Using Meta-Analysis and GIS for Value Transfer and Scaling Up: Valuing Climate Change Induced Losses of European Wetlands

There is growing policy and academic interest in transferring ecosystem service values from existing valuation studies to other ecosystem sites at a large geographic scale. Despite the evident policy demand for this combined transfer and “scaling up” of values, an approach to value transfer that addresses the challenges inherent in assessing ecosystem changes at a national or regional level is not available. This paper proposes a methodology for scaling up ecosystem service values to estimate the welfare effects of ecosystem change at this larger geographical scale. The methodology is illustrated by applying it to value the impact of climate change on European wetlands for the period 2000–2050. The proposed methodology makes use of meta-analysis to produce a value function. The parameters of the value function include spatial variables on wetland size and abundance, GDP per capita, and population. A geographic information system is used to construct a database of wetland sites in the case study region with information on these spatial variables. Site-specific ecosystem service values are subsequently estimated using the meta-analytic value function. The proposed method is shown to enable the adjustment of transferred values to reflect variation in important spatial variables and to account for changes in the stock of ecosystems.     

Taxing air pollutants and carbon individually or jointly: results from a CGE model enriched by an emission abatement sector

We analyse the separate and collective impacts of emissions taxation to understand the internalisation effects of externalities. The analysis is carried out using a static computable general equilibrium model, with unemployment, bottom-up abatement technologies represented by a step function, and detailed emission coefficients. Environmental and health external costs are quantified using the ExternE’s Impact Pathway Approach. Emissions, as a result of environmental taxation, fall through reduced output, production factor substitution, and increased end of pipe abatement activity. The analysis shows that a full internalisation of environmental externalities can result in modest overall economic and environmental welfare gains. There are, however, differences in terms of employment and output, depending on what combination of taxes are applied, which sectors are covered, and how fiscal revenues are redistributed. Air quality benefits range from €35–75 per ton of CO₂ abated. Total environmental benefits always exceed GDP loss and the associated welfare loss.     

Managing the accountability–autonomy tensions in university research commercialisation

This article investigates organisational responses to emerging concerns about how accountability–autonomy tensions can be managed within the context of university research commercialisation. The findings suggest that changed expectations of university research practices, which result from the introduction of a commercialisation logic, can be managed via the homogenisation of research goals and strategies. The successful management of accountability–autonomy tensions also depends on utilising the various structures and cultural contexts that can be facilitated by decoupling and bridging strategies. Further, while adopting symbolic systems may enhance legitimacy, failure to implement material practices and provide the appropriate cultural context to manage conflicting relationships may put university commercialisation ambitions at risk.     

Sovereign Wealth Funds: A Growing Global Force in Corporate Finance

Sovereign wealth funds (SWFs) have emerged as among the most important players in global financial markets. With an estimated $3 trillion at present, the collective assets at their disposal are expected to reach or surpass $7.5 trillion by 2012. SWFs have shown a wide range of investment objectives, along with continually evolving time horizons and risk appetites. For example, some SWFs have become increasingly active in corporate acquisitions and other strategic transactions. Though many of these funds prefer to invest in debt or non‐controlling equity positions, a small but growing number are seeking substantial minority and controlling equity stakes. SWFs have also recently become major participants in the financial institutions and alternative investment industries, with several high profile investments in well‐known private equity firms and financial services companies. In certain corporate transactions, their longer time horizons and willingness to employ larger percentages of equity have made them attractive alternatives to established private equity. At the same time, however, the rising prominence and perceived lack of transparency of SWFs have raised concerns among governments and other market participants in countries where companies have been targeted for investment. For this reason, companies intent on obtaining funding from or investing with SWFs are advised to prepare for media and regulatory scrutiny, particularly if a transaction is perceived to involve a country's strategic or security interests. Government policymakers are urged to balance the perceived threats of SWFs against their potential benefits, particularly their ability to provide a stabilizing source of global liquidity in the current economic environment.     

Best Practices in Corporate Governance: What Two Decades of Research Reveals

This report addresses two key questions for today's top executives: Do acquisitions create value for acquirers? And under what circumstances have acquisitions created the most value for acquiring shareholders?
The authors' analysis of over 1,500 completed deals by non-financial companies in the United States over the past 12 years shows that, at announcement, acquirers' shareholders suffer small losses, on average, in the short term around the initial deal announcement. Over longer intervals, such as one or two years following the announcement of the transaction, acquirers tend to slightly outperform industry peers.
The average or median market response hides tremendous variability in how the market has reacted to individual deals, however. This article provides evidence that the "right" M&A transaction can create substantial value for acquirers. One-quarter of the transactions lead to market-adjusted gains in excess of 5% for the acquirer and oneeighth of the transactions lead to gains in excess of 10% in the short term. However, some deals have also destroyed substantial shareholder value.
Financing structure is a key driver of the stock market reaction. Stock-financed transactions, on average, have a negative stock market reaction, while cash-financed transactions have benefited acquirers in both the short term as well as the long term.
Acquisitions of private companies or assets and units of public companies have consistently generated higher returns for acquirers than purchases of public companies.
Moreover, EPS dilution is not a major driver of how the stock market reacts to a deal. Although "accretive" deals perform slightly better than "dilutive" ones in the short and long run, the difference is small and not statistically significant. Over the long run, acquiring shareholders have benefited the most from deals within the same industry and that avoid targets with relatively optimistic earnings growth projections.     

Option Value to Waiting Created by a Control Problem

We study a principal-agent model in which there is an option to defer a capital project approval decision. A control (incentive) problem makes the option to wait valuable when it would not have been valuable otherwise. Deferring the project approval decision has both a cost and a benefit. The cost of waiting is that the agent's uncertainty regarding future project cost realizations cannot be exploited. However, by delaying the first project's approval decision, the principal can condition its approval on the agent's cost report of the second project. Such conditioning can be valuable in the provision of incentives because of a diversification effect.     

The Keys to Success in Spinoffs

Corporate restructurings accomplished through spinoffs have long been a key tool for management to unlock shareholder value. In 2016, global spinoff volume reached $117 billion, and spinoff activity continues to unfold at a similar pace in 2017, with Hilton, Xerox, Alcoa, Johnson Controls, and Danaher all recently completing major transactions. Spinoffs are often designed to increase strategic focus and discipline in the allocation of capital, enabling companies to respond more effectively to opportunities that create shareholder value, including transformational M&A. And intensifying shareholder activist pressure, along with favorable debt market conditions, has provided significant momentum to spinoff activity. In fact, almost 20% of the companies that announced spinoffs in the past five years were subject to some form of prior activist engagement. Moreover, part of the impetus for such activism can be traced to the record M&A volume of the past few years, which has added to investor demand for many acquisitive companies to consider shedding businesses that are no longer a strategic fit. But even with all this M&A activity, opportunities for unlocking value through spinoffs have not been as abundant or readily identified as in the past owing to the general reduction in corporate business diversification that has taken place during the last decade or so. And perhaps reflecting this development, the average longer‐run shareholder returns from spinoffs have actually turned negative during the past five years, while the dispersion of spinoff returns has increased, representing greater downside risk for restructurings undertaken without an effective strategy and rationale for increasing efficiency and value. Nonetheless, more than half of all spinoffs over the past five years have generated share price outperformance despite the overall decline in spinoff performance. The authors devote the second half of the article to identifying several key characteristics of the post‐separation entities that indicate the potential for such a restructuring to deliver share price outperformance. The main attributes of value‐increasing spinoffs are size and organic growth, and increases in business focus and capital efficiency; but such transactions have also produced companies that maintain the financial flexibility to pursue M&A along with a dividend policy that is both attractive and sustainable.     

The interaction between corporate tax structure and disclosure policy

When socially desirable behaviors are deemed difficult to legislate, tax code is often called upon to indirectly achieve the desired ends. Adjustments to tax policy have been employed to spark investment, encourage charitable donations, and discourage tobacco consumption, to name a few examples. This paper demonstrates that tax policy may also be an effective means of encouraging welfare enhancing disclosures by firms. Further, by inducing disclosures of the right types of information while discouraging revelation of other types, tax policy proves to be a more versatile instrument than direct regulatory attempts which can mandate (but not prohibit) disclosures. The intuition behind our results is that when firms make decisions to disclose (or withhold) pieces of private information, such a decision is often made with an eye on the potential for a large payoff. In such cases, progressive taxes can dampen the appeal of big payoffs and better align the incentives of firms with those of consumers. In short, while progressive taxes may be criticized for curbing aggressiveness, it is precisely such a decrease in aggressiveness that can prompt efficient sharing of information.