R&D investment, international trade, and home market and competitiveness efects

We analyze the effects of R&D investment on international trade. The importance of studying this comes from the fact that one of the most important characteristics of modern industrial organization is that firms try to influence market behavior through strategic variables as R&D. Moreover international competition between firms is, more and more, also centered in R&D competition (besides output and price competition). With this in mind, we develop an oligopolist reciprocal-markets model where firms engage in R&D investment to achieve future reductions in marginal costs. We find ‘home market effects’ at the level of R&D investment, i.e.: firms located in countries that host a higher share of skilled-labor perform higher levels of R&D investment. As consequence, firms in these countries are more competitive than firms in other countries, and as such they can penetrate more easily foreign markets. As result of this ‘competitiveness effect’, countries where these firms are located run trade surplus, while countries where firms perform lower levels of R&D investment incur in trade deficits.

The Brazilian real state market in 2012: robust growth or speculative bubble?

A forte alta dos imóveis no Brasil nos últimos anos iniciou um debate sobre a possível existência de uma bolha especulativa. Dada a recente crise do crédito nos Estados Unidos, é factível questionar se a situação atual no Brasil pode ser comparada à crise americana. Considerando argumentos quantitativos e fundamentais, examina-se o contexto imobiliário brasileiro e questiona-se a sustentabilidade em um futuro próximo. Primeiramente, analisou-se a taxa de aluguel e o nível de acesso aos imóveis e também utilizou-se um modelo do custo real para ver se o mercado está em equilíbrio o não. Depois examinou-se alguns fatores fundamentais que afetam o preço dos imóveis – oferta e demanda, crédito e regulação, fatores culturais – para encontrar evidências que justificam o aumento dos preços dos imóveis. A partir dessas observações tentou-se chegar a uma conclusão sobre a evolução dos preços no mercado imobiliário brasileiro. Enquanto os dados sugerem que os preços dos imóveis estão supervalorizados em comparação ao preço dos aluguéis, há evidências de uma legítima demanda por novos imóveis na emergente classe média brasileira. Um risco maior pode estar no mercado de crédito, altamente alavancado em relação ao consumidor brasileiro. No entanto, não se encontrou evidências que sugerem mais do que uma temporária estabilização ou correção no preço dos imóveis.

International private equity funds strategies in the Brazilian market

The Private Equity Market in Brazil has flourished in the last two decades, and international Funds have been entering the market since then. The activity of these enterprises and how they deal with institutional voids that are present in the brazilian market and the all spheres of distances they have with Brazil are investigated in this research. What are the main challenges for those players in the local market and how private equity functions in Brazil? The first chapter reviews all the literature that concerns private equity in their home countries, such as the United States and Spain (Europe) and Brazil. It also discourses about the concept of private equity in all its different senses, the routine of investees and how is the relationship between Private Equity Fund and Investee. In addition to that, the due diligence process is also explained as well as the private equity sector in Brazil and its regulation. Moreover, the distance between countries and how it affects business is presented followed by the concepts of institutional voids. For the inquiry proposed interviews were conducted in order to capture the perspective of International Private Equity Funds on the Brazilian market. Advent International, The Carlyle Group and Mercapital replied to the inquiries and provided the tools so a picture of the sector was developed. This sector has a range of challenges and opportunities and requires the International Fund to establish a local branch in order to really succeed in the market. The results of this project pointed out to the challenges the market presents and how International Private Funds are coming about it. There are definitely gaps that need to be fulfilled however the industry is going in the right direction. Revenues may change its nature in the next couple of years, however from the Private Equity Fund perspective Brazil has been a worthwhile investment. Nonetheless, it is important to question the vision also of the investee and institutional investor so one can have the entire picture of the sector.

The Market for borrowing securities in Brazil

We report the results of an exploratory data analysis of the Brazilian securities lending market. The analysis is performed over the full historical data set of each individual loan offer and loan contract negotiated between January 2007 and August 2013. We give a quantitative description of volume and loan fee trends and fee dependence on asset characteristics. We also unveil new stylized facts specific to the Brazilian market on market access asymmetries between different types of investors. The emerging picture is that the Brazilian securities lending market is a complex environment with specific frictions and strong asymmetries among players. In particular, we describe a tax arbitrage operation performed by domestic mutual funds which generates a significant distortion in the data. In one such event, we estimate additional aggregate profits of 24.25 million Reais (around 10 million Dollars).

Informational spillovers in the pre-1914 London sovereign debt market

We document a novel type of international financial contagion whose driving force is shared financial intermediation. In the London peripheral sovereign debt market during pre-1914 period financial intermediation played a major informational role to investors, most likely because of the absence of international monitoring agencies and the substantial agency costs. Using two events of financial distress – the Brazilian Funding Loan of 1898 and the Greek Funding Loan of 1893 – as quasi-natural experiments, we document that, following the crises, the bond prices of countries with no meaningful economic links to the distressed countries, but shared the same financial intermediary, suffered a reduction relative to the rest of the market. This result is true for the mean, median and the whole distribution of bond prices, and robust to an extensive sensitivity analysis. We interpret it as evidence that the identity of the financial intermediary was informative, i.e, investors extracted information about the soundness of a debtor based on the existence of financial relationships. This spillover, informational in essence, arises as the flip-side of the relational lending coin: contagion arises for the same reason why relational finance, in this case, underwriting, helps alleviate informational and incentive problems.

Home bias no mercado de capitais brasileiro : um estudo sobre a custódia de investidores em ações

A presente dissertação apresenta uma análise da concentração do portfólio de a-ções de investidores brasileiros nas próprias empresas onde trabalham com o intuito de observar se o Home Bias se aplica à amostra analisada. Nosso estudo foi reali-zado com uma amostra extraída da custódia de 86 clientes de uma corretora de va-lores mobiliários, sendo estes dados reais de mercado. Restringimos a seleção da amostra de forma que metade fosse de clientes que trabalham em empresas de ca-pital aberto e a outra metade não. Foi feita análise cross section de quanto os inves-tidores alocam em ações das empresas para a qual trabalham e verificou-se qual o percentual desta participação em seus portfólios, em comparação a uma amostra de controle de investidores que não trabalham nesta mesma empresa. Além destas a-nálises, separamos a amostra pelo valor total do portfólio e realizamos os mesmos estudos com estes dois grupos diferentes da amostra. Como uma análise de robus-tez, identificamos empresas listadas que não adotam a remuneração com ações como uma sub-amostra do estudo. Como resultado, encontramos evidências de que os funcionários investem significativamente mais (seja em proporção do portfólio ou em valores) em ações das empresas onde trabalham em relação aos demais inves-tidores, evidenciando um viés de familiaridade na tomada de decisão de investimen-tos.

The analysis of foreign market entry strategies on the basis of different cultural backgrounds and environments: a qualitative study characterising the differences and similarities of Brazilian and European firms

Moving into a new and foreign market can be challenging, especially when such market has a different culture and working environment in comparison to the home market. Thus, it is of utter importance to adjust a company’s strategy to the new market conditions. Currently, there are no concrete guidelines of what aspects are most important when moving from a developing market such as Brazil into a more sophisticated market like Europe, or vice versa. The present study will examine two companies from the same industry, but with different cultural backgrounds and its strategic similarities and differences for operating in multiple international markets. The data was collected via semi-structured interviews with the Chief Executive Officers (CEOs’) from both companies, using an interview guideline that is based on three different theoretical frameworks. The aim is to give recommendations to these two industries of how to efficiently use existing theoretical frameworks and which aspects are most significant when moving into a new market while keeping in mind a company’s size and background.

A bidimensional model of matching in the marriage market with women labor decision

We construct a frictionless matching model of the marriage market where women have bidimensional attributes, one continuous (income) and the other dichotomous (home ability). Equilibrium in the marriage market determines intrahousehold allocation of resources and female labor participation. Our model is able to predict partial non-assortative matching, with rich men marrying women with low income but high home ability. We then perform numerical exercises to evaluate the impacts of income taxes in individual welfare and find that there is considerable divergence in the female labor participation response to taxes between the short run and the long run.