The Price of Risk on the African Frontier Stock Markets

The Capital Asset Pricing Model (CAPM), and the Fama-French and Carhart models have been widely applied in the developed and most emerging markets; however, there is scant evidence of the viability of the models on the African Frontier Stock Markets (AFSMs). This study examines the viability of the models for a sample that pools securities across nine AFSMs, and whether or not the risk factors of these models command risk premium on the AFSMs. The paper provides evidence of the existence of the size, value and momentum effects on the AFSMs. In addition, the models only partly capture the returns to size and book-to-market sorted portfolios on the AFSMs. Also, the risk factors of these models generally, command marginally significant premium on the AFSMs. Caution should in general be exercised when applying these models on the AFSMs.     

Do Mature Firms Gain Higher Economic Value from R&D Investment?

Despite the significance of economic value indicators in the measurement of firm value, not much attention has been dedicated to how research and development (R&D) influences firms’ economic value. This study examines the relationship between R&D investments and firms’ economic value and considers the moderating role of age in the relationship using a dataset from manufacturing and information and technology firms in China. The results show that R&D investments impact firms’ economic value positively. This suggests that firms that invest in R&D are rewarded with a monopoly, which increases their market shares, thereby increasing economic value. Again, we find that older firms increase their economic value more than younger ones when they both invest in R&D. Thus, younger firms in China suffer from the liability of newness when they invest in R&D. It is recommended that these younger firms should strive to shorten the time to reap the returns from R&D investments.

     

Climate change reduces the mitigation obtainable from sequestration in an Australian farming system

Agricultural research on climate change generally follows two themes: (i) impact and adaptation or (ii) mitigation and emissions. Despite both being simultaneously relevant to future agricultural systems, the two are usually studied separately. By contrast, this study jointly compares the potential impacts of climate change and the effects of mitigation policy on farming systems in the central region of Western Australia’s grainbelt, using the results of several biophysical models integrated into a whole‐farm bioeconomic model. In particular, we focus on the potential for interactions between climate impacts and mitigation activities. Results suggest that, in the study area, farm profitability is much more sensitive to changes in climate than to a mitigation policy involving a carbon price on agricultural emissions. Climate change reduces the profitability of agricultural production and, as a result, reduces the opportunity cost of reforesting land for carbon sequestration. Nonetheless, the financial attractiveness of reforestation does not necessarily improve because climate change also reduces tree growth and, therefore, the income from sequestration. Consequently, at least for the study area, climate change has the potential to reduce the amount of abatement obtainable from sequestration – a result potentially relevant to the debate about the desirability of sequestration as a mitigation option.     

Hand pollination,mass spraying,and hybrid seedlings: Do these technologies affect the welfare of smallholder cocoa farmers in Ghana?

Adoption of cocoa production technologies has the potential to improve productivity and welfare of smallholder producers in low-income countries. While studies investigating synergies in agricultural technologies are growing, empirical evidence on the determinants and impacts of adopting multiple cocoa production technologies on smallholder farmers' welfare is scarce. Therefore, this study contributes by analyzing the determinants and effects of adoption of multiple cocoa production technologies on the welfare of smallholder farmers in Ghana. To achieve this, we used the multinomial endogenous switching regression and multivalued inverse probability regression adjustment models to a random sample of 2233 cocoa farmers from Ghana. The results show that various socioeconomic characteristics (e.g., farmer's age and experience), resource constraints (e.g., land ownership and credit access), market-related factors (e.g., distance to the market), and production shocks (e.g., rainfall) influence the adoption of multiple cocoa production technologies. Furthermore, the results reveal that adopting multiple production technologies significantly improves cocoa yields, gross income, per capita consumption expenditure, and reduces household food insecurity. Therefore, policies, such as financial support, need to be aimed at improving and strengthening smallholder cocoa producers' capacity to adopt synergistic conventional and non-conventional cocoa production technologies to maximize smallholder farmers' welfare.