Capital Funds Research Articles

When government is the solution: creating the arms industry in the Connecticut River Valley in the 1800s

PurposeThis historical example of the creation of the arms industry in the Connecticut River Valley in the 1800s provides new insights into the value of government venture capital (GVC) and government demand in creating a new industry. Since current theoretical explanations of the best uses of governmental venture capital are still under development, there is considerable need for further theory development to explain and predict the creation of an industry and especially those industries where failures in private capital supply necessitates governmental involvement in new firm creation. The purpose of this paper is to provide an in depth historical review of how the arms industry evolved spurred by GVC and government created demand.Design/methodology/approachThis study uses abductive inference as the best way to build and test emerging theories and advancing theoretical explanations of the best uses of GVC and governmental demand to achieve socially required outcomes.FindingsBy observing this specific historical example in detail, the authors add to the understanding of value creation caused by governmental venture capital funding of existing theory. A major contribution of this paper is to advance theory based on detailed observation.Originality/valueThe relatively limited research literature and theory development on governmental venture capital funding and the critical success factors in startups are enriched by this abductive investigation of the creation of the historically important arms industry and its spillover into creating the specialized machine industry.

CROSS BORDER MERGERS & ACQUISITIONS ALONG WITH REGULATIONS OF OVERSEAS INVESTMENT AND SEBI

Cross-border mergers and overseas investments by “Alternative Investment Funds” (AIFs) and “Venture Capital Funds” (VCFs) are two significant mechanisms facilitating capital movement across borders in the globalized economy. This paper provides an in-depth analysis of the regulatory frameworks and operational dynamics of both mechanisms, comparing and contrasting their objectives, entities involved, regulatory requirements, and risk-reward profiles. Cross-border mergers involve the consolidation of companies from different jurisdictions, aiming to achieve synergies, expand market presence, or leverage complementary strengths. The regulatory landscape governing cross-border mergers includes provisions under the Companies Act, of 2013, “The Foreign Exchange Management Act” (FEMA), and Competition Act, of 2002, among others. These mergers entail adherence to complex legal and regulatory frameworks, including approvals from regulatory authorities, compliance with foreign exchange laws, and fulfilment of competition norms. Despite the potential benefits, cross-border mergers also pose integration challenges, cultural differences, and regulatory uncertainties. In contrast, overseas investments by AIFs/VCFs enable domestic investors to diversify their portfolios by accessing opportunities in offshore companies, typically startups or emerging enterprises. The regulatory framework for these investments is overseen by the “Securities and Exchange Board of India” (SEBI) and includes guidelines, circulars, and compliance requirements. While regulatory compliance is necessary, the process may be relatively streamlined compared to cross-border mergers. Furthermore, the paper discusses the distinct objectives, entities involved, and risk-reward profiles of cross-border mergers and overseas investments by AIFs/VCFs. Cross-border mergers primarily involve established companies seeking strategic alliances or expansion opportunities, while AIFs/VCFs focus on deploying capital into high-growth opportunities, often at early stages of development. Overall, understanding the nuances of both mechanisms is crucial for businesses, investors, and policymakers to navigate the complexities of the globalized economy and make informed decisions regarding cross-border transactions.

Environment Social Governance Performance and Capital Structure: Evidence in Indonesia and Malaysia

Purpose: This research aims to investigate the relationship between Environmental, Social, and Governance (ESG) performance and capital structure, using Debt-to-Equity Ratio (DER) and Debt-to-Asset Ratio (DAR) proxies, in Indonesia and Malaysia. The study seeks to address the gap in the literature by exploring how ESG factors influence the capital structure decisions of both financial and non-financial companies in these countries. Additionally, the research analyzes the impact of ESG performance on the cost of equity and cost of debt. Methods: The research utilizes secondary data extracted from annual reports and sustainability reports spanning from 2015 to 2020. A total of 102 companies, comprising 59 Indonesian companies and 52 Malaysian companies registered on CSRHub, are included in the analysis. ESG performance is assessed based on community, environmental, social, and governance indicators. Capital structure is measured using DER and DAR proxies. Statistical analysis techniques are employed to examine the relationship between ESG performance and capital structure, as well as its impact on the cost of equity and cost of debt. Results and Discussion: The research findings indicate that community, environmental, social, and governance performance exhibit a negative effect on the cost of equity, suggesting that companies with stronger ESG performance experience lower costs of equity financing. However, these ESG factors do not significantly affect the cost of debt. This implies that while ESG performance may influence equity holders' perceptions of risk and return, it may not have a direct impact on the cost of debt financing for companies in Indonesia and Malaysia. Implications of the Research: The results of this research have important implications for companies, investors, and policymakers interested in understanding the relationship between ESG performance, capital structure decisions, and financing costs. By demonstrating the impact of ESG factors on the cost of equity, the findings underscore the importance of integrating sustainability considerations into financial decision-making processes. Moreover, the research highlights the need for further investigation into the mechanisms through which ESG performance influences capital structure and financing costs. Originality/Value: This study contributes to the literature by offering novel insights into the relationship between ESG performance and capital structure in Indonesia and Malaysia. By examining the impact of ESG factors on both equity and debt financing costs, the research expands our understanding of how sustainability considerations influence corporate financial decisions. The findings provide valuable guidance for companies seeking to enhance their ESG performance and optimize their capital structure, ultimately contributing to more sustainable and responsible business practices in emerging markets.

Manajemen Pendayagunaan Dana Zakat Oleh Baznas Dalam Mengentaskan Kemiskinan Di Kabupaten Lebak

The Gini Index for Indonesia rose from 0.381 to 0.388 in March 2023. The issue of poverty also remains a concern, impacting roughly 25.90 million people or 9.36% of the total population. To address this problem, Baznas Lebak Regency has adopted a policy in line with Regional Regulation No. 11 of 2005 article 17. The policy focuses on adherence to religious regulations, prioritizing mustahik (eligible recipients), and seeks input from local government. The Revolving Capital Fund program at Baznas Lebak is supported by infaq and sadaqah funds, adhering to the principles of Islamic fiqh, instead of zakat funds. Baznas Lebak is positioned in quadrant V for program development, with an EFI total score of 2.68 and an EFE total score of 2.59.

Mortality in patients admitted to hospital with heart failure in China: a nationwide Cardiovascular Association Database-Heart Failure Centre Registry cohort study

China has the largest burden of heart failure worldwide. However, large-scale studies on heart failure mortality are scarce. We aimed to investigate mortality and identify risk factors for mortality among patients with heart failure in China. This prospective cohort study used data from the China Cardiovascular Association (CCA) Database-Heart Failure Centre Registry, which were linked to the National Mortality Registration Information Management System by the Chinese Centre for Disease Control and Prevention. We included patients enrolled from Jan 1, 2017, to Dec 31, 2021, across 572 CCA Database-Heart Failure Centre certified hospitals in 31 provinces of mainland China. Eligible patients were aged 18 years or older (younger than 100 years) with a principal discharge diagnosis of heart failure based on Chinese heart failure guidelines. All-cause mortality at 30 days, 1 year, and 3 years for patients with heart failure were calculated and the causes of death were recorded. Multivariable analysis was used to analyse factors associated with all-cause mortality and cardiovascular mortality. This study was registered with the Chinese Clinical Trial Registry, ChiCTR2200066305. Of the 327 477 patients in the registry, 230 637 eligible adults with heart failure were included in our analyses. Participant mean age was 69·3 years (SD 13·2), 94 693 (41·1%) participants were female, and 135 944 (58·9%) were male. The median follow-up time was 531 days (IQR 251-883). Post-discharge all-cause mortality of patients with heart failure at 30 days was 2·4% (95% CI 2·3-2·5), at 1 year was 13·7% (13·5-13·9), and at 3 years was 28·2% (27·7-28·6). Cardiovascular death accounted for 32 906 (71·5%) of 46 006 all-cause deaths. Patients with heart failure with reduced ejection fraction had the highest all-cause mortality. A lower guideline adherence score was independently associated with the increase of all-cause and cardiovascular mortality. In China, mortality for patients with heart failure is still high, especially in patients with reduced ejection fraction. Our findings suggest that guideline-directed medical therapy needs to be improved. National High Level Hospital Clinical Research Funding, the Capital's Funds for Health Improvement and Research, and the Chinese Academy of Medical Sciences Innovation Fund for Medical Sciences. For the Chinese translation of the abstract see Supplementary Materials section.

Analisis Faktor-Faktor yang Memengharuhi NPF Pembiayaan UMKM di Perbankan Syariah Periode 2019-2022

MSMEs are currently still the largest sector that supports the majority of Indonesian people, but MSMEs business development tends to be difficult considering that banking sector tends to be careful when providing financing to MSMEs because this sector has a high NPF ratio. Meanwhile, Bank Indonesia made regulations PBI Number 23/13/PBI/2021 that requiring banks to increase financing for MSMEs, this creates a dilemma for Islamic banking because this can make worsen the health of bank due to the higher NPF. This study examines the factors that could influence the NPF of MSMEs Islamic banking such as equivalent rate of working capital financing, equivalent rate of investment financing, ROA, the amount of financing, and Inflation. This research is a quantitative study using multiple linear regression to determine the direction and how much influence the independent variables have on the dependent variable. From this study it was found that the two types of equivalent rates have the opposite impact on NPF where Islamic banking can actually reduce the equivalent rates to help MSMEs development while reducing the NPF ratio because Islamic banking ROA is still in the very healthy category and ROA is directly proportional to NPF if it is increased. Then, if Islamic banking increases the amount of financing for MSMEs will reduce the NPF and the effect of inflation will not affect the increase in the NPF of MSMEs financing.

The Effect Of Mergers And Acquisitions On The Financial Performance Of Companies Listed On The Indonesia Stock Exchange

Mergers and acquisitions (M&A) have become a common strategy in business development in today's global market. This study aims to analyze the effect of M&A on the financial performance of companies listed on the Indonesia Stock Exchange (IDX). Data is collected from companies that experienced M&A during a certain period, focusing on financial variables such as profitability, liquidity, leverage, and sales growth. The panel regression analysis method was used to test the research hypothesis. The results show that M&A has a significant influence on the financial performance of companies on the IDX. Specifically, the findings show an increase in profitability and sales growth after M&A, while liquidity tends to decrease in the short term after the transaction. Leverage may also fluctuate depending on the capital structure and financial policies the company implements post-M&A. This study provides valuable insights for stakeholders in the Indonesian capital market, including investors, fund managers, and regulators, to understand the implications of M&A on firms' financial performance. The practical implications of this study can assist firms in planning and evaluating their M&A decisions more carefully to increase firm value and reduce the risks associated with such transactions.

Brand capital and debt choice

This paper investigates the effect of brand capital on firms' choices of debt structure. Using a sample of publicly listed U.S. firms between 2001 and 2019, we find that firms with higher levels of brand capital rely less on bank debt financing. This finding is robust to the use of alternative regression models and alternate measures of brand capital and bank debt financing. Employing an industry-level positive shock to brand capital as a quasi-natural experiment, we demonstrate that such a shock negatively affects firms' reliance on bank debt. Our cross-sectional analyses reveal that the effect of brand capital on bank debt is more pronounced for firms with high information asymmetry, weak corporate governance mechanisms, and poor financial conditions. We also find that brand capital-intensive firms raise funds from the public debt market and issue more (or less) unsecured (or secured) debt. Taken together, we show that brand capital has an important bearing on corporate financing decisions.

Guest editorial: Venture capital and green finance for sustainable development

Guest editorial: Venture capital and green finance for sustainable development

Analysis of the Evolution of the Policy of Linking the Increase and Decrease in Urban and Rural Construction Land in China Based on the Content Analysis Method

The policy of linking the increase and decrease in urban and rural construction land is a land policy that gradually forms and develops to solve the contradiction between “food and construction” under the background of urbanization in China. It is of great significance to the sustainable development of China’s social economy. In order to grasp the evolution of the policy of linking the increase and decrease in urban and rural construction land in China as a whole, this paper used the content analysis method to analyze the changes in the content of China’s urban−rural construction land increase/decrease linkage policy from different perspectives, such as the levels of policy promulgation and the types of policy promulgation. Firstly, 105 directly related policy texts were selected from a large amount of policy information and read in detail with this as a sample, and 11 keywords were extracted, which were “balance of occupation and compensation”, “clear property rights”, “reasonable planning”, “project area”, “turnover indicators”, “linkage procedure”, “voluntary principle”, “resettlement compensation”, “cultivated land protection”, “supervision and management”, and “capital finance and taxation”. Secondly, the policy text was coded to provide quantitative data on policy development. Finally, the trajectory of policy development was analyzed on the basis of the quantitative data on policy development. The results show that the existing policies were mostly issued in the form of notifications, management measures, implementation plans, working rules, and so on, involving the nature, principles, conditions, methods, procedures, capital finance and taxation, and circulation indicators of the linkage between the increase and decrease, but the policy effectiveness is low, and there is a lack of formal laws and regulations. Improving the legal status of the policy, changing the relationship between the government and the market, strengthening the protection of cultivated land, and reconstructing the income distribution mechanism will help to further improve the policy of linking the increase and decrease in urban and rural construction land.

Two-sided asymmetric information and convertible securities in venture financing

This paper presents a new explanation for the prevalence of convertible securities in venture capital finance. Modeling two-sided asymmetric information between an entrepreneur and a venture capitalist, we demonstrate that convertible securities can result in the optimal contract. Our theoretical findings also provide some testable predictions. Specifically, the optimal conversion ratio rises when the information asymmetry problem worsens. We also reveal that the conversion ratio becomes smaller during economic booms since the adverse selection problem is less relevant.

Capital Eco-Environment Protection Group Innovative Financing Research

Capital Eco-Environment Protection Group Innovative Financing Research

The impact of the effective tax rate change on financial assets of commercial banks: The case of Visegrad group countries

While many tax professionals have discussed corporate taxation in the banking sector and its effectiveness on bank institutions, investment decisions, bank size, asset structure, or bank rentability, there is little evidence of tax efficiency within V-4 Group. The research on banks and tax rates is mainly based on American data. Few papers solved banking stability and corporate taxes within the European countries. This paper examines effective corporate taxation in the banking sector of the V-4 Group and aims to find out how the effective tax rate change affects commercial banks’ financial assets. In this study, we examine the relationship between variables using regression analysis in which we assess the impact of ETR on bank financial assets. We examined data in the consolidated financial statements data of commercial banks and tested their impact on the economy. Our findings supported the theory that ETR impacts the banking sector, particularly capital and equity financing. However, the results did not prove the research hypothesis, in which we assumed that an increase in ETR would lead to an increase in financial assets. Based on our results, it leads to an increase in equity assets (7.34%) and a decline in debt assets (16.83%).

Comprehensive Explanation of the Correlation between the Average Payment Period, the Working Capital Financing Policy, and a Firm's Profitability

Comprehensive Explanation of the Correlation between the Average Payment Period, the Working Capital Financing Policy, and a Firm's Profitability

Creating an Innovative Ecosystem for the Development of Unmanned Aviation in Ukraine: Synergy Between Science and Industry

Abstract In this paper we advocate for the establishment of an aviation “innovative ecosystem” in Ukraine, particularly regarding the technology of unmanned aerial vehicles (UAVs). This ambitious strategy necessitates the introduction of new business models, taking advantage of new opportunities for achieving sustainable development goals in the increasingly resource-limited world. Moreover, this initiative faces a notable challenge: navigating the “double transition” of adopting both green and digital transformations across multiple domains. We believe the solution to creating an innovative ecosystem lies in harnessing the intellectual and infrastructural capabilities of top-tier research institutions – which in Ukraine include the National Aviation University (NAU) and the National Technical University “KPI.” By combining the efforts of Ukrainian higher education institutions and actively enhancing international cooperation, in particular with the Łukasiewicz Research Network – Institute of Aviation in Warsaw – we argue – Ukraine can expedite the development of “factories” of ideas and innovations by supporting the training, incubation and growth of startups, encourage the formation of micro and small high-tech enterprises and bringing their products to global and regional markets, improving the mechanisms of interaction of the startup teams with venture capital funds and investment companies.

Cultures of Inequality: Labor, Social Finance, and the Swinging Pendulum of Trust in Capitalism

Social finance, an arena of international finance comprising social banking, impact investing, and microfinance, offers a powerful conceptual lens through which to interrogate the interface of finance and labor in financial capitalism. This article investigates social finance’s development at the crossroad of two processes. Social finance emerged in the context of a process of laboring finance, an often-coercive inclusion of workers and households into financial circuits of accumulation and expansion made possible by labor market changes that began in the 1970s. The global financial crisis occasioned the growth of social finance, which, by means of financing labor, placed the reproductive needs of labor—the needs of society’s most disadvantaged agents, the poor, the homeless, the marginal, and unemployed workers—at the center of financial accumulation. By informing an oscillatory movement between laboring finance and financing labor, and, affectively, between trust and distrust, social finance primes and cultivates financial market participants’ belief in purported solutions to the social problems financial capitalism has contributed to create. As a critical investigation of the complex interface between finance and labor that animates social finance’s operations, this article aims to provide conceptual resources that can contribute to releasing labor’s social cooperation from finance’s hegemony.

Fee Variation in Private Equity

ABSTRACTWe study how investment fees vary within private equity funds. Net‐of‐fee return clustering suggests that most funds have two tiers of fees, and we decompose differences across tiers into both management‐ and performance‐based fees. Managers of venture capital funds and those in high demand are less likely to use multiple fee schedules. Some investors consistently pay lower fees relative to others within their funds. Investor size, experience, and past performance explain some but not all of this effect, suggesting that unobserved traits like negotiation skill or bargaining power materially impact the fees that investors pay to access private markets.

Complexity and competing interests: what factors bear on payment choices and financial decisions made for older people entering nursing homes?

ABSTRACT Each year, many frail older people in Australia and their informal carers, are faced with the complex choice of how to pay for nursing home accommodation (through a refundable, one-off lump sum payment on entry, daily ‘rent-style’ interest payments or a combination), a choice interconnected with several other financial decisions. The payment choice often needs to be made suddenly after a health shock and within tight timeframes, and impacts an older person’s income, consumption, and long-term wealth. To explore what factors potentially bear on this complex choice, we modelled payment choices in online survey data using multinomial and fractional logistic regression. We found payment choices to be associated with an older person’s finances, family situation and health situation, supporting that individual budgets and access to liquidity constrains choice. Informal carer characteristics including educational attainment, English-speaking background, investment risk appetite and perceived stress were associated with choices, suggesting informal carers may directly or indirectly exert influence. Nursing home providers’ payment preferences were also associated with choices, suggesting potential influence due to providers’ capital financing requirements. We offer policy suggestions on reducing the complexity of payment choices, and better aligning the interests of consumers and providers.

The Impact of Regional and Segmental Factors on the Benefits and Risks of Venture Capital Financing

This paper presents an analysis of aspects of venture capital (VC) financing, focusing on risks and rewards, correlation with geographic location and industry. The results were obtained through statistical analysis of data from public startup databases and a questionnaire distributed to selected VC-funded startups. The aim of the paper was to analyze the risks and benefits of VC funding and the impact of regional and segment factors. The paper identifies the key benefits of VC funding as fast and flexible access to capital, while the key risks include loss of control over the business and high pressure on performance. The analysis suggests that the perceived riskiness of VC financing is strongly influenced by both geographic location and industry. Certain geographic locations were found to have an affinity for specific industries, suggesting regional specialization within the VC market. The paper reveals significant trends in funding, with the dominance of technology startups, business platforms and the HealthTech sector, and increasing activity in certain regions in recent years.

Thinking Across Capability Model for Accessibility of People's Business Credit (KUR) Capital for Micro Business Actors

This research examines the central government's facilitation to foster the resilience of MSME actors through capital financing, namely the People's Business Credit (KUR) program. The implementation of capital assistance through KUR remains problematic, especially the accessibility. The main objective is to analyse the problem situations and dynamics of micro-business capital and provide recommendations in the form of an adaptive and innovative policy construction model to the government. This research utilises the Soft Systems Methodology (SSM) perspective, which can transform a complex, unstructured problem into a more structured problem situation and build a conceptual model that fits the context of the existing problem. The results indicate that the primary problem is the dominance of the KUR program’s policy control by the central government, which complicates capital accessibility, especially for micro businesses, and limits the authority of local governments. The proposed conceptual model focuses on thinking across capabilities, which allows the adoption of thoughts, opinions, and ideas outside the inherent cultural framework to create innovative and adaptive policy outcomes. The two main dimensions of the model application are delegated task and authority, which is the power to delegate and provide insight or the ability to produce innovative and adaptive thinking. This resulted in two recommendations for the mandate mechanism to local governments, namely (1) authorising local governments to make recommendations for business status based on mapping to provide a guarantee for micro-businesses (2) the authority of local governments to work with banks to facilitate the distribution and bureaucratic management of KUR financing to micro businesses.