Why Mortgage Borrowers Persevere: An Explanation of First and Second Lien Performance Mismatch

Borrowers with a pair of mortgages collateralized by the same property sometimes continue to make payments on one while defaulting on the other. We articulate a framework for understanding this performance mismatch that emphasizes two types of borrowers: those with stable equity positions who perceive they are facing moderate or temporary liquidity shocks, and those facing severe financial stress in combination with negative equity. The former have an incentive to enter mismatch and subsequently cure, while the latter would default on both contracts. Our empirical analysis using newly available, national samples of matched first‐ and second‐lien mortgages supports this view.     

Valuing the Defeasance Option in Securitized Commercial Mortgages

To protect the interests of investors, commercial mortgage loans pooled for the issuance of commercial mortgage-backed securities (CMBS) have restrictive covenants that discourage the borrower from refinancing. Such restrictions limit the borrower's ability to access any accumulated equity. The predominant means of accessing this equity today is defeasance. By defeasing a loan, the borrower substitutes the commercial mortgage with U.S. Treasury or agency obligations whose payments match those of the defeased mortgage. Therefore, defeasance is an exchange option whereby the borrower gives up the portfolio of Treasury or agency securities and in return receives the market value of the commercial mortgage plus the liquidity benefits arising from accessing the accumulated equity in the underlying property. The value of the option to defease is shown to depend critically on the rate of return that can be earned on the released equity, prevailing interest rate conditions, as well as the option's contractual features.     

Das Umlaufvermögen von Verteilnetzbetreibern

How much current assets are needed to operate a distribution system in Germany? The German “Energiewende” requires tremendous amounts of investment in the distribution network over the next years. The return of invested capital is regulated by § 7 Strom/GasNEV (German network tariff regulations). Current assets are principally included in the regulatory asset base in order to determine the regulatory equity yield rate. The regulatory authorities and distribution system operators have different point of views regarding the proper amount of current assets needed for operating a distribution network. This debate seems quite significant when considering that the average ratio of current assets to total assets is 25%. On the other hand, one could argue that distribution system operators do not need current assets at all. In order to address the issue of the proper amount of current assets for distribution system operators, business specific processes (such as the “EEG process”) should be examined. Furthermore, the provision of current assets causes costs of capital, which reduces the shareholder value and makes the acquisition of capital more challenging. This paper analyses such interrelations between current assets and shareholder value in regulated markets. Moreover, the current regulatory practice of cutting current assets in the regulatory asset base to a standardized amount does not seem appropriate. Rather there is a need for a multi-level and item-by-item based valuation scheme: Is the item required for the business? Is the amount limited to the efficient minimum? Is the amount comparable to other businesses? Concerning this matter, this paper examines proper instruments, such as the cash flow statement. In addition, this paper benchmarks the current (liquidity) ratio of distribution system operators and non-regulated companies. Based on this benchmark, the current assets of distribution system operators appear comparatively efficient. The results point out a need of action regarding current regulatory practice.     

竞争战略的产权观点

产权理论认为，不完备的产权不仅影响利用资产创造价值的程度，也使得人们花费资源用于攫取和保护产权。本文把交易成本看做是与攫取、保护和转移产权相联系的成本。由于攫取和保护行为会耗散企业的价值，企业可以凭借影响攫取和保护的成本来创造价值。本文在产权理论的基础上构建了竞争战略的产权分析框架，并且比较了这一观点与其他竞争战略观点的区别与联系。     

Integrating Illiquid Assets into the Portfolio Decision Process

We consider the issues associated with modeling the decision to invest in an illiquid asset, such as real estate, over an extended period of time. Markets for illiquid assets tend to display certain characteristics: for example, significant time‐till‐sale and correlation in the rates of return over time. More importantly, as the liquidity of a market cannot be an issue if an investor never needs to liquidate an asset, we focus on how the liquidity of a market interacts with an individual's uncertain need to liquidate. We show that the optimal strategy is state contingent, if possible. We also show that the penalty associated with an illiquid investment depends on the characteristics of other assets being held in the portfolio, on the characteristics of liquidity shocks and on the interaction between time and behavior. We show that borrowing to pay for a liquidity shock cannot overcome all of the costs of owning an illiquid asset. In contrast, borrowing at t = 0 benefits from the complementarity in the assets. In a simpler model, we show that the portfolio perspective makes illiquid assets more valuable to an investor with a longer time horizon.     

关于服饰类奢侈品牌的品牌忠诚度建设探究——以中国奢侈品市场的消费者为例

著名品牌战略专家David Aaker提出了品牌五大资产,即品牌忠诚、品牌知名、品质认知、品牌联想和专有资产。这些资产的总和构成了企业的品牌资产,它可以提升一个产品或服务的价值。其中,品牌忠诚在品牌资产中占有特殊的地位,它是顾客价值和企业价值的载体[1]。随着市场经济的发展,品牌竞争的时代已经到来。品牌忠诚作为企业资产的重要组成部分,可以为企业带来切实的利润增长和竞争优势。任何品牌想要长久立于不败之地,培育消费者长期的品牌忠诚是有效途径,这就需要品牌企业准确地分析行业特征和目标客户群,不断地维护和提升目标消费者的品牌忠诚度。     

Housing,Wealth, Income and Consumption: China and Homeownership Heterogeneity

Impacts on consumer spending in urban China associated with housing value, housing equity, financial assets and household income are evaluated using longitudinal data from the China Family Panel Studies (CFPS) survey. Findings suggest that the housing wealth effect on household consumption in China is much larger than has been shown for developed economies. The larger impact is prospectively related to structural limits on investing which favor real estate ownership, along with the dominant position of housing in total household wealth. We also find that a household's consumption varies across housing tenure. Homeowners having joint ownership of property on average have the highest consumption propensity, while those having sole ownership of property consume the most in response to appreciation in housing wealth.     

场外市场与私募股权投资退出

场外市场是沪深证券交易市场的有益补充,是建立多层次资本市场体系中的重要一极,由于其相对较低的进入门槛．在中小企业直接融资体系及企业资产要素流动中扮演着极为重要的角色,而私募股权投资基金则是场外市场的重要交易主体。文章着重论述了私募股权投资退出与场外市场是相互促进、相辅相成的关系,规范统一有序的场外市场为私募投资退出提供了广阔舞台,私募投资退出的顺畅又为场外市场注入了流动性活力。因此．当前形势下加强场外市场建设对于私募股权投资退出具有重要的现实意义。     

Price Signaling and Return Chasing: International Evidence from Maturing REIT Markets

This article examines the liquidity of international real estate securities across 10 markets over the period 1990–2015. We apply and compare results for four different measures of liquidity, and find that while liquidity has increased consistently, wide variations still exist across markets, with the United States and Japan in the lead. Our results also suggest that the introduction of local REIT regimes did not have any pervasive effects on stock liquidity. When we study the relationship between liquidity and returns, we document new and consistent evidence for international return chasing behavior, whose pattern is a function of local market efficiency, listed real estate market maturity and stock ownership dispersion. The introduction of REIT regimes seems to weaken the importance of extra performance over and above general equity returns as investors tend to allocate funds to real estate securities within real estate rather than equity portfolios.     

Rent appropriation of knowledge‐based assets and firm performance when institutions are weak: A study of Chinese publicly listed firms

Research summary : A firm's strategic investments in knowledge‐based assets through research and development (R&D) can generate economic rents for the firm, and thus are expected to affect positively a firm's financial performance. However, weak protection of minority shareholders, weak property rights, and ineffective law enforcement can allow those rents to be appropriated disproportionately by a firm's powerful insiders such as large owners and top managers. Recent data on Chinese publicly listed firms during 2007–2012 were used to demonstrate that the expected positive relationship between knowledge assets and performance is weaker in transition economies when a firm's ownership is highly concentrated and its managers have wide discretion. Moreover, rent appropriation by insiders was shown to vary with the levels of institutional development in which a firm operates. Managerial summary : Investing in knowledge‐based intangible assets (e.g., R&D) is an important value‐creation activity for the firm. Such value creation process can be facilitated by large shareholders and powerful managers, who can then take an advantageous position with critical insider information on these valuable intangible assets and therefore enjoy more opportunities to appropriate more value from them, leaving less value for other minority shareholders. The value distribution becomes increasingly skewed against minority shareholders when the institutional protection for them is weak. Indeed, in a large sample of Chinese publicly listed firms, we found that R&D investment becomes less positively associated with firm financial performance with the presence of large shareholders, high managerial equity, or CEO/Chairman duality, especially in Chinese provinces with weak institutional development. Copyright © 2016 John Wiley & Sons, Ltd.     

Who does private equity buy? Evidence on the role of private equity from buyouts of divested businesses

Research Summary: We examine the role of nonventure private equity firms in the market for divested businesses, comparing targets bought by such firms to those bought by corporate acquirers. We argue that a combination of vigilant monitoring, high‐powered incentives, patient capital, and business independence makes private equity firms uniquely suited to correcting underinvestment problems in public corporations, and that they will therefore systematically target divested businesses that are outside their parents’ core area, whose rivals invest more in long‐term strategic assets than their parents, and whose parents have weak managerial incentives both overall and at the divisional level. Results from a sample of 1,711 divestments confirm these predictions. Our study contributes to our understanding of private equity ownership, highlighting its advantage as an alternate governance form. Managerial Summary: Private equity firms are often portrayed as destroyers of corporate value, raiding established companies in pursuit of short‐term gain. In contrast, we argue that private equity investors help to revitalize businesses by enabling investments in long‐term strategic resources and capabilities that they are better able to evaluate, monitor, and support than public market investors. Consistent with these arguments, we find that when acquiring businesses divested by public corporations, private equity firms are more likely to buy units outside the parent's core area, those whose peers invest more in R&D than their parents, and those whose parents have weak managerial incentives, especially at the divisional level. Thus, private equity firms systematically target those businesses that may fail to realize their full potential under public ownership.     

A value-in-process analysis of relationship interactions in non-equity alliances

In the domain of relationship marketing, there is an increasing need for greater understanding of ‘value’ in the process of social exchange interactions. We present a framework for analysis of value creation through these interactions. Two types of value creating interaction are identified, asset specific investment and technical exchange. Taking a series of 197 project-based, non-equity alliances between architects and building contractors, we examine value creation through these interactions. The findings establish that value in the relationship process is co-created and that this occurs through an iterative investment in specific assets at the operational level throughout the alliance. Additionally, the exchange of technical information at the operational level is found to be a source of value for the relationship and has iterative and co-creational characteristics similar to investment in specific assets. We provide an explanation for the relationship between these interaction types and relational value. We also find that goodwill trust's positive relationship with the asset specific investment interaction type is stronger in low, rather than high, operational compatibility partnerships. The implications for researchers and managers are explored and study limitations acknowledged.     

The Liquidity of Property Shares: An International Comparison

This article investigates the magnitude and determinates of share liquidity over the 1990–2007 period in the world's four largest securitized real estate markets: the United States, the United Kingdom, Continental Europe and Australia. We document a significant and consistent role for market capitalization, nonretail share ownership and dividend yield as drivers of liquidity across markets. We also document significant differences in liquidity across countries and between property and nonproperty companies. Also striking is the lack of correlation among our three measures of liquidity across property firms and time. This supports the notion that share price liquidity is multifaceted and therefore reliance on any one measure of liquidity in empirical work may produce misleading conclusions. Although we find some evidence of a connection between liquidity and firm value, it is less conclusive than prior studies.     

中华老字号品牌资产增值——一个创新与怀旧契合的案例分析

当前多数老字号品牌发展停滞,品牌资产不断流失,维护与提升老字号品牌资产变得迫切而且必要。文章结合老字号品牌复兴的创新和怀旧理论,分析了王老吉品牌资产增值的策略选择和启示。通过个案研究发现,王老吉在传承品牌精髓和其他独特品牌元素的基础上,运用营销创新获得品牌经营的成功,这对其他老字号品牌复兴具有借鉴意义。     

Institutional Investors' Preferences for REIT Stocks

This article investigates the determinants of real estate investment trusts (REIT) portfolio investment and institutional REIT ownership using multivariate Tobit regressions. We contend that many institutional investors take larger positions in more liquid assets like REIT stocks, as compared with private real estate equities, because of liquidity considerations. Consistent with this contention, we find that liquidity constraints are significantly related to REIT portfolio investment by institutional investors. We also find that institutional investors have different preferences for REIT stocks than do other investors; they generally prefer larger, more liquid REIT stocks.     

A Model of the Asset Disposition Decision of the RTC

The purpose of this paper is to develop a model of the asset disposition decision for the Resolution Trust Corporation (RTC). In this paper, we focus on the primary goal of the RTC—to maximize the net present value of the cash flows generated through holding and selling the assets it acquires. A major decision it faces is whether to hold or sell assets. This decision ultimately depends on the RTC's discount rate versus that of the marginal buyer. A second question relates to the decision of which assets to sell first and which ones to delay sale. The model developed in this paper characterizes the asset disposition decision process of the RTC for different types of assets. We develop a set of optimal disposition rules based on the simple premise of a multi-period cash flow maximization. In addition, we test some of these rules by analyzing RTC disposition performance. Through this exercise, we hope to provide some guidance to the RTC in implementing its enormous task as well as to policy makers in charting the progress of the RTC. The main results of this analysis indicate that liquid assets and retail deposit franchises should be sold as quickly as possible. Illiquid assets that are performing and do not have high servicing costs are good candidates to finance through senior/subordinated securities or sale with seller financing by the RTC. Illiquid non-performing assets are good candidates for equity participation financing by the RTC. The sales proceeds obtained by the RTC will be increased if buyers have greater certainty with respect to expected cash flows and RTC sales policies.     

Contagion Channels between Real Estate and Financial Markets

The recent crisis has demonstrated the linkages between asset classes within a country as well as the association between assets internationally. We provide for a better understanding of some of these linkages by conducting an empirical investigation of the channels underlying the risk of contagion between real estate investment trusts (REITs) and stocks in the United States. We test for three financial mechanisms potentially driving contagion. A behavioral dimension in the crisis propagation is also examined by considering investor sentiment and panic risk. We find that contagion prevails between REITs and stocks and that this phenomenon is driven by behavioral and liquidity mechanisms.     

Measuring and Explaining Changes in REIT Liquidity: Moving Beyond the Bid–Ask Spread

This paper investigates changes in REIT liquidity since the REIT boom of 1993. We use trade-by-trade data for REITs traded on the major U.S. exchanges to estimate and compare Kyle's (1985) measure of inverse liquidity for the 1993 and 1996 time periods. For our full sample of equity REITs, there is a significant increase in REIT liquidity in terms of the median price impact of trades. The increasing importance of the self-advised, self-managed organizational structure is found to be a major factor driving increased REIT liquidity. Our results imply a decline in the asymmetric information faced by market-makers. Our investigation of the changes in the size distribution and resulting price impacts of REIT trades over the 1993–1996 period yields evidence of increased importance of informed traders to REIT price dynamics. Our findings of increased liquidity indicate that the increase in adverse-selection costs due to the presence of more informed traders is more than offset by the increase in market thickness as a result of an increase in the number of uninformed (liquidity) traders.     

Expanding the conceptual domain of governance in franchising

We propose a model that expands the conceptualization of governance in franchising that acknowledges traditionally ignored stakeholders, including debt and equity holders. Though research has examined how equity holders benefit from the organizational form of franchising, it has not examined the specific role that equity or debt holders play in governing franchise organizations. Additionally, the unique ontology of franchising, which includes semi-internal members of the organization (i.e., franchisees) that invest their own assets and maintain their own balance sheets, provides a rich context for exploring such governance issues. Franchisees exist outside traditional firm boundaries and are not employees, but they are closely linked to the brand given their significant investments in firm-specific assets. Franchisee-based organizations also are growing their own corporate structures and investments in firm-specific assets, sometimes dwarfing those of their franchisor partners. By expanding the concept of governance in franchising, we open avenues for significant scholarship that can enrich both the governance and franchising literatures. We provide several preliminary propositions and constructs to help encourage new research in this emerging arena of franchising research.     

Host Country’s Intellectual Property Rights and Firm’s Equity Participation

There has been an important debate on whether the degree of intellectual property rights (IPR) protection in a host country affects the choice of ownership structure of a transnational firm (TNF) for its affiliate. It is argued that a TNF’s equity participation in its affiliate is used to exert control and to protect its assets. Firms with greater equity ownership can control better the extent of the technology spillover, and thus compensate for weaker IPR protection in the host country, than can firms that do not have as large an equity participation in their affiliates. Using a unique data set of a newly developed country’s (South Korea) TNFs, this paper shows that there is a negative relationship between a host country’s standards of IPR protection and a TNF’s equity participation.