Supply Of Capital Research Articles

OnTheMark: Integrated Stochastic Resource Planning of Human Capital Supply Chains

In this paper, we present a suite of innovative operations research models and methods called OnTheMark (OTM). This suite supports the effective management of human capital supply chains by addressing distinct features of human talent that cannot be handled via traditional supply chain management. OTM consists of novel solutions for (1) statistical forecasting of demand and human capital requirements, (2) risk-based stochastic human-talent capacity planning, (3) stochastic modeling and optimization (control) of human capital supply evolutionary dynamics over time, (4) optimal multiskill supply-demand matching, and (5) stochastic optimization of business decisions and investments to manage human capital shortages and overages. The OTM suite was developed and deployed as an important part of the human capital management and planning process within IBM, providing support for decision making to drive better business performance. This is achieved through important contributions in the areas of stochastic models and optimization (control), and the innovative application and integration of these models and methods in human capital management applications.

The role of interest rates in the Brazilian business cycles

This paper offers additional insights on the relationship between interest rates and business cycles in Brazil. First, I document that Brazilian interest rates are very volatile, counter-cyclical and positively correlated with net exports, as observed in other emerging market economies. Next, I present a dynamic stochastic general equilibrium model in which firms face working capital constraints and labor supply is independent of consumption. This parsimonious model, appropriately calibrated to the Brazilian economy, predicts that interest rate shocks can explain about one third of output fluctuations and delivers business cycle regularities consistent with the Brazilian data.

Non Profit Organization Liquid Assets Strategies

In dependence of kind of realized mission, sensitivity on risk, which is a result of decision about liquid assets investment level and liquid assets financing. The kind of organization influence the best strategy choice. If an exposition on risk is greater, the higher level of inventories, accounts receivable and operating cash should be. If the exposition on that risk is smaller, the more aggressive will be the net liquid assets strategy and smaller level of inventories. The organization choosing between various solutions in liquid assets needs to decide what level of risk is acceptable for her owners and capital suppliers. That choice results with financing consequences, especially in cost level. It is a basis for considerations about relations between risk and expected benefits from the liquid assets decision and its results on financing costs for both nonprofit or for profit organizations. The paper shows how in authors opinion decisions about liquid assets management strategy and choice between kind of taxed or non-taxed form inflow the risk of the organizations and its economical results during realization of main mission. Comparing the theoretical model with empirical data for 1000 Polish nonprofit organization results, suggest that nonprofit organization managing teams choose higher risky aggressive liquid assets solutions than for-profit organizations.

The Harsh Master: What Can We Learn from the Big Crises?

The paper identifies and discuss the main three issues related to the impact of financial crisis on markets. The first main concern of analyst and regulators is the Capital provision for banks, under the light of Basel II accord, and further, in the view of a better regulation. The focus is on the need for a counter-cycle regulation, allowing for more prudential behavior in better times so to build good defense against bad times. Liquidity regulation is the second issue considered in the paper, and relates to the optimal treasury management and the tips for an adequate liquidity provision to face customers needs. The final issue is the cross-border banking, condensed to the spot of the trade off between the need of interbank relations for business and trade and the risk of systemic contagion and propagation of shocks

The Effects of Tax Evasion on the Choice between Personal and Corporate Income Taxation

This article analyzes the relative choice between different tax tools burdening corporate incomes or dividends at the personal level in open economies where tax evasion, both corporate and personal, is not null. A theoretical discussion explains why a government may decide to levy a positive corporate income tax even when capital is internationally mobile while shareholders are immobile. Since tax auditing may be more effective on corporate incomes rather than on personal incomes, a benevolent or malevolent government may face a trade-off between reducing available capital supply and reducing total taxation revenues. The intuition is then submitted to empirical test using panel data from twenty-eight Organisation for Economic Co-operation and Development (OECD) countries. The results hint at a possible role for tax evasion in explaining why some countries prefer to tax corporate incomes rather than dividends and capital gains under personal taxation.

Capital Gains: A Critique

The following discussion brings to the forefront the present treatment of capital gains. It joins the line of commentary that is generally critical of the present capital gain provisions on the basis of inadequate justification for the substantial and what is argued to be arbitrary preference, which in itself is based on a historical tradition and theoretical argument that hardly holds water in the modern age. At the same time, this piece stops short of advocating a radical reform of the capital gains treatment. Before any drastic action in this arena can be undertaken, a much more complete and thorough study of the myriad of interconnected issues is in line.

Analysis of the factors that influence venture capital fundraising: An empirical study in China

China is now in a period of economic transition and the promotion of the venture capital (VC) industry embodies the national strategy of building an innovation-oriented country. A sufficient supply of fund capital is a prerequisite to the development of the VC industry, as it is essentially engaged in fundraising activities. It is thus of considerable significance to investigate the supply of the funds for VC, or in other words, to examine the various factors that have an impact on VC fundraising. Although, some scholars have undertaken empirical analyses of these factors, there are no studies that have examined the VC fundraising factors in China based on domestic data. However, those factors that have already been studied are likely to have, significantly, different influences in different countries. Consequently, this paper defines seven factors that may impact VC fundraising based on interviews with Chinese VC entrepreneurs and limited partners in China. The seven factors are tested through regression analysis based on Chinese data and the results show considerable differences when compared with other countries. This paper undertakes a detailed analysis of the Chinese VC fundraising factors based on the existing academic framework and the unique Chinese data. Based on this, the study will present some recommendations for the development of the Chinese VC industry. Key words: Venture capital (VC), fundraising, impact factors, China.

대학이 지역발전에 미치는 영향 -천안시를 중심으로-

이 연구는 천안지역을 대상으로 대학이 지역발전에 미치는 영향을 다루었다. 본 연구는 문헌조사와 실증분석을 병행하였다. 설문지는 유효한 133부만을 SPSS 15.0버전으로 빈도분석을 실시하였다. 대학이 지역사회에 미치는 긍정적 효과는 지역사회에 원활한 인적자본의 공급, 지역소득의 증가, 교육기회 확대로 인한 지역 이미지 개선, 각종 대학시설의 지역사회에 제공 등이 있다. 부정적 효과는 양질의 교육을 받은 지역젊은이들이 다른 지역으로 떠나면서 생기는 지역격차의 확대, 지역고유의 문화와 새로운 문화의 충돌로 인한 갈등발생이 있다. 지역발전을 위한 대학의 역할은 보조 자문 역할, 상징적 역할, 교육적 역할 등 여러 가지가 있다. 그러나 가장 중요시 되는 역할은 대학이 지역발전을 주도적으로 이끌어나가는 선도적 역할이다. 마지막으로, 지역 사회 발전을 위한 대학의 활성화 방안은 산학간 인적자원의 이동을 활성화 시켜 고급인력과 운영방식의 교류를 이루어나가는 것이다. This study dealt with the effect of the university in area development to Cheonan city. This study ran parallel literature investigation and actual proof investigation. Questionnaires 394 enforce frequency analysis in SPSS 15.0 versions. University positive effect on local community is smooth supply of human capital in local community, increase of regional income, improvement of area image by expanded education opportunities, supply of various university facilities in local communities etc. Contradictory effect is expansion of gap for areas that young persons in local community taken to education of good quality leave other local community, occurrence of conflict by collision of new culture and culture of area characteristic. Role of university for area development is role of help consultation, symbolic role, educational role etc. But the weighed role is leading role which university leads area development. Finally, the prompting methods of university for local community development .must accomplish interchange of operational mode with high quality human resources activating removal of manpower between arithmetic.

The Level-Specific Effects of Education on Economic Growth: Evidence from Four Caribbean Countries

The supply of human capital in the economy's production activities is a function of the quality and volume of education services provided at the secondary and tertiary levels in the education system. Hence, the allocation of resources by government to education is an important determinant of human capital formation. Depending on its level-specific variations, a given amount of human capital accumulation can have differential impacts across sectors and on economic growth. This study posits that government spending on education can be identified as an important indicator of human capital formation that propels economic growth and confirms that for the countries considered, there are level-specific effects of human capital on output in the manufacturing and service sectors, and ultimately on aggregate output. Given this information, policy makers can therefore consider opportunities for enhanced budgetary allocations aimed at building capital that has a positive impact on economic growth.

Firm versus industry financing structures in Nigeria

PurposeThe purpose of this paper is to examine whether industry‐specific factors play a more significant role in the financing decisions of firms than firm‐specific characteristics; and to determine the degree of uniformity that exists between a firm's capital structure and industry financing patterns in Nigeria.Design/methodology/approachThe described study makes use of fixed effects panel regression techniques. The dataset, which covers the period 1990‐2006, comes from a sample of 71 non‐financial firms quoted in the Nigerian Stock Exchange.FindingsThe study finds support for both the pecking order theory and the trade‐off theory of capital structure in Nigeria. Firms/industries that are more profitable have less proportion of debt, and those that have a higher level of asset tangibility use more long‐term finances. Empirically, the study reveals that the set of factors that explain firm‐specific determinants of capital structure do not statistically and significantly explain the way industries follow finance.Practical implicationsThe study affirms the need for firms to invest reasonable resources in setting up capital structure policies, rather than herd along industry patterns.Originality/valueThough studies on industry herding and financial leverage are not new, the paper gives interesting insights into the nature of the relationship in an atmosphere of shortage of capital supply and poor corporate performance.

The American System of Manufactures: Factor Bias or the Democratization of Invention?

Imbued with the scientific rationality of the Enlightenment in the period prior to the Civil War Americans actively embraced the use of interchangeable parts and machine tools in manufacturing. Imbued with the Enlightenment concept of equality of opportunity the political architects of the young republic fostered the democratization of invention through the creation of an accessible patent system and the promotion of basic education and universal literacy. The result was a high rate of augmentation of all factors of production, of capital, labor and land. After the Civil War the rates of augmentation interacted with scale economies, accelerating total factor productivity. The resulting overall productivity growth was not induced by the relative supplies of land, labor and capital. In particular it did not have a labor-saving bias.

Countercyclical Macroprudential Tools

Risk-sensitive capital requirements, such as those established in Basel 2/3, and loan loss provisions based on incurred losses or on short-horizon expected losses, increase procyclicality in the banking system. They could, therefore, contribute to fuelling credit bubbles in good times, as rising risks are not properly covered either with capital or provisions, and credit crunches in bad times, as requirements are sharply increased to compensate for the former undercapitalisation and under-provisioning, and banks respond by cutting credit to households and firms. This paper shows that the procyclicality of current and envisaged capital requirements and loan loss provisions is a serious concern. But, at the same time, it can be dealt with using countercyclical macroprudential tools, first, by smoothing minimum capital requirements using a very simple and intuitive formula based on GDP growth and, secondly, by using forward-looking provisions such as the Spanish dynamic provisions, a working macroprudential mechanism for more than a decade and a full lending cycle.

Determinants for allocations to Central Eastern Europe venture capital and private equity limited partnerships

Growth expectations and institutional settings in Central Eastern Europe (CEE) seem favorable for establishing a vibrant venture capital and private equity (VC/PE) market. However, the risk capital supply there is rather small in relation to the growth prospects. We examine the determinants of institutional investors' CEE allocation decisions through a questionnaire addressed to limited partners worldwide. Investors in CEE VC/PE limited partnerships are very knowledgeable about the region, they also appreciate other emerging regions, they regard entrepreneurial opportunities in CEE as very favorable, and they attribute local general partners in CEE with a high level of professional quality. In more detail, they appreciate team independence and the match of fund strategies with the teams' backgrounds. As economic growth expectations are fairly high in all emerging regions, investors focus on other allocation determinants, notably on the potential of institutional and cultural characteristics to turn the economic growth into entrepreneurial activism.

Driving Forces of Corporate Capital Structure Variation Over Time

This paper develops a dynamic model of capital structure. It uses the model to determine whether shifts in the demand for capital or shifts in the supply of capital is the key driving force behind capital structure variation over time. Simulations of the model show that adjusting capital structure in response to variation in the supply of capital results in persistence of dividend and market leverage that is lower than the observed persistence in the data. When variation in the supply of capital is shut down, the persistence of dividend and market leverage of simulated firms is reasonably close to that in the data. The results suggest that shifts in the demand for capital are likely the key driving force behind capital structure variation over time.

Optimal Capital Structure, Relation-Specific Investment, and Supplier Competition

This paper studies the relationship between firm leverage and supplier market structure by examining their joint impacts on bargaining and relation-specific investments. We find that firm leverage decreases with the degree of competition among suppliers. Specifically, leverage decreases with the elasticity of substitution between suppliers. Leverage also decreases with the number of suppliers when the elasticity of substitution is high, and increases with the number of suppliers when the elasticity is low. Empirical evidence supports these model predictions. We find that firm leverage is positively related to the number of supplying industries, and negatively related to the average number of suppliers per supplying industry. Moreover, we find that firm leverage is positively related to the degree of input goods heterogeneity.

Management Insights

Management Insights

How do the capital markets undermine sustainable development? What can be done to correct this?

This article sets out how the capital markets relate to sustainable development issues and makes some modest proposals for how to improve our capital markets. It argues that capital markets' influence over corporate sustainable development originates via two principal routes: (i) financial influence—the buying and selling of equity shares and debt on the capital market influences the cost of capital for listed companies; and, (ii) investor advocacy influence—shareholders are the principals of the business and can exercise their rights of share ownership over their agents, the company directors, by sending explicit signals regarding the management of the company. Capital markets generally do not need to understand nor reward sustainable behaviour. This is either because the markets are inefficient and do not reward good behaviour, or because market failures means that investors do not need to worry about the very long term costs as they are outside of their investment time horizons. In order to change this, we should focus on the incentives of all key players within the capital supply chain such that they are all sanctioned and incentivized partly on their sustainability performance. The market also needs much better market information on the sustainability performance of companies. Better training of market participants on the materiality of sustainability issues as well as how they can be factored into valuation analysis would also help. However, before capital markets can be genuinely sustainable we need capital market policy makers to have greater regard for future generations when setting policy. This will require greater government intervention, particularly around the regulation of investor delivery of responsible ownership.

Optimal Capital Structure, Relation-Specific Investment, and Supplier Competition

Optimal Capital Structure, Relation-Specific Investment, and Supplier Competition

Capital Supply Uncertainty, Cash Holdings, and Investment

We develop a model of investment, financing, and cash management decisions in which investment is lumpy and firms face uncertainty regarding their ability to raise funds in the capital markets. We characterize optimal policies explicitly and show that the smooth-pasting conditions used in prior contributions are necessary, but may not be sufficient, for an optimum. Instead of the standard Miller and Orr (1966) double-barrier policy for financing and payout, firms may optimally raise outside funds before exhausting internal resources and the optimal payout policy may feature several regions, with both smooth and discrete dividend payments. In the model, firms with high investment costs are qualitatively as well as quantitatively different in their investment, financing, and payout behaviors from firms with low investment costs. Finally, investment and payout do not always increase with slack, challenging the use of investment-cash flow sensitivities or payout ratios as measures of financing constraints.

Competition in Lending and Credit Ratings

I examine whether rating agencies strategically manipulate the informativeness of bond ratings in response to competition from private lenders. I model a monopolistic rating agency that caters to a low quality marginal customer with uninformative ratings. High quality customers prefer informative ratings but are captive customers of the rating agency in the absence of competition from private lenders. With competition from private lenders, the rating agency uses informative ratings to keep high quality customers in public markets. I test predictions of the model using a measure of informativeness based on the impact of unexpected ratings on a debt issuer’s borrowing cost. I analyze two events that increased the relative supply of private vs. public lending: the temporary shutdown of the high yield market in 1989 and legislation in 1994 that reduced barriers to interstate bank lending. After each event, I find that the informativeness of ratings increased for issuers whose relative supply of private vs. public capital increased most. The model also suggests that the ratings sector dampens the impact of capital supply shocks, and offers a strategic pricing rationale for the controversial practice of issuing unsolicited credit ratings.