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The purpose of this paper is to present a procedure to include the implicit assumptions of Net Present Value (npv ) in the Internal Rate of Return (irr ), and the profitability index (benefit–cost ratio b/cr). The resulting indicators are the weighted irr (wirr ) and the expanded b/cr (eb/cr). These two desirability measures are designed for variable and constant discount rates. They have the property to coincide with the npv ranking for investment analysis and hence, will maximize value. Examples are presented.

Considerable empirical evidence suggests that firm’s time equity issues to market movements and that this behavior impacts capital structures. Based on a survey of investigations of this phenomenon, this study observes capital structures in different financial markets and identifies different situations related to the effect of timing on leverage. This study also explains optimal leverage with a simplified dynamic adjusted model. Firms facing financial constraints in debt financing may increase equity issues resulting in considerable leverage variance. On the other hand, firms with fewer financial constraints can time the market when issuing equity. This study takes regional samples from the United Kingdom and Japan, to summarize circumstances involving partial financial constraints and no financial constraints. The market timing effects tests in the United Kingdom are insignificant but the results for Japan are significant. This phenomenon improves understanding of the market timing model under different circumstances.

There are two points of view on the performance of the public administration: an internal one, governed by the principle of the three “E”’s and an external one, a measure of the public accessibility to the civil service. The problem with these two points of view in that, although they show the same direction they are of opposite bearings. Even though the inherent purpose is ensuring the citizen’s access to the civil service, serving the tax payer with their problems thus serving the whole community in a most efficient manner, we cannot overlook the fact that the resources of the public administration are often more limited than those of private economic agents, especially when considering that the civil service usually involves very high operating costs. In these conditions the performance of the public administration is defined as an optimum between the capacity to deliver the civil service towards the citizens and the associated costs of this capacity.

The special features of using of venture capital as a way of attracting investments for innovative development have been defined. The comparative characteristic of the types of venture capital investments has been done. The ways of companies' participation in venture financing through forming small businesses, small business ventures or their own operating specialized investment firms of venture capital have been investigated. The mechanism of functioning of the corporate venture investment has been worked out. The authors describe the stages of venture investing according to the stages of the company life cycle

The empirical study was focused predominantly on validity tests of the three theories on capital structures, the static trade-off theory, the pecking order theory (information asymmetry theory), and agency cost theory in the Tanzanian context. The study used secondary data from eight of the non-financial companies listed in Dar Es Salaam Stock Exchange (DSE) from 2006-2012. The study used descriptive (quantitative) approach to test the practicality of the theories in Tanzania. The multiple regressions model used to test the theoretical relationship between the financial leverage and characteristics of the company. The research found that there is no strong evidence for validation of static trade off theory, little support of pecking order theory, but the agency cost theory is confirmed to be valid and practiced in Tanzania. It recommended that Tanzanian companies should be adhering to the determinants of the capital structure in the Tanzanian context found by this study.

What is the impact of real estate prices on corporate investment? In the presence of financing frictions, firms use pledgeable assets as collateral to finance new projects. Through this collateral channel, shocks to the value of real estate can have a large impact on aggregate investment. Over the 1993-2007 period, the representative U.S. corporation invests 6 cents out of each additional dollar of collateral. To compute this sensitivity, we use local variations in real estate prices as shocks to the collateral value of firms that own real estate. We address the endogeneity of local real estate prices using the interaction of interest rates and local constraints on land supply as an instrument. We address the endogeneity of the decision to own land (1) by controlling for observable determinants of ownership and (2) by looking at the investment behavior of firms before and after they acquire land. The sensitivity of investment to collateral value is stronger the more likely a firm is to be credit constrained.

In recent years, the technology transfer was considered more and more an important tool for promoting growth and creating jobs. Europe has a strong scientific and technological base but this potential is not used properly and the main cause is the lack of investment funds, especially in the early stages of business development. In fact, for the early stages of business development, companies need pre-seed capital and seed type. Therefore, at European and national level, there were taken initiatives for providing public funds for pre-seed projects and to support the development of networks of business angels or new seed capital funds.

The article makes a comparative analysis of Romania and Bulgaria on their way to adopting the euro. In order to highlight the situation of the two countries after 5 years of EU membership and the opportunity to adopt the euro, we analyzed the macroeconomic key performance indicators, the indicators of the financial sector and of foreign trade for Romania and Bulgaria. The article emphasizes the comparison between the two countries in terms of the achievement of the convergence criteria and the position that officials have regarding the euro.

L’une des caracteristiques essentielles du capitalisme familial est une inscription dans le long terme, liee a un souhait de perennite et de transmission intergenerationnelle. Investissement a long terme et capitalisme familial sont donc naturellement lies. Cet article a pour objet, partant des specificites des entreprises familiales, de detailler le lien entre investissement et capitalisme familial sous deux aspects principaux : l’attitude des entreprises familiales face a leur propre financement et l’attitude des familles comme investisseurs dans d’autres entreprises. Classification JEL : G31, G32.

The economic and financial evaluation of industrial investment projects in developed countries with market economy is based on the combined use of traditional and modern, rational methods, characterized by the scientific and reliability, tested and validated by long practice. This article present the indicator of economic evaluation of industrial projects, economical and financial rate of profitability and its method of calculation through a case study. The rate of profitability is a significant indicator in assessing the economic and financial performance of a project or a company both internally and in the diagnostic tests requested by external partners. Also, the results of the enterprise activity in all the stages of the economic cycle are reflected in the profit and the rate of profitability.The results of the case study can be put into practice as they have been, or may be interpreted depending on the nature of the project.

Working capital management is a vital issue in financial decision making since it is a part of investment in asset and it directly affects the liquidity and profitability of the company. The study tries to investigate the relationship between working capital management components and the profitability of a sample of Indian manufacturing firms using a sample of 311Indian manufacturing firms for a period of 14 years from 1996-97 to2009-10 and have studied the effect of different variables of working capital management including the average collection period, inventory turnover in days, average payment period, cash conversion cycle and current ratio,debt ratio, size of the firm and financial assets to total assets ratio on the net operating profitability of Indian firms. The result suggests a strong negative relationship between the measures of working capital management including the number of days accounts receivable and cash conversion cycle, financial debt ratio with corporate profitability. Previous studies regarding the average days of accounts payable reported negative correlation of this variable and the profitability of the firm. But, we have not found any statistically significant relationship between these variables. Finally, we found insignificant negative relationship between firm size and its net operating profit ratio.

We use the 2007 credit crisis to assess the effect of financial contracting on real corporate behavior. We identify heterogeneity in financial contracting at the onset of the crisis by exploring ex-ante variation in long-term debt maturity. Our empirical methodology uses an experiment-like design in which we control for observed and unobserved firm heterogeneity via a differences-in-differences matching estimator. We study whether firms with large portions of their long-term debt maturing right at the time of the crisis observe more pronounced outcomes than otherwise similar firms that need not refinance their debt during the crisis. Firms whose long-term debt was largely maturing right after the third quarter of 2007 reduced investment by 2.5% more (on a quarterly basis) than otherwise similar firms whose debt was scheduled to mature well after 2008. This relative decline in investment is statistically significant and economically large, representing approximately one-third of pre-crisis investment levels. A number of falsification and placebo tests confirm our inferences about the effect of credit supply shocks on corporate policies. For example, in the absence of a credit shock ("normal times"), the maturity composition of long-term debt has no effect on investment outcomes. Likewise, maturity composition has no impact on investment when long-term debt is not a major source of funding for the firm.

We propose in this study, to make an analysis of the influence of the investment decision on the return of the company. The goal of our research is the quantification of the influence of investment activity on profitability. Fulfilling such a goal has forced us to research the existing literature in this field, both in our country and abroad, ascertaining the existence of a unitary meaning of the criteria for investment projects'(tm) evaluation. Of course, the realization of such research was possible only after close consideration of the opinions expressed in the relevant literature on this area. Our research aims to be a theoretical-applied one. It is based on comparisons we make between the two criteria for assessing investment projects namely: that of net present value (VAN) and internal rate of return (RIR). By creating a suite of phase calculations, based on information from economic and financial documentation of corporate investments, we separated the influence of the policy investment decisions on profitability. We are convinced that the most accurate determination of the influence of policy investment decisions on profitability helps the financial management, facilitating the process of adopting the most appropriate policy decisions that ultimately leads to the objectives formulated by the financial policy. The result of our research is the quantification of the influence of investment policy decisions of the firm on profitability.

The topic of real options applies the option valuation techniques to capital budgeting exercises in which a project is coupled with a put or call option. In many project valuation settings, the firm has one or more options to make strategic changes to the project during its life. These strategic options, which are known as real options, are typically ignored in standard discounted cash-flow analysis where a single expected present value is computed. This paper presents the types of real options that are met in economic activity.

The real options capture the importance of the managerial team’s role in creating value through investment projects. The investments in real assets have a set of options that managers can exercise during the period of the project to increase the value of the assets or to limit the eventual losses. This options have their own value.The traditional methods for investment project evaluatioan, based on discounted cash flows, have some major disadvantages: they assume the irreversibility of a decision, do not take into account the interactions between decisions in several periods and treat the investment as pasive. The evaluation using real options undertake this disadvantage. The paper shows the main types of real options, together with their elements and captures the impact of these options on the value of the investment. The main two models used to evaluate real options, the binomial model and Black-Scholes model, are explained and used to compute the value of real options attached to an investment project.

We study the implications of hedging for firm financing and investment. We do so using an extensive, hand-collected dataset on corporate hedging activities. Hedging can lower the odds of negative firm realizations, reducing the expected costs of financial distress. In theory, this should ease a firm's access to credit. Using a tax-based instrumental variable approach, we find that hedgers pay lower interest spreads and are less likely to have capital expenditure restrictions in their loan agreements. These favorable financing terms, in turn, allow hedgers to invest more. Our tests characterize two exact channels (cost of borrowing and investment restrictions) through which hedging affects corporate outcomes. The analysis we present shows that hedging has a first-order effect on firm financing and investment, and provides new insights into how hedging affects corporate wealth. More broadly, our study contributes novel evidence on the real consequences of financial contracting.

This paper analyses the syndication behavior of VC organisations and the factors influencing their overall propensity to co-invest. We develop hypothesis concerning the investment behavior of Venture Capitalists in the German market and compare these hypothesis to the actual empirical evidence from a data set including 2,500 VC investments. We find that the underlying theories of financial and resource driven motives can indeed be used to explain the observed behavior for syndicated venture capital investments. We show that mainly Resource driven motives foster the propensity to syndicate an investment. Additionally, we find that Venture Capital Firms tend to diversify their portfolio, such that both motives of venture capital syndication (Finance and Resource driven) seem to be present at the same time and play a significant role simultaneously for the decision to jointly co-invest. We find evidence that a lower level of experience and expertise fosters the need to syndicate an investment.

The present study proposes an analysis of the main views expressed in the literature on financial policy, as well as the shaping of our own, clear and comprehensive vision, regarding the content of this concept. The main objective of our research is to clarify the content of the financial policy concept, so that this policy may be effectively used in the service of overall development of our economy and society. Reaching such an objective has implied the research of a vast existing literature on the field, in the country as well as abroad, observing a vast variety of understandings regarding the meaning of the concept itself, the objectives stated within the financial policy as well as the main approaches (ways to follow) for achieving these objectives. Of course the achievement of such a research is not possible without a meaningful analysis of the principles expressed in this field's literature. In relation to this matter we can see that each author has his own conception regarding the subject under review. These expressed conceptions are, in turn, based on previous research in the analyzed area. The accelerated dynamism proved by the evolution of our economy and society in this stage shows us that through the financial policy, outlined both at a micro and a macroeconomic level, clear fundamental objectives must be formulated that should be possible to achieve by partial objectives (sequential), practical methods and procedures being adapted to them. Our research is at the present stage, a theoretical and methodological one. It is based on the comparisons we make between the views expressed in the studies of different authors, trying to draw the "red line" of these views and observing the fundamental meaning given to the financial policy concept. We express our conviction that a clear conceptual expression of the financial policy notion comes to the rescue of the general management (macro and microeconomic) facilitating the process of adopting the most appropriate decisions for achieving the objectives set by the financial policy. The result of our research is represented by the formulation of a clear and comprehensive concept concerning the financial policy. Removing ambiguities in formulating the concept under review as well as in the means of achieving the formulated objectives is for the benefit of achieving the monetary, financial and budgetary balance at a macroeconomic level, which is the foundation for promoting some beneficial financial policies at a microeconomic level.

This paper investigates a principal-agent model in which an owner (principal) optimizes a contract with a manager (agent) delegated to undertake an investment project. In the model, we explore the effects of costly exploration by which the manager learns the real value of development cost. We show that high exploration cost can lead to a pooling policy not contingent on project type. Further, and more notably, we show that, in the presence of asymmetric information, higher exploration cost leads to wealth transfer from owner to manager and can then play a positive role in preventing a greedy contract by the owner and improving social welfare.

The consequences of information differences across investors in capital markets are still much debated. This paper examines the relation between information differences across investors and the cost of capital, and makes three points. First, in models of perfect competition, information differences across investors affect a firm's cost of capital through investors' average information precision, and not information asymmetry per se. Second, the average precision effect of information that is heterogeneously distributed across investors is unlikely to diversify away when there exist many firms whose cash flows covary. Thus, better disclosure can reduce a firm's cost of capital. Third, the precision effect does not give rise to a separate information-risk factor. These points are important to empirical research in accounting and finance, as well as to regulators who debate future disclosure requirements and the consequences of prior requirements such as Regulation Fair Disclosure.

Much of corporate finance is concerned with the impact of financing constraints on firms. However, the literature on financing constraints largely ignores the intertemporal implications of those constraints; in particular, how future financing constraints affect current investment decisions. We present a model in which future financing constraints lead firms to have a current preference for investments with shorter payback periods, investments with less risk, and investments that utilize more liquid/pledgeable assets. The model has a host of implications in different areas of corporate finance, including firms' capital budgeting rules, risk-taking behavior, capital structure choices, hedging strategies, and cash management policies. We show how a number of patterns reported in the empirical literature can be reconciled and interpreted in light of the intertemporal optimization problem firms solve when they face costly external financing. For example, contrary to Jensen and Meckling (1976), we show that firms may reduce rather than increase risk when leverage increases exogenously. Furthermore, firms in economies with less developed financial markets will not only take different quantities of investment, but will also take different kinds of investment (safer, short-term projects that are potentially less profitable). We also point out to several predictions that have not been empirically examined. For example, our model predicts that investment safety and liquidity are complementary: constrained firms are specially likely to distort the risk profile of their most liquid investments.

We study a competitive model in which market incompleteness implies that debt-financed firms may default in some states of nature, and default may lead to the sale of the firms ' assets at fire sale prices when a finance constraint is binding. The anticipation of such "losses" alone may distort firms' investment decisions. We characterize the conditions under which fire sales occur in equilibrium, and their consequences on firms ' investment decisions. We also show that endogenous financial crises may arise in this environment, with asset prices collapsing as a result of pure self-fulfilling beliefs. Finally, we examine alternative interventions to restore the efficiency of equilibria. (JEL D83, G31, G32, G33) markets play an important role in the efficient allocation of resources. Among other things, they provide the price signals that guide investment decisions. If the market value of a firm is distorted, the firm's investment decisions will also be distorted. In this paper, we present a general-equilibrium model in which debt-financed firms face the risk of bankruptcy in some states of nature and show how the prospect of bankruptcy can distort the investment decisions of the firm. This is true even though there are no direct costs associated with the re-organization of the firm and the creditors are able to perfectly hedge any uncertainty about their future wealth.

We construct a comprehensive panel data of 92 publicly traded European utilities over the period 1994-2005 in order to study the relationship between capital structure, regulated prices, and firm value, and examine if and how this interaction is affected by ownership structure and regulatory independence. We show that regulated firms in our sample tend to have a higher leverage if they are privately-controlled and if they are regulated by an independent regulatory agency. Moreover, we find that the leverage of these firms has a positive and significant effect on their regulated prices, but not vice versa, and it also has a positive and significant effect on their market values. Our results are consistent with the theory that privately-controlled firms use leverage strategically to shield themselves against regulatory opportunism.

Within the Internal Ratings-Based (IRB) approach of Basel II it is assumed that idiosyncratic risk has been fully diversified away. The impact of undiversified idiosyncratic risk on portfolio Value-at-Risk can be quantified via a granularity adjustment (GA). We provide an analytic formula for the GA in an extended singlefactor CreditRisk setting incorporating double default effects. It accounts for guarantees and their effect of reducing credit risk in the portfolio. Our general GA very well suits for application under Pillar 2 of Basel II as the data inputs are drawn from quantities already required for the calculation of IRB capital charges.

This paper examines whether debt financing can undermine a supermarket firm's incentive to provide product quality. In the supermarket industry, product availability is an important measure of a retailer's quality. Using US consumer price index microdata to track inventory shortfalls, I find that taking on high financial leverage increases shortfalls. Highly leveraged firms appear to be degrading their products' quality in order to preserve current cash flow for debt service. Although reducing quality can erode both current sales and customer loyalty, firms appear to be willing to risk these outcomes in order to achieve benefits associated with debt finance. (JEL D92, G31, G32, L15, L81)

Cohesion and structural funds absorption in the EU is one of the most debated issues at hand in terms of macroeconomic management and financial development of the MS. This direction results in the development of funds and all the related structural and cohesion policies as to assure structural adjustment and harmonize operations by homogenizing and sustaining the economic standards of MS. Central national budgets have to mold and be structured in order to ensure the co-financing in the projects appliance and also the fine implementation of growth through fund allotment and absorption.

In the knowledge-based economy the fundamental determinants of the enterprise value, in the present, have an intangible nature. The intangible investments are the most important factors of the enterprise success. Wealth, growth and welfare are driven nowadays by intangible investments. The knowledge economy is characterized by huge investments in human capital and informational technology. Despite of the increased importance of intangible assets, as the source of the firm` competitive advantages, the information regarding these kind of assets, both available in the inside of the firm and, which is presented to the externals, is pour. In this paper I present the reasons for this situation.

Social security and social protection concepts are gaining importance, especially in the Pacific Island countries (PICs). The state-led welfare and social protection system is limited in PICs, where there has been a heavy reliance on traditional, informal and non-state social protection systems which are provided through extended family, kinship, and community. The aim of the paper is to examine the nature of traditional, informal and semi-formal social security and protection mechanisms within PICs, to explore the role of non-governmental organizations (NGOs) and civil society organizations (CSOs) in providing social security and safety nets and to aid in enhancing social development in PICs.

Working capital does not receive a great deal of attention in financial decision making. Perhaps this is because it involves investment and financing for the short term. Nevertheless, it is an important component of firm financial management. This study investigates the relationship between aggressive/conservative working capital practices and profitability as well as risk. The sample includes 59 industrial firms and 14 banks listed on the Amman Stock Exchange for the period of 2004-2008. The results indicate a negative relationship between profitability measures and working capital aggressiveness, investment and financing policy. Firms have negative returns if they follow an aggressive working capital policy. In general, there is no statistically significant relationship between the level of current assets and current liabilities on operating and financial risk in industrial firms. There is some statistically significant evidence to indicate a relationship between standard deviation of return on investments and working capital practices in banks.

Trade credit (accounts receivable and accounts payable) is both an important source and use of funds for manufacturing firms in India. This paper empirically investigates the determinants of trade credit in the Indian context. The empirical evidence presented suggests that strong evidence exists in support of an inventory management motive for the existence of trade credit. Highly profitable firms are found to both give and receive less trade credit. Firms with greater access to bank credit offer less trade credit to their customers. On the other hand, firms with higher bank loans receive more trade credit. Holdings of liquid assets have a positive influence on both accounts receivable and accounts payable.

In the knowledge-based economy, the fundamental determinants of the company’s value, in the present, have an intangible nature. The intangible investments are the most important factors of the enterprise success. Wealth, growth and welfare are driven nowadays by intangible investments. The knowledge economy is characterized by huge investments in human capital and informational technology. The current accounting regulation does not allow companies to capitalize a big part of investments in intangibles (produced by a company) and to report these as assets in the financial reports. There are inconsistencies regarding the book-keeping treatment of the two categories of intangible assets: internally generated and externally, acquired from the outside of the company.

In my paper, I look at the 2012 budget from two distinct points of view. Approaching from the perspective of the economic environment, I describe the most important lessons and relevant empirical experiences of budgetary adjustments as well as the topical macroeconomic and budgetary processes providing the foundation for next year’s budget. The second half of the paper discusses the institutional environment of the adoption of the budget. The paper presents the tasks related to the preparation and adoption of the 2012 budget, providing assistance for the legislative work of Parliament adopted by the Fiscal Council and which also follow from the new Constitution adopted in April. In addition, I shall also give an overview of the analyses provided by the Hungarian National Bank (MNB) to be used by the Fiscal Council in its relevant work.

Inventory is one of the most dynamic current assets in the retail industry due to its variability with time and across firms. The organized retail sector is in its nascent stage in India. This study tries to find out the important variable(s) that affect(s) inventory productivity in three selected Indian retail companies namely Pantaloon Retail India Limited, Trent limited and Shopper’s Stop respectively. The gross margin return on investment (GMROI) has been regressed on inventory turnover, gross margin, size of the firm (last year sales), and capital intensity. Balanced panel data is used for conducting the analysis. The results indicate that all variables have a positive and significant impact on GMROI.

We offer a theory of the sunk cost fallacy as an optimal response to limited memory. As new information arrives, a decision-maker may not remember all the reasons he began a project. The sunk cost gives additional information about future profits and informs subsequent decisions. The Concorde effect makes the investor more eager to complete projects when sunk costs are high and the pro-rata effect makes the investor less eager. In a controlled experiment we had subjects play a simple version of the model. In a baseline treatment subjects exhibit the pro-rata bias. When we induce memory constraints the effect reverses and the subjects exhibit the Concorde bias. (JEL D24, D83, G31)

The Pepperdine Private Capital Markets Project survey for business owners, administered during the spring of 2010, reveals an increasingly important role of friends and family (Friends/Family) to provide capital for privately-held businesses. Examining business owners’ perceptions of their sources of capital reveals that, overall, business owners prefer Friends/Family and angel financing as well as asset-based lenders and banks (ABL/Bank). Business owners consider Friends/Family financing to be the least costly. However, business owners also believe venture capital (VC), private equity (PE), and angels provide more benefits than friends/family and ABL/Bank. This study unveils a detailed spectrum of the funding continuum for privately owned firms across different levels of firms’ size, age, and information availability.

Delayed payment (trade credit) and prepayment are widely observed forms of interfirm credit. We propose a simple theory to account for the prevalence of such credit. A downstream firm trades off inventory holding costs against lost sales. Lost final sales impose a negative externality on the upstream firm. The solution requires a subsidy limited by the value of inputs. Allowing the downstream firm to pay with a delay, an arrangement known as “trade credit,” is precisely such a solution. Further, solving a reverse externality accounts for the use of prepayment\ud for inputs, even in the absence of any risk of default by the downstreamfirm. We clarify howinput prices vary with such policies as well as when such instruments are more efficient than pure input price adjustments. Thus we account for inter-firm credit as an optimal instrument delivering a targeted inventory subsidy designed to prevent lost sales. The theory offers an explanation for the\ud widespread use of net terms, and the fact that prepayment always carries a zero interest rate. Our results are also consistent with non-responsiveness of trade credit charges to fluctuations in the bank rate as well as market demand, and the fact that trade credit is negatively related to supplier profit level and inventory, but positively related to supplier profit margin.

The purpose of this study is to examine and demonstrate the strategic investment decisions faced by Taiwan’s chain and franchise store enterprise. We show that incorporating an abandonment option to strategic timing in a game-theoretic real option approach makes the approach more complete and accurate. The results show that the chain and franchise store industry favors large companies, a finding consistent with economies of scale. The demonstration also provides practitioners a step-by-step guideline for analyzing dynamic investment strategy in the chain and franchise store industry.

This paper develops a new approach to testing for strategic entry deterrence and applies it to the behavior of pharmaceutical incumbents just before they lose patent protection. The approach involves looking at a cross-section of markets and examining whether behavior is nonmonotonic in the size of the market. Under certain conditions, investment levels will be monotone in market size if firms are not influenced by a desire to deter entry. Strategic investments, however, may be nonmonotone because entry deterrence is unnecessary in very small markets and impossible in very large ones, resulting in overall nonmonotonic investment. The pharmaceutical data contain advertising, product proliferation, and pricing information for a sample of drugs which lost patent protection between 1986 and 1992. Among the findings consistent with an entry deterrence motivation are that incumbents in markets of intermediate size have lower levels of advertising and are more likely to reduce advertising immediately prior to patent expiration.

In times of uncertainty and crisis the performance measurement instruments should be reanalyzed. Thus, alongside the classic indicators of performance, in business financial analysis can be used modern indicators which offer a greater flexibility and efficiency. Such a measurement indicator for financial results closely correlated with the requirement of maximizing shareholder wealth is the Economic Value Added (EVA). The economic value added reflects the real economic profits of a company and it is an effective tool for financial managers. Despite some limits, taking into account the usefulness of EVA indicator, many companies have adopted it as a part of a comprehensive management and at the same time, an incentive system that governs the financial decision-making process.

Since the 1990s, professional football has been experiencing an unprecedented economic boom worldwide, but only a few football clubs can meet the rapidly changing economic requirements. There are important questions that remain unanswered within the financing of football clubs, such as the impact of risks or the market value of capital costs. In addition to liquidity and beyond the above, the acceptance of the determinational dependence of certain capital funds on sports results and the development of a strategy suitable for the optimal target system are also important requirements. The conscious management of financing is pushed to the background even in countries with great football traditions. The study makes observations and recommends financing solutions for professional football clubs. Internal funding: income from media rights and ticket revenues, merchandising (image transfer), income from the sale of various assets and intangible assets. Cost-saving measures are very important for football clubs as the extent of internal funding is significant. External funding: external financing, issuing of securities, patronage capital, etc.

This paper deals with the cost of debt and its impact on the financing decision of the companies, in the context of the informational asymmetry between the firm and the lender, which is in mostly a bank. The banks finance the direct investment projects of different companies by assessing the debtor risk profile roughly, using a risk classification system usually compounded of five risk classes established according to risk methodologies specific for each bank. The cost of capital is established according to the risk class in which the debtor is included. This study revisits the determinants of the cost of debt, as a start point for an analysis of the opportunities of the companies to influence the cost of debt by the signals transmitted to the banks. We realize an empirical verification of a model regarding the impact of macroeconomic factors on the cost of debt and propose a model for analyzing the role of the informational asymmetry in establishing the cost of debt for companies. The model proves a complex impact of the income tax rate on the cost of debt, consisting in a negative effect due to the tax shields, but also in a direct one due to the effect of the taxation on the value of the own capital. The informational asymmetry also determines the increase of the cost of debt. The article inventories the determinants of the cost of debt as a start point in studying the behaviour of the companies influencing the cost of capital.

The systemic approach on companies is a well established economic science practice. In systems research, some terms were created in order to give an overall perspective on systems in their relationship with their environment. So those systems were defined as autopoetic, heteropoetic and alopoetic. Those terms have been introduced on economic research by Milan Zelezny, Gunther Teubner and Alberto Febrajo in 1997. In our paper we present a view over the bankruptcy ? recovery choice using these concepts. Since bankruptcy is generated by accumulated negative cash-flow, we will use cash income and cash expenses as inputs and outputs of the system, disregarding other inputs and outputs.

Investment decisions depend very much on a correct forecast of cash flows and an appropriate discount rate. At a first view, it does not seem to be too difficult to carry out the theoretical criteria. But how do we discount the cash-flows? How do we find the appropriate discount rate? The paper tries to evaluate some of these aspects from a behavioral point a view. As discounts rates are not constant over a period of time, they will be influenced by time and confidence. Biased by the economic environment the individual will discount the future cash-flows different. Thus, the paper will have a look at the relation between discounting, time and value.

We survey 1,050 Chief Financial Officers (CFOs) in the U.S., Europe, and Asia to directly assess whether their firms are credit constrained during the global financial crisis of 2008. We study whether corporate spending plans differ conditional on this surveybased measure of financial constraint. Our evidence indicates that constrained firms planned deeper cuts in tech spending, employment, and capital spending. Constrained firms also burned through more cash, drew more heavily on lines of credit for fear banks would restrict access in the future, and sold more assets to fund their operations. We also find that the inability to borrow externally caused many firms to bypass attractive investment opportunities, with 86% of constrained U.S. CFOs saying their investment in attractive projects was restricted during the credit crisis of 2008. More than half of the respondents said they canceled or postponed their planned investments. Our results also hold in Europe and Asia, and in many cases are stronger in those economies. Our analysis adds to the portfolio of approaches and knowledge about the impact of credit constraints on real firm behavior.

This paper studies the degree of the exchange rate pass-through (ERPT) to import and consumer prices in China with both the ratio of China’s imports to GDP and domestic prices of China’s main trade partners going up. Statistic results show that the degree of ERPT is somehow less than the degree of marginal cost plus mark-up pass-through of exporters, and econometric analyses reach the same conclusion. Besides, the ERPT to import prices is found to be high while the ERPT to CPI is low owing to some factors that obstruct the import prices pass-through channel to domestic CPI. But this situation has been changing significantly since August 2005. Thus, a more flexible exchange rate system is needed for China to absorb the price shock from aboard efficiently.

The selection of the financing sources of an enterprise constitutes a major problem for the managerial finance field with influences over the economic-financial performances. The theoretical and practical studies did not provide to the scientific research field the proper identification of the representative models for managing the capital structure and to evaluate the real costs for the financing sources. The liquidity crisis by which are confronted the Romanian companies nowadays, relevant situation for the actual period, imposes the need for correlation and optimization of the capital structure and identification of the financial and operational risks at the level of the enterprises and at the level of the representative responsibility centres in order to valorise at a maximum level the existing financial potential..

This paper focuses on the importance of equity markets in facilitating the exit of entrepreneurs investing in technology. Entrepreneurs' willingness to invest and aggregate output is affected in two opposite ways. First, uncertainty about equity price or lack of market liquidity discourages technology adoption. This can explain slow technology adoption and limited participation by venture capitalists in underdeveloped equity markets. Second, fast adoption is a positive signal to imperfectly informed equity market participants. This provides a rational explanation for overpricing technology stocks and overinvestment in developed markets. Fast adoption is most probable at an intermediate quality of information. (JEL D82, E23, G12, G31, G32, O33)

The market economy creates various variants that an investor or another should know very well, should analyze them and choose the variant of investment which is the closes to its purposes. Such a variant of investments is the one that may materialize in certain manufacturing capacities, case in which the gain of the investor turns into profit; on this plan, we may assert that gaining much profit is the final purpose pursued by any investor in such a variant of capital placement. On the other side, we also must emphasize that profit is earned in time, and the time factor, on its turn, should be known, analyzed, localized and, certainly, quantified, so that the investment decision should not be empirical, but substantiated. This paper proposes to focus on few of the most important aspects of the impact of time factor on the capital investments, generally, and on their economic efficiency, particularly.

The findings presented in this article improve the existing methods for estimating financial models of returns and especially for estimating the parameters that are relevant for portfolio managers, such as the Jensen alpha, a popular measure for stock selection, and beta, a well-known systemic risk measure. The authors focus on the presence of measurement errors in these models. For instance, the risk factors in the Fama and French models or the market model are biased by measurement, or specification, errors. These measurement errors are related to the use of proxies for measuring risk factors, such as the risk premium, and other risk factors, which are approximated by mimicking portfolios. To tackle these specification problems, the authors propose new Hausman-based estimators lying on cumulants optimal instruments. Using these newly generated strong instruments in a generalized method of moments (GMM) setting, the authors obtain new GMM estimators that they call GMM-C and its homologue GMM-hm. They also extend the methodology to the standard two-stage least squares (TSLS) framework using new optimally generated instruments. These procedures improve the existing method of moments for estimating, or calibrating, the parameters of a financial model and, more generally, for treating the problem of endogeneity often encountered in financial studies. Moreover, this study leads to a new indicator that signals the presence of specification errors in financial models. The authors apply a battery of tests and estimators to a sample of 22 HFR hedge fund indices observed monthly over the period 1990–2005. Their tests reveal that specification errors bias parameter estimation of financial models of returns and that the ranking of hedge funds is very sensitive to the choice of estimators.

This paper investigates the decision of an automaker concerning the alternative promotion of a hybrid vehicle (HV) and a full electric vehicle (EV). We evaluate the HV project by considering the option to change promotion from the HV to the EV in the future. The results not only extend previous findings concerning American options on multiple assets, but also include several new implications. One notable observation is that the increased market demand for EVs can accelerate the promotion of the HV because of the embedded option.