Found 21 article(s) for author 'Investment'

Contextual Knowledge and Ethnic Migrant Inventors

Contextual Knowledge and Ethnic Migrant Inventors. Prithwiraj Choudhury, 2017, Paper, “We study the role of ethnic Chinese/Indian migrant inventors in transferring contextual knowledge across borders and the role of ethnic networks in further disseminating such knowledge. Using a unique dataset of herbal patents filed in the United States by western firms and universities, we test whether contextual knowledge is codified in the west by ethnic migrant inventors and spread by their ethnic networks. Our identification comes from an exogenous shock to the quota of H1B visas, and a list of institutions that were exempted from the shock. We generate a control group of non-herbal patents that have similar medicinal purposes as our herbal patents through textual matching. Using this framework, we estimate a triple differences equation, and find that herbal patents are likely to be filed by Chinese/Indian migrant inventors and are likely to be initially cited by other Chinese/Indian inventors.Link

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Can analysts assess fundamental risk and valuation uncertainty? An empirical analysis of scenario-based value estimates

Can analysts assess fundamental risk and valuation uncertainty? An empirical analysis of scenario-based value estimates. Suraj Srinivasan, September 2016, Paper, “We use a data set of sell-side analysts’ scenario-based equity valuation estimates to examine whether analysts can assess the state-contingent risk surrounding a firm’s fundamental value. We find that the spread in analysts’ scenario-based valuations captures the riskiness of operations and predicts the absolute magnitude of long-run valuation errors and future changes in firm fundamentals. We also show that analysts’ assessment of fundamental risk and its predictive ability systematically improved after the financial crisis, consistent with the macroeconomic shock raising analysts’ awareness of firms’ systematic risk exposures.Link

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ESG for All? The Impact of ESG Screening on Return, Risk, and Diversification

ESG for All? The Impact of ESG Screening on Return, Risk, and Diversification. Robert Eccles, July 11, 2016, Paper. “A large body of research has documented a positive relationship between different measures of sustainability—such as indicators of employee satisfaction and effective corporate governance—and corporate financial performance. Nevertheless, many investors still struggle to quantify the value of ESG to investment performance.  To address this issue, the authors tested the effects of using different ESG filters on an investable universe that serves as the starting point for a fund manager. In this way, they attempted to determine the extent to which ESG data can add value to any investment approach, regardless of preferences towards sustainable investing.Link

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Private Equity in Emerging Markets: Yesterday, Today, and Tomorrow

Private Equity in Emerging Markets: Yesterday, Today, and Tomorrow. Josh Lerner, May 2016, Paper, “General partners of private equity entered emerging markets in the 1990s seeking diversification and returns, and their investment has increased substantially since then. Manager selection remains important because there is a wide range of returns across funds of the same vintage, and minority LP (limited partner) investments are found to perform the same as or better than majority investments.Link

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Pay Now or Pay Later? The Economics within the Private Equity Partnership

Pay Now or Pay Later? The Economics within the Private Equity Partnership. Victoria Ivashina, Josh Lerner, March 26, 2016, Paper. “The article focuses on the importance of equity partnerships that are essential to the professional service and investment sectors. It examines private equity partnerships and shows that the allocation of fund economics to individual partners is divorced. It mentions that departures of senior partners have negative effects on the ability of funds to raise additional capital.Link

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Does reserve accumulation crowd out investment?

Does reserve accumulation crowd out investment? Carmen Reinhart, January 2016, Paper, “It is understood that investment serves as a shock absorber in times of crisis. The duration of the drag on investment, however, perplexing. For the Asian economies we study, average investment/GDP is about 6 percentage points lower during 1998–2014 than its average level in the decade before the Asian crisis; the decline is greater if China is excluded. We document how in the wake of crisis home bias in finance increases markedly as public and private sectors look inward when external financing becomes prohibitively costly or undesirable from a financial stability perspective. Reserve accumulation involves an official institution (i.e., the central bank) funneling domestic saving abroad and thus competing with domestic borrowers in the market for loanable funds.Link

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Making Private Data Accessible in an Opaque Industry: The Experience of the Private Capital Research Institute

Making Private Data Accessible in an Opaque Industry: The Experience of the Private Capital Research Institute. Josh Lerner, December 2015, Paper. “The level of interest in alternative investments, and private capital in particular (by which we mean both venture capital and private equity), has been intense over the past decade. This interest has stemmed from both investors’ needs for attractive returns and the policy questions around this rapidly growing asset class. Returns from the United States publicly traded equities, the mainstays of investment portfolios for individuals and institutions, have been weak for much of this period, while low (and rising) interest rates suggest limited future returns for bonds. Many other classes of alternative investments, such as hedge funds, have struggled in recent years to match market benchmarks. Concurrently, many public pension funds are facing severe shortfalls, and other institutional investors—from university endowments to sovereign wealth funds—are seeking additional funds to fulfill ambitious agendas …” Link

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Investment Hangover and the Great Recession

Investment Hangover and the Great Recession. Andrei Shleifer, July 1, 2015, Paper. “We present a model of investment hangover motivated by the Great Recession. In our model, overbuilding of residential capital requires a reallocation of productive resources to nonresidential sectors, which is facilitated by a reduction in the real interest rate. If the fall in the interest rate is limited by the zero lower bound and nominal rigidities, then the economy enters a liquidity trap with limited reallocation and low output. The drop in output reduces nonresidential investment through a mechanism similar to the acceleration principle of investment…” Link

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The output effect of fiscal consolidation plans

The output effect of fiscal consolidation plans. Alberto Alesina, June 2015, Paper. “We show that the correct experiment to evaluate the effects of a fiscal adjustment is the simulation of a multi-year fiscal plan rather than of individual fiscal shocks. Simulation of fiscal plans adopted by 16 OECD countries over a 30-year period supports the hypothesis that the effects of consolidations depend on their design. Fiscal adjustments based upon spending cuts are much less costly, in terms of output losses, than tax-based ones and have especially low output costs when they consist of permanent rather than stop-and-go changes in taxes and spending…Link

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Corporate Financial Policies in Overvalued Credit Markets

Corporate Financial Policies in Overvalued Credit Markets, Matthew Rhodes-Kropf, March 16, 2015, Paper, We investigate the repercussions of credit market mistakes for a firm’s borrowing and investment decisions. When credit ratings are relatively optimistic, we find evidence that firms take advantage of inaccuracies by issuing more debt, increasing leverage, rolling over more debt and lengthening maturities. The result goes beyond a wealth transfer and has real investment implications: approximately 75% of the funds raised from debt issuance related to credit rating mistakes was used for capital expenditures and cash acquisitions. In the cross section, credit rating mistakes affect financially constrained firms the most, suggesting that debt overvaluation loosens financial constraints. Link

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