Separation of Control and Cash-Flow Rights of State Owned Listed Enterprises: Channels of Expropriation after the Discriminated Share Reform in China

Literature on agency problems arising between controlling and minority owners claim that separation of cash flow and control rights allows controllers to expropriate listed firms, and further that separation emerges when dual class shares or pyramiding corporate structures exist. Dual class share and pyramiding coexisted in listed companies of China until discriminated share reform was implemented in 2005. This paper presents a model of controller to expropriate behavior as well as empirical tests of expropriation via particular accounting items and pyramiding generated expropriation. Results show that expropriation is apparent for state controlled listed companies. While reforms have weakened the power to expropriate, separation remains and still generates expropriation. Size of expropriation is estimated to be 7 to 8 per cent of total asset at mean. If the "one share, one vote" principle were to be realized, asset inflation could be reduced by 13 percent.

Competition of the mechanisms : how Chinese home appliance firms coped with default risk of trade credit?

During the transition period from a planned economy to a market economy in 1990s of China, there was a considerable accrual of deferred payment, and default due to inferior enforcement institutions. This is a very common phenomenon in the transition economies at that time. Interviews with home electronics appliance firms revealed that firms coped with this problem by adjusting their sales mechanisms (found four types), and the benefit of institutions was limited. A theoretical analysis claim that spot and integration are inferior to contracts, a contract with a rebate on volume and prepayment against an exclusive agent can realize the lowest cost and price. The empirical part showed that mechanisms converged into a mechanism with the rebate on volume an against exclusive agent and its price level is the lowest. The competition is the driving force of the convergence of mechanisms and improvement risk management capacity.

Balance of payments dominance: its implications for macroeconomic policy

This paper defines “balance of payments dominance” as a macroeconomic regime in which the short-term macroeconomic dynamics is essentially determined by external shocks, positive or negative. It argues that this is the predominant regime in emerging and developing countries. Trade shocks play an important role but the major procyclical shocks are associated with boom-bust cycles in external financing. Policy challenges are associated not only with the management of such shocks but also with the need to enhance the space for countercyclical macroeconomic policies, as boom-bust cycles tend to pressure macroeconomic policies to behave in a procyclical way. Under these conditions, the best bet is to design policies to reduce external vulnerabilities through a mix of administered exchange rate policies, very active foreign exchange reserve management, reduced reliance on external borrowing, and macroprudential regulations, including those directly affecting capital flows. Countercyclical fiscal policy can also play a role but face strong economic and political economy challenges.

Balance of payments dominance : its implocations for macroeconomic policy

This paper defines “balance of payments dominance” as a macroeconomic regime in which the short-term macroeconomic dynamics is essentially determined by external shocks, positive or negative. It argues that this is the predominant regime in emerging and developing countries. Trade shocks play an important role but the major procyclical shocks are associated with boom-bust cycles in external financing. Policy challenges are associated not only with the management of such shocks but also with the need to enhance the space for countercyclical macroeconomic policies, as boom-bust cycles tend to pressure macroeconomic policies to behave in a procyclical way. Under these conditions, the best bet is to design policies to reduce external vulnerabilities through a mix of administered exchange rate flexibility, very active foreign exchange reserve management, reduced reliance on external borrowing, and macroprudential regulations, including those directly affecting capital flows. Countercyclical fiscal policy can also play a role but face strong economic and political economy challenges.

Investment Valuation with Tax-optimized Financing Decisions and a Tax-optimized Default Alternative

In this paper we evaluate an indivisible investment project that is carried out in a corporation under very simple premises. In particular, we discuss a one-period model with certainty, the pure domestic case and proportional tax rates. Surprisingly, the decision problem turns out to be rather complex if one has to make allowance for different taxation of the corporation and its owner. Altogether there are more than 10 cases that have to be distinguished if the firm's managers want to make a correct decision, depending on the relation of personal and corporate tax rates.

Financial fragility, trade credit and contagion effects during the crisis: a spatial econometric approach to firm-level data

The number of distressed manufacturing firms increased sharply during recessionary phase 2009-13. Financial indebtness traditionally plays a key role in assessing firm solvency but contagion effects that originate from the supply chain are usually neglected in literature. Firm interconnections, captured via the trade credit channel, represent a primary vehicle of individual shocks’ propagation, especially during an economic downturn, when liquidity tensions arise. A representative sample of 11,920 Italian manufacturing firms is considered to model a two-step econometric design, where chain reactions in terms of trade credit accumulation (i.e. default of payments to suppliers) are primarily analyzed by resorting to a spatial autoregressive approach (SAR). Spatial interactions are modeled based on a unique dataset of firm-to-firm transactions registered before the outbreak of the crisis. The second step in instead a binary outcome model where trade credit chains are considered together with data on the bank-firm relationship to assess determinants of distress likelihoods in 2009-13. Results show that outstanding trade debt is affected by the liquidity position of a firm and by positive spatial effects. Trade credit chain reactions are found to exert, in turn, a positive impact on distress likelihoods during the crisis. The latter effect is comparable in magnitude to the one exerted by individual financial rigidity, and stresses the importance to include complex interactions between firms in the analysis of the solvency behavior.

Fatores determinantes da maturidade e composição da dívida das empresas portuguesas cotadas

Mestrado em Contabilidade e análise financeira

Three essays in dynamic corporate finance

The three essays constituting this thesis focus on financing and cash management policy. The first essay aims to shed light on why firms issue debt so conservatively. In particular, it examines the effects of shareholder and creditor protection on capital structure choices. It starts by building a contingent claims model where financing policy results from a trade-off between tax benefits, contracting costs and agency costs. In this setup, controlling shareholders can divert part of the firms' cash ows as private benefits at the expense of minority share- holders. In addition, shareholders as a class can behave strategically at the time of default leading to deviations from the absolute priority rule. The analysis demonstrates that investor protection is a first order determinant of firms' financing choices and that conflicts of interests between firm claimholders may help explain the level and cross-sectional variation of observed leverage ratios. The second essay focuses on the practical relevance of agency conflicts. De- spite the theoretical development of the literature on agency conflicts and firm policy choices, the magnitude of manager-shareholder conflicts is still an open question. This essay proposes a methodology for quantifying these agency conflicts. To do so, it examines the impact of managerial entrenchment on corporate financing decisions. It builds a dynamic contingent claims model in which managers do not act in the best interest of shareholders, but rather pursue private benefits at the expense of shareholders. Managers have discretion over financing and dividend policies. However, shareholders can remove the manager at a cost. The analysis demonstrates that entrenched managers restructure less frequently and issue less debt than optimal for shareholders. I take the model to the data and use observed financing choices to provide firm-specific estimates of the degree of managerial entrenchment. Using structural econometrics, I find costs of control challenges of 2-7% on average (.8-5% at median). The estimates of the agency costs vary with variables that one expects to determine managerial incentives. In addition, these costs are sufficient to resolve the low- and zero-leverage puzzles and explain the time series of observed leverage ratios. Finally, the analysis shows that governance mechanisms significantly affect the value of control and firms' financing decisions. The third essay is concerned with the documented time trend in corporate cash holdings by Bates, Kahle and Stulz (BKS,2003). BKS find that firms' cash holdings double from 10% to 20% over the 1980 to 2005 period. This essay provides an explanation of this phenomenon by examining the effects of product market competition on firms' cash holdings in the presence of financial constraints. It develops a real options model in which cash holdings may be used to cover unexpected operating losses and avoid inefficient closure. The model generates new predictions relating cash holdings to firm and industry characteristics such as the intensity of competition, cash flow volatility, or financing constraints. The empirical examination of the model shows strong support of model's predictions. In addition, it shows that the time trend in cash holdings documented by BKS can be at least partly attributed to a competition effect.

O Conselho Federal de Cultura e o Instituto Histórico e Geográfico Brasileiro: um estudo de caso da política de financiamento à cultura (1966-1974).

Esta dissertação analisa a política de financiamento do Conselho Federal de Cultura (CFC), órgão responsável pelas políticas públicas de cultura da ditadura civil-militar, diretamente ligado ao Ministério da Educação e Cultura. O CFC estabeleceu convênios com diversas instituições culturais, como o Instituto Histórico e Geográfico Brasileiro (IHGB). No período de 1966 a 1974 atuou com exclusividade, o que permitia estabelecer regras para requisição e repasse de recursos às instituições culturais. Buscaremos aqui, entender, a partir das publicações da Revista Cultura e, posteriormente, do Boletim do Conselho Federal de Cultura, as normas que possibilitavam a liberação de recursos para instituições privadas, como os Institutos Históricos. Averiguaremos a importância da produção intelectual e cultural do IHGB. Para um aprofundamento dessas questões, selecionamos convênios do CFC estabelecidos com o IHGB que visavam dois tipos de financiamento: obras de infraestrutura e atividade cultural.

Financiamento da Educação Superior no Pará: uma análise dos cursos de contrato na Universidade Federal do Pará no período de 2000 a 2008

Esse estudo apresenta resultados de uma pesquisa que investigou os contratos estabelecidos, no período de 2000 a 2008, entre a Universidade Federal do Pará (UFPA) e prefeituras do interior do estado do Pará, para a oferta de cursos de licenciatura plena, financiado com os recursos do Fundo de Manutenção e Desenvolvimento do Ensino Fundamental e de Valorização do Magistério (FUNDEF), para os professores das redes municipais de ensino. Para compreender essa problemática, elaboramos os seguintes questionamentos: Como está estruturada a política de financiamento implementada pelo governo federal, para as IFES, ao longo desse período, e quais são as suas relações com a reforma do Estado e da Educação Superior, no país? Qual a política de financiamento do processo de interiorização da Universidade Federal do Pará e qual a sua relação com a política de oferta de cursos de contrato? Qual o montante dos recursos públicos municipais provenientes dos contratos celebrados entre Universidade Federal do Pará e as prefeituras do interior do estado, no período destacado? Como foram aplicados os recursos advindos dos contratos celebrados entre a Universidade Federal do Pará e as prefeituras do interior do estado?Adotamos como metodologia a abordagem quanti-qualitativa e utilizamos dados documentais. Como resultado, percebemos que, a Reforma do Estado, resultante da crise financeira do capital, implicou em reconfigurações do papel do Estado na educação, especialmente no que tange à legislação da educação superior e à política de financiamento para esse nível de ensino. Por isso, a universidade pública brasileira vive uma crise institucional, que se manifesta, especialmente, na estagnação orçamentária dos recursos do Governo Federal para sua manutenção. Os recursos disponibilizados pelo fundo público federal para custearem as despesas com Educação Superior não têm dado conta da crescente demanda de jovens que buscam esse nível de ensino. Ficou evidenciado na pesquisa que os cursos de contrato são uma estratégia de qualificação de profissionais locais com complementação de recursos para manutenção dos campi do interior e para complementação salarial dos professores que atuam nesses cursos.

Financiamento do ensino médio público no estado do Maranhão no período de 1996 a 2006: possíveis efeitos da política de focalização

Este estudo tem como objeto o Financiamento do Ensino Médio público no Estado do Maranhão no período de 1996 a 2006 e os possíveis efeitos da política de focalização para esse nível de ensino. Procuramos ao longo desse estudo responder algumas questões: Quais os efeitos da política que focalizou os recursos financeiros para o ensino fundamental na manutenção e desenvolvimento do Ensino Médio, no Estado do Maranhão? Quais as fontes de recursos que financiaram a manutenção e o desenvolvimento do Ensino Médio, no período de 1996 a 2006?Quais os valores do custo-aluno-ano do Ensino Médio no período em que a política de financiamento priorizou o Ensino Fundamental?O objetivo foi analisar os efeitos da política de financiamento que focalizou apenas uma etapa da educação básica, visando avaliar a pertinência dessa estratégia na manutenção e desenvolvimento do Ensino Médio. Para iluminar as nossas reflexões e análises, numa perspectiva crítica, fizemos uma revisão da literatura sobre Estado, capitalismo e financiamento da educação, de forma específica das suas configurações a partir da década de 1990. Considerando as particularidades do Ensino Médio, apresentamos algumas considerações históricas sobre sua política de financiamento. Para a realização desse estudo realizamos um levantamento dos dados educacionais e financeiros do Estado do Maranhão em estudo detalhado de documentos (Balanços Gerais, Demonstrativo de alguns Convênios, Sinopses do INEP e dados do IBGE) ancorados numa perspectiva de pesquisa quantiqualitativa. Os dados revelam aspectos ligados ao valor gasto-aluno do ensino fundamental e médio; apresentam a relação entre o PIB e os gastos com a educação no Estado; mostram os programas PROMED/Escola Jovem, ALVORADA e VIVA EDUCAÇÃO e seu caráter transitório de financiamento do Ensino Médio a autos custos aos cofres públicos. Reforçando os aspectos da política neoliberal implementada na educação brasileira, com destaque a influência dos organismos multilaterais Os resultados desse estudo revelam, dentre outras coisas, que a política de focalização de recursos para o ensino fundamental deixou rebatimentos danosos a qualidade do Ensino Médio no período de 1996 a 2006 no Estado do Maranhão.

The Military-Industrial Complex and US Military Spending After 9/11

This article examines the economic, political and institutional power of the military-industrial complex (MIC) by examining its influence on military spending before and after the events of 9/11. The reasons for the continuity of MIC influence in US foreign policy is explored. This includes the role of military contractors in financing policy planning organizations, the relationship between military contractors and the Defense Department, and the centralization of executive branch authority in foreign policy decision-making, especially during critical junctures or foreign policy crises.

Proposta de uma matriz de decisão em energia hidrelétrica com o uso do método multicritério, para formulação de políticas públicas no estado do Paraná

Brazil is internationally acknowledged for its renewable sources, most notably, hydroelectric power plant projects which correspond to 65% of electricity production supply to the National Interconnected System. The main question behind this research is: what are the weights and the relative importance of the variables which have influence on the decision making process for the expansion of hydroelectric generation projects in Parana? The main objective is to propose a multi-criteria decision procedure, in association with water sources options that take into consideration the weight and relative importance of the alternatives having influence on the decision by enterprises in the generation of electricity in the state of Paraná. As far as the approach to the problem is concerned, this research can be classified as having mixed methodologies, applying Content Analysis, Delphi technique and the Analytic Hierarchy Process. Following Delphi methodology, a group of 21 was selected for data collection, all of those linked to Paranaense hydroelectricity market. And the main result was the construction of a decision tree in which it was possible to identify the importance and relative weight of the elements associated with the four dimensions of energy. In environmental dimension, the highest relative weight was placed on the loading capacity of Parana system; the economic dimension, the amortization of investment; in social dimension, the generation of direct work places and in institutional dimension, the availability of suitable sources of financing. Policy makers and business managers make their decisions based on specific criteria related to the organization segment, market information, economic and political behavior among other indicators that guide them in dealing with the typical tradeoffs of projects in hydropower area. The results obtained in the decision tree show that the economic bias is still the main factor in making investment decisions. However, environmental impacts on the State loading capacity, income generation, providing opportunities for direct as well as indirect jobs. And at an institutional level, the absence of funding sources show that the perception of experts is focused on other issues beyond the logic behind development per se. The order of priority of variables in this study indicates that in the current environment of uncertainty in the Brazilian economy as many variables must be analyzed and compared in order to optimize the scarce resources available to expand local development in relation to Paranaense water matrix.