Showing papers on "Physical capital published in 2012"
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TL;DR: In this article, the authors argue that while social capital is essential for the acquisition, integration, and release of resources at the core of a dynamic capability, actors can also use social capital for personal gain.
Abstract: Rent appropriation is an emerging area in the strategic management literature. Along these lines, the article explores who reaps the fruits of a dynamic capability. We argue that while social capital is essential for the acquisition, integration, and release of resources at the core of a dynamic capability, actors can also use social capital for personal gain. Thus, social capital may be a key to understanding both rent generation and rent appropriation. Even when causal ambiguity obscures individual contributions, they may use their social capital to establish credible claims on the rent. Specifically, employees who occupy structural holes, span organizational boundaries, or who are highly central may be most able to appropriate rent because their social capital grants credibility to their claims. Rent that is appropriated in this way may be unobservable in performance measures that fail to distinguish normal compensation from rent. We contribute by identifying the specific role of social capital in a dynamic capability and linking social capital to rent appropriation patterns.
546 citations
01 Jan 2012
TL;DR: In this article, the authors consider which existing network measures might be used to formalize the notion of social capital and propose a range of possible measures to quantify the social capital of social networks.
Abstract: As Burt (1998) notes, "social capital is fast becoming a core concept in sociology and political science". But it has mostly been used in a theoretical context; only a few researchers have had to confront the issue of measurement. Those that have (e.g., Burt 1992; Gulati 1999) have almost universally chosen or constructed a single measure of social capital. The focus has been substantive rather than methodological, so none have systematically considered the range of possible measures. In this short paper, we would like to consider which existing network measures might be used to formalize the notion of social capital.
422 citations
TL;DR: In this article, the impact of firm and industry characteristics on small firms' capital structure was studied. And the authors found that profits reduce in particular short-term debt, whereas growth increases longterm debt.
Abstract: We study the impact of firm and industry characteristics on small firms’ capital structure, employing a proprietary database containing financial statements of Dutch small and medium-sized enterprises (SMEs) from 2003 to 2005. The firm characteristics suggest that the capital structure decision is consistent with the pecking-order theory: Dutch SMEs use profits to reduce their debt level, and growing firms increase their debt position since they need more funds. We further document that profits reduce in particular short-term debt, whereas growth increases long-term debt. We also find that inter- and intra-industry effects are important in explaining small firms’ capital structure. Industries exhibit different average debt levels, which is in line with the trade-off theory. Furthermore, there is substantial intra-industry heterogeneity, showing that the degree of industry competition, the degree of agency conflicts, and the heterogeneity in employed technology are also important drivers of capital structure.
338 citations
TL;DR: In this article, the authors build a framework for the analysis of macroeconomic fluctuations that incorporates the endogenous determination of the number of producers and products over the business cycle, and the model performs at least as well as the benchmark real business cycle model with respect to the implied second-moment properties of key macroeconomic aggregates.
Abstract: This paper builds a framework for the analysis of macroeconomic fluctuations that incorporates the endogenous determination of the number of producers and products over the business cycle. Economic expansions induce higher entry rates by prospective entrants subject to irreversible investment costs. The sluggish response of the number of producers (due to sunk entry costs and a time-to-build lag) generates a new and potentially important endogenous propagation mechanism for real business cycle models. The return to investment (corresponding to the creation of new productive units) determines household saving decisions, producer entry, and the allocation of labor across sectors. The model performs at least as well as the benchmark real business cycle model with respect to the implied second-moment properties of key macroeconomic aggregates. In addition, our framework jointly predicts procyclical product variety and procyclical profits even for preference specifications that imply countercyclical markups. When we include physical capital, the model can simultaneously reproduce most of the variance of GDP, hours worked, and total investment found in the data.
269 citations
TL;DR: In this paper, the relationship between intellectual capital and financial performance of 65 Indian banks for a period of ten years from 1999 to 2008 was investigated empirically using Value added intellectual coefficient (VAIC) method for measuring the value based performance of banks.
Abstract: Purpose – The purpose of this study is to investigate empirically the relationship between intellectual capital and financial performance of 65 Indian banks for a period of ten years from 1999 to 2008.Design/methodology/approach – Reserve Bank of India's database and Annual reports, especially the profit and loss accounts and balance sheets of the banks for the relevant years have been used to obtain the data. Value added intellectual coefficient (VAIC™) method is applied for measuring the value based performance of banks. Return on assets (ROA) and return on equity (ROE) are used to measure the profitability and productivity of Indian banks, measured by assets turnover ratio (ATO). The intellectual capital (human capital and structural capital) and physical capital of selected banks have been analyzed and their impact on corporate performance has been measured using multiple regression technique.Findings – The analysis indicates that the relationships between the performance of a bank's intellectual capi...
260 citations
TL;DR: In this article, the authors examined the effect of working capital management on firms' performance for a sample of firms listed on a small emerging market, namely Amman Stock Exchange, and found that more profitable firms are less motivated to manage their working capital.
Abstract: – The purpose of this paper is to examine the effect of working capital management on firms’ performance for a sample of firms listed on a small emerging market, namely Amman Stock Exchange., – The paper includes a conceptual as well as empirical analysis, in which data from a sample of listed firms for the period from 2000 to 2008 are analyzed to examine if more efficient working capital management improves firms’ accounting profitability and firms’ value. Cash conversion cycles as well as its components are used as measures of working capital management skills. In this study, two performance measures are used: one accounting and one market measure, believing that wealth maximization is shareholders’ main concern. To bring up more robust results, this study used more than one estimation technique, including panel data analysis, fixed and random effects, and generalized methods of moments., – Using robust estimation techniques this study found that profitability is affected positively with the cash conversion cycle. This indicates that more profitable firms are less motivated to manage their working capital. In addition, financial markets failed to penalize managers for inefficient working capital management in emerging markets., – The paper's originality and value lies in suggesting that policy makers in emerging markets need to motivate and encourage managers and shareholders to pay more attention to working capital through improving investors’ awareness and improving information transparency.
228 citations
TL;DR: This article studied the impact of the level and volatility of commodity terms of trade on economic growth, as well as on the three main growth channels: total factor productivity, physical capital accumulation, and human capital acquisition.
Abstract: This paper studies the impact of the level and volatility of the commodity terms of trade on economic growth, as well as on the three main growth channels: total factor productivity, physical capital accumulation, and human capital acquisition. We use the standard system GMM approach as well as a cross-sectionally augmented version of the pooled mean group (CPMG) methodology of Pesaran et al. (1999) for estimation. The latter takes account of cross-country heterogeneity and cross-sectional dependence, while the former controls for biases associated with simultaneity and unobserved country-specific effects. Using both annual data for 1970--2007 and five-year non-overlapping observations, we find that while commodity terms of trade growth enhances real output per capita, volatility exerts a negative impact on economic growth operating mainly through lower accumulation of physical capital. Our results indicate that the negative growth effects of commodity terms of trade volatility offset the positive impact of commodity booms; and export diversification of primary commodity abundant countries contribute to faster growth. Therefore, we argue that volatility, rather than abundance per se, drives the "resource curse" paradox.
192 citations
25 Oct 2012
TL;DR: Wang et al. as mentioned in this paper presented a method of calculating the capital stock by input-output table, and calculated the fixed capital stock of china and industrial sectors from 1986 to 2007 by PIM and compared the estimation results with the existing research.
Abstract: Capital stock is the basis of macroeconomic research, yet, China is no official announcement of the capital stock data, so, In order to improve the reliability and accuracy of follow-up study, by reviewing and comparing the existing research results in China, the author gives a method of calculating the capital stock by input-output table, And the author calculates the fixed capital stock of china and industrial sectors from 1986 to 2007 by PIM, further, compares the estimation results with the existing research. The capital-output ratio test shows that China is going through a capital deepening process. Further, by analyzing the capital stock of industrial sectors, we draw a conclusion, since the mid-90s, China's major industrial sectors have emerged in the process of capital deepening, but after the 1998, there was no capital deepening phenomenon.
177 citations
TL;DR: In this paper, the effects of the working capital management factors for Greek enterprises' yields through the examination of profitability (gross operating profit), the performance (return on assets) and the market value of the firm (Tobin Q).
Abstract: Purpose - The purpose of this paper is to provide empirical evidence for the effective management of working capital and for its impact on the performance of Greek listed companies in terms of profitability, performance and market valuation.Design/Methodology/approach -This research approach is based on the examination of 211 listed on the Athens Stock Exchange firms for a period of six years from 2005 to 2010. This research intents to investigate the effects of the working capital management factors for Greek enterprises’ yields through the examination of profitability (gross operating profit), the performance (return on assets) and the market value of the firm (Tobin Q).Findings -The results of our research showed that there are significant negative correlations between the variables of working capital and the business performance. Thus, we must highlight the importance of managing working capital to ensure improved profitability, efficiency and market value of companies, as this aspect should be part of strategic and operational thinking of Greek enterprises, in order to operate effectively and efficiently.Research Limitations/implications -The main limitation of this research is that examining a sample of listed firms does not allow for generalization of conclusions for all listed firms.Originality/value - This paper provides new evidence for the effects of the determinants of working capital on the efficiency, profitability and market value of listed firms.
177 citations
TL;DR: It is essential that in such a period of public funding constraints health authorities monitor incidence of diseases and access to care of the most vulnerable groups and specifically target interventions to those who may be disproportionally hit by the crisis.
174 citations
TL;DR: In this article, the authors examined whether variations in the level of public capital across Spain's Provinces affected productivity levels over the period 1996 to 2005, by making (log) labour efficiency a function of total public capital stock and human capital stock, leading to a simple and empirically tractable reduced form linking productivity level to density of employment, human capital and public capital.
Abstract: In this article, we examine whether variations in the level of public capital across Spain's Provinces affected productivity levels over the period 1996 to 2005. The analysis is motivated by contemporary urban economics theory, involving a production function for the competitive sector of the economy (‘industry’) which includes the level of composite services derived from ‘service’ firms under monopolistic competition. The outcome is potentially increasing returns to scale resulting from pecuniary externalities deriving from internal increasing returns in the monopolistic competition sector. We extend the production function by also making (log) labour efficiency a function of (log) total public capital stock and (log) human capital stock, leading to a simple and empirically tractable reduced form linking productivity level to density of employment, human capital and public capital stock. The model is further extended to include technological externalities or spillovers across provinces. Using panel data ...
TL;DR: In this article, the authors empirically study the relationship between intellectual capital (IC) components (human, structural, and physical capitals) with the traditional measures of performance of the firm (profitability, productivity and market valuation) within the pharmaceutical sector of Iran.
Abstract: Purpose – The purpose of this study is to empirically study the relationship between intellectual capital (IC) components (human, structural, and physical capitals) with the traditional measures of performance of the firm (profitability, productivity and market valuation) within the pharmaceutical sector of Iran.Design/methodology/approach – The empirical data were drawn from pharma companies listed in the Iranian Stock Exchange (ISE), over the six‐year period of 2004 to 2009. The analysis of correlation, simple linear multiple regression and artificial neural networks (ANNs) were applied for analyzing any existing relationship between variables in the present study.Findings – The analysis indicates that the relationships between the performance of a company's IC and conventional performance indicators are varied. The findings suggest that the performance of a company's IC can explain profitability but not productivity and market valuation in Iran. Also the empirical analysis found that physical capital (...
TL;DR: In this paper, the authors use changes in Brazil's tax on capital inflows from 2006 to 2011 to test for direct portfolio effects and externalities from capital controls on investor portfolios.
Abstract: We use changes in Brazil’s tax on capital inflows from 2006 to 2011 to test for direct portfolio effects and externalities from capital controls on investor portfolios. The analysis is structured based on information from investor interviews. We find that an increase in Brazil’s tax on foreign investment in bonds causes investors to significantly decrease their portfolio allocations to Brazil in both bonds and equities. Investors simultaneously increase allocations to other countries that have substantial exposure to China and decrease allocations to countries viewed as more likely to use capital controls. Much of the effect of capital controls on portfolio flows appears to occur through signalling — i.e. changes in investor expectations about future policies — rather than the direct cost of the controls. This evidence of significant externalities from capital controls suggests that any assessment of controls should consider their effects on portfolio flows to other countries.
TL;DR: This paper investigated whether return migrants are more likely to become entrepreneurs than non-migrants and found that an overseas returnee is more likely than a nonmigrant to become an entrepreneur, even after controlling for the endogeneity of the temporary migration decision.
TL;DR: This article explored the professional identity formation of professionals and its relationship with their embodied physical image, with a particular focus on women in accounting and law, and argued that notions of physical capital remain highly gendered in professional services firms, with implications for equality and diversity in the professions.
Abstract: This article explores the professional identity formation of professionals and its relationship with their embodied physical image, with a particular focus on women in accounting and law. It examines the role of the professional services firm in defining a professional body image, socialization processes that contribute to the definition of the professional body, the role of the client in defining professionalism, the legitimation of certain types of embodied identities and the importance of the body in defining gendered perceptions of the self. The article draws on Bourdieu's concepts of capital to explore how physical capital is implicated in processes of socialization, subordination and control. By examining the development of professional embodiment of women in accounting and law, and drawing on interviews with contemporary practitioners, the article argues that notions of physical capital remain highly gendered in professional services firms, with implications for equality and diversity in the professions.
TL;DR: In this article, the authors test the predictions of Titman (1984) and Berk, Stanton, and Zechner (2010) by examining the effect of leverage on labor costs and find that leverage has a significantly positive impact on CEOs' cash, equity-based, and total compensation.
Abstract: We test the predictions of Titman (1984) and Berk, Stanton, and Zechner (2010) by examining the effect of leverage on labor costs. Leverage has a significantly positive impact on CEOs’ cash, equity-based, and total compensation. Compensation of new CEOs hired from outside the firm is positively related to prior-year firm leverage. In addition, leverage has a positive and significant impact on average employee pay. The incremental total labor expenses associated with an increase in leverage are large enough to offset the incremental tax benefits of debt. The empirical evidence supports the theoretical prediction that labor costs limit use of debt.
TL;DR: For example, this paper found that women are less likely than men to become non-farm entrepreneurs in rural areas of Bangladesh, Ethiopia, Indonesia and Sri Lanka, and that female-led firms are much smaller and less productive on average than male-led ones.
TL;DR: This paper developed a micro-foundation model linking institutions to human capital and found that improvements in the quality of institutions foster human capital accumulation, decrease income inequality and change the historical development path.
TL;DR: In this paper, the authors used a unique, comprehensive database of regulatory capital requirements on all UK banks to examine their effects on capital, lending and balance sheet management behavior, and found that capital requirements that include firm-specific, time-varying add-ons set by supervisors affect banks' desired capital ratios and that resulting adjustments to capital and lending depend on the gap between actual and target ratios.
Abstract: The financial crisis prompted widespread interest in developing a better understanding of how capital regulation drives bank behavior. This paper uses a unique, comprehensive database of regulatory capital requirements on all UK banks to examine their effects on capital, lending and balance sheet management behavior. We find that capital requirements that include firm-specific, time-varying add-ons set by supervisors affect banks’ desired capital ratios and that resulting adjustments to capital and lending depend on the gap between actual and target ratios. We use these results to measure the effects of a capital regime that includes features similar to those embedded in the UK framework. Our results suggest that countercyclical capital requirements may be less effective in slowing credit activity when banks can readily satisfy them with lower-quality (lower-costing) capital elements versus higher-quality common equity. Given the size of the UK banking sector and the global nature of many of the largest institutions in the UK banking sector, the results have implications for the ongoing debate surrounding the design and calibration of international capital standards.
TL;DR: In this paper, the authors present a model for the equilibrium movement of capital between asset markets that are distinguished only by the levels of capital invested in each market, and show that the speeds of adjustment of mean returns and of capital are increasing in the degree to which capital is imbalanced between the two markets, and can be reduced by competition among intermediaries.
Abstract: We present a model for the equilibrium movement of capital between asset markets that are distinguished only by the levels of capital invested in each. Investment in that market with the greatest amount of capital earns the lowest risk premium. Intermediaries optimally trade off the costs of intermediation against fees that depend on the gain they can offer to investors for moving their capital to the market with the higher mean return. The bargaining power of an investor depends on potential access to alternative intermediaries. In equilibrium, the speeds of adjustment of mean returns and of capital between the two markets are increasing in the degree to which capital is imbalanced between the two markets, and can be reduced by competition among intermediaries.
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TL;DR: In this article, the authors illustrate the potential for smart machines to engender long-term misery in a highly stylized two-period model and show that appropriate generational policy can be used to transform win-lose into win-win for all generations.
Abstract: Are smarter machines our children's friends? Or can they bring about a transfer from our relatively unskilled children to ourselves that leaves our children and, indeed, all our descendants - worse off? This, indeed, is the dire message of the model presented here in which smart machines substitute directly for young unskilled labor, but complement older skilled labor. The depression in the wages of the young then limits their ability to save and invest in their own skill acquisition and physical capital. This, in turn, means the next generation of young, initially unskilled workers, encounter an economy with less human and physical capital, which further drives down their wages. This process stabilizes through time, but potentially entails each newborn generation being worse off than its predecessor. We illustrate the potential for smart machines to engender long-term misery in a highly stylized two-period model. We also show that appropriate generational policy can be used to transform win-lose into win-win for all generations.
TL;DR: In this paper, the authors examine the relationship between aid and foreign direct investment (FDI) and find that aid invested in complementary inputs draws in FDI, while investment in pure physical capital crowds it out.
TL;DR: In this article, the authors argue that changes in international capital played only a small role in driving house price movements in this episode and that, instead, the key causal factor was a financial market liberalization and its subsequent reversal.
Abstract: The last …fteen years have been marked by a dramatic boom-bust cycle in real estate prices, accompanied by economically large ‡uctuations in international capital ‡ows. We argue that changes in international capital ‡ows played, at most, a small role in driving house price movements in this episode and that, instead, the key causal factor was a …nancial market liberalization and its subsequent reversal. Using observations on credit standards, capital ‡ows, and interest rates, we …nd that a bank survey measure of credit supply, by itself, explains 53 percent of the quarterly variation in house price growth in the U.S. over the period 1992-2010, while it explains 66 percent over the period since 2000. By contrast, once we control for credit supply, various measures of capital ‡ows, real interest rates, and aggregate activity–collectively–add less than 5% to the fraction of variation explained for these same movements in home values. Credit supply retains its strong marginal explanatory power for house price movements over the period 2002-2010 in a panel of international data, while capital ‡ows have no explanatory power. Keywords: housing boom and bust, global savings glut, foreign capital ‡ows. JEL:F20,F32,G12,G21
University of California, Davis1, Wageningen University and Research Centre2, University of Massachusetts Boston3, Empresa Brasileira de Pesquisa Agropecuária4, Universidade Federal de Viçosa5, International Center for Tropical Agriculture6, University of Cambridge7, Ikerbasque8, Columbia University9, University of Göttingen10, World Agroforestry Centre11
TL;DR: In this article, the authors examined management options for biodiversity in agricultural landscapes, eight research regions were classified into social-ecological domains, using a dataset of indicators of livelihood resources, i.e., capital assets.
Abstract: To examine management options for biodiversity in agricultural landscapes, eight research regions were classified into social-ecological domains, using a dataset of indicators of livelihood resources, i.e., capital assets. Potential interventions for biodiversity-based agriculture were then compared among landscapes and domains. The approach combined literature review with expert judgment by researchers working in each landscape. Each landscape was described for land use, rural livelihoods and attitudes of social actors toward biodiversity and intensification of agriculture. Principal components analysis of 40 indicators of natural, human, social, financial and physical capital for the eight landscapes showed a loss of biodiversity associated with high-input agricultural intensification. High levels of natural capital (e.g. indicators of wildland biodiversity conservation and agrobiodiversity for human needs) were positively associated with indicators of human capital, including knowledge of the flora and fauna and knowledge sharing among farmers. Three social-ecological domains were identified across the eight landscapes (Tropical Agriculture-Forest Matrix, Tropical Degrading Agroecosystem, and Temperate High-Input Commodity Agriculture) using hierarchical clustering of the indicator values. Each domain shared a set of interventions for biodiversity-based agriculture and ecological intensification that could also increase food security in the impoverished landscapes. Implementation of interventions differed greatly among the landscapes, e.g. financial capital for new farming practices in the Intensive Agriculture domain vs. developing market value chains in the other domains. This exploratory study suggests that indicators of knowledge systems should receive greater emphasis in the monitoring of biodiversity and ecosystem services, and that inventories of assets at the landscape level can inform adaptive management of agrobiodiversity-based interventions.
TL;DR: In this paper, the authors developed a tractable normative theory of socially-optimal capital taxation, and derived formulas for optimal tax rates on capitalized inheritance expressed in terms of estimable parameters and social preferences.
Abstract: This paper develops a realistic, tractable normative theory of socially-optimal capital taxation. We present a dynamic model of savings and bequests with heterogeneous random tastes for bequests to children and for wealth per se. We derive formulas for optimal tax rates on capitalized inheritance expressed in terms of estimable parameters and social preferences. The long-run optimal tax rate increases with the aggregate steady-state flow of inheritances to output, decreases with the elasticity of bequests to the net-of-tax rate, and decreases with the strength of preferences for leaving bequests. For realistic parameters, the optimal tax rate on capitalized inheritance should be as high as 50%-60% - or even higher for top wealth holders - if the government has meritocratic preferences (i.e., puts higher welfare weights on those receiving little inheritance) and if capital is highly concentrated (as it is in the real world). In contrast to the Atkinson-Stiglitz result, bequest taxation remains desirable in our model even with optimal labor taxation because inequality is two-dimensional: with inheritances, labor income is no longer the unique determinant of lifetime resources. In contrast to Chamley-Judd, positive capital taxation is desirable because our preferences allow for finite long run elasticities of inheritance to tax rates. Finally, we discuss how capital market imperfections and uninsurable shocks to rates of return can justify shifting one-off inheritance taxation toward lifetime capital taxation, and can account for the actual structure and mix of inheritance and capital taxation.
TL;DR: In this paper, a new theory of international capital flows is proposed, which integrates factor-proportions-based trade and financial capital flows, and a novel force emerges: capital tends to flow toward countries that become more specialized in capital-intensive industries.
Abstract: This paper provides a new theory of international capital flows. In a framework that integrates factor-proportions-based trade and financial capital flows, a novel force emerges: capital tends to flow toward countries that become more specialized in capital-intensive industries. This "composition" effect competes with the standard force that channels capital toward the location where it is scarcer. If the composition effect dominates, capital flows away from the country hit by a positive labor force/productivity shock - a flow "reversal." Extended to a quantitative framework, the model generates sizable current account imbalances between developing and developed countries broadly consistent with the data.
TL;DR: In this article, the human capital price series associated with dierent education levels are correlated and exhibit a strong secular trend, and robustness checks are conducted to identify the price and quantity of human capital.
Abstract: Separate identification of the price and quantity of human capital has important implications for understanding key issues in labor economics and macroeconomics. Price and quantity series are derived and subjected to robustness checks. The human capital price series associated with dierent education levels are highly correlated and exhibit a strong secular trend. Three result
TL;DR: In this paper, the influence of human capital, labour force, and absorptive capacity, physical capital as a control variable, foreign direct investment (FDI) inflows and gross domestic product (GDP) on Malaysia's productivity growth was inspected.
TL;DR: In this article, a simple model of how a small open economy can undervalue its real exchange rate using its capital account policies is presented, and a rule of thumb is proposed to assess their welfare cost.
Abstract: This paper presents a simple model of how a small open economy can undervalue its real exchange rate using its capital account policies. The paper presents several properties of such policies, and proposes a rule of thumb to assess their welfare cost. The model is applied to an analysis of Chinese capital account policies.
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27 Sep 2012
TL;DR: In this paper, the determinants of regulatory capital, economic capital, and actual capital were analyzed in a dynamic model of a bank with a loan-portfolio return described by the single-risk-factor model of Basel II.
Abstract: We analyze the determinants of regulatory capital (the minimum required by regulation), economic capital (that chosen by shareholders without regulation), and actual capital (that chosen with regulation) in a dynamic model of a bank with a loan-portfolio return described by the single-risk-factor model of Basel II. We show that variables that only affect economic capital, such as the intermediation margin and the cost of capital, can account for large deviations from regulatory capital. Actual capital is closer to regulatory capital, but the threat of closing undercapitalized banks generates significant capital buffers. Market discipline, proxied by the coverage of deposit insurance, increases economic and actual capital, although the effects are small.