Capital Investment Expenditures Research Articles

Balancing act: Examining the trade‐offs between regional convergence and economic growth in China's province managing county reform

AbstractThe study examines the relationship between regional convergence, economic growth and government hierarchies, with a specific focus on the province managing county (PMC) reform policy in China. The motivation for this research stems from the observation that a substantial portion of the increased inequality in China is attributable to disparities at the county level. This underscores the necessity for policies that address regional inequalities at the county level while simultaneously promoting sustained economic growth. We employ a time‐varying quasi‐natural experiment to explore how this reform has influenced regional convergence and economic growth within the sample period. The outcomes reveal that the PMC reform had a detrimental impact on regional convergence, hindering it by an average of 2.6%, while economic growth received a modest increase of 0.36%. The study also reveals notable heterogeneity in the effects of the reform, contracted disparities in western region, alongside exhibiting widened disparities and higher growth in eastern & central region. The study also investigates the underlying mechanisms, finding that expenditures on basic provisions reduced, while county revenue and investment expenditures increased following the policy change. It proposes that the increased investment in capital expenditures stimulated economic growth but came at the cost of hindering regional convergence.

Retail Companies: The Impact of Brand Image, Advertising, Promotional, and Capital Spending on Financial Performance

The maximisation of shareholder wealth can be achieved by attaining favourable financial performance. Consequently, the organisation can fulfil the anticipated outcomes of its owners and investors. The financial performance of a corporation serves as an indicator of its efficacy and efficiency in attaining its objectives. The organisation is facing a growing demand to enhance its operational performance by implementing innovative strategies in its business management. Continual implementation of this practice is necessary to navigate a highly competitive market environment effectively. This research employs empirical data to examine and evaluate the impact of brand image, advertising spending and promotion, and capital expenditure investment on a company's financial success. The present study centres on the examination of the retail industry in Indonesia from 2013 to 2023, utilising data obtained through the purposive sampling technique. The present study aims to gather data from prior research sources that are pertinent to the keywords "brand image," "shopping investment," and "Company financial performance." Utilise Helper Harzing's Publish or Perish tool to do this. Subsequently, the data underwent analysis through the utilisation of multiple linear regression. This study examines the research and impact of brand image on consumer shopping investment. The effect of capital on a company's financial performance will be thoroughly examined in this article.

Application of Fuzzy Simple Additive Weighting Method in Group Decision-Making for Capital Investment

Investment management is a common process and practice used for achieving a desirable investment goal or outcome. Unfortunately, the systematic variation of economic situations in the marketplace effects the continuous and frequent change of investment conditions and environment in which the investor should act and operate. Hence, the rules required for providing a reasonable quality of investment projects can be based only on the investor’s management strategy, intuition and practice. There exists various decision-making approaches to investment management, and simple additive weighting (SAW) is one of the most well-known multicriteria decision-making (MCDM) methods aiming to provide an optimal decision for the decision-maker when solving various real-life problems, particularly investment problems. In this paper, the fuzzy simple additive weighting (FSAW) method is applied in group decision-making to undertake capital investment expenditure for purchasing cars with the purpose of renting them out to the public. A numerical example illustrates the importance and effectiveness of the suggested approach with the aim of ranking alternatives, and, hence, determining the preferred alternative in the MCDM problem.

Rivals risk-taking incentives and firm corporate policy

This study contributes to the literature on the sensitivity of executives' compensation to risk, or vega, by examining the impact of rivals’ compensation on the firm's vega and its associated risk-taking corporate policies. Using firms from Compustat, I find that the vega of executive compensation is significantly and positively influenced by two determinants: rivals’ vega and competition intensity. The vega explained by these two determinants leads to lower return idiosyncratic risk, relatively more investment in research and development (R&D), and less investment in capital expenditures than the components of vega that are orthogonal to these determinants. I show that the explained vega, along with R&D, increases cash holdings and reduces the extent of corporate diversification. To validate a causal effect of rivals' managerial risk-taking incentives on firm risk and investment, I exploit vega changes incited by the FAS 123 R accounting regulation in 2005 that mandated stock option expensing at fair values. The findings remain consistent with earlier tests.

The effect of life cycle stages on capital expenditures: evidence from an emerging market

PurposeThe purpose of the article is to examine the effect of life cycle stages on capital expenditures, using Borsa Istanbul-listed companies.Design/methodology/approachThe panel data estimation procedure was used as the primary method to test the hypothesis. The authors used four additional analyses to check the robustness of the results. The model was tested for endogeneity using the generalized method of moments (GMM) estimation. Quantile regression was utilized for the non-parametric test of the model. In the third robustness test, the sample was divided into two using financial constraints with the Size-Age (SA) Index proposed by Hadlock and Pierce (2010). The last analysis removed the global financial crisis (GFC) years from the sample.FindingsBorsa Istanbul-listed companies tend to invest less as they move forward in their life cycle stages. The results show that market capitalization, operating cash flow levels and leverage positively affect capital expenditure investments. The empirical evidence also revealed that cash holding levels have a negative effect on capital expenditure decisions. Robustness tests support the results.Practical implications The findings are potentially useful for investors and managers. Having the information that decreasing capital expenditures signals that the company is in the last stages of its life would be a sign for managers to improve their investment strategies to avoid getting out of business and survive. They need to find options and solutions to propel their companies back on a path of growth. Additionally, the same information could be vital for investors' investment decisions.Originality/valueThis paper contributes to the literature by providing evidence about the effect of life cycle stages on capital expenditures from an emerging market. To the best of the authors’ knowledge, it is the first paper to investigate empirically how moving forward in the life cycle stages affects capital expenditures in an emerging market.

Technology Focus: High Pressure/High Temperature (March 2023)

The array of papers received for review this year covers a wide spectrum, both in applications and research, which indicates that the exploration and production (E&P) industry is actively working to monetize high-pressure/high-temperature (HP/HT) reservoirs. The pandemic has already put an indelible mark on the industry during the past 2 years. The present geopolitical scenario is posing a serious challenge to countries’ energy security. The oil and gas sector is confronted with the biggest task in society—addressing climate change. The E&P sector is going to face stiff challenges in the coming days, with the word “petroleum” being substituted by the word “energy” to cover wider possibilities. Eminent actions are distinctly visible in the strategic planning of fossil fuel companies and the capital-expenditure investments in the E&P sector. Companies are shifting priorities toward diversification, resilience, and decarbonization. Safety continues to dominate HP/HT operations and will do so in the future with more-stringent measures and compliances. Cost-effective technology solutions blanketing the entire domain of HP/HT activities will provide exploitation on a sustainable basis with collaboration between industry and academia. While reviewing the papers, every attempt was made to provide a fair representation that cuts across the HP/HT domain to show the reader what is happening in the industry, both in the field as well as in research, over different geographical locations. Several of these case studies presented inspiration tied to the indomitable human spirit that can overcome challenges through innovation. Recommended additional reading at OnePetro: www.onepetro.org. SPE 210702 An Integrated Approach in Pore-Pressure Prediction Contributes to Drilling Success of an HP/HT Wildcat Well in the South China Sea by Lijun Guan, CNOOC, et al. SPE 209865 Challenges of an HP/HT Completion Design With Extreme H2S and CO2 in a Carbonate Gas Development by C.W. Graham Grant, PTT Exploration and Production, et al. OTC 31051HP/HT Subsea Connector Verification and Validation Using an API 17TR8 Methodology by Barry Stewart, TechnipFMC, et al. SPE 210543 Bridging the Gap: Highly Depleted Reservoir Entry in a Mature HP/HT Field by Michael Cadd, Shell, et al. SPE 211735 Innovative Solutions to Subsurface Challenges in Deep Hard-Rock High-Temperature Slim Wells by Khalifa Omair Wahshi, Petroleum Development Oman, et al.

Reliable and cost-efficient protection scheme for 5G fronthaul/backhaul network

One of the challenges for Mobile Network Operators (MNO) in 5G deployment is to ensure reliability in the various sections of the network as the new services and applications, for instance, video on demand, telemedicine, online learning, smart transportation and augmented reality require not only high bandwidth but also demand uninterrupted service. However, this reliability requires substantial investment. Therefore, MNO only deploys protection or backup resources in the network unless it is cost-effective. The study aims to present a reliable and low-cost protection scheme based on an Ultra-Dense Wavelength Division Multiplexing Passive Optical Network (UDWDM PON) for the transport layer of the 5G network, i.e., for the fronthaul/backhaul section. We have evaluated the Capital Expenditure (CAPEX) cost of UDWDM PON with and without protection in a dense urban area. We also measure the figure of merit between the cost and reliability of the system and, subsequently, confirm that the proposed protection scheme can achieve system reliability up to four nines with very low additional CAPEX investment. Finally, the efficacy of the proposed protection scheme is also demonstrated through simulation experiments.

Seasoned equity offerings and payout policy

AbstractWe investigate firms that issue seasoned equity following a period of payouts to equity holders. Firms that engage in this roundtrip of equity exhibit strong growth in investment in capital expenditures. Issuing seasoned equity for payout firms does not appear to be associated with future declines in operating cash flow, but rather is associated more with large absolute increases in future cash flow. These firms tend to issue equity when their equity valuations are high, suggesting that market conditions matter. Our findings are consistent with firms issuing equity to use the capital for valuable investments in fixed assets, consistent with market assessments of growth opportunities.

Momentum Pattern of the Growth Anomaly

This paper investigates if the growth anomaly, the phenomenon that stocks of firms with lower growth in capital investment expenditures have higher future returns, exhibits the momentum pattern and if it can be explained from behavioral perspectives. We achieve this by decomposing a long-term 3-year investment growth into three consecutive short-term growth measures. The result from a cross-sectional analysis indeed reveals the presence of the momentum pattern in the growth anomaly that can be explained by behavioral theories. Long-term 3-year investment growth is statistically significant in explaining subsequent stock returns, but the first 1-year growth that is closest to the formation affects the returns (and hence is priced by investors) the most, followed by the second and third ones, monotonically. A further investigation shows that the growth anomaly is amplified by limits to arbitrage as measured by the level of idiosyncratic risk. However, the farther growth is less sensitive to the limit-to-arbitrage measure, thereby reiterating the momentum pattern of the growth anomaly.

Organisational restructuring of Indian Railways

Strategic drift of Indian Railways is due to the stagnant network capacity, declining freight share, project overrun, inefficient operating ratio, and, lack of autonomy. We propose two constructs to mitigate sectoral competition and augment investor credibility of IR for the period (2022–27). The first construct is a meta-competency framework in its strategic thinking of constituent skills. The second construct is the top-down empowerment by the government in collaborating freight segment of railways, highways, and the inland waterways for creating a strategic business unit under surface transport ministries. This study tests the hypotheses and discusses its implications of strategic drift, loss of freight share to road sector, ownership of monetisation of land rights & ancillary services by zonal railways, and, potential security & sabotage threats. Thus, this study expects to serve as a policy recommendation in creating an ecosystem for foreign direct investment and corporate restructuring of select subsidiaries of the Ministry of Railways in the four pillars of strategy architecture: Ease of doing business and transparency; Deregulation of capital expenditure investment; Cold supply chain capacity; Capitalize land rights and Right-of-Way. Hence, this IR strategic architecture discourse is prioritising economic value over social obligation of cross-subsidisation.

The Effect of Profit Sharing Fund, Export Value, Capital Expenditure Investment in Economic Growth and Unemployment in East Kalimantan

Purpose: This study discusses 1 To determine the effect of Profit Sharing Funds, Export Value on Economic Growth, Capital Expenditure on Economic Growth investment on unemployment through Economic Growth in East Kalimantan
 Design/methodology/approach: This research is a quantitative research and data analysis using path analysis regression
 Findings: Profit Sharing Funds, Export Value, Capital expenditure has no effect on economic growth and investment has a significant effect on economic growth in East Kalimantan Province. : Profit Sharing Funds, Export Value, Capital expenditure and investment has no significant effect on unemployment in East Kalimantan Province. profit sharing funds, export value, capital expenditure and investment have an indirect effect on unemployment through economic growth in East Kalimantan Province.
 Research limitations/implications: There are six variables considered in this paper: Profit Sharing Funds, Export, Capital Expenditure, investment, Economic Growth unemployment
 Practical implications: partially corporate governance has no effect and macroeconomics has a negative effect.
 Originality/value: This study calculates and finds out the truth of Profit Sharing Funds, Export, Capital Expenditure, investment, Economic Growth unemployment

Can Staggered Boards Improve Value? Causal Evidence from Massachusetts*

ABSTRACTStaggered boards (SBs) are one of the most potent common entrenchment devices, and their value effects are considerably debated. We study SBs' effects on firm value, managerial behavior, and investor composition using a quasi‐experimental setting: a 1990 law that imposed SBs on all Massachusetts‐incorporated firms. We find that relative to a matched control group of companies, for treated companies the law led to an increase in Tobin's Q, investment in capital expenditures and R&D, patents, and higher‐quality patented innovations, resulting in higher profitability. These effects are concentrated in innovating firms, especially those facing greater Wall Street scrutiny. An increase in institutional and dedicated investors also accompanied the imposition of SBs, facilitating a longer‐term orientation. The evidence suggests that SBs can benefit early‐life‐cycle firms facing high information asymmetries by allowing their managers to focus on long‐term investments and innovations.

Public Expenditure and Economic Growth: A Test of Wagner’s and Keynes Hypotheses in Nigeria and Angola Economies

This study verifies the validation of Wagner’s theory and Keynes's hypothesis between three main government expenditure components (Health expenditure, education expenditure, and capital investment expenditure) and economic growth in Nigeria and Angola. The study employs Johansen cointegration and pairwise granger causality as the estimation techniques. Findings revealed no evidence of long-run relationships with government expenditure components of health, education, and capital investment and economic growth. The study equally reveals the validation of Wagner’s theory between growth and expenditure on health in both Nigeria and Angola. Evidence that confirms both Wagner’s theory and Keynes's hypothesis between growth and expenditure on education in Angola and validation of only Keynes hypothesis in Nigeria was found. Also, the study confirms the validation of Keynes's hypothesis between government expenditure on capital investment in both Nigeria and Angola

Unconventional monetary policy and corporate bond issuance

We assess the effect and the timing of the corporate arm of the ECB quantitative easing (CSPP) on corporate bond issuance. Because of several contemporaneous measures, to isolate the programme effects we rely on one key eligibility feature: the euro denomination of newly issued bonds. We find that the significant increase in bonds issuance by eligible firms is due to the CSPP and that this effect took at least six months to unfold. This result holds even when comparing firms with similar ratings, thus providing evidence that unconventional monetary policy can foster a financing diversification regardless of firms’ risk profile. We also highlight the impact of the programme on the real economic activity. The evidence suggests that while all firms increased investment in capital expenditures and intangible assets, the CSPP induced eligible firms to invest in marketable and equity securities, to repurchase their own stocks, to hold cash and to carry out short-term investment.

Unconventional Monetary Policy and Corporate Bond Issuance

We assess the effect and the timing of the corporate arm of the ECB quantitative easing (CSPP) on corporate bond issuance. Because of several contemporaneous measures, to isolate the programme effects we rely on one key eligibility feature: the euro denomination of newly issued bonds. We find that the significant increase in bonds issuance by eligible firms is due to the CSPP and that this effect took at least six months to unfold. This result holds even when comparing firms with similar ratings, thus providing evidence that unconventional monetary policy can foster a financing diversification regardless of firms’ risk profile. We also highlight the impact of the programme on the real economic activity. The evidence suggests that while all firms increased investment in capital expenditures and intangible assets, the CSPP induced eligible firms to invest in marketable and equity securities, to repurchase their own stocks, to hold cash and to carry out short-term investment.

Corporate equity performance and changes in firm characteristics

While prior equity performance research analyzes portfolio characteristics using multifactor models, portfolio groups are typically used to explain average returns. Instead, we explore annual firm-level data and compare this with annual percentage changes in firm characteristics, emphasizing model predictive power and individual variation. Our analyses show a significant link between individual firm equity returns and percentage changes in total assets, book-to-market ratios, current ratios and shares outstanding, as well as historical returns and average market returns. Our findings affirm prior work illustrating the importance of profitability, size, liquidity, momentum and market returns, although we observe minimal evidence of the importance of investment in capital expenditures. We also perform these analyses at the industry level and note differences across industries, including the cyclical nature of the business equipment and consumer durables industries in contrast to the utilities and energy sectors. Overall, we contribute to the understanding of corporate characteristics and equity performance.

An application of simultaneous stochastic optimisation of an open-pit mining complex with tailings management

ABSTRACT This paper presents an application of a stochastic framework that simultaneously optimises mining, destination, processing and tailings management decisions for a multi-pit gold mining complex. The application explicitly accounts for supply uncertainty via stochastic orebody simulations. The tailings management component of the case study integrates a capital expenditure investment option to expand the existing tailings storage facility, evaluating its feasibility within the simultaneous stochastic optimisation framework. The results provide a risk-resilient long-term schedule that produces more metal than conventional forecasts and show that the operation has a positive growth outlook beyond its current life-of-mine.

Sarbanes-Oxley, agency conflicts and the marginal value of capital expenditure

PurposeThe purpose of this paper is to examine the relationship between the strength of corporate governance and the value of firm-level investment policies following the passage of the Sarbanes–Oxley (SOX) Act of 2002 and the associated changes to the listing requirements of major stock exchanges. In particular the authors seek to examine potential changes in the market’s assessed value of capital expenditures after the passage of the SOX Act relative to before.Design/methodology/approachThe authors employ a difference-in-difference methodology, centred on the year of the passage of the SOX Act to test for the role of governance on the marginal value of capital expenditures. Excess stock returns are calculated by subtracting Fama and French (1993) size and book-to-market portfolio value-weighted returns from the firms’ annual stock returns. Each firm is grouped into one of 25 size and book-to-market portfolios for each year in the sample, with size and the book-to-market ratio proxying for sensitivity to common risk factors in stock returns (Fama and French, 1993).FindingsThe authors find that markets responded to the change in governance brought about by the new regulation by altering the value of firm-level capital expenditures in a way that is generally consistent with predictions of agency theory. While the overall findings imply a reduction in agency conflicts post-SOX, there is some evidence that certain firms may have suffered excessive costs of compliance, while still others saw managers become excessively risk averse.Research limitations/implicationsThe study has implications related to the efficacy of legislation. Cross-sectional variation in the effect of SOX on the marginal value of capital expenditures suggests that one-size-fits-all legislative approach can have both expected as well as unintended consequences. The study limits its analysis to examining the impact of three significant provisions of the Act. While, the value implications of the Act are largely captured by the selected three, a more comprehensive study could expand on the set of provisions studies to obtain a more granular level impact.Practical implicationsThis research should add to the growing body of the literature examining the effect of SOX on firms’ real activities and decisions, as well as contribute to the debate on whether the Act was beneficial or costly to firms. With particular reference to the impact of capital expenditure on firm value, the research contributes to the sparse literature examining the contribution of capital expenditures to firm value and the role that agency conflicts play in this relationship. Additionally, this research adds to the growing body of the literature that examines the costs and benefits of the sweeping new regulations brought on by the adoption of SOX.Social implicationsGiven the importance of investment policy for economic productivity and growth, the insights provided by findings in this research should benefit lawmakers both within the USA as well as in countries where corporate misconduct and fraud is a concern.Originality/valueThis is the first study that examines the impact of the SOX Act on the way capital markets value firm-level investment in capital expenditures. Since use of corporate resources by managers is fraught with agency conflicts, the role of SOX in potentially alleviating this conflict as revealed by the tests in this study are very valuable.

HYDROMETALLURGICAL PROCESSING OF NICKEL LATERITES- A BRIEF OVERVIEW ON THE USE OF SOLVENT EXTRACTION AND NICKEL/COBALT PROJECT FOR THE SEPARATION AND PURIFICATION OF NICKEL AND COBALT

In this study, a brief overview of the solvent extraction (SX) application for the separationand purification of nickel and cobalt in hydrometallurgical processing of laterite nickel ores ispresented. This paper consists of two parts: firstly, the SX of nickel and cobalt from sulphateleach solutions is described; and secondly, the development of hydrometallurgical plants forthe processing of laterite nickel ores that involve solvent extraction technique is discussed. Themost important extractants are shortly given in the first part of the study. It is seen that theextraction and separation of nickel and cobalt from the impure leach solution of laterite nickelores can be performed by either using a single extractant system that is called as a direct solventextraction (DSX) or a mixture of two or more extractant which is known as a synergistic solventextraction system (SSX). Mixed sulphide precipitation (MSP) and mixed hydroxide precipitation(MHP) processes are mentioned. This paper is also addressed advantage and disadvantages ofeach extraction system. It is shown that capital investment expenditure, operational investmentexpenditure and mineralogical content are the most important factors that can affect the selectionof the appropriate hydrometallurgical process for lateritic nickel ore.

Sacrificing corporate investment for stock repurchases: Are family firms different?

Recent changes to the US tax code have increased stock repurchases by US firms. Critics state and existing research provides evidence that firms forego valuable investment to repurchase stock for short-term stock price increases, benefiting managers whose compensation is closely tied to the firm's stock price. Firms for which the founding family is involved have been shown to have longer horizons regarding investment decisions. This study examines the repurchase and investing behavior of 827 firms for the period 2006 through 2015. The results provide evidence that firms decrease investment in employment and research & development concurrently with stock repurchases. Family firms, however, are less likely to repurchase shares during the period and, when they do, have a lower propensity to decrease investment in capital expenditures, employment, and research & development compared to firms that do not have a founding family presence.