Profitable Investment Projects Research Articles

Accounting background and cross-membership effects on investment efficiency in Islamic banks: a study of Islamic Supervisory Board members

Purpose This study aims to examine the joint effect of accounting background and cross-membership of Islamic Supervisory Board (ISB) members on bank investment efficiency. Design/methodology/approach This study uses data collected from 36 Islamic banks across 15 countries globally, spanning the period from 2012 to 2021. This research uses an ordinary least squares regression and a comprehensive set of endogeneity and robustness tests. Findings The findings show a negative relationship between the accounting background of ISB members and investment efficiency. However, when ISB members with accounting backgrounds also have ISB cross-memberships, the banks exhibit high investment efficiency. These results suggest that ISB cross-membership plays a crucial role in facilitating Islamic banks’ access to timely information on investment opportunities. This enables ISB members with accounting expertise to thoroughly assess the benefits and risks associated with their investment prospects. These findings imply that ISB members with accounting backgrounds and cross-memberships have greater motivation and thoughtful considerations for making better investment decisions. Consequently, Islamic banks are better positioned to undertake high profitable investment projects, which enhance their investment efficiency. Practical implications The current study holds immense value for Islamic bank management in their selection of ISB members who possess an accounting background and cross-membership. Originality/value This study delves into a comprehensive investigation of the proficiency, underlying principles and unique characteristics exhibited by ISB members with an accounting background. Moreover, this study acknowledges the burgeoning global prominence of Islamic banks.

Job satisfaction and investment efficiency – Evidence from crowdsourced employer reviews

This study investigates the effect of job satisfaction on investment efficiency. To operationalize job satisfaction empirically, we employ a novel measure based on crowdsourced employer reviews. Considering the as yet under-researched and less regulated private firm setting, in which internal characteristics such as employee satisfaction should play a more important role for corporate actions, we find that our measure for job satisfaction has a positive impact on investment efficiency. High job satisfaction seems to alleviate problems related to moral hazard and adverse selection resulting from information asymmetries, which ultimately improves corporate investment efficiency. We further show that high job satisfaction reduces particularly the likelihood of underinvestment, where profitable investment projects are not carried out. Our study demonstrates the importance of cultivating a positive workplace environment with contented employees, which does benefit fundamental corporate actions.

ВПРОВАДЖЕННЯ ІННОВАЦІЙ В МАРКЕТИНГУ АГРОПРОМИСЛОВИХ ПІДПРИЄМСТВ

The development of directions for the development of innovations in marketing at agro-industrial complex enterprises focused on ensuring the energy and food security of the state in the conditions of the increase in the price of energy carriers on the world market, the reduction of prices on the domestic market for agricultural products, and the refusal to supply hydrocarbons from the aggressor country are extremely urgent. The article examines key approaches to creating innovations in marketing in agro-industrial formations. The need to create craft productions on the basis of farms and small agricultural formations on the basis of existing ones has been determined. The necessity of processing grain products into bioethanol with the formation of marketing models of the interaction of relevant business entities is well-founded. The need to create production clusters based on sugar factories focused on the production of biogas and bioethanol has been identified. The peculiarities of the use of digital channels for the promotion of agricultural products to the market have been studied. The expediency of reorientation of privatized distilleries to the production of bioethanol has been determined, which, in the conditions of the increase in the price of gasoline and the requirements of the legislation that provides for the mandatory addition of bioethanol to gasoline, is a sufficiently profitable investment project for the new owners of privatized productions. Reasonable expediency of directing the profits of agricultural enterprises to innovations in marketing focused on the production of biofuels to ensure their own energy needs. Directions for the development of state support in the field of creation of craft industries and production restructuring of agro-industrial enterprises focused on the production of biofuel are proposed. The necessity of using modern information systems in the activity of agro-industrial formations is argued. The necessity of using modern information systems in the activities of agro-industrial enterprises has been proven. The need to implement the proposed measures is argued, which will make it possible to increase the level of competitiveness of agricultural products and serve as a direction to ensure Ukraine's energy and food independence.

Assessment of the investment attractiveness of the regional economic sectors on the example of the Kirov region

The article focuses on the fact that the general struggle for investment resources, both at the state level and at the regional level, forces us to study the essence, content of the investment process, the forms of interaction between its participants in more depth and in detail, assess the investment potential of individual sectors of the economy and look for ways to improve its efficiency. When studying the investment attractiveness of economic sectors, such a methodology was used, which includes three stages: 1) assessment of the socio-economic situation of the region and determination of its rating in Russia; 2) analysis of the dynamics and structure of investments in fixed assets; 3) identification of benefits that provide investment incentives for external investors in the regional system and deter conditions for the development of investment activity. It has been revealed that there is a significant gap between regions in terms of investment activity in the Russian economy, which contradicts the principle of a single economic space of the country. The Kirov region is analysed in relation to other regions of the country in terms of the indicators under consideration. The most attractive sectors of the region’s economy for investors have been identified. The article shows how important it is to assess the investment attractiveness of individual sectors of the economy of the Kirov region in order to offer the most profitable investment projects in the future.

Optimizing the Finance Structure of Capital at Commercial Organization

In conditions of limited finance resources building optimum finance structure of capital is considered the most important objective, as the availability of the necessary amount of own funds can provide finance sustainability of the organization, the potential to meet timely liabilities to creditors, finance and develop new lines of work. However, any resources (both borrowed and own) have value, as they can be invested into the profitable investment project. It is obvious that the finance structure of capital can influence indirectly the level of organization profit, as in other expenses interest costs or interests payable are shown. Therefore, it is necessary to build such a correlation of own and borrowed sources, which can provide the max profit for the enterprise. As tools for building such a correlation the article proposes methods of mathematic modeling and, namely, the correlation analysis to find the interconnection between the dependent variable, i.e. work profitability and different factors - a share of own and borrowed funds. On the basis of this interconnection regression equation was built, which allows us to find out how the amount of net profit changes with a certain correlation of own and borrowed resources. The analysis was carried out based on published finance reports of the limited company ‘Gazprom Bureniye'.

Does Financialization of Non-Financial Corporations Promote or Prohibit Corporate Risk-Taking?

ABSTRACT We investigate how the financialization of nonfinancial corporations (NFCs) affects corporate risk-taking. We find that NFCs’ financialization has an adverse effect on corporate risk-taking, supporting the “crowding-out” effect. Short-term financial investments undermine firms’ incentives to chase risky but profitable investment projects. The negative association between NFCs’ financialization and corporate risk-taking is more pronounced in state-owned enterprises and firms with lower institutional ownership, showing that financialization leads managers to become more myopic and reduce long-term investments. Further, the sensitivity of financialization and corporate risk-taking varies with financial asset classification. We address both selection and endogeneity concerns.

Common Analysts and Corporate Mergers and Acquisitions：Evidence from A Quasi-natural Experiment

This paper investigates whether the quality of mergers and acquisitions（M&A）is higher when acquiring firms and target firms share the same external analysts. Our intuition is that the acquisition process often involves considerable uncertainty, including information asymmetry between bidders and targets regarding their operations, financial health, corporate culture, risks and prospects as well as uncertainty related to post-acquisition operational synergies. This uncertainty would negatively impact M&A performance by reducing managers’ ability to identify the most profitable investment projects, and make an evaluation objectively. We argue that when an acquirer and a target share common analysts, these analysts can help to reduce uncertainty along several dimensions. On the one hand, analysts can communicate with managers of target firms to obtain some private information through conformance call, site visit and investor meeting. At the same time, analysts can also acquire some information related to industry prospects and macro-economic environment using their relations with peer firms, other research departments and government institutions. Combining with the extra information, managers of bidders can screen the profitable investment target and make an appropriate evaluation for the target, which necessitates to make a high quality M&A investment. On the other hand, comparing to other investors in the capital market, analysts have the advantage in interpreting target firms’ complex information about accounting accruals and research development. Moreover, with the help of analysts, managers can have an insight into accounting policy, accounting choice and corporate strategy plan of the target. In this sense, information interpretation advantages of analysts would reduce the information asymmetry between bidders and targets as well as uncertainty about resources synergies after the acquisition. Above-mentioned reasoning suggests that common analysts can improve M&A performance. However, a study examining whether common analysts are beneficial to M&A performance is subject to the endogeneity problem. For example, certain types of firms may purposely seek out analysts of target firms because these firms need the knowledge and evaluation that analysts accumulate from targets（the self-selection” problem）. In order to address the endogeneity problem, we exploit a natural experiment in which brokers’ going public results in an external shock to common analysts. Following Bertrand and Mullainathan（2003）, we employ a difference-in-differences approach to estimate the effect on M&A performance. The results show that there is a positive effect of common analysts on M&A performance, and the effect is much stronger for firms not sharing common directors and common auditors, for firms with fewer similarities to targets, and for firms without M&A experiences before. We also find the higher M&A performance can be attributed to investment project profitability rather than lower premium. The conclusions of this paper provide the enlightenment to understand the effect of information intermediaries on corporate financial policies in general, and M&A quality in particular. First, confronting with serious information asymmetry and uncertainty, managers can communicate with common analysts to obtain some information in M&A activities. Due to the information advantage in obtaining private information and interpreting public information, common analysts contribute to shaping high-quality M&A decisions and improving M&A performance. Second, regulators in the financial market can further improve the disclosure quality of corporate information, which can reduce the information processing cost for analysts, facilitate the information to transfer from targets to acquiring firms, and eventually improve the efficiency of resource allocation.

Built Heritage Attractions in Cultural Tourism: the case of Al - Mustansiriya Madrassa, Baghdad

This research deals with the subject of Built heritage attractions in Muslim historical building, for what it represents, as an element dealing with Cultural tourism, in the process of developing tourism industry of the city.
 The location of Mustansiriya Madrassa in Baghdad’s commercial district could make it a profitable investment project to revive a cultural, artistic and tourist centre that could make it a cultural Tourism haven.
 The problem emerges through, how the role of built heritage to attract tourists in order to give vitality and liveability to the cultural tourism destination such as Al - Mustansiriya Madrassa which is one of the most popular heritage destinations, a historic school building situated in the ancient Abbasid district of Rusafa in the very heart of Baghdad.
 Therefore, the research's aim is to shed light on the heritage attraction as a mean to clarify the meaning of Cultural Tourism and specifying its definition.
 This research explains how the built heritage plays an important role in tourism in general and in the cultural tourism in particular because they attract tourists and provides a sustainable economic resource through its inclusion of values that make it distinct from other sources of attraction.

The importance of financial cost for renewable energy projects: economic viability assessment of renewable hybrid mini-grid systems in Indonesia

Still a lot of Indonesia’s population lacks access to electricity, and a large number of those people live in remote areas or on islands. Traditionally, electrification of areas not yet connected to the main electricity grid and too remote for grid extension has mainly been achieved through installation of decentralized generation units with diesel generators. However, with decreased cost of renewable energy technologies, renewable hybrid mini-grid systems are becoming economically viable options in an ever-increasing number of places. This paper analyzes the economic viability of renewable hybrid mini-grid systems with solar Photo-Voltaic cells, batteries, and diesel generators in a typical un-electrified village in Indonesia employing local data. The analysis is conducted by utilizing HOMER simulation techniques to design the optimal renewable hybrid mini-grid systems and the economic viability assessment of the system is performed by comparing the levelized cost of energy of the system with that of the conventional diesel system under different financial scenarios. Further financial analyses, such as Internal Rate of Return and Net Present Value, are performed for the hybrid systems to investigate what kind of financial scenarios (debt/equity ratios) and public aid (international aid and government fund), would make the hybrid systems attractive to private investors. The analysis has clarified that even at the most conservative scenario with 100% equity finance, the levelized cost of energy of the renewable hybrid mini-grid system is lower than that of the diesel system. Further analysis has shown that grant finance that covers 35% of the total project cost could make the hybrid system a profitable investment project for private investors even in the most conservative scenario. The paper also demonstrates that the profitability of renewable hybrid mini-grid systems is highly affected by financial scenarios (debt/equity ratios) in comparison with that of diesel systems, concluding with policy recommendations.

Interbank loans, collateral and modern monetary policy

This study develops a novel agent-based model of the interbank market with endogenous credit risk formation mechanisms. We allow banks to exchange funds through unsecured and secured transactions, which facilitates the flow of funds to the most profitable investment projects. Risk premiums result from banks׳ forecasting rules and depend on past performance of the benchmark risk factors and interest rates. Our model confirms basic stylized facts of the interbank interest rates and volumes. We also find that network structures within the secured market segment are characterized by the presence of dealer banks, while we do not observe similar patterns in the unsecured market. We perturb the model with exogenous shocks and policy scenarios which correspond to unconventional monetary policies.

Leverage, Growth Opportunity Dan Investasi Pada Perusahaan Non Keuangan Yang Terdaftar Di BEI

Company's investment activities in Indonesia experienced significant fluctuations. Companies make the investments in order to enhance shareholder value. In connection with investment decision-making, company should consider the internal conditions, such as the condition of the company's bank debt or leverage conditions. Moreover, before making an investment decision, the company should consider the investment opportunities (growth opportunity). This study aims to identify the effect of leverage on investment and whether a company that has low growth opportunity has lower investment. This is seen by adding moderating variable-growth opportunity in leverage effect on investment, which is proxied by Tobin's Q and sales growth. The samples used were non-financial companies listed on the Indonesia Stock Exchange in 2009 through 2013. The regression results showed significant negative effect of leverage on investment. This means that the leverage gives a negative impact on investment, the higher the leverage makes the investment lower. This happens because the bank debt raises investment restrictions on companies, thus higher bank debt will strengthen the restrictions on the investments made by the bank. Moderation model, of growth opportunity proxied by Tobin's Q and Sales Growth, weakens the negative effect of leverage on investments in companies with low growth opportunity. This means, companies with low growth opportunities has weaker negative influence of leverage on the investment. This is because, companies that have low growth opportunity, have a lower profitable investment projects, so restrictions on investments made by the bank or keditor are looser.

Payout flexibility and capital expenditure

Over the past two decades or so, repurchases have become an appealing method for disbursing cash to shareholders compared to the traditional dividends. Managerial perception as well as empirical evidence suggests that repurchases are inherently more flexible than dividends, which may account for their increasing popularity. The rigidity of dividends and the apparent flexibility of share repurchases could impact firm investments. Firms may forego profitable investment opportunities to maintain their dividend levels, while repurchases could be easily scaled back to fund profitable investment projects without fear of an adverse market reaction. We test the flexibility hypothesis of repurchases by regressing capital expenditures on repurchases and dividends in addition to other control variables. Consistent with our hypotheses, we find an inverse relationship between capital expenditures and repurchases but an insignificant relationship with dividends. Further, we find that the flexibility associated with repurchases is especially evident for firms that are financially constrained, and during the recent financial crisis period when external capital constraints were severe. Finally, we find that flexibility of repurchases with respect to capital expenditures is stronger in the more recent time period during which regulatory changes made repurchases more attractive as a mechanism to disburse cash back to shareholders.

Formula Apportionment or Separate Accounting? Tax-Induced Distortions of Multinationals' Locational Investment Decisions

We examine which tax allocation system leads to more severe distortions with respect to locational investment decisions. We consider separate accounting (SA) and formula apportionment (FA). The effects of both systems have been hotly debated in Europe in the past years. The reason is that the EU Member States are striving to implement a common European tax system that would lead to a switch from SA to FA. While existing studies focus primarily on the impact of taxes on locational decisions under either SA or FA, the main innovation of this paper is that it compares both systems with regard to the level of distortions they induce. We compare the optimal pre-tax investment decision with the optimal after-tax investment decision and infer from the difference in the allocation of investment funds which tax allocation system causes more severe distortions. We assume that the multinational group (MNG) has comprehensive book income shifting opportunities under SA. We find that the investment incentives under SA are opposed to those under FA for a profitable investment project. Whereas under SA as much as possible should be invested in a high-tax country, under FA as much as possible should be invested in a low-tax country. The distortions of locational investment decisions tend to be more severe under SA than under FA if a greater share of investment funds is to be invested in a low-tax country from a pre-tax perspective and the investment is profitable. Vice versa, locational decisions may be more distorted under FA if the optimal pre-tax investment decision requires investing a major share of funds in the high-tax country. In contrast to the often stated insensitivity of FA towards income shifting, we find the introduction of a tax allocation system based on FA in Europe could lead to a severe shift of economic substance to low-tax countries. The results of this paper are of particular interest for European policy makers and MNGs as our findings may induce European MNGs to reassess their recent locational investment decisions in the face of a potential future change in the applied tax allocation system. (authors' abstract)

What Is Illegal About Share Buybacks in Nigeria?

It is no news that the Companies and Allied Matters Act (“CAMA”) restricts the ability of a company to purchase its own shares, while allowing only few instances when a company may acquire its own share. Worth noting is that several postulations have been put forward as the rationale for this apparent restriction. For one, the argument has been made in certain quarters that this restriction was important in order to prevent fraud as some unscrupulous “managers” of a company could create an artificial “bubble” or impression of buoyancy of the shares of a company and ultimately fuel dangerous speculative trading of share by repurchasing those shares with loans. Meanwhile, proponents of share buybacks have equally argued that there is a need for companies (quoted) to reduce their shares and create scarcity; revive the stock market and ensure that value is given to investors. Arguments have further been canvased that buy back of shares allows a company to return to shareholders, surplus cash that the company itself is unable to invest efficiently in profitable investment projects and also assists a company to bolster or stabilize the market price of its shares. Although a number of writers have opined on the concept of share buybacks and rationale for share buybacks, there remains paucity of literature, if any at all, on whether share buyback is actually illegal in Nigeria. This paucity has however not helped the emergence of two schools of thoughts: first being that share buyback is illegal and the second being that there is nothing illegal about share buyback. It is equally worth noting that different interpretations have been provided to the statutory provision restricting the ability of a company to acquire its own share in Nigeria. It is in this wise that it becomes imperative to examine: (x) the common law position; (y) the concept of share buyback and its ambit under the Nigerian law; and (z) whether share buyback is actually illegal as argued in certain quarters.

Entrepreneurial Miscalculation and Business Cycles: How Interest Rate Targeting Distorts Capital Budgeting

This article, using Austrian Business Cycle Theory, shows how entrepreneurs and business managers are vulnerable to central bank monetary policies targeting interest rates. These policies distort market signals used as inputs in widely used capital budgeting metrics. Their reliance on nominal cash flows—together with their dependence on market-based discount rates, themselves directly or indirectly influenced by central bank policy—induces entrepreneurs to misestimate the real future profitability and feasibility of investment projects. Based on distorted market signals, entrepreneurs and business managers ignite an unsustainable economic boom. The divergence between ex ante and ex post profitable investment projects is widened because of business miscalculation leading to a cluster of errors that eventually results in the bursting of an economic boom. Therefore, although the exogenous distortion of market signals is a necessary condition of a business cycle, its ignition is purely endogenous.

The background for enhancing the investment activity of Russian transnational corporations in Africa

The article discloses the link between Soviet economists’ works and theoretical underpinning of the investment expansion of Soviet transnational corporations in the Third World, especially in Africa. The effect of Marxist and Leninist economic doctrines enriched by Comrade Stalin concerning displacement of Western transnational corporations from the Continent due to collapse of the colonial system. The conditions for implementation of a series of profitable investment projects by Russian enterprises up to the 1990s were analyzed. The authors estimated Russian foreign direct investments in Africa as insignificant, as well as their industrial concentration that is associated with mining industry and unprofitable metallurgic industries. They reveal special features of the use of offshores by such transnational corporations, and the character of the management statements disclosure, as well as quotations of declared projects the data of which contrasts the data of African contractors and is not registered by statistics. The article proves need for attracting African capital to projects that are joint with Russian transnational corporations and diversifying such business to the African agriculture, manufacture and innovative services for the local market like transnational corporations of developed countries do.

Ordered Fuzzy Numbers Approach to an Investment Project Evaluation

Abstract Aim of the paper is to propose a new tool for a decision supporting system concerning the financial project evaluation. It is based on the determination of the internal rate of return (IRR) of a investment project in which all expenditure and anticipated incomes are vague, and described by Ordered Fuzzy Numbers (OFNs). It means that the probabilistic approach is neglected in this paper and the use of the well developed arithmetics of OFNs is made to find a positive fuzzy root of a fuzzy polynomial representing the fuzzy net present value of the project. Since in the space of OFNs a partial order relation is defined together with a number of defuzzification functionals, the authors can construct a decision support system for investors helping them in acceptance procedure of most profitable investment projects.

Influence of Taxation on Investment Decisions by Entrepreneurs

The example presented in the paper explains operation of the phenomenon known in the literature as the "taxation paradox" that means that the net present value of the investment after considering taxation is higher than the net present value after taxation or the other way round. The aim is to present that dismissing the taxation aspects in the decision taking processes may result in inappropriate choices or lead to resignation from a profitable investment project by investors.

Restoring Trust in Banking

Trust allows financial transactions to take place when contracts are incomplete and the cost of negotiating too great for the parties involved. Banking covers many different types of transactions in assets with different levels of incomplete contracts. Investment banks have traditionally dealt with assets with incomplete contracts and often traded on informal and opaque markets. The creation of new global banks combined know-how, capital and collateral to generate enormous growth in these markets. While global banks developed trust with counterparties in specific markets, the opacity combined with limited liability structures also created principal-agent problems. The scandals which emerged are a reflection of these agency problems and have left trust in the banks greatly diminished. If levels of trust remain so low, this will be consistent with ongoing bank vulnerability, less lending to finance risky but profitable investment projects, and consequently lower economic activity. Regulation can support private incentives to accept codes of conduct which enhance trust.

Ownership Structure, Firm Value and Investment Opportunities Set: Evidence from Mexican Firms

This paper analyses the influence of ownership, board of directors, and financial leverage on companies’ performance when these either face, or do not face, profitable growth opportunities. Towards that end we examined a sample of 83 listed Mexican firms during the period 2005-2011. The results confirm the relevance of debt and board of directors in terms of firm market value by showing a negative relationship between performance and both, board of directors and leverage, in the presence of growth opportunities. In contrast, the relationship between debt and performance becomes positive when firms have no profitable investment projects. The results also demonstrate that the relevance of controlling shareholders on firm value is different when firms have or not growth opportunities. Therefore, our results show that ownership structure, composition and size of board and the level of leverage play a dual role on performance (increase or decrease the firm value) and determinewhether the firms have profitable investment projects.