Aggressive Investment Research Articles

Do Working Capital Decision and Efficiency of Working Capital Management Contribute to the Profitability? Evidence from Bangladesh

This study attempts to explore how working capital decision, that is, aggressive investment and finance decision and efficiency of the working capital management (WCM) contribute to the profitability operationalised by gross operating profit (GOP) and return on assets of listed manufacturing firms in Bangladesh. To investigate this relationship, the study has taken into consideration of 468 sample observations from 108 listed firms covering the year from 2013 to 2017. This study finds that aggressive investment and finance decision significantly contribute to the profitability of the firm. Besides, the efficiency of WCM has significant impact on the profitability. In addition, the constructs of efficiency of WCM—that is, days in inventory outstanding, days in sales outstanding—has significant negative impact on the profitability of the firm. Unfortunately, this study finds no significant impact of days in payables outstanding on firm’s profitability.

Study on the Relationship Between Employee Satisfaction and Corporate Performance in Japan via Text Mining

For the past 30 years, under the stagnant Japanese economy, companies have adopted various management strategies, and employees’ sense of values has become more diverse. In this study, we conduct research on the relationship between employee satisfaction and corporate performance.Although survey-based methods are used as a common approach to assessing employee satisfaction, we determined employee satisfaction by performing sentiment analysis based on online reviews of employees. In addition, we developed two performance indicators based on financial cash flow figures, which include the growth rate of operating cash flow and the ratio of investing cash flow to operating cash flow. These figures demonstrate corporate operating cash flow performance, as well as management’s attitude toward investment. By analyzing Japanese companies in the information and communication, electric appliance, and transportation equipment industries, we obtained three findings: 1) the companies with high operating cash flow growth affects or are positively affected by employee satisfaction with “Accomplishment” and “Promotion,” 2) the companies with low operating cash flow growth and aggressive investment over operating cash flow affect or are affected by variations in employee satisfaction with “Accomplishment,” 3) the companies in information and communication industry with high operating cash flow growth and aggressive investment over operating cash flow negatively affect or are affected by employee satisfaction with “corporate atmosphere.”

Measuring the selectivity and market timing performance of Islamic mutual funds in the KSA

This paper examines the selectivity and market timing abilities of Islamic fund managers in the Kingdom of Saudi Arabia (KSA), since the empirical research has yet to explore the profitability and investment risk factors involved. We use a uniquely large set of data for 134 Islamic funds for a period from June 2002 to December 2019, and this was free from any survival bias. We found that Islamic fund managers in the KSA demonstrated good selectivity skills but no market timing ability. We also found that Islamic fund managers in the KSA tend to select companies with aggressive investment patterns despite their low profitability.

Over-Investment and Product Market Competition

This study uses both theory and empirical evidence to examine over-investment by managers. Based on analytical research, we find that complementary goods are an essential factor contributing to decisions regarding over-investment. Due to the complementarity of goods, an increase in the demand for efficient firms’ products increases the demand for inefficient firms. Efficient firms are then likely to resort to aggressive investments to gain a competitive advantage and improve demand. In addition, we present an empirical case for over-investment by testing the relationship between current year investments and future performance. We introduce a new variable using an analytical model and demonstrate that it impacts managerial investment decision-making. While previous economic theory-based studies frequently applied contract theory to consider managers’ behavior, this study contributes to the literature by indicating that it is also essential to use the industrial organization model. Our study makes the following unique contribution. It proposes a new variable that affects over-investment using the analytical model and demonstrates that it has a significant impact on managers’ decision-making. This finding has an essential contribution to the over-investment literature.

Investment timing and capacity decisions with time-to-build in a duopoly market

In this study, we investigate optimal investment timing and capacity decisions in the presence of time-to-build and competition. Due to uncertain time-to-build, a leader, who invests first, may have its product enter the market after a follower’s. We show that a dominated firm with the longer time-to-build can become a leader by making the investment earlier than a dominant firm with shorter investment lags. The leader’s capacity choice increases with the dominated firm’s time-to-build, even if the dominated entity is the leader. This finding is consistent with the observation in the electric vehicles market in which a relatively new firm with little experience of mass production makes aggressive investment early on, while the biggest carmakers capable of mass production are timing their investment. With a welfare-maximizing policy, however, the dominant firm with the shorter time-to-build always becomes the leader. There is a significant loss of social welfare with the dominated firm being the leader, and the loss increases with the asymmetry of time-to-build.

Dynamic portfolio strategy by loss-averse fund managers facing performance-induced fund flows

In a continuous-time framework, we establish an optimal dynamic portfolio strategy for a loss-averse fund manager facing performance-induced fund flows. Using the martingale approach, we derive closed-form solutions to both the optimal terminal value and optimal dynamic strategy of the fund under management. The model shows that the loss-averse manager strives to earn high returns in good market conditions at the risk of losing all investments at the terminal date in bad market conditions. The prospect of higher fund inflows induced by superior performance motivates fund managers to take more aggressive investment strategies, increasing the fund's risk exposure, whereas the prospect of fund outflows due to underperformance has no impact on the fund manager's investment decision. While the prospect of higher fund inflows increases dynamic optimal wealth as well as optimal terminal wealth in good market conditions, in bad market conditions, it reduces dynamic optimal wealth and results in a higher chance of a complete loss at the terminal date. Finally, a manager with a higher degree of loss aversion tends to take a conservative investment strategy with a lower risk exposure especially in bad market conditions, leading to a lower dynamic and terminal wealth in good market conditions and also a lower chance of a complete loss in bad market conditions.

Institutional systems inducing R&D in Amazon- the role of an investor surplus toward stakeholder capitalization

Amazon demonstrated a conspicuous increase in R&D and became the world's top R&D firm in 2017 with a skyrocketing increase in market capitalization, making it close to being the world's biggest company.Such a remarkable accomplishment can be attributed to Amazon's institutional systems, which orchestrate techno-financing systems that fuse a unique R&D transformation system and a sophisticated financing system centered on the cash conversion cycle (CCC). These institutional systems support and endorse aggressive investment in R&D that incorporates the characteristics of uncertainty, a long lead time, and successive inflows of very large amounts of funding without interruption.While some of this investment can be endorsed by Amazon's positive business results in terms of a sustained increase in sales and free cash flow, such a large amount of aggressive investment is beyond endorsement. In addition to actual economic performance, investors have been betting on a high level of risky investment with the expectation of Amazon's future success by trusting its R&D-inducing institutional systems.While the former can be considered to be a general reaction to a producer surplus, the latter can be postulated as an investor surplus in which investors bet on overly optimistic future prospects instead of actual accomplishments. This is similar to a consumer surplus in which consumers pay more than the actual market price for attractive goods and services.By introducing a concept of gross market value consisting of a producer surplus and an investor surplus, this paper attempts to elucidate the institutional systems that enable Amazon to invest a very large amount of financing resources in aggressive R&D.An intensive empirical analysis focusing on the development trajectory of Amazon's techno-financing system over the last two decades was conducted, together with comparative analyses of the performance of the big four online service companies, Google, Apple, Facebook, and Amazon (GAFA).It was identified that among GAFA, Amazon demonstrated the highest dependence on an investor surplus, which suggests that investors are betting on the continuation of Amazon's solid growth by means of its aggressive investment in R&D, supported and endorsed by its institutional systems. This idea is supported by the high elasticity of its investor surplus to R&D investment.Noteworthy is that investors incorporate not only shareholders but also broad stakeholders centered on users, and that they expect not only economic value but also supra-functionality beyond such value.A broadly applicable practical approach for measuring an investor surplus and an insightful suggestion highlighting the significance of an investor surplus toward stakeholder capitalism are thus provided.

A roadmap investment strategy to reduce carbon intensive refrigerants in the food retail industry

High global warming potential (GWP) refrigerant leakage is the second-highest source of carbon emissions across UK supermarket retailers and a major concern for commercial organisations. Recent stringent UN and EU regulations promoting lower GWP refrigerants have been ratified to tackle the high carbon footprint of current refrigerants. This paper introduces a data-driven modelling framework for optimal investment strategies supporting the food retail industry to transition from hydrofluorocarbon (HFC) refrigeration systems to lower GWP systems by 2030, in line with EU legislation. Representative data from a UK food retailer is applied in a mixed integer linear model, making simultaneous investment decisions across the property estate. The model considers refrigeration-system age, capacity, refrigerant type, leakage and past performance relative to peer systems in the rest of the estate. This study proposes two possible actions for high GWP HFC refrigeration systems: a) complying with legislation by retrofitting with an HFO blend (e.g. R449-A) or b) installing a new natural refrigerant system (e.g. R744). Findings indicate that a standard (i.e. business-as-usual) investment level of £6 m/yr drives a retrofitting strategy enabling significant reduction in annual carbon emissions of 71% by the end of 2030 (against the 2018 baseline), along with meeting regulatory compliance. The strategy is also highly effective at reducing emissions in the short term as total emissions during the 12-year programme are 59% lower than would have been experienced if the HFC emissions continued unabated. However, this spending level leaves the business at significant risk of refrigeration system failures as necessary investments in new systems are delayed resulting in an ageing, poorly performing estate. The model is further tested under different budget and policy scenarios and the financial, environmental, and business-risk implications are analysed. For example, under a more aggressive investment approach of £50 m/yr carbon reductions are at 93% by the end of 2030, whilst also ensuring compliance with the legislative cut-off four years early in 2026 and substantially enhancing the reliability of the refrigeration systems in the portfolio. Alternatively, when emissions are minimised instead of cost with a £50 m/yr investment level, 99% decarbonisation is achieved by 2030. Overall, the study highlights the trade-offs between capital investment and system resilience requiring a careful balance of priorities and the need to have up to date information so decision makers can reliably drive a successful strategy towards more sustainable operation of refrigeration systems.

A study on Norwegian offshore policy

ABSTRACT The world shipbuilding and shipping, offshore industries are experiencing a downturn due to oversupply, low economic growth, and low oil prices. Also, domestic shipbuilding and shipping industries are having difficult time due to bankruptcy of Hanjin shipping and restructuring of DSME. The market outlook for 2020 is still expected to be negative. In order to overcome the recession in the shipbuilding and shipping industry, Korean shipyards and shipping companies are making efforts to strengthen their competitiveness through aggressive investment inducement, restructuring, and merger and acquisition. Various countermeasures are being considered in connection with the government and academia. In order to overcome the current recession, the world’s major maritime and offshore countries are developing a variety of offshore industry clusters based on government’s strong policy support in addition to strengthening their own competitiveness and expanding their competitiveness based on competitive advantage. This is an ideal best practice. This study analyzes the Norwegian offshore policy and offshore industry clusters, one of the most representative maritime powers, and provides data for establishing policies that will lead to sound and continuous development of Korean shipbuilding, shipping, and offshore industries based on this analysis.

Multi-Period Planning of Hydrogen Supply Network for Refuelling Hydrogen Fuel Cell Vehicles in Urban Areas

The hydrogen economy refers to an economic and industrial structure that uses hydrogen as its main energy source, replacing traditional fossil-fuel-based energy systems. In particular, the widespread adoption of hydrogen fuel cell vehicles (HFCVs) is one of the key factors enabling a hydrogen economy, and aggressive investment in hydrogen refuelling infrastructure is essential to make large-scale adoption of HFCVs possible. In this study, we address the problem of effectively designing a hydrogen supply network for refuelling HFCVs in urban areas relatively far from a large hydrogen production site, such as a petrochemical complex. In these urban areas where mass supply of hydrogen is not possible, hydrogen can be supplied by reforming city gas. In this case, building distributed hydrogen production bases that extract large amounts of hydrogen from liquefied petroleum gas (LPG) or compressed natural gas (CNG) and then supply hydrogen to nearby hydrogen stations may be a cost-effective option for establishing a hydrogen refuelling infrastructure in the early stage of the hydrogen economy. Therefore, an optimization model is proposed for effectively deciding when and where to build hydrogen production bases and hydrogen refuelling stations in an urban area. Then, a case study of the southeastern area of Seoul, known as a commercial and residential center, is discussed. A variety of scenarios for the design parameters of the hydrogen supply network are analyzed based on the target of the adoption of HFCVs in Seoul by 2030. The proposed optimization model can be effectively used for determining the time and sites for building hydrogen production bases and hydrogen refuelling stations.

ТЕОРЕТИЧНІ ТА ОРГАНІЗАЦІЙНІ ЗАСАДИ ФОРМУВАННЯ ТА РЕАЛІЗАЦІЇ ІНВЕСТИЦІЙНОЇ ПОЛІТИКИ БАНКУ

The article is devoted to the research of theoretical principles of formation of bank investment policy. The essence of the bank's investment policy from the point of view of organizational legal, economic and strategic groups of approaches is investigated. The basic types of bank's investment policy are classified by directions and purpose of investing. The conservative, moderate and aggressive investment policy of the bank are highlighted, as well as the optimal methods of realization of the goals of the investment policy. The article outlines the main areas of investment policy, focusing on which the bank forms an investment policy by establishing the composition of investment objects, sources of income, the level of tolerable risk and approaches to investment analysis. The principles of the bank's investment policy at different stages of its development, as well as the sources of origin of resources for financing the bank's investment activity are investigated.

Public Sector Pensions and the Covid-19 Shock

The 2020 Coronavirus Aid, Relief, and Economic Security Act (CARES) awarded $200 billion in federal aid to the states to support spending for core areas including general relief, education, and mass transit. As revenue pressures mount in the coming months Congress may provide further aid to state and local governments. Nevertheless, financial support for key services such as health, welfare, and public safety should not be allowed to morph into a more generalized bailout of state and local pension plans. The most serious pension funding gaps are largely the result of failures to undertake meaningful pension reforms over the course of the past decade. Any future federal aid packages that might be used to meet pension plan obligations should be conditioned on structural pension reforms. Conditions for federal assistance should include a de-risking of public pensions’ overly aggressive investment strategies, a freezing of pension plans to future benefit accruals, and the establishment of alternate defined contribution retirement plans for affected public sector employees.

Disclosure Environment and Investment Information in Multiple Markets

We study the effect of disclosure requirements on a firm's investment decisions when it competes with an identical competitor in multiple (two) markets. We assume that firms have limited investment resources, and we focus on cases in which the disclosure environment may differ from market to market. As with previous studies on single Cournot competition, our results show that firms pursue more aggressive investments under disclosure than under non-disclosure in symmetric disclosure environments. However, firms invest less in a market with disclosure than in one without if both markets have asymmetric disclosure environments. This is because firms are willing to concentrate their limited investment resources on a less competitive market, and multimarket contact allows firms to predict rival firm behavior.

Crawling financialization in Central and Eastern Europe using the example of Agriculture

The article examines the financialization process in Western and Central and Eastern European countries using the example of agriculture, in particular, agricultural land. The phenomenon discussed is identified as ‘crawling financialization' in Central and Eastern Europe. Countries whose economies underwent a socialpolitical transformation in the 1990s proved to be resistant to the heavy impact of the 2008 financial crisis. Agriculture is one area that should be examined for the phenomenon of financialization, because agricultural land is a desirable investment resource (after exhausting relatively safe opportunities in the financial market), and because investors from capital markets are increasingly moving into commodity markets to speculate on raw materials and agricultural products. Therefore, it is necessary to examine the extent of this phenomenon - whether it's defined as aggressive investment or the crawling financialization of agricultural markets. This paper outlines the determinants of the development of financialization in the food sector, and examines the concept of both ‘galloping' and ‘creeping' financialization and their implications for the agricultural sector, with particular emphasis on agricultural land. Considering the fact that ‘financialization' is a fuzzy concept that is open to interpretation, an attempt was made to concretize it by dividing countries into developed or developing. In addition, attention was paid to the decline in the share of agricultural land in the long-term, and the transfer of investors' free cash from high-risk markets to the agricultural land market. This is prompted by the specific features of land, such as its inconsistency, non-reproducibility, and theoretically also indestructibility.

Disclosure of Investment Information in a Vertically Related Industry

This study investigates the strategic disclosure of a downstream firm’s information regarding cost-reducing investment in a vertically related industry. Disclosing information affects an (common) upstream firm’s input price (i.e., vertical strategic effects) and a rival downstream firm’s output level (i.e., horizontal strategic effects). We show that the downstream firm is willing to withhold its information as the products become more differentiated because the horizontal strategic effects decrease with the products differentiation degree. This implies that non-disclosure, rather than disclosure, can convey an aggressive investment (i.e., lower marginal costs) to a rival downstream firm when the products are sufficiently differentiated. Moreover, we show that the downstream firm may disclose its information and pursue its investment at a minimum level when the products are extremely differentiated. In this case, they desire to reveal high marginal costs (i.e., a low investment level) to the upstream firm to reduce the input price, regardless of horizontal market competition.

The Impact of Aggressive Working Capital Management Policy on Firm’s Value: A Mediating Effect of Company’s Profitability

The study will examine the value of the firm and aggressive working capital management while considering the mediating effect of a firm's profitability. The study consist of 147 non-financial firms listed on the Pakistan Stock Exchange. The study period consists of years from 2009 to 2014. The finding reveals that aggressive working capital financing policy has a significant negative impact on profitability and firm value while aggressive investment policy discloses a significantly positive relationship with profitability. Profitability has a significant and positive impact on the firm's valuation therefore, profitability can mediate the relationship between the aggressive working capital management and the value of the firm. Therefore, we conclude that to enhance profitability through optimization of investment on current assets and by adding the proportion of long term financing in working capital. In the end, we have discussed some of our limitations and future research opportunities.

Has aggressive investing strategy performed? An insight from Malaysia listed companies

This study examines the role of aggressive investing strategy on firm performance for a sample of 514 listed firms in Malaysia from 2010 to 2017. In our first objective, we investigate the investing activism effect on firm performance by simultaneously controlling the firm characteristics and industry in our model. Our second objective is to test whether aggressive investing activism affects firm performance. Lastly, we want to investigate whether this aggressive investing may produce different results with different measures of performance. Our findings show that investment has significant effects on firm performance. Our research further indicates that companies with aggressive investing strategies had a better firm performance than compared to its peers. We test this theory using three different measures of aggressive investing strategies and substantiate this conclusion. Our research confirms the resource-based view theory and empirically proves that aggressive investments would result in better firm performance. JEL Classification : C23, D21, G31, L25 DOI: https://doi.org/10.26905/jkdp.v23i3.3069

Why female board representation matters: The role of female directors in reducing male CEO overconfidence

Abstract We suggest a novel reason why there might be a need for female board representation. Female participation in the boardroom attenuates the CEO’s overconfident views about his firm’s prospects as we find that male CEOs at firms with female directors are less likely to hold deep-in-the-money options. Further, we argue that female board representation matters for industries where male CEO overconfidence is more prevalent. We find support for our argument as female directors are associated with less aggressive investment policies, better acquisition decisions, and improved financial performance for firms operating in industries with high overconfidence prevalence. We also identify a market failure around economic crises. Firms that do not have (sufficient) female board representation suffer a greater drop in performance as a result of the crisis than those that have female board representation.

가계재무관리자의 가계재무관리능력, 재무관리 자신감이 공격적 투자행동에 미치는 영향 분석

본 연구에서는 가계재무관리자의 가계재무관리 능력과 재무관리 자신감이 공격적 투자행동에 미치는 영향에 대 해 공변량구조 분석을 수행하여 분석하였다. 또한, 가계재무관리자의 재무관리 능력, 재무관리 자신감, 공격적 투자 행동에 영향 미치는 요인을 회귀분석을 통해 파악하였다. 본 연구의 결과를 정리하고 또 종합하면 다음과 같다. 첫째, 가계재무관리자가 남성, 서울수도권 거주자, 취업자, 50대 이상, 본인 소득과 가계소득 수준이 높을수록 재무관리 자신감 수준이 높았다. 한편, 남성, 취업자, 40대 이상, 가계소득과 본인 소득이 높을수록 공격적 투자 행동 성향이 높은 수준이었다. 둘째, 공변량구조분석 결과에 따르면 가계재무정보관리 능력 수준이 높고, 가계재무계획능력 수준이 높은 가계 재무관리자일 수록 본인의 재무관리행동에 대해 자신감 수준이 높은 것으로 나타났다. 한편, 가계재무관리자의 재무관리 자신감이 공격적 투자행동에 미치는 영향을 분석한 결과 재무관리 자신감이 높은 재무관리자가 공격적 투자성향이 높은 것으로 나타났다. 셋째, 가계재무관리자의 재무정보관리 능력은 서울수도권 거주자, 전문직에 종사하는 경우, 주식투자경험이 있 는 경우 높은 것으로 나타났다. 가계재무관리자의 재무계획능력은 서울수도권 거주자, 가계소득이 많은 경우, 전 문직 종사자, 주식투자경험이 있는 경우 높은 것으로 드러났다. 가계재무관리자의 재무관리실천능력 수준은 서울 수도권 거주자, 부동산보유액이 많은 경우로 밝혀졌다. 가계재무관리자의 재무관리 자신감은 남성, 대졸자, 서울 수도권 거주자, 재산증여․상속을 받은 경우, 부동산보유액이 많은 경우, 은행 예금액수와 부채액수가 많은 경우, 주식 투자경험이 있는 경우 높은 것으로 밝혀졌다. 가계재무관리자의 공격적 투자행동은 남성, 재산증여․상속을 받은 경우, 부동산, 은행예금, 부채가 많은 경우, 주식투자경험이 있는 경우 높은 수준으로 나타났다.

Investment Timing and Capacity Decisions with Time-to-Build in a Duopoly Market

We investigate firms' optimal investment timing and capacity decisions in the presence of time-to-build and competition. Due to the uncertainty in time-to-build, the product of the leader who makes the first investment might enter the market later than that of the follower. We show that a firm dominated by investment lags can become a leader and that the leader's optimal capacity increases in the size of the dominated firm's lags, even when the dominated firm becomes the leader. This result is consistent with the electric vehicles market, in which a relatively new firm lacking experience in mass production makes an aggressive investment, while the biggest car makers capable of mass production with shorter lags are timing their investment. With a welfare-maximizing policy, however, the dominant firm always becomes the leader. Compared to investments according to the welfare-maximizing policy, the leader and follower's investment choices in the market are inefficiently late and early, respectively. The welfare-maximizing capacities of both the leader and the follower are much higher than those determined in the market, but the difference is more pronounced in the leader's capacity. There is a significant loss of social welfare resulting from the dominated firm becoming the leader, and the loss increases as the dominated firm's time-to-build increases.