Empirical Analysis on Influencing Factors of Capital Structure ——The Case of China Real Estate Listed Companies

We choose 16 main financial indices reflecting the profitability, liquidity, velocity, growth, size, volatibility, collateral value of assets, and ＂tax shield effect＂ from the Annual Report （2000-2002） of 35 real estate listed companies in China. Then we extract six factors （as independent variables） from the index mentioned above Multi-regression was made between Asset-Liability Ratio and Ratio of Borrowed Capital to Assets （dependent variable） and six independent variables. It indicates that the velocity is significantly negatively related to the capital structure and the ＂tax shield effect＂ is positively related to the capital structure in some degree. The profitability, liquidity, growth, size, volatibility are almost not related to the capital structure.     

Property development firms IPOs in Brazil： Was there overpricing or not？

Between September 2005 and October 2007, representative companies of the Brazilian residential real estate market adopted a strategy intended to increase their investment capacity by Initial Public Offer （IPO）. The setting at that time was favorable for constructing residential real estate designed for the middle class, in view of two main factors： First, in 2005, a restructuring of the Brazilian finance system had relaxed requirements needed to receive financing for the purchase of residential property; Second, there was substantial demand in the middle class market because most developers had been focusing on the upper class market in order to guarantee the sale resources in the production phase. Thus, it was necessary to enhance the investment capacity of the real estate companies to attend the middle-class demand. These two factors, associated with a favorable outlook for the Brazilian, as well as the global economy, encouraged those representative companies to rapidly increase their investment capacity by IPO in a short time. The focus of this article is to analyze the quality of the investments in the stock of these real estate companies （21 offers were taken into account in the analysis）. In order to identify what these companies＇ expectations were and how they supported their decisions to enter BOVESPA with their designated prices and amounts, correlating offers against the BOVESPA Index （market index） were also analyzed. The results allow concluding that these offers were not supported by validated procedures of pricing, but rather were just speculative offers, even though we do take into account the investment grade granted to the Brazilian economy within the period concerned in our analysis.     

Seeking for Balances between Deficits and Competitive Advantage： Looking into the American Financial Market and Policies in Advance after the Presidential Election

The American financial market plays a remarkable role as one of the global core markets, but many changes have taken place in recent years. The policy of White House becomes one of the variables deciding the direction of the market movement. After the Presidential Election, the financial market will move in the effect of anticipating the policies in next phase. For the uncertainty during the resuscitation, the financial policy is facing the problem that how to be an assistance in keeping the economic growth, and how to seek for balances in the contradiction between controlling deficit and maintaining competitive advantages. After the comprehensive analysis on American financial market, the possible result could be like this： interest rate will rise gradually again, exchange rate will fluctuate in perch, but the price of the assets in capital markets will show the difference according to the market framework. The analysis aiming at market and policy can impossibly be built on the base of the hypothetical close system. If no ideal adjustment emerges in American foreign policy in the future, the financial market will possibly turn into another disordered circle.     

Financial Market Turmoil： Implications for Monetary Policy Transmission in China

The recent financial market turmoil has initiated another search for insightful understanding of the interactions between the financial market and monetary policy. This paper explores these interactions in terms of the transmission mechanism of monetary policy in China. We argue that evolving financial development, enhanced by the expansion of the financial market, has altered the conventional channel for monetary transmission in China. Analyzing marked changes in the financial landscape and taking into account policy regime shifts in China, the paper provides clear evidence showing that the financial market has become a new and important channel for transmission of monetary policy in China.     

Calm Consideration of Prosperous Growth of Convertible Bond

As a re-financing instrument for listed companies, convertible bond has been greatly promoting the prosperity of China capital market. However, due to the institutional defect of stock ownership is severe, convertible bond has also inevitably caused the negative effect on the situation that the non-negotiable shareholders are frantically depriving the negotiable shareholders of equity when enriching the financial products and releasing the financial risk. Taking ShanYing convertible bond as an example, the article researches the reasonableness in the market pricing by using the Single-Index Model and further analyze reasonable activities of the present listed companies＇ tending to issuing convertible bond.     

Excess Liquidity and Inflation Dynamics in China： 1997-2007

The surge in international capital inflows and the remarkable excess liquidity in China between 1997and 2007are examined in the present paper. It is shown that China＇s improved position in terms of foreign exchange purchases, ignited by huge foreign capital inflows, has effectively induced excess liquidity in China. More importantly, by developing an econometric madel for inflation and excess liquidity, the present study demonstrates that excess liquidity has imposed significant pressure on inflation in China over the past 10 years. This finding suggests that excess liquidity in China has not only contributed to the rise in stock prices and the real estate market boom, but also affected the consumer goods market. The potential transmission mechanism of liquidity-driven inflation and policy implications of the findings of this study are discussed.     

On the Demand for Earnings Quality: Implications for Fundamental Analysis in China

I. IntroductionIn 2003, China launched a $15.7 billion investment fund to shore up a weak pension systemand up to 40 percent of the investment fund will be put into Chinas stock markets. Chinesefund-management companies, selected to invest a portion of the pension funds in stocksand bonds, now have the task of finding quality companies. An August 2003 Wall StreetJournal article indicated that the fund managers are patiently planning for the long-termwith expectations that Chinas market co…     

China＇s Sovereign Wealth Fund： Weakness and Challenges

The establishment of sovereign wealth funds in large developing countries has generated hot debate among participants in the international financial market. When accumulated foreign exchange reserves surpass a sufficient and an appropriate level, the costs, risks and impacts of holding reserves on the macroeconomy of a country need to be considered. The Chinese Government established China Investment Corporation （ CIC） in 2007 to diversify its investment of foreign reserves and to raise investment income. However, because of certain conflicts of interest and institution-design caveats, CIC possesses some internal weakness, including a vague orientation, mixed investment strategies and an inefficient bureaucratic style. Although the subprime crisis has softened certain regulations and lessened rejection by the USA of ClC potential investments, the increased volatility and uncertainty of the market means that CIC is facing some new challenges in terms of its investment decisions. Moreover, CIC is competing with other Chinese investment institutions for injections of funds from the Chinese Government.     

China and the Global Financial Crisis： Assessing the Impacts and Policy Responses

The present paper explores the role of China in the creation of the current global financial crisis and the impacts of the crisis on its economy. It argues against the view that the ＂saving glut＂ in China （along with other Asian emerging economies） played a significant causal role in the crisis. The global financial crisis did not engender much damage in China＇s financial structure, thanks to the relatively closed, bank-centered financial system. However, the impacts on the ＂real＂ side of the Chinese economy were hard felt. Growth and employment have fallen, largely due to the decline in exports and foreign direct investment. The crisis reveals the vulnerability of the export-dependent growth pattern. Policy responses of the Chinese Government, including monetary, fiscal and social policies, have helped to stem the downfall of the economy in the immediate term, but some of the policies have not addressed the structural problems of the Chinese economy and might well aggravate such problems over time. The present paper proposes a tentative reform blueprint to rebalance the economy and to sustain long-term growth.     

Innovations in the Application of Insurance-linked Securities in Non-financial Companies

Recently, capital market innovations within transferring insurable risk have grown in diversity. It initiated the development of innovative financial instruments, with the prime role of Insurance Linked Securities （ILS）. Financial institutions （insurers in particular） remain the key players on this market. However, ILS are applicable in non-financial companies as well. Accordingly, the aim of this study is to broadly discuss the application of ILS in non-financial companies. In particular, the purpose of this paper is to provide answers to the crucial questions： （1） What are the potential areas of the use of ILS in non-financial companies？ （2） What are the consequences of the use of ILS in non-financial companies？ The paper is based on the application of document analysis and literature studies as its main research methods. The literature review was directed to enable the provision of systemized characteristics of 1LS. Additionally, case studies were implemented to indicate the areas of ILS applications in non-financial companies. Overall, ILS in the class of financial instruments （including cat bonds, insurance derivatives, and contingent capital structures） may find potential use in non-financial companies. However, significant limitations of such a use are identifiable, mainly within the expert knowledge need and accessibility.     

Analyzing of Investment Strategies of Local Companies in Azerbaijan： Problems and Solutions

For businesses to be viable nowadays they must be able to invest successfully. Globalization insists that businesses track new innovations and remain open to the idea of change. In addition, businesses need to stay informed of new technological trends, retain the shareholders they already have, and be ready to invest in innovative technologies when they are introduced. Through these strategies, businesses can be competitive in the marketplace. Short- and long-term planning is necessary to identify the direction of both investments and new projects and project ideas. Two major obstacles to implementing these pre-planned strategies are insufficient in-house resources and lack of access to loans. Companies need to be realistic about what they are capable of and make sure that all new ventures tie into the existing capabilities instead of risking starting a product or service unrelated to the existing business. Projects that are undertaken must be thoroughly researched as alternative options in case the need arises to change direction. Companies should be prepared with a plan and be prepared to move to a secondary plan if the first plan meets with obstacles. In this way, companies can be well informed, prepared, and still versatile enough to meet the needs of the globalized competitive market. A proposed article describes details of the theoretical part of the business investment strategy. The themes of the research are mainly about identification of economical perspectives of the investment, type of investment, identification of investment strategy overview, and its components as well as forming of investment strategy stages. Afterwards, in proposed investigation taken place analyzing of investment risks that might be faced by companies focusing on business investment and their investment capacity based on exist strategy. Research methodology included survey, interview, and critical literature. At the end of research work, it provided expected results of the development of the investment strategy of local companies situated in Azerbaijan.     

China＇s Pension Reform and Capital Market Development

The paper analyzes the interaction between the pension system and capital market development, especially the case of China. A funded pension system is most likely to boost the capital market, but in the absence of a supportive financial infrastructure and effective financial regulation, a funded system will not be successful. China‘s determination to establish a partially funded system is afirst step in the right direction, but without the separation of individual accounts from the social pooling and their replenishment, the working out of the implicit pension debt, and improvements in pension fund management and regulation, the pension system will not be sustainable. The key to capital market development in the process of the pension reform is to enact laws to protect the interests of pensioners, to contract out pension fund management to professional asset managers, and to accelerate the financial opening.     

Rise and Fall of the First Financial Futures Market in China： The Case of Chinese Government Bond Futures

This paper studies the rise and fall of the first financial futures market in China. We compare the characteristics in the Chinese Government bond futures market with those in the US T-bond futures market. They differ in market design and structure, market governance, margin requirements, position limits, delivery process, and the way in which the settlement price is calculated. Furthermore, with a unique dataset, we show that prior to maturities of government bond futures, traders began to accumulate significant amounts of long positions for several selected contracts without the intention to offset, forcing short position holders to either purchase deliverable bonds or offset futures at highly inflated prices, causing higher market volatility and price disequilibrium in both spot and futures markets. Arbitrage opportunity arises and the market eventually collapses. The lessons learned from the suspension of the Chinese Government bond futures market offer an invaluable learning experience.     

What Prompts the People＇s Bank of China to Change Its Monetary Policy Stance？ Evidence from a Discrete Choice Model

In the present paper, we model the policy stance of the People＇s Bank of China （PBC） as a latent variable, and the discrete changes in the reserve requirement ratio, policy interest rates, and the scale of open market operations are taken as signals of movement of this latent variable. We run a discrete choice regression that relates these observed indicators of policy stance to major trends of macroeconomic and financial developments, which are represented by common factors extracted from a large number of variables. The predicted value of the estimated model can then be interpreted as the implicit policy stance of the PBC. In a second step, we estimate how much of the variation in the PBC＇ s implicit stance can be explained by measures of its policy objectives on inflation, growth and financial stability. We find that deviations of CPI inflation from an implicit target and deviations of broad money growth from the announced targets, but not output gaps, figure significantly in the PBC＇s policy changes.     

对盈利质量的需求与中国资本市场的基本面分析

It was reported that Chinese fund managers are patiently planning for the long-term with expectations that China‘s market conditions will improve, recognizing that regulators continue to take steps to improve corporate transparency. This paper discusses the relevance of high quality publicly available earnings information, how accounting standards influence the quality of reported earnings, and how capital market participants act as monitoring forces for earnings quality. Using the U.S. market as a benchmark, this paper considers earnings quality characteristics and monitoring forces in the context of the Chinese market. My overarching premise is that high quality analysis of high quality accounting information is crucial for the efficient flow of resources through a capital market. Thus it is instrumental to the growth of China‘s financial market and its economy. To this end, the paper summarizes potential impediments to high quality earnings and high quality analysis in China.     

An Empirical Study on Relationship between Corporation Performance and Capital Structure

By using data of listed companies in both Shanghai and Shenzhen stock markets in 2001, this paper analyzes the relationship between corporation performance and capital structure. Empirical study finds that there is a strong correlation between corporate performance and financial structure： （1） Corporation performance is positively related to debt ratio; （2） When debt ratio is between 24.52% and 51.13%, corporate performance has a quadratic or cubic correlation passively related to debt ratio.     

Does Foreign Direct Investment Provide Desirable Development Finance？ The Case of China

Foreign direct investment (FDI) is often considered as a cost-effective and risk-reducing source for development finance. This paper,however,shows that FDI finance often entails underestimated risks and costs. FDI might react sensitively to business cycles and might not be as "permanent" as conventionally believed. FDI might also accelerate other forms of capital flow in times of financial difficulties and,hence,destabilize financial order. In addition to the risks,compensations to FDI and the high import-dependency of FDI-related trade lead to a considerable drain on the balance of payments. Moreover,the reliance on foreign capital for development finance is equivalent to building a Ponzi financing scheme and,therefore,is unsustainable. Given the fact that FDI financing is risky and costly and China does not lack savings,it is suggested in the present paper that China's efforts in attracting FDI should not aim at external capital provisioning.     

Financial Services in the Doha Round and China＇s Commitments

Current negotiations on financial services at the WTO are concerned with improving liberalization commitments over the Financial Services Agreement which became an integral part of the General Agreement on Trade in Services (GATS) in 1997. Important underlying issues of these negotiations are member states‘ policy decisions in two particular areas: capital account liberalization and prudential regulation. These decisions not only determine the member countries‘ scope for liberalization,, the liberalization commitments in turn also limit the scope of national economic poliey in these two areas. Taking these characteristics offinancial services talks into account, there are two major goals for the ongoing negotiations:for industrialized countries to make progress with respect to trade business and for developing countries and emerging-market economies to concentrate on improving market access on an established basis. For China, the most important goal is to implement the far-reaching liberalization commitments that were made in the context of its accession to the WTO in December 2001.     

An Overview of China’s Bond Markets

I.Introduction China's success in developing a fully functioning capital market depends in large part onwhether it succeeds in establishing a thriving market for bonds.The government has,untilrecently,restricted the types of bonds that can be issued in China.But China has realizedthat there are powerful financial reasons to promote the expansion and deepening of theChinese bond market.Among the most important are,first,that bonds would be desirableadditions to the portfolios of Chinese insur…     

Target costing as a strategic cost management tool for success of balanced scorecard system

The precondition of gaining and sustaining competitive advantage for companies that operate today＇s competitive markets is the effective cost management. Since price is determined by the market, the ways of increasing profits are productivity and cost reduction. Balanced scorecard system is accepted by academicians and practitioners as an effective strategic management tool for applying the strategy successfully. In the financial perspective of the balanced scorecard system, cost reduction is a strategic objective. It is necessary that company＇s cost reduction strategy should not only be a reaction to the market, but also a continual strategy. The approach which aims to the reduction of costs that reveal along product life cycle and preset this aim at the design stage is target costing （TC）. TC can be used as an effective tool in BSC＇s financial perspective for the objective of cost reduction. In this study, the authors aim to display how to integrate the TC to BSC.