Industry expertise, information leakage and the choice of M&A advisors

This paper examines the impacts of M&A advisors’ industry expertise on firms’choice of advisors in mergers and acquisitions. We show that an investment bank’s expertise in merger parties’ industries increases its likelihood of being chosen as an advisor, especially when the acquisition is more complex, and when a firm in M&A has less information about the merger counter party. However, due to the concerns about information leakage to industry rivals through M&A advisors, acquirers are reluctant to share advisors with rival firms in thesame industry, and they are more likely to switch to new advisors if their former advisors have advisory relationship with their industry rivals. In addition, we document that advisors with more industry expertise earn higher advisory fees and increase the likelihood of deal completion.

The association between the investment opportunity set and corporate financing and dividend decisions: some Australian evidence

Summarizes previous research on the investment opportunity set (IOS) using price-based and investment-based proxies and variance measures; and develops hypotheses on the relationship between IOS, debt/equity ratios and dividend policies. Tests them on 1990-1998 data from listed Australian companies and explains the methodology, which builds on Gover and Gover (1993) by including more recent proxy variables. Finds no significant results from low growth firms, although some high growth firms show lower debt/equity ratios and dividends. Questions the robustness of existing IOS proxies in the Australian context and calls for further research.

Tax incentives for foreign direct investment part II : Design considerations

Part I of this article concluded that tax incentives for foreign direct investment (FDI) have become increasingly common over the past 10 years or so, especially among developing countries, and that there is substantial evidence to support the proposition that tax considerations now play an important role in many investment decisions. Countries seeking to attract FDI often feel compelled to offer tax inducements that are at least as attractive as those offered by their neighbours or competitors. Countries do so at a cost, however, and that cost may be substantial. Governments are thus placed in a dilemma - can they afford to cut taxes in order to attract investment, and can they afford not to? The second part of this article assumes that countries, and especially most developing countries, will continue to feel obliged to provide tax incentives. The aim of this part therefore is to examine ways in which those incentives can be made more effective and more efficient, thereby reducing their cost to the host country.

Tax incentives for foreign direct investment part I : Recent trends and countertrends

According to the conventional wisdom, tax incentives for investment - in particular for foreign direct investment (FDI) - are not recommended. That is the view held almost universally by theorists and by the international bodies that advise on tax matters.' Tax incentives are bad in theory and bad in practice. They are bad in theory principally because they cause distortions: investment decisions are made that would not have been made without the inducement of special tax concessions. They are bad in practice, being both ineffective and inefficient. They are ineffective in that tax considerations are only rarely a major determinant in FDI decisions; they are inefficient because their cost, in terms of tax revenue foregone, often far exceeds any benefits they may produce. Other criticisms are also frequently levelled against tax incentives for FDI - they are inequitable (since they benefit some investors but not others), they are difficult to administer and open to abuse, and they lack transparency. Thus, it is not surprising that ''the standard advice given by institutions like the World Bank and the lMF to developing countries is to refrain from offering tax incentives to foreign investors".2 The purpose of this article is not to question that advice or to challenge the conventional wisdom - except in one respect. Recent evidence does suggest that tax considerations are an increasingly important factor in investment decisions and that special tax incentives have become substantially more effective as instruments for attracting FDI than they were 10 or 20 years ago.3 The first part of this article, published here, examines some of that evidence, reviews some recent trends in national policies towards FDI, attempts to suggest why investment incentives have become more important and more effective, and looks at the pressures that are exerted on governments, especially in developing countries, to compete for FDI by offering special incentives. The second part of the article, to be published in the Bulletin next month, assumes that many countries will continue to offer tax incentives to investors regardless of the best advice, and considers how incentives might be designed in order to increase their effectiveness and efficiency.

A multi-agent framework for financial investment planning

If a company or person wants to invest a lot of money, where, when, and how should the investment go? A multi-agent based Financial Investment Planner may give some reasonable answers to the above question. Good advice is mainly based on adequate information, rich knowledge, and great
skills to use knowledge and information. To this end, this planner consists of four principal components information gathering agents that are responsible for gathering relevant information on the Internet, data mining agents that are in charge of discovering knowledge from retrieved information as well as other relevant databases, group decision making agents that can effectively use available knowledge and appropriate information to make reasonable decisions (investment advice), and a graphical user interface that interacts with users. This paper is focused on the group decision making part. The design and implementation of an agent-based hybrid intelligent system - agent-based soft computing society are detailed.

Exports, Inward Foreign Direct Investment (FDI) and Regional Economic Growth in China

The relationship between exports and economic growth is strong in developing economies. Both externality effects of exports on the non-exports sector and higher marginal productivity in the exports sector in relation to the non-exports sector play an important role in promoting exports and GDP growth. The underlying theoretical model of FEDER, 1982, is used with the data on the Chinese provinces and it is shown that the economic structure, degree of openness and policy environment have a significant role in the relationship between exports and economic growth.

Foreign Direct Investment and Regional Export Performance in China

This paper investigates the impact of foreign direct investment (FDI) on the export performance of China at the provincial level. First, it presents a theoretical discussion of the impact of FDI on foreign trade, and then an empirical study of the impact of FDI on the export performance of regions in Chin. It has been found that the impact of FDI on exports differs across three macro-regions in China. The effect is stronger in the coastal region than in the inland regions. Although FDI shows a positive and significant impact on exports from the central region, its impact on the western region is found to be insignificant.

Investment opportunities and leverage: some Australian evidence on the role of board monitoring and director equity ownership

This paper tests the hypothesis that the negative relationship between investment opportunity set (IOS) and debt is moderated by board monitoring and director equity ownership. According to contracting theory, firms with high growth opportunities (high IOS) are associated with lower levels of debt as a result of the asset substitution and the under-investment problem. However, our hypotheses test the conjecture that the negative debt / IOS relationship will be moderated by the proportion of non-executive directors (NEDs) on the board and director equity ownership. NEDs provide higher monitoring which reduces management discretion while director equity ownership provides incentives for managers to maximize the value of the firm. More specifically, we expect that high growth firms with a higher proportion of non-executive directors and director equity ownership are less likely to be associated with asset substitution and under investment. Thus, the negative investment opportunity set / debt relationship will be weaker for firms with higher levels of non-executive directors and high director equity ownership. Data collected from Australian companies support both these two hypotheses. Results have significant implications for corporate finance theory.

An analysis of the association between firms' investment opportunities, board composition and firm performance

The purpose of this paper is to identify the variables that influence the board structure adopted by firms and the subsequent relationship to the firm's performance. The results of this study of 229 Australian firms show that firms' investment opportunities are strongly associated with a higher proportion of executive directors ("EDs") on the board. The results also show that the negative relationship between a firm's investment opportunity set ("IDS") and firm performance is weakened at higher levels of non-executive director board domination. These results have implications for policy setters and managers of firms with investment opportunities

Decision aggregation in an agent-based financial investment planning system

Agent technology provides a new way to model many complex problems like financial investment planning. With this observation in mind, a financial investment planning system was developed from agent perspectives with 12 different agents integrated. Some of the agents have similar problem solving and decision making capabilities. The results from these agents require to be combined. Ordered Weighted Averaging (OWA) operator was chosen to aggregate different results. Details on how OWA was applied as well as appropriate evaluation are presented.

Transitional labour markets : a social investment and risk mitigation strategy for social policy

Drawing on transitional labor market (TLM) theory, this introductory chapter highlights major themes, overviews the contributions to this volume and suggests a future agenda for policy makers. The focus of applied research projects has been the impact of post-modem social transformations on systems of social protection, looking through the lens of the labor market and shifts in household and family structure. The Transitional Labor Market project uses the TLM model as a means of developing new thinking on how flexibility and innovation might be paired with social investment and new forms of social protection. TLM theory emphasizes the importance of institutions and of the links between different institutions which frequently operate as policy silos, rather than integrated systems to buffer risks and support capability and enhance employability. The great advantage of the TLM model is that it draws attention to the right places for strategic reform. It does not offer a standard set of institutions to facilitate transitions however.

An agent-based hybrid intelligent system for financial investment planning

Many complex problems including financial investment planning require hybrid intelligent systems that integrate many intelligent techniques including expert systems, fuzzy logic, neural networks, and genetic algorithms. However, hybrid intelligent systems are difficult to develop due to complicated interactions and technique incompatibilities. This paper describes a hybrid intelligent system for financial investment planning that was built from agent points of view. This system currently consists of 13 different agents. The experimental results show that all agents in the system can work cooperatively to provide reasonable investment advice. The system is very flexible and robust. The success of the system indicates that agent technologies can significantly facilitate the construction of hybrid intelligent systems.

Issues in measuring the return of marketing investment in sporting club brands

This paper examines approaches to the measurement of brand value, and discusses their applicability to the various parties and branded products relevant to professional football clubs. It is concluded that the applicability of many of these measures of performance to sporting club brands is questionable. In order to provide an appropriate measure of the return on investment in brand loyalty to both the sporting club brand and sponsor-related products, the use of nonfinancial performance measures is critical. This paper suggests future research directions to enable greater consistency of the measurement of the return on marketing investment for sporting club brands.

Is privatisation good for investment in Australia?

Privatisation was expected to promote investment in the economy as part of improving dynamic efficiency. The relation between aggregate public and private investment in Australia is investigated in an endogeneous ECM framework. Model selection for a simple investment function allows restrictions for neoclassical crowding out or Keynesian crowding in (after Aschauer 1989) in a small open economy. An ECM is estimated including annual aggregate private investment, public investment, income, rate of return, average interest cost, exchange rate and inventories from 1960 to 2005. Public capital appears unresponsive to shocks and crowding out is not evident.