Capital markets and the market structure of foreign investments

Contrary to the long-received theory of FDI, interest rates or rates of return can motivate foreign direct investment (FDI) in concert with the benefits of direct ownership. Thus, access to investor capital and capital markets is a vital component of the multinational’s competitive market structure. Moreover, multinationals can use their superior financial capacity as a competitive advantage in exploiting FDI opportunities in dynamic markets. They can also mitigate higher levels of foreign business risks under dynamic conditions by shifting more financial risk to creditors in the host economy. Furthermore, the investor’s expectation of foreign business risk necessarily commands a risk premium for exposing their equity to foreign market risk. Multinationals can modify the profit maximization strategy of their foreign subsidiaries to maximize growth or profits to generate this risk premium. In this context, we investigate how foreign subsidiaries manage their capital funding, business risk, and profit strategies with a diverse sample of 8,000 matched parents and foreign subsidiary accounts from multiple industries in 38 countries.We find that interest rates, asset prices, and expectations in capital markets have a significant effect on the capital movements of foreign subsidiaries. We also find that foreign subsidiaries mitigate their exposure to foreign business risk by modifying their capital structure and debt maturity. Further, we show how the operating strategy of foreign subsidiaries affects their preference for growth or profit maximization. We further show that superior shareholder value, which is a vital link for access to capital for funding foreign expansion in open market economies, is achieved through maintaining stability in the rate of growth and good asset utilization.

Characterisation and oxidative stability of speciality plant seed oils

The past decade has seen an influx of speciality plant seed oils arriving into the market place. The need to characterise these oils has become an important aspect of the oil industry. The characterisation of the oils allows for the physical and chemical properties of the oil to be determined. Speciality oils were characterised based on their lipid and fatty acid profiles and categorised as monounsaturated rich (oleic acid as the major acyl components e.g. Moringa and Marula oil), linoleic acid rich (Grape seed and Evening Primrose oil) or linolenic acid rich (Flaxseed and Kiwi oil). The quality of the oils was evaluated by determining the free fatty acid content, the peroxide value (that measures initial oxidation) and p-anisidine values (that determines secondary oxidation products containing the carbonyl function). A reference database was constructed for the oils in order to compare batches of oils for their overall quality including oxidative stability. For some of the speciality oils, the stereochemistry of the triacylglycerols was determined. Calophyllum, Coffee, Poppy and Sea Buckthorn oils stereochemistry was determined. The oils were enriched with saturated and/or a monounsaturated fatty acids at position sn-1 and sn-3. The sn-2 position of the four oils was esterified with a polyunsaturated and/or a monounsaturated fatty acid indicating that they follow a typical acylation pathway and no novel acylation activity was evident from these studies (e.g enrichment of saturates at the sn-2 position). The oxidative stability of the oils was evaluated at 18oC and 60oC and the effect of adding a-tocopherol at commercially used level i.e 750ppm was assessed. The addition of 750ppm of a-tocopherol at 18oC increased the oxidative stability of Brown flax, Moringa, Wheat germ and Yangu oils. At 60oC Brown Flax, Manketti and Pomegranate oil polymerised after 48 hours. The addition of 750ppm a-tocopherol delayed the onset of polymerisation by up to 48 hours in Brown Flax seed oil. Pomegranate oil showed a high resistance to oxidation, and was blended into other speciality oils at 1%. Pomegranate oil increased the oxidative stability of Yangu oil at 18oC. The addition of Pomegranate oil to Wheat germ oil at 60oC, decreased the peroxide content by 10%. In Manketti and Brown Flaxseed oil at elevated temperatures, Pomegranate oil delayed the onset of polymerisation. Preliminary studies of Pomegranate oil blending to Moringa and Borage oil showed it to be more effective than a-tocopherol for certain oils. The antioxidant effects observed following the addition of Pomegranate oil may be due to its conjugated linolenic acid fatty acid, punicic acid.

Resource allocation in decentralised computational systems:an evolutionary market-based approach

We present a novel market-based method, inspired by retail markets, for resource allocation in fully decentralised systems where agents are self-interested. Our market mechanism requires no coordinating node or complex negotiation. The stability of outcome allocations, those at equilibrium, is analysed and compared for three buyer behaviour models. In order to capture the interaction between self-interested agents, we propose the use of competitive coevolution. Our approach is both highly scalable and may be tuned to achieve specified outcome resource allocations. We demonstrate the behaviour of our approach in simulation, where evolutionary market agents act on behalf of service providing nodes to adaptively price their resources over time, in response to market conditions. We show that this leads the system to the predicted outcome resource allocation. Furthermore, the system remains stable in the presence of small changes in price, when buyers' decision functions degrade gracefully. © 2009 The Author(s).

Sticky credit spreads, macroeconomic activity and equity market volatility

We uncover high persistence in credit spread series that can obscure the relationship between the theoretical determinants of credit risk and observed credit spreads. We use a Markovswitching model, which also captures the stability (low frequency changes) of credit ratings, to show why credit spreads may continue to respond to past levels of credit risk, even though the state of the economy has changed. A bivariate model of credit spreads and either macroeconomic activity or equity market volatility detects large and significant correlations that are consistent with theory but have not been observed in previous studies. © 2010 Nova Science Publishers, Inc. All rights reserved.