Public investment and the risk premium for equity

Analysis of the equity premium puzzle has focused on private-sector capital markets. However, the existence of an anomalous equity premium raises important issues in the evaluation of public-sector investment projects. These issues are explored below. We begin by formalizing the argument that an equity premium may arise from uninsurable systematic risk in labour income, and show that, other things being equal, increases in public ownership of equity will improve welfare, up to the point where the equity premium is eliminated. Finally, we consider policy implications and the optimal extent of public ownership.

Estudo sobre a captação dos fundos de Private Equity e Venture Capital

O estudo tem por objetivo avaliar os fatores que possam explicar a captação de recursos (fundraising) dos fundos de Private Equity e Venture Capital (PE/VC). Em linhas gerais, a proposta é averiguar empiricamente quais são os fatores que impactam na captação de recursos pelos fundos de PE/VC. A amostra foi formada por 25 países e em um espaço temporal de 6 anos (2006-2011). Foram identificados seis fatores: atividade econômica, desenvolvimento do mercado de capitais, governança corporativa, desenvolvimento socioambiental, empreendedorismo e tributação. Assim, construiu-se através de Análise Fatorial seis fatores que foram compostos por 26 variáveis. Por meio de regressão múltipla foram investigadas as relações entre a captação de recursos por parte dos fundos PE/VC e os fatores gerados. Os resultados demonstraram que apesar dos fatores testados serem significativos, a captação dos recursos é fortemente influenciada pelo nível de desenvolvimento do mercado de capitais. Os resultados aqui encontrados se tornam relevantes, pois discutem uma realidade crescente tanto no Brasil quanto no mundo, visto que o mercado de PE/VC solidifica-se como alternativa de captação de recursos.

EU Commission participation in the Troika mission: is there a European Union price to pay?

The article is intended to debate two questions regarding the involvement of the Commission in the Troika's action: firstly, considering the nature of financial assistance programs, it aims to discuss the effect of the Commission's participation in Troika negotiations on the balance of power of the EU institutions; and secondly, the article raises the issue of the Commission's liability for the results achieved by the financial assistance program, taking into account the extent of the conditions imposed, as well as the intensity of scrutiny by the Troika.

The determinants of international equity investment: Do they differ between institutional and noninstitutional investors?

In this paper we investigate whether the determinants of international equity investment differ between investors with different degrees of sophistication. For this purpose, we analyse and compare the determinants of international equity investment of institutional and noninstitutional investors from 20 OECD countries (US not included) in the period 2001-2009. The results show that there are significant differences in the determinants of international equity investment between institutional and noninstitutional investors. In particular, noninstitutional investors tend to exhibit a more pronounced preference for equities of geographical nearby, contiguous and more transparent countries than institutional investors. The preference for more developed equity markets and the contrarian behaviour are also significantly more pronounced for noninstitutional than for institutional investors. These results support the argument that international equity investment of less sophisticated investors is more affected by information costs and familiarity than that of more sophisticated investors. Moreover, business cycles exert an influence on international equity investment decisions of both institutional and noninstitutional investors.

The determinants of international equity and bond investment

The purpose of this research is fourfold. First, to investigate whether the determinants of international equity investment differ between investors with different degrees of information, experience and sophistication. For this purpose, the determinants of international equity investment of institutional and noninstitutional investors from 20 OECD countries, in the period 2001-2009, were analysed and compared. The results show that there are significant differences in the determinants of international equity investment between institutional and noninstitutional investors. Particularly, noninstitutional investors exhibit a more pronounced preference for equities of geographical nearby, contiguous and more transparent countries than institutional investors, suggesting that the effect of information costs and familiarity on international equity investment is stronger for less informed, experienced and sophisticated investors. Moreover, the preference for more developed equity markets and the contrarian behaviour are more severe for noninstitutional investors. Hence, the heterogeneity of institutional and noninstitutional investors in international equity investment is not negligible and therefore should be taken into account. Second, to investigate whether the determinants of international bond investment differ between investors with different degrees of information, experience and sophistication. For this purpose, the determinants of international bond investment of institutional and noninstitutional investors from 20 OECD countries, in the period 2001-2009, were analysed and compared. The results show that there are few significant differences in the determinants of international bond investment between institutional and noninstitutional investors. Particularly, the preference for bonds of more transparent countries and the return chasing behaviour are more pronounced for noninstitutional investors, whereas the preference for bonds with lower risk diversification potential is more pronounced for institutional investors. Hence, not only the results for international bond investment do not allow to support (or reject) the argument that information costs and familiarity are more important for less informed, experienced and sophisticated investors, but also they are contrary to the idea that financial variables, namely return and risk diversification, are more important for more informed, experienced and sophisticated investors. Third, to investigate whether the determinants of international equity investment differ from the determinants of international bond investment. For this purpose, the determinants of both international equity and bond investment of institutional and noninstitutional investors from 20 OECD countries, in the period 2001-2009, were analysed and compared. The results show that, although the effect of information costs on international equity investment tends to be stronger than on international bond investment, the differences between assets are not usually statistically significant, especially when the influence of financial variables is taken into account. Hence, it is not possible to conclude that international equity investment is much more information intensive than international bond investment, as suggested by Gehrig (1993) and Portes, Rey and Oh (2001), among others. Fourth, to investigate whether the flight to quality phenomenon is also observable in international investment and whether the flight to quality phenomenon is more pronounced for more sophisticated than for less sophisticated investors. For this purpose, a two-factor and three-factor ANOVA models, respectively, were applied to the international equity and bond investment of institutional and noninstitutional investors from 20 OECD countries in the period 2001-2009. The results suggest that the flight to quality phenomenon is also observable in international investment, as a change from business cycle of expansion to recession causes investors to significantly decrease the average weight invested in more risky assets (equities) and increase the average weight invested in less risky assets (bonds). The results also show that the variation on the average weight assigned to each type of asset, due to changes in business cycles, is significantly stronger for institutional investors than for noninstitutional investors, thereby suggesting that the flight to quality phenomenon is more pronounced for more sophisticated than for less sophisticated investors.

Brand equity in the Pakistani hotel industry

Brand equity is considered as the most important aspect of branding, which is a set of brands' assets and liabilities, its symbol or name that subtracts from or adds the value provided by a product or service to a firm and customers. The current research endeavor was to identify the interrelationship of customer-based brand equity dimensions (brand awareness, brand loyalty, brand image, and service quality) in Pakistani hotel industry. Data was collected from 821 consumers who experienced the services of Pakistani five star hotels from multiple locations. Mediating regression and stepwise regression analyses were applied for investigation of study hypotheses. Results pointed out positive and significant influences of service quality on all other dimensions of brand equity whereas partial mediations were endorsed among the variables. Researchers and practitioners implications are discussed.

DISPOSITION EFFECT AMONG BRAZILIAN EQUITY FUND MANAGERS

The disposition effect predicts that investors tend to sell winning stocks too soon and ride losing stocks too long. Despite the wide range of research evidence about this issue, the reasons that lead investors to act this way are still subject to much controversy between rational and behavioral explanations. In this article, the main goal was to test two competing behavioral motivations to justify the disposition effect: prospect theory and mean reversion bias. To achieve it, an analysis of monthly transactions for a sample of 51 Brazilian equity funds from 2002 to 2008 was conducted and regression models with qualitative dependent variables were estimated in order to set the probability of a manager to realize a capital gain or loss as a function of the stock return. The results brought evidence that prospect theory seems to guide the decision-making process of the managers, but the hypothesis that the disposition effect is due to mean reversion bias could not be confirmed.

BRAND EQUITY OF LAHORE FORT AS A TOURISM DESTINATION BRAND

ABSTRACTStudies that measure the brand equity of destination brands by using the Customer-Based Brand Equity (CBBE) model in a developing country context are scarce. The present study investigates the destination brand equity of the Lahore Fort by employing the CBBE model in a developing country context of Pakistan. Following the positivist tradition, we adopted a survey-based approach to collect data from 237 tourists visiting the Lahore Fort. Data were collected through a questionnaire developed to explain the relationship of brand awareness, brand image, brand association, and brand loyalty with Lahore Fort’s overall brand equity. We used various robust statistical techniques such as correlation, regression and confirmatory factor analysis (using PLS method) to reach meaningful conclusions and found that brand image and brand associations positively contribute to brand loyalty. Furthermore, brand loyalty significantly contributes towards overall brand equity. Pragmatically, this study measures the customer based brand equity of the Lahore Fort, a destination brand. The results are useful as they suggest a few strategies that can help policy makers to enhance Lahore Fort’s brand performance.

Trying To understand all-equity firms

This paper studies all equity firms and shows which are in US firms, the main drivers of zero-debt policy. I analyze 6763 U.S. listed companies in years 1987-2009, a total of 77442 firms year. I find that financial constrained firms show a higher probability to become unlevered. In the opposite side, firms producing high cash flow are also likely to become unlevered, paying their debt. Some firms create economies of scale in the use of funds, increasing the probability of become unlevered. The industry characteristics are also important to explain the zero-debt policy. However is the high perception of risk, the most important factor influencing this extreme behavior, which is consistent with trade-off theory.

The US actuarial balance model for the pay-as-you-go system and its application to Spain

The aim of this paper is to formulate an approximation of the US actuarial balance model and apply it to the Spanish public retirement pension system under various scenarios in order to determine a consistent indicator of the system's financial state comparable to those used by the most advanced social security systems. This will enable us to answer the question as to whether there is any justification for reforming the pension system in Spain. This type of actuarial balance uses projections to show future challenges to the financial side of the pension system deriving basically from ageing, the projected increase in longevity and fluctuations in economic activity. If one is compiled periodically it can provide various indicators to help depoliticize the management of the pay-as-you-go system by bringing the planning horizons of politicians and the system itself closer together.

Diversity and equity: dealing with biological and social differences

In the context of the design of working hours inequities in health associated with biological, psychological, social, and socioeconomic diversities can be observed. The paper first tries to set up a frame of reference for a discussion of this topic, relating to the Universal Declaration of Human Rights and some recent discussions on equity in health and then goes into some factors that produce inequities in health in the context of the design of working hours, dealing with sex or gender, age and job age, personality traits, marital status, social support, diversities in values, and socio-economic differences; the discussion deals with approaches on how to deal with these differences and inequities.

El concepto de willingness-to-pay en tela de juicio

La idoneidad del concepto de willingness to pay (disponibilidad a pagar) es revisado en las evaluaciones económicas que se realizan en el campo de la salud. Por un lado, existe dentro de la literatura económica un número importante de investigadores que señalan los múltiples problemas metodológicos que entrañan las estimaciones de willingness to pay. Por otro lado, aún el debate teórico-conceptual acerca de la agregación de las preferencias individuales dentro de una demanda agregada no ésta del todo resuelto. Sin embargo, durante los últimos 20 años la estimación de la disponibilidad a pagar dentro de las investigaciones económicas ha aumentado de forma significativa, siendo en muchos casos uno de los principales factores de la toma de decisión en políticas de salud. Plantease alguna de las limitaciones de esta técnica, así como el posible efecto distorsionador que podría tener sobre las evaluaciones económicas que se realizan en el área de la economía de la salud.

Recuperação de calor dos efluentes da tinturaria

Foram utilizados como elemento principal de estudo, os efluentes líquidos dos processos industriais da ENDUTEX, Tinturaria e Acabamento de Malhas, S. A. localizada no município de Caldas de Vizela, distrito de Braga. O estudo foi realizado na empresa devido ao interesse da mesma em poder reaproveitar o calor libertado nos efluentes para aquecimento de parte da água captada no rio de Vizela. O objectivo do trabalho consiste no dimensionamento de um permutador de calor que permita satisfazer o interesse da empresa, assim como, um estudo económico relativo aos custos envolventes. Com o intuito de concretizar os objectivos propostos foram realizadas visitas semanais à empresa para se proceder ao levantamento de dados e para a realização de amostragens do efluente para posterior caracterização. Depois de efectuado o dimensionamento do permutador de placas para diferentes caudais e temperaturas dos fluidos, frio (água do rio) e quente (efluentes), concluiu-se que as condições mais rentáveis correspondiam a um caudal de fluido frio de 17 m3/h em que a temperatura de entrada e de saída no permutador seria de 14 ºC e 48 ºC, respectivamente. O caudal de fluido quente seria de 20 m3/h, sendo a temperatura de entrada e de saída no permutador de 62 ºC e 33,1 ºC, respectivamente. Como resultado do dimensionamento obteve-se um permutador de placas com 167 placas em que o coeficiente global de transferência de calor (U) é de 726,9 W/m2ºC, a área projectada de 55,7 m2 e a queda de pressão de 0,904 KPa. Foi consultada a empresa ARSOPI-THERMAL para verificação das características dos permutadores existentes no mercado. No entanto, para as mesmas condições foi sugerido um permutador com 31 placas em que o coeficiente global de transferência de calor (U) é de 6267 W/m2ºC, a área projectada de 7,39 m2 e a queda de pressão de 76 KPa. A diferença verificada nos resultados apresentados pode ter origem na utilização de diferentes expressões no cálculo do coeficiente pelicular de transferência de calor (h) e pelo facto da ARSOPI desprezar o factor de sujamento no seu dimensionamento Na análise económica do projecto é de referir que para o arranque do projecto foi feito o levantamento das necessidades de investimento, situando-se este num valor total de 9640€, sendo o investimento financiado apenas por capitais próprios. O prazo de recuperação do investimento (Pay Back Period) é de cerca de 2 meses.