Credit lines: The other side of corporate liquidity

In this paper we offer the first large sample evidence on the availability and usage ofcredit lines in U.S. public corporations and use it to re-examine the existing findings oncorporate liquidity. We show that the availability of credit lines is widespread and thataverage undrawn credit is of the same order of magnitude as cash holdings. We test thetrade-off theory of liquidity according to which firms target an optimum level of liquidity,computed as the sum of cash and undrawn credit lines. We provide support for the existenceof a liquidity target, but also show that the reasons why firms hold cash and credit linesare very different. While the precautionary motive explains well cash holdings, the optimumlevel of credit lines appears to be driven by the restrictions imposed by the credit line itself,in terms of stated purpose and covenants. In support to these findings, credit line drawdownsare associated with capital expenditures, acquisitions, and working capital.

Systemic crises and growth

In this paper, we document the fact that countries that have experienced occasional financial crises have on average grown faster than countries with stable financial conditions. We measure the incidence of crisis with the skewness of credit growth, and find that it has a robust negative effect on GDP growth. This link coexists with the negative link between variance and growth typically found in the literature. To explain the link between crises and growth we present a model where weak institutions lead to severe financial constraints and low growth. Financial liberalization policies that facilitaterisk-taking increase leverage and investment. This leads to higher growth, but also toa greater incidence of crises. Conditions are established under which the costs of crises are outweighed by the benefits of higher growth.

Is bank debt special for the transmission of monetary policy? Evidence from the stock market

We combine existing balance sheet and stock market data with two new datasets to studywhether, how much, and why bank lending to firms matters for the transmission of monetarypolicy. The first new dataset enables us to quantify the bank dependence of firms precisely,as the ratio of bank debt to total assets. We show that a two standard deviation increase inthe bank dependence of a firm makes its stock price about 25% more responsive to monetarypolicy shocks. We explore the channels through which this effect occurs, and find that thestock prices of bank-dependent firms that borrow from financially weaker banks display astronger sensitivity to monetary policy shocks. This finding is consistent with the banklending channel, a theory according to which the strength of bank balance sheets mattersfor monetary policy transmission. We construct a new database of hedging activities andshow that the stock prices of bank-dependent firms that hedge against interest rate riskdisplay a lower sensitivity to monetary policy shocks. This finding is consistent with aninterest rate pass-through channel that operates via the direct transmission of policy ratesto lending rates associated with the widespread use of floating-rates in bank loans and creditline agreements.

Challenges to the implementation of behavioural survellance for HIV/STI in Europe

Background: Well-conducted behavioural surveillance (BS) is essential for policy planning and evaluation. Data should be comparable across countries. In 2008, the European Centre for Disease Prevention and Control (ECDC) began a programme to support Member States in the implementation of BS for Second Generation Surveillance. Methods: Data from a mapping exercise on current BS activities in EU/EFTA countries led to recommendations for establishing national BS systems and international coordination, and the definition of a set of core and transversal (UNGASS-Dublin compatible) indicators for BS in the general and eight specific populations. A toolkit for establishing BS has been developed and a BS needs-assessment survey has been launched in 30 countries. Tools for BS self-assessment and planning are currently being tested during interactive workshops with country representatives. Results: The mapping exercise revealed extreme diversity between countries. Around half had established a BS system, but this did not always correspond to the epidemiological situation. Challenges to implementation and harmonisation at all levels emerged from survey findings and workshop feedback. These include: absence of synergy between biological and behavioural surveillance and of actors having an overall view of all system elements; lack of awareness of the relevance of BS and of coordination between agencies; insufficient use of available data; financial constraints; poor sustainability, data quality and access to certain key populations; unfavourable legislative environments. Conclusions: There is widespread need in the region not only for technical support but also for BS advocacy: BS remains the neglected partner of second generation surveillance and requires increased political support and capacity-building in order to become effective. Dissemination of validated tools for BS, developed in interaction with country experts, proves feasible and acceptable.

Iowa Interstate Corridor Plan, 2013

The purpose of this Interstate Corridor Plan (plan) is to provide the Iowa Department of Transportation (Iowa DOT) with an initial screening and prioritization of interstate corridors/segments. This process evaluates the entire interstate system, independent of current financial constraints, using a select group of criteria weighted in terms of their relative significance. The resulting segments would then represent those areas that should be considered for further study (e.g., environmental, design, engineering), with the possibility of being considered for programming by the Iowa Transportation Commission. There was a dominant theme present in conversations with those department stakeholders who have a keen interest in the product of this planning effort. A statement that was often heard was that staff needed more information to help answer the question, “Where do we need to be looking to next, and when?” There was a strong desire to be able to use this plan to help populate that initial pool of candidate segments that would progress towards further study, as discussed below. It was this theme that framed the need for this plan and ultimately guided its development. Further study: As acknowledged at the beginning of this section, the product of this planning effort will be an initial screening and prioritization of interstate corridors/segments. While this initial screening will assist the Iowa DOT in identifying those areas that should be considered for further study, the plan will not identify specific projects or alternatives that could be directly considered as part of the programming process. Bridging the gap between this plan and the programming process are a variety of environmental, design, and engineering activities conducted by various Iowa DOT offices. It is these activities that will further refine the priority corridors/segments identified in this plan into candidate projects. In addition, should the evaluation process developed through this planning effort prove to be successful, it is possible that there will be additional applications, such as future primary system highway plans and statewide freight plans.

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.

Choosing hybrid organizations for local services delivery : An empirical analysis of partial privatization

The empirical literature about factors explaining local government delivery choices has traditionally focused the attention on the public or private production dilemma. However, hybrid organizational forms such as mixed public-private firms are increasingly used in several European countries. This paper makes use of survey data from Spanish municipalities to examine motivations of local governments for engaging in hybrid organizational forms. Data refer to two very relevant local services: water distribution and solid waste collection. The empirical analysis indicates that the use of mixed firms emerge as a type of pragmatically based ‘third way’ between pure public and pure private production. Indeed, local governments make use of mixed firms when cost considerations (scale economies, transaction costs and soon), financial constraints and private interests exert contradictory pressures. On the contrary, political and ideological factors do not play any significant role on the local government decision of engaging or not in joint ventures with private partners.

Letters to the Honourable John H. Dunn, 1837-1838

The recipient of the letters is John Henry Dunn who was born on St. Helena (a British territory island of volcanic origin located in the South Atlantic Ocean) in 1792 to John Charles Dunn and Elizabeth Bazette. He was married to Charlotte Roberts on May 4th, 1820 and they had 6 sons and 2 daughters. He came to Canada in 1820 in which year he became the Receiver General for Canada. He held this position until 1841.Charlotte died in 1835. In 1822 he was named to the Province’s Legislative Council. He was president of the Welland Canal Company from 1825-1833. In 1836 he was named to the executive council of Upper Canada but resigned 3 weeks later with fellow counselors when lieutenant governor Sir Francis Bond refused the advice of the council. Dunn was made the Receiver General for the newly formed Province of Canada in 1841, and was elected to represent Toronto in the legislative assembly that year. He married his second wife on March 9th, 1842. Her name was Sophie-Louise Juchereau Duchsnay. They had a son and a daughter. In 1843 he resigned, and was not re-elected in 1844. He returned to England with his family and died in London on April 21, 1854. Dunn was a supporter of the Welland Canal, St. Lawrence Canals and other public improvements. Between the passage of the Canada Trade Act and the Act of the Union he had tried to insure that projects received funding despite financial constraints. He claimed that he has saved Upper Canada from bankruptcy. His son, Alexander Roberts Dunn received the Victoria Cross for his role in the Charge of the Light Brigade at Balaclava. Dunn Street in Niagara Falls is named after John Henry Dunn. The town and township of Dunnville were also named for him. Sources: http://biographi.ca/009004-119.01-e.php?id_nbr=3889 http://www.niagarafrontier.com/cityfalls.html

University Faculty Members’ Understanding of Their Role: Identity, Power, and Silence

This qualitative study was conducted to explore tenured faculty members’ understandings of their roles as professors. Tenure is an institutional means to enact academic freedom, which allows tenured faculty members to investigate topics of their choosing free from external influence. Academic freedom also enables faculty members to be public intellectuals who shape and critique social policies and make knowledge assertions. In effect, the faculty members are institutionally protected to speak truth to power. Purposeful sampling of 9 participants from 2 universities yielded 3 major themes: professorial identity (shaped by such factors as career stage, university culture, and faculty affiliation), professorial power (powers that participants experienced as well as the ways in which they exercised power), and professorial silencing (as a response to fiscal realities coupled with numerous governance issues). While participants were cognizant of the powers that affected their freedoms, they were less aware of the ways in which their position afforded them powers. Subtle but more potent forms of power were at play for tenured professors, but the participants saw themselves as having to work within institutional and financial constraints that limited their freedom to speak out on controversial issues. Faculty members were, thus, silenced and at times chose to self-silence. The context of the present-day university, governance models, and the financial issues affecting universities and departments worked in concert to silence this critical voice in society.

Discerning policy and drivers for sustainable facilities management practice

Due to the changing nature of the facilities management (FM) profession, facilities managers are increasingly engaged with the evolving sustainability agenda in the UK and the development or uptake of sustainability policies within their organisations. This study investigates how facilities managers are engaging with the sustainability agenda and the drivers, policy issues and information they use to improve their sustainability performance management. A web based self-administered questionnaire survey of facilities managers in the UK was conducted to identify drivers and issues that influence and support good sustainable practices. A total of 268 facilities managers responded. The results indicate that legislation is the most important driver for the implementation of sustainable practices. Corporate image and Organisational ethos are also recognised. However demand for efficient monitoring, management and reporting on environmental impact is not highly rated even though the top three issues of sustainability managed by facilities managers are energy management, waste and recycling management and carbon footprint. In addition, facilities managers are expected to take ownership of activities assigned to the reduction of carbon emission. Government industries and organisation with high turnover are more likely to have a sustainability policy. Financial constraints are the main barriers while legislations are the main driver for implementing sustainability. For non-profit organisations and the charitable sector, financial constraints are no hindrance to implementing a sustainability policy. The conclusion drawn is that sustainability agendas continue to be influenced by regulated environmental issues rather than a balanced approach which takes into consideration the wider social and economic aspects of sustainability. While this scenario is far from ideal, the expectation is that the organisation will trust FM to take a vital role in delivering a comprehensive sustainability policy due to the rising tide of legislation, public scrutiny, as well as the needed business case for genuinely embracing sustainability. However, as the integration of sustainability with core business strategies is continuously evolving the emphasis on different drivers will vary from organisation to organisation as well as the responsibilities of facilities managers.

Politian: a critical analysis

Why even look at Politian, an unfinished failure? While it is true that Politian was a failure for its time and surely one of Poe's least successful attempts, it may improve on a stage with a more modern perspective. If not solely for examination of Poe's artistic effort, Politian also warrants a closer read due to its historical relevance by way of Beauchamp and Sharp. Poe, a most fastidious editor of his work, was ultimately required because of financial constraints to lay aside Politian in its unfinished state. As a result, the unedited Politian may provide insight into the writing process of Poe that other polished pieces cannot, and that, if nothing else, warrants a more precise study of his play.

A abertura financeira reduz as restrições de crédito nos países emergentes?

Um dos principais entraves aos investimentos das firmas é a restrição ao financiamento. A existência de controles de capitais em determinados países pode aumentar o custo de captação das empresas, sobretudo para companhias menores ou para fabricantes de produtos não comercializáveis, que são mais dependentes de recursos domésticos. Este trabalho analisa o impacto da abertura financeira sobre os investimentos de uma amostra de 6.860 empresas de capital aberto de treze países emergentes. Os resultados sugerem que firmas residentes em países com menos controles de capitais possuem menores restrições ao financiamento dos investimentos. Adicionalmente, empresas maiores e produtoras de bens comercializáveis também são menos restritas ao crédito.

Teoria da agência e franchising: evidência empírica para o caso brasileiro

O presente estudo tem um duplo objetivo: (i) analisar os determinantes da escolha das firmas por um modelo de franchising na estratégia de expansão de seus negócios, e (ii) analisar como os termos de um contrato de franchising podem potencialmente ser influenciados por questões relativas a compartilhamento de risco, problemas de incentivo relacionados ao risco moral (moral hazard) e restrições de recursos financeiros. Essa discussão se dará seguindo a abordagem empírica proposta por Lafontaine (1992). Os modelos são estimados a partir de dados para uma amostra de 350 redes de franquias brasileiras relativas ao ano de 2011. Os resultados sugerem que a definição do valor da taxa de royalties leva em conta os problemas decorrentes do risco moral por parte dos franqueados e do compartilhamento de risco. Em particular, nos negócios onde o esforço dos franqueados afeta significativamente a provisão dos serviços prestados, observa-se uma tendência de cobrança de menores taxas de royalties e uma relação positiva entre risco e incentivos, com a cobrança de menores taxas de royalties em setores de atividade com maior risco. Em relação ao percentual de unidades franqueadas, obteve-se resultados coerentes com a expectativa teórica para o problema de risco moral do franqueado, de modo que quanto mais importante o trabalho do agente, maior o índice. Entretanto, para a restrição de capital, contrário a expectativa teórica, quanto maior a disponibilidade de recursos maior o número de franquias.

Entry mode choice and market selection of born globals in developing countries: a multiple-case study of the ecuadorian software sector

O fenômeno "Born global" refere-se a empresas que consideram o mercado global como seu contexto natural e que iniciam seu processo de internacionalização muito cedo após sua criação. As teorias tradicionais como o modelo de Uppsala não conseguem explicar este processo. Portanto, outras teorias têm surgido, como a perspectiva de redes. Existem alguns estudos relacionados a esta área, principalmente realizados em países desenvolvidos com pequenos mercados e economias abertas. No entanto, poucos estudos têm sido feitos em economias em desenvolvimento. Além disso, o número de pesquisas quanto à escolha do modo de entrada e seleção de mercados das empresas “born global” é bastante limitado. Consequentemente, este estudo pretende descrever os principais fatores que influenciam a escolha do modo de entrada e seleção de mercados das empresas, de economias em desenvolvimento, nascidas globais. O foco da pesquisa é a indústria de software e um estudo de casos múltiplo foi realizado com três empresas no Equador. A metodologia incluiu entrevistas com fundadores, bem como a coleta de dados secundários. Com base na evidência empírica, verificou-se que os principais fatores que influenciam a escolha do modo de entrada são as restrições financeiras, as receitas esperadas, a velocidade de internacionalização, mercados nicho e a experiência empresarial anterior dos fundadores. Por outro lado, a seleção de mercado é influenciada por semelhanças de língua e cultura, mercados nicho e relações em rede.

Why has productivity growth stagnated in most Latin American countries since the neo-liberal reforms?

Latin America’s economic performance since the beginning of neo-liberal reforms has been poor; this not only contrasts with its own performance pre-1980, but also with what has happened in Asia since 1980. I shall argue that the weakness of the region’s new paradigm is rooted as much in its intrinsic flaws as in the particular way it has been implemented. Latin America’s economic reforms were undertaken primarily as a result of the perceived economic weaknesses of the region — i.e., there was an attitude of ‘throwing in the towel’ vis-à-vis the previous state-led import substituting industrialisation strategy, because most politicians and economists interpreted the 1982 debt crisis as conclusive evidence that it had led the region into a cul-de-sac. As Hirschman has argued, policymaking has a strong component of ‘path-dependency’; as a result, people often stick with policies after they have achieved their aims, and those policies have become counterproductive. This leads to such frustration and disappointment with existing policies and institutions that is not uncommon to experience a ‘rebound effect’. An extreme example of this phenomenon is post-1982 Latin America, where the core of the discourse of the economic reforms that followed ended up simply emphasising the need to reverse as many aspects of the previous development (and political) strategies as possible. This helps to explain the peculiar set of priorities, the rigidity and the messianic attitude with which the reforms were implemented in Latin America, as well as their poor outcome. Something very different happened in Asia, where economic reforms were often intended (rightly or wrongly) as a more targeted and pragmatic mechanism to overcome specific economic and financial constraints. Instead of implementing reforms as a mechanism to reverse existing industrialisation strategies, in Asia they were put into practice in order to continue and strengthen ambitious processes of industrialisation.