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Author : Daniel Hoang
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (12 download)
Download or read book The Economics of Capital Allocation in Firms written by Daniel Hoang and published by . This book was released on 2018 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : George H. Zanjani
Publisher :
ISBN 13 :
Total Pages : 42 pages
Book Rating : 4.:/5 (129 download)
Download or read book An Economic Approach to Capital Allocation written by George H. Zanjani and published by . This book was released on 2009 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper starts with primitive assumptions on consumer preferences and risk. It then derives prices consistent with a social optimum within an insurance company and the consumer-level capital allocation implied therein. The implied allocation quot;adds upquot; to the total capital of the firm (a result echoing findings in the congestion pricing literature - where optimal tolls exactly cover the rental cost of the highway). The allocation follows each consumer's share of recoveries in states where the insurer defaults, weighted by the severity of the default in terms of welfare impact. The paper goes on to argue that the economic approach employed supports a broader conception of allocation - beyond that based on the marginal impact of each consumer's risk. Specifically, it shows that marginal allocation rules do restrict the capital assigned to marginal units of coverage, but inframarginal units of coverage may in general receive different assignments of capital.
Author : David Dollar
Publisher : International Monetary Fund
ISBN 13 : 1451865732
Total Pages : 40 pages
Book Rating : 4.4/5 (518 download)
Download or read book Das (Wasted) Kapital written by David Dollar and published by International Monetary Fund. This book was released on 2007-01-01 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: Based on a survey that we designed and that covers a stratified random sample of 12,400 firms in 120 cities in China with firm-level accounting information for 2002-2004, this paper examines the presence of systematic distortions in capital allocation that result in uneven marginal returns to capital across firm ownership, regions, and sectors. It provides a systematic comparison of investment efficiency among wholly and partially state-owned, wholly and partially foreignowned, and domestic privately owned firms, conditioning on their sector, location, and size characteristics. It finds that even after a quarter-of-century of reforms, state-owned firms still have significantly lower returns to capital, on average, than domestic private or foreign-owned firms. Similarly, certain regions and sectors have consistently lower returns to capital than other regions and sectors. By our calculation, if China succeeds in allocating its capital more efficiently, it could reduce its investment intensity by 5 percent of GDP without sacrificing its economic growth (and hence deliver a greater improvement to its citizens' living standard).
Author : John R. Graham
Publisher :
ISBN 13 :
Total Pages : 42 pages
Book Rating : 4.:/5 (748 download)
Download or read book Capital Allocation and Delegation of Decision-Making Authority Within Firms written by John R. Graham and published by . This book was released on 2011 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: We survey more than 1,000 CEOs and CFOs to understand how capital is allocated, and decision-making authority is delegated, within firms. We find that CEOs are least likely to share or delegate decision-making authority in mergers and acquisitions, relative to delegation of capital structure, payout, investment, and capital allocation decisions. We also find that CEOs are more likely to delegate decision authority when the firm is large or complex. Delegation is less likely when the CEO is particularly knowledgeable about a project, when the CEO has an MBA degree or long tenure, and when the CEO's pay is tilted towards incentive compensation. We study capital allocation in detail and learn that most companies allocate funds across divisions using the net present value rule, the reputation of the divisional manager, the timing of a project's cash flows, and senior management's "gut feel." Corporate politics and corporate socialism are more important allocation criteria in foreign countries than in the U.S -- National Bureau of Economic Research web site.
Author : Dennis Schlegel
Publisher : Springer
ISBN 13 : 3319151355
Total Pages : 255 pages
Book Rating : 4.3/5 (191 download)
Download or read book Cost-of-Capital in Managerial Finance written by Dennis Schlegel and published by Springer. This book was released on 2015-02-24 with total page 255 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book examines cost-of-capital models and their application in the context of managerial finance. This includes the use of hurdle rates in capital allocation decisions, as well as target returns in performance management. Besides a review of classical finance models such as the Capital Asset Pricing Model (CAPM), other contemporary models and techniques to determine the cost-of-capital of business units and private companies are discussed. Based on a mixed methods approach, current cost-of-capital practices and their determinants are empirically analyzed among German companies.
Author : George M. Constantinides
Publisher : Elsevier
ISBN 13 : 0080495079
Total Pages : 654 pages
Book Rating : 4.0/5 (84 download)
Download or read book Handbook of the Economics of Finance written by George M. Constantinides and published by Elsevier. This book was released on 2003-11-04 with total page 654 pages. Available in PDF, EPUB and Kindle. Book excerpt: Volume 1A covers corporate finance: how businesses allocate capital - the capital budgeting decision - and how they obtain capital - the financing decision. Though managers play no independent role in the work of Miller and Modigliani, major contributions in finance since then have shown that managers maximize their own objectives. To understand the firm's decisions, it is therefore necessary to understand the forces that lead managers to maximize the wealth of shareholders.
Author : Harold L. Cole
Publisher : Oxford University Press
ISBN 13 : 0190941723
Total Pages : 304 pages
Book Rating : 4.1/5 (99 download)
Download or read book Finance and Financial Intermediation written by Harold L. Cole and published by Oxford University Press. This book was released on 2019-03-29 with total page 304 pages. Available in PDF, EPUB and Kindle. Book excerpt: The financial system is a densely interconnected network of financial intermediaries, facilitators, and markets that serves three major purposes: allocating capital, sharing risks, and facilitating intertemporal trade. Asset prices are an important mechanism in each of these phenomena. Capital allocation, whether through loans or other forms of investment, can vary both across sectors-at the broadest, manufactures, agriculture, and services-and within sectors, for example different firms. The risk that various investors are willing to take reflects their financial position and alternative opportunities. Risk and asset allocation are also influenced by whether money, and especially its expenditure, is more important now or in the future. These decisions are all influenced by governmental policies. When there are mismatches, the results include financial meltdowns, fiscal deficits, sovereign debt, default and debt crises. Harold L. Cole provides a broad overview of the financial system and assets pricing, covering history, institutional detail, and theory. The book begins with an overview of financial markets and their operation and then covers asset pricing for standard assets and derivatives, and analyzes what modern finance says about firm behavior and capital structure. It then examines theories of money, exchange rates, electronic payments methods, and cryptocurrencies. After exploring banks and other forms of financial intermediation, the book examines the role they played in the Great Recession. Having provided an overview of the provate sector, Cole switches to public finance and government borrowing as well as the incentives to monetize the public debt and its consequences. The book closes with an examination of sovereign debt crises and an analysis of their various forms. Finance and financial intermediation are central to modern economies. This book covers all of the material a sophisticated economist needs to know about this area.
Author : Robert A. Taggart jr.
Publisher :
ISBN 13 :
Total Pages : 20 pages
Book Rating : 4.:/5 (255 download)
Download or read book Capital allocation in multi-division firms written by Robert A. Taggart jr. and published by . This book was released on 1983 with total page 20 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : B. Porteous
Publisher : Springer
ISBN 13 : 0230512704
Total Pages : 343 pages
Book Rating : 4.2/5 (35 download)
Download or read book Economic Capital and Financial Risk Management for Financial Services Firms and Conglomerates written by B. Porteous and published by Springer. This book was released on 2005-12-19 with total page 343 pages. Available in PDF, EPUB and Kindle. Book excerpt: The authors present a comprehensive and timely discussion of economic capital and financial risk management for financial services firms and conglomerates. Topics covered include: the different types of risks that firms collect; risk governance issues; how stress testing can be used to measure risk; the provision of a clear and precise definition of economic capital; the different types of capital that are eligible to back regulatory capital, and; the development of models that can be used to estimate a firm's economic capital requirements. A unique feature of the book is that, for the first time, the economic capital requirements of financial services firms across the entire risk spectrum, from the short end to the long end, are considered in one book. The authors develop models to estimate the economic capital requirements of banks, asset management firms, life and non-life insurance firms, pension funds, and the financial services conglomerates that comprise these firms. Economic capital is compared to regulatory capital and regulatory capital arbitrage is discussed. The diversification benefit present in financial services conglomerates is quantified and the practical management of this diversification benefit is dealt with. The authors give new insights into capital management and performance measurement for financial services conglomerates and provide detailed descriptions of the main financial services firm regulatory capital changes that are ongoing at the time of writing. This superb and original book charts new ground in the practical application of economic capital for financial services firms and conglomerates. It is required reading for all capital allocation and risk professionals.
Author : Marc Steffen Rapp
Publisher :
ISBN 13 :
Total Pages : 104 pages
Book Rating : 4.:/5 (13 download)
Download or read book From Financial Markets to Corporate Governance written by Marc Steffen Rapp and published by . This book was released on 2019 with total page 104 pages. Available in PDF, EPUB and Kindle. Book excerpt: Ten years ago, much of the Western world was shocked by the financial crises affecting not only the corporate ecosystem, but society at large. This brought a - classical - question to the forefront: How can we ensure that capital is allocated to its most efficient uses?Not only economists consider a well-functioning capital allocation process to be of first order importance for a modern (capitalist) economy and differentiate two levels of capital allocation: First, on the macro-level investors decide about their investments (i.e. which firms receive capital). Second, on a micro-level managers determine the capital allocation among the multitude of firms.Following this hierarchy, this research proceeds in two steps. First, it examines the role and economic impact of financial structures (i.e., the size and composition of financial markets) for economic development (broadly defined). Analyzing 98 countries over the years 1975-2016, it provides novel evidence for the importance of equity markets for growth, investment, capital formation, and productivity, as well as for reducing unemployment and inequality. Moreover, it documents that stock markets are particularly important in countries with well-functioning institutions, as for instance measured by the Rule of Law. Second, it examines the role and economic impact of corporate governance on individual firm behavior. Analyzing about 450 European firms over the years 2004-2016, it provides novel evidence for the importance of long-term oriented institutional investors and board independence for a firm's long-term development. Specifically, it documents that these two factors are able to reduce the firm's cost of capital and to encourage more unique strategies.The project contributes to the ongoing debate about the optimal design of financial markets and the role of corporate governance in the capital allocation process among the firms. It provides strong arguments for initiatives fostering equity capital markets and establishing country- and firm-level governance mechanisms ensuring an efficient capital allocation process.
Author : Art Durnev
Publisher :
ISBN 13 :
Total Pages : 62 pages
Book Rating : 4.:/5 (129 download)
Download or read book Capital Markets and Capital Allocation written by Art Durnev and published by . This book was released on 2013 with total page 62 pages. Available in PDF, EPUB and Kindle. Book excerpt: Recent work showing that a sounder financial system is associated with faster economic growth has important implications for transition economies. Stock prices in developed economies move in highly firm-specific ways that convey information about changes in firms' marginal value of investment. This information facilitates the rapid flow of capital to its highest value uses. In contrast, stock prices in low-income countries tend to move up and down en masse, and thus are of scant use for microeconomic capital allocation. Some transition economy markets are coming to resemble those of developed economies, others those of low-income countries. Stock return asynchronicity is highly correlated with the strength of private property rights in general - and public shareholders' rights in particular. Other recent work suggests that small entrenched elites in low-income countries preserve their sweeping control over the corporate sectors of their economies by using political influence to undermine the financial system and deprive entrants of capital. The lack of cross-sectional independence in some transition economies' stock returns may be a warning of such economic entrenchment. Sound property rights, solid shareholder rights, stock market transparency, and capital account openness appear to check this, and thus contribute to efficient capital allocation and economic growth.
Author : Robert A. Jr Taggart
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (874 download)
Download or read book Capital Allocation in Mult-Division Firms written by Robert A. Jr Taggart and published by . This book was released on 1987 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: It is common practice for firms to ration capital funds to their divisions, rather than set a price and let the divisions use as much as they want. This appears to be true even when the overall firm faces no rationing in the capital market. This paper offers an interpretation of this phenomenon based on Martin Weitzman's "Prices vs. Quantities" model. It is found that a rationing systemis advantageous when division managers do not perceive the full consequences of their investment decisions for the firm as a whole. By contrast, a pricing system for allocating capital among divisions would be favored when the division managers possess valuable information that cannot be costlessly communicated to headquarters. It is then argued that actual capital budgeting practice in many firms reflects a mixture of these two systems and can thus be interpreted as an attempt to reap both kinds of benefits at once
Author : Tarun Khanna
Publisher : Harvard Business Press
ISBN 13 : 1422157865
Total Pages : 261 pages
Book Rating : 4.4/5 (221 download)
Download or read book Winning in Emerging Markets written by Tarun Khanna and published by Harvard Business Press. This book was released on 2010-04-28 with total page 261 pages. Available in PDF, EPUB and Kindle. Book excerpt: The best way to select emerging markets to exploit is to evaluate their size or growth potential, right? Not according to Krishna Palepu and Tarun Khanna. In Winning in Emerging Markets, these leading scholars on the subject present a decidedly different framework for making this crucial choice. The authors argue that the primary exploitable characteristic of emerging markets is the lack of institutions (credit-card systems, intellectual-property adjudication, data research firms) that facilitate efficient business operations. While such "institutional voids" present challenges, they also provide major opportunities-for multinationals and local contenders. Palepu and Khanna provide a playbook for assessing emerging markets' potential and for crafting strategies for succeeding in those markets. They explain how to: · Spot institutional voids in developing economies, including in product, labor, and capital markets, as well as social and political systems · Identify opportunities to fill those voids; for example, by building or improving market institutions yourself · Exploit those opportunities through a rigorous five-phase process, including studying the market over time and acquiring new capabilities Packed with vivid examples and practical toolkits, Winning in Emerging Markets is a crucial resource for any company seeking to define and execute business strategy in developing economies.
Author : Dimitris N. Chorafas
Publisher : Elsevier
ISBN 13 : 0080472567
Total Pages : 441 pages
Book Rating : 4.0/5 (84 download)
Download or read book Economic Capital Allocation with Basel II written by Dimitris N. Chorafas and published by Elsevier. This book was released on 2004-02-09 with total page 441 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book is a complimentary follow-on book to Operational Risk Control with Basel II. While the previous book focuses on operational risk, Economic Capital Allocation provides an overview of credit risk within the context of the Basel II accords.The book provides:* comprehensive coverage of the evolution of the banking industry with Basel II in mind* extensive information on the capital requirements for bank liquidity and solvency * coverage of the new rules as laid down by the supervisory authorities of the Group of Ten industrialized nations* key information on the technical requirements for credit institutions such as: new credit rating scales, modeling of credit risk, control of operational risks, and, novel ways and means for the management of exposure to Credit Risk* Basel II accords must be implemented by 2006 and require 2 years preparation for proper implementation* Author at the forefront in the development of the Basel II Capital Adequacy Accord * Based on intensive research in the US, UK and continental Europe
Author : Artyom Durnev, Randall Morck, and Bernard Yeung
Publisher :
ISBN 13 :
Total Pages : 62 pages
Book Rating : 4.L/5 ( download)
Download or read book Capital Markets and Capital Allocation: Implications for Economies of Transation written by Artyom Durnev, Randall Morck, and Bernard Yeung and published by . This book was released on 2001 with total page 62 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Oliver D. Hart
Publisher : Oxford University Press
ISBN 13 : 0198288816
Total Pages : 239 pages
Book Rating : 4.1/5 (982 download)
Download or read book Firms, Contracts, and Financial Structure written by Oliver D. Hart and published by Oxford University Press. This book was released on 1995-10-05 with total page 239 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book provides a framework for thinking about economic instiutions such as firms. The basic idea is that institutions arise in situations where people write incomplete contracts and where the allocation of power or control is therefore important. Power and control are not standard concepts in economic theory. The book begins by pointing out that traditional approaches cannot explain on the one hand why all transactions do not take place in one huge firm and on the other handwhy firms matter at all. An incomplete contracting or property rights approach is then developed. It is argued that this approach can throw light on the boundaries of firms and on the meaning of asset ownership. In the remainder of the book, incomplete contacting ideas are applied to understandfirms' financial decisions, in particular, the nature of debt and equity (why equity has votes and creditors have foreclosure rights); the capital structure decisions of public companies; optimal bankruptcy procedure; and the allocation of voting rights across a company's shares. The book is written in a fairly non-technical style and includes many examples. It is aimed at advanced undergraduate and graduate students, academic and business economists, and lawyers as well as those with aninterest in corporate finance, privatization and regulation, and transitional issues in Eastern Europe, the former Soviet Union, and China. Little background knowledge is required, since the concepts are developed as the book progresses and the existing literature is fully reviewed.
Author : John R. Graham
Publisher :
ISBN 13 :
Total Pages : 42 pages
Book Rating : 4.:/5 (129 download)
Download or read book Capital Allocation and Delegation of Decision-marking Authority Within Firms written by John R. Graham and published by . This book was released on 2011 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt:
