The effect of corporate real estate ownership on R&D innovation: credit relief vs. resource replacement in China

Against the background of supply-side structural reform and the real estate financialisation in China, this study investigates the impact of real estate holdings on R&D investment using data of enterprises listed on the Shanghai and Shenzhen stock exchanges. Our empirical results yield five main findings. First, enterprises holding more real estate assets face more serious financial constraints, thus restraining corporate innovation efficiency. Second, when the profit margin gap between entity enterprises and the real estate industry is larger, enterprises are more inclined to transfer industrial capital into the real estate industry, thus reducing R&D investment. Third, when the degree of marketisation is high, intensified market competition, the optimal allocation of factor and product markets, and stronger patent protection will weaken the restraining effect of corporate real estate holdings on R&D investment. Fourth, monopoly enterprises obtain potential profits more than undertaking risks from the real estate industry, they are more willing to hold real estate, thus strengthening the restraining effect of real estate holdings on innovation. Finally, investors' regional preference intensifies the restraining effect of corporate real estate holdings on R&D investment. Our empirical evidence can guide entity enterprises on how to effectively balance short-term (non-productive) and long-term (productive) capital investment.     

Corporate Governance and Financial Constraints on Strategic Turnarounds*

abstract The paper extends the Robbins and Pearce (1992 ) two‐stage turnaround response model to include governance factors. In addition to retrenchment and recovery, the paper proposes the addition of a realignment stage, referring specifically to the realignment of expectations of principal and agent groups. The realignment stage imposes a threshold that must be crossed before the retrenchment and hence recovery stage can be entered. Crossing this threshold is problematic to the extent that the interests of governance‐stakeholder groups diverge in a crisis situation. The severity of the crisis impacts on the bases of strategy contingent asset valuation leading to the fragmentation of stakeholder interests. In some cases the consequence may be that management are prevented from carrying out turnarounds by governance constraints. The paper uses a case study to illustrate these dynamics, and like the Robbins and Pearce study, it focuses on the textile industry. A longitudinal approach is used to show the impact of the removal of governance constraints. The empirical evidence suggests that such financial constraints become less serious to the extent that there is a functioning market for corporate control. Building on governance research and turnaround literature, the paper also outlines the general case necessary and sufficient conditions for successful turnarounds.     

Soviet all-union enterprises as new multinationals of the CIS

This paper examines the restructuring of the former Soviet economy provoked by the break-up of the USSR and the creation of the Commonwealth of Independent States. Particular attention is devoted to the changes taking place in the former All-Union enterprises that have now essentially become new multinationals. The pressures influencing the two parallel developments of internalization and divestment are examined and illustrated using two case studies. © 1993 John Wiley & Sons, Inc.     

Improving on two-stage estimators for scale families

Summary Consider the problem of finding an estimator for a scale parameter such that its risk function is bounded by a preassigned constant. As a solution of the problem, two-stage estimators based on only the second sample have been proposed. The paper shows that these estimators can be improved by combining the first and the second sample.     

Corporate governance in family-controlled firms in Taiwan

This paper examines the effects of ownership structure and board characteristics on performance in publicly traded Taiwanese firms that are controlled by founding families. Results show that when shares are owned by institutional investors, particularly foreign financial institutions, firms perform better. However, where families are the major shareholders, this is not the case. In addition, boards that are independent of the financial interests of the founding family have a positive impact on performance, whether measured by accounting ratios, operating performance or the stock market. (JEL: P52, G32)     

Analysis of Domestic Factors Affecting Outward Foreign Direct Investment in Brazil

Developing markets have increasingly gained prominence in the world economy, but the domestic factors behind this success are not well established. This uncertainty may interfere with multinational expansion plans. In this article, we examine several macroeconomic and institutional factors affecting Brazilian outward foreign direct investment in 17 destination countries. We applied a pooled ordinary least squares regression over the 2001–2014 period. The findings suggest that macroeconomic factors are still statistically significant to explain investment abroad, but several institutional factors such as corruption have emerged, having a negative effect and political violence having a positive effect on Brazilian outward foreign direct investment.     

RECENT DEVELOPMENTS IN CONSUMER CREDIT AND DEFAULT LITERATURE

This survey discusses recent contributions to the quantitative literature on unsecured consumer debt and default, and some ongoing challenges for the literature. Key topics include the sources of the rise in personal bankruptcies, the importance of asymmetric information and the effects of developments in information technologies on consumer credit markets, delinquency and informal bankruptcy, debt collection and restructuring of distressed debt, the cyclical behavior of consumer debt and default, and the insurance role of household debt. Implications for welfare analysis and policy design are discussed. Several theoretical contributions and approaches to modeling the consumer credit markets are also highlighted.     

Autocatalytic Growth and Development and the South-North Convergence

Abstract:

This article engages with the issue of income convergence between North and South by using the autocatalytic hypothesis of growth and development. Two system models describe positive and negative feedback loops which govern economic flows between North and South. The analysis of endogenous and exogenous negative feedbacks points to the process that would slowly push the world economy towards vanishing growth rates and, eventually, halt its material growth. The present work rejects convergence in per capita GDP between North and South from the theoretical perspective. Such an outcome would stand against one of the fundamental properties of autocatalytic dynamics—centripetality— that has its causal roots in the competitive process and capitalist institutions. In that sense, the autocatalytic hypothesis provides a theoretical explanation for those empirical analyses that dismisses convergence.     

Coherent Distortion Risk Measures and Higher-Order Stochastic Dominances

Abstract

We show that the only coherent distortion risk measure that is consistent with respect to 3-convex order and hence with stochastic dominance of order 3 is the expected value, thus generalizing previous results of Hurlimann and solving a problem posed by Yamai and Yoshiba.