Capital Injections Research Articles

Risk Analysis of Financing Structure in Theme Park Industry and Optimization Using Blockchain Finance -- Based on Shanghai Disney Company

Abstract: In recent years, with the passing of the epidemic period, the theme park industry has rapidly developed and heated up. On the basis of favorable development conditions, the financing model of theme parks will become a key consideration factor for ensuring their sustainable development, that is, how to ensure sufficient capital injection. This research mainly studies the risk analysis of the existing financing structure of the theme park industry, as well as how to further optimize the structure and whether new technology blockchain technology can be applied to it. Through this study, business managers will further understand the shortcomings and risks of the current theme park financing model, how to optimize it in the future, and how to combine new technologies such as blockchain in supply chains to gain competitiveness in complex market environments. This research uses a combination of case analysis and data analysis to select Shanghai Disneyland as the target object. The capital data in its annual report is analyzed, as well as companies that use new technologies in their financing structure as case studies. This research analyzes the shortcomings and risks of the existing financing structure of Disneyland, proposes new financing models that will benefit the future development of Disney Company, and combines blockchain technology to propose new plans.

Assessing insurer guarantee cover and risk retention toward SDG 3: a structure-break down-and-out call valuation

The paper develops a down-and-out call option to evaluate the equity of a life insurer. The COVID-19 pandemic challenges captured by the premature feature of the down-and-out call option are also identified as structural breaks incorporated into the contingent claim option. Hedging, shown by the guarantee cover ratio, reflects the insurer’s ability to meet policy commitments. Reinsurance, indicated by the risk retention ratio, distributes insurance risk between the insurer and reinsurer. The insurer engages in those practices aligned with Sustainable Development Goal 3 (SDG 3: good health and well-being). The main findings are as follows. The COVID-19 pandemic harms policyholder protection and deviates from SDG 3 due to financial instability. However, strategic hedging, reinsurance, and government capital injections enhance policy assurances, achieving SDG 3 by increasing payments to policyholders and improving financial stability. Moreover, the risk retention ratio increases during severe COVID-19 periods but decreases with more government capital injections, which can substitute for risk retention. Policy implications suggest that policymakers can mitigate crisis impacts on insurer capacity to fulfill commitments, thereby enhancing life insurance stability and well-being aligned with SDG 3.

Stochastic Control Problems with State Reflections Arising from Relaxed Benchmark Tracking

This paper studies stochastic control problems motivated by optimal consumption with wealth benchmark tracking. The benchmark process is modeled by a combination of a geometric Brownian motion and a running maximum process, indicating its increasing trend in the long run. We consider a relaxed tracking formulation such that the wealth compensated by the injected capital always dominates the benchmark process. The stochastic control problem is to maximize the expected utility of consumption deducted by the cost of the capital injection under the dynamic floor constraint. By introducing two auxiliary state processes with reflections, an equivalent auxiliary control problem is formulated and studied, which leads to the Hamilton-Jacobi-Bellman equation with two Neumann boundary conditions. We establish the existence of a unique classical solution to the dual partial differential equation using some novel probabilistic representations involving the local time of some dual processes together with a tailor-made decomposition-homogenization technique. The proof of the verification theorem on the optimal feedback control can be carried out by some stochastic flow analysis and technical estimations of the optimal control. Funding: L. Bo and Y. Huang are supported by the National Natural Science Foundation of China [Grant 12471451], the Natural Science Basic Research Program of Shaanxi [Grant 2023-JC-JQ-05], the Shaanxi Fundamental Science Research Project for Mathematics and Physics [Grant 23JSZ010], and Fundamental Research Funds for the Central Universities [Grant 20199235177]. X. Yu is supported by the Hong Kong RGC General Research Fund (GRF) [Grant 15304122] and the Research Centre for Quantitative Finance at the Hong Kong Polytechnic University [Grant P0042708].

Evaluating the Efficiency of Capital Enhancement and Investment Constraints in Life Insurance Supervision

Abstract This study addresses the critical public concern of effectively mitigating solvency risks in insurance companies through supervisory intervention. Building upon existing research, we extend our analysis to incorporate the effects of foreign investment and examine the impact of varying degrees of risk aversion among insurers. Furthermore, we investigate the optimal expected terminal utility in relation to initial insurance company premiums, integrating interest and exchange rates into our analytical framework. Additionally, we evaluate the impact of regulatory interventions, specifically capital injection schemes and risk-constrained asset allocation, on insurers’ default risk and certainty equivalent wealth using a utility-based approach. Our findings indicate that: (1) when policyholders exhibit higher degrees of risk aversion, a reduced propensity to allocate funds to riskier assets, such as stock index funds and foreign assets, is observed; (2) when exchange rates offer higher returns, an increased allocation to foreign assets is advisable; (3) conversely, when exchange rate returns exhibit greater uncertainty, a reduction in foreign asset allocation is recommended; (4) in scenarios where foreign risk-free rates yield higher returns, an increased allocation to foreign assets is suggested; and (5) under conditions of capital minimization, the influence of exchange rates and foreign interest rates on optimization becomes less discernible.

Optimal dividends and capital injection: A general Lévy model with extensions to regime-switching models

This paper studies a general Lévy process model of the bail-out optimal dividend problem with an exponential time horizon, and further extends it to the regime-switching model. We first show the optimality of a double barrier strategy in the single-regime setting with a concave terminal payoff function. This is then applied to show the optimality of a Markov-modulated double barrier strategy in the regime-switching model via contraction mapping arguments. We solve these for a general Lévy model with both positive and negative jumps, greatly generalizing the existing results on spectrally one-sided models.

Market reactions to capital increases: Insights from asset revaluation in pharmaceutical companies on the stock exchange

This study investigates the impact of capital increases on market reactions, focusing specifically on pharmaceutical companies listed on the Tehran Stock Exchange (TSE). We analyze stock returns over a six-month window: three months preceding and three months following the announcement of capital increases. Employing the market model, we assess investor responses and the revaluation of assets associated with these capital injections. Our comprehensive sample includes 200 pharmaceutical firms selected through systematic random sampling, covering the period from 2017 to 2023. The results reveal that asset revaluation significantly enhances investor reactions compared to capital increases stemming from cash contributions and retained earnings. Furthermore, our findings underscore the critical role of information transparency from company management in shaping market responses. This research contributes to a deeper understanding of investor behavior and informs management strategies related to capital restructuring in the dynamic pharmaceutical sector.

Adaptation of Chinese traditional villages from the perspective of locality preservation

Recently, traditional villages in China have received multiple policy protections and capital injections. While these external interventions protect the cultural heritage of traditional villages and provide opportunities for development, they have gradually eroded their intrinsic adaptive cycle system. This study focused on 6819 traditional villages, revealed the characteristics and transitions of the adaptive cycle stages in traditional villages and described the internal mechanisms of adaptability within these villages. The research findings are as follows: Regarding adaptability characterisation, the adaptability of traditional villages has developed a regionally significant imbalance. The highest proportion of adaptability cycle stages was found in the poverty trap, exploration (r) and gambling traps. Traditional villages are mostly in a rigid state, with a few adaptive processes shifting between the poverty trap and exploration (r), requiring a new impetus to guide positive cycles. In terms of adaptability mechanisms, there was a significant negative relationship between locality, mobility and resilience in traditional villages. Intrinsic adaptive mechanisms gradually disintegrate, and there is an increasing risk of falling into a lock-in trap. This study provides empirical evidence for analysing the issues in traditional villages and offers recommendations for long-term planning and policy formulation of locality protection in traditional villages.

On the moments of dividends and capital injections under a variant type of Parisian ruin

This paper considers a risk model driven by a spectrally negative Lévy process, where any surplus above b (0<b<∞) is deducted away as dividends and any deficit is covered by injected capitals/raised money. For such a risk model, we define a variant of Parisian ruin time as the first time that the surplus process stays continuously below a (0<a<b<∞) for a time interval with length larger than some pre-specified exponential random variable that is marked on this time interval. A recursive formula for the moments of the Net Present Value (NPV) of dividends paid until Parisian ruin is provided. The expected NPV of capitals injected until the Parisian ruin time is also characterized compactly in terms of the scale functions of the underlying process.

Irreversible reinsurance: minimization of capital injections in presence of a fixed cost

AbstractWe propose a model in which, in exchange to the payment of a fixed transaction cost, an insurance company can choose the retention level as well as the time at which subscribing a perpetual reinsurance contract. The surplus process of the insurance company evolves according to the diffusive approximation of the Cramér-Lundberg model, claims arrive at a fixed constant rate, and the distribution of their sizes is general. Furthermore, we do not specify any particular functional form of the retention level. The aim of the company is to take actions in order to minimize the sum of the expected value of the total discounted flow of capital injections needed to avoid bankruptcy and of the fixed activation cost of the reinsurance contract. We provide an explicit solution to this problem, which involves the resolution of a static nonlinear optimization problem and of an optimal stopping problem for a reflected diffusion. We then illustrate the theoretical results in the case of proportional and excess-of-loss reinsurance, by providing a numerical study of the dependency of the optimal solution with respect to the model’s parameters.

The social effects of energy regulation: Energy-consuming rights trading system and corporate labor demand

Although it is a key measure to control energy consumption and promote the improvement of industrial structure, energy market allocation reform has rarely been concerned with its impact on employment, an important livelihood issue. To fill this gap, this paper takes the Energy-Consumption Rights Trading System (ECRTS) enacted by China in 2016 as a research background and adopts the difference-in-difference approach to explore the effects and mechanisms of the ECRTS on enterprise labor demand. The results show that the ECRTS significantly reduces firms' labor demand, particularly for low-skilled workers, through both production scale effects and technological upgrading effects. Specifically, the ECRTS has led to a decrease in sales revenues and an increase in labor productivity, thereby reducing firms' labor demand. Heterogeneity tests indicate that the ECRTS has a greater impact on employment in firms with lower energy-consumption intensity, domestic capital injections, weaker innovation capacity, and lower market power. The paper also explores the welfare consequences of the policy, finding that while the ECRTS does not improve the environmental performance of firms it does not pass on the compliance costs of regulations to incumbent workers. The overall impact is neutral. This paper extends the study of the economic consequences of the ECRTS and has implications for other developing countries in reconciling energy regulation and employment.

Bundesbank-Verluste: Bilanzierungspraxis und etwaige Nachschusspflicht des Bundes

Abstract The Bundesbank’s balance sheet and those of other central banks in the eurozone are currently showing high “operating“ losses due to the discrepancy between the low interest bearing securities holdings from bond purchases and the now higher interest bearing commercial bank deposits. However, the current accounting practice does not reflect the associated losses in value anywhere near the market level – even though, according to the PSPP ruling of the German Federal Constitutional Court, the sale of securities before final maturity should be the rule. Even under the current valuation practice, an equity gap cannot be ruled out in the future, which is generally seen as unproblematic for central banks. However, there are risks in the context of recapitalisation by the state. Within the eurozone, national and European requirements could make such capital injections necessary.

An Analysis of Factors Affecting IPO Performance Based on Alibaba IPO

In this dynamic era of technological innovation and information flow, an increasing number of internet companies and e-commerce platforms emerge in endlessly. The level of capital injection is a crucial consideration for companies who desire to expand or innovate, especially for internet companies during the period of rapid development. As a result, going public will be a plausible solution for firms as they are not only able to get sufficient financial support, but also to gain competitiveness. However, companies always need to make some choices when going public: Which and how many underwriters do they need? Which stock exchange do they want to be listed? How should shares issued by a company be priced? Companies need to develop a far-sighted mind to look at this event, along with an innovation strategy that enable businesses to gain a firm foothold in the international market. This paper explains the factors that companies have to take into account in their IPO processes. The IPO event of Alibaba, which shows double-edged effects, is discussed in detail.

Does state capital equity affect ESG performance of private firms?—based on the perspective of sustainable development of Chinese enterprises

Along with the intensification of global ecological problems, corporate environmental, social, and governance (ESG) issues have attracted extensive attention from the investment community, and solving these issues is crucial for sustainable development. However, little is known about the research on equity structure reform on corporate ESG performance, especially state-owned capital on private firms' ESG performance. To this end, we utilize the panel data of 1,589 privately listed firms in China from 2013 to 2021 to explore the impact of state-owned capital on the ESG performance of private firms. The findings suggest that state-owned capital significantly improves the ESG performance of private firms. In addition, the results of mechanism analysis indicate that state-owned capital stimulates ESG performance through the dual path of improving the mitigation of external financial constraint problems and internal control environment problems. We also find that firms' external environmental shocks enhance the extent to which state capital injection into private firms enhances ESG performance, and these external environmental shocks include the strength of environmental regulation in the region, whether the firms' attribute is that of heavily polluting industries, and the strength of external media attention. In summary, our findings support the conjecture that state capital injection into private firms will be followed by enhanced ESG performance, and the external environment is a factor that influences this process. Our study may provide lessons for the sustainable development of private firms and dig deeper into the internal root causes and external shock factors.

Optimal reinsurance under a new design: two layers and multiple reinsurers

We investigate the optimal reinsurance problem considering a more realistic two-layer design involving excess-of-loss reinsurance and multiple reinsurers. Unlike the commonly assumed single-layer design in the existing literature, our approach involves a top layer consisting of excess-of-loss reinsurance and the involvement of multiple reinsurers. Our focus is on the insurer's management of risk exposure and costly capital reinvestment strategies to maximize the company value. We formulate this problem as an optimization problem with constrained multivariate reinsurance exposure variables, and capital injection control. Our findings show that, from a profitability standpoint, when the surplus is low and the excess-of-loss reinsurance is not too expensive, the insurer should obtain a two-layer reinsurance with an excess-of-loss reinsurance at the top layer and a combination of proportional reinsurance from multiple reinsurers at the bottom layer. In contrast, when the surplus is relatively large or the excess-of-loss reinsurance is too expensive, the insurer should purchase a single-layer proportional reinsurance from multiple reinsurers. When the surplus is large enough, the insurer should not acquire any reinsurance. Our results suggest that stand-alone excess-of-loss reinsurance is never optimal when there is also proportional reinsurance with a variance premium principle available for losses below the excess threshold, and we theoretically confirm that a multi-layer reinsurance design is preferable over a single-layer design. Furthermore, our results demonstrate that in order to maximize the company's value, dividends should be paid according to the lump-sum barrier strategy, and capital injections should be considered only if the surplus is null and the transaction costs on capital injections are not too high.

Law and Regulation as Safeguards for Investors Against Crime in Capital Market Sector

As a country with potency in economic growth, Indonesia is supported by several essential sectors, and one of them is through the Capital Market. The capital market enables the growth acceleration for a company or country by providing the needed fund. At least, through this medium, there are reciprocal benefits obtained by both parties involved in the Capital Market: issuers with capital injections, and investors with dividends and price increases. Unfortunately, there are big risks that investors have to deal with in capital markets, and some of them are related to fraud, market manipulation and insider trading. The results of this research found that government has enacted regulations that protect investors' rights through the Capital Market Law and the Financial Services Authority Law. However, there are still weaknesses in this regulation, especially for types of crimes that are still not regulated in this regulation. Moreover, it is necessary to have sufficient prowess from the authorized institution, especially the Financial Services Authority (OJK), to resolve cases in accordance with the applicable law aiming to protect investors' rights.

Renegotiable debt, liquidity injections and financial instability

This paper develops a debt-run model to study the effects of liquidity injections on debt markets in the presence of a renegotiation option. In the model, creditors decide when to withdraw their funding and equityholders can renegotiate the contract terms of debt. We show that when equityholders have a large bargaining power, liquidity injections into distressed firms can rather cause more aggressive runs from their creditors, hurting the debt value. This outcome occurs because equityholders can strategically utilize the renegotiation option as a bankruptcy threat, pushing down the debt value below the potential liquidation value of the firm. In such a scenario, a deterred default resulting from emergency capital injections could be detrimental to creditors.

A Note on the Risk Model with Dependence and Capital Injections

The note considers a risk model with dependence and capital injections, where the dependence structure is modeled by a Farlie-Gumbel-Morgenstern copula. In the risk model, the initial surplus starts from a level u \(\ge\) h, where h &gt; 0 is a fix constant. The author derives an expression for the Laplace transform of the Gerber-Shiu function. In particular, an explicit formula for the Gerber-Shiu function is obtained when the initial surplus is h.

Linearisation techniques and the dual algorithm for a class of mixed singular/continuous control problems in reinsurance. Part II: Numerical aspects

This paper is intended as a companion to [12] and focuses on the numerical implementations of the method in the context of insurance problems with mixed controls: reinsurance acting as continuous control, and capital injection and dividend payment acting as singular ones. The aim is twofold. On the one hand, we provide a comparison of the output of our method in terms of the optimal value against two benchmarks. The first benchmark is provided by [4] in the no-reinsurance setting and when the claims are exponentially distributed. The second benchmark refers to [8] where capital injections are not permitted, but different claim distributions can be employed. On the other hand, we illustrate the improvement of the models in [8] when capital injection is allowed. We also look into the effect of reinsurance in the model [4]. Several cases for the equity cost parameter are discussed as are the boundary (or limit) situations.

Asset injection and enterprise earnings management

This paper selects listed companies that have made significant asset injections between 2006 and 2022 as a research sample to explore the relationship between listed companies and earnings management after they have made asset injections. It is found that compared with the pre-injection period, the degree of earnings management is higher after capital injection by shareholders holding relatively more shares in listed companies than before; the more substantial the managerial ability and the greater the analysts' attention are, the higher the degree of earnings management is after significant asset injection by major shareholders compared with the pre-injection period.

Endogenous and Exogenous Factors Influencing the Investment Environment

In the conditions of the rapid growth of digital technologies, it is very important to ensure the degree of competition of the economy, which is carried out through constant capital injections. Being attractive for investment has a number of positive aspects: it increases the country's production capabilities, brings new technologies, and also changes the business culture