further, we show that a rapid increase in the level of skill‐biased technology may cause a switch from a steady state with no‐inequality to one with high inequality. This causes at least a temporary increase in the ratio of unproductive investment during the transition to the new steady state.

Objetivo: Analizar el enfoque de las entidades financieras, el cual no solo se basan en ofrecer un amplio portafolio de productos, sino que estos se ajusten a las necesidades y expectativas de rentabilidad y retorno de capital, además de cuantificar las posibles causas de riegos y las formas de mitigarlos. Metodología: El método de estudio aplicado en el artículo es analítico. Resultados y Conclusiones: La información disponible permite a identificar y reconocer la importancia del ahorro e inversión en los bolsillos de los colombianos como uno de los motores principales de la economía de un país, para la recolección de información y llevar a cabo la investigación es necesario utilizar fuentes de investigación secundarias ya que debemos obtener datos de la superintendencia financiera de Colombia , Old mutual, Anif, en la prensa de carácter financiero , en el sector financiero y bancario, adicional realizar una encuesta a una muestra determinada de la población, entre; empleados, independientes y Empresarios.

This study attempts to resolve the puzzle regarding the announcement effects of cash distributions. The introduction of taxes on dividend income since 2009 has led many Greek listed companies to seek alternative ways of distributing untaxable income, at personal level, to shareholders, mainly through the form of return of capital. Employing a unique dataset of 130 returns of capital and a control sample of 890 dividends between 2000 and 2014, we investigate the stock price behaviour surrounding the announcement of these cash distributions. The results from the event study reveal a statistically significant market reaction on the announcement day for both cash distributions; however that of returns of capital was more than double compared to dividends (1.53% vs. 0.72%). The market reaction was even stronger when firms opted to distribute a dividend and a return of capital contemporaneously. Regression analysis delves into the determinants of the market reaction documenting that dividend or return of capital yield, firm size and profitability levels explain much of the stock price appreciation on announcement dates.

Theoretical studies and practical experiences in power systems show that electricity market by itself cannot create an effective mechanism for optimal investment in generation capacity expansion. This is due to some inherent characteristics of power systems, such as high investment costs, and various risks in profit and return of capital. On the other hand, the political, social, and economic consequences of shortage of power generation are intolerable in any conditions. As a result, several incentives such as capacity payment, capacity auction, capacity obligation, and strategic reserve have been introduced to support investment in generation capacity. But all these incentives suffer from a number of inadequacies and inefficiencies. In this paper, first a new incentive called Capacity Certificate is proposed and its characteristics are explained. Then, taking the advantage of System Dynamics, the impact of this mechanism on long-term performance of power market is studied from the generation capacity expansion perspective, and is compared with energy-only and capacity payment mechanisms. Indicators such as system reserve and the overall customer payments reveal the benefits of the proposed mechanism. In addition, this mechanism effectively motivates the customers to optimize their energy consumption, while none of the other incentives has such a capability.

Purpose This paper aims to investigate the relationship between family and institutional ownerships and corporate performance. Design/methodology/approach Using a panel data of 139 nonfinancial companies listed on the Indonesian Stock Exchange from 2009 to 2013, this study used generalized least square model. Findings The results show that family ownership has a significant and positive impact on corporate performance, while institutional ownership has significantly and negatively influenced corporate performance. These results imply that family ownership leads to better corporate performance, while institutional ownership leads to lower corporate performance. Research limitations/implications Future research would extend to examine different ownership variables, e.g. domestic, foreign and black shareholders ownerships with different performance measures such as profit margin and return on investments (ROI). Then, their results could be compared to the result of this paper. Practical implications For shareholders and managers, the result of this study provides a base for shareholder on the importance to have the same understanding as management to improve return of capital invested by them (family capital) through firm’s long- and short-term business decision-making. It is possible for management for doing so because their interest is same. Therefore, this can be an interesting incentive for management. This result of this study also provides practical implication for investors (including international investors) with respect to their funds in the firm with family ownership share. By doing so, they will get better and stable ROI compared to nonfamily-owned business. Originality/value This study is original as studies on institutional and family ownerships and corporate performance are limited in the Indonesian context. The use of nonlinearity effect of family ownership and corporate performance in Indonesian case is the first attempt. Therefore, this study contributes to corporate governance literatures by investigating the relationship between family and institutional ownerships and market performance in Indonesian context using the improved methodology.

Existing empirical studies have mainly focused on determinants of average investment levels. Instead, we investigate episodes of accelerated capital stock growth having a duration of eight years or longer. We find that episodes are relatively common, even in low-growth regions, but more so in middle-income and Asian countries. After identifying 175 episodes between 1950 and 2014, we employ probit analysis to explore their characteristics. Turning points in investment tend to be preceded by macroeconomic stability, real exchange rate undervaluation, and net capital outflows (especially portfolio outflows). We also find a negative correlation with the capital to output ratio and per capita GDP, and a positive correlation with a human capital index. Investment surges tend to be associated with changes in the trade balance and, to a (statistically) weaker extent, with structural change. Fil: Libman, Emiliano. Universidad Nacional de San Martín; Argentina. Centro de Estudios de Estado y Sociedad; Argentina. Consejo Nacional de Investigaciones Científicas y Técnicas; Argentina Fil: Montecino, Juan Antonio. Columbia University; Estados Unidos Fil: Razmi, Arslan. University of Massachussets; Estados Unidos

This paper examines the relationship between foreign and domestic investment activity of multinational enterprises. The empirical analysis is based on micro data of German firms and their operations at home and abroad, including information on investment in fixed assets. The empirical approach, which rests upon extensive and intensive margin variation, is shown to produce very robust results. These suggest a positive relationship between foreign and home investment in real capital. This positive effect seems to be mainly related to additional opportunities for tax planning and better access to financing capital. In contrast, we do not find evidence that improved production processes and technology upgrading cause the positive effect on investment at home. Our empirical approach allows us to distinguish between an extensive and intensive margin effect: setting up a new foreign affiliate leads to an immediate positive effect of about EUR 460,000 additional investment; the investment elasticity at the intensive margin is estimated to be approximately 0.13.

We use a panel of over 116,000 Chinese firms of different ownership types over the period 2000–2007 to analyze the linkages between investment in fixed and working capital and financing constraints. We find that those firms characterized by high working capital display high sensitivities of investment in working capital to cash flow ( WKS ) and low sensitivities of investment in fixed capital to cash flow ( FKS ). We then construct and analyze firm-level FKS and WKS measures and find that, despite severe external financing constraints, those firms with low FKS and high WKS exhibit the highest fixed investment rates. This suggests that an active management of working capital may help firms to alleviate the effects of financing constraints on fixed investment.

German abstract: GAUs und LEGENDRE entwickelten Ende des 18. Jahrhundert die Methode der kleinsten Quadratfehler und legten den Grundstein fur Regression. MARKOWITZ untersuchte in den 1950er Jahren das Zusam-menwirken einzelner Guter im Portfolio und minimierte im Rahmen der Modernen Portfoliotheorie prio-risiert Risiko in Form der Volatilitat zur erwarteten Rendite. SHARPE, LINTNER und MOSSIN etablierten in den 1960er Jahren das Capital Asset Pricing Modell. ROSS schrieb in den 1970er Jahren mit dem linea-ren Multifaktormodell Geschichte, das insbesondere FAMA, FRENCH und CARHART in den 1990er Jah-ren, zuletzt im Jahr 2015 mit dem 5-Faktor-Modell, konkretisierten. Da Volatilitat nicht allein fur Risiko steht, untersuche ich weitere Risikomerkmale: (1) die ganzzeitliche Abweichung erwarteter gegenuber angebotenen Kapitalruckflussen uber die Investitionszeit sowie (2) die Einflusse-Intensitat einzelner, als auch Gruppenvariablen auf Guter-Ebene auf Rendite der Kapitalgeber mit ‚Generalized Additive Related Modell‘ Regressionen. Die Portfolioanalyse heterogener Guter zum Modell ‚Future Yield after Taxes‘ in modifizierter Form des Baldwin-Zinses optimiert robuste Allokation. English abstract: At the end of the 18th century GAUs and LEGENDRE developed the method of the smallest square errors and laid the foundation for regression. MARKOWITZ examined the interaction of individual assets in the portfolio in the 1950s and, within the Modern Portfolio Theory, minimized risk in form of volatility to the expected return. SHARPE, LINTNER and MOSSIN established the Capital Asset Pricing Model in the 1960s. ROSS made history in the 1970s with the linear multifactor model, which FAMA, FRENCH and CARHART concretized in the 1990s especially, last modified in 2015 with the 5-factor model. Since volatility does not stand for risk alone, I examine further risk characteristics: (1) the full-time deviation of expected capital returns compared to the offered return of capital over the investment period, and (2) the influence intensity of individual as well as group variables at assets level on the return of the investor with 'Generalized' Additive Related Model 'regressions. The portfolio analysis of heterogeneous assets using the 'Future Yield after Taxes' model in a modified form of the Baldwin interest rate optimizes robust allocation.

This chapter described tools, structures and instruments used by impact investors to effectively apply their theories of environmental and/or social change. Impact tools are actions that impact investors can take to create a portfolio that is aligned with the investor’s investment and impact goals. Each impact investment needs to be structured properly to optimize impact while fitting within the investor’s overarching impact investment goals and policies. Impact structures are a function of decisions made regarding the investor, intermediary and enterprise vehicles and the use of certain transactional tools that are intended to drive specific impact outcomes. The selection of the investment instrument that will be used by the investor or the intermediary to provide capital to the enterprise depends on a number of factors including the investment goals and risk tolerances of the investor/intermediary; the legal structure of the enterprise; the instruments that the enterprise have previously issued to other investors, since the relative priorities of different groups of investors with respect to return of capital and their rights to the assets of the enterprise as collateral for their investment must always be clear; the relative cost of the financing to the business and the existing owners; the risks associated with the instrument and the degree of flexibility associated with any payment obligations under the terms of the instrument.

Introduction. The overall situation in the field of waste management in Ukraine is extremely difficult, which is explained by the lack of preventive resource conservation and environmental protection policies, as well as the lack of financing of measures aimed at eliminating the negative consequences resulting from the increasing generation of waste. In particular, due to insufficient financing of landfill contents: there are violations of the schedules of their sanitary cleaning, which leads to the formation of spontaneous landfills in the territories of residential development, especially in rural areas; there are cases of chaotic accumulation of waste that is not compacted and not filled with soil; most landfills and the surrounding area have a terrible look. The general state of waste in Ukraine highlights the urgency and seriousness of the problem of domestic and industrial waste management. Aim and tasks. The purpose of the article is to substantiate the role and disclosure of the peculiarities of the transport and logistics component of waste management strategies in the context of implementing resource-saving and environmental policy in Ukraine. Results. As a result of the research it is determined that the reform of the waste management system is necessary, which envisages solving of such key organizational, economic and managerial tasks in the context of realization of resource saving and environmental protection policy in Ukraine. The organizational and economic directions of waste management reform are: effective implementation of separate waste collection; construction of new landfills and waste treatment plants; information and institutional support for issues related to waste management; economically justified tariff formation ; stabilization of the finance industry through the introduction of a system of fines for violating legislation, in particular, on the separate collection of waste and the transfer of funds received to the development of the industry, investments provided by state guarantees on the return of capital invested by the investor. Conclusions. At present the reform of the waste management system is necessary by means of solving a series of interrelated organizational, economic and managerial tasks in the context of implementation of resource conservation and environmental protection policy in Ukraine. In particular, it is about the need for financial stabilization of the industry, the expediency of strengthening regulatory instruments and, at the same time, motivational instruments, etc. Based on the analysis of the relationship between these objectives and the objectives of environmental policy, in particular in the field of transport and logistics, as well as the content and constituents of waste management strategies in Ukraine, it was concluded that there is a need for an integrated approach to determine the role and place of transport-logistic component.

This paper introduces spectral risk measure (SRM) into optimization problem of insurance investment. Spectral risk measure could describe the degree of risk aversion, so the underlying strategy might take the investor's risk attitude into account. We establish an optimization model aiming at maximizing risk-adjusted return of capital (RAROC) involved with spectral risk measure. The theoretical result is derived and empirical study is displayed under different risk measures and different confidence levels comparatively. The result shows that risk attitude has a significant impact on investment strategy. With the increase of risk aversion factor, the investment ratio of risk asset correspondingly reduces. When the aversive level increases to a certain extent, the impact on investment strategies disappears because of the marginal effect of risk aversion. In the case of VaR and CVaR without regard for risk aversion, the investment ratio of risk asset is increasing significantly.

Capital reallocation is strongly procyclical in the data, but in standard business-cycle models with heterogeneous firms it is countercyclical. In this paper I argue that endogenizing the price of used capital solves this puzzle. First, I show empirically that for several sectors the price of used investment goods relative to new is procyclical. Second, I build an equilibrium model of endogenous partial irreversibility, with heterogeneous firms facing aggregate and idiosyncratic productivity shocks. Used investment goods are imperfect substitutes for new investment because of firm-level capital specificity and this creates a downward-sloping demand for used capital that shifts in response to aggregate shocks. The model generates a procyclical resale price and procyclical reallocation. In a recession, when the price of used capital is low, both static and dynamic real-options effects induce unproductive firms to sell fewer assets to more productive firms. This generates an amplification mechanism for measured aggregate TFP. Finally, the model shows that endogenous irreversibility smooths aggregate investment and generates a countercyclical cross-sectional dispersion of returns from capital, consistent with the empirical evidence.

We reconsider the macroeconomic implications of public investment efficiency, defined as the ratio between the actual increment to public capital and the amount spent. We show that, in a simple and standard model, increases in public investment spending in inefficient countries do not have a lower impact on growth than in efficient countries, a result confirmed in a simple cross-country regression. This apparently counter-intuitive result, which contrasts with Pritchett (2000) and recent policy analyses, follows directly from the standard assumption that the marginal product of public capital declines with the capital/output ratio. The implication is that efficiency and scarcity of public capital are likely to be inversely related across countries. It follows that both efficiency and the rate of return need to be considered together in assessing the impact of increases in investment, and blanket recommendations against increased public investment spending in inefficient countries need to be reconsidered. Changes in efficiency, in contrast, have direct and potentially powerful impacts on growth: “investing in investing” through structural reforms that increase efficiency, for example, can have very high rates of return.

Government departments and their agencies occupy a significant portion of building stock, whose annual water and energy costs are substantial. Although it has been demonstrated that retrofitting public buildings can lead to drastic reductions in water and energy consumption with rapid payback periods, in most countries the retrofitting rate is very low. In addition, the focus of retrofit projects is often solely on energy, while water conservation and the water-energy nexus are typically neglected. To improve the current lackluster retrofit rates, the key challenges and potential coping strategies must be identified and retrofit program implementation frameworks developed. This research study adopted a mixed methods approach including scenario modelling and stakeholder workshops and interviews, to achieve such objectives. The comprehensive review identified retrofit project financing and procurement impediments to be the greatest deterrent, although other factors such as education and awareness-raising, which are typically overlooked, were also recognized as being critical. Interviews with stakeholders revealed that governments' willingness to introduce a retrofit program and related supporting mechanisms is also a major barrier to public building retrofitting. Coping strategies for achieving accelerated implementation of retrofit projects were identified as being the introduction of project facilitation teams, revolving loan funding, performance contracting, to name a few. Once such barriers and strategies were acknowledged and refined through stakeholders’ consultation, scenario modelling was conducted in order to quantify the benefits of a proposed widespread retrofit program. Modelling results demonstrated a potential five-fold return of capital investment for a nationwide Australian hospital building energy and water retrofit program if the recommended financial and procurement mechanisms were put in place. Such results and final project outcomes were presented to key-stakeholders in order to incentivise decision-makers to implement some of the proposed strategies and finally boost the building retrofitting sector.

The objective of this research was to survey the productivity, costs, agricultural income and economic viability of Semi-Confined and confined milk production systems in Free-Stall and Compost Barn in Rio Grande do Sul, Brazil. In order to perform the research, four milk production units were selected in each of the three systems studied. Compared to the others, the Semi-Confined system had greater return of capital invested per year, as well as higher agricultural income per animal and per area, while the confined system in Compost Barn had higher farm incomes per man work unit and total farm incomes due to greater productive scale of properties. The Free-Stall system had the worst economic results. It was not possible to define an ideal system for the state, since the specificities of each property should be analyzed for choosing the system, especially the availability of the factors of production land, capital and labor.

Purpose To explain actions the US Securities and Exchange Commission (SEC) brought on August 27, 2018, against a group of affiliated investment advisers and broker-dealers for what the SEC considered misleading and insufficient representations and disclosures, insufficient compliance policies and procedures, and insufficient research and oversight concerning the use of faulty quantitative models to manage certain client accounts. Design/methodology/approach Explains the SEC’s findings concerning the advisers’ and broker-dealers’ failure to confirm that certain models worked as intended, to disclose the risks associated with the use of those models, to disclose the role of a research analyst in developing the models, to disclose the use of volatility overlays along with the associated risks, to determine whether a fund’s holdings were sufficient to support a consistent dividend payout without a return of capital, and to take sufficient steps to confirm the advertised performance of another investment manager whose products they were marketing. Provides insight into the SEC’s position and offers key takeaways. Findings These cases are significant for advisers who use quantitative models to implement their investment strategies in the management of client accounts and signal the SEC’s continued focus on investment advisers’ compliance with disclosure obligations to discretionary account investors. Practical implications Each manager should consider its own facts and circumstances, and should consult with counsel, in assessing how and to what extent to incorporate the SEC’s conclusions in crafting disclosure and other communications with investors on matters such as adequate representations, testing and validation of models, disclosure of errors, and verifying performance claims. Originality/value Practical guidance from experienced securities lawyers.

Capital utilization and market power crucially affect asset prices in an economy exposed to shocks that improve real investment opportunities through capital-embodied technological innovations. We embed these two mechanisms in a standard general equilibrium model and show that (i) the price of risk for investment shocks is negative under fixed capital utilization, but positive under sufficiently flexible capital utilization, and (ii) the equity return exposure to investment shocks is negative under perfect competition, but positive under high market power. We further show that, high market power, persistent components in technology growth, and a strong preference for early resolution of uncertainty are jointly important to quantitatively match the observed equity risk premium.

Background Plastic surgeons are rapidly integrating social media into their practices and recent articles on the subject have exploded in the literature. Although social media is being evaluated as a tool, few have actually been able to quantify the impact of social media on a practice. Objectives To quantify the return on investment for social media in a plastic surgery practice. Methods The ideal method for this type of study is a new practice, without preexisting clients and with a broad approach to marketing to examine the effects of multiple marketing tools. In this study, we profile a start-up plastic surgery practice in Beverly Hills, Los Angeles. Results In this study, we report practice demographics as well as one year of income, broken down by the referral source for each patient. The dollar amount returned was reported for several social media resources and other internet-based marketing tools. Conclusions Social media has a relatively high return on investment, and to date this is the first study to transparently quantify the value of social media in plastic surgery.

We identify farms’ optimal investment path in capital assets and compare it with their actual investment to assess the direction and extent of deviation from the optimal investment. A probit model is further used to investigate the determinants of the probability that a farmer over- or under-invests in capital assets. We use a panel dataset of Dutch dairy farms over the period 2003–2013, and find that most farms under-invest in capital assets during the study period. Although the number of farms that had over-invested in capital assets is relatively small, these farms account for the biggest share of total investment in capital assets. The probit results show that liquidity, agricultural support payments, age, land tenure and standard output size are important variables explaining the likelihood of over-and under-investment.

Rooftop residential photovoltaic (PV) generation is becoming more widespread among homeowners. A proper PV system design is crucial in order to avoid annual electricity production in excess of residential demand in countries where a net metering scheme is in place like in Brazil. It is therefore important that the information related to the average solar irradiation incident on the solar modules is accurately assessed, allowing precise estimates of photovoltaic electricity production. This work defines the criteria for the proper choice of a freely available irradiation database for the Brazilian territory and compares the results with the PVsyst-Meteonorm, a well-known modeling system. We demonstrate that, for Brazil, the Global Horizontal Irradiance (GHI) information provided by Openei-SWERA series is the best fit to different locations in the Brazilian territory, after introducing the corrections made by the horizontal to the plane-of-array transposition algorithms.

This paper studies research and development (R&D) investment and accumulation of firm-specific knowledge capital (i.e., human capital) in the presence of debt market frictions, highlighting the macroeconomic implications. Empirically, R&D investment and knowledge capital are negatively correlated with debt at the firm level, which is in contrast with the positive relationship between physical investment and firm debt. I propose a new model to account for these facts: Firms accumulate firm-specific knowledge capital through R&D investment. However, knowledge capital – different from physical capital – cannot be used as banking collateral. Firms with high R&D investment opportunities rely more on internal finance and less on external debt. The model is quantitatively consistent with empirical facts along several dimensions. Based on the model, I then study the implications of two industrial policies. A practice that encourages using intellectual property as collateral for bank loans has a relatively small effect. I recommend a policy of tax credits for R&D investment. In fact, this policy can increase output by more than 5% and welfare by more than 3% in the long run.

Previously reported effects of institutional quality and political risks on foreign direct investment (FDI) are mixed and, therefore, difficult to interpret. We present empirical evidence suggesting a relatively clear, statistically robust, and intuitive characterization. Institutional factors that affect the likelihood of an abrupt and total loss of foreigners’ capital (i.e., return of capital) dominate factors that affect rates of return conditional on a strictly positive terminal investment value (i.e., return on capital). The evidence is consistent with the hypothesis that expropriation risk is most important among the available measures of different dimensions of institutional quality. A one-standard-deviation reduction in expropriation risk is associated with a 72% increase in FDI, which is substantially larger than the effects of any other dimensions of institutional quality as simultaneously estimated in our empirical models of expected FDI inflows. We show that this evidence is consistent with the predictions of a standard theory of FDI under imperfect contract enforcement and multiple dimensions of political risk.

Limited human capital investment is a common characteristic of low-income countries despite the fact that estimated returns to educational investment in low-income countries are generally higher than those in high-income countries. Empirical evidence suggests that income and credit constraints can only account for a part of this underinvestment. Recent experimental evidence shows that families' misperceptions about the returns to education play a role in their low-investment levels. This paper builds a heterogeneous-agent model of human capital and growth that incorporates an adaptive learning mechanism to capture the way agents form perceptions about returns to education. We find natural conditions guaranteeing existence of stable equilibria. Along transition paths, agents' misperceptions about returns to education depress realized returns, which serves to reenforce and perpetuate low human-capital investment. If human capital investments have both private and public returns, we find multiple stable equilibria, including those which are characterized by low investment and low returns. (JEL D83, O10, I25)

For regulated electricity utilities, if trend-load growth enters a state of terminal decline through disruptive competition and costs are unable to contract at a similar rate, the regulatory outcomes that follow produce strikingly different results to an equivalent episode in a competitive market, where profits fall and assets are written-off. Under economic regulation, prices rise to offset volumetric losses and in the presence of disruptive competition, a destructive price spiral can ensue. In these circumstances, some component of the regulated utility's assets meet the definition of ‘stranded’. Failure to deal with stranded assets will eventually, and needlessly, damage shareholders, consumers and welfare. However, the ‘regulatory compact’ makes this an especially complex area of economics. Zero recovery of stranded monopoly assets is not credible policy. A normative analysis of economics and law suggests full recovery is not credible either. In this article, asset stranding experience from the US is reviewed and a series of policy principles are established; viz. asset stranding is a case-by-case proposition involving recovery via non-bypassable pricing mechanisms, quantified and packaged as a partial Return of Capital, possibly financed by Transition Bonds on a time-limited basis. Financial risk tolerances of the utility and the stability of post-stranding consumer tariffs are important parameters that should guide the policy approach to asset stranding. But ultimately, asset stranding is a policy choice, not an analytical determination.

China's road investment boom since 1990 has often been criticized as excessive. In this paper, we estimate the return to road investment in China due to manufacturing firms’ increased productivity between 1998 and 2007. To address endogeneity in road investment, we estimate the differential impact of road investment on firms with heterogeneous reliance on transport. Although some investment may be inefficient, our finding does not support the claim that road investment in China is excessive overall. The annual rate of return from productivity gains alone amounts to approximately 11%, partly due to positive spatial spillover. We find little return to road investment in inland China around 2000, but this has significantly improved since the mid-2000s. Our findings are robust to controlling for road quality, railroad investment, and variant markups of firms due to market demand and price shocks.

• We examine internal capital market inefficiencies and U.S. multinational firms' return of capital to shareholders.

We revisit China's suspected overinvestment problem by examining the rate of return on capital from two perspectives. First, we find that two existing methods of estimating the rate of return generate conflicting results, and we succeed in reconciling them. Our revised estimates show that the rate of return rose sharply from 1998 to 2014, which helps explain the strong investment drive. Second, we explore what caused the rate of return to rise. We find the explanation lies mainly with the long-term factor of rising total factor productivity but that the short-term cyclical factor of low real interest rates has also contributed.

In many textbooks, the decision to invest in human capital is presented in terms of the present discounted value of the lifetime stream of costs and benefits associated with the investment. I argue...

Degrees of firm internationalization vary across industries and over time, depending on a number of factors. In this paper, I hypothesize that firms mitigate the investment risk resulting from having large amounts of capital investment by expanding their business internationally. Using a large panel sample that covers non-financial firms listed in the US during the period 1990–2013, I find that capital investment negatively affects the internationalization level. The negative effect of capital investment on internationalization levels is evident for (1) large firms, (2) firms with large fixed assets, (3) firms with small and large capital investment, and (4) firms with non-positive sales growth rates. In addition, the relation between capital investment and the degree of internationalization is non-linear and varies over time. I also find that the effect is negative prior to the burst of the IT bubble in 2001, neutral during the burst of the IT bubble and the non-crisis period, and positive during and after the 2007 global financial crisis.

Research has shown that "the most fundamental and crucial aspects of the market": profitability, return of capital to shareholders, management and safety, express a lot about the performance of the stock market since 1990. Moreover, these aspects have distinct financial features that provide meaningful information for investors. Indeed, a valid method to evaluate these aspects can be a vital tool for investors. This study attempts to examine the performance of three retail companies by calculating the primary ratio that is used to analyze the profitability, management, growth, and safety of those companies. This ratio has demonstrated that it is possible for investors to apply this calculation method to a company to create considerable future capital returns.

Requirements of increasing customer network availability to 99.999% needs data communication service providers to provide services with the specified SLA while considering economic value in order to maintain profit. This study conducts a techno economic analysis in order to answer this problem. Technical analysis is conducted by analyzing network availability based on the access media reliability. Furthermore, cellular M2M performance testing using tunneling Bridge EoIP over SSTP was conducted on MPLS data communication provider network as a new access media. The results obtained to achieve 99.999 availability requires 4 access media with mutual diversity. Then the M2M testing results showed an average of ping time of 160 milliseconds, throughput 1Mbps, and jitter 21 milliseconds. While to assess economic feasibility, we analyzed the economic value of investments using M2M access media with other access media through six implementation scenarios. Of all the scenarios made, the combination scenario using M2M access media can provide the highest NPV value of up to 42 billion in 5 years with fastest return of capital investment for only 1.3 years. Compared to the implementation scenario without using M2M access media, the use of M2M access media provides a significant increase in economic value.

Many microenterprises in developing countries have high returns to capital, but also face risky revenue streams. In principle, equity offers several advantages over debt when financing investments of this nature, but the use of equity in practice has been largely limited to investments in much larger firms. The authors develop a model contract to make self-liquidating, quasi-equity investments in microenterprises. This contract has three key parameters that can be used to shift risk between the entrepreneur and the investor, resulting in a continuum of contracts ranging from a debt-like contract that shifts little risk from the entrepreneur to a pure revenue-sharing contract in which the investor absorbs much more of the risk. The paper discusses implementation choices, and then provides lessons from a proof-of-concept carried out by an investment partner, KGC Equity, which made nine investments averaging $3,800 in Sri Lankan microenterprises. This pilot demonstrates that this new contract structure can work in practice, but also highlights the difficulties of micro-equity investments in an environment with weak contract enforcement.

Corresponding publicationsWorking Paper | On the Interplay Between Speculative Bubbles and Productive Investment. 2015. 〈halshs-01214689〉; International audience; The aim of this paper is to study the interplay between long term productive investments and more short term and liquid speculative ones. A three-period lived overlapping generations model allows us to make this distinction. Agents have a portfolio decision. When young, they can invest in human capital that is a productive long term investment that provides a return during the following two periods. When young or in the middle age, they can invest in a bubble. Young individuals can also borrow on a credit market to finance the productive investment. However, the amount borrowed is limited by a credit constraint. We show that the existence of a stationary bubble raises productive investment and production when the bubleless economy is credit constrained and dynamically efficient. Indeed, young agents sell short the bubble to increase productive investments, whereas traders at middle age transfer wealth to old age. The bubble allows to relax the credit constraint. We outline that a permanent technological shock inducing either a larger return of capital in the short term or a similar increase in the return of capital in both periods raises productive capital, production and the bubble size. We use our framework to discuss the effect on the occurrence of bubbles of financial regulation and fiscal policy.

How to measure a project's implied rate of return has long been an unresolved problem, except for some special cases. This paper derives return on present cost (ROPC) as the correct measure of an investment project's implied rate of return. The IRR is a biased measure except for projects classified as simple projects, and this bias is likely to be substantial in many real-world applications. Thus while net present values should be used to determine whether to accept/reject projects, I recommend that analysts use ROPC in place of the IRR as a measure of a project's true rate of return.

Hurley, Rao, and Pardey (2014) argue to replace the internal rate of return with the modified internal rate of return for the evaluation of public research investment. The crux of their argument is that the internal rate of return “assumes intermediate cash flows can be reinvested (or borrowed) at same return as the initial investment, which is generally not correct or reasonable,” (page 1492). This article first demonstrates that reinvestment decisions are embodied in the project specification, and that the internal rate of return makes no inherent reinvestment assumption. The article then clarifies the algebraic properties of the marginal internal rate of return and the reinvestment implications of the internal rate of return and modified internal rate of return within the context of public agricultural research evaluation.

The decision of investment is a strategic decision and it is an integral part of the general policy of the company. The purpose of this paper is to present the manner in which the ROI (Return on Investment) indicator can be used in the analysis of investment projects. Understanding the concept of investment is the first issue addressed. Then ROI is analyzed, highlighting the advantages and limitations of its use. They are addressed the aspects related to the manner in which the size of the ROI indicator is influenced by the method of valuation of assets, but also by the method of calculation of the working capital. The research results can be used by any investor to select based on ROI indicator, an investment project of several possible. As well, ROI may serve after completion of the investment to measure its profitability.

Using data from 1972 to 2011 on 109 countries, this paper empirically studies the impact of economic freedom on human capital investment. Enrollment in secondary education is used as a proxy for such investments. Controlling for a large number of other determinants of education, it finds that, over the sample period, economic freedom had a substantial positive effect. This is probably because more economic freedom increases the return on investing in human capital, enables people to keep a larger share of the return, and, by facilitating the operation of credit markets, makes it easier for them to undertake such investments in the first place.

This study examines the optimal fiscal policy in a stochastic endogenous growth model with private and public capital. The government is willing to actualize a socially optimal equilibrium using a lump-sum tax and government debt linked to public investments, subject to the budget constraint under the golden rule of public finance. A socially optimal fiscal policy states that a deterministic rate of return on government bonds sets the marginal product of public capital. Moreover, public investments optimally adjust the ratio of private capital to public capital to equate the rates of return on such capital. The presence of stochastic disturbances results in a disparity between the optimal marginal products of the two types of capital, as reported in previous empirical studies. This disparity significantly affects the socially optimal growth rate in response to investment risk.

We investigate irreversible investment behavior under uncertainty of payoffs using U.S. firm-level panel data. Specifically, we estimate the relationship between the firm’s investment to capital ratio and the interest rate, while controlling for investment opportunities, real option values, uncertainty, and profitability. The results indicate that the investment demand curve is a backward-bending function of the interest rate. That is, at low interest rates an increase in the interest rate leads to additional investment by increasing the cost of postponing investment. Interestingly, the backward-bending shape of investment demand does not hold for the sub-sample of agribusiness firms in our dataset, which are characterized by greater asset fixity. Lastly, firm investment behavior is consistent with the existence of real option values.

In the process of eradicating poverty, Bank Muamalat with the collaboration with the Baitul Maal Muamalat (BMM), has undertaken the Mosque Based Micro Muamalat Community Program (KUM3). The problem identified in the program is that many members of KUM3 cannot make a capital return at the right time, causing them to fail in re-threading the capital. This study aims to determine the factors that affect the KUM3 member’s capital returns. Investigations carried out in four districts in Bogor City namely the Community of Loji, Pamoyanan, Pasar Anyar and Situ Gede. Eight factors that might affect the business capital was studied i.e. the value of social capital, the theory, the economy, the religion, marketing, finance, management and technical. The method used in analysing the data is the multiple logistic model . The analysis obtained a good results in the social value, theoretical value, the economy, the religion, marketing, finance, management , and technical for the KUM3 participants in Bogor City. The most influential factor in the return of capital is the social value. Two factors were studied in this value i.e. family factor and community factor. It has a tendency to break on time 6.46 times faster with the value of the regression coefficient 1.946 and value of -p 0.010 (

The issue of whether capital inflows promote domestic investment has been of major concern especially in developing countries considering their massive dependence on these inflows. To this end, we make a case for 25 sub-Saharan African countries, using foreign direct investment and external debt as proxies for capital inflows, and the pooled mean group estimator over the period 1981–2010. The results reveal that foreign direct investment positively impacts domestic investment, but external debt has a negative impact on domestic investment in the long run. This implies that increase in foreign direct investment and/or reduction in external debt will promote domestic investment in sub-Saharan Africa. Therefore measures have to be put in place to attract more foreign direct investment and reduce the inflow of external debt in the region.

This paper develops a two-period model in which the recipient faces borrowing constraint and the donor is a Stackelberg follower to address two important policy questions: (i) whether foreign aid can lead to the efficient level of capital investment in the recipient country and (ii) how does the form (e.g. budgetary transfers, capital transfer) and the timing of aid affect the recipient's financial savings and capital investment. It finds that the disincentive effect of the capital transfer on the capital investment by the recipient is larger than the budgetary transfers. It makes financial savings more attractive relative to the capital investment for the recipient. In the absence of capital transfer, the multi-period budgetary transfers not only lead to the efficient level of capital investment by the recipient, but also achieve the same allocation as under commitment. The capital transfer can lead to the efficient level of capital investment, but in this case, it completely crowds out the recipient's own capital investment.

While most retail stores offer return policies, some offer more lenient return policies than others. The inherent belief is that lenient return policies are more likely to lead to purchases than to encourage returns. Examining prior research we find that return policy leniency has been characterized in terms of five different dimensions: time, money, effort, scope, and exchange. We conduct a meta-analysis of 21 papers examining the effect of leniency on purchase and return decisions, and demonstrate that overall, leniency increases purchase more than return. Further, we show the return policy factors that influence purchase (money and effort leniency increase purchase) are different from the return policy factors that influence returns (scope leniency increases returns while time and exchange leniency reduces returns).