Aggressive Investment Research Articles

Exploring the themes in the U.S. media coverage of Wanda’s investments in Hollywood

ABSTRACTCast against the backdrop of the U.S.–China “trade war” during the Trump Administration, Wanda Group’s billionaire chairman Wan Jianlin’s aggressive investments in the U.S. entertainment industry have become even more contemporaneous. This study first analyses the U.S. media coverage of Wanda’s investments in Hollywood using the grounded theory approach. The content analysis identified three major embedded themes: business, attitudes and actions of U.S. society, and China’s soft power strategy. The concurrence of the business and China’s soft power strategy reinforces the argument of previous studies that business and soft power are inherently connected. This study further argues that these two themes reflect the two major driving forces underlying the collaboration between China and Hollywood. This study also shows the predominant negativity in the attitudes and actions of U.S. society theme. This negativity reveals the public opinion environment in which the sharp power theory and Trump Administration’s new China–U.S. relations policies were developed, which would have significant impacts on the future collaboration between China and Hollywood.

The Standalone and the Portfolio Risk of the Rogers Energy Commodity Index

This paper tackles the rather recent weekly period from January 18, 2005 to February 28, 2018, encompassing 523 observations. The portfolio is constructed from the perspective either of a US investor or of a Lebanese one, since the US dollar foreign exchange rate was pegged during the above whole period. The portfolio consists of an investment in the US S & P 500 stock market index and in three Rogers international commodity indexes: agricultural, energy, and metals. The purpose of the paper is to estimate the diversification benefits of the energy commodity index. These benefits arise from the fall in the volatility of the investment portfolio when it is compared to an investment in the energy index only, or in the S & P 500 only. The procedure follows the seminal approach of Markowitz. The inputs of the model are the variance/covariance matrix, the average log returns, and the condition that all investment shares should sum up to 1. The outputs, obtained by matrix manipulation, are the optimal investment shares in the four assets, the volatilities of the optimal portfolios, the characteristics of the efficient frontier, the relation between portfolio shares and the expected, or required return, and finally, the predicted Capital Market Line (CML). The evidence shows that, by holding a portfolio composed of the above four assets, the volatilities are substantially reduced. Moreover, and since short sales are allowed in the model, all optimal investment shares in the energy commodity asset are negative, meaning that in the optimal portfolios the positions in the energy index are short positions. The paper points to the significantly high relative riskiness of the energy index, as a stand-alone asset, or as an aggressive and speculative investment on the CML, and to the substantial portfolio benefits of shorting this index.

Portfolio composition and critical line: a methodological approach

The purpose of this paper is to illustrate, at least pedagogically, composition of an efficient portfolio. Principally, two scenarios are examined. In the first we intend to minimise the portfolio variance and achieve a desired level of return. To do so, we find the optimal weights using Lagrange multiplier method. Short sales of securities are allowed. This implies that negative weights can be found. In the second case, we obtain the optimal portfolio composition, considering that weights cannot be negative. This suggests that short sales of securities are not allowed, and the Kuhn-Tucker system is used. Results are examined in the light of the investor's risk tolerance, and reveal that an investor who chooses an aggressive investment is focused more on return rather than risk. Conversely, when the investor's risk tolerance decreased, funds were invested more in stocks with both lower return and risk.

Portfolio composition and critical line: a methodological approach

The purpose of this paper is to illustrate, at least pedagogically, composition of an efficient portfolio. Principally, two scenarios are examined. In the first we intend to minimise the portfolio variance and achieve a desired level of return. To do so, we find the optimal weights using Lagrange multiplier method. Short sales of securities are allowed. This implies that negative weights can be found. In the second case, we obtain the optimal portfolio composition, considering that weights cannot be negative. This suggests that short sales of securities are not allowed, and the Kuhn-Tucker system is used. Results are examined in the light of the investor's risk tolerance, and reveal that an investor who chooses an aggressive investment is focused more on return rather than risk. Conversely, when the investor's risk tolerance decreased, funds were invested more in stocks with both lower return and risk.

Should Corporate Pensions Invest in Risky Assets?

We use a modified corporate risk management framework (e.g., Froot and Stein, 1998) to understand how inefficient risk sharing between firms and employees leads to aggressive investment policies of defined corporate pensions as well as their declining popularity. For reasonable parameter values, our model matches key empirical patterns including pension’s risk allocation and the relations among pension investment risk, corporate bankruptcy probability, and pension funding. Further, we show that inefficient risk sharing may cause pensions to invest more aggressively than what employees choose for DC plans. By switching from DB plans to DC plans, firms may substantially reduce pension funding costs.

A stochastic program to evaluate disruption mitigation investments in the supply chain

Supply chain risk management is becoming increasingly important due to a variety of natural and man-made uncertainties. We develop a methodology to evaluate the costs of disruptions and the value of supply chain network mitigation options based on a two-stage stochastic program. To solve the model, we rely on a solution scheme based on sample average approximation. We explicitly differentiate between disruption periods and business as usual periods to decrease the model size and computational requirements by approximately 85% and 95%, respectively. Furthermore, the decrease in model complexity allows us to include the conditional value at risk in the objective function to incorporate the risk aversion of decisions makers. Based on a case study of a chemical supply chain, this study shows the trade-off between long-term expected costs minimization and short term risk minimization, where the latter leads to a more aggressive investment policy.

Working capital policies and value creation of listed non-financial firms in Ghana: a panel FMOLS analysis

The aim of the study was to determine effects aggressive/ conservative working capital policies have on the value creation. Data from 10 listed non-financial companies on the Ghana Stock Exchange spanning from 2004-2015 was used for this study. The study adopted quantitative research design applied to panel cointegration technique and panel fully modified ordinary least square methodology. The panel cointegration results indicated that there was a long-run equilibrium association between working capital variables and shareholders’ value creation. The panel FMOLS results indicated that aggressive current asset investment policies enhance market-to-book ratio in the long-run. On the other hand, conservative current asset financing policies enhance market-to-book ratio in the long-run. This study has two contributions. First, prior studies investigated the connection existing between components of working capital management and shareholder value creation without investigating the specific policies these firms are pursuing and their effect on the shareholders’ value creation. Second, this study employs a contemporary econometric methodology in analyzing the data.

An analytical approach for behavioral portfolio model with time discounting preference

This paper presents a behavioral portfolio selection model with time discounting preference. Firstly, we discuss the portfolio selection problem and then modify this model based on cumulative prospect theory (CPT) as well as considering investors’ time discounting preference in psychology. Furthermore, an analytical solution with satisfying behavior is given for our proposed model, the results show that when investors’ goals are very ambitious, they put a high proportion of their wealth in long-term goals and adopt aggressive investment strategies with high leverage to reach short-term goals and the overall investment strategy also displays high leverage. Finally, numerical analysis is given and it is shown that investor who tends to future bias performs adequate confidence and patience whereas investor with present bias is apt to the immediate interests.

From finance to marketing: Initial public offering ownership overhang and marketing in the hospitality industry

Hospitality firms spend significant amounts on marketing activities post-IPO. It is critical to understand the driving force behind these firms’ aggressive marketing strategies. This study examines the impact of Initial Public Offering (IPO) overhang on the marketing activity of newly public firms in the U.S. hospitality industry. IPO overhang measures the ownership retained by pre-existing shareholders who are mostly corporate insiders. Our results indicate that IPO overhang is positively associated with post-IPO marketing intensity up to three years post-IPO. Further, the marketing activity by newly public firms is associated with higher equity market liquidity, consistent with the view that marketing activity promotes equity market liquidity and thus facilitates insiders’ exit. Our findings provide an avenue for IPO firms to manage the negative price impact of corporate insiders’ cash-out, and a partial explanation for newly public firms’ aggressive investments in marketing.

Domestic Flying Geese: Industrial Transfer and Delayed Policy Diffusion in China

AbstractThis study illuminates the important yet under-studied phenomenon of industrial transfer in China: the migration of capital and investment from wealthy coastal areas into poorer central and western provinces, beginning in the 2000s. By 2015, the value of domestic investment in five central provinces alone was 2.5 times that of foreign investment throughout China. Compared to the original “flying geese” model of tiered production in Asia, China's experience is distinct in three ways: (1) industrial transfer occurred domestically, rather than across nations; (2) sub-national transfer followed cross-national transfer; and (3) industrial migration is accompanied by a delayed replication of government policies and practices. While coastal locales today resolve to expel low-end industries, inland governments cannot afford to be selective and have only recently adopted the aggressive investment promotion tactics that coastal cities abandoned years ago. Policy diffusion is delayed as policy adoption depends on economic conditions, which vary widely across China and change over time.

Nexus Between Working Capital Management and Sectoral Performance

This study aims to examine the impact of aggressive working capital factors/policies on firms’ performance to improve the financial health. Random and Fixed Effect models estimated by taking annual data of two major sectors: automobile and food sectors from 2006 to 2016. According to the findings, aggressive investment factor/policy (AIF) has a negative impact on gross operating income (GOI) in both sectors while aggressive financing factor/policy (AFF) has an adverse effect on GOI in the food sector and positive impact on GOI in the automobile sector. The results of this study should be of great importance to investors, creditors, and financial analysts, especially after the global financial crisis and the collapses of giant organizations worldwide. DOI: 10.15408/ess.v8i1.7075

Optimal carbon taxes for China and implications for power generation, welfare, and the environment

China is expected to constitute about half of the world's emissions between 2010 and 2040. As concerns about climate change intensify, the Chinese government is poised to commit to a low carbon economy. These conditions make China a suitable case in which to study how emission policies impact on energy supply, welfare, and the environment. To achieve this purpose, we incorporate abatement technologies into the GTAP computable general equilibrium model and show that optimal taxes range between 0.03% for services and 2.02% for manufacturing. In most cases, simulated tax rates are by far higher than pollution taxes stipulated in the new Chinese environmental tax law. Furthermore, despite a decline in output of many sectors including the electricity sector, overall welfare gains exist from introducing carbon taxes. Moreover, these taxes reduce environmental pollution by approximately 62.5%. In general, carbon taxes are insufficient for mitigation in China, and due to a coal-dominant energy structure, implementing these taxes leads to a decline in power generation. Hence, the Chinese aggressive investment strategy for renewable electricity technologies as stipulated in its 13th Five-Year Plan is understandable.

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

This study investigates the mediating effect of the company’s profitability on the link between the aggressive working capital management policy and the value of the firm. The study has been conducted to 158 non-financial firms which have managerial ownership and listed on the Indonesia Stock Exchange from 2012 to 2015. Results of this research show that aggressive working capital management policy in the form of aggressive financing policy has a negative and significant impact on profitability and firm’s value, while, the aggressive investment policy has a positive and significant impact on profitability. However, the aggressive working capital management policy has no significant impact on the firm value. Profitability has a positive and significant effect on firm’s value, and profitability able to mediate aggressive working capital management policy on the firm’s value. Accordingly, to increase the company’s market value on the non-financial firms which have managerial ownership, the manager has to increase profitability by optimizing investment on current asset and by adding the proportion of long-term financing in working capital. Finally, this study has also discussed some limitations and future research.

Impact of Working Capital Management Policies on Firms'Earnings and Value: Empirical Evidence from Indian Manufacturing Companies

Traditionally, the central focus of organisations was on managing their long-term assets. But they realised that neglecting the short-term assets and liabilities can affect their very survival. Working capital management has become imperative for every business organisation as it can upset the firms’ profitability, value and level of risk. This paper investigates the relationship between working capital policy and firms’ performance. The working capital policies are Aggressive Financing Policy (AFP) and Aggressive Investment Policy (AIP). The firms’ performance has been measured in terms of return on assets (ROAs), Net Profit Ratio (NPR) and Tobin's q. The data were collected from secondary sources covering a period of 6 years, that is, 2011–16. The sample size was 10 Indian manufacturing companies. The analysis shows that both aggressive financing policy and investment policy have significant positive impact on firm's ROAs and significant negative relationship with firm's value. So far as firms’ net profit is concerned, aggressive financing policy has significant negative impact on it whereas aggressive investment policy has significant positive impact on it.

How Public Investment Could Help Strengthen Iran's Growth Potential: Issues and Options

Public investment is key to growth in developing oil-exporting countries and oil revenue is an important source of finance for public investment. Assessing the growth impact of public investment in Iran under various investment scaling-up (gradual, aggressive, and conservative) and oil price (baseline and adverse) scenarios, this paper shows that because of absorptive capacity constraint and investment inefficiency the growth outcome of an aggressive investment scaling-up is not significantly different from a conservative or a gradual scenario while its costs, in terms of fiscal adjustment, are significantly higher, especially during low oil price periods. An improvement in investment efficiency has a significant positive impact on growth outcome and leads to higher private consumption and investment. Using an oil fund, on the other hand, can help contain the size of fiscal adjustments, although it would result in a larger appreciation of real exchange rate and deterioration in the current account balance.

How Public Investment Could Help Strengthen Iran's Growth Potential: Issues and Options

Public investment is key to growth in developing oil-exporting countries and oil revenue is an important source of finance for public investment. Assessing the growth impact of public investment in Iran under various investment scaling-up (gradual, aggressive, and conservative) and oil price (baseline and adverse) scenarios, this paper shows that because of absorptive capacity constraint and investment inefficiency the growth outcome of an aggressive investment scaling-up is not significantly different from a conservative or a gradual scenario while its costs, in terms of fiscal adjustment, are significantly higher, especially during low oil price periods. An improvement in investment efficiency has a significant positive impact on growth outcome and leads to higher private consumption and investment. Using an oil fund, on the other hand, can help contain the size of fiscal adjustments, although it would result in a larger appreciation of real exchange rate and deterioration in the current account balance.

Production, Capacity, and Liquidity of a Self-Financed Firm

We develop and analyze a dynamic stochastic model of a self-financed firm that optimizes its expected present value of dividends, profits, or a mixture of both. Each period the firm chooses how much to produce, to invest in capacity expansion, to distribute as a dividend, and to retain as liquidity subject to constraints from existing capacity and capital. Product-market prices and yields of capacity-enhancing investments are Markov-modulated. We show that linearity assumptions regarding investment yield and production cost imply that the value function has an affine structure. This leads to a complete characterization of an optimal policy and a linear program that exorcises the curse of dimensionality. We clarify the linkage between capacity and capital in a dynamic framework and provide real option interpretations. We prove that profit maximization induces a more aggressive investment attitude than does maximization of dividends.

Production, Capacity, and Liquidity of a Financially Constrained Firm

This paper studies the optimal coordination of operational and financial decisions of a firm with restricted and costly access to capital markets. The firm dynamically manages its production capacity and cash reserve by making production, divestment, investment, dividend, and capital injection decisions each period. The paper characterizes the optimal policy and shows that it corresponds to the optimal exercising of the real options embedded in the capacity and cash. A distinguishing feature of these real options is that they are embedded in each other, reflecting the fact that in a dynamic setting, exercising a real option in capacity or cash generates additional capacity or cash, thus additional real options. As the capital market becomes less frictional, the values of the real options in capacity and cash increase, and the firm is more likely to raise capital but less likely to issue dividends to exploit the higher values of the real options. As the firm places more emphasis on maximizing the operating profit rather than the shareholder's value, the values of the real options in capacity increase, and the firm exhibits a more aggressive investment attitude.

The impact of plan and sponsor characteristics on pension funds’ asset allocation and currency diversification

This paper presents new empirical evidence on the role of plan and sponsor characteristics in pension funds’ investment decisions. In this research, we analyzed the portfolio allocation of 182 Belgian pension funds over the period 2001–2015. The results indicate that larger pension funds and pension funds with more active participants have better diversified equity portfolios. Furthermore, we show that pension funds in which employers pay higher contributions take more aggressive investment decisions; however, pension funds in which employees pay higher premiums take more conservative investment decisions. Finally, our findings suggest that corporate culture and performance parameters affect the investment behavior of pension funds.

How is Investment Efficiency Related to Investment Transparency?

The relationship between investment efficiency and investment transparency is investigated using a sample of Australian listed company capital expenditure announcements between 2008 and 2014. We suggest two opposing hypotheses to explain why investment efficiency may influence the informativeness of investment disclosures, and present evidence that investment transparency is greater for firms that are over-investing and when sales growth is positive. This evidence is supported by the results from a simultaneous equation regression that considers endogeneity issues. Further evidence reveals that these firms achieve higher profitability and cash flow from operations surrounding the investment announcements, and that high sales growth firms maintain higher debt levels to sustain their investment. Hence the availability of liquid resources appears to support the aggressive investment practices of these firms, and their need for debt financing gives their managers incentives to disclose more financial information in order to ‘hype’ the stock and reduce the costs of financing. Considering possible reverse causality, the results show that investment transparency does not improve investment efficiency. Our interpretation is that managers’ forecasts of project profitability are unsubstantiated and hence in an over-investment situation are ineffective in reducing information asymmetries.