The Development of a Corporate Risk Policy for Capital Investment Decisions

1968 ◽  
Vol 4 (3) ◽  
pp. 279-300 ◽  
Author(s):  
Carl Spetzler
Keyword(s):  
Capital Investment ◽  
Investment Decisions ◽  
Corporate Risk ◽  
Risk Policy

Agreeing to disagree: structuring future capital investment provisions in joint ventures

2020 ◽  
Vol 13 (1) ◽  
pp. 12-22
Author(s):  
Edgar Elliott ◽  
Lois D’Costa ◽  
James Bamford
Keyword(s):  
Joint Ventures ◽  
Capital Investment ◽  
Joint Venture ◽  
Investment Decisions ◽  
Capital Investments ◽  
Agreeing To Disagree ◽  
Structural Work ◽  
Opt Out ◽  
Contractual Structures

Abstract Prior to entering into any joint venture agreement (JVA), dealmakers should be aware of the options available to resolve future investment disagreements. There are three broad capital investment structures commonly found in joint ventures: (i) standard passmark rules; (ii) non-consent/opt-out; and (iii) sole risk. Within each category, deal practitioners have numerous options to tailor capital investment structures. As much as possible, deal practitioners should contemplate the most likely areas of disagreement, and then tailor the capital investment structures appropriately to ensure that the joint ventures (JV) can manage capital investment decisions in an efficient, value-preserving way. While it is impossible to establish a formula to determine which specific contractual structures will best accommodate future capital investments in a given JV, companies should weigh various factors to inform their position. We reviewed 40 JVAs to understand various capital investment mechanics and how they differ based on the nature of the venture and owner context. Our research found an extremely diverse array of creative structural work-arounds to address different owner appetites to make future capital investments. The purpose of this article is to describe, illustrate and provide benchmarks on different mechanics and contractual terms found in joint venture agreements, and to offer guidance as to which future capital investment mechanics should be included in venture agreements.

Promotion Signaling and Human Capital Investments

2020 ◽  
Vol 12 (1) ◽  
pp. 125-155 ◽  
Author(s):  
Michael Waldman ◽  
Ori Zax
Keyword(s):  
Human Capital ◽  
Labor Market ◽  
Capital Investment ◽  
Investment Decisions ◽  
Human Capital Investment ◽  
Capital Investments ◽  
Human Capital Investments ◽  
Asymmetric Learning ◽  
Specific Human Capital ◽  
Investment Choices

In a world characterized by asymmetric learning, promotions can serve as signals of worker ability, and this, in turn, can result in inefficient promotion decisions. If the labor market is competitive, the result will be practices that reduce this distortion. We explore how this logic affects human capital investment decisions. We show that, if commitment is possible, investments will be biased toward the accumulation of firm-specific human capital. We also consider what happens when commitment is not possible and show a number of results including that, if investment choices are not publicly observable, choices are frequently efficient. (JEL D82, J24, J31, M12, M51)

scholarly journals Child Ability and Household Human Capital Investment Decisions in Burkina Faso

2012 ◽  
Vol 61 (1) ◽  
pp. 157-186 ◽  
Author(s):  
Richard Akresh ◽  
Emilie Bagby ◽  
Damien de Walque ◽  
Harounan Kazianga
Keyword(s):  
Human Capital ◽  
Burkina Faso ◽  
Capital Investment ◽  
Investment Decisions ◽  
Human Capital Investment

Taxes and risk-taking behavior: evidence from mergers and acquisitions in the G7 nations

2018 ◽  
Vol 19 (3) ◽  
pp. 277-294
Author(s):  
Poonyawat Sreesing
Keyword(s):  
Mergers And Acquisitions ◽  
Option Pricing ◽  
Risk Taking ◽  
Investment Decisions ◽  
Tax Rates ◽  
Content Type ◽  
Asset Risk ◽  
Tax Effects ◽  
Corporate Risk

PurposeThis study aims to examine how corporate taxes affect corporate risk-taking decisions.Design/methodology/approachThis study examines corporate risk-taking by analyzing how a firm’s asset risk changes following an acquisition carried out by publicly listed companies in the G7 nations. To measure the asset risk of a firm, this study uses the option pricing framework in Merton (1974).FindingsConsistent with an implication of the Merton (1974) framework, the findings show that firms take more risk in their investment decisions when tax rates are high. Moreover, the tax effects wane for firms with a relatively large borrowing opportunity and this suggests that the risk-taking incentive from taxes is moderated by the reputation concern in the debt market, lending support to the Diamond (1989) reputation-building model. The empirical results also show that the tax-induced risk-taking incentive is restrained by creditor rights. Overall, the study reveals an important role of taxes in the structure of corporate investment decisions.Practical implicationsThe implications of this study can be beneficial to policymakers when considering the alteration of tax rates, as it will affect the riskiness of firm investment decisions.Originality/valueThis study provides a better understanding of the role of taxes on risk-taking and also contributes to the growing body of evidence supporting tax effects of risk-taking. The relationship between taxes and risk-taking has proven that the corporate taxation is one of the key factors that firms consider during their selection of risky investments. Unlike previous studies, this research is the first to investigate the change in asset risk, estimating by the option pricing framework, through studying a particular event: mergers and acquisitions.

The Rationale for Interventions to Foster Child Development

2019 ◽  
Author(s):  
Samuel Berlinski ◽  
Marcos Vera-Hernández
Keyword(s):  
Child Development ◽  
Capital Investment ◽  
Investment Decisions ◽  
Early Years ◽  
Government Policies ◽  
Early Age ◽  
Government Interventions ◽  
Policy Interventions ◽  
Information Set ◽  
Socioemotional Skills

Socioeconomic gradients in health, cognitive, and socioemotional skills start at a very early age. Well-designed policy interventions in the early years can have a great impact in closing these gaps. Advancing this line of research requires a thorough understanding of how households make human capital investment decisions on behalf of their children, what their information set is, and how the market, the environment, and government policies affect them. A framework for this research should describe how children’s skills evolve and how parents make choices about the inputs that model child development, as well as the rationale for government interventions, including both efficiency and equity considerations.

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