Finance, Investment and Investment Performance: Evidence from the REIT Sector

We examine financing, investment and investment performance in the equity REIT sector over the 1981–1999 time period. Analysis reveals significant differences between the old-REIT (1981–1992) and new-REIT (1993–1999) eras. The sector experienced rapid growth in the new-REIT era, primarily from firm-level investment as opposed to new entry. Firm-level investment was largely financed by equity and long-term debt, with little reliance on retained earnings. Financing policy stabilized in the new-REIT era, and capital structures became more complex. We find that REITs provided returns over and above their cost of capital, where most of the value-added investment occurred in the new-REIT era by newer firms. Finally, we present novel evidence on IPO activity and new firm investment–investment performance relations that is consistent with Tobin's q theory of investment.     

Land Development: Risk, Return and Risk Management

We model and examine the financial aspects of the land development process incorporating the industry practice of preselling lots to builders through the use of option contracts as a risk management technique. Using contingent claims valuation, we are able to determine endogenously the land value, presale option value, credits spreads and the effects of presales on debt pricing and equity expected returns. We show that using presales options effectively shift market risk from the land developer to the builder. Results from the model are consistent with the high rates of return on equity observed in empirical surveys; they also suggest that developers may be justified in pursuing projects with substantially lower expected returns to equity when a large number of lots can be presold. Additionally, we show that presales reduce default risk dramatically for leveraged projects and can support a considerable reduction in the cost of construction financing. Large debt risk premiums are justified for highly levered projects, which helps explain the use of mezzanine financing in the land development industry to reduce expected default costs.

Episodes of Exuberance in Housing Markets: In Search of the Smoking Gun

In this paper, we examine changes in the time series properties of three widely used housing market indicators (real house prices, price-to-income ratios, and price-to-rent ratios) for a large set of countries to detect episodes of explosive dynamics. Dating such episodes of exuberance in housing markets provides a timeline as well as empirical content to the narrative connecting housing exuberance to the global 2008 ?09 recession. For our empirical analysis, we employ two recursive univariate unit root tests recently developed by Phillips and Yu (International Economic Review 52(1):201–226, 2011) and Phillips et al. (2015). We also propose a novel extension of the test developed by Phillips et al. (2015) to a panel setting in order to exploit the large cross-sectional dimension of our international dataset. Statistically significant periods of exuberance are found in most countries. Moreover, we find strong evidence of the emergence of an unprecedented period of exuberance in the early 2000s that eventually collapsed around 2006 ?07, preceding the 2008 ?09 global recession. We examine whether macro and financial variables help to predict (in-sample) episodes of exuberance in housing markets. Long-term interest rates, credit growth and global economic conditions are found to be among the best predictors. We conclude that global factors (partly) explain the synchronization of exuberance episodes that we detect in the data in the 2000s.     

Financial reporting by charities: a matched case study analysis from four countries

This paper analyses financial reporting requirements applicable to charities in four jurisdictions—Australia; England; Ireland; New Zealand—using case study analysis which compares the actual financial statements of four charities operating in the same field and with similar levels of total income. The authors highlight common issues and implications in terms of the concepts underpinning not-for-profit organization (NPO) financial reporting and argue the case for harmonized international NPO accounting standards.     

A theoretical and empirical investigation into investment activities of technologically-intensive Chinese state-owned enterprises in the UK

This paper examines the determinants of direct investment in the UK by technology-intensive Chinese state-owned enterprises (SOEs). It also investigates the ways in which investment strategies are being employed for entry to the UK and to achieve access to technology. Drawing on an inductive case study strategy it is found that Chinese SOEs are motivated by their ambitions to close the technology gap by tapping into UK knowledge networks. In terms of entry strategies, the findings indicate that the initial focus on existing technology subsequently shifts to the creation of added R&D capacity and new technology. This is achieved from a permanent UK R&D base which is integrated into the parent companies’ wider R&D networks. Technology creation is enabled by adoption of divergent management practices, especially at operational level, reflecting the parent companies’ surprisingly adaptable mindsets.     

The Influence of Regulation on the Publication of Consolidated Statements

The impact of regulation on the publication of consolidated statements by Australian listed companies is examined by reviewing evidence of the first use of consolidated statements by holding companies listed on the Sydney Stock Exchange, excluding companies incorporated elsewhere, and relating that evidence to the chronology of the development of statutory, professional and stock-exchange regulations permitting or prescribing the use of consolidated statements. The findings are that the wider adoption of consolidation accounting has been associated with changes in statutory and other forms of regulation. These findings contradict the conclusions of earlier studies (Whittred, 1986, 1987, 1988), namely that regulation was of minimal influence, and that the adoption of consolidation accounting was explainable by 'contracting cost variables'. Major flaws identified in these earlier studies were an apparent failure to recognize that Sydney listed companies may have been subject to regulations established in other jurisdictions, and a crucial misinterpretation of the history of Australian stock exchange listing rules, which led to the misidentification of listed companies as having adopted consolidation 'voluntarily'.
The findings also underline comments made previously in critiques of other papers which have tested hypotheses incorporating agency or contracting costs. While historical analysis can assist the exercise of judgment in the classification of events, those who rely on historical evidence in the development of theories and in framing hypotheses should use that evidence with care, having regard to pertinent contextual factors.     

Towards a bioregional approach to tropical forest conservation: Costa Rica's Greater Osa Bioregion

Even by neotropical standards, the Osa Peninsula on the Southwest Pacific coast of Costa Rica contains extraordinary levels of biodiversity and endemism. Despite a 40-year history of conservation in a country known for its conservation efforts, the greater Osa Bioregion and its complex of protected areas face an uncertain future. Habitat fragmentation and genetic isolation threaten the long-term survival of the Osa's signature species, while Osa policymakers with limited resources struggle to address dilemmas posed by illegal resource extraction and uncertain and changing land tenure. More recently, the socio-political landscape has changed with the emergence of a ‘landed conservation gentry,’ sharing the Osa's ecological wealth with the poor frontier campesino. A review of conservation efforts in the Osa through the political ecology construct of bioregionalism provides an opportunity to further define this construct in the distinct context of neotropical forest conservation. In this article we review the theoretical underpinnings of bioregionalism, focusing on its value for neotropical forest conservation, and apply it to the mosaic of public and private lands that encompass the Greater Osa Bioregion. We characterize the complex and shifting governance framework for Osa conservation focusing on the current conservation initiative, the Osa Biological Corridor project. We conclude with the suggestion that bioregionalism's emphasis on reconciliation of humans and their environment—‘reinhabitation’—an implicit goal of the Osa Biological Corridor project, may offer the best hope for the future.