Creating Value Through Best‐In‐Class Capital Allocation1

With the economy showing signs of recovery, companies are shifting their focus from liquidity and balance sheet concerns back towards capital allocation and value creation. This article provides a comprehensive framework to examine shareholder value creation through capital allocation, and discusses important capital allocation lessons that have re‐emerged over the last few years. Notable among the key lessons are the following:

• ? Growth alone does not guarantee value creation, which suggests that companies should allocate capital based on the economic value of each investment opportunity.
• ? The limits of diversification in a financial crisis should be considered when allocating capital and managing liquidity.
• ? Companies should be conservative with base‐case cash flow projections and incorporate the possibility of downside scenarios into their projections.
• ? It is important to incorporate all forms of capital when managing liquidity.
• ? Whether using a long‐term or current‐market approach, companies should be consistent throughout the cycle in their cost of capital methodology.
• ? Companies should continually rethink investments and allocate capital in an attempt to maintain a competitive advantage.
• ? Evaluate returns relative to risk and cost of capital, and not against the company's average ROIC.
• ? Comparing the IRR of share repurchases to new investments is not an apples‐to‐apples comparison.

Finally, companies should concentrate on the strategic uses and value of particular assets and not allow their decisions to be driven by the value they might receive relative to their initial cost.     

Asset allocation and age effects in retirement savings choices

We examine the asset allocation decisions of members of three large Australian retirement savings funds. Superannuation Guarantee legislation in 1992 made Australian employees compulsory investors by requiring employers to contribute a fixed proportion of earnings to a superannuation fund on behalf of employees. A majority of these employees can choose an investment strategy for these contributions. We examine how actual investment strategy and asset allocation choices of members change with age in view of the conventional wisdom that individuals allocate less to risky assets as they age and investments theory which provides conflicting advice on the issue.     

Foreign Ownership,Equity Arbitrage and Strategic Trade Policy *

This paper investigates whether the cost of environmental regulation influences the international location of polluting industries. Industries that operate production facilities in developing countries are identified through their use of the offshore assembly provisions in the U.S. tariff Code. Pollutions Intensity of industry output is found to significantly reduce the probability of conducting offshore assembly in developing countries. This finding contradicts the arguments that developing countries are becoming pollution havens as a result of offshore assembly independent of their general disregard for the environment. Integrating production across national boundaries might actually enhance worldwide environmental quality. Relatively clean stages of the production process are being transferred to developing countries with lax environmental regulations, while polluting segments remain in the U.S. where strict environmental controls are enforced. [F1, Q2]     

Country and industry-level determinants of vertical specialization-based trade

Abstract

This paper investigates country and industry-level determinants of vertical specialization-based trade. Industries that engage in this pattern of trade are identified through their use of offshore assembly provisions in the US tariff code. Findings explain why industries engage in vertical specialization-based trade and shed light on factors that enter production location decisions. Identifying factors that encourage vertical specialization-based production and trade will enhance our understanding of industry strategy and how trade patterns will evolve as the process of globalization continues. Results suggest vertical specialization-based trade will continue to grow relative to total trade.     

‘My Life Is Like a Novel’: Embodied Geographies of Security in Southeast Turkey

Scholarship at the development-security nexus has called for greater attention to space to better understand grounded encounters with security and insecurity. Through an examination of embodied engagements with space, this paper details the way migrant women in Southeast Turkey experience security and insecurity in their day-to-day lives in regards to gendered violence. Against the backdrop of state investment in gendered development as a mechanism of conflict mitigation, the reach and mobility of women in and across new spaces in the city has grown. At the juncture between these spaces – the classroom, courtroom, and home – lie conflicting narratives about nation, community, and family that pose implications for the physical well-being of women. To this end, interviews with migrant women and development administrators and teachers suggest that (human) security be understood as embodied and relational, experienced differentially across time and space.     

旅游生态补偿:内涵探讨与科学问题

生态/环境在旅游中的重要性逐渐被认识到.一方面,生态/环境成为旅游地重要的吸引要素,成为旅游发展的重要生态资本;另一方面,旅游活动带来的生态/环境破坏,影响生态文明建设和整体生态服务价值的增值.因此,作为生态文明建设的重要途径之一的旅游生态补偿受到了重视.文章在生态旅游研究起源分析基础上,对旅游生态补偿的4个核心科学问题进行系统分析:①旅游生态补偿的涵义(什么是旅游生态补偿);②旅游生态补偿的利益主体(补给谁,谁出钱);③旅游生态补偿的标准(补多少);④旅游生态补偿的渠道与机制(通过什么样的方式,建立怎样的资金分配方式和政策体系).最后,文章展望旅游生态补偿的研究进行,认为需要关注3个重点问题:①从实践需求和研究现状看,目前首要解决的两个问题是判别旅游生态补偿的利益主体和建立旅游生态补偿标准的共识;②未来研究需要具体关注旅游生态补偿的区域和产权界定情景;③未来亦需关注国外生态补偿的经验借鉴.     

Men of Steel Meet the Market: Interpreting Firm Behavior in Russia’s Metallurgy Industry

In Capital in the Twenty-First Century, Thomas Piketty (2014) explains growing income inequality via the difference between the rate of return on capital and the growth rate of the economy: the “r > g” inequality. Even if it is true that r > g leads to increasing inequality, nearly every school of economic thought predicts that r will fall as the economy grows. Thus, for Capital (2014) to be a comprehensive theory of inequality, a more adequate theory of r is required. I term this the “Piketty Problem.” I offer a solution to this problem from an institutionalist perspective.     

John Stuart Mill's Theory Of Justice

John Stuart Mill has traditionally been portrayed as self-contradictory and failing to construct a unified social theory. Recent scholarship, however, has challenged this view, finding Mill's work to be creatively synthetic in bridging the antinomies inherent in liberal democratic thought. This revisionist interpretation of Mill is advanced by an understanding of his theory of justice and its role in shaping his policy positions on issues such as welfare, education, voting rights, property rights, taxation, government intervention, and the future of capitalism.     

International equity flows, marginal conditional stochastic dominance and diversification

The weak empirical evidence linking diversification and international equity flows calls into question the diversification paradigm at the international level and the analytical framework it implies. Using the concept of Marginal Conditional Stochastic Dominance (MCSD) to estimate the diversification opportunities, this paper reexamines the role that diversification opportunities play in the determination of international equity flows. It provides strong evidence that when diversification opportunities are measured in terms of MCSD, they are significant determinants of international equity flows. Capital flows into dominant markets and flees markets that are dominated. These results are robust with respect to a range of conventional control variables documented in the outstanding literature.