Institutions and the Book-to-Market Effect: The Role of Investment Horizon

2021 ◽  
Author(s):  
Muhammad Sabeeh Iqbal ◽  
Aslıhan Salih ◽  
Levent Akdeniz
Keyword(s):  
Investment Horizon ◽  
Market Effect

Financial impact of high land prices on the viability of winery startup projects

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Michael Santos ◽  
Vincent Richman ◽  
Aidong Hu
Keyword(s):  
Net Present Value ◽  
Weighted Average ◽  
Capital Budgeting ◽  
Investment Horizon ◽  
Internal Rate Of Return ◽  
Content Type ◽  
Land Prices ◽  
Practical Implications

Purpose Does it make economic sense to invest in winery startups with high land prices? This paper aims to apply a capital budgeting analysis for a startup project to investigate the role of land prices in the decision-making of a wine entrepreneur. Design/methodology/approach This paper uses a capital budgeting analysis to evaluate the value of a winery project using the six investment criteria: net present value (NPV), internal rate of return (IRR), modified IRR, profitability index, payback period (PB) and discounted PB. Findings This study finds that high land prices are economically justifiable (NPV is greater or equal to zero) when the weighted average capital cost is sufficiently low for investors who are able to diversify risks and with access to a cheap source of funds. Additionally, this study demonstrates that wine entrepreneurs need a long-term investment horizon because the recovery of the initial investment in winery startup projects takes many years. Research limitations/implications The startup winery projects are heavily influenced by wine pricing, production and cost assumptions. As a result, different assumptions made at other wine regions may result in slightly different outcomes for the acceptability of the wine startup projects. Practical implications High land prices are economically justified for investors and entrepreneurs with the ability to diversify risk and access to cheap financial resources. As such, land prices can be a critical obstacle for individual entrepreneurs who experience a lack of capital. Social implications In the famous wine regions of the world, high land prices may result in more wineries being owned by the capital rich wine conglomerates. Originality/value This paper provides estimations of land prices based on financial methods to discuss the justification of observed prices and the implications regarding the ability of investors and entrepreneurs to access capital.

The monitoring role of institutional investors

2019 ◽  
Vol 36 (4) ◽  
pp. 517-546 ◽  
Author(s):  
Xiaoqiong Wang ◽  
Siqi Wei
Keyword(s):  
Financial Institutions ◽  
Institutional Investors ◽  
Empirical Support ◽  
Two Dimensions ◽  
Geographical Proximity ◽  
Investment Horizon ◽  
Corporate Policies ◽  
Content Type ◽  
Corporate Decisions

Purpose This paper aims to examine the monitoring role of institutional investors in corporate decision-making by classifying financial institutions based on geographical proximity and investment horizon from 1980 to 2014. Design/methodology/approach By using unique data sets on firm and institution location and investor horizon measure (Gaspar et al., 2005), the authors categorize institutional investors into six proximity-horizon classifications. This method captures the heterogeneity of investors. The corporate decisions assessed include firm investment, financing, payout policy, misbehavior, takeover defenses and profitability. Findings Both geographical proximity and investment horizon are directly related to institutional investors' monitoring cost. As a result, the effectiveness of institutional monitoring may vary based on geographical proximity and investment horizon. This paper collectively examines both dimensions of financial institutions and provides evidence that institutional investors present different preferences for corporate policies. Given stronger information advantage, both local and nonlocal investors that are long-term oriented fulfill better roles in monitoring corporate decisions but from different perspectives. Research limitations/implications Different from previous studies that treat institutional investors homogeneously, this paper provides empirical support that investors are indeed different in influencing firm policies. Originality/value To the authors’ best knowledge, this is the first study that classifies investors based on two dimensions, geographical proximity and investment horizon, and examines their joint effects on corporate policies. This proximity-horizon classification allows the authors to better disentangle the effects of institutional ownership structure on the monitoring outcomes.

Real Estate in a Mixed-Asset Portfolio: The Role of the Investment Horizon

2011 ◽  
Vol 40 (1) ◽  
pp. 65-95 ◽  
Author(s):  
Christian Rehring
Keyword(s):  
Real Estate ◽  
Investment Horizon ◽  
Asset Portfolio

Volatility Decay and Diversification Role of Timberland as the Investment Horizon Lengthens

2021 ◽  
Author(s):  
Weiyi Zhang ◽  
Bin Mei
Keyword(s):  
High Risk ◽  
Serial Correlation ◽  
Private Equity ◽  
The United States ◽  
Investment Horizon ◽  
Holding Period ◽  
Asset Portfolio ◽  
Public Equity

Abstract Under the mean-variance efficiency framework, we investigate the role of timberland asset in a mixed-asset portfolio in the United States. Starting from a single period (quarterly) view, we first reveal the crucial role of serial correlation in defining an asset’s financial performance. Accordingly, we modify return, volatility, and correlation for multiyear horizons to account for the nature of long-term investments. Our results show that, although timberland is persistent in all portfolios, private-equity timberland can be substituted by other liquid assets, including public-equity timberland, as the lengthening holding period substantially reduces their volatilities. We conclude that private-equity timberland is a risk diversifier regardless of the length of the investment horizon, whereas public-equity timberland becomes a suitable diversifier only for long-term investors with high risk tolerance. Study Implications: Serial correlation influences an asset’s return, risk, and correlation with other assets as the investment horizon lengthens. Volatilities of large-cap stocks and public timber real estate investment trusts decay significantly when the holding period is longer than three years. Therefore, these liquid assets become more efficient in the long run. Regardless of the length of the investment horizon, private-equity timberland acts as a risk diversifier in a mixed-asset portfolio, whereas public-equity timberland is a suitable diversifier only for high risk, long-term investors.

Optimal Portfolio Selection: The Role of Illiquidity and Investment Horizon

2017 ◽  
Vol 39 (4) ◽  
pp. 515-536
Author(s):  
Ping Cheng ◽  
Zhenguo Lin ◽  
Yingchun Liu
Keyword(s):  
Portfolio Selection ◽  
Optimal Portfolio ◽  
Investment Horizon ◽  
Optimal Portfolio Selection

scholarly journals Undertstanding the Home Market Effect and the Gravity Equation: The Role of Differentiating Goods

10.3386/w6804 ◽  
1998 ◽  
Author(s):  
Robert Feenstra ◽  
James Markusen ◽  
Andrew Rose
Keyword(s):  
Gravity Equation ◽  
Home Market ◽  
Home Market Effect ◽  
Market Effect

Do Investors Use Fair Value Disclosures? The Role of Investment Horizon

2013 ◽  
Author(s):  
Brian J. White
Keyword(s):  
Fair Value ◽  
Investment Horizon

Role of dactinomycin in the improved survival of children with Wilms' tumor

JAMA ◽  
1966 ◽  
Vol 195 (12) ◽  
pp. 1005-1009 ◽  
Author(s):  
D. J. Fernbach
Keyword(s):  
Wilms Tumor
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