Showing papers on "Exit strategy published in 2014"

Incentives to Innovate and the Decision to Go Public or Private

Abstract: We model the impact of public and private ownership structures on firms' incentives to invest in innovative projects. We show that it is optimal to go public when exploiting existing ideas and optimal to go private when exploring new ideas. This result derives from the fact that private firms are less transparent to outside investors than are public firms. In private firms, insiders can time the market by choosing an early exit strategy if they receive bad news. This option makes insiders more tolerant of failures and thus more inclined to invest in innovative projects. In contrast, the prices of publicly traded securities react quickly to good news, providing insiders with incentives to choose conventional projects and cash in early.

Policy windows, ambiguity and Commission entrepreneurship: explaining the relaunch of the European Union's economic reform agenda

Abstract: This article explains the relaunch of the European Union's (EU) economic reform agenda in 2010. After repeated delays during 2009, the European Commission scaled back its initial plan for a revived social dimension and instead proposed a strengthened governance architecture of economic surveillance. Using the multiple streams framework we argue that the new Europe 2020 strategy which emerged is a product of two overlapping policy windows which opened suddenly in the problem stream (the Greek sovereign debt crisis) and politics stream (shifting institutional dynamics). This created a window of opportunity for skilful policy entrepreneurs to ‘couple’ the three streams by reframing the existing Lisbon Strategy as the EU's exit strategy from the crisis. The article contributes to understanding policy change under conditions of ambiguity by demonstrating the causal significance of key temporal and ideational dynamics: the timing of policy windows; access to information signals; and the role of policy entrepren...

Liquidity Traps: an Interest-rate-based Exit Strategy: Liquidity Traps

Abstract: This paper analyzes a potential strategy for escaping liquidity traps. The strategy is based on an augmented Taylor-type interest-rate feedback rule and differs from usual specifications in that when inflation falls below a threshold, the central bank temporarily deviates from the traditional Taylor rule by following a deterministic path for the nominal interest rate. This path reaches the intended target for this policy instrument in finite time. The policy we study is designed to raise inflationary expectations over time while at the same time maintaining all of the desirable local properties of the Taylor principle in a neighborhood of the intended inflation target. Importantly, the effectiveness of the potential exit strategy studied in this paper does not rely on the existence of an accompanying fiscalist (or non-Ricardian) fiscal stance.

Guest editorial on research and innovation strategies for smart specialisation in Europe

Abstract: Purpose – This Special Issue of the European Journal of Innovation Management sheds new light on the burning issue of Research and Innovation Strategies for Smart Specialisation (RIS3), both in terms of their policy formulation and their practical implementation in the field. This new policy approach refers to the process of priority setting in national and regional research and innovation strategies in order to build “place-based” competitive advantages and help regions and countries develop an innovation-driven economic transformation agenda. The paper aims to discuss these issues. Design/methodology/approach – This is an important topic both in the current debate about a new industrial policy for Europe and as a policy option for a successful crisis exit strategy led by public investments in the real economy. Moreover, smart specialisation is promoted by the European Commission as an ex ante conditionality for all regions in Europe to receive European Structural and Investment Funds in the field of inn...

Structural Change and Innovation as Exit Strategies from the Middle Income Trap

Abstract: This paper is intended to provide an updated discussion on a series of issues that the relevant literature suggests to be crucial in dealing with the challenges a middle income country may encounter in its attempts to further catch-up a higher income status. In particular, the conventional economic wisdom – ranging from the Lewis-Kuznets model to the endogenous growth approach – will be contrasted with the Schumpeterian and evolutionary views pointing to the role of capabilities and knowledge, considered as key inputs to foster economic growth.Then, attention will be turned to structural change and innovation, trying to map – using the taxonomies put forward by the innovation literature – the concrete ways through which a middle income country can engage a technological catching-up, having in mind that developing countries are deeply involved into globalized markets where domestic innovation has to be complemented by the role played by international technological transfer.Among the ways how a middle income country can foster domestic innovation and structural change in terms of sectoral diversification and product differentiation, a recent stream of literature underscores the potentials of local innovative entrepreneurship, that will also be discussed bridging entrepreneurial studies with the development literature.Finally, the possible consequences of catching-up in terms of jobs and skills will be discussed.

The Financing of Italian Firms and the Credit Crunch: Findings and Exit Strategies

Abstract: The second wave of the financial crisis — the sovereign debt crisis — which started in 2010, hit Italian banks hard, and since 2011 it has been causing a severe credit crunch for households and non-financial corporations.

Fare Thee Well? An Analysis of Buyout Funds' Exit Strategies

Abstract: This paper analyzes exit strategies of buyout funds in their portfolio companies following Initial Public Offerings. We use a data set of 222 buyout-backed IPOs in the United States between 1999 and 2008 including hand-collected data about each exit process to draw up a detailed road map of buyout investors’ divestment processes. Using this data, we document timing and aggressiveness of the exit strategies, and analyze to which degree a multitude of possible determinants influence the choice for a given exit strategy. Our results show that buyout funds stay invested in their portfolio companies for a substantial period of time after the IPO, and that the choice for a given exit strategy depends not only on characteristics of each respective portfolio company, but also on the financial success of the deal from the perspective of the buyout investor.

Monetary policy in the US and EU after quantitative easing: the case for asset based reserve requirements

Abstract: This paper critiques the Federal Reserve’s quantitative easing (QE) exit strategy which aims to deactivate excess liquidity via higher interest rates on reserves. That is equivalent to giving banks a tax cut at the public’s expense. It also risks domestic and international financial market turmoil. The paper proposes an alternative exit strategy based on ABRR which avoids the adverse fiscal and financial market impacts of higher interest rates. ABRR also increase the number of monetary policy instruments which can permanently improve policy. This is especially beneficial for euro zone countries. Furthermore, ABRR yield fiscal benefits via increased seignorage and can shrink a financial sector that is too large.

Corporate social responsibility: a likely causality of the crisis or a potential exit strategy component? A proposition development for an economy under pressure

Abstract: Purpose – The purpose of this paper is to outline a set of propositions for the Greek business sector concerning the value of strategically adopting a responsible business behaviour. The recent economic downturn of the Greek economy stresses the need for redefining current business models, attitudes and practices. Design/methodology/approach – The authors draw from prior literature on strategic corporate responsibility and build their arguments on the value of social responsibility as an important component of an exit strategy from the domestic economic crisis. Findings – Promoting the social responsibility of business could yield win–win opportunities for Greek firms and have a positive effect on the regeneration of the national economy’s dynamics. Connecting the well-established strategic CSR literature with the specific handicaps of an economy under pressure, we point out that the current deep crisis can be alleviated by regaining the trustworthiness, supporting the competitiveness potential and enhanc...

Building Better Armies: An Insider's Account of Liberia

Abstract: : We have long known that helping allies build better armies and police forces is a key to regional stability and the exit strategy for costly missions like Afghanistan in an as they stand up, we stand down approach. Yet the U.S. track record on this is unacceptably weak. The 2012 coup in Mali was staged by U.S. trained Malian soldiers. In Afghanistan, after years of training, the Pentagon assessed that only one of the Afghan National Army s 23 brigades is able to operate independently. This does not augur well for U.S. troop withdrawal in 2014 or for the future of Afghanistan. Nor is the United States alone. The United Nations has suffered similar setbacks in East Timor, Haiti, and the Democratic Republic of the Congo, where ill-trained security forces have staged coups, preyed on the civilian population, and necessarily elongated costly peacekeeping missions. There are many reasons for these failures: Building professional security forces in conflict affected countries is hard to do; there is a significant theory to practice gap on how to do it; there are no comprehensive practitioner guides or field manuals; and few practical models exist. Worse, the de facto train and equip approach is ineffective, as it focuses too much on tactics and techniques and misses important intangibles. This monograph fills a timely gap in our knowledge of security sector reform and offers a unique model to accomplish it. Liberia was once the epicenter of conflict and human rights abuse in West Africa, frequently at the hands of the military. Ten years later, Liberia is stable and even sending a peacekeeping contingent to Mali. This makes an excellent case study in how to build an army, as told by the program s architect. The author s frank and critical analysis provides key insights into improving the U.S. capabilities in this crucial yet underserved area. The author explains that a state must have the monopoly of force to uphold its rule of law.

Do the effects of private equity investments on firm performance persist over time

Abstract: This study examines whether the effect of private equity (PE) investments persists over time or wears off after the PE investors exit. Unlike previous studies that focus on the PE-backed initial public offerings (IPOs), we constructed a unique and distinctive dataset comprising PE investments exiting both via IPO and other common ways (i.e., trade sale, secondary buy-out and buy-back). Consistent with Jain and Kini (1995), we observe that PE-backed firms outperform other firms. Our results shed light on existing literature because we find that whether PE investments continue to benefit the portfolio firms is strictly related to the type (venture capital versus buy-out) and length of the PE investment, the nature of the PE investor (bank-based versus nonbank based), and the exit strategy (IPO versus other exit strategies).

An Assessment of the Impacts of the Runde Water Supply on the Life and Business of the Local People. A Case Study of Lundi Business Centre in Mwenezi District

Abstract: The research assesses the sustainability of small livestock pass on projects as a livelihood strategy for vulnerable households in rural communities using a case study of Africare small livestock pass on projects in Ward one Mwenezi District. The research focuses on the benefits and constraints of small livestock pass on schemes in the rural areas and if they can have life after the withdrawal of the donor. The major findings of the research include among other things that small livestock pass on projects have some benefits to vulnerable households in rural communities as well as being affected by many constraints that affect their sustainability as a livelihood strategy. An exit plan is very important for the continuation of the survival of the schemes when the donor withdraws. Issues to be addressed are, among others, control of diseases, provision of back up training and market coordination, so that beneficiaries will have to sell their livestock at a fair price at the market. Infrastructure developments are very important and follow up and monitoring after the initial implementation of the projects is vital.

Corporate social responsibility: A promising social innovation or a neoliberal strategy in disguise?

Abstract: :Since the Lisbon Summit the European Union has become resolute in its intention to promote the uptake of corporate social responsibility among European companies. The recent financial crisis has provided further impetus for evangelising CSR, which is identified by the EU public authorities as one exit strategy from the crisis and a promising means of fulfilling the Treaty objectives of inclusive and sustainable social market economy. This paper finds the above assertion problematic and uses a Polanyian framework to evaluate its validity. The paper represents a conceptual intervention in the policy justification provided by the European Commission. Contrary to the overly optimistic voices that see decommodifying tendencies within CSR, this paper claims that CSR does not have a potential to re-embed the economy as argued by the Commission. Despite its protective invocation, CSR is predicated on deepened commodification. It depends on the staging of a special type of exchange relation, whereby reputation is quantified and sold as a commodity by being denominated in a common unit. As such the CSR form promoted by the Commission is a microeconomic counterpart to the regime of rule-based macroeconomic depoliticisation.Keywords: Corporate social responsibility, European Union, Polanyi, disembedded, commodification, neoliberal.The recent economic crisis has not left a corner of the world unaffected and the many reports are here to remind us of its consequences. While some countries and regions have restored their pre-crisis economic output, the European Union is still engaging in fire-fighting missions (Streeck, 2012; Roxburgh and Mischke, 2011). Despite the dire unemployment figures, member state governments have not formulated any tangible growth strategy that will boost the economic activity within the EU, notwithstanding the recent approval of the Compact for Growth and Jobs worth euro120 billion (European Council, 2012).Contrary to the ample evidence, the European politicians are neurotically clinching to the belief that all we need for a recovery to unfold is for the markets to gain confidence (Hemerijck, 2012). However, the proposed solution of fiscal tightening originates from a skewed twisting of cause and effect, wherein deficit spending is projected as the cause of the Great Recession. And every attempt is made to conceal the fact that it was the financial crisis that enticed some governments to acquire debt by bailing out their banks (Brassett et al., 2010). Although scholars have warned that the austerity policies would not necessarily cure the patient (Hemerijck, 2012; Schmidt, 2014), the politicians are depriving the population of a quick recovery by pursuing fiscal consolidation in times of depressed demand. Thus, Polanyi's (1944: 148) argument is even more valid today than ever, when:the repayments of foreign loans and the return to stable currencies were [time and again] recognized as the touchstone of rationality in politics; and no private suffering, no restriction of sovereignty, is deemed too great a sacrifice for the recovery of monetary integrity.In line with their confidence fairy myth (Krugman, 2012) and the belief in a private sector led recovery, the Commission has identified corporate social responsibility (CSR) as one possible exit strategy from the crisis. In its latest Communication on CSR, the Commission has stated that enterprises have responsibility to 'mitigate the social effects of the current economic crisis, including job losses' (COM2011: 3). While making the above claims the Commission does not elaborate on how an increase in the CSR uptake is supposed to lead to a resolution of the sovereign debt crisis. Although the link between CSR and the economic crisis, which requires macroeconomic adjustment, is not selfevident, one can assume its existence if one adopts a broader understanding of the crisis. The crisis in the EU is a multifaceted phenomenon and the current Eurozone calamity is only one manifestation of it. …

The impact of national culture and type of entrepreneurs on outsourcing

Abstract: In this paper, we seek to address two important questions. First, why do companies outsource to countries with intensive entrepreneurial activities? Second, we examine the relationship between entrepreneurs and outsourcing success. We argue that national cultures determine the types of entrepreneurs that are more common in a country. We contend that the type of entrepreneurs, promoters versus trustees, influences outsourcing success. Specifically, we propose that promoters tend to outsource more and find an exit strategy faster, but are also more likely to select the wrong vendor than trustees.

Voluntary corporate governance with an empirical application

Abstract: The main idea of the article is to advance some arguments regarding a paradox of corporate governance: if it creates so much value for shareholders why in most countries governance is still heavily regulated by strict codes? The article advances a theoretical framework for the voluntary adoption of better corporate governance practices as influenced by four dimensions: ownership and control issues, capital structure, exit strategies and market performance. I estimate probit panel models with data from Brazilian companies that voluntarily moved to the Novo Mercado (New Market). Results indicate as significant variables representing the need for exit strategies through liquidity and the existence of shareholders’ agreements, while higher capital concentration implies a lower probability of companies voluntarily adopting better governance practices. Also, market drivers such as lower capital costs and performance are not statistically significant.

SMEs: Their Role in Developing Growth and the Potential for Investors

Abstract: Small- and medium-sized enterprises are the global catalyst for job creation, and there is a great need for start-ups and scale-ups in the Middle East and North Africa to raise regional economic prosperity. Some obstacles exist that could hinder successful entrepreneurial endeavors, such as inefficient processes, the criminalization of debt, scarcity of financing, and the time necessary to implement successful exit strategies. But the attractive opportunities that are available will perhaps cause entrepreneurs to reconsider the region.

“The Federal Reserve’s Exit Strategy: Looming Inflation or Controllable Overhang?

Abstract: Many economists and economic commentators fear that the Federal Reserve does not have an adequate exit strategy from the quantitative easing that took place during the financial crisis. Its bloated balance sheet has allegedly left a looming monetary overhang that the Fed will not be able to manage once the economy returns to normal. Interest rates will rise, banks will increase their loans, reserve ratios will fall, and money multipliers will rise, all unleashing very high inflation. Caught off guard, the Fed will neither accurately foresee nor easily offset this process. I argue that this fear is exaggerated. The Fed has four new or expanded tools?loans from the Treasury, reverse repurchase agreements, interest on reserves, and term deposits?with which it can restrain inflation without resorting to traditional open market operations. Indeed, a greater danger is that the Fed's exit strategy will involve no significant reduction in its balance sheet.

When and How to Exit Quantitative Easing

Abstract: The essence of quantitative easing (QE) is reducing the cost of private borrowing through large-scale purchases of privately issued debt instead of public debt (Bernanke, 2009). Regardless of how effective this highly unconventional monetary policy may be in reviving private investment and the economy in general, it is time to consider how exiting from these private asset purchases will affect the economy. In a standard economic model, if monetary injections can increase aggregate output and employment, then the reverse action may undo such effects. But does this imply that the U.S. economy will dive into another recession once the Fed starts its large-scale asset sales (under the assumption that QE has successfully pulled the economy out of the Great Recession)? This article studies the likely impact of QE and its exit strategy on the economy. In particular, it shows that three aspects of the Federal Reserve’s exit strategy are important in achieving (or maintaining) maximum gains (if any) in aggregate output and employment under QE: (i) the timing of the exit, (ii) the pace of the exit, and (iii) the private sector’s expectations of when and how the Fed will exit.

Can cooperation with the BRICs and other Growth Markets help EU member states exit the crisis

Abstract: This article explores potential differences in the level and speed of adjustment to the new centres of economic growth (BRICs and other Growth Markets) between the industrial member states (EU-15) and the new members of the European Union (NMS). It seeks to examine whether such differences can be attributed to differences in policies and the countries' crisis exit strategies. It establishes that the NMS have been more successful in adjusting to the new centres of economic growth (more by way of exports than inward FDI), but not if Russia, easily the biggest partner of the NMS, is excluded from the analysis. It therefore cannot be claimed that this success was the result of far-sighted strategies.

Art of War Papers: An Exit Strategy not a Winning Strategy? Intelligence Lessons Learned from the British Emergency in South Arabia, 1963-67

Abstract: : The British Army is often praised for a particular skill in small wars or counter-insurgencies (COIN). Some attribute this to the special challenge of maintaining order across a global empire with a relatively small force; others cite the intellectual inheritance of great British military theorists and an inherent flexibility present within a small army used to adaptation. Recent scholarship has challenged this view, suggesting that the UK s record of success in COIN is inconsistent and ignores many failures. When thinking about the British record, and the validity of British ideas on how best to fight and win at COIN, it is useful to examine a less well-known conflict the war in South Arabia (better known as the Aden Emergency). Although the war was part of the decolonization of the British Empire in the 1960s, the South Arabian conflict has much in common with recent conflicts in Iraq and Afghanistan: challenging terrain and people; intricate local politics; a de facto nation-building task; an externally-sponsored insurgency with safe havens in a neighboring state; finally, an unexpected major change in strategy-in this case to unilateral withdrawal (an exit strategy). This thesis examines the relationship between strategy, operational art and intelligence in the context of the British government s controversial decision in February 1966 to reverse its course by adopting an exit strategy with a public timeline. One of the unintended consequences of this decision was to cripple the ability of the withdrawing military to collect intelligence from the local populace. As a result of the shift in strategy, UK forces were more vulnerable and the British government less able to achieve the limited objectives of its new policy and strategy. Consequently, British forces became increasingly blind and faced greater violence from the insurgents with their intelligence organization simply overwhelmed.

QE: When and How Should the Fed Exit?

Abstract: The essence of Quantitative Easing (QE) is to reduce the costs of private borrowing through large-scale purchases of privately issue debts, instead of public debts (Ben Bernanke, 2009) Notwithstanding the effectiveness of this highly unconventional monetary policy in reviving private investment and the economy, it is time to think about the likely impacts of the unwinding of QE (or the reversed private-asset purchases) on the economy In a standard economic model, if monetary injections can increase aggregate output and employment, then the reversed action will likely undo such effects Would this imply that the US economy will dive into a recession once the Fed starts its large-scale asset sales (under the assumption that QE has successfully pulled the economy out of the Great Recession)? This paper shows that three aspects of the Federal Reserve’s exit strategy matter for achieving (or maintaining) maximum gains in aggregate output and employment under QE (if any): (i) the timing of exit, (ii) the pace of exit, and (iii) the private sector’s expectations of when and how the Fed will exit

Exit Strategies and Their Impact on the Euro Area

Abstract: This paper comments on the pros and cons of exit strategies. The focus is on the impact on the Euro area economy of the exit from unconventional monetary policies (UMP) by the Fed, which appears to be the first central bank to lay out an exiting path. In this context, it discusses the issue of policy coordination between central banks in the light of the substantial potential spillover effects via capital flows and exchange rate adjustments of unconventional monetary policies. The risks of a premature versus a delayed exit are assessed. In particular, the paper looks at the risk associated to spillover effects from UMP exit and the different shapes of exit paths. It also analyses exit strategies in a wider context and the associated financial stability risks, with a specific focus on the role of uncertainty. The paper presents estimates of the impact of the Fed’s exit from UMP in 2014 on the Euro area economy using new and innovative global IMF models. Finally, specific policy options to minimize exit risks are discussed and compared.

Operation, Problems, and Prospects of Youth Employment Programmes in Oyo State, Nigeria

Abstract: Oyo State like many of its counterparts in Nigeria is faced with the problem of a high number of its young population lacking access to employment opportunities. The State Government having realized the extent of the problem had to embark on several initiatives with the aim of reducing youth unemployment in the state. Evaluating the impact of any programme is an invaluable element required in policy formulation thus, the study was conducted to investigate the operation, problems and prospects of youth employment programmes in the State, using the Skill Acquisition Scheme and the Youth Empowerment SchemeOyo (YES-O) as case studies. A survey methodology was adopted for the study with structured questionnaires designed for four categories of respondents: trainees under the Skill Acquisition Scheme, tutors under the Skill Acquisition Scheme, administrators of the two employment programmes in the State, and cadets of the YES-O programme. The data gotten from respondents were analyzed through the help of the statistical software, SPSS. To ensure a lucid and simple analysis, descriptive statistics measures such as tables and percentages were used in interpreting results gotten from the study. The results obtained showed that many factors have militated against the ability of the two schemes to achieve their objectives. The State Skills Acquisition Scheme was characterized by problems ranging from inadequate funding, lack of an enduring exit strategy, lack of start-up capital, ineffective monitoring and supervisory mechanism, absence of literacy and numeracy components, and poor sensitization. The YES-O programme encountered challenges such as salary-related issues, absence of clearly defined exit strategy, duplications of duties and the inability of cadets to acquire relevant skills useful in the labor market. The recommendations for the improvement of the Skill Acquisition Scheme include the expansion of channels of enrollment into the scheme through collaboration with social groups, the establishment of more training centers, the creation of linkages with Micro Finance Institutions, and the adoption of Public Private Partnership (PPP) developmental strategy in the scheme. With regard to the YES-O programme, components such as entrepreneurship education, vocational training, and business management skills should be incorporated into the programme to cater for cadets in the post YES-O employment period.

QE: when and how should the Fed exit?

Abstract: The essence of Quantitative Easing (QE) is to reduce the costs of private borrowing through large-scale purchases of privately issue debts, instead of public debts (Ben Bernanke, 2009). Notwithstanding the effectiveness of this highly unconventional monetary policy in reviving private investment and the economy, it is time to think about the likely impacts of the unwinding of QE (or the reversed private-asset purchases) on the economy. In a standard economic model, if monetary injections can increase aggregate output and employment, then the reversed action will likely undo such effects. Would this imply that the U.S. economy will dive into a recession once the Fed starts its large-scale asset sales (under the assumption that QE has successfully pulled the economy out of the Great Recession)? This paper shows that three aspects of the Federal Reserve’s exit strategy matter for achieving (or maintaining) maximum gains in aggregate output and employment under QE (if any): (i) the timing of exit, (ii) the pace of exit, and (iii) the private sector’s expectations of when and how the Fed will exit.

Will You Ever Need an Exit Strategy

Abstract: Many decision makers fail to consider an exit strategy when adopting a new solution, because few want to consider the demise of the wonderful solution being implemented with great effort and expectation. Yet it's critical to plan for unanticipated events, such as providing safe and affordable ways of retrieving and transferring your data from a cloud if the need arises.

The Economic Crisis and Governance in the European Union

Abstract: This book explores the way in which the financial crisis that began in the US spread to the economy of the European Union. It takes a critical look at the measures adopted by EU institutions in response to that crisis, seeking to explain the rationale behind them, their context, their development and why different exit strategies were not adopted. In doing this, the book makes comparisons with the measures adopted by institutions in the US and the UK. As the crisis has shown that the financial supervision frameworks prevailing in 2007 were not fully able to deal with the largest financial crisis in history, this volume also reviews the proposals that have been designed to reform the supervisory architecture in financial services in the EU. The book concludes that the EU member states under most pressure from financial markets do suffer from intrinsic problems, but that the economic effects of the crisis have been exacerbated by shortcomings in economic governance within the EU. This work will be highly relevant to policy makers and scholars looking at EU integration, finance and market regulation