State ownership, bank loans, and corporate investment

We study the effect of bank loans on Chinese publicly listed firms' investment decisions based on the underinvestment and overinvestment theories of leverage. Evidence from China is of particular importance because China is the world's largest emerging and transitional economy. At first we show that there is a negative relationship between bank loan ratios and investment for Chinese publicly listed firms. And this negative relationship is much stronger for firms with low growth than firms with high growth. Secondly, we find that both short-term and long-term loan ratios are negatively correlated with investment. However, the higher the long-term loan ratios are, the weaker the negative relationship between long-term loan ratios and investment is. Thirdly, firm ownership only matters to the effect of short-term bank loans on investment in our sample. That is, the negative relationship between short-term loan ratios and investment is weaker for SOEs than for non-SOEs. Lastly, we show that the reform of China's banking system in 2003 has not strengthened the negative relationship between bank loans and investment. Our findings suggest that although Chinese state-owned banks are severely intervened by government policies, they still have a disciplining role on firms' investment, especially in firms with low growth.

Prebiotic effects: metabolic and health benefits

The different compartments of the gastrointestinal tract are inhabited by populations of micro-organisms. By far the most important predominant populations are in the colon where a true symbiosis with the host exists that is a key for well-being and health. For such a microbiota, 'normobiosis' characterises a composition of the gut 'ecosystem' in which micro-organisms with potential health benefits predominate in number over potentially harmful ones, in contrast to 'dysbiosis', in which one or a few potentially harmful micro-organisms are dominant, thus creating a disease-prone situation. The present document has been written by a group of both academic and industry experts (in the ILSI Europe Prebiotic Expert Group and Prebiotic Task Force, respectively). It does not aim to propose a new definition of a prebiotic nor to identify which food products are classified as prebiotic but rather to validate and expand the original idea of the prebiotic concept (that can be translated in 'prebiotic effects'), defined as: 'The selective stimulation of growth and/or activity(ies) of one or a limited number of microbial genus(era)/species in the gut microbiota that confer(s) health benefits to the host.' Thanks to the methodological and fundamental research of microbiologists, immense progress has very recently been made in our understanding of the gut microbiota. A large number of human intervention studies have been performed that have demonstrated that dietary consumption of certain food products can result in statistically significant changes in the composition of the gut microbiota in line with the prebiotic concept. Thus the prebiotic effect is now a well-established scientific fact. The more data are accumulating, the more it will be recognised that such changes in the microbiota's composition, especially increase in bifidobacteria, can be regarded as a marker of intestinal health. The review is divided in chapters that cover the major areas of nutrition research where a prebiotic effect has tentatively been investigated for potential health benefits. The prebiotic effect has been shown to associate with modulation of biomarkers and activity(ies) of the immune system. Confirming the studies in adults, it has been demonstrated that, in infant nutrition, the prebiotic effect includes a significant change of gut microbiota composition, especially an increase of faecal concentrations of bifidobacteria. This concomitantly improves stool quality (pH, SCFA, frequency and consistency), reduces the risk of gastroenteritis and infections, improves general well-being and reduces the incidence of allergic symptoms such as atopic eczema. Changes in the gut microbiota composition are classically considered as one of the many factors involved in the pathogenesis of either inflammatory bowel disease or irritable bowel syndrome. The use of particular food products with a prebiotic effect has thus been tested in clinical trials with the objective to improve the clinical activity and well-being of patients with such disorders. Promising beneficial effects have been demonstrated in some preliminary studies, including changes in gut microbiota composition (especially increase in bifidobacteria concentration). Often associated with toxic load and/or miscellaneous risk factors, colon cancer is another pathology for which a possible role of gut microbiota composition has been hypothesised. Numerous experimental studies have reported reduction in incidence of tumours and cancers after feeding specific food products with a prebiotic effect. Some of these studies (including one human trial) have also reported that, in such conditions, gut microbiota composition was modified (especially due to increased concentration of bifidobacteria). Dietary intake of particular food products with a prebiotic effect has been shown, especially in adolescents, but also tentatively in postmenopausal women, to increase Ca absorption as well as bone Ca accretion and bone mineral density. Recent data, both from experimental models and from human studies, support the beneficial effects of particular food products with prebiotic properties on energy homaeostasis, satiety regulation and body weight gain. Together, with data in obese animals and patients, these studies support the hypothesis that gut microbiota composition (especially the number of bifidobacteria) may contribute to modulate metabolic processes associated with syndrome X, especially obesity and diabetes type 2. It is plausible, even though not exclusive, that these effects are linked to the microbiota-induced changes and it is feasible to conclude that their mechanisms fit into the prebiotic effect. However, the role of such changes in these health benefits remains to be definitively proven. As a result of the research activity that followed the publication of the prebiotic concept 15 years ago, it has become clear that products that cause a selective modification in the gut microbiota's composition and/or activity(ies) and thus strengthens normobiosis could either induce beneficial physiological effects in the colon and also in extra-intestinal compartments or contribute towards reducing the risk of dysbiosis and associated intestinal and systemic pathologies.

Depreciation, income distribution and the UK REIT

Purpose – The purpose of this paper is to consider prospects for UK REITs, which were introduced on 1 January 2007. It specifically focuses on the potential influence of depreciation and expenditure on income and distributions. Design/methodology/approach – First, the ways in which depreciation can affect vehicle earnings and value are discussed. This is then set in the context of the specific rules and features of REITs. An analysis using property income and expenditure data from the Investment Property Databank (IPD) then assesses what gross and net income for a UK REIT might have been like for the period 1984-2003. Findings – A UK REIT must distribute at least 90 per cent of net income from its property rental business. Expenditure therefore plays a significant part in determining what funds remain for distribution. Over 1984-2003, expenditure has absorbed 20 per cent of gross income and been a source of earnings volatility, which would have been exacerbated by gearing. Practical implications – Expenditure must take place to help UK REITs maintain and renew their real estate portfolios. In view of this, investors should moderate expectations of a high and stable income return, although it may well still be so relative to alternative investments. Originality/value – Previous literature on depreciation has not quantified amounts spent on portfolios to keep depreciation at those rates. Nor, to our knowledge, has its ideas been placed in the indirect investor context.

Real estate investment in global financial centers: risk, return and contagion

Global financial activity is heavily concentrated in a small number of world cities –international financial centers. The office markets in those cities receive significant flows of investment capital. The growing specialization of activity in IFCs and innovations in real estate investment vehicles lock developer, occupier, investment, and finance markets together, creating common patterns of movement and transmitting shocks from one office market throughout the system. International real estate investment strategies that fail to recognize this common source of volatility and risk may fail to deliver the diversification benefits sought.