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1 – 10 of over 3000Anna Szelągowska and Ilona Skibińska-Fabrowska
The monetary policy implementation and corporate investment are closely intertwined. The aim of modern monetary policy is to mitigate economic fluctuations and stabilise economic…
Abstract
Research Background
The monetary policy implementation and corporate investment are closely intertwined. The aim of modern monetary policy is to mitigate economic fluctuations and stabilise economic growth. One of the ways of influencing the real economy is influencing the level of investment by enterprises.
Purpose of the Chapter
This chapter provides evidence on how monetary policy affected corporate investment in Poland between 1Q 2000 and 3Q 2022. We investigate the impact of Polish monetary policy on investment outlays in contexts of high uncertainty.
Methodology
Using the correlation analysis and the regression model, we show the relation between the monetary policy and the investment outlays of Polish enterprises. We used the least squares method as the most popular in linear model estimation. The evaluation includes model fit, independent variable significance and random component, i.e. constancy of variance, autocorrelation, alignment with normal distribution, along with Fisher–Snedecor test and Breusch–Pagan test.
Findings
We find that Polish enterprises are responsive to changes in monetary policy. Hence, the corporate investment level is correlated with the effects of monetary policy (especially with the decision on the central bank's basic interest rate changes). We found evidence that QE policy has a positive impact on Polish investment outlays. The corporate investment in Poland is positively affected by respective monetary policies through Narodowy Bank Polski (NBP) reference rate, inflation, corporate loans, weighted average interest rate on corporate loans.
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Suggests that most managers (other than those in marketing) take the view that too much money is spent on marketing. Adumbrates that the accountant may be able to contribute to…
Abstract
Suggests that most managers (other than those in marketing) take the view that too much money is spent on marketing. Adumbrates that the accountant may be able to contribute to improved decision making in marketing with regard to expenditure as an investment outlay rather than current expenses. Stresses, herein, that the concern for accounting is with marketing assets and their intangibility. Discusses further assets, valuation and investment and portrays these with the aid of tables and figures. Sums up by saying that a strong case can be made for recognizing many examples of marketing outlay as investments in assets rather than current operating expenses, showing new light on attitudes towards marketing decision‐making and financial reporting.
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Sees the objective of teaching financial management to be to helpmanagers and potential managers to make sensible investment andfinancing decisions. Acknowledges that financial…
Abstract
Sees the objective of teaching financial management to be to help managers and potential managers to make sensible investment and financing decisions. Acknowledges that financial theory teaches that investment and financing decisions should be based on cash flow and risk. Provides information on payback period; return on capital employed, earnings per share effect, working capital, profit planning, standard costing, financial statement planning and ratio analysis. Seeks to combine the practical rules of thumb of the traditionalists with the ideas of the financial theorists to form a balanced approach to practical financial management for MBA students, financial managers and undergraduates.
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This paper modifies the “standard” methodology for calculating the economic opportunity cost of foreign exchange (EOCFX), so as to incorporate into its calculation the distortions…
Abstract
This paper modifies the “standard” methodology for calculating the economic opportunity cost of foreign exchange (EOCFX), so as to incorporate into its calculation the distortions involved in the act of “sourcing” in the capital market the funds that will be spent by the project. Once we take these “sourcing” distortions into account, we are logically forced to pursue two parallel calculations. The first, EOCFX traces the results of sourcing money in the capital market and spending it on tradables. The second, the shadow price of nontradables outlays (SPNTO) traces the results of sourcing money in the capital market and spending it on nontradables. Supporting arguments and illustrative calculations are presented in the paper.
Krzysztof Jackowicz, Paweł Mielcarz and Paweł Wnuczak
The literature on project finance appraisal contains several ambiguities mainly concerning the correct method of equity cash flow (ECF) determination. This vagueness can lead to…
Abstract
Purpose
The literature on project finance appraisal contains several ambiguities mainly concerning the correct method of equity cash flow (ECF) determination. This vagueness can lead to serious misevaluation of these projects. The purpose of this paper is to present and justify a correct method of ECF determination for project finance evaluation.
Design/methodology/approach
Based on the analysis of the specificity of project finance ventures and the study of existing literature, the authors propose a coherent model of ECF estimation that avoids misevaluating project finance ventures.
Findings
This paper demonstrates that the potential dividends methodology of ECF estimation, used commonly in the corporate finance world, leads to the erroneous valuation of project finance investments. Moreover, simulations demonstrate that the scale of this misevaluation is an increasing function of the debt covenant duration, the required rate of return, and the investment outlay dispersion over time. The proposed model of proper project finance valuation, despite inconsistency with assumptions of the fair value concept, is best suited for project finance venture appraisal, taking into consideration the inherently specific timing of the ECF.
Originality/value
This paper rectifies, clarifies, and extends the range of existing solutions for the project finance valuation and the application of the concepts of actual dividends and potential dividends in different valuation contexts. Furthermore, it proposes a simple and coherent method to value project finance ventures. Additionally, it offers evidence of the scale of NPV misevaluation in project finance, which occurs when the potential dividends approach is utilized.
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Khursheed Omer, Andre de Korvin and Philip H. Siegel
This paper presents an alternative approach to the usual method of computing expected values of cash flows in capital budgeting situations. The approach is based on the more…
Abstract
This paper presents an alternative approach to the usual method of computing expected values of cash flows in capital budgeting situations. The approach is based on the more realistic notion that the cash flows, the probabilities assigned to the cash flows, or both are not always exactly known. Three cases representing different types of uncertainties relating to the cash flow prospects are presented and expected values are derived using the fuzzy set theory. The approach utilized in this paper provides an alternative to the prevalent methodology of estimating cash flows in capital budgeting. This approach offers greater flexibility in dealing with the complex issue of uncertainty than the prevalent probability‐based approach in cases where decisions are complex enough so that neither cash flows nor probability distributions are totally available.
Anran Chen, Steven Haberman and Stephen Thomas
Although it has been proved theoretically that annuities can provide optimal consumption during one’s retirement period, retirees’ reluctance to purchase annuities is a…
Abstract
Purpose
Although it has been proved theoretically that annuities can provide optimal consumption during one’s retirement period, retirees’ reluctance to purchase annuities is a long-standing puzzle. The purpose of this paper is to use behavioral model to analyze the low demand for immediate annuities.
Design/methodology/approach
The authors employ cumulative prospect theory (CPT), which contains both loss aversion and probability transformations, to analyze the annuity puzzle.
Findings
The authors show that CPT can explain the unattractiveness of immediate annuities. It also shows that retirees would be willing to buy a long-term deferred annuity at retirement. By considering each component from CPT in turn, the loss aversion is found to be the major reason that stops people from buying an annuity while the survival rate transformation is an important factor affecting the decision of when to receive annuity incomes.
Originality/value
This paper identifies CPT as one of the reasons for the low demand of immediate annuities. It further suggests that long-term deferred annuities could overcome behavioral obstacles and become popular among retirees.
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The purpose of this paper is to examine the influence of institutional investors’ investment horizons (IIIH) on a wide variety of key corporate policies.
Abstract
Purpose
The purpose of this paper is to examine the influence of institutional investors’ investment horizons (IIIH) on a wide variety of key corporate policies.
Design/methodology/approach
The authors perform regression analysis to a panel data set of quarterly financial statement data for US firms over the 1981-2014 using several measures of IIIH.
Findings
The authors argue that an increase in the presence of long-term investors contributes to more effective monitoring and information quality. This results in a reduction in agency costs and informational asymmetry problems for firms that are more heavily influenced by long-term investors, which in turn influences the corporate policies they pursue. Consistent with these arguments, the evidence suggests that firms with a greater long-term institutional investor base maintain lower investment outlays, higher dividend payments, lower levels of cash and higher levels of leverage. All results hold after controlling for potential endogeneity issues.
Originality/value
The authors show that a greater presence of long-term institutional investors leads to higher dividends, lower investment outlays, lower cash holdings and higher leverage. The comprehensive nature of the predictions with respect to overall corporate finance policies and the supporting evidence provided represents an important contribution, as previous studies have tended to focus on one specific area of corporate behavior (i.e. such as cash holdings).
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Tomasz Dorożyński, Janusz Świerkocki and Wojciech Urbaniak
One of the ways of convincing investors, in particular foreign ones, to take part in the implementation of host country economic policies is the development of Special Economic…
Abstract
One of the ways of convincing investors, in particular foreign ones, to take part in the implementation of host country economic policies is the development of Special Economic Zones (SEZs) designed to ensure more favourable business environment than those available in other locations. Poland has created and develops the SEZs. They play a positive role in attracting foreign direct investment (FDI) or creating new jobs but also may have negative consequences, such as deepening regional disproportions in the country.
This paper aims at examining why certain SEZs in Poland attracted more FDI than other. In our opinion that may result from the location in a particular region (understood as a unit of administrative division of the country at the level of a voivodeship) and from endogenous conditions characteristic of the zone, such as the land it owns, infrastructure and its accessibility and finally high quality performance of the company that manages the zone.
Our calculations have shown statistically significant positive relationships between FDI inflow to SEZ and overall and some partial coefficients that describe investment attractiveness of voivodeships. Test results also suggest that efforts of managing companies with regard to wooing investors (e.g. through promotions, infrastructure development) are important in increasing the inflow of foreign investment.
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Papers by Wyatt (Wyatt, 1984) and Hall (Hall, 1985) have addressed the subject of property performance measurement in this journal, and the topicality of the subject has been…
Abstract
Papers by Wyatt (Wyatt, 1984) and Hall (Hall, 1985) have addressed the subject of property performance measurement in this journal, and the topicality of the subject has been ensured by the response to Hager and Lord's paper to the Institute of Actuaries (see Editorial, Journal of Valuation, 3: and Brown, 1985). However, the measure employed has not been the subject of detailed analysis, and at various times the time weighted rate of return, the money weighted rate of return, the internal rate of return and others have been suggested as the appropriate measure. It is not even clear whether MWRR and IRR are identical measures. This paper examines alternative measures and demonstrates the difference between MWRR and IRR and makes recommendations of the correct measure.