Contingent capital,capital structure and investment

We examine the interaction between investment and financing policies in a dynamic model for a firm with existing assets-in-place and a growth option, of which investment cost is financed with equity and contingent convertible bonds (CoCos). We attempt to clarify how CoCos impact on investment timing, capital structure and inefficiencies arising from debt overhang and asset substitution. We show that there is a conversion ratio (the fraction of equity allocated to CoCo holders upon conversion) to eliminate the inefficiencies. Our conclusions predict that debt leverage decreases with investment option payoff factor and the average appreciation rate of the cash flow. In contrast to traditional corporate finance theory saying that a firm's value decreases globally with business risk, our model indicates that it might first decrease and then increase with asset volatility.     

Human capital and the internationalisation of venture capital firms

We examine the neglected area of internationalisation by VCs. Using a representative sample of 195 VCs, we show that the decision of a European VC firm to invest internationally is driven by its human resources. Having more VC executives in general and more VC executives with previous international experience in specific, results in a higher probability of investing internationally. In contrast, more VC executives with experience in the VC industry or with an engineering background lead to a higher probability of remaining domestic.     

Restricting capital outflow

According to the “Capital Asset Pricing Model”, an individual can increase his utility by diversifying his capital across countries. If that is the case, then why do governments impose restrictions on capital outflow? This paper argues that foreign owners of capital have less political power than domestic ones and therefore capital liberalization weakens the political power that protects capital, increases the taxation of capital and thus reduces total investment. Indeed, most of the empirical evidence suggests that capital liberalization is positively correlated with government expenditure, social security spending and corporate taxation.     

a capital idea

Christie Davies, of Reading University, proposes to stifle the clamour for Scottish independence by creating an additional British capital in Edinburgh.     

Constructing intellectual capital statements

This article analyses the development of intellectual capital statements in 19 Danish firms. These statements are discussed in order to show how they work in relation to knowledge-management activities. Based on survey and interview data from the firms that have collaborated in developing intellectual capital statements, the article focuses on why and how these firms embarked on producing such statements. Three brief case studies illustrate the complexities of this type of reporting, which integrates a three-way relationship between narratives/stories, sketches, and metrics.     

Human capital,social capital,and innovation: a multi-country study

The authors examine the effects of two forms of capital, i.e. human capital and social capital, on innovation at the country level. We use secondary data from the World Development Report on a country's overall human development to test for a relationship between human capital and innovation. We also use previous conceptualizations of social capital as comprising trust, associational activity, and norms of civic behaviour to test for relationships between these indicators of social capital and innovation using data from the World Values Survey. Unlike most previous studies that examined human and social capital within a given country, we develop and empirically test a theoretically grounded model that relates human and social capital to innovation at the societal level across 59 different countries, thus providing a more global view of the role of these two forms of capital in generating value. We find strong support for the positive relationship between human capital and innovation and partial support for the positive effect of trust and associational activity on innovation. However, contrary to our prediction, we find a negative relationship between norms of civic behaviour and one of our innovation measures.     

The departmental capital plan

The capital budget process can be a long and time-consuming process. However, if the proper amount of effort is expended, a positive result can be achieved. This can lead to departmental and personal pride, not to mention efficiencies for the department and the hospital. With the proper capital additions in place, the hospital can go about its true business of delivering quality medical care.     

Investment in organizational capital

Organizational capital is a specific form of capital that firms accumulate. It relates to the development of codes, technical languages, practical arrangements about how the work is done and to the creation of an organizational culture. The distinctive feature of this form of capital is the fact that it does not contribute directly to an output result. Instead, it can be thought as creating the correct environment for the human factor to maximize its capability of generating value, that is, organizational capital works as an external effect on the accumulation of the human capital input. Nevertheless, organizational capital is a form of capital and therefore it has an investment process associated with it. The paper considers the process of investment in this form of capital and recognizes that it introduces important changes over the firm's profit maximization problem. The problem gains new features relating to its dynamic nature and a condition that guarantees saddle‐path stability can be derived. Copyright © 2007 John Wiley & Sons, Ltd.     

Asset specificity,capital intensity and capital structure: An empirical test

Capital investment and capital financing decisions interact. To resolve current controversies in investment-leverage-growth relationships requires an integrated industrial organization/financial economics empirical model of profit margins, capital investment intensity, leverage and risk. Using cumulative future losses in discontinued operations to measure the asset specificity of the firm's investments, empiricai results support a complementary (positive) relationship between debt and investment, the debt financing of verifiable contemporaneous growth, equity financing of future growth and the debt financing of specific assets. This evidence rejects the transactions cost theory of capital structure in Fortune 500 firms.     

Evaluating capital investment projects

The risk-adjusted discount rate method for evaluating capital investment projects applies the risk-adjusted rate to equilibrium as well as disequilibrium expected returns, leading to biased NPV calculations. This paper uses the CAPM framework, and suggests a procedure for applying the risk-adjusted rate without causing a bias. The procedure is shown to result in NPVs identical to those obtained by the certainty equivalent approach. A comparison with a previously suggested procedure is also provided.     

借金融资本的力量 助推行业转型升级

<正>我们要与物业服务企业通过股权合作的方式,将传统物业服务企业转型升级为金融类物业服务企业。物业管理正值转型升级关键期,除了借力科技,拥抱互联网之外,引入金融资本,亦是实现弯道超车的良策。中民物业是中民投的全资子公司,注册资本金人民币30亿元。作为一家大型金融投资企业,中民物业以"金融进社区,物业金融化"为发展战略,以"关注民生、服务百姓、服务小微企业"为价值追求,旨在用金融资本的力量,激活和壮大物业服务企业,构建立足社区的商业生态链。     

Cyclical capital structure decisions

Past literature has documented clear trends in the leverage ratio and other capital structure choices made by US firms. We expand this line of research by showing that aggregate capital structure ratios of US firms, during the last decades, are characterised not only by time trends but also by clear cycles. We set the start and end dates of these cycles using a ‘classical approach’. The cycles relating to the ratio of new shares versus debt are shorter and are more intense than the cycles regarding the term of the new debt obligations. The cycles that describe the ratio of retained earnings versus new equity issues are wider in relative terms and with similar duration to the cycles of decisions on external versus internal financing. This means that the decision to substitute debt for shares (or vice versa) is much more common, frequent and significant, than the decision term debt.     

Wars and capital destruction

In this paper, we propose a theoretical framework to investigate the impact of conflicts and wars on key macroeconomic aggregates and welfare. Using a panel data with 9 countries from 1870 onwards, we first show that the consumption-to-output ratio is minimal during WWII for participants. While this can be explained by an increase in public spending in the USA, this cannot be the case in other countries that participated in WWII, as they experience a large fall in output during wartime. To account for this, we build a variation of a Real Business Cycle model first proposed by Hercowitz and Sampson (1991). We extend the initial model to account for specific shocks that destroy private and public capital stocks – as conflicts do – by assuming an (exogenously) time-varying parameter in the law of capital accumulation. In addition, the model imbeds generalized TFP shocks capturing standard technological factors as well as the potential effects of war on the labor force. The model is estimated and used (i) to assess the importance of capital shocks during war episodes, and (ii) to quantify the welfare effects of conflicts. We show that capital shocks are crucial to account for the macroeconomic dynamics of countries that have experienced large war-related destruction, and that the welfare losses from fluctuations can be quite large when considering data samples that include major war episodes.     

Direct and indirect effects of SEWi,family human capital and social capital on organizational social capital in small family firms

International Entrepreneurship and Management Journal - Given the importance of social capital in organizations, this research answers the question of how socioemotional wealth importance (SEWi),...     

Industrial policy,social capital,human capital,and firm-level competitive advantage

Despite the popularity of governmental action devised to foster firm performance, the link between industrial policy and firm-specific human capital and social capital has received scant attention in the strategic management literature. In this paper, we build a dynamic optimization model which bridges concepts from industrial policy, social capital, human capital, and firm-level competitive advantage. We derive theoretical and policy implications from our competitiveness model, concluding that it increases in the opportunity cost of social capital reduce the production of human capital, so the optimal opportunity cost of social capital under feasible industrial policy should be set equal to zero. A government’s optimal industrial policy to help accumulate and churn human capital should reduce the opportunity cost of social capital to zero and reduce the probability of human capital leaving the community to zero. Thus, the model not only expands the potential determinants of competitive advantage in the context of governmental intervention, but also broadens the human capital theory and social capital theory in the creation of firm-specific human capital.

     

Intangible capital distribution in China

This paper aims to examine the distribution dynamics of intangible capital investment across Chinese regions and hence contributes to the understanding of China’s regional development. A nonparametric approach is adopted to investigate the long-run distribution dynamics. Intertemporal dynamics and spatial conditional dynamics are analysed to explore the impacts of the global financial crisis and knowledge spill-over on intangibles’ distribution. It is shown that the formation of convergence clusters persists in the long run. High levels of investment tend to be concentrated in a few coastal regions while investment in most Chinese regions is projected to be low. External shocks exert an adverse effect: The post-global financial crisis transition dynamics indicate that most regions tend to converge towards a lower level than the pre-crisis dynamics imply. Finally, knowledge spill-over in the context of intangibles is identified to be an important factor that helps mitigate regional imbalance.     

开发商难解资金困局

在市场不景气的现状下,牢固的资金链已经成为企业的"安全带",良好的资金运转将为地产商"保驾护航"。商家拿地更为谨慎日前,上海"地王"南京东路163号地块