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This paper derives a closed-form solution for European options on pure discount bonds, assuming a mean-reverting Gaussian interest rate model as in Vasicek [8]. The formula is extended to European options on discount bond portfolios. [ABSTRACT FROM AUTHOR]

This paper evaluates the impact of structural funds on the convergence process between 145 European regions over 1989–1999. The presence of spillover effects is investigated with spatial econometric methods, which assess the impact of the funds on the targeted region and its neighbours. We also control the potential endogeneity problem in the estimation of their impact. Our estimation results indicate that significant convergence takes place, but that the funds have no impact on it. Simulation experiments show how investments targeted to the peripheral regions never spill over to their neighbours, which calls for a reconsideration of current regional policy tools. Resumen. Este artículo evalúa el impacto de los fondos estructurales en el proceso de convergencia entre 145 regiones europeas durante el periodo 1989–1999. La presencia de efectos derrame ( spill over) se investigó mediante métodos econométricos espaciales, que evalúan el impacto de los fondos en la región objetivo y sus vecinas. También controlamos el problema de endogeneidad potencial en la estimación del impacto. Los resultados de nuestra estimación indican la presencia significativa de una convergencia, pero que los fondos no tienen un impacto sobre la misma. Experimentos de simulación muestran que las inversiones dirigidas a las regiones periféricas nunca derraman ( spill over) sobre sus vecinas, lo cual pide reconsiderar las herramientas actuales de política regional. [ABSTRACT FROM AUTHOR]

This paper analyzes the determinants of returns generated by mature European private equity funds. It starts from the presumption that this asset class is characterized by illiquidity, stickiness, and segmentation. Given this presumption, Gompers and Lerner (2000) have shown that venture deal valuations are driven by overall fund inflows into the industry that yield the putative ‘money chasing deals’ phenomenon. It is the aim of this paper to show that this phenomenon explains a significant part of the variation in private equity funds' returns. This is especially true for venture funds, as they are affected more by illiquidity and segmentation than buy-out funds. In the context of a WLS-regression approach the paper reports a highly significant impact of total fund inflows on fund returns. It can also be shown that private equity funds' returns are driven by GP's skills as well as stand-alone investment risk. In a bootstrapping context we can show that most of these results are quite stable. [ABSTRACT FROM AUTHOR]

The article presents abstracts of papers related to European financial management, which include topics on optimal microstructures, the magnet effect of price limits and the effect of socially responsible investing on portfolio performance.

In this paper we investigate the comovements between the R&D intensity of private investment and GDP growth in different European Union (EU) areas over the period 1999–2014. Our empirical analysis shows that only core countries display a common countercyclical mechanism leading to an increased intensity of R&D over prolonged downturns. The lack of an effective countercyclical pattern of R&D intensity over the evolution of GDP growth in periphery countries makes this area highly vulnerable to persistent recessions, with potentially harmful consequences for long‐term growth. For recent EU members the evidence of acyclicality should be evaluated in the light of the catching‐up process still at work in this area. Our analysis suggests that any successful EU innovation policy should not disregard the potential divergence in R&D performance due to the dispersion of the countercyclical properties of the investment intensity in productivity enhancing activities in the different EU areas. [ABSTRACT FROM AUTHOR]

International equity markets exhibit medium-term return continuation. Between 1980 and 1995 an internationally diversified portfolio of past medium-term Winners outperforms a portfolio of medium-term Losers after correcting for risk by more than 1 percent per month. Return continuation is present in all twelve sample countries and lasts on average for about one year. Return continuation is negatively related to firm size, but is not limited to small firms. The international momentum returns are correlated with those of the United States which suggests that exposure to a common factor may drive the profitability of momentum strategies. [ABSTRACT FROM AUTHOR]

This paper empirically examines the theoretically ambivalent relationship between socially responsible investing (SRI) and stock performance. It contributes to the existing literature by considering both the US and the entire European stock markets and by using consistent world-wide corporate sustainability performance data. Our portfolio analysis from 1998 to 2009 is based on the common four-factor model according to Carhart (1997), which comprises market return, size, value, and momentum factors. We show for the US and the European stock markets that SRI is associated with large-sized firms. The insignificant abnormal stock returns for SRI in both regions are the main result of our paper. Therefore, our study supports the view that SRI stocks are correctly priced by market participants, although we cannot rule out that a corresponding mispricing has existed before the beginning of our observation period in 1998. [ABSTRACT FROM AUTHOR]

Abstract: Markowitz (1952, 1959) underlies modern corporate finance literature, from modern portfolio theory, option theory, to risk management (especially value at risk type methodologies). From it, Diversify has entered all languages, such is its power. Terms such as “the only free lunch” have become a way to give praise to Markowitz work. And, just as with all fundamental breakthroughs in the literature it has been extended many directions, sometimes not necessarily to the benefit of the original work, which often gets blamed when one rendition or another breaks down. With almost every MBA graduated believing they know what Markowitz optimization or portfolio theory means, it behooves us to step back and look at some of the basics, the assumptions that are made, the costs of breaking assumptions, and the potential disasters that can occur when those basics behind all of the theories dependent upon Markowitz'' original work are ignored. This paper lays out many of the basic underlying assumptions behind creation of Markowitz type portfolios, why they matter, and where those assumptions are ignored and/or broken. Breaking model assumptions is common in actual application of theory. Not understanding the implications of broken assumptions is almost a guarantee of failure for a money manager; it is just a matter of time. As one often hears, “Wall Street (or the City if in Europe) is littered with great ideas that do not work in practice.” Some people throw Markowitz and portfolio optimization into that litter bin. We discuss several basic assumptions of modern portfolio theory, when and why they are commonly broken by the best of us in academia and in practice, and discuss the implications for breaking them under trying circumstances. [Copyright &y& Elsevier]

Manuscript Type: Conceptual. Research Question/Issue: Shareholding structures are sometimes so complex that it can be difficult to know who are the actual owners and controllers of a firm. In particular, in continental Europe and Asia, control tunnelling appears frequently through pyramidal structures. Different methods exist to isolate control from ownership. This paper attempts to better understand these different models and their implications. Research Findings/Results: After describing ownership structure through a graph association, this paper analyzes the voting game at stake in the race for control. It compares existing methods and algorithms to identify the owners and controllers of a firm in a pyramidal structure without cross-ownership. These different methods are then applied to the case of a Belgian retailer, Colruyt. The results are compared and the influence of a control threshold is analyzed. Furthermore, it shows how the ownership structure allows the Colruyt family to maintain control of the firm even if there is dissension within the family. Theoretical Implications: This study clarifies definitions of ownership structures and provides a better understanding of models that analyze ownership structure and their implications. Practical Implications: In practice, these models can help shareholders achieve a majority of voting rights in the general assembly by identifying who are the influential partners. Furthermore, the models provide a means for external parties to determine whether control of a firm is attainable, and if so, how. Established shareholders may also use these models to ascertain the optimal ownership structure that will preserve their control with a minimum level of investment. [ABSTRACT FROM AUTHOR]

This paper introduces a new dataset from 50 private investment funds from 17 countries around the world. We analyse the frequency of use of investment covenants imposed by institutional investors governing the activities of private investment fund managers in areas pertaining to investment decisions, investment powers, types of investments, fund operations and limitations on liability. While the data indicate a role for country legality in affecting the frequency of use of fund covenants, the data further indicate that the presence of legally trained managers has a more pronounced role in affecting the use of covenants. As private equity and venture capital investment increases across Europe and elsewhere, our results indicate that legal practice factors will matter more than the legal setting for the establishment of covenants governing new funds. [ABSTRACT FROM AUTHOR]

In this paper we analyse the effect of remittances on employment performance for Central and East European (CEE) economies. We show that the impact of remittances on unemployment depends on its effect on productivity growth and investment. In order to empirically analyse the impact of remittances we estimate a productivity equation using a set of 11 transition countries during the 1990 to 1999 period. Our results show support for the view that remittances have a positive impact on productivity and employment both directly and indirectly through its effect on investment. [ABSTRACT FROM AUTHOR]

The author investigates the case to be made for the financial accelerator in Europe. The financial accelerator implies that weak balance sheets can amplify shocks and have a negative effect on firm investment spending. The different strength of the accelerator across firm size classes and asymmetric effects over the cycle are investigated in this paper, which fills a gap in the evidence on this issue for the euro area. The author provides background on a number of studies and reduces the findings to three testable hypotheses on the financial accelerator: (H1) balance sheet positions are significant determinants of firm investment spending; (H2) in downturns, balance sheet positions are more important in explaining firm investment spending than in other times; and (H3) the financial accelerator influences small and large firm investment spending differently, with small firms being most likely to be influenced most. He then examines investment behavior in the period 1983-1997 for the four largest euro area economies--Germany, France, Italy and Spain--and tests whether size matters and whether balance sheet effects on investment are significantly different during the downturn of the early nineties. The author finds sufficient evidence indicating that a financial accelerator with different strength across size classes and asymmetric effects over the cycle is working in Europe.

The article talks about the modeling of the dynamic interdependence of major European stock markets. The growing globalization of financial markets has been accompanied by a growing body of empirical research, attempting to describe and quantify the ways in which financial markets within and across countries interact. Better understanding of the nature of cross market linkages and interactions could be of help to investors and policy makers alike. With respect to policy, aspects of market interaction that promote efficiency could, in principle, be facilitated, whereas those with undesirable side effects could be controlled. Likewise, investment and hedging strategies could be more effective, if the nature of market interactions were better understood. Markets around the globe respond to innovations, in a way that is consistent with the notion of informationally efficient international stock markets. This paper contributes to the ongoing debate on first and second moment stock market interactions.

This paper presents hedging strategies for European and exotic options in a Lévy market. By applying Taylor's theorem, dynamic hedging portfolios are constructed under different market assumptions, such as the existence of power jump assets or moment swaps. In the case of European options or baskets of European options, static hedging is implemented. It is shown that perfect hedging can be achieved. Delta and gamma hedging strategies are extended to higher moment hedging by investing in other traded derivatives depending on the same underlying asset. This development is of practical importance as such other derivatives might be readily available. Moment swaps or power jump assets are not typically liquidly traded. It is shown how minimal variance portfolios can be used to hedge the higher order terms in a Taylor expansion of the pricing function, investing only in a risk-free bank account, the underlying asset, and potentially variance swaps. The numerical algorithms and performance of the hedging strategies are presented, showing the practical utility of the derived results. [ABSTRACT FROM AUTHOR]

In the past few years, investors from different European countries have become increasingly interested in the new opportunities that socially responsible investing (SRI) can offer. Empirical research into this subject has often assumed as ‘given’ the meaning attributed to the terms ‘ethical’ or ‘socially responsible’, thus concentrating more on other elements (particularly financial performance). This paper, through the analysis of the characteristics of ethical funds traded in Italy, investigates the possible contents that the terms ‘ethical’ and/or ‘socially responsible’ can assume in practice, with particular attention to the underlying values and to how these values are integrated into the selection process. This analysis brings to light the impressive variety of ethical funds traded in Italy. In particular, it reveals the ‘Italian model’, whose distinguishing characteristics seem to be the following: recentness of issue, options for charitable donations, almost exclusive use of screening strategies, use of ‘best in class’ and ‘minimum tolerance quota’ indications, preference for ethical indices, application of commissions no higher than the national average, presence of ethical committees and the utilization of consulting or rating agencies. [ABSTRACT FROM AUTHOR]

The standard method for valuing a European option on a bond portfolio is developed by Jamshidian. He shows that under certain circumstances the payoff from a bond option can be expressed as a portfolio of payoffs on discount bond options, allowing the option to be valued as a portfolio of options. A limitation of this approach is that it cannot be applied to non-Markovian interest rate processes. This paper develops a method for the valuation of a European option on a bond portfolio that can be applied to both Markovian and non-Markovian interest rate processes. [ABSTRACT FROM AUTHOR]

During the last decade, the idea of sustainable investments hit the market. Investors both private and institutional started to supplement financial considerations with social and ecological ones. Meanwhile the supply of mutual funds in the ‘green’ investment sector increased enormously. Currently in Europe about 300 mutual funds are available that are managed according to sustainability and social responsibility. Potential investors face the difficulty of keeping track of the various funds and choosing among them based on a reliable comparative assessment. This paper outlines the basic principles and methods on which such a comparative sustainability rating is based. The method was designed to be analogous to rating of the funds financially. The sustainability rating is based on assessment of the research processes in the fund management as well as investigation of the fund portfolio in terms of composition and sustainability performance. It should support investors in their investment choices by offering them a third party view. Copyright © 2005 John Wiley & Sons, Ltd and ERP Environment. [ABSTRACT FROM AUTHOR]

This paper considers a portfolio problem with control on downside losses. Incorporating the worst-case portfolio outcome in the objective function, the optimal policy is equivalent to the hedging portfolio of a European option on a dynamic mutual fund that can be replicated by market primary assets. Applying the Black-Scholes formula, a closed-form solution is obtained when the utility function is HARA and asset prices follow a multivariate geometric Brownian motion. The analysis provides a useful method of converting an investment problem to an option pricing model. [ABSTRACT FROM AUTHOR]

This study investigates how the effect of employee stock ownership on financial performance may hinge on the diverse cultural and societal contexts of European countries. Based on agency and national culture theories, we hypothesize that the positive relationship between employee stock ownership and return on assets (ROA) is stronger in those nations with lower uncertainty avoidance and higher social trust. Using a multisource, time‐lagged, large‐scale dataset of 1,741 firms from 21 countries in Europe, our multilevel, random coefficient modeling analysis found evidence for these hypotheses, suggesting that uncertainty avoidance and social trust serve as important contextual cues in predicting the linkage between employee stock ownership and financial performance. Our supplemental analysis with distinction between the managerial and nonmanagerial employee stock ownership further indicates managerial employee stock ownership has a direct positive effect on ROA. Although nonmanagerial employee stock ownership had a nonsignificant association with ROA, the relationship was positive and significant when uncertainty avoidance was low and social trust was high. This research contributes to the existing literature by illuminating some of the contextual influences altering the effectiveness of employee stock ownership. Our findings also offer practical suggestions for effectively using employee stock ownership. [ABSTRACT FROM AUTHOR]

In this multilevel study, the authors investigate the influence of country‐level formal institutions and workgroup behavior on foreign subsidiary employees' participation in employee stock ownership plans (ESOPs). Based on the perspectives of bounded rationality, transaction cost theory, and psychological ownership, the authors argue that weak formal institutions restrain multinational enterprises from effectively implementing ESOPs due to reduced employee participation. However, the authors expect that workgroup behavior—more specifically, the participation of the workgroup's members and superiors in ESOPs—has a positive influence on employees' ESOP participation. Furthermore, the authors analyze whether cross‐level effects of institutions and workgroup behavior function as substitutes or complements. They empirically examine the ESOP participation of 185,291 foreign subsidiary employees in 28 countries. The results confirm the hypotheses about direct effects of weak institutions and workgroup behavior and additionally provide support for a complementary relationship between institutions and workgroup behavior. [ABSTRACT FROM AUTHOR]

Using the EU-SILC database, we estimate and compare the Inequality of Opportunity (IO) of 23 European countries in 2005. IO is estimated as the between-type ( ex-ante) inequality component following the parametric procedure of Ferreira and Gignoux (2011), which allows for the inclusion of the large set of circumstances in the database. We also measure the degree of correlation between IO estimates and a set of past and contemporaneous economic factors related to the degree of development, labor market performance, investment in human capital, and social protection spending. [ABSTRACT FROM AUTHOR]

This study examines the ability of the Central and Eastern European countries to attract foreign direct investment during the first decade of transition. After considering a model of profit maximizing firms, we undertake an empirical investigation of the factors that determine multinational firms’ location decisions within Europe. We find empirical support for the traditional market size and cost factors. In addition, we examine the effect of key European Union announcements regarding the accession process. Results indicate that the announcements had statistically significant and quantitatively important effects on foreign direct investment in the Central and Eastern European candidate countries.JEL classifications: F23, P33. [ABSTRACT FROM AUTHOR]

This article analyzes the optional and strategic features of infrastructure investment. Infrastructure investments generate other investment opportunities, and in so doing change the strategic position of the enterprise. A combination of real options theory and game theory can capture the elusive value of a strategic modification of a firm's position in its industry. My model focuses in particular on an analysis of European airport expansion. Airports with infrastructures that are less constrained by growth regulations capture more value, because they are in a better position to exercise growth options available in the airport industry. [ABSTRACT FROM AUTHOR]

The paper analyses the hypotheses that imports and inward foreign direct investment (FDI) have positive effects on the innovative activity of domestic firms because competition on the domestic market is thereby increased, and domestic firms have to perform more efficiently to maintain their market position. Chamberlain's random effects probit approach which may account for individual heterogeneity depending on exogenous variables is used to analyse a panel data set containing 1270 firms of the German manufacturing industry from 1984 to 1988. It turns out that both import share and EDI-share have positive and significant effects on product and process innovations. [ABSTRACT FROM AUTHOR]

This article presents a list of reference material related to investment. The article "The International Flow of Private Capital," examines private foreign investment as per direct investment, portfolio investment, and credit extended by banking institutions, and an assessment of their changes during the past few years. Attention is given to Western Europe as a capital supplier and to the prospects for private capital in Latin America., Africa, Asia, and the Far East. The article "The Pattern of U.S. Investments in Europe," presents results of a survey of the growth of U.S. investment in Europe, of the countries receiving this investment, and of the industries most invested in

Extensive research suggests that political factors bias the domestic allocation of the European Structural and Investment Funds (SIF) in ways that may not be in line with EU goals. This article offers the first systematic and comparative analysis of the role of electoral institutions in shaping county-level allocations of SIF. Drawing on theories of distributive politics and federalism, this article argues that electoral institutions provide politicians in the executive branch of national government with incentives to use at least a part of the SIF to buy votes in NUTS 3-level counties, whereby vote-buying is more common under majority voting than under proportional representation. The results of a statistical analysis of SIF allocations across 202 Italian and French NUTS 3-level counties during 2007-13 confirm this argument. The article concludes by discussing the findings and their implications for future research on EU budgetary implementation and cohesion policy. [ABSTRACT FROM AUTHOR]

This article reconsiders the relative growth performance of centrally planned economies in the broader context of postwar growth in Europe. It reports a new dataset of revised estimates for investment rates in eastern European countries between 1950 and 1989. Complemented with data on other growth determinants, this evidence is used to re-evaluate the socialist growth record in a conditional convergence framework with a panel of 24 European countries. After controlling for relative backwardness, investment rates, and improvements in human capital, the findings show that centrally planned economies underperformed due to their relative inefficiency only after the postwar golden age. In the 1950s and 1960s, eastern Europe was falling behind mainly due to relatively low levels of investment and weak reconstruction dynamics. Both are explained, in part, by the lack of labour-supply flexibility that, in turn, resulted from the comparatively much larger negative impact of the war on population growth in eastern Europe. [ABSTRACT FROM AUTHOR]

The article discusses economic growth and unemployment in Europe. Topics discussed include economic condition of Euro zone countries, European Central Bank and investment in the region. Other topics which includes de industrialization, private investment and macroeconomics are also discussed. In addition, economic stagnation of the country is also mentioned.

Manuscript Type Empirical Research Question/Issue We examine the way in which the exit mode (i.e., initial public offering - IPO, trade sale, or write-off) of venture capital ( VC) investments is influenced by the additional exit opportunities brought by cross-border VC investors. Research Findings/Insights We perform our analysis on a sample of 1,062 VC investments in 462 young high-tech companies in seven European countries. Our findings indicate that, controlling for firm performance, investor characteristics, and local exit conditions, the probability of exiting via trade sale is positively correlated to the additional set of mergers and acquisitions ( M&A) opportunities brought by cross-border investors. A similar effect, but with weaker statistical significance, is also identified for exits by IPO, which are positively affected by IPO volumes in the countries of cross-border investors. Theoretical/Academic Implications Cross-border VC investment may, at least partially, compensate for inadequate local exit conditions. Cross-border investors can spillover the capital market activity of their home country and enhance exit options for young ventures. International syndicates are also quicker to write off their non-performing investments. Practitioner/Policy Implications Not all exit modes are equally affected by international syndication. The impact of cross-border investors on the exit mode also depends on their country of origin and, more specifically, on the exit opportunities available there. The mechanism is stronger for trade sales than for IPOs. [ABSTRACT FROM AUTHOR]

We analyse the patterns and determinants of technology alliance formation with partner firms from emerging economies with a focus on European firms' alliance strategies. We examine to what extent European firms' alliance formation with partners based in emerging economies is persistent - that is, to what extent prior collaborative experience determines new alliance formation - and we compare this pattern with alliance formation with developed country partners. Second, we examine to what extent prior engagement in international alliances with partners from developed countries increases the propensity to form technology alliances with partners based in emerging economies, and vice versa (interrelation). We find that both persistence and interrelation effects are present, and that they are generally not weaker for emerging economy alliances. Alliance formation with Indian and Chinese firms is significantly more likely if firms have prior alliance experience with Japanese firms. The findings suggest that building on their prior international alliance experience firms extend their alliance portfolios across both developed and emerging economies, increasing the geographical diversity of their alliance portfolios. [ABSTRACT FROM AUTHOR]

We rank European countries' collective commitment to development on seven cross-border issues: aid, trade, investment, migration, environment, security and technology. We calculate a consolidated score for 21 European countries and show that they perform well on aid and environment but lag the rest of the world on trade and technology. We find that Europe's approach to development energetically tackles the symptoms of poor economic opportunities for developing countries by providing relatively effective aid, but there is an opportunity to do more to tackle the underlying structural causes of poverty. Copyright © 2013 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

During the last decade, the European asset management industry has undergone a period of unprecedented change. Europe has witnessed ten years of financial integration, driven in particular by various regulatory initiatives. But Europe has also been transformed in the geopolitical sense, with 12 new Member States and millions of new citizens of the European Union. Add to that a decade of rapid globalization and one financial crisis of historical proportions. But while Europe and its financial markets have evolved and the asset management industry has transformed itself, academic research has not kept pace. During the last ten years or so, the lack of systematic research on the structural dimensions of the asset management industry is striking. This article fills this gap by providing a comprehensive overview of the European asset management industry at the end of the first decade of the 21st century. We seek to provide explanations to the various differences observed between European countries. Using prior research as a basis, we also compare the characteristics of the industry to their standing at the turn of the century. This also includes assessing whether and to what extent the forecasts provided in prior research did materialize. We also try to find reasons for cases in which they did not. Finally, we ourselves offer a number of prognoses on the development of the European asset management over the coming years. [ABSTRACT FROM AUTHOR]

One and a half decades after the end of a centralised regime in Central and Eastern Europe, the policy literature on local debt management in transition economies reveals that there is a general confusion about the appropriate use of debt finance at the municipal level. The literature is mainly concerned with institutional borrowing restrictions and sanctions against excessive debt. Both emphasise the responsibility of the centre and consider local government unable to pursue a sound financial management without central patronage. Breaking with the traditional focus on budget discipline, this study advocates budget responsibility. Favourable credit ratings and compliance with legal norms are necessary but not sufficient conditions for municipalities to borrow. Successful financial management requires a more proactive attitude in which local governments adjust their investment policy to their financial capacity, assessing the costs and benefits of each investment project. [ABSTRACT FROM AUTHOR]

This article provides empirical evidence of the link between technological change and overall income inequality in 14 EU countries. The analysis begins by testing the skill-biased technological change (SBTC) hypothesis in sectors with different levels of technology intensity. After confirming the skill complementarity of technology and the predominantly skill-replacing character of investment, the analysis turns to sectoral changes in skilled-labour demand as a possible determinant of income inequality. It finds a non-linear relationship between SB TC and inequality in five of the eight sectors considered, suggesting an inverted U-shaped pattern that can be explained by stages in labour demand and supply adjustments over time. [ABSTRACT FROM AUTHOR]

This article tests four theories of portfolio distribution within the European Commission and assesses whether experience plays a role in the process of allocating policy responsibilities. The share of portfolios that each Member State is assigned, through its Commissioners, is strongly related to its resources and voting power, as predicted by the proportionality norm and bargaining theory, respectively. Additionally, Member States with Commissioners that have experience in the relevant portfolios are assigned shares that are significantly above what one may expect from these two theories. For half of the portfolios, Commissioners have moderate views along the dimension of the policy they manage, but appointed Commissioners also have significantly more experience in both supranational portfolios and similar national portfolios than the median Commissioner. The difference in experience in supranational and, more weakly, national portfolios significantly accounts for the difference in preference between the appointed and the median Commissioner. Finally, salience matters as well. Left/right leaning Commissioners are significantly more likely to be assigned portfolios with a left-wing/right-wing ideological profile, but this strong relation disappears for Commissioners with above average experience in the Commission, in the relevant supranational portfolios or in national governments. [ABSTRACT FROM AUTHOR]

The hazard rate of investment is derived within a real-option model, and its properties are analysed so as to directly study the relation between uncertainty and investment. Maximum likelihood estimates of the hazard are calculated using a sample of multinational enterprises (MNEs) that invested in Central and Eastern Europe over the period 1990–98. Employing a standard, non-parametric specification of the hazard, our measure of uncertainty has a negative effect on investment, but the reduced-form model is unable to control for nonlinearities in the relationship. The structural estimation of the option-based hazard is instead able to account for the nonlinearities and exhibits a significant value of waiting, although the latter is independent of our measure of uncertainty. This finding supports the existence of alternative channels through which uncertainty can affect investment. [ABSTRACT FROM AUTHOR]

We rely on a survey of Swiss firms to document deviation from first-best for reasons of internal‘fairness’ when allocating resources. This‘socialist’ practice is more widespread in smaller than in larger firms. It ignores the reputation and past performance of the managers who apply for funding, but takes into account their hierarchical position and their past use of resources. Socialism is only partially explained by concerns about empire building and managerial optimism, and it is not meant to benefit shareholders. [ABSTRACT FROM AUTHOR]

This article focuses on the interview with Enric Banda, secretary general of the European Science Foundation. On a question about the importance of the establishment of the European Research Council, Banda said that it was important for several reasons, but most important was because of European Research Area (ERA). In the background documents that set out the concept of the ERA, there are constant comparisons with the U.S. Certainly, there is not enough investment into research and development in Europe.

We use estimates of parents’ discount rate, inferred from their decisions to treat their children’s body burdens of lead, to test empirically a model of transmission of cognitive skills from parents to children. The development of a child’s cognitive skills depends in part upon the specific environment in which the skills are nurtured. The parental discount rate serves as a theoretically well defined index for a broad array of nurturing investments in the child. We find that children whose parents have a lower estimated discount rate exhibit higher assessed cognitive skills. [ABSTRACT FROM AUTHOR]

Presents information on a policy exercise study which explored options for creating synergies between venture capital investment and European climate policy. Methodology of the policy exercise; Information on global climate diplomacy; Concept of venture capitals investments; Results concerning options for lowering barriers to venture capital engagement in ecological energy investment in Europe.

Presents a study which determined how the cost of capital for investments made by multinationals is affected by tax regimes. Overview of the tax-aided finance centers in European countries; Discussion on the capital cost of investment of the finance centers; Conclusion.

The article discusses the importance of understanding the pattern and role of European direct investment in the Scottish economy, with a view of defining policy and promotional alternatives. It draws on the results of a sample survey among European firms in Scotland which focuses on majority policy dimensions. It offers information on the acquisition route, which has been a major importance for European firms investing in Scotland in the past and raises new questions concerning the benefits and costs of foreign direct investment for the Scottish economy. It concludes that the literature relating to the impact of foreign-sourced acquisitions on host countries provides only limited guide to policy, since the possible range of outcomes associated with takeovers from abroad is very wide.

Presents an econometric analysis of the determinants of capacity expansion investments in the West European chemical industry. Theory underlying investment decisions; Impediments to a firm's ability to enter or leave an industry; Relationship between capacity expansion and plant announcements by industry incumbents and their rivals and/or potential entrants.

Focuses on the East-West trade and investment of multinational corporations in Europe. Reasons for the preservation of East-West trade and investment by multinational corporations; Importance of joint ventures in East-West trade and investment; Existence of counter-trade agreements in the East.

Editorial. Comments on tuberculosis research in Europe. Neglect of research investment in tuberculosis; Developments in antimycobacterial treatment; Overstated confidence in control instruments.