Corporate Investment Programs

Paper Summary:

Corporate investing programs allow firms to maximize their profits by utilizing excess cash reserves and strategically investing in vehicles with potential for high returns while incurring the lowest possible risk. This paper discusses such programs, as well as the concept of "beta," which is a method for calculating the risk of an investment and how beta can be calculated.

From the Paper:

"The most prevalent form of corporate investing is when larger companies invest in smaller companies with huge potential. Passive investment funds also exist, as an alternative or complimentary investment option. Corporate investing programs may be loosely organized programs affiliated with the existing companies business developments or may be self-contained entities with a strategic charter and mission to make investments congruent with the parents company strategic mission. Stuart Read, vice president of marketing at AvantGo states "with cash in the bank, big companies are looking for ways to leverage that asset, and if there is a good investment, they'll take it." Firms encounter different implications when investing than individuals, firms face a different set of rules and regulations to in which they must abide, firms have differing tax consequences, they also face a different set of risks."

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