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This study investigates whether shareholders are willing to pay for higher levels of corporate financial, social, and environmental disclosure. We conduct a choice-based conjoint experiment wherein 65 shareholders are asked to make 12 choices, choosing each time between two predetermined randomized combinations of different levels of investment returns, financial disclosure, environmental disclosure, and social disclosure. Results indicate that whereas shareholders are willing to pay for financial disclosure and environmental disclosure, they are unwilling to pay for social disclosure. Hence, the latter finding does not provide conclusive evidence on the overall question. However, the result that investors are willing to pay for non-financial disclosures—such as environmental information—constitutes our main contribution as prior research has not been able to provide strong evidence that investors are willing to forfeit investment returns in order to gain access to more corporate disclosures. The use of a choice-based conjoint experiment to examine these matters is novel and potentially opens avenues for future research. We believe our theoretical and practical contributions to be of interest to various stakeholders, including firms in making decisions about disclosure levels and regulators in assessing the need for financial disclosure regulation.

This paper investigates the impact of financial liberalization on the relationship between consumption and total wealth (i.e., the sum of asset wealth and human wealth). Financial liberalization is persistent and may signal changes in expected future consumption growth rates and/or in rates of return on wealth that, through the inter-temporal budget constraint, affect the current consumption-wealth ratio. We estimate the long-run relationship between consumption, total wealth and financial liberalization by state space methods using quarterly US data. The results show that the trend in the consumption-wealth ratio is well-captured by our baseline liberalization indicator. We find that the increase in this indicator over the sample period has increased the consumption-wealth ratio with about ten to sixteen percent. Investigating the responsible channel, additional estimates show that financial liberalization has predictive power for aggregate consumption growth rather than for returns, a result that supports an incomplete markets interpretation of the link between liberalization and the consumption-wealth ratio.

We study access to banking and how it is related to banks’ rate of return on investments and the distribution of income. We develop our empirical framework through a theoretical supply-side model of bank deposit services with a consumer population heterogeneous in income. We use this model to show how decreases in the interest rate margin and higher income disparities lead to an increase in the proportion of unbanked. Using localized US household data from 2009, 2011, 2013 and 2015 we find strong empirical evidence for the predictions of the model. We then structurally estimate our model to estimate the value of having a checking account relative to alternative financial services and to quantify the effects of actual changes in the interest rate margin and the distribution of income that occurred in the aftermath of the 2008 financial crisis.

Given overall lack of gender diversity in the venture capital and entrepreneurship industry shown in Calder-Wang and Gompers (2017) we ask: What promotes greater gender diversity in hiring? Does diversity lead to better firm performance and higher investment returns? In this paper, using a unique dataset of the gender of venture capital partners’ children, we find strong evidence that when partners have more daughters, the propensity to hire female partners increases. Moreover, our instrumental variable results suggest that increased gender diversity improves deal and fund performance. Lastly, the effects are primarily driven by the gender of senior partners’ children.

This paper examines the relationship between household consumption and financial literacy. The economic framework is a simple life-cycle model of consumption in which financial literacy affects the rate of return on assets. The theoretical predictions are that, for plausible values of the intertemporal elasticity of substitution, financial literacy is positively related to both the level of consumption and consumption growth. We empirically test these theoretical predictions with Dutch data from the LISS household panel. Our results provide evidence in favour of a positive association between non-durable consumption, and in particular food consumption, and financial literacy. No evidence is, however, found in favour of an association between consumption growth and financial literacy.

We study how a capital income tax and a wealth tax affect an investor's valuation of a company's stock in an efficient international capital market. Using a one-period model, a model of infinite horizon where the asset generates a future cash flow that is a martingale, and a finite horizon model where we abandon the martingale assumption, we find that a wealth tax and/or a capital income tax do not lead investors to value an investment differently from untaxed investors. Investors who seek a higher pre-tax rate of return due to capital taxes harm their own wealth.

I consider the role of news provided by the media as signals used by investors to learn about partisan conflict. Higher partisan conflict induces uncertainty (by increasing the probability of crises) and gridlock (making tax reforms less likely), both affecting investment returns. The true degree of political disagreement is unobservable to investors, who create expectations based on the observation of informative signals. Using a Bayesian learning model, I illustrate how these signals affect investment decisions. To the extent crises are severe enough, an increase in the partisan conflict reduces expected returns and induces lower investment.

This paper quantifies the factors contributing to Australia’s gender gap in superannuation balances. Around 60 per cent of the gap can be attributed to the prior stock of superannuation, for respondents who had superannuation balances in both 2014 and 2018 in the Household Income and Labour Dynamics in Australia Survey. This is partly due to the accumulation of the prior gap with investment returns. Financial literacy and risk aversion explain around 7 per cent of the gap in total, such as through impacts on subsequent investment returns. Work patterns and wage rates affect contributions and explain approximately 30 per cent of the superannuation gap in total.

We empirically examine the effect of local religious beliefs on the risk-taking behaviour of U.S. life insurers headquartered in that region. We distinguish between insurers that predominantly write annuities and insurers that predominantly write life insurance policies; the annuity business is relatively riskier than writing life insurance. Insurers headquartered in high-Catholic or low-Protestant areas are more likely to be annuity writers. Annuity writers located in high-Catholic or low-Protestant areas invest more in risky assets and exhibit higher investment return volatilities, as well as a higher volatility of their return on assets. Overall, our results suggest that local culture has significant influences on life insurers’ behaviour. Supplementary Information The online version contains supplementary material available at 10.1057/s41288-021-00211-z.

Funds with performance fees have annual net risk-adjusted returns of 0.50% below other funds, a result mostly due to funds without a stochastic benchmark against which performance is measured and funds with a benchmark that is easy to beat. For other funds, there is no evidence of underperformance. Performance fee funds charge total expenses, including the performance fee, that are substantially higher than those of other funds. Investors are more likely to punish poor performance in funds with performance fees than in other funds. Our results indicate that even when fees are less regulated, investors can generally be relied upon to make the right choices, but that there are a subset of funds where performance fees are employed to extract additional fees from investors.

Research background: The role of supplementary pension systems in providing adequate income in old-age is increasing significantly. They are frequently analysed, but rather in terms of architecture, product forms, assets under management or tax incentives than in terms of their efficiency, costliness or readability for individuals. Purpose of the article: The first aim of this paper is to evaluate individual retirement products in Poland regarding their linguistic readability and transparency, investment efficiency and costliness. Moreover, we examine whether there is any correlation between the analyzed characteristics of contracts that would suggest an intentional strategy by financial institutions to hide low efficiency and high costs. The second aim of the article is to assess which individual retirement products are similar to each other and which are significantly different. The research covers two types of individual retirement products (IKE and IKZE) offered at the beginning of 2017. Methods: We used the ?Jasnopis? linguistic analysis tool to assess the difficulty level of the language used in the contracts and we conducted desk-research to analyse their transparency. We indicated the costliness and efficiency of the products by calculating the 5-year cost ratios and real average 5-year rates of return. To examine the relations between the characteristics of pension contracts, we used the Spearman's rank correlation coefficient and then verified its significance with a non-parametric test. Moreover, to identify groups of products that are similar to or different from each other, Ward's method was used. The study includes nearly 90% of all individual retirement products offered in Poland. Findings & value added: For both types of retirement products studied (IKE and IKZE), we found that the more readable a contract is, the higher its rate of return is and the higher the costs charged are. Moreover, the more readable a contract is, the more transparent it is. The findings of the study provide financial institutions, the supervisor and creators of social policy with information on market imperfections and recommendations how to improve the individual retirement products offered on the market. Our research makes a unique contribution to the multidimensional research of supplementary pension systems. It also develops the understanding of how to successfully use linguistic tools in complex analyses of financial services. The results of the hierarchical cluster analysis proved that both IKE and IKZE products differ substantially and their features generally do not depend on the type of the financial provider.

The optimal investment to mitigate climate change crucially depends on the discount rate used to evaluate the investment's uncertain future benefits. The appropriate discount rate is a function of the horizon over which these benefits accrue and the riskiness of the investment. In this paper, we estimate the term structure of discount rates for an important risky asset class, real estate, up to the very long horizons relevant for investments in climate change abatement. We show that this term structure is steeply downward-sloping, reaching 2.6% at horizons beyond 100 years. We explore the implications of these new data within both a general asset pricing framework that decomposes risks and returns by horizon and a structural model calibrated to match a variety of asset classes. Our analysis demonstrates that applying average rates of return that are observed for traded assets to investments in climate change abatement is misleading. We also show that the discount rates for investments in climate change abatement that reduce aggregate risk, as in disaster-risk models, are bounded above by our estimated term structure for risky housing, and should be below 2.6% for long-run benefits. This upper bound rules out many discount rates suggested in the literature and used by policymakers. Our framework also distinguishes between the various mechanisms the environmental literature has proposed for generating downward-sloping discount rates.

Commercial real estate investors prefer coastal, gateway, markets for liquidity, demand density, and durable returns. Yet, these areas are more vulnerable to the effects of climate change from more intense and frequent weather events such as hurricanes and typhoons as well as to gradual changes such as sea-level rise. Recognition is growing of the risks that these events pose to investment performance, but little is known about how this risk has impacted property values and returns when an event such as a hurricane occurs. This is the first study to analyze the impact on property values and returns from hurricanes causing the most significant damage by value over the past 30-plus years throughout the nation. Using individual property data from the National Council of Real Estate Investment Fiduciaries database, we find a significant impact on the value and rates of return, after accounting for any additional capital expenditures for repairs, for properties that are in areas impacted by a hurricane, relative to areas that were not impacted by a hurricane. These impacts vary by property type and can last for several years after the hurricane hit land in the area.

Returns are an inconvenient problem in the mail-order business, not only for the merchant but also for the customer. With an estimated return rate of 50% in the fashion sector, the seller has to deal with the expense of restocking and possibly reprocessing, the buyer, who must reship the return, and the environment. We do not consider returns to be generally bad, but rather an explicit, integral part of the online business model. Therefore, we investigate potentially suitable measures to avert or avoid returns in the pre-purchase, purchase, and post-purchase phases. We look at current and technological developments in return management and the most critical drivers for fashion assortment returns. The measures we investigate deliver a holistic view of the issue and target all three purchase phases. The resulting measures were assessed via an online questionnaire with 8393 participants (customers of a German fashion online retailer) to impact customer satisfaction using Kano’s method. There are clear measures that promise high customer satisfaction (such as 360° view) and a clear hierarchy regarding monetary and non-monetary measures. By applying a new method, the segmented Kano perspective, we found different customer segments, which are different in their expectations towards returns. That allowed us to conclude dynamics regarding return management. This assessment is followed by discussing the results, conclusions, and indications for further research fields.

PurposeThe increasing rate at which individuals, especially, females in Ghana are seeking higher education calls for an estimation of the returns to schooling and education in Ghana.Design/methodology/approachThe study employs the Mincer equation to a representative cross-sectional micro-data from Ghana using OLS and instrumental variable (IV) methodologies. The paper uses spouse's education as instruments in the IV estimation.FindingsReturn to schooling was found to be higher for females than males, likewise, membership of an old student associations and location of the household. Returns to education increases as the level of education rises whilst the rate of returns initially increases but fall as labour market experience rises. The study also found that the rates of return to education were higher for Christian, followed by Muslim and believers of other lesser-known religion in Ghana.Research limitations/implicationsReturn to schooling was found to be higher for females than males. Likewise, individuals who are members of an old student association and are in urban areas were found to have a higher return to schooling than individuals who are not members of an old student association and are in rural areas. Returns to education increases as the level of education rises whilst the rate of returns initially increases but fall as labour market experience rises. The study also found that the rates of return to education were higher for Christian, followed by Muslim and believers of other lesser-known religion in Ghana.Practical implicationsWage determination process is different for males and females, across religion and residency. The higher returns to schooling for females imply education is a good investment for women and girls and should be a development priority.Social implicationsThe higher returns to schooling for females imply an investment in girl's education should be a development priority.Originality/valueThe paper extends the existing literature by focussing on the role of religion, old student's association (alma mater) and gender on the differential earning returns to schooling.

This article considers trends in wealth at the middle and top of the distribution, with a particular focus on the period around the Great Recession. It illustrates that leverage rates of middle class families relative to high‐wealth families were beneficial to relative rates of return of middle class families for most periods since 1983 but was extremely detrimental during the Great Recession. It also considers the savings rates over time among high‐wealth and middle class families, showing that dissaving slowed the recovery in wealth—especially among the middle class. Differential leverage was also a key factor explaining wealth inequality trends.

This article provides the first large-sample analysis of buyout and venture capital fund values over their lifetimes. Specifically, the authors examine fund future investment multiples (TVPIs), internal rates of return (IRRs), and direct alphas based on the current reported net asset values (NAVs) at each year of a fund’s life. Using a sample of 1,400 mature buyout and VC funds, they find that the typical fund experiences a falloff in future returns after it is about seven to eight years old. However, the remaining performance is highly variable for funds of all ages, and the dispersion in returns also tends to increase after funds are about eight years old. They examine the cross-sectional determinants of the remaining fund value and find that several fund-specific and market-wide factors determine future performance and that these vary by type and age of fund. For example, young funds tend to be harmed by high market-wide dry powder levels, whereas older funds appear to benefit. TOPICS:Private equity, performance measurement Key Findings ▪ The typical fund experiences a falloff in returns after it is about seven to eight years old. This is true for both VC and buyout funds. ▪ Contrary to common wisdom, the cross-sectional dispersion of fund performance measured by future internal rate of return and direct alpha tends to increase, not decrease, for funds more than five years old. ▪ A wide variety of market-wide and fund-specific factors predict future fund performance. These include to-date distributions, dry powder, previous fund performance, fund size, general partner fundraising activity, previous public market stock returns, and credit spreads. Relevant factors are different for VC funds and buyout funds and can vary systematically over funds’ life cycles.

The regulatory and operating context of energy networks is dynamic and constantly evolving. Achieving a multitude of economic, environmental, social and policy objectives is a challenging task for the sector regulators. In 2010, the UK energy regulator Ofgem replaced its approach to energy network price control and incentive regulation with a Revenue-Incentive-Innovation-Output (RIIO-1) model. This paper reviews the incentive areas that influence the performance of the next version of the model (RIIO-2). Guided by the principles of regulatory economics and evidence in the literature, we discuss key aspects and incentive properties of the regulation model under revision by the regulator. The lessons of experience from the RIIO models are also relevant for regulators in other countries and can inform their design of incentive regulation of energy networks.

International audience; Based on a detailed model of the German tax-benefit system, this paper simulates private and fiscal returns to education for college graduates and college dropouts.

Using regulatory data free of self-reporting bias for 2007–16, we decompose investment returns of 455 Dutch pension funds according to their key investment decisions, i.e., asset allocation, market timing and security selection. In extension to existing papers, we also assess the impact of benchmark selection. Over time, asset allocation explains 39% of the variation of returns, whereas benchmark selection, timing and selection explain 11%, 9% and 16%, respectively. Across pension funds, asset allocation explains on average only 19% of the variation in pension fund returns. Benchmark selection dominates this by explaining 33% of cross-sectional returns. We relate the choice for a specific benchmark to investment, risk and style preferences.

This study aims to identify issues plaguing rural India's water supply chain and present a general methodology for the implementation of an IoT-based water distribution and management system in a rural setting. Through the literature review, significant hurdles in the water supply chain of rural India, as well as the potential role of IoT in water supply chain management, were recognized. An implementation plan was proposed to design an IoT-based water distribution and management system with the help of flow meters, ultrasonic sensors, motors, etc. Also, the feasibility of such a system was explored with the help of a use case. This study highlighted that one of the most significant reasons for water scarcity in rural India is the lack of proper infrastructure leading to water resources mismanagement. In the context of our use case, despite adequate availability of physical water for consumption, by the time water is delivered to the consumers, a significant amount of it is wasted due to the lack of an efficient water management system. It was determined that the investment return for the proposed system would break even within three months of installment. This study's results are based on inputs from governmental data collected in the Census report of 2011. As such, the ground level scenario is bound to be comparatively different today. This study is anticipated to guide governmental organizations and policymakers in the formulation of new strategies. Graphic abstract

The paper seeks to develop a comprehensive framework to cross-border discounted cash flow valuation. Although the literature on company valuation and on international financial management is vast, such a framework has not yet been proposed. We build upon well-known fundamentals and relevant contributions, e.g. on the derivation of the risk-adjusted rate of return. Relevant risks are exchange rate risk, business risk, financial risk, the risk of the tax effects induced by debt financing, and the risk of default. Additional tax effects beyond the well-known tax shield on interest expenses must be considered. Risk discounts from cash flows and risk premia to be added to risk-free interest rates are derived according to the global capital asset pricing model. A conceptual choice occurs not only between the foreign currency and the home currency approach, but also regarding the estimation of future exchange rates. The paper shows how a valuation can be implemented with or without consideration of covariances between cash flows and rate of returns with exchange rates. It also derives the discount rates if forward exchange rates are applied. We discuss the consequences of assuming the uncovered interest parity to hold. We assume deterministic debt and apply the adjusted present value approach. In addition, we derive the RADR to be used in the flow to equity and weighted average cost of capital approach. The paper addresses not only the valuation of a foreign company, but also the valuation of a domestic company that generates cash flows in foreign currency and/or uses debt in foreign currency.

This paper, using the Australian stock market data, examines the investor-herding and risk-profiles link that has implications for asset pricing, portfolio diversification and foreign investments. As investors may herd towards a specific factor, sector or style to combat market conditions for optimizing investment returns, examining such herding can reveal investors' risk profiles. We employ State-Space models for extracting time series of herd dynamics and the proportion of signal explained by herding (PoSEH). The possibility of a leverage effect between market returns and volatility and its implications are discussed. The change in market volatility strengthens PoSEH; its impact is maximum on high return days of stocks. Quantile regression analysis shows that herding and adverse herding can emerge during the worst and best performance days of stock returns, but extreme uncertainty can bring both herding behaviours to a near halt. The study reveals the presence of a regulated stock market environment and the change in volatility and risk-aversion as the determinants of herding behaviour.

Historical rates of return on investments have received increasing scholarly attention in recent years. Much literature has focused especially on colonies, where institutions have been argued to facilitate severe exploitation. In the present study, we examine the return on investments in an Asian colony, British Malaya, from 1889 to 1969 for a large sample of companies. Our results suggest that the return on investments in Malaya might have been among the highest in the world during the period studied. Nevertheless, this finding fits badly with theories of imperial exploitation and can only to a limited extent be explained by a higher risk premium. Instead, we argue that the main driver of the very high return on investments in Malaya was rather the substantial rise in global market prices of the output of the two main sectors of the Malayan economy, rubber and tin. The way that the process of decolonization unfolded in Malaya did, furthermore, not lead to any major nationalization of foreign-held assets, and did thereby not disrupt the return on investment in the region in the same way as decolonization did to the return on investment in some other colonies.

The purpose of this research study is to examine the stock market’s response to terrorist attacks. The study uses data of terrorist attacks in different parts of the country (Pakistan) from June 1, 2014 to May 31, 2017. The event window procedure applies to a 16-day window in which 5 days before and 10 days after the attack. In addition, several event windows have been built to test the response of the Pakistan Stock Exchange. KSE-100 index is taken as proxy of response. The total terrorist attacks are classified into four categories: attacks on law enforcement agencies, attacks on civilians, attacks on special places and attacks on politicians, government employees and bureaucrats. The standard market model is used to estimate the abnormal return of the Pakistan Stock Exchange, which takes 252 business days each year. Furthermore, BMP test is used to check statistical significance of cumulative abnormal rate of return (CAAR). The results of this study reveal that total number of terrorist attacks and attacks on law enforcement agencies show long-term effects on Pakistan stock exchange. However, attacks on civilians, attacks on special places and attacks on politicians, government employees and bureaucrats have little effect on the Pakistan Stock Exchange.

Investors increasingly use machine learning (ML) algorithms to support their early stage investment decisions. However, it remains unclear if algorithms can make better investment decisions and if so, why. Building on behavioral decision theory, our study compares the investment returns of an algorithm with those of 255 business angels (BAs) investing via an angel investment platform. We explore the influence of human biases and experience on BAs’ returns and find that investors only outperformed the algorithm when they had extensive investment experience and managed to suppress their cognitive biases. These results offer novel insights into the role of cognitive limitations, experience, and the use of algorithms in early stage investing.

Bitcoin and other prominent cryptocurrencies have gained much attention since the last several years. Globally known as digital coin and virtual currency, this cryptocurrency is gained and traded within the blockchain system. The blockchain technology adopted in using the cryptocurrency has raised the eyebrows within the banking sector, government, stakeholders and individual investors. The rise of the cryptocurrency within this decade since the inception of Bitcoin in 2009 has taken the market by storm. Cryptocurrency is anticipated as the future currency that might replace the current paper currency worldwide. Even though the interest has caught the attention of users, many are not aware of its opportunities, drawbacks and challenges for the future. Researches on cryptocurrencies are still lacking and still at its infancy stage. In providing substantial guide and view to the academic field and users, this paper will discuss the opportunities in the cryptocurrency such as the security of its technology, low transaction cost and high investment return. The originality of this paper is on the discussion within law and regulation, high energy consumption, possibility of crash and bubble, and attacks on network. The future undertakings of cryptocurrency and its application will be systematically reviewed in this paper.

This paper estimates rates of return across the gross wealth distribution in eight European countries. Like differential saving rates, differential rates of return matter for post Keynesian theory,...

This paper employs Swedish data on households' stock holdings to investigate how consumption responds to changes in stock market returns. We instrument the actual capital gains and dividend payments with past portfolio weights. Unrealized capital gains lead to a marginal propensity to consume (MPC) of 23 percent for the bottom 50% of the wealth distribution and about 3 percent for the top 30% of the wealth distribution. Households’ consumption is significantly more responsive to dividend payouts across all parts of the wealth distribution. Our findings are consistent with households treating capital gains and dividends as separate sources of income.

Bi-Directional Grid Constrained (BGC) trading strategies have never been studied academically until now, are relatively new in the world of financial markets and have the ability to out-perform many other trading algorithms in the short term but will almost surely ruin an investment account in the long term. Whilst the Gambler’s Ruin Problem (GRP) is based on martingales and the established probability theory proves that the GRP is a doomed strategy, this research details how the semimartingale framework is required to solve the grid trading problem (GTP), i.e. a form of BGC financial markets strategies, and how it can deliver greater return on investment (ROI) for the same level of risk. A novel theorem of GTP is derived, proving that grid trading, whilst still subject to the risk of ruin, has the ability to generate significantly more profitable returns in the short term. This is also supported by extensive simulation and distributional analysis. These results not only can be studied within mathematics and statistics in their own right, but also have applications into finance such as multivariate dynamic hedging, investment funds, trading, portfolio risk optimization and algorithmic loss recovery. In today’s uncertain and volatile times, investment returns are between 2%-5% per annum, barely keeping up with inflation, putting people’s retirement at risk. BGC and GTP are thus a rich source of innovation potential for improved trading and investing. Acknowledgement(s)Aldo Taranto was supported by an Australian Government Research Training Program (RTP) Scholarship. The authors would like to thank A/Prof. Ravinesh C. Deo and A/Prof. Ron Addie of the University of Southern Queensland for their invaluable advice on refining this paper.

Today, growth in the population and the use of vehicles have led to a growth in the production of waste tires and subsequently the creation of environmental concerns. Thus, choosing common strategies (such as retreading, recycling, burning, and disposal) to deal with these wastes and improve environmental conditions has become one of the most significant concerns of today's industries. In this study, a mixed-integer linear programming model has been used to develop a stochastic closed-loop supply chain network design (SCND). The proposed formulation has two objectives: (i) minimizing Eco-indicator 99 and (ii) maximizing profit in a multi-product, multi-echelon, and multi-period problem for tires. It is implemented in a practical case study in tire production industry. Also, uncertain parameters such as the return rate of products, demand, and the percentage of tire material provided by external suppliers are considered as possible scenarios. The improved version of the augmented ɛ-constraint, named AUGMECON2, is applied to solve the proposed problem. Finally, comprehensive sensitivity analysis is carried out to measure the efficiency. Obtained results represent that concerning global factors, an optimal closed-loop SCND can be very different and the problem is sensitive to the customs duty rate and exchange rate parameters. Besides, without considering the limitations of supplying raw materials by external suppliers, profits can increase by about 12%.

Zvi Griliches’ seminal analysis of hybrid corn spawned a large literature seeking to quantify and demonstrate the value of agricultural research and development (R&D) investments. The most important metric for quantifying the rate of return to R&D emerging from this literature is the internal rate of return (IRR), even though Griliches was sceptical of its usefulness as a metric in this context. An alternative metric, also reported by Griliches but not as commonly used in the subsequent returns‐to‐research literature, is the benefit–cost ratio (BCR). We assess how the implications of the returns to agricultural R&D literature may have differed if the BCR had become the standard rather than the IRR. We reveal that the IRR and BCR produce substantially different rankings of agricultural R&D projects, differences that persist even under various commodity and geographical aggregations of the BCR and IRR estimates. The median across 2,627 reported IRRs is 37.5 per cent per year. Using data gleaned from 492 research evaluation studies, we developed and deployed a methodology to impute 2,126 BCRs (median of 5.4) and modified internal rates of returns (MIRRs, median of 16.4 per cent per year) assuming a uniform 10 per cent per year discount rate and a 30 year research timeline.

This paper shows that the decline in the labor share over the past 30 years was not offset by an increase in the capital share. Capital costs are the product of the required rate of return on capital and the value of the capital stock, and the capital share is the ratio of capital costs to gross value added. The capital share is declining, driven by a large decline in the cost of capital. Measured in percentage terms, the decline in the capital share (30%) is much more dramatic than the decline in the labor share (10%). The profit share has increased by more than 12 percentage points. The value of this increase in profits amounts to over $1.1 trillion in 2014, or $14 thousand per employee. The decline in the capital share is unlikely to be driven by unobserved capital. In a standard model, a decline in competition is necessary to generate simultaneous declines in the labor and capital shares. A calibrated model shows that a decline in competition quantitatively matches the data. This paper provides reduced form empirical evidence that a decline in competition plays a significant role in the decline in the labor share. Increases in industry concentration are associated with declines in the labor share. These results suggest that the decline in the shares of labor and capital are due to a decline in competition and call into question the conclusion that the decline in the labor share is an efficient outcome.

The article is directed to determine the most appropriate method for evaluating cost of capital of a manufacturing sector and, using the methodology, to perform a case study of Lithuanian manufacturing sector. For the evaluation of capital cost, calculation of Weighted Average Capital Cost was chosen, as literature analysis distinguished this method as the most widely accepted and used. The most popular methods for cost of capital evaluation prevent investors from estimating capital cost in countries, which do not contain liquid, mature financial markets. This paper contributes to methodology of WACC assessment by adapting the method for less liquid markets with new techniques, like using country’s credit ranking to measure risk premium and adding it to base premium of mature equity markets. The paper also evaluates, how much changes in WACC affect long-term investments into fixed assets in Lithuanian manufacturing sector. The case study of Lithuanian manufacturing sector was performed for the period of 2001–2016. Empirical study revealed that required rate of return on separate WACC components evolved differently between the years of 2001–2016. Average annual return on equity for the period 2001–2016 was 7.7 %, while average annual return on debt was only 4.4 %. In the year 2015, the weight of equity capital, exceeded 50 % first time during the analysed period. In the same year, ratio of net profit before taxes to total assets of Lithuanian manufacturing sector also reached the highest value at the time, later surpassed in 2016. This fact demonstrates that increased free cash flows from the operations were reinvested into further development of the companies. To maximize value of the shareholders, it would be preferable to pay out a portion of earnings as dividends and finance growth with debt, as it is currently a cheaper alternative.

Gollier proposed in 2008 a model for the analysis of pension schemes that is helpful to focus attention on the impact of intergenerational risk sharing and on the role of the participation constraint. He uses the model to analyze the relative attractiveness of a collective scheme with respect to schemes that may be implemented by individuals for themselves. The analysis makes use of an assumption concerning the ownership rights of investment returns realized by generations that are between career start and retirement at the time of the transition from an individual to a collective system. The present paper investigates the consequences of adopting an alternative assumption. In a calibration exercise, the increase of the effective rate of return obtained by switching from an existing ‘autarky’ scheme to an infinite-horizon ‘collective’ scheme is found to be 8 basis points, as opposed to 72 basis points as reported by Gollier. Additionally, the effects are considered of changes in the specification of agents' preferences, aiming to express the specific nature of retirement income provision in the second pillar. The Black–Scholes assumptions are used to model the economic environment, so that many results can be obtained in closed form.

Research and development (R&D) planners in homeland security agencies would like to be able to prioritize investments in projects based on costs versus future safety and security benefits. While costs are often readily available, estimates of safety and security benefits are fraught with uncertainty. To address these challenges, a benefit–cost model of technological change is adapted to the homeland security context. Data are sparse; therefore, estimation is facilitated by developing a familiar linear welfare model using derivatives of cost and risk reduction functions to estimate areas of costs and benefits. The theoretical model is applied to two homeland security projects involving airport patrols and the assignment of U.S. federal air marshals to international flights. Retrospective data are available for most periods. Welfare-based rates of return are reported for the two cases, each of which is estimated to return large present value net benefits. Extensive sensitivity and Monte Carlo simulation explores uncertainties. Two important findings are that (i) given the rationality assumption, relative increases in security levels can be valued, even if the absolute level of security is not known; and (ii) large uncertainties about risk reduction exist but can be bounded by parametric sensitivity and uncertainty analysis.

Due to the accelerated expansion of technology and improved living standards, the use of electronic products is increasing exponentially. Unfortunately, the improper disposal of used electronic products, such as cell phones, has resulted in rapid degradation of the environment and is, therefore, posing a great threat to human health. Meanwhile, proper recycling is also likely to generate high profits; thus, recycling of electronic products is a necessity of the time. However, the profitability of recycling and remanufacturing depends upon the return rate, which is very low in the cell phones industry. In this paper, we first identify the root causes of low return rate and, then, develop a novel Radio Frequency Identification (RFID) based return channel to increase the recycling rate. A dual-recovery-channel hybrid manufacturing-remanufacturing production model is proposed, which procure used products of different quality from both the traditional market-driven recovery channel as well as the new RFID based channel. A mathematical model is developed considering the cost of implementation and the design of the proposed RFID based recovery channel. Recovery-channel selection is studied, and results show that a hybrid collection strategy with 85% share of channel-1 and 15% of channel-2 is the optimal one. Moreover, the collection from the proposed RFID based channel increases as the demand increases. For the proposed RFID based system, reader sensing power is found more significant compared to the cost of readers. A numerical example is given with three different cases and impacts of different input parameters are studied to draw important results. Managerial insights are given to assist the designer of the system in some critical decisions.

In this article, we evaluate the rate of return to government efforts to promote broadband. Specifically, we estimate the impact of USDA's broadband loan and grant programs on the average payroll per worker using zip code level data from the Zip Code Business Patterns for the period from 1997 to 2007. Our results indicate that two of the smaller broadband programs (the Pilot loan program and the broadband grants program) likely had no effect on local payroll per workers. On the other hand, the largest program in terms of funding and coverage (the current broadband loan program) likely had a positive impact. Our estimate implies that a $1 per capita increase in a particular zip code's one‐time receipt of the current program broadband loan results in a $0.92 increase in payroll per worker annually. Our calculated point estimates of the benefit: cost ratios for this broadband program range from 1.98 to 2.99, depending on assumptions about the time frame over which benefits accrue. However, the confidence intervals are wide enough to include the possibility that the costs outweigh the benefits.(JEL L86, J30, O18)

This paper considers a multi-level closed loop supply chain (CLSC) including a supplier, a producer, a retailer, and a collector. Most of the works in the literature considered remanufactured products as-good-as newly produced items, while in the real world situations, some customers perceive remanufactured items as lower quality products than newly produced ones; so we assume that demands for manufactured and remanufactured items are different which leads to lost sales situations. To make the study more realistic, we assume the return rate of the second-hand items as a variable function which depends on the acceptance quality level of the returns. Also, producing and reproducing processes are assumed to be imperfect, so they can produce some defectives which are reworked in the same cycle. To address this problem, a mathematical model with single manufacturing/remanufacturing cycles is established and solved using two algorithms extended for the case of local (non-integrated) and global (integrated) optimization. The results of our analysis indicate that integration results in higher acceptance quality level of returns, higher replenishment cycle time for both manufactured and remanufactured items and less (higher) number of shipments to the retailer per manufacturing (remanufacturing) cycle. Furthermore, the results indicate that as the revenue of selling newly produced items (remanufactured items) increases, acceptance quality level of the returns decreases (increases) and the total number of shipments to the retailer per manufacturing (remanufacturing) cycle increases (decreases).

We present a simple, linear asset pricing model of the cross section of Mortgage-Backed Security (MBS) returns. MBS earn risk premia as compensation for their exposure to prepayment risk. We measure prepayment risk and estimate security risk loadings using real data on prepayment forecasts vs. realizations. Estimated loadings on prepayment risk are monotonically decreasing in securities’ coupons relative to the par coupon, as predicted by the fundamental effect of prepayment on the value of bonds trading above and below par. Prepayment risks appear to be priced by specialized MBS investors. In particular, we find convincing evidence that prepayment risk prices change sign over time with the sign of a representative MBS investor’s exposure to prepayment risk.

In this article, the authors examine the evolving composition of the global equity market over the last 121 years. Using the DMS database from Morningstar, they study the long-term returns on all the main asset classes. The authors present investment returns based on 90 countries, 23 of which have histories starting in 1900. Over the long run, equity returns have systematically exceeded the investment performance of government bonds and Treasury bills. For the world as a whole, stocks beat bills by 4.4% per year and bonds by 3.1% per year. In the United States, stocks outperformed bills by 5.8% per year, compared with 3.7% per year in the world ex-US. Contrary to many equity investors’ expectations at the dawn of the 21st century, the United States continued to outperform non-US stock markets by a significant margin. TOPICS:Security analysis and valuation, global markets, financial crises and financial market history, performance measurement Key Findings ▪ The long-term growth of US financial assets has been exceptional. The US stock market now represents 56% of the market capitalization of worldwide equities. ▪ Over the 1900–2020 period, the annualized real (inflation-adjusted) return on US equities was 6.6%, that on long government bonds was 2.1%, and that on Treasury bills was 0.8%. The US experience is not a guide to the typical non-US market. ▪ The 6.6% real USD return on US equities contrasts with 4.5% real USD return on a 90-country index of international, non-US equities over the same 121-year period. The US was an outlier. ▪ US stock market returns were superior not only in the 20th century. In the 21st century, real US returns (4.6%) have exceeded the world ex-US (2.8%) and Europe (2.5%). ▪ US markets have beaten non-US markets with the help of expansionary monetary policy and a high weighting in technology companies. Whether US exceptionalism will persist is an open question.

Background: The growing consumption is what drives the development of unsustainable energy and material-intensive production technologies that emit large quantities of pollutants into the atmosphere, water, and land. Obtaining green energy allows reduction of the interference with the environment and, consequently, fits into a sustainable energy development strategy. In order to achieve the emission targets set by the EU for Poland, it is necessary to prioritize the development of renewable energy sources (RES) technologies within the energy sector.Methods: The purpose of the study was to present the results of the research relating to the return on investment of solar collectors for single-family houses in Poland. The research was presented on the basis of the legal conditions applicable to micro installations in the light of the amendment of the RES Act, and the impact of these amendments on the aspects of such investment was determined.Results: On the basis of the constructed economic model used to assess the return on investment of increasing the area of solar collectors, it has been shown that an operating installation will bring measurable economic benefits in the form of reduction in the amount of energy purchased annually in the amount of 6,756 kWh and environmental benefits in the form of reduction of carbon dioxide emissions to the atmosphere 2.4–3.6 Mg per year. An installation subsidized under the “My Electricity” program can reach an NPV of EUR 6,000 over 20 years at a discount rate r = 0 and assuming that the electricity is EUR 0.15/kWh. If the price rises to 0.2 EUR/kWh, the NPV will be 10,000 EUR. For the analyzed installation, the investment consisting in increasing the collector area in accordance with NPV is economically effective for the absorber area in the range of 5.6–7.6 m2 and reaches the maximum value for the absorber area of 6.6 m2, while the absorber area above 7 m2 contributes to reduce the value of the economic return on investment. The obtained results have been generalized, which allows to use them in the process of selecting the size of collector area for similar installations.Conclusion: The return on investment analysis carried out in respect of a detached house allowed to demonstrate that this project is fully justified. Furthermore, pursuant to the Renewable Energy Sources Act in force in Poland, treating a small entrepreneur as a prosumer who may generally take advantage of favorable conditions for discounting the produced energy leads to very favorable possibilities of settling electricity. Considering an entrepreneur as a prosumer who may use one-off depreciation of a solar collectors installation as a fixed asset and request for VAT refund is what makes such an investment very attractive in financial terms and makes it difficult to find a safe investment alternative characterized by such a high rate of return.

This article examines the current portfolio allocation in ESG and Green projects. Traditional investments focus on rates of return and risks associated with investment. Environmental, Social and Governance (ESG) or Green factors are additional components that investors have to pay attention to. Environmental protection is very important. However, as we see the current different definitions of ESG or Green factors lead to distorted allocations in portfolio investments. In order to bring portfolio allocations to a desirable direction, global taxation on pollution or creation of an accurate Green credit rating based on emissions of various pollutants are recommended.

This study investigates the strategic effect of return policies in a dual-channel supply chain, in which a manufacturer can sell products directly to end customers and indirectly via an independent retailer. The manufacturer decides whether to implement a return policy in either the direct or indirect channel, or in both channels. When the return policy is provided, the cost of returned products has to be covered by the corresponding channel. We consider four possible strategies, including full refund in the direct channel only, full refund in the indirect channel only, full refund in both channels, and no refund in both channels. Given the equilibrium pricing strategies of firms, the preferences of firms over different strategies are determined by comparisons between the anticipated return rate of customers and their perceived value of the return policy. The manufacturer prefers the full-refund policy in both channels when the return rate of the customer is low. Otherwise, the dominant strategy for the manufacturer is the no-refund policy in both channels. The retailer benefits more from the full-refund policy in the indirect channel alone when the return rate is low; otherwise, the retailer prefers the full-refund policy in the direct channel only.

Increasing attention to sustainable development issues and competition between different supply chains are forcing the stakeholders to use different incentives to capture more market share. Collecting channels are one of the effective topics in the reverse competitive chains. Because of the importance of this issue, we consider two collecting reverse supply chains consist of a retailer and a manufacturer who compete together by proposing more rewards to the customers. One of these chains tries to facilitate the collecting process and obtain more market share by using the direct and traditional channels advantages. The other one uses only the traditional channel. Hence, the return rate of each channel not only depends on the self-reward but also is function of the cross-rewards suggested to the customer by the competitors in the other channels. The competitive environment in our model consists of internal and external competitions. Competition between two channels of one chain infers to internal competition, external competition that points out to competition among two supply chains. We apply three game theory structures to obtain the optimal channels rewards: Nash, Nash-Stackelberg-first supply chain, and Nash-Stackelberg-second supply chain. Finally, we comparing the results of decision variables and profit function of members under three structures through numerical analysis. Our numerical investigations show that e-channel because of less costly than traditional channel proposes more appropriate reward to customers, so this channel could obtain a more substantial share of the market. Moreover, the results reveal that highest return rate occurred under Nash scenario while Nash-Stackelberg-first supply chain and Nash-Stackelberg-second supply chain are the most economic scenarios for the first and the second supply chains, respectively.

A detailed treatment of aggregation and capital heterogeneity substantially improves the performance of the investment CAPM. Firm-level predicted returns are constructed from firm-level accounting variables and aggregated to the portfolio level to match with portfolio-level stock returns. Working capital forms a separate productive input besides physical capital. The model simultaneously fits the value, momentum, investment, and profitability premiums and partially explains positive stock-fundamental return correlations, the procyclical and short-term dynamics of the momentum and profitability premiums, and the countercyclical and long-term dynamics of the value and investment premiums. However, the model falls short in explaining momentum crashes. Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online..

Most impact evaluations of Conditional Cash Transfers (CCTs) and Unconditional Cash Transfers (UCTs) focus on the returns to increased human capital investments that will be reaped largely or exclusively in the future (e.g., when current children have increased productivities as adults). But the objectives of these programs are not only to increase human capital investments with implications for future levels and distributions of income but also to alleviate current poverty and reduce current inequality. The current distributional gains from such programs depend on the degree of inequality aversion in the social welfare function. Simulations show that, for a range of inequality aversion parameters, the welfare gains from current redistribution for the Mexican PROGRESA CCT program can be as large, or possibly much larger, than the estimated present discounted value of future earnings from human capital investments in lower and upper secondary schooling. These, moreover, are underestimates of the gains from redistribution because, in addition to current gains, such gains will be augmented in the future through the distribution of the returns on the human capital investments induced by cash transfer programs. Therefore, to fully evaluate such programs, it is critical to incorporate the distributional gains, not only the impacts on human capital investments.

Subjective mortality beliefs affect pre- and post-retirement consumption and savings decisions, as well as portfolio allocation. New survey evidence shows that individuals overestimate their mortality at short horizons and survival rate at long horizons. For example, a 28-year-old male with a 99.4% chance of surviving beyond 5 years believes he will do so with 92.8% probability. A 68 year old with a 71.4% probability of living to 78 believes he has an 82.4% chance of living that long. The formation of these beliefs across age cohorts can be attributed to overweighting salient causes-of-death. This bias matters empirically: Survival expectations correlate with heterogeneity in financial education and investment behavior. Embedded in a run-of-the-mill life-cycle model, these beliefs cause the young to under-save and retirees to not fully draw down their assets. In addition, for reasonable levels of risk-tolerance, the required excess rate of return on equity is in line with historical averages once subjective beliefs are accounted for.

This paper analyzes long run outcomes resulting from adopting a binding minimum wage. The model distinguishes between workers of heterogeneous ability, and capitalists who do all the saving, and it entails – relative to the perfectly competitive benchmark - large output and employment losses (among the lowest-ability workers) from the imposition of moderately binding minimum wages. These effects arise not only because firms respond to the wage increase – relative to the static perfectly competitive benchmark – by moving upwards along a given labour demand curve, but also due to inward shifts of the labour demand curve as savers respond to decreases in the (net of taxes) rate of return on their savings by saving less, thus reducing the economy’s steady-state capital stock. Nevertheless, and despite the large, long-run, declines in aggregate output, consumption, and the capital stock implied by this model, MW legislation can be beneficial for large segments of employed workers, as long as they do not have to provide generous welfare support to the low-ability workers that the MW prevents them from finding employment.