Cross Listing of a Finnish Company on an Exchange in the United States of America

Finnish companies cross listing in the United States is an exceptional phenomenon. This study examines the cross listing decision, cross listing choice and cross listing process with associated challenges and critical factors. The aim is to create an in-depth understanding of the cross listing process and the required financial information. Based on that, the aim is to establish the process phases with the challenges and the critical factors that ought to be considered be- fore establishing the process plus re-evaluated and further considered at points in time during the process. The empirical part of this study is conducted as a qualitative study. The research data was collected through the adoption of two approaches, which are the interview approach and the textual data approach. The interviews were conducted with Finnish practitioners in the field of accounting and finance. The textual data was from publicly available publications of this phenomenon by the two BIG5 accounting companies worldwide. The results of this study demonstrate the benefits of cross listing in the U.S. are the better growth opportunities, the reduction of cost of capital and the production of higher quality financial information. In the decision making process companies should assess whether the benefits exceed the increased costs, the pressure for performance, the uncertainty of market recognition and the requirements of management. The exchange listing is seen as the most favourable cross listing choice for Finnish companies. The establishment of the processes for producing reliable, transparent and timely financial information was seen as both highly critical and very challenging. The critical success factors relating to the cross listing phases are the assessment and planning as well as the right mix of experiences and expertise. The timing plays important role in the process. The results mainly corroborate the literature concerning cross listing decision and choice. This study contributes to the literature on the cross listing process offering a useful model for the phases of the cross listing process.

A performance analysis of conventional and fundamental exchange traded funds: ETFs and their risk-return characteristics in relation to building institutional investor’s passive portfolio

An exchange traded fund (ETF) is a financial instrument that tracks some predetermined index. Since their initial establishment in 1993, ETFs have grown in importance in the field of passive investing. The main reason for the growth of the ETF industry is that ETFs combine benefits of stock investing and mutual fund investing. Although ETFs resemble mutual funds in many ways, also many differences occur. In addition, ETFs not only differ from mutual funds but also differ among each other. ETFs can be divided into two categories, i.e. market capitalisation ETFs and fundamental (or strategic) ETFs, and further into subcategories depending on their fundament basis. ETFs are a useful tool for diversification especially for a long-term investor. Although the economic importance of ETFs has risen drastically during the past 25 years, the differences and risk-return characteristics of fundamental ETFs have yet been rather unstudied area. In effect, no previous research on market capitalisation and fundamental ETFs was found during the research process. For its part, this thesis seeks to fill this research gap. The studied data consist of 50 market capitalisation ETFs and 50 fundamental ETFs. The fundaments, on which the indices that the fundamental ETFs track, were not limited nor segregated into subsections. The two types of ETFs were studied at an aggregate level as two different research groups. The dataset ranges from June 2006 to December 2014 with 103 monthly observations. The data was gathered using Bloomberg Terminal. The analysis was conducted as an econometric performance analysis. In addition to other econometric measures, the methods that were used in the performance analysis included modified Value-at-Risk, modified Sharpe ratio and Treynor ratio. The results supported the hypothesis that passive market capitalisation ETFs outperform active fundamental ETFs in terms of risk-adjusted returns, though the difference is rather small. Nevertheless, when taking into account the higher overall trading costs of the fundamental ETFs, the underperformance gap widens. According to the research results, market capitalisation ETFs are a recommendable diversification instrument for a long-term investor. In addition to better risk-adjusted returns, passive ETFs are more transparent and the bases of their underlying indices are simpler than those of fundamental ETFs. ETFs are still a young financial innovation and hence data is scarcely available. On future research, it would be valuable to research the differences in risk-adjusted returns also between the subsections of fundamental ETFs.

Por que a poupança externa não promove crescimento

Why foreign saving fail to cause growth. The present paper is a formalization of the critique of the growth with foreign savings strategy. Although medium income countries are capital poor, current account deficits (foreign savings), financed either by loans or by foreign direct investments, will not usually increase the rate of capital accumulation or will have little impact on it in so far as current account deficits will be associated with appreciated exchange rates, artificially increased real wages and salaries and high consumption levels. In consequence, the rate of substitution of foreign savings for domestic savings will be relatively high, and the country will get indebted to consume, not to invest and grow. Only when there are large investment opportunities, stimulated by a sizeable difference between the expected profit rate and the long term interest rate, the marginal propensity to consume will get down enough so that the additional income originated from foreign capital flows will be used for investment rather than for consumption. In this special case, the rate of substitution of foreign for domestic savings tend to be small, and foreign savings will contribute positively to growth.

National exchange rate policies and international debt crises: how Brazil did not follow Argentina into a default in 2001-2002

This paper examines how exchange rate policies and IMF Stand-By Arrangements affect debt crises using econometrics and a comparison between Argentina and Brazil. It refines an existing diagram outlining crisis development to propose crisis prevention strategies. Flexible exchange rate policies reduce a country's probability of default by over 4%, but Stand-By Arrangements increase it by an inconsequential percentage. Unlike Argentina, Brazil avoided a default via a freely-floating exchange rate system, fiscal deficit reduction, and a cooperative and coordinated relationship with the IMF. The results provide policymakers from developing countries with lessons to manage their countries' default risks more effectively.

Uma análise da estratégia nacional de desenvolvimento da Malásia

This paper aims at studying Malaysia's national development strategy in the last three decades. Firstly, we will give emphasis to the country's economic planning development, its medium-term and long-term plans, as well as Mahathir's political influence. Secondly, we will try to identify key elements in the Malaysian growth process, such as its exchange rate and current account policies, the participation of the government in the whole process and matters related to domestic savings and foreign direct investment. We will also talk about the 1997 financial crisis.

Déficits gêmeos e poupança nacional: abordagem teórica

A consensus has not yet emerged about the relationship between budget deficit, external deficit and national saving. According to mainstream economic literature the budget deficit can cause an insufficiency of national saving for a given investment rate. In this case, the investment rate will not be reduced if foreign saving is absorbed, causing an external deficit. In general, the mechanisms through which budget deficits could cause current account deficits are not highlighted in the works about this theme. We arrive at the conclusion that there is not a systematic relationship between budget deficit, current account deficit and national saving and that when it happens it can be processed only through changes in the real exchange rate.

The Impact of Foreign Direct Investment Inflows on the Economic Growth of Bangladesh. The Roles of Infrastructural Facilities

Foreign direct investment (FDI) inflow has been a key concern for Bangladesh to obtain additional support for the economic development. The Government of Bangladesh continuously competing with other South Asian countries and putting more effort to increase the number of FDI inflows in the country. From the country’s perspective, the constant increasing rate of economic growth shows a positive outcome of FDI inflow. However, the country still not performing up to the mark to pull enough FDI inflows to its potential. Thus, this study discusses about the major determinants and factors affecting FDI inflows in Bangladesh. Among those determinants and factors, infrastructural facility is considered as the most important to affect FDI inflows. FDI inflow is fundamentally depending upon infrastructural facilities to achieve its desire success. Foreign investors take this issue very seriously because based on this they can measure their ease of doing business in the host country. Despite of providing a large market size, due to having weak and lack of infrastructural facilities, Bangladesh is facing trouble in drawing attention of the foreign investors. In order to make the infrastructural facilities happen, it is highly required to organize each of the systems under of it. The body of this study discussed about the weak infrastructures in Bangladesh such as transport and communication, power and energy, education system, and governance services. Improvement in one of these systems cannot provide valuable positive changes on FDI inflows. It requires improvement in all the weak systems to grasp multinational companies and attract foreign investors. On the basis of this research problem, research questions are established. Both qualitative and quantitative methods are used to answer the research questions. Furthermore, several theories have been applied to justify possible scenarios from the research problem. In addition, the history in between Bangladesh, trade liberalization, and FDI inflows is presented briefly.