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Explores the changing locational patterns of the pulp and paper industry in Soviet Union. Evaluation of the changes locational pattern of the industry; Range of per capita consumption of the industry; Terms of capital investments.

The process for allocating resources to major capital investment projects was studied in two vertically integrated and two diversified corporations. The hypotheses predicting greater decentralization of decision making in the diversified corporations were strongly confirmed. However, the results did not support other hypotheses related to the influence of a financial model on the process. Instead, decisions were guided by product-market strategy and measures of organizational performance. [ABSTRACT FROM AUTHOR]

In this paper, conditions are discussed under which maximum wealth does not correspond to maximum welfare. As one might suspect, these conditions involve situations in which capital investment on the part of the individual firm influences not only the wealth of its stockholders but also the prices and/or characteristics of existing assets available to stockholders in the market. In these situations changes in nominal stockholder wealth due to corporate investment may not correspond in direction to the concomitant changes in the size of stockholders' "real" opportunity sets. The discussion of conditions under which changes in wealth do not measure changes in welfare naturally leads to consideration of (a) conditions under which the price maximization rule is equivalent to maximization of stockholder welfare, and (b) alternative investment criteria which avoid the problems associated with price maximization. With respect to the optimality of the price maximization rule it is argued that rather stringent conditions on capital market structure are required. This is particularly true of, though not limited to, the case of uncertainty. As for alternative investment criteria, a simple and "operational" welfare maximizing rule is given of which price maximization is a special case under appropriate conditions. The welfare rule, however, applies to all capital market structures. [ABSTRACT FROM AUTHOR]

In this paper we present an outline of LONGER, a financial planning model based on mixed integer linear programming. The model is based on recent advances in capital market theory, but at the same time it recognizes certain additional considerations that are manifestly important to the financial manager. Thus, we believe that the model has good potential for practical application, although in this paper we emphasize LONGER's relationship to finance theory. We will skim over a number of issues that are critical in a practical application; a later paper will discuss these issues and present LONGER at a practical level of detail. Still another paper has worked out implications for decentralized capital budgeting rules. [ABSTRACT FROM AUTHOR]

This paper seeks to extend the theory of valuation and the cost of capital to the case of a multinational corporation (MNC) operating in two countries. It represents an initial attempt to address issues regarding the conditions under which MNCs can plan globally for a world-wide enterprise optimum especially when controls restrict free international capital movements. The paper raises and explores several important specific questions. Are the MNC's valuation maximand and cost of capital functions of the nationality of its investment projects and financing sources? Do they depend on the structure of the MNC itself? Can mutually consistent valuation objectives and investment planning criteria be devised for the parent and its subsidiaries when ownership is international? To date, such matters have fallen outside the scope of the theory of finance. [ABSTRACT FROM AUTHOR]

Everyone seems to agree that there are significant interactions between corporate financing and investment decisions. The most important argument to the contrary--embodied in Modigliani and Miller's (MM's) famous Proposition I--specifically assumes the absence of corporate income taxes; but their argument implies an interaction when such taxes are recognized. Interactions may also stem from transaction costs or other market imperfections. The purpose of this paper is to present a general approach for analysis of the interactions of corporate financing and investment decisions, and to derive the approach's implications for capital investment decisions. Perhaps the most interesting implication is that capital budgeting rules based on the weighted average cost of capital formulas proposed by MM and other authors are not generally correct. Although the rules are reasonably robust, a more general "Adjusted Present Value" rule should, in principle, be used to evaluate investment opportunities. [ABSTRACT FROM AUTHOR]