International Institutional Investors Research Articles

The Deming Cycle (PDCA) Concept as a Tool for the Transition to the Innovative Path of the Continuous Quality Improvement in Production Processes of the Agro-Industrial Sector

Introduction At the present stage, the catastrophic and apocalyptic scenarios of the civilization development after the active introduction of scientific discoveries at the beginning of the 21st century (shale revolution in the USA, the rapid development of genetic engineering technology in the West and in China, the active development of "green energy" in the world, etc.) have proved to be ineffective. Thus, there is a need for the qualitative review of future scenarios of the development of the modern civilization in general and individual regions, ecumenes in particular (Walliser, 2008). This refers both to the highly developed civilizational habitats and to the regions, which are traditionally considered to be underdeveloped (Dinur, 2011; Norse, 2012). Many of the abovementioned scientific concepts were developed in the early--mid-twentieth century, but it was not until fairly recently that their commercial implementation became possible (at the end of the last century and at the beginning of this century). Therefore, along with a number of social, technological, economic and political achievements, the key issues of providing the world's population with good quality food resources remain highly relevant. That is why the international non-governmental organizations, institutional and venture capital investors, governments of the countries pay considerable attention to the development of the agro-industrial sector, which makes a significant contribution to the formation of human capital and intellectual potential of the world's population (Mathe, 2013; Sekhampu, 2013; Ziatdinov and Tyunnikov, 2016). At the same time, the development of technology, an increase in the availability of bank lending and the expansion of access of underdeveloped countries to high technology in the agro-industrial sector (mainly with the active participation of Western and Chinese transnational corporations) significantly negate the importance of the highly productive land and its areas (as a key factor of agricultural production) against the world indicator. In previous studies (Dudin et al., 2016; 2015) we have repeatedly shown that the availability of fertile land is one of the aspects; its effective and intensive use is possible only by means of the management of production processes in the agro-industrial sector on the basis of key quality management concepts. The production quality management in the agro-industrial sector involves not only the formation of competitive advantages, it is also a social responsibility of manufacturers, which, in combination with the environmental responsibility, forms a new understanding in developing business models that are more focused on the achievement of parity between the needs of society and the needs of entrepreneurs. In turn, this means the growth of quality and living standards, which is also achieved by increasing economic and physical access to food resources (Firescu and Popescu, 2015; Havhcek et al., 2013; Kovalenko et al., 2016; Tyaglov et al., 2017). We suppose that the product and service quality management in the agro-industrial sector is currently one of the few practice-oriented tools, the effectiveness of which has been proved by time and demand patterns. This thesis is also confirmed by the results of previous studies (in particular, the analysis of trends in the agro-industrial sector development in Italy, as well as the applicability of the concept of "business model canvas" for Russian agricultural and agro-industrial enterprises (Dudin et al., 2015a; Osterwalder and Pigneur, 2010; Clark et al., 2012; Frank et al., 2016; Bashmakov et al., 2015) and the statistical data (Food and Agriculture Organization of the United Nations, 2013; Food and Agriculture Organization of the United Nations, 2015) which provide an additional scientific value to the cycle of proposed publications. Therefore, we offer to comprehensively and systematically consider the problems of quality assurance in the agro-industrial sector, including with the involvement of recommended quality management tools. …

Sovereign Wealth Funds: Opportunity or Threat?

Sovereign Wealth Funds, which have become one of the most popular financial instrument of recent years and were accepted as both institutional innovation and financial power in international financial markets, have reached a level that can shape the structure of national economies with total assets of 7.445 trillion dollars. The fact that national asset funds have reached a considerable volume today makes it possible for both the host country and the home country to influence the economic conditions at the macroeconomic and microeconomic dimension.The fact that sovereign wealth funds, which have a size that can affect national economies, are in the state property, which is the most striking and controversial feature, places such funds in the target of criticism. However, there are also opinions that sovereign wealth funds act only for economic purposes. This study investigates the driving forces behind the development of sovereign wealth funds, which are examined as international institutional investors, as well as the funding sources and the purposes of such funds. In addition, this study discusses whether national asset funds are a useful tool for economies, and the ideas that are directed at and favored against these funds.

Sovereign wealth fund investments and policy implications: a survey

Purpose – The purpose of this paper is to address a research gap by providing a comprehensive survey of sovereign wealth funds (SWFs) as international institutional investors and clarifying the definition of SWFs. By doing so, this paper aims to provide a balanced set of policy prescriptions towards SWFs. Design/methodology/approach – This paper conducted a comprehensive survey of world major 24 SWFs with assets under management of 500 million USD between 2008 and 2012. Key dimensions include objectives, funding and governance, asset allocation and investment activities. Findings – SWFs are planning institutions with management direction. They present great variety in terms of funding mechanism, governance, asset allocation and investment strategies, but they in essence pursue financial returns. It is not evident that SWFs are primarily motivated by political objectives and distinctively different from other international institutional investors. Difficulty in interpreting SWFs should not lead to the imposition of constraints on SWFs. Research limitations/implications – More in-depth and dynamic analysis of SWFs requires better data access. For such a purpose, case studies and longitudinal studies should be adopted, with particular emphasis on comparing SWFs with different types of financial institutional investors as well as typical state-owned enterprises (SOEs) and multinational enterprises. Practical implications – This study is trying to demystify SWFs based on a comprehensive survey. As a result, this paper may assist investors, policy-makers and regulators to gain a better understanding of SWFs, their investment behaviours and rationales behind. Social implications – SWFs like other long-term capital is important for economic and job growth. To attract long-term investments, creating an open, unbiased and welcoming investment environment is the key. Originality/value – The contribution of this paper is that we provide a deeper understanding of the strategy and empirics of SWF operations. First, after a clearer definition of the phenomenon of SWFs, we can explain their investment strategies and behaviour as firms. Second, we can derive rational policy prescriptions, and third, we can propose a research agenda that will further deepen our understanding of SWFs and the appropriate policy prescriptions.

Economic Forces and the Sukuk Market

The aim of this study is to investigate macroeconomic influences on sukuk issuance in Malaysia for the period 1996-2011 at the aggregate level. Based on vector autoregressive models (VARs), variance decomposition (VDC) and impulse response functions (IRF), the results indicate that sukuk Granger- cause GDP while GDP Granger-causes both PPI and CPI. Sukuk are also driven by their own dynamics in the short horizon. The results have important policy implications to the decision-makers. Since sukuk issuance Granger-causes GDP, policy makers should design new policies to modernize the functional aspects of Islamic capital market. A further implication for international institutional investors is that sukuk have the competitive advantage since it targets a segment of the global markets that has not been penetrated by other rivals.

Istanbul Stock Exchange Moves First on Mandatory Electronic Voting at General Meetings of Shareholders

Turkey’s New Company Law paved the way for its national stock exchange to be the first in the world to require the issuers change their company statutes in order to allow electronic participation and voting at their general assemblies. A recent regulation mandated all listed companies to use a single electronic portal to allow shareholders to participate and vote electronically in general assemblies with immediate effect. The move is one in a series of reforms in support of Istanbul International Financial Center Project. The Financial Times refers to the new regulation as a coup for international institutional investors with Turkish holdings as it increases the transparency of ISE listed companies and empowers them to embrace an activist approach. This commentary discusses the possible consequences of the new regulation.

Implementing transparency in an Eastern European office market: preparing Warsaw for global investments

In the aftermath of an increasing integration of property and financial markets, the real estate industry is subject to soaring internationalization processes. Since international institutional investors appeared, transnational real estate investments have increased tremendously. In recent years, Central and Eastern European countries have been becoming more attractive to institutional investors and are therefore being integrated into international market structures. Within these countries, Warsaw emerged as the most dynamic and important real estate market. But what are the mechanisms and practices through which the real estate market of Warsaw becomes international? Which networks, intermediaries and frames are necessary to constitute a mature real estate market? The article argues that international real estate consultants are playing a crucial role in the underlying internationalization process. They are acting at the interface between investors, developers, construction companies and tenants and are therefore becoming a crucial hinge between real estate actors. With the example of the Warsaw real estate market we argue that international real estate consultancies are key drivers of the transformation process from a local to a global market. They transfer global knowledge, competence and practices and implement transparent and professional structures in the emerging Warsaw real estate market.

Financial reporting opacity and informed trading by international institutional investors

Using cross-country data on trading by international mutual funds, I find that firms with more opaque information environments, as captured by firm- and country-level measures of the availability of financial reporting information, experience more privately informed trading by institutional investors. The association between firm-level opacity and informed trading is most pronounced where country-level disclosure infrastructures are less developed and for those investors for whom the incentives and opportunities to acquire private information are greatest. A difference-in-differences analysis of the returns earned by institutions in opaque stocks suggests that this information advantage is economically significant.

Discussion of “Financial reporting opacity and informed trading by international institutional investors”

Maffett (this issue) finds that the opacity of a firm's information environment affects the degree of informed trade by institutional investors. In this discussion, I address the key research design choices involved in studies of opacity and informed trading and I relate the results to the literature on institutional investor performance and stock selection. I suggest that future work investigate the role of discretionary opacity in facilitating informed trade as part of the cost–benefit trade-off of the opacity decision maker (e.g., managers, analysts); test the relative effects of opacity on private information, liquidity, and price correction speed; and examine how institutional investors select which opaque firms to hold.

Discussion of 'Financial Reporting Opacity and Informed Trading by International Institutional Investors'

Maffett (2012) finds that the opacity of a firm's information environment affects the degree of informed trade by institutional investors. In this discussion, I address the key research design choices involved in studies of opacity and informed trading and I relate the results to the literature on institutional investor performance and stock selection. I suggest that future work investigate the role of discretionary opacity in facilitating informed trade as part of the cost-benefit trade-off of the opacity decision maker (e.g., managers, analysts); test the relative effects of opacity on private information, liquidity, and price correction speed; and examine how institutional investors select which opaque firms to hold.

Fire Sales and Inside Information: When Insiders Help

We study how inside information reduces the transmission of the crisis due to fire sales (e.g., Shleifer and Vishny, 2012). We focus on the role of international institutional investors in propagating financial market instability and the mediating role of the banking sector during the 2008-2009 global financial crisis. We argue that international institutional investors affiliated with banking conglomerates share information with the banks’ lending subsidiaries. This provides them with inside information that lowers their incentive to join uninformed fire sales as the crisis emerges. We test this intuition using a comprehensive data set on international mutual fund holdings over the period 2001-2009. We show that bank affiliation provides an informational advantage that more than offsets disadvantages due to geography. During the pre-crisis period, this inside information causes bank-affiliated funds to function as insiders, reducing the liquidity of the stocks they hold, and increasing extreme negative return realizations. However, during the crisis, bank-affiliated funds increase stock liquidity, reduce extreme negative return realizations, increase price informativeness, and reduce short-selling demand. Overall, during the crisis, bank-affiliated funds provide price support over the stocks they have inside information.

Fire Sales and Inside Information: When Insiders Help

We study how information flows within international financial conglomerates and how such a flow reduces the transmission of liquidity crisis due to fire-sales. We focus on the role of international institutional investors affiliated with banks during the 2008-2009 global financial crisis. We argue that affiliation with banks provides international asset managers with an information advantage that lowers their incentive to herd with the uninformed fire-sales as the crisis emerges. This effectively provides price support to foreign stocks. We test this intuition using a comprehensive sample of non-North American firms with detailed information on international institutional holdings. We show that bank affiliation provides an informational advantage that more than offsets the disadvantages of foreign investors due to geography. During the crisis, the bank-affiliated investors increase stock liquidity, reduce extreme negative return realizations, lower short-selling demand and increase price informativeness.

Uluslararası Kurumsal Yatırımcıların Genel Kurullara Katılımı Ve Oy Kullanma Eğilimleri (Institutional and Company Specific Determinants of International Institutional Investors’ Tendency to Vote at General Assemblies)

Sermaye Piyasasi Kurulu 30 Aralik 2011 ve 11 Subat 2012 tarihlerinde yayinladigi Seri IV, No: 56 ve 57 sayili tebliglerle 2003 yilinda ‘uy yada acikla’ yaklasimi ile yayinladigi Kurumsal Yonetim Ilkeleri’ni yeniledi ve ilkelerin bir kismini 654 sayili kanun hukmundeki kararnamenin kendisine verdigi yetkilere dayanarak halka acik sirketler icin uyulmasi zorunlu kurallar haline getirdi. Bu makale, reform niteligindeki bu degisikliklerin uluslararasi alanda genis capta kabul gormus kuramsal bir cati ve diger gelismekte olan piyasalarda elde edilmis gorgun sonuclar isiginda degerlendilmesi ve yorumlanmasi amaciyla yazilmistir. The Capital Markets Board of Turkey has recently reformed major aspects of the Corporate Governance Principles for companies listed at the Istanbul Stock Exchange which were, prior to reform, based on a 'compy or explain' mechanism. The changes were notified with two communiques (Series IV, No: 56 and 57) on December 30th, 2011 and on February 11th, 2012. This paper evaluates the potential impact of these reforms from an investor perspective. We argue that the new regulation is likely to improve the capital market development in Turkey.

On the valorisation of public real estate properties: the valuation of programs and projects (feasibility study)

Building construction and improvement and development require a holistic approach that allows an overall valuation of the investment, also as regards its town-planning/technical/economic aspects. The valuation can be done ex ante through feasibility studies (which are expressly provided for in the cases referred to in the Regulation for Implementation and Enforcement of the code of Public Contracts (D.P.R. 207/2010); to this end it is necessary to reconcile the “project constraints” that take shape in four macro-areas: Resources (and Economic Sustainability), Cost Engineering, Time Frames, Performance/Quality. Demonstrating the economic sustainability of a building project by combining principles and definite rules consistent with international best practices – even more so in the current international economic-financial situation – constitutes the essential prerequisite for raising resources, sometimes even among international institutional investors, that make it possible to develop all stages of the building process with continuity. An intelligent promotion and development of the immense national public real estate heritage will also promote the country’s economic-social development.

The Impact of International Institutional Investors on Local Equity Prices: Reversal of the Size Premium

Using comprehensive company-level ownership data from Japan, the authors found that the equity size premium correlates strongly with the investment flows of international institutional investors. When investment flows intensified and shifted into larger stocks in the mid-1990s, the equity size premium was reversed. Their findings suggest that a large fraction of the time variation in the size premium is driven by price pressures, regardless of any shift in the fundamentals of small and large companies.

International diversification and Microfinance

International commercial banks, institutional investors, and private investors have become increasingly interested in financing microfinance institutions (MFIs). This paper investigates whether adding microfinance funds to a portfolio of risky international assets yields diversification gains. By using mean-variance spanning tests with short-sale constraints, we find that investing in microfinance may be attractive for investors seeking a better risk–return profile. Specifically, the analysis suggests that investing in MFIs from Latin America, or microfinance and rural banks yields more efficient portfolios. In contrast, adding MFIs from Africa or microfinance NGOs to a portfolio of international assets is not beneficial for a mean-variance investor.

Local Bond Markets as a Cornerstone of Development Strategy

Debt markets represent the leading channel of liquidity for governments, public companies, agencies and financial institutions in many advanced and emerging economies. Developing a local currency fixed income market brings multiple benefits: stable access to capital, diversification of monetary policy instruments, creation of a yield curve for pricing financial assets and tailoring risk management tools.In most countries, the debt market is born out of the need to finance government expenditures. With time, the yield curve on public debt becomes a reference for private entities such as banks, public utilities and corporations, which are then able to tap the market to fund their investments.The development of local bond markets requires a strong commitment from governments to implement a proactive debt management programme as well as ensure a large and diversified issuers base. Therefore, a focused issuance programme of government securities is essential to establish benchmark bonds. Governments should also encourage publicly owned companies (especially utilities) to issue similarly structured securities to provide a slate of issuers that enjoy local name recognition, thereby paving the way for private corporations to issue debt. The GCC countries are investing heavily in infrastructure, which according to estimates requires USD2.2 trillion in financing. It is both opportune and desirable to raise this financing through securities backed by future cash flows from the infrastructure services, as is typical of project financing schemes.Although banks are the obvious buyers of bonds, since government debt is highly attractive for meeting statutory reserve or prudential requirements, authorities should encourage the development of a secondary market among life insurances, asset managers and international institutional investors. To ensure the success of the endeavour, the legal environment needs to be tailored to promote transparency, the seamless and timely flow of information, prevention of insider trading and minimal counterparty risk. As markets develop, issuances further down the credit spectrum will increase and more transparent accounting standards in accordance with International Financial Reporting Standards (IFRS) must be adopted. Another pre-requisite for the development of a healthy bond market is a flexible, interlinked, electronic registry clearing and settlement system.Building and sustaining a vibrant capital market relies on the commitment of long-term stakeholders. In addition to the government and the central bank, market makers, in their capacity as liquidity providers, are essential to ensure an active secondary market, particularly during a hiatus in primary market issuance. Finally, creating a robust framework for creditor rights and investor protection is necessary to instill investor confidence and maintain the momentum of capital market growth.

Liquidity Provision by International Institutional Investors: Evidence from Brazilian Privatization

Liquidity Provision by International Institutional Investors: Evidence from Brazilian Privatization

International Diversification and Microfinance

International commercial banks, institutional investors, and private investors have become increasingly interested in financing microfinance institutions (MFIs). This paper investigates whether adding microfinance funds to a portfolio of risky international assets yields diversification gains. By using mean-variance spanning tests with short-sale constraints, the paper indicates that investing in microfinance may be attractive for investors seeking a better risk-return profile. More specifically, the analysis suggests that investing in MFIs from Latin America, or microfinance and rural banks may yield more efficient portfolios. In contrast, adding MFIs from Africa or microfinance NGOs to a benchmark portfolio of international assets does not seem beneficial for a mean-variance investor.

PRIVATIZATION THROUGH GOING PUBLIC CASE STUDY OF T-HT

Principle objective of this paper is to analyze specific phase of privatization process of the largest telecommunication company in Croatia T-HT, in which they went public when Croatian government sold 32.5 percent of total stocks. More than 358, 406 Croatian citizens bought shares packages in tota amount of 16, 695.00 HRK, or 63 stocks, each valued 265.00 HRK, which is 25 percent of previously mentioned 32.5 percent of total T-HT stocks. Remaining part of 7.5 percent was sold to international and local institutional investors. It is very interesting how many citizens have bought their stocks for the first time, regardless the fact that they did not collect information from the capital market up to that moment and in most cases the were not familiar with Stock Exchange regulations and Laws.

Bank Performance, Efficiency and Ownership in Transitition Countries

Using data from 1996 to 2000, we investigate the effects of ownership, especially by a strategic foreign owner, on bank efficiency for eleven transition countries in an unbalanced panel consisting of 225 banks and 856 observations. Applying stochastic frontier estimation procedures, we compute profit and cost efficiency scores taking account of both time and country effects directly. In second-stage regressions, we take these efficiency measures along with return on assets as dependent variables with dummy variables for ownership type, a variable controlling for bank size, and dummy variables for year and country effects as explanatory variables. Methodologically, our results demonstrate the importance of including fixed effects, especially country effects, and also suggest a preference for efficiency measures over financial measures of bank performance in empirical work on transition countries. With respect to the impact of ownership, we conclude that privatization by itself is not sufficient to increase bank efficiency as government-owned banks are not appreciably less efficient than domestic private banks. Our results do support the hypothesis that foreign ownership leads to more efficient banks in transition countries. We find that foreign-owned banks are more cost-efficient than other banks and that they also provide better service, in particular if they have a strategic foreign owner. Moreover, the participation of international institutional investors is shown to have a considerable additional positive impact on profit efficiency, which is consistent with the notion that these investors facilitate the transfer of technology and know how to newly privatized banks. In addition, we find that the remaining government-owned banks are less efficient in providing services, which is consistent with the hypothesis that the better banks were privatized first in transition countries. Finally, efficiency declines with bank size, which could call into question government-orchestrated bank consolidation strategies. We conjecture that the presence of many small and efficient foreign greenfield operations in these transition countries may be responsible for this result.