Liquidity hedging with futures and forward contracts

2019 ◽  
Vol 36 (2) ◽  
pp. 265-290 ◽  
Author(s):  
Yong Jae Shin ◽  
Unyong Pyo
Keyword(s):  
Firm Value ◽  
Minimal Amount ◽  
Forward Contracts ◽  
Content Type ◽  
Term Operation ◽  
Futures Contract ◽  
Hedging Strategies ◽  
Parameter Values ◽  
Risky Debt

Purpose This paper aims to develop hedging strategies using both futures and forward contracts and issuing risky debt when financially constrained firms are forced to operate in long horizon. Design/methodology/approach The authors present a model for developing hedging strategies using both futures and forward contracts and issuing risky debt. A theoretical model employing stochastic differential equations for forward hedging is illustrated with a numerical example over parameter values consistent with the literature. Findings A financially constrained firm with limited cash balance must hedge its liquidity with both future and forward contracts and issue risky debt to support its long-term operations. The firm can issue a minimal amount of risky debt by adding forward contracts into hedging and can increase its value higher than that when hedging with only futures contracts. We show numerically that hedging with both futures and forward contracts allows the firm to issue minimal risky debt in increasing its firm value. Practical implications When Metallgesellschaft nearly collapsed in 1993, it offered long-term forward contracts to its customers and attempted to hedge its risk by rolling over series of short-term futures contract. It created the situation of inherent mismatch in maturity structure. A financially constrained firm operating in a long horizon appears to commit its liquidity as long-term forward contracts, which cannot be fully hedged with series of futures contacts. The firm should hedge its liquidity with both futures and forward contracts and avoid liquidation with deadweight costs in its long-term operation. Originality/value This is the first study examining hedging strategies with both futures and forward contracts.

Low friction states for thin solid lubricant film of MoS2

2018 ◽  
Vol 70 (4) ◽  
pp. 639-644 ◽  
Author(s):  
Kwang-Hua R. Chu
Keyword(s):  
Thin Films ◽  
Solid Lubricant ◽  
Activation Volume ◽  
High Vacuum ◽  
Low Friction ◽  
Friction Behavior ◽  
Stick Slip ◽  
Content Type ◽  
Term Operation

Purpose During the operation of Wendelstein 7-X (W7-X), any mechanical disturbance such as stick-slip may cause quenching of superconducting (SC) coils. The friction behavior of MoS2 lubrication (thin film) for narrow support elements between the SC coils in W7-X is rather important, as there is a design requirement for a coefficient of friction (COF) 0.05 between the sliding surfaces to control the stress contribution (from friction). Design/methodology/approach The author has carried out intensive calibrations or verifications using verified models considering previous friction tests on various samples which measured the COF in 4.2 K, 77 K and room temperature conditions (at high vacuum) to simulate the actual working condition. Findings The author has given useful explanations and diagnosis for previous anomalous scattered data. To improve the performance of MoS2, the author has predicted its better COF (0.002 via tuning of the activation volume), which could be a superlubricating state for MoS2 thin films considering the long-term operation requirement W7-X. Originality/value In this paper, the author has adopted Eyring’s approach to predict the low COF (0.002 via tuning of the activation volume), which could be a superlubricating state for MoS2 thin films considering the long-term operation requirement W7-X. Finally, some recent progresses about the possible few-layer MoS2 role in the electromagnetic loads have been provided.

Firm web visibility and its business value

2014 ◽  
Vol 24 (3) ◽  
pp. 292-312 ◽  
Author(s):  
Fang Wang ◽  
Liwen Vaughan
Keyword(s):  
Significant Relationship ◽  
Firm Value ◽  
Shareholder Value ◽  
Convincing Evidence ◽  
Business Value ◽  
Cross Sectional ◽  
Content Type ◽  
Web Visibility ◽  
Advertising Efficiency

Purpose – The purpose of this paper is to theoretically analyze and empirically test the business value of firm web visibility, including its relationship to advertising efficiency and long-term financial performance (i.e. shareholder value). Design/methodology/approach – A conceptual framework is established to analyze firm value of web visibility through its market effects. Hypotheses on the associations between firm web visibility and advertising efficiency and shareholder value are tested by cross-sectional analysis of 1,331 firms in six industries and four industry sectors. The authors control for several firm- and industry-level factors. Findings – The results consistently support the two hypotheses, i.e., first, a positive and significant relationship between firm web visibility and advertising efficiency; and second, a positive and significant relationship between firm web visibility and shareholder value. Practical implications – In addition to increasing web traffic, firm web visibility has business value and helps to enhance advertising efficiency and shareholder value. Managers can use the web references as a valuable tool for marketing success when the use of traditional advertising reaches saturation. Managers should actively monitor and use web visibility as a web management measure in practice. Originality/value – This research provides convincing evidence to support both short-term and long-term business value of web visibility and suggests that web visibility be recognized and managed as a market-based asset.

Volatility in frontier markets: a Multivariate GARCH analysis

2019 ◽  
Vol 16 (3) ◽  
pp. 294-312
Author(s):  
Neha Seth ◽  
Monica Singhania
Keyword(s):  
Financial Distress ◽  
Spillover Effect ◽  
Multivariate Garch ◽  
Volatility Spillover ◽  
Causality Test ◽  
Content Type ◽  
Hedging Strategies ◽  
Long Run ◽  
Short Run

Purpose The purpose of this paper is to analyze the existence of volatility spillover effect in frontier markets. This study also examines whether any linkages exist among these markets or not. Design/methodology/approach Monthly data of regional frontier markets, from 2009 to 2016, are analyzed using Multivariate GARCH (BEKK and Dynamic Conditional Correlation (DCC)) models. Findings The result of cointegration test shows that the sample frontier markets are not linked in long run, and Granger causality test reveals that the markets under consideration do not cause each other even in the short run. BEKK test says that the effect of the arrival of shock from the own market does not last for longer, whereas shock from other markets lasts with the stronger persistence, and according to DCC test, the volatility spillover exists for all the markets. Practical implications The results of present study suggest that the frontier markets are not cointegrated in the long run as well as in the short run, which opens the doors for long-term investments in these markets in future, which may lead to decent returns. Long-term investors may draw the benefits from including the financial assets in their portfolios from these non-integrated frontier markets; nevertheless, they have to consider and implement diversification and hedging strategies during the period of financial turmoil, so as to protect themselves against economic and financial distress. Originality/value Significant work has been done on developed, developing and emerging markets but frontier markets are not explored much so far. This paper is an attempt to see the status of frontier stock markets as potential financial markets for diversification benefits.

scholarly journals Geochemical and Temporal Influences on the Enrichment of Acidophilic Iron-Oxidizing Bacterial Communities

2016 ◽  
Vol 82 (12) ◽  
pp. 3611-3621 ◽  
Author(s):  
Yizhi Sheng ◽  
Kyle Bibby ◽  
Christen Grettenberger ◽  
Bradley Kaley ◽  
Jennifer L. Macalady ◽  
...  
Keyword(s):  
Community Structure ◽  
Microbial Community ◽  
Microbial Communities ◽  
Temporal Distance ◽  
Fed Batch ◽  
Content Type ◽  
Term Operation ◽  
Geochemical Conditions ◽  
Suspended Growth

ABSTRACTTwo acid mine drainage (AMD) sites in the Appalachian bituminous coal basin were selected to enrich for Fe(II)-oxidizing microbes and measure rates of low-pH Fe(II) oxidation in chemostatic bioreactors. Microbial communities were enriched for 74 to 128 days in fed-batch mode, then switched to flowthrough mode (additional 52 to 138 d) to measure rates of Fe(II) oxidation as a function of pH (2.1 to 4.2) and influent Fe(II) concentration (80 to 2,400 mg/liter). Biofilm samples were collected throughout these operations, and the microbial community structure was analyzed to evaluate impacts of geochemistry and incubation time. Alpha diversity decreased as the pH decreased and as the Fe(II) concentration increased, coincident with conditions that attained the highest rates of Fe(II) oxidation. The distribution of the seven most abundant bacterial genera could be explained by a combination of pH and Fe(II) concentration.Acidithiobacillus,Ferrovum,Gallionella,Leptospirillum,Ferrimicrobium,Acidiphilium, andAcidocellawere all found to be restricted within specific bounds of pH and Fe(II) concentration. Temporal distance, defined as the cumulative number of pore volumes from the start of flowthrough mode, appeared to be as important as geochemical conditions in controlling microbial community structure. Both alpha and beta diversities of microbial communities were significantly correlated to temporal distance in the flowthrough experiments. Even after long-term operation under nearly identical geochemical conditions, microbial communities enriched from the different sites remained distinct. While these microbial communities were enriched from sites that displayed markedly different field rates of Fe(II) oxidation, rates of Fe(II) oxidation measured in laboratory bioreactors were essentially the same. These results suggest that the performance of suspended-growth bioreactors for AMD treatment may not be strongly dependent on the inoculum used for reactor startup.IMPORTANCEThis study showed that different microbial communities enriched from two sites maintained distinct microbial community traits inherited from their respective seed materials. Long-term operation (up to 128 days of fed-batch enrichment followed by up to 138 days of flowthrough experiments) of these two systems did not lead to the same, or even more similar, microbial communities. However, these bioreactors did oxidize Fe(II) and remove total iron [Fe(T)] at very similar rates. These results suggest that the performance of suspended-growth bioreactors for AMD treatment may not be strongly dependent on the inoculum used for reactor startup. This would be advantageous, because system performance should be well constrained and predictable for many different sites.

Changes in measured biodegradation kinetics during the long-term operation of completely mixed activated sludge (CMAS) bioreactors

1996 ◽  
Vol 34 (5-6) ◽  
pp. 35-42 ◽  
Author(s):  
Timothy G. Ellis ◽  
Barth F. Smets ◽  
Benjamin S. Magbanua ◽  
C. P. Leslie Grady
Keyword(s):  
Activated Sludge ◽  
Kinetic Parameters ◽  
Plug Flow ◽  
Biodegradation Kinetics ◽  
Monod Kinetics ◽  
Term Operation ◽  
In Series ◽  
Parameter Values ◽  
Ks Values

Two completely mixed activated sludge (CMAS) bioreactors, one with an aerobic selector and one without, were operated for approximately twelve and sixteen months, respectively. Extant biodegradation kinetics for several compounds were periodically tested using a batch respirometric procedure. Kinetic parameters from the CMAS unit without a selector showed considerable variability (standard deviation of ± 50%) even though it was operated at steady state (i.e. constant HRT, SRT, organic loading, etc.) for the duration of the study. At first, there was a large discrepancy between the kinetic parameters of the two bioreactors. Phenol and 4-chlorophenol were biodegraded according to Monod kinetics in the selector system and Andrews (inhibitory) kinetics in the non-selector system, and the μ^ and KS values were significantly greater in the selector system. The kinetic parameter values of the two systems converged, however, when the xenobiotic compounds were no longer fed to the selector in that system but were fed to the main bioreactor. After this switch, phenol and 4-chlorophenol followed inhibitory kinetics in both systems. The lack of inhibition when phenol and 4-chlorophenol were fed to the selector suggests that, contrary to conventional wisdom, bioreactors which have a concentration gradient (e.g. plug flow, sequencing batch, and tanks in series bioreactors) may be more resistant to inhibition.

The effects of IT: from performance to value

2014 ◽  
Vol 114 (1) ◽  
pp. 70-85 ◽  
Author(s):  
Chorng-Shyong Ong ◽  
Po-Yen Chen
Keyword(s):  
Firm Performance ◽  
Firm Value ◽  
Design Methodology ◽  
Test Methods ◽  
Short Term ◽  
Content Type ◽  
Sustained Competitive Advantage ◽  
It Capabilities ◽  
Practical Implications

Purpose – The purpose of this paper is to differentiate and define the concepts of firm performance and firm value. Then, the implications of information technology (IT)-enabled firm performance and firm value will be clarified. Finally, the effects of IT capabilities on firm performance and firm value will be compared. Design/methodology/approach – InformationWeek's IT leader rankings (from 1998 to 2011) are used for analysis in a longitudinal study. Three different test methods (i.e. significant years, significant levels, and adjusted-previous performance) are used. Findings – It is confirmed that no matter which tests are examined, the contributions of IT capabilities to firm value are all greater than those to firm performance. This also shows that IT contributes to long-term influences more than it does to short-term influences. Research limitations/implications – This study confirms that firm performance (accounting-based measures) and firm value (financial market-based measures) are two different variables and IT capabilities affect these two parts differently. Practical implications – Firms should use a long-term viewpoint to deploy their IT strategies. This will create a long-term growth of firm value leading to greater competitiveness, and, ultimately, sustained competitive advantage. Originality/value – The differences between firm performance and firm value in measurements, characteristics, and implications are specified. The empirical study confirms that IT capabilities contribute more to firm value than to firm performance, although IT capabilities influence both at the same time.

Chief marketing officer’s equity incentives: economic determinants and effects on shareholder value

2014 ◽  
Vol 48 (9/10) ◽  
pp. 1757-1781 ◽  
Author(s):  
Michele Fabrizi
Keyword(s):  
Firm Value ◽  
Positive Impact ◽  
Shareholder Value ◽  
Chief Executive ◽  
Content Type ◽  
Economic Determinants ◽  
Equity Incentives ◽  
The Board Of Directors ◽  
Marketing Intensity

Purpose – This paper aims to investigate the economic determinants and the effects on firm value of the Chief Marketing Officer’s (CMO’s) equity incentives. Design/methodology/approach – The empirical analysis uses 586 firm-year observations corresponding to 227 unique firms collected from Execucomp dataset over the period 2000-2009. Findings – The paper documents that when a firm’s marketing intensity increases, the CMO’s equity incentives significantly increase; CMO’s equity incentives are positively related to shareholder value, and this positive relationship is incremental to that between the Chief Executive Officer’s (CEO)’s equity incentives and firm value; the positive impact of the CMO’s equity incentives on the firm value is partially mediated by marketing investments. Research limitations/implications – The paper helps understand under which circumstances firms provide the CMO with high-equity incentives and what the performance implications are of providing the CMO with long-term incentives. Practical implications – Results indicate that companies should try to incent the CMO with equity-based incentives because the CMO can boost shareholder value on a way that is incremental to how the CEO does so. As a consequence, if the board of directors decides not to provide the CMO with sufficient equity incentives, it is likely that this decision will be suboptimal for shareholders. Originality/value – This paper is the first to analyze the structure and effect on firm value of the CMO’s compensation in answer to calls for research on compensation of executives other than CEOs.

Executive compensation and corporate social responsibility: does a golden parachute matter?

2020 ◽  
Vol 16 (5) ◽  
pp. 575-598
Author(s):  
Collins E. Okafor ◽  
Nacasius U. Ujah
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Executive Compensation ◽  
Firm Value ◽  
Moderating Effect ◽  
Inverse Association ◽  
Content Type ◽  
Golden Parachute ◽  
Corporate Social

PurposeThis study examines the efficacy of compensation in encouraging corporate executives to promote corporate social responsibility (CSR). In particular, it closely examines the effect of a golden parachute (GP) on an executive's behavior toward CSR.Design/methodology/approachThis study uses longitudinal data on 1,301 US firms for the period from 1993 to 2013. The data comes from Compustat, MSCI ESG STATS, RiskMetrics and ExecuComp.FindingsWe find an inverse association between current and long-term compensations and GP on firms' CSR. However, a test on the moderating effect discloses that a GP and long-term compensation jointly and positively increase the firms' CSR performance. This increase supports the idea that executives with a GP seek to maximize their long-term wealth by approving CSR projects that add value. The results also show that female executives are more likely to promote CSR than their male counterparts, and older executives are less willing to engage in CSR projects.Practical implicationsAdding a GP contractual clause to the executive compensation package could encourage greater engagement in CSR projects. The CEO with a GP will ensure that the firm engages in only value-enhancing CSR projects; this should align the interest of the society (greater firm engagement in CSR) with the interest of the firm (value maximization).Originality/valueThis study contributes to the literature by examining the moderating effect of a GP on the association between CSR and executive compensation.

Brand and firm values in distinct national cultures

2020 ◽  
Vol 32 (8) ◽  
pp. 1737-1758 ◽  
Author(s):  
Reza Chowdhury ◽  
Wootae Chun ◽  
Sungchul Choi ◽  
Kurtis Friend
Keyword(s):  
Cultural Values ◽  
Firm Value ◽  
Power Distance ◽  
Uncertainty Avoidance ◽  
National Cultures ◽  
Content Type ◽  
Brand Values ◽  
The Relationship

PurposeThe objective of this article is to investigate the moderating role of national cultures in the relationship between brand value and firm value.Design/methodology/approachThis article examines the topic in the context of different national cultural attributes, including individualism, uncertainty avoidance, masculinity, power distance, and long-term orientation. We use brand values of the Financial Times Global 500 companies and national cultural values reported by Hofstede, GLOBE, and Schwartz.FindingsResults exhibit that brands are more value-additive to companies in highly individualistic cultures. Furthermore, a valuable brand contributes more to firm value in countries with low uncertainty avoidance, high masculine, low power distance, and short-term oriented cultures.Originality/valueThe evidence suggests that while a valuable brand contributes to firm value, the level of its effect on firm value varies by national cultures.

scholarly journals Effect of Start-Up Strategies and Electrode Materials on Carbon Dioxide Reduction on Biocathodes

2017 ◽  
Vol 84 (4) ◽  
Author(s):  
Soroush Saheb-Alam ◽  
Abhijeet Singh ◽  
Malte Hermansson ◽  
Frank Persson ◽  
Anna Schnürer ◽  
...  
Keyword(s):  
Microbial Community ◽  
Electrode Materials ◽  
Microbial Community Composition ◽  
Community Analysis ◽  
Microbial Community Analysis ◽  
Cathodic Current ◽  
Content Type ◽  
Term Operation ◽  
Start Up

ABSTRACT The enrichment of CO 2 -reducing microbial biocathodes is challenging. Previous research has shown that a promising approach could be to first enrich bioanodes and then lower the potential so the electrodes are converted into biocathodes. However, the effect of such a transition on the microbial community on the electrode has not been studied. The goal of this study was thus to compare the start-up of biocathodes from preenriched anodes with direct start-up from bare electrodes and to investigate changes in microbial community composition. The effect of three electrode materials on the long-term performance of the biocathodes was also investigated. In this study, preenrichment of acetate-oxidizing bioanodes did not facilitate the start-up of biocathodes. It took about 170 days for the preenriched electrodes to generate substantial cathodic current, compared to 83 days for the bare electrodes. Graphite foil and carbon felt cathodes produced higher current at the beginning of the experiment than did graphite rods. However, all electrodes produced similar current densities at the end of the over 1-year-long study (2.5 A/m 2 ). Methane was the only product detected during operation of the biocathodes. Acetate was the only product detected after inhibition of the methanogens. Microbial community analysis showed that Geobacter sp. dominated the bioanodes. On the biocathodes, the Geobacter sp. was succeeded by Methanobacterium spp., which made up more than 80% of the population. After inhibition of the methanogens, Acetobacterium sp. became dominant on the electrodes (40% relative abundance). The results suggested that bioelectrochemically generated H 2 acted as an electron donor for CO 2 reduction. IMPORTANCE In microbial electrochemical systems, living microorganisms function as catalysts for reactions on the anode and/or the cathode. There is a variety of potential applications, ranging from wastewater treatment and biogas generation to production of chemicals. Systems with biocathodes could be used to reduce CO 2 to methane, acetate, or other high-value chemicals. The technique can be used to convert solar energy to chemicals. However, enriching biocathodes that are capable of CO 2 reduction is more difficult and less studied than enriching bioanodes. The effect of different start-up strategies and electrode materials on the microbial communities that are enriched on biocathodes has not been studied. The purpose of this study was to investigate two different start-up strategies and three different electrode materials for start-up and long-term operation of biocathodes capable of reducing CO 2 to valuable biochemicals.

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