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Author: Seyed Esmaeil Seyedan Publisher: ISBN: Category : Languages : en Pages : 35
Book Description
I study the real effects of benchmarking in the professional fund management industry. Stocks of the productive sector are traded in a competitive equity market. Investors delegate their portfolio decisions to managers whose performance is benchmarked against an aggregate stock market index. Benchmarking affects market prices and returns, which consequently changes firms' investment behaviour. Managers hedge themselves by tilting their portfolio toward the index which increases the demand and price of the stocks that feature prominently in the index. Higher prices lead to even more investment by larger firms, generating a positive feedback loop. In equilibrium there is an inefficient shift towards extreme states in which big sectors dominate the economy. In presence of benchmarking, index inclusion is preceded by rise in firm's investment rate relative to its capital stock, which drops by a smaller degree after the inclusion.
Author: Seyed Esmaeil Seyedan Publisher: ISBN: Category : Languages : en Pages : 35
Book Description
I study the real effects of benchmarking in the professional fund management industry. Stocks of the productive sector are traded in a competitive equity market. Investors delegate their portfolio decisions to managers whose performance is benchmarked against an aggregate stock market index. Benchmarking affects market prices and returns, which consequently changes firms' investment behaviour. Managers hedge themselves by tilting their portfolio toward the index which increases the demand and price of the stocks that feature prominently in the index. Higher prices lead to even more investment by larger firms, generating a positive feedback loop. In equilibrium there is an inefficient shift towards extreme states in which big sectors dominate the economy. In presence of benchmarking, index inclusion is preceded by rise in firm's investment rate relative to its capital stock, which drops by a smaller degree after the inclusion.
Author: Ms.Yu Shi Publisher: International Monetary Fund ISBN: 1484378946 Category : Business & Economics Languages : en Pages : 87
Book Description
This paper identifies a new mechanism leading to inefficiency in capital reallocation at the extensive margin when an economy experiences a sectoral boom. I argue that imperfections in the financial market and capital barriers to entry in the booming sector create a misallocation of managerial talent. Using comprehensive firm-level data from China, I first provide evidence that more productive firms reallocate capital to the booming real estate sector, and demonstrate that the pattern is likely driven by fewer financial constraints on these firms. I then use a structural estimation to verify the talent misallocation. Finally, I calibrate a dynamic model and find that the without the misallocation, the TFP growth in the manufacturing sector would have improved by 0.5% per year.
Author: Veronica Guerrieri Publisher: DIANE Publishing ISBN: 1437941370 Category : Business & Economics Languages : en Pages : 39
Book Description
This is a print on demand edition of a hard to find publication. Proposes a general equilibrium model where investors hire fund managers (FM) to invest their capital either in a risky bond or in a riskless asset. There is a small fraction of informed FM with superior info. on the default probability. Looking at the past performance, investors update their beliefs on the info. of their FM and make hiring and firing decisions. This leads to career concerns which affect the investment decision of un-informed FM, generating a ¿reputational premium¿. When the default probability is high enough, un-informed FM prefer to invest in the riskless asset to reduce the probability of being fired. On the contrary, if the probability of default is low enough, investing in the risky bonds has a reputational advantage and the premium is negative.
Author: Ted Seides Publisher: Harriman House Limited ISBN: 0857198874 Category : Business & Economics Languages : en Pages : 197
Book Description
The chief investment officers (CIOs) at endowments, foundations, family offices, pension funds, and sovereign wealth funds are the leaders in the world of finance. They marshal trillions of dollars on behalf of their institutions and influence how capital flows throughout the world. But these elite investors live outside of the public eye. Across the entire investment industry, few participants understand how these holders of the keys to the kingdom allocate their time and their capital. What’s more, there is no formal training for how to do their work. So how do these influential leaders practice their craft? What skills do they require? What frameworks do they employ? How do they make investment decisions on everything from hiring managers to portfolio construction? For the first time, CAPITAL ALLOCATORS lifts the lid on this opaque corner of the investment landscape. Drawing on interviews from the first 150 episodes of the Capital Allocators podcast, Ted Seides presents the best of the knowledge, practical insights, and advice of the world’s top professional investors. These insights include: - The best practices for interviewing, decision-making, negotiations, leadership, and management. - Investment frameworks across governance, strategy, process, technological innovation, and uncertainty. - The wisest and most impactful quotes from guests on the Capital Allocators podcast. Learn from the likes of the CIOs at the endowments of Princeton and Notre Dame, family offices of Michael Bloomberg and George Soros, pension funds from the State of Florida, CalSTRS, and Canadian CDPQ, sovereign wealth funds of New Zealand and Australia, and many more. CAPITAL ALLOCATORS is the essential new reference manual for current and aspiring CIOs, the money managers that work with them, and everyone allocating a pool of capital.
Author: Dennis J. Chambers Publisher: ISBN: Category : Languages : en Pages : 50
Book Description
This study seeks to find evidence of misallocation of invested capital caused by opportunistic earnings management. Investors, if unable to detect the direction and magnitude of the managed portion of reported earnings, may tend to over-value firms practicing income-increasing earnings management and under-value firms practicing income-decreasing earnings management. I test this possibility by measuring future abnormal returns from a trading rule based on the magnitude of earnings management. Using five separate and distinct methodologies, I find consistent evidence of significant positive abnormal trading returns from a hedge portfolio based on the magnitude of earnings management. These results represent evidence of significant mis-pricing associated with opportunistic earnings management.
Author: Veronica Guerrieri Publisher: ISBN: Category : Assets (Accounting) Languages : en Pages : 40
Book Description
Abstract: We propose a model where investors hire fund managers to invest either in risky bonds or in riskless assets. Some managers have superior information on the default probability. Looking at the past performance, investors update beliefs on their managers and make firing decisions. This leads to career concerns which affect investment decisions, generating a positive or negative "reputational premium". For example, when the default probability is high, uninformed managers prefer to invest in riskless assets to reduce the probability of being fired. As the economic and financial conditions change, the reputational premium amplifies the reaction of prices and capital flows.
Author: Diane-Laure Arjaliès Publisher: Oxford University Press ISBN: 0198802943 Category : Business & Economics Languages : en Pages : 206
Book Description
This book suggests that investment decisions cannot be understood by focusing on isolated investors. Rather, most of their money flows through a chain: a sequence of intermediaries that 'sit between' savers and companies/governments. It argues that investment management is shaped by the opportunities and constraints that this chain creates.
Author: Edward Chancellor Publisher: Springer ISBN: 1137571659 Category : Business & Economics Languages : en Pages : 223
Book Description
We live in an age of serial asset bubbles and spectacular busts. Economists, policymakers, central bankers and most people in the financial world have been blindsided by these busts, while investors have lost trillions. Economists argue that bubbles can only be spotted after they burst and that market moves are unpredictable. Yet Marathon Asset Management, a London-based investment firm managing over $50 billion of assets has developed a relatively simple method for identifying and potentially avoiding them: follow the money, or rather the trail of investment. Bubbles whether they affect a whole economy or merely a single industry, tend to attract a splurge of capital spending. Excessive investment drives down returns and leads inexorably to a bust. This was the case with both the technology bubble at the turn of the century and the US housing bubble which followed shortly after. More recently, vast sums have been invested in mining and energy. From an investor's perspective, the trick is to avoid investing in sectors, or markets, where investment spending is unduly elevated and competition is fierce, and to put one's money to work where capital expenditure is depressed, competitive conditions are more favourable and, as a result, prospective investment returns are higher. This capital cycle strategy encourages investors to eschew the simple 'growth' and 'value' dichotomy and identify firms that can deliver superior returns either because capital has been taken out of an industry, or because the business has strong barriers to entry (what Warren Buffett refers to as a 'moat'). Some of Marathon's most successful investments have come from obscure, sometimes niche operations whose businesses are protected from the destructive forces of the capital cycle. Capital Returns is a comprehensive introduction to the theory and practical implementation of the capital cycle approach to investment. Edited and with an introduction by Edward Chancellor, the book brings together 60 of the most insightful reports written between 2002 and 2014 by Marathon portfolio managers. Capital Returns provides key insights into the capital cycle strategy, all supported with real life examples from global brewers to the semiconductor industry - showing how this approach can be usefully applied to different industry conditions and how, prior to 2008, it helped protect assets from financial catastrophe. This book will be a welcome reference for serious investors who looking to maximise portfolio returns over the long run.
Author: Sebnem Kalemli-Ozcan Publisher: ISBN: Category : Asset allocation Languages : en Pages : 35
Book Description
We study capital misallocation within and across 10 African countries using the World Bank Enterprise Surveys. First, we compare the extent of misallocation among firms within countries. We document high variation in firms' marginal product of capital (MPK), implying that countries could produce significantly more with the same aggregate capital stock if capital were allocated optimally. Such variation differs from country to country with some African countries (success stories) closer to developed country benchmarks. Small firms and non-exporters have less access to finance and have higher returns to capital in general. Self reported measures of obstacles to firms' operations suggest access to finance is the most important obstacle: A firm with the worst access to finance has MPK 45 percent higher than a firm with the worst access to finance as a result of low capital per worker. We compare average levels of the MPK across countries, finding evidence that the strength of property rights and the quality of the legal system help explain country-level differences in capital misallocation.
Author: Seyed Esmaeil Seyedan
Author: Seyed Esmaeil Seyedan
Author: Ms.Yu Shi
Author: Veronica Guerrieri
Author: Ted Seides
Author: Dennis J. Chambers
Author: Veronica Guerrieri
Author: Yue Xu
Author: Diane-Laure Arjaliès
Author: Edward Chancellor
Author: Sebnem Kalemli-Ozcan