Prepurchase financing pool: Revealing the IRR problem

Internal rate of return (IRR) is one of the most common and important indicators in investment analysis because it is often used by managers and practitioners as a decision-making criterion. Moreover, the IRR reflects the financial cost in financing decisions and it helps to answer the following question when comparing different financing alternatives: “Which loan is the cheapest?” Among the different types of loans in Brazil, there is a financial product called a prepurchase financing pool (PPFP) that is generally regarded as the best option for financing or loans. The objective of this article is to use the prepurchase financing pool to show the flaws of IRR in financial analysis. In particular, when IRR is used to evaluate the prepurchase financing pool, one finds problems of reliability regarding (i) existence, (ii) uniqueness, and (iii) economic interpretation of the rate. The results show that the prepurchase financing pool is relevant evidence that the IRR flaws are found in financial products.     

Die Risikoprämie als Teil des Zinses

Ohne Zusammenfassung     

Wirtschaftsordnung und Statistik

Ohne Zusammenfassung     

Good Cop–Bad Cop: Trust,Control, and the Lure of Integration

Based on a longitudinal case study of four interorganizational product development collaborations, this paper identifies a lure to cross‐functional integration that has hereto been neglected. In particular, findings suggest that when the buyer firm separates the Research and Development (R&D) Department from the Procurement Department, the two departments play a good cop–bad cop strategy toward the supplier. Thereby, they are able to foster a high level of goodwill trust between R&D personnel of the collaborating firms, while procurement personnel maintain a high level of formal control. Using an intricate sample design with polar cases, the study shows that cross‐functional integration of the two departments hampers interorganizational goodwill trust at the benefit of formal control. The findings offer a way forward for managers seeking to reap the benefits of collaboration, while limiting their exposure to the associated risks.     

Technology Exploitation Paths: Combining Technological and Complementary Resources in New Product Development and Licensing

Technological resources in the form of patents, trade secrets, and know‐how have become key assets for modern enterprises. This paper addresses a critical issue in technology and innovation management, namely, the commercial exploitation of technological resources resulting from research and development (R&D) investments. Extracting economic value from these resources by maximizing the benefits for shareholders is an extremely challenging task because technological resources are intangible, idiosyncratic, uncertain, predominantly tacit, and with poorly defined property rights. In their attempt to extract the maximum value from their technological resources, firms increasingly combine their internal exploitation through new product development (NPD) with external exploitation through licensing. However, most existing studies on NPD and technology licensing have treated the two exploitation paths independently and in isolation, which has resulted in two separate research streams using different theories and addressing different managerial challenges. The purpose of this paper is to contribute to filling this gap by developing and testing a comprehensive conceptual framework that simultaneously considers the antecedents affecting the successful implementation of NPD and licensing strategies as well as their consequences on firm profitability. The paper in particular investigates the effects of the interplay between technological resources and three types of complementary resources, marketing, manufacturing, and relational. We test the model using structural equation modeling on a sample of 733 Spanish manufacturing firms observed from 2003 to 2007. The data provide support for the existence of different paths to market firm technologies: an internal path, whereby the ownership of technological resources fully explains NPD performance, and an external path, whereby high intensity of marketing and relational resources reinforces the positive effect of technological resources on licensing performance. This sustains the relevance of the resource‐based value‐enhancing effects of complementary resources in licensing, as opposed to the motivation‐reducing effects advanced by transaction cost‐based literature. Moreover, the empirical analysis shows a substitution effect between NPD and licensing, whereby their simultaneous pursuit at intense levels is associated with lower profit margins. This provides evidence of the much theorized, but seldom tested, rent dissipation effect. These findings offer several contributions to research on licensing, NPD, open innovation, and the resource‐based view of the firm. On a managerial level, they suggest that achieving maximum value from proprietary technologies may not entail exploiting them both through external and internal paths. Managers are also informed that the resource combinations that enhance licensing performance include marketing and relational resources.     

Do analysts add value when they most can? Evidence from corporate spin‐offs

This article investigates how securities analysts help investors understand the value of diversification. By studying the research that analysts produce about companies that have announced corporate spin‐offs, we gain unique insights into how analysts portray diversified firms to the investment community. We find that while analysts' research about these companies is associated with improved forecast accuracy, the value of their research about the spun‐off subsidiaries is more limited. For both diversified firms and their spun‐off subsidiaries, analysts' research is more valuable when information asymmetry between the management of these entities and investors is higher. These findings contribute to the corporate strategy literature by shedding light on the roots of the diversification discount and by showing how analysts' research enables investors to overcome asymmetric information. Copyright © 2013 John Wiley & Sons, Ltd.     

The α-stable processes and their relationship with the exponent of self-similarity: Exchange rates of USA Dollar,Canadian Dollar,Euro and Yen

This research work analyzes the yields of the exchange rate parities of the American dollar, Canadian dollar, Euro, and Yen; estimates the basic statistics and the α-stables; carries out the Kolmogorov–Smirnov, Anderson–Darling, and Lilliefors goodness of fit tests; estimates the self-similar exponents and carries out the t and F tests, ruling out that the series of parities are multifractal. It also estimates the confidence intervals of the exchange rate parities and concludes that the estimated α-stable distributions are more efficient than the Gaussian distribution to quantify the risks of the market, and that the series are self-similar. Through the ? index, we can infer the risk of the events, indicating that the parities are anti-persistent and thus have short-term memory, mean reversion, and a negative correlation with the high risk in the short and medium term. The estimation and validation of the α-stable distributions and the self-similar exponent are important in the evaluation and creation of innovative investment instruments through financial engineering, risk administration, and the evaluation of derived products.