Capital structure,investment unanimity,and public goods: the case for social responsibility

This paper examines the concepts of optimal capital structure and investment in an economy where government’s role is the provision of a public good. That public good is financed through current tax revenues and the sale of government securities. Absent such complications, traditional finance theory has established the equivalence among (competitive) value maximization, unanimity, and Pareto optimality. In the setting of this paper, however, the market value of government securities is not determined by the value of public good production, and the correspondence between value maximization, Parto optimality, and unanimity will not generally hold without significant restrictions on the tax structure. Otherwise, value maximization is neither an optimal nor unanimously supported objective for the firm.     

The shale oil revolution and the global oil supply curve

We focus on the implications of the shale oil boom for the global supply of oil. In order to derive testable implications, we introduce a simple stylized model with two producers, one facing low production costs and one higher production costs but potentially lower adjustment costs, competing à la Stackelberg. We find that the supply function is flatter for the high cost producer and that the supply function for shale oil producers becomes more responsive to demand shocks when adjustment costs decline. On the empirical side, we apply an instrumental variable approach using estimates of demand-driven oil price changes derived from a standard structural VAR of the oil market. A main finding is that global oil supply is rather vertical, with a short-term elasticity around 0.05. A rolling sample reveals that the shale oil boom does not appear to have fundamentally changed the contours of global oil production, but there is evidence for the oil supply curve to become more vertical in Saudi Arabia and more price responsive in the United States.     

Are government or private enterprises more likely to engage in dumping? Some international evidence

This paper provides the first systematic evidence comparing the incidence of below-cost dumping among state and privately owned firms. Recent economic theory indicates that government enterprises, if motivated by goals such as output or revenue maximization rather than profit maximization, face higher returns to engaging in below-cost pricing than private enterprises. International data from anti-dumping investigations strongly confirm this prediction. Between 43% and 94% of initiated below-cost dumping cases and between 54% and 100% of affirmative dumping decisions against exporting firms from nonmarket economies are attributable to those firms' publicly owned status. We are able to reject the hypotheses that this result is explained by political biases against nonmarket economies in anti-dumping procedures or from possible political biases stemming from the industry composition of nonmarket exports. In fact in both cases, we find that the above results may understate the true effect of market organization on a country's propensity to engage in dumping.     

国内外油气开采企业生产经营管理经验评述

由于石油产品的特殊性和战略地位,保持企业生产经营的良性稳定发展成为当前油气开采企业生存的核心要务。在此基础上,从生产成本结果、生产经营质量和生产经营决策三个方面总结分析了当前国内外油气开采企业的成功生产经营管理经验。     

An option pricing approach to optimal bidding in construction projects

Reaching an optimal mark‐up value in the context of construction projects' bidding competitions has been a research topic for more than 40 years. This paper aims to contribute to this debate by applying a real options approach. The proposed model has a pure theoretical nature and is based on a maximization problem, whose outcome is the optimal price, that is, the price that should be included in the bid proposal. The model is later extended to accommodate the existence of penalty costs if the selected bidder refuses to enter into contract. Results reached using a numerical example demonstrate that the optimal price is higher when penalty costs are considered.     

A Bayesian approach for exact optimal measurement and cutting times for a Eucalyptus production forest

This paper addresses the design for supporting the optimal decision on tree cutting in a Portuguese eucalyptus production forest. Trees are usually cut at the biological rotation age, i.e. the age which maximizes the yearly volume production. Here we aim the maximization of the long-term yearly volume yield reduced by harvest costs. We consider different growth curves, with a known prior distribution, that can occur in each rotation. The optimal cutting time at each rotation depends both on the current growth curve and on the prior distribution. Different priors and strategies are compared with respect to the long-term production. Optimization of the cutting time allows an improvement of 16% of the long-term volume production. We conclude that the use of optimal designs can be beneficial for tree cutting in modern production forests.     

On the Optimal Structure of Government Subsidies for Enterprise Zones and Other Locational Development Programs

Government locational development programs often reward businesses for decisions they would have made or that are going to be quickly reversed. This paper presents a model to determine the amount and structure of government locational subsidies that minimize this problem. We model the firm's decision to switch locations as an option whose value depends on stochastic operating costs, the costs to switch locations and subsidies offered by the government. The government maximizes the expected benefit from the operation of the firm within its preferred location by choosing a subsidy package that explicitly and endogenously recognizes the firm's switching option.     

Sources of real exchange rate movements in Saudi Arabia

The paper investigates the sources of real exchange rate movements in Saudi Arabia by decomposing real exchange rate movements into those attributable to real and nominal shocks. Using a popular structural VAR model and assuming long-run neutrality of nominal shocks, we find that real shocks play a significant role in explaining real exchange rate movements in Saudi Arabia. Using a more disaggregated model, we also find that oil production shocks rather than real oil price shocks are responsible for real exchange rate movements. In order to stabilize the real exchange rate, Saudi Arabia should focus on stabilizing oil production.(JEL F3, C5)     

Risk behavior in the presence of government programs

Our paper assesses the impacts of the 1996 US Farm Bill on production decisions. We apply the expected utility model to analyze farmers’ behavior under risk and assess how farmers’ production decisions change in the presence of government programs. Specifically, we empirically evaluate the relative price and the risk-related effects of farm policy changes at the intensive margin of production, as well as the extra value that these policies add to farmers’ certainty equivalent. We use farm-level data collected in Kansas to estimate the model. We find evidence that decoupled government programs have only negligible impacts on production decisions.     

Stochastic optimal growth with risky labor supply

Production takes time, and labor supply and profit maximization decisions that relate to current production are typically made before all shocks affecting that production have been realized. In this paper we re-examine the problem of stochastic optimal growth with aggregate risk where the timing of the model conforms to this information structure. We provide a set of conditions under which the economy has a unique, nontrivial and stable stationary distribution. In addition, we verify key optimality properties in the presence of unbounded shocks and rewards, and provide the sample path laws necessary for consistent estimation and simulation.     

Social optimal pricing in a spatial market

This paper investigates optimal spatial price patterns derived on the basis of welfare maximization (in terms of consumer surplus plus profit) under alternative spatial pricing policies, including discriminatory, fo.b., and c.i.f. pricing. It shows that under all forms of spatial pricing policies, optimal spatial prices should equate marginal costs of production with the mill price, and that transportation costs incurred are always charged to consumers, even in the case of c.i.f. pricing. In addition, it shows that society never prefers c.i.f. to any other pricing policies, and is always indifferent between discriminatory and Lo.b. pricing. Some additional properties of optimal spatial prices are also presented.     

政治联系、市场化进程与权益资本成本——来自中国民营上市公司的经验证据

以中国民营上市公司为样本,文章实证检验不同市场环境下政治联系对企业权益资本成本的影响,研究发现:政治联系对权益资本成本的影响在不同地区是有差异的;在市场化程度较低地区,由于政府干预导致企业经营业绩有较高的不确定性,有政治联系企业承担着较高的权益资本成本;在市场化程度较高地区,政府干预相对较少,政治联系更多地体现为一种荣誉或良好的政商关系,此时有政治联系企业享有较低的权益资本成本;当上市公司存在控股股东利益输送时,投资者预期到无法共享政治联系为企业带来的利益,此时有政治联系企业要承担较高的权益资本成本。本研究为厘清政治联系对企业和投资者的利弊影响提供了一个有益的视角。     

Risk spillover from crude oil prices to GCC stock market returns: New evidence during the COVID-19 outbreak

In this study, we examine oil price extreme tail risk spillover to individual Gulf Cooperation Council (GCC) stock markets and quantify this spillover’s shift before and during the COVID-19 pandemic. A dynamic conditional correlation generalized autoregressive heteroscedastic (DCC- GARCH) model is employed to estimate three important measures of tail dependence risk: conditional value at risk (CoVaR), delta CoVaR (ΔCoVaR), and marginal expected shortfall (MES). Using daily data from January 2017 until May 2020, results point to significant systemic oil risk spillover in all GCC stock markets. In particular, the effect of oil price systemic risk on GCC stock market returns was significantly larger during COVID-19 than before the pandemic. Upon splitting COVID-19 into two phases based on severity, we identify Saudi Arabia as the only GCC market to have experienced significantly higher exposure to oil risk in Phase 1. Although all GCC stock markets received greater oil systemic risk spillover in Phase 2 of COVID-19, Saudi Arabia and the United Arab Emirates appeared more vulnerable to oil extreme risk than other countries. Our empirical findings reveal that investors should carefully consider the extreme oil risk effects on GCC stock markets when designing optimal portfolio strategies, minimizing portfolio risk, and adopting dynamic diversification process. Policymakers and regulators should also enact awareness, oversight, and action plans to minimize adverse oil risk effects.     

考虑成本/物流服务水平权衡的双层规划工厂选址

合理的选址方案,良好的配置当前和未来的设施资源,是企业适应和满足不断变化的动态经营环境,从而提高服务质量,增强其核心竞争力的重要途径之一。对工厂选址问题进行了描述,分析了选址中需考虑物流服务水平的必要性,提出了利用双层规划协调供应链整体利益。在现有大多数研究只考虑优化成本的基础上,建立了基于成本/物流服务权衡的双层规划工厂选址模型。     

Political and economic influences on the bureaucratic allocation of federal funds: The case of Urban Development Action Grants

The distributive theory of politics predicts that federal budget allocations will be responsive to the committee position of congressmen and their majority/minority party status. But such political allocations are less likely where bureaucrats rather than legislators make the allocative decisions. In such cases we must take into account bureaucratic motivations as well. Niskanen's bureaucratic budget maximization theory emphasizes such bureaucratic maximands and the efficient production of output or activity by the budget constrained bureau. In this paper the two theories are tested using data from the Urban Development Action Grant program, a capital subsidy program operated by the Department of Housing and Urban Development. A set of political and bureaucratic decision criteria is employed as independent variables in a series of logit and Tobit models in order to predict the likelihood of projects being funded and the amounts they will receive. The political criteria are not significant in any specifications, but the bureaucratic criteria suggest an investment-maximizing, risk-avoidance strategy on the part of HUD bureaucrats. Thus the results support the Niskanen theory, but do not support the distributive theory.     

Federal Water Resources Policy and Decision-Making: Their Formulation Is Essentially a Political Process Conditioned by Government Structure and Needs

A bstract . The effects that politics, government structure , and economic standards have upon federal water resources planning are examined. Water resources policy decisions are treated as a product of political demands which, in turn, are examined as a product of the direct or indirect stakes, or perception thereof, in a policy. Government structure also affects decisions, since it affects political access and, subsequently, power as well as the administrative capacity of government. Economic standards , such as a requirement that water projects contribute to national economic development , arise within a political context. Formulation of federal water resources policy is essentially a political process that is conditioned to some extent by government structure and planning standards such as economic requirements. Thus, recommendations to improve the product of this process must take into account its essential nature. Examples are drawn from the western reclamation and water pollution experiences.     

基于制度经济学视角分析产业集群组织内部企业边界

产业集群内的企业在利润最大化的驱使下不断增加企业边界,在企业内部的生产成本和交易成本的制约下不断缩小企业边界在这两种相反效应的共同作用下,企业边界将达到边际收益等于边际成本时的规模,企业实现利润最大化。企业生产边际成本要包含企业内部交易成本。     

Capital Budgeting and Political Risk: Empirical Evidence

This paper surveys and investigates Swedish firms' use of capital budgeting techniques for foreign direct investments. We document that the use of the theoretically correct net present value method decreases with the political risk in the host country, and that the use of the Payback method increases with the political risk. We conclude that in the presence of capital market imperfections, unsystematic and country-specific political risks are important. Because these risks are difficult to estimate (rendering high deliberation costs) managers are inclined to use simple rules of thumb for their capital budgeting decisions. Our results can partly explain why surveys find that alternative methods such as the Payback method are frequently used despite their theoretical drawbacks.     

Performance Implications of Ties to the Government and SOEs: A Political Embeddedness Perspective

In many countries governments not only regulate business activities, but also become involved in the corporate governance of individual firms through ownership and board ties. While existing studies usually focus either on benefits of political connections or on costs of government influence, a political embeddedness perspective helps us consider both advantages and constraints associated with ties to the government. In particular, firms with direct ties to the government will experience significant costs associated with government officials' involvement in the corporate governance process. In contrast, firms with ties to state‐owned enterprises (SOEs) are connected to the government indirectly and thus, while getting access to state‐owned resources, avoid costs associated with the government's interventions. This study compares the performance consequences of board and ownership ties to the government with the consequences of board and ownership ties to SOEs. I find that ties to SOEs are associated with higher profitability, while no significant differences are discovered for firms with direct ties to the government.     

Corporate takeovers,stockholder returns and executive rewards

Various motives for making corporate acquisitions have been forwarded in the managerial economics literature. Two that have received a lot of attention are the maximization of stockholder wealth and the maximization of senior management's utility. These two alternative views can lead to different acquisition decisions. The paper examines the returns to senior management and the returns to stockholders following corporate takeovers in the United Kingdom. The evidence suggests that if shareholders profit from takeovers then so do the senior' management. Of more interest, however, is the finding that if acquisitions result in a reduction in stock market value for the acquiring firm, their senior management appear to gain. In particular, senior management remuneration increases substantially after an acquisition. This evidence is consistent with the maximization of senior management's utility being an important motive in many corporate-acquisition decisions.