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Investment Returns (investment + return)
Selected AbstractsRisk and Return in the 20th and 21st CenturiesBUSINESS STRATEGY REVIEW, Issue 2 2000Elroy Dimson The single most important contemporary issue in finance is the equity risk premium. This drives future equity returns, and is the key determinant of the cost of capital. The risk premium , the expected reward for bearing the risk of investing in equities, rather than in low-risk investments such as bills or bonds , is usually estimated from historical data. This article starts by summarising new evidence on historical returns in twelve major world markets from the authors' recent book, ,The Millennium Book: A Century of Investment Returns'. The authors show that the historical equity risk premium has been lower than previously believed, and argue that the future risk premium is likely to be lower still. They discuss what this implies for the cost of capital, stock market values, and companies' target rates of return. They suggest that many companies are seeking too high a rate of return and thus run the risk of under-investing. [source] The Rise of a Global Infrastructure Market through Relational InvestingECONOMIC GEOGRAPHY, Issue 1 2009Morag Torrance abstract Infrastructure assets around the world are shifting from public to private ownership. This article investigates how institutional investors are investing beyond their traditional financial and geographic borders and are increasingly serving as owners of infrastructure assets. It shows how infrastructure assets have specific geographies of information embedded in their investment returns and discusses the growing interest of institutional investors in investing in the infrastructure landscape. While infrastructure investments are considered globally, opportunities depend on the availability of specialist information in the region of investment. The article demonstrates that the low-risk, geographically varied returns match the diversification objectives of pension fund portfolios. Relational investing is important in implementing strategies for investing in the infrastructure, since the bidding on and ensuing ownership and management of infrastructure assets around the world require a combination of financial, legal, and technical expertise. The article addresses three distinct economic geography literatures: the geography of finance, pension fund research, and emerging debates on "relational geometries." [source] Liquidity Constraints and Firms' Investment Return BehaviourECONOMICA, Issue 276 2002Parantap Basu We construct a production-based model, which compares the investment return behaviour of liquidity-constrained firms with that of unconstrained firms. The key testable implication that emerges from the model is that the investment returns of the constrained firms are predictable, while those of the unconstrained firms are not. We test this implication indirectly, verifying whether the capital stock and investment returns of the latter firms lead those of the former, and directly, via the estimation of an Euler equation. Our results are consistent with the model's prediction. [source] Campaign Contributions and Agricultural SubsidiesECONOMICS & POLITICS, Issue 3 2001Rigoberto A. Lopez This article examines the influence of campaign contributions on agricultural subsidies. Empirical results revealed that rent-seeking works, i.e. contributions, influence agricultural subsidies in the manner they best serve contributors' economic interests. Eliminating campaign contributions would significantly decrease agricultural subsidies, hurt farm groups, benefit consumers and taxpayers, and increase social welfare by approximately $5.5 billion. Although contributions are not the only determinants of agricultural subsidies, investment returns to farm PAC contributors are quite high ($1 in contributions brings about $2,000 in policy transfers). In fact, the results are in sharp contrast to the "truthful contributions" assumption of the Grossman,Helpman model. [source] Ratings Changes, Ratings Levels, and the Predictive Value of Analysts' RecommendationsFINANCIAL MANAGEMENT, Issue 2 2010Brad M. Barber We show that abnormal returns to analysts' recommendations stem from both the ratings levels assigned and the changes in those ratings. Conditional on the ratings change, buy and strong buy recommendations have greater returns than do holds, sells, and strong sells. Conditional on the ratings level, upgrades earn the highest returns and downgrades the lowest. We also find that both ratings levels and changes predict future unexpected earnings and the associated market reaction. Our results imply that 1) investment returns may be enhanced by conditioning on both recommendation levels and changes; 2) the predictive power of analysts' recommendations reflects, at least partially, analysts' ability to generate valuable private information; and 3) some inconsistency exists between analysts' ratings and the formal ratings definitions issued by securities firms. [source] Connecting Optimal Capital Investment and Equity ReturnsFINANCIAL MANAGEMENT, Issue 2 2005R. Burt Porter Economic theory predicts a contemporaneous correlation between equity returns and investment growth that is only weakly present in the data. By modifying the firm's production function to include a lag between investment decisions and expenditures, and after correcting for the temporal aggregation of investment, I find the predicted correlation to be present in the data. I estimate the model for 31 industries and find that investment returns are highly correlated with the industry portfolio equity returns. Further, the portion of investment returns orthogonal to equity returns is associated positively with changes in profitability and negatively with lagged differences between equity and investment returns. [source] Functional trait variation and sampling strategies in species-rich plant communitiesFUNCTIONAL ECOLOGY, Issue 1 2010Christopher Baraloto Summary 1. ,Despite considerable interest in the application of plant functional traits to questions of community assembly and ecosystem structure and function, there is no consensus on the appropriateness of sampling designs to obtain plot-level estimates in diverse plant communities. 2. ,We measured 10 plant functional traits describing leaf and stem morphology and ecophysiology for all trees in nine 1-ha plots in terra firme lowland tropical rain forests of French Guiana (N = 4709). 3. ,We calculated, by simulation, the mean and variance in trait values for each plot and each trait expected under seven sampling methods and a range of sampling intensities. Simulated sampling methods included a variety of spatial designs, as well as the application of existing data base values to all individuals of a given species. 4. ,For each trait in each plot, we defined a performance index for each sampling design as the proportion of resampling events that resulted in observed means within 5% of the true plot mean, and observed variance within 20% of the true plot variance. 5. ,The relative performance of sampling designs was consistent for estimations of means and variances. Data base use had consistently poor performance for most traits across all plots, whereas sampling one individual per species per plot resulted in relatively high performance. We found few differences among different spatial sampling strategies; however, for a given strategy, increased intensity of sampling resulted in markedly improved accuracy in estimates of trait mean and variance. 6. ,We also calculated the financial cost of each sampling design based on data from our ,every individual per plot' strategy and estimated the sampling and botanical effort required. The relative performance of designs was strongly positively correlated with relative financial cost, suggesting that sampling investment returns are relatively constant. 7. ,Our results suggest that trait sampling for many objectives in species-rich plant communities may require the considerable effort of sampling at least one individual of each species in each plot, and that investment in complete sampling, though great, may be worthwhile for at least some traits. [source] Severance Payments and Firm,specific Human CapitalLABOUR, Issue 1 2003Jens Suedekum What effect does employment protection through severance payments have on the behaviour of employed workers? We analyse this issue within a stochastic two,period framework where workers decide on human capital investments and find two competing effects: severance payments imply higher job security that fosters human capital formation. At the same time, a lay,off is perceived by the workers to be a weaker penalty if severance payments are provided. This incentive lowers their optimal amount of firm,specific investments. Which effect prevails on balance depends on the distribution of investment returns among firm and workers. For strong positive reactions, employment protection is also in the interests of the firm. [source] Costing yield loss from acidity, sodicity and dryland salinity to Australian agricultureLAND DEGRADATION AND DEVELOPMENT, Issue 5 2005S. Hajkowicz Abstract Salinity, sodicity and acidity are three major soil constraints that limit crop and pasture yields in Australia. In this paper estimates are made of the potential benefits arising from their treatment by measuring and mapping their impact on agricultural profit. This is achieved by estimating the increase in profit for Australia's main commodities that would occur if the three soil constraints were costlessly ameliorated. These estimates reveal the upper achievable limit on investment returns. They are also indicative of each soil constraint's economic significance to Australian agriculture. It was found that costless removal of salinity would increase annual profits by A$187 million, sodicity by A$1034·6 million and acidity by A$1584·5 million. This equates to 2·9,per,cent, 15·8,per,cent and 24·2,per,cent of total net economic return. It was also found that worsening salinity extent and severity over 2000,2020 has a present value of A$496,A$712 million. Although soil salinity is currently the focus of much public attention, this analysis suggests that from a production viewpoint the correction of sodic and acidic soils may create greater private economic benefit. Opportunities vary considerably among industries. In particular, there is considerable opportunity for the horticultural and viticultural sector to address acidity issues. Whether gross benefits translate into net benefits is a complex question requiring access to context and location-specific information. Copyright © 2005 John Wiley & Sons, Ltd. [source] Ownership, incentives, and the hold-up problemTHE RAND JOURNAL OF ECONOMICS, Issue 2 2006Tim Baldenius Vertical integration is often proposed as a way to resolve hold-up problems. This ignores the empirical fact that division managers tend to maximize divisional (not firmwide) profit when investing. I develop a model with asymmetric information at the bargaining stage and investment returns taking the form of cash and "empire benefits." Owners of a vertically integrated firm will then provide division managers with low-powered incentives to induce them to bargain more cooperatively, resulting in higher investments and overall profit as compared with nonintegration. Vertical integration therefore mitigates hold-up problems even without profit sharing. [source] China's Great Ascendancy and structural risks: consequences of asymmetric market liberalisationASIAN-PACIFIC ECONOMIC LITERATURE, Issue 1 2010Yiping Huang China's great ascendancy from a poor agrarian economy to an economic superpower is unprecedented. But in the process, structural imbalances, resource inefficiency, and income inequality worsened rapidly. It is argued that the coexistence of China's extraordinary growth and serious structural risks are two sides of the same coin: asymmetric liberalisation of product and factor markets. Distortions in markets for labour, capital, land, energy, and the environment lower production costs, increase corporate profits, raise investment returns, improve the international competitiveness of Chinese goods, and therefore lift China's growth. But they also depress consumption. China needs to accelerate factor market liberalisation in order to complete the transition to a market economy and to lock the economy onto a more sustainable path. [source] Overcoming Short-Termism: Mental Time Travel, Delayed Gratification and How Not to Discount the FutureAUSTRALIAN ACCOUNTING REVIEW, Issue 4 2009Kym Irving Short-termism has been identified as a characteristic of individuals, companies, stock markets, governance structures and policies, and has been linked to inadequate saving for retirement, reduced investment returns, greater market instability and destruction of long-term value. As a construct, short-termism is complex and multidimensional. Accordingly, this paper draws upon current theory and research from a range of fields including behavioural economics, psychology and the cognitive sciences to uncover both explanations of the phenomenon and implications for countering an overly short-term focus. Possible strategies for achieving the latter are discussed. [source] The Introduction of Choice of Superannuation Fund: Results to DateAUSTRALIAN ACCOUNTING REVIEW, Issue 40 2006ROSS CLARE Commonwealth legislation providing for choice of superannuation fund has now been in operation since 1 July 2005. This paper explores the extent to which employees have exercised choice in the period immediately following the implementation of fund choice. The data available suggest that choice of fund has had only a modest impact. However, while community awareness of superannuation has increased and the level of member attachment to the main superannuation fund has increased, a downturn in investment returns, and subsequently in member sentiment, could have a significant impact on member preparedness to choose another fund [source] Foreign direct investment and the dark side of decentralizationECONOMIC POLICY, Issue 49 2007Sebastian G. Kessing SUMMARY Fiscal decentralization VERTICAL, HORIZONTAL, AND FDI Both in the developed and developing world, decentralization of fiscal policy is frequently argued to foster investment, because allowing investors to choose between competing locations should make it difficult for each jurisdiction to tax the investment's returns. We point out that this ,horizontal' dimension of decentralization cannot eliminate ex post incentives to tax investments once they are irreversibly located in a jurisdiction, and that the negative ex ante investment effects of such ,hold up' problems are actually stronger when decentralization inevitably leads to multiple levels of taxation power in each location. Empirically, we detect significant negative effects on FDI of the ,vertical' dimension of decentralization, measured by the number of government layers, in a data set containing many countries and many suitable control variables. Indicators of overall fiscal decentralization do not appear to affect the investment climate negatively per se, but our theoretical arguments and empirical results suggest that policymakers should consider very carefully the form and degree of government decentralization if they aim at improving the investment climate. , Sebastian G. Kessing, Kai A. Konrad and Christos Kotsogiannis [source] | ||||||||||