Industry relatedness in trade sales and venture capital investment returns

We investigate relationships between the industry relatedness of venture capital-backed companies and their strategic acquirer in trade sales and the achieved investment returns of venture capitalists. Using a proprietary data set of 716 trade sales, we analyze return differences between lateral and synergetic trade sales, as well as between horizontal and vertical trade sales. We find that venture capitalists achieve higher returns with lateral rather than synergetic trade sales, and that the difference is greater for deals involving early stage companies characterized by strong information asymmetries. In addition, horizontal trade sales yield higher returns than vertical trade sales; however, in boom phases of the venture capital market, this effect reverses. Finally, we find that experienced venture capitalists are able to overcome disadvantageous situations in trade sales, resulting in comparable returns across all trade sale categories.     

Boom and bust in the Baltic countries — Lessons to be learnt

For the first seven years of this decade, the Baltic countries experienced very rapid GDP growth. In 2007, though, the boom period turned to bust as country-specific factors such as the slowdown in credit growth dampened domestic demand growth. This was followed by the international financial crisis, which further limited the availability of foreign capital and pushed the Baltic countries into severe recession. This article looks in particular at the role of public finances, the impact of the fixed exchange-rate regimes and the need for a more balanced growth pattern in the future.     

Recreation boating spatial patterns: Theory and management

Abstract

The activity patterns of recreation boating on an intensively used small urban lake are measured. Matrix maps were used to collect data and to analyze the results. Distinct patterns were observed, with competition for space and conflict among different types of boats. A theory of reciprocal choreography is proposed to help explain the findings. Management options are proposed.     

MARKET SELECTION OF FINANCIAL TRADING STRATEGIES: GLOBAL STABILITY

In this paper we analyze the long-run dynamics of the market selection process among simple trading strategies in an incomplete asset market with endogenous prices. We identify a unique surviving financial trading strategy. Investors following this strategy asymptotically gather total market wealth. This result generalizes findings by Blume and Easlcy (1992) to any complete or incomplete asset market.     

Financial Markets and Stochastic Growth

The authors study the effect of financial markets on the investment of a two-good two-country economy with stochastic production in a dynamic framework. Each country produces and invests only one good and, therefore, makes decisions as a central planner in an optimal growth model. Trade between consumers of both countries, however, takes place on competitive (spot or financial) markets. The authors compare the investment–consumption decisions of both "market" models with the benchmark case of an integrated world-equilibrium. In the log-linear case, it is possible to uniquely characterize the state-dependent preferences of consumers that lead to dynamically efficient investment decisions. It is shown that the investment decisions in both "market" models are, in general, inefficient compared with the efficient, or integrated world economy, case.     

A global robustness measure for input–output projections from ESA and SNA tables

Input–output (interindustry) data are in wide use in empirical research and constitute an integral part of the European System of Accounts (ESA) and of the System of National Accounts (SNA). In a strict sense, however, these data are merely estimates of the true economic relationships. Therefore, we suggest a measure of robustness of input–output projections with respect to errors or changes in the underlying Leontief matrix. Our measure is based on the mathematical theory of norms and characterizes a complete Leontief matrix. Thereby, no assumptions are required on the distribution of the matrix elements. We discuss alternative numerical-computing algorithms and provide useful bounds and approximation formulas. The paper concludes with a large set of empirical sample applications.