POLITICAL RISK IN FOREIGN DIRECT INVESTMENT IN THE RUSSIAN ELECTRIC POWER SECTOR

Russia approved ambitious reform plan for the electricity sector in 2001 including privatisation of the country’s huge thermal generation assets. So far the sector had suffered from power shortages, aging infrastructure, substantial electricity losses, and weak productivity and profitability numbers. There was obvious need for foreign investments and technologies. The reform was rather successful; the generation assets were privatised in auctions in 2007-2008 and three European energy companies, E.On, Enel and Fortum, invested in and obtained together over 10% of the Russian production assets. The novelty of these foreign investments serves unique object for the study. The political risk is involved in the FDI due to the industry’s social and economic importance. The research’s objective was to identify and analyse the political risk that foreign investors face in the Russian electricity sector. The research had qualitative study method and the empirical data was collected by interviewing. The research’s theoretical framework was based on the existing political risk theories and it focused to understand the Russian government in relation to the country’s stability and define both macro-level and micro-level sources of political risk for the foreign direct investments in the sector. The research concludes that the centralised and obscure political decision-making, economic constriction, high level of governmental control in economy and corruption form the country’s internal macro-level risk sources for the foreign investors in the sector. Additionally the retribution due to the companies’ home country actions, possible violent confrontations at the Russian borders and the currency instability are externally originated risk sources. In the electricity industry there is risk of tightened governmental control and increased regulation and taxation. Similarly the company-level risk sources link to the unreformed heating sector, bargaining with the authorities, diplomatic stress between host and home countries and to companies and government’s divergent perspective for the profit-making. The research stresses the foreign companies’ ability to cope with the characteristics of Russian political environment. In addition to frequent political and market risk assessment, the companies need to focus on currency protection against rouble’s rate fluctuation and actively build good company-citizenship in the country. Good relationship is needed with the Russian political authorities. The political risk identification and the research’s conclusive framework also enable political risk study assessments for other industries in Russia

TAKING ADVANTAGE OF THE LOCAL ADVANTAGE? - Investment value of the analyst local advantage in the Finnish stock market in 2006–2014

An investor can either conduct independent analysis or rely on the analyses of others. Stock analysts provide markets with expectations regarding particular securities. However, analysts have different capabilities and resources, of which investors are seldom cognizant. The local advantage refers to the advantage stemming from cultural or geographical proximity to securities analyzed. The research has confirmed that local agents are generally more accurate or produce excess returns. This thesis tests the investment value of the local advantage regarding Finnish stocks via target price data. The empirical section investigates the local advantage from several aspects. It is discovered that local analysts were more focused on certain sectors generally located close to consumer markets. Market reactions to target price revisions were generally insignificant with the exception to local positive target prices. Both local and foreign target prices were overly optimistic and exhibited signs of herding. Neither group could be identified as a leader or follower of new information. Additionally, foreign price change expectations were more in line with the quantitative models and ideas such as beta or return mean reversion. The locals were more accurate than foreign analysts in 5 out of 9 sectors and vice versa in one. These sectors were somewhat in line with coverage decisions and buttressed the idea of local advantage stemming from proximity to markets, not to headquarters. The accuracy advantage was dependent on sample years and on the measure used. Local analysts ranked magnitudes of price changes more accurately in optimistic and foreign analysts in pessimistic target prices. Directional accuracy of both groups was under 50% and target prices held no linear predictive power. Investment value of target prices were tested by forming mean-variance efficient portfolios. Parallel to differing accuracies in the levels of expectations foreign portfolio performed better when short sales were allowed and local better when disallowed. Both local and non-local portfolios performed worse than a passive index fund, albeit not statistically significantly. This was in line with previously reported low overall accuracy and different accuracy profiles. Refraining from estimating individual stock returns altogether produced statistically significantly higher Sharpe ratios compared to local or foreign portfolios. The proposed method of testing the investment value of target prices of different groups suffered from some inconsistencies. Nevertheless, these results are of interest to investors seeking the advice of security analysts.

Feeding rates, parental investment, and brood reduction in Caspian terns (Sterna caspia)

Fresh egg-weights and feeding rates to chicks were related to chick survival as one means of quantifying apportionment of parental investment wi thin broods of Caspian Terns (SterDI casRla) at a colony in Georgian Bay. Lake Huron, during 1978 and 1979. Ftrst-laid eggs from 2-egg clutches were Significantly heavier and usually hatched one to three days earlier than second-laid eggs in both years of the study. In both years, first-hatched chicks were larger and generally better fed than second-hatched siblings. The disparity between feedIng rates of first- and second-hatched ehicks was greater in 1979. Brood feeding I rates correlated positively with the percentage of food fed to the least-fed sibUng through the period of B-chick ages zero to 10 days in 1978. I suggest that after this age period, parental control over whlcb cbick was fed diminished. In 1978, 10 of 16 secondhatched chicks were fed more than their older siblings during their first 5 days. 'lb.is is interpreted as a parental response to reduce the competitive advantage of the larger first-hatched chicks. Most chick losses were apparently caused by starvation or preda. tion. In 1979, seeorvl-hatched chick disappearance (due to predation) was -related to low feeding rates, whereas first-hatched chick disappearance was related to low fresh egg-weights.. First-hatched chicks survived better than second-hatched chicks both years, and more pairs fledged two chicks in 1978. Maximum estimated feeding rates at the nest and fledging ages suggested that food was more avatlable in 1978 than in 1979. In 1979, second eggs apparently functioned as "insurance" eggs. When the first-laid egg falled to hatch, or the first-hatched chick died, the second-hatched chick was often successfully fledged. When first-hatched chicks survived, the second-hatched chick usually starved or was preyed upon, reducing the brood to one chick. Parental investment patterns favored first-hatched chicks. Brood reduction, when employed, discouraged total nest failure, however, under appropriate conditions, brood reduction was avoided and full broods (or two chicks) were fledged.

DNA Banking: current and ideal practices

Ce livre est la conclusion d’un projet de recherche de deux ans portant sur les technologies en génétique humaine. Les développements récents en matière de collecte, d’analyse et de conservation du matériel génétique ont soulevé des questions juridiques complexes et ont attiré l’attention de plusieurs avocats, scientifiques et du public. Ce livre présente une analyse de ces questions et une comparaison de la position et de la politique canadienne avec celle en émergence dans divers pays

Trade Creation, Trade Diversion and Investment Flows: Evidence from the Canada-Chile Free Trade Agreement.

Rapport de recherche

The role of investment specific technological shocks in explaining macroeconomics fluctuations.

Rapport de recherche

Investment Under Demand Uncertainty: the Newsboy Problem Revisited.

In this article we study the effect of uncertainty on an entrepreneur who must choose the capacity of his business before knowing the demand for his product. The unit profit of operation is known with certainty but there is no flexibility in our one-period framework. We show how the introduction of global uncertainty reduces the investment of the risk neutral entrepreneur and, even more, that the risk averse one. We also show how marginal increases in risk reduce the optimal capacity of both the risk neutral and the risk averse entrepreneur, without any restriction on the concave utility function and with limited restrictions on the definition of a mean preserving spread. These general results are explained by the fact that the newsboy has a piecewise-linear, and concave, monetary payoff witha kink endogenously determined at the level of optimal capacity. Our results are compared with those in the two literatures on price uncertainty and demand uncertainty, and particularly, with the recent contributions of Eeckhoudt, Gollier and Schlesinger (1991, 1995).

Rigidité normale, dévaluation et équilibre général intertemporel

La présente étude analyse les effets dynamiques de la dévaluation du franc CFA, à l’aide d’un modèle monétaire d’équilibre général, intertemporel et multisectoriel. L’accent est particulièrement mis sur les interactions entre dévaluation et accumulation du capital. Dans le modèle, les effets du changement de parité passent par le marché du travail qui se caractérise par l’inertie du salaire nominal. Les résultats montrent que la dévaluation relance l’investissement, avec des effets expansionnistes sur l’activité économique. Le choc monétaire n’a eu qu’un impact limité sur les soldes budgétaire et commercial. Une mesure d’accompagnement telle que la réduction des salaires de la fonction publique améliore ces deux soldes mais déclenche un processus récessif.

The Transmission of Monetary Policy in a Multi-Sector Economy

This paper constructs and estimates a sticky-price, Dynamic Stochastic General Equilibrium model with heterogenous production sectors. Sectors differ in price stickiness, capital-adjustment costs and production technology, and use output from each other as material and investment inputs following an Input-Output Matrix and Capital Flow Table that represent the U.S. economy. By relaxing the standard assumption of symmetry, this model allows different sectoral dynamics in response to monetary policy shocks. The model is estimated by Simulated Method of Moments using sectoral and aggregate U.S. time series. Results indicate 1) substantial heterogeneity in price stickiness across sectors, with quantitatively larger differences between services and goods than previously found in micro studies that focus on final goods alone, 2) a strong sensitivity to monetary policy shocks on the part of construction and durable manufacturing, and 3) similar quantitative predictions at the aggregate level by the multi-sector model and a standard model that assumes symmetry across sectors.

The euro impact of the banking system of Greece : cost-benefit analysis.

Rapport de recherche

Investment Under Demand Uncertainty: the Newsboy Problem Revisited.

In this article we study the effect of uncertainty on an entrepreneur who must choose the capacity of his business before knowing the demand for his product. The unit profit of operation is known with certainty but there is no flexibility in our one-period framework. We show how the introduction of global uncertainty reduces the investment of the risk neutral entrepreneur and, even more, that the risk averse one. We also show how marginal increases in risk reduce the optimal capacity of both the risk neutral and the risk averse entrepreneur, without any restriction on the concave utility function and with limited restrictions on the definition of a mean preserving spread. These general results are explained by the fact that the newsboy has a piecewise-linear, and concave, monetary payoff witha kink endogenously determined at the level of optimal capacity. Our results are compared with those in the two literatures on price uncertainty and demand uncertainty, and particularly, with the recent contributions of Eeckhoudt, Gollier and Schlesinger (1991, 1995).