Capital Issues Research Articles

International bank capital standards and the costs of issuing capital securities by Japanese banks

Banks in the industrialized world are moving toward a new international capital standard. The BIS or Basle standard establishes higher levels of capital and requires increased sales of securities by Japanese banks. This study measures the stockholders' costs of selling new capital issues by 27 Japanese banks, containing the largest banks in the world. There are significant differences in the stockholders' costs of these sales from those of U.S. banks. These sales effects by Japanese banks are opposite from those suggested by many finance theories. Several explanations for these differences are presented.

A Bibliography of Finance.

Finance - general decisions under uncertainty economics of information the principal-agent relationship social responsiblity capital markets and securities markets market microstructure intermediation efficiency of securities markets rates of return on securities risk portfolio selection equilibrium prices of risky assets measurement of investment performance valuation of common stocks accounting information and valuation interest rates debt and preferred stock options convertible securities and warrants hedging instruments - futures and forwards capital expenditures cost of capital new securities issues splits and stock dividends cash dividends company financing and capital structure leasing and project finance financial planning working capital mergers and corporate restructuring regulated industries foreign exchange real estate commodity markets and exhaustible resources other speculative markets human capital tax inflation econometrics and statistics.

The impact of regulation on bank equity infusions

This article examines the extent to which regulatory capital standards influence infusions of external equity into commercial banks. While such infusions occur infrequently, they result in large adjustments to overall bank capital and provide important signals to regulators of managerial intent. Using a sample of 753 equity capital issues occurring during 1986 and 1987, we find evidence that regulatory minimum capital constraints are instrumental in influencing the financing decisions made by a significant subset of banks.

Causality Between Investment and Saving Rates: Inferences for the International Mobility of Capital Among OECD Countries

This paper explores the capital mobility issue by inspecting the causal relationship between domestic saving and investment rates in 24 OECD countries. Closed economy macroeconomic models illustrate the need for national saving to equal investment in equilibrium. Thus, the existence of any form of causal relationship between these two series implies that markets are not perfectly open, hence, capital flows are impeded. Therefore, the paper employs two standard techniques for causality testing, the Haugh test and variance decomposition, to determine the causal structure. The results are mixed but quite interesting in light of other recent works in this area. [215]

Capital Issues and the Minority-Owned Business

This article presents some of the results from an unusual survey of small business owners who differ in their ethnicity: Asians, blacks, Hispanics, and nonminorities. Contrary to the prevailing view of black and Hispanic business owners and their firms, the blacks and Hispanics in the data base—in general and on average—had the same human and financial capital as their Asian and nonminority counterparts. As a result, the black-owned and Hispanic-owned firms performed as well as the Asian-owned and nonminority-owned firms. Nevertheless, black business owners had lower success rates than nonminority men in obtaining commercial bank loans, although the terms for loans granted were similar for the two groups. In light of the apparent credit discrimination, U.S. Small Business Administration (SBA) loans remain an important source of debt-type capital to black-owned firms.

The Myths, Facts, and Theories of Ethnic, Small-Scale Enterprise Financing

This article combines the results of three financial studies that examine capital issues affecting minority business development. The results are presented so as to explain or refute conventional wisdom regarding capital availability, cost of capital, credit market discrimination, sources of capital and differences in firm capital composition. Generally, Asian and Hispanic businesses more approximate nonminority businesses in the sources of capital, the cost of capital, total capital investment, and access to capital. Black firms, on the other hand, face credit discrimination from all sources of capital, which limits their access to capital, increases its cost, and affects firm profitability. Consequently, black firms have a smaller capital composition at startup and during operations. The only deviation from this pattern occurs where minority and nonminority financial institutions vie for black business patronage by reducing the cost of borrowing and increasing the availability of funds.

The Foreign Capital Issue in the Asean Chambers of Commerce and Industry

Who controls organizations for regional economic cooperation among developing countries and benefits from their programs? In early groupings such as the East African Community, the Central American Common Market, and the Latin American Free Trade Area (LAFTA), polarization and dependency effects were evident. The more advanced member countries tended to be the leaders and to receive the greatest economic gains from cooperation. The larger, usually foreign-owned, firms with the capital, technology, and marketing resources necessary to undertake region-wide operations were the principal actors in and beneficiaries of private-sector regional plans. Thus, for example, the regional development poles in LAFTA were the three largest countries, Argentina, Brazil, and Mexico. LAFTA's program for industrial complementation, in Mytelka's view, was initiated by multinational corporations that dominated the pharmaceutical, electronics, and office machine sectors and signed between multinational corporations, with national governments rubber stamping and implementing the agreements on their behalf. 1 Taking its cues from these experiences, particularly those in Latin America, the Association of Southeast Asian Nations (ASEAN) adopted

The Foreign Capital Issue in the Asean Chambers of Commerce and Industry

The Foreign Capital Issue in the Asean Chambers of Commerce and Industry

Max Weber and the Theory of Ancient Capitalism

In the now quite voluminous literature dealing with the work of Max Weber, it is surprising how few commentators have addressed his writings on antiquity.1 I say surprising because Weber wrote two major books concerned exclusively with antiquity, and many of his other writings are concerned with it as well. It is worth remembering that Weber began his scholarly career as an ancient historian, and it was really only after his nervous breakdown mid-career as it were -that he turned his attention to the study of more contemporary matters out of which his great sociological works emerged. Thus it is of some interest, both for the history of ideas and also heuristically as regards an understanding of Weber's later work, to look once again at this early phase of his career. But, most importantly, in the following essay, I wish to focus upon a key issue raised here in this work of Weber-the issue of capitalism.2 I shall do this in part because one of the main conceptual concerns of Weber in these early works perhaps the key, unifying theme in them is the issue of the existence and nature of ancient capitalism. It is not well known that Weber took very seriously the idea that capitalism played an important, perhaps decisive, role in the life of ancient societies. As we shall see shortly, Weber's precise

Creative Financing and Housing Prices: On a Theoretical Inquiry Into the Capitalization Issue

Creative Financing and Housing Prices: On a Theoretical Inquiry Into the Capitalization Issue

A new approach to capital payment in a competitive era.

Prologue: One important item on the health agenda of the new Congress will be the formulation of a policy to prospectively pay hospitals for the Medicare portion of their capital costs. When the Medicare prospective payment system was signed into law in 1983, Congress delayed its decision on how to fund capital costs until it could research the issue more fully. Now, with the October 1987 deadline for determining a capital payment policy around the corner, discussion of capital issues has been active among the health policy community. In this article, Jonathan Betz Brown analyzes the thought behind the various flat-rate capital payment proposals under consideration, asserting that while they look simple and effective, they probably are not. Additionally, they “will get us into deep trouble in the long run,” he argues. The author then presents a new approach to capital payment that has emerged from a three-and-a-half-year study by the Harvard Health Capital Project. This proposal of “planned payment” looks at the long-range implications of designing capital policy and attempts to build in the flexibility that is so necessary in our rapidly changing health care environment. Brown, an assistant professor of public policy and health planning at the Harvard School of Public Health, emphasizes the need to recognize capital payment—beyond Medicare— as a fundamental health policy issue: “Present capital decisions cast a long shadow. Long-term commitments based on short-term thinking or mistaken forecasts could have tragic consequences.” Also, Brown asks, How can we design community and governmental institutions that really work in a competitive era? He suggests that this question of integrating public policy and community planning into a competitive market needs to be addressed as seriously as are questions surrounding financial reimbursement. Brown , who holds both a master's degree and doctorate in public policy from Harvard's John F. Kennedy School of Government, has studied capital issues for the past five years and has been closely involved in the Health Capital Project.

Selling Public Assets: Techniques and Financial Implications

Clearly, the UK government's privatization program has been a large-scale exercise in new capital issues. There are 3 main considerations that may have influenced the form of the asset sales: 1. extent of ownership, 2. costs of sale, and 3. disruption to markets. Little evidence exists that the first 2 objectives are being met; costs have been high, primarily as a result of the underpricing of assets, and large personal shareholdings have been maintained only for very short periods of time. There appears to be a simple way to avoid high costs by staggering the sales, which would also reduce disruptions to the equity markets. Furthermore, there is no clear statement as to why huge corporations have to be brought to market in a single sale. Analysis shows that accounting conventions give misleading impressions of the effects of asset sales on the private and public sectors.

Creative Financing and House Prices: A Theoretical Inquiry into the Capitalization Issue

Since buyers offer a premium for access to creative financing (CF), creatively‐financed houses will sell for more than otherwise identical houses purchased with standard financing. A commonly suggested method for adjusting house values to eliminate the effects of CF is the “cash equivalence” method, where the CF premium is assumed to equal the present value of savings from CF. This paper shows that in a world with active housing speculators, the cash equivalence approach gives the right answer: In an “arbitrage” equilibrium, house values must differ by exactly the present value of CF savings. Further analysis shows that when capital markets are perfect, each consumer is indifferent between CF and standard financing when arbitrage equilibrium obtains. Without perfect capital markets, however, consumers will strictly prefer one financing mode or the other.

A MICROECONOMIC ANALYSIS OF THE AMEY/SOLOMONS DEBATE

This paper analyses the Solomons/Amey debate in terms of the traditional theory of the firm. The scope of the paper includes a clarification of the working capital issue, and in particular, the appropriate charge which should be recorded in the periodic income statement submitted by management. The analysis then examines Amey's proposition that Solomons is confusing the investment decision with the operating decision and concludes that Amey's position is correct. The reporting framework which would induce divisional management to act both in the short‐ and long‐run interests of a group is examined and there is adiscussion of the market strategies which may be dictated by the divisional periodic accounting reports.

University/Industry Research Ties Still Viewed with Concern

Interest appears to be rekindling around the issue of collegiate capitalism, or more specifically, the impact of industrial money on the identities of university researchers and their institutions. Arguments are being refined, regulations and laws are being examined, university policies are being formed or reworked—all to explore what mutations the research universities are undergoing in their quest for the corporate dollar. New laws passed by Congress and federal sponsorships of cooperative research between industry and academia hurry it along. A key spur is the right of universities to license their federally funded technology on an exclusive basis to corporations. A further catalyst is the campaign by states to spin their economic development around research parks funded by industry and staffed mainly by university scientists. Some may think the conflict of interest issue has waned, but I don't think so at all, says John D. Holmfeld, a senior staffer for the House Science & Technology ...

Medicare payment and hospital capital: future policy options.

Prologue: At a time when hospitals are largely consumed by the challenging task of implementing Medicare's prospective payment system (PPS), the Reagan administration is putting the finishing touches on a report to Congress which will recommend how capital payments should be incorporated into the new payment scheme. Congress established a deadline of October 1, 1986, for enacting new hospital capital legislation. In this article, two well-respected economists who are often consulted by the public and private sectors for approaches to complicated policy problems, set out options that Congress will consider when it turns to the hospital capital issue. Until one year ago, Gerard Anderson was a central figure within the Department of Health and Human Services (DHHS) in the development of the administrations prospective payment policy. Over the course of his six-year stint at the department, Anderson served four assistant secretaries in a similar technical capacity, thus demonstrating an ability to bridge a br...

Systematic Assessment Error and Intrajurisdiction Property Tax Capitalization

Over the past twelve years considerable evidence has accumulated on the extent to which intercommunity differences in property tax burdens are capitalized into property values [17; 21; 8; 7; 25]. Recently, Linneman [14] has analyzed the validity of this evidence after taking into consideration alternative models of local government finance. In the model that he believes best represents the spirit of the tax capitalization literature, local government expenditures are financed wholly by property tax receipts. He demonstrates that in this case a perfect correlation between taxes and public goods makes it econometrically impossible to estimate property value equations unless measurement errors and omitted variables are present. He therefore asserts that existing results on the tax capitalization issue are of nebulous value.

Intangible Capital Aspects of Advertising and R & D Expenditures

Twenty years have passed since economists first emphasized the aspects of advertising. According to this view, . . consumers tend to forget brands and continuous advertising is needed to maintain a given rate of sales. Thus, advertising expenditures can be viewed as a capital good that depreciates over time and needs maintenance and repair [22, p. 197]. More recently, Weiss [25], among others, has suggested that research and development, R&D, costs might also be capitalized as such expenditures . . yield benefits mainly in the future [25, p. 421]. Unfortunately, most analyses of the intangible capital issue have been limited to advertising largely because no comprehensive data on R&D were available until quite recently. However, important recent theoretical contributions on the topic and improvements in data availability now make it possible more completely to consider the intangible capital aspects of both advertising and R&D expenditures. Here the intangible capital issue is investigated through use of a market valuation model. In this approach, significant future (intangible capital) effects of advertising and R&D are suggested to the extent that current expenditures have significant effects on the market value of the firm. Given positive market value influences, individual coefficient estimates can be used to estimate both the total stock of intangible capital as well as average annual depreciation rates for advertising and R&D. While these depreciation rate estimates are interfirm averages and undoubtedly err in individual instances, they can be quite useful in indicating the general magnitude of corporate profit and tax misstatement due to current reporting and tax policies. In section I below, various articles closely related to this study are reviewed. Section II develops a valuation model embodying intangible capital considerations. The data are discussed in section III, and estimation results are presented in section IV. And finally, conclusions and implications for public policy are discussed in section V.

Health Capital Issues

Health Care Management Review (HCMR) disseminates state-of-the-art knowledge about management, leadership, and administration of health care systems, organizations, and agencies. Multidisciplinary and international in scope, articles present completed research relevant to health care management, leadership, and administration, as well report on rigorous evaluations of health care management innovations, or provide a synthesis of prior research that results in evidence-based health care management practice recommendations. Articles are theory-driven and translate findings into implications and recommendations for health care administrators, researchers, and faculty. Annually, HCMR publishes the Best Theory to Practice paper chosen by the Health Care Administration Division of the Academy of Management.

Health Capital Issues.

Health Capital Issues.