Abstract This document examines the character of venture capital firms in general and in particular on venture capital methods for determining investment targets. The paper concludes that while there are several universally applied criteria, venture capital firms apply them in varying amounts according to the culture and investment preferences of the individual firm. Additionally, the paper examines the venture capitalmarket in China in relation to the Chinese IT industry.
Abstract The paper compares the 19th century capitalmarkets, whose stability resulted from the trust in the gold standard, with capitalmarkets today, which provide the means to raise capital for all ventures. The paper notes that investments in the products available in the capitalmarkets help generate funds and stabilize interest rates and are an indicator of the status of the economy. The paper further notes that, unlike the colonial past, the modern economies that are developing need special care regarding the effects of the capital on states labor. In comparison with the 19th century market which was good, the present international capitalmarket is in chaos. The paper concludes that while the modern international capitalmarkets has great problems, it is unique to the present, and cannot be compared to the economy that was based on a colonial world, although some economic features seem to be common in both
Outline:
Introduction
International CapitalMarket in the Nineteenth Century
Transition from the Old to the New
The Post War Economy and Globalization
International CapitalMarket - Analysis
Globalization and the International CapitalMarket Comparison of both the Markets Conclusion
From the Paper "During the depression of 1920 and the Second World War, the system collapsed. Post war activity was more in direct investment and the United States has emerged as a more powerful player. The post war scenario witnessed the entire capital surplus of the nineteenth and twentieth century evaporates. The capital market has come back to the operative state ever since 1972 and is growing to the state it was in the nineteenth century. The amount of capital flow in the globe in the nineteenth century shows that the market was well organized at that period. The capital market integration was also taking place within the countries that participated during the period. (O'Rourke H; Williamson, 1999) "The integration of capital markets is usually tested with an interest rate arbitrage model even though much different financial assets must be compared."
Abstract This paper explains an organized and well-planned capitalmarket guarantees that investments are safe and with limited risks; however, the presence of the money market, the market from which banks borrow or lend finances to each other, cannot be ignored. The author points out that securitization and credit derivatives have resulted in the ability to spread credit risks across different sectors of the financial system. The paper relates that the health of the global financial system is an issue of major concern to the U.S.A. and to the entire world; therefore, several multinational organizations, such as the World Bank and the International Monetary Fund (IMF), assist countries that are faced with financial problems and developmental requirements.
From the Paper "Robust capitalization and strong earnings is a must for any country if there were to be a line of defense against losses; when the capital of a country is strong, then these losses can be countered with ease. If there were indeed loss of any kind, or a negative incident of some sort, then capitalization would help restore the loss of confidence in the customers and the counter parties who would at first attempt to pull out of the institution. Therefore, it is evident that capital is capable of insuring the financial institutions against the system of "runs", both traditional and on franchise value. The traditional run is one in which the issues at stake are those of short term funding, and short term liquidity, whereas for the franchise run the issues that are brought into play are those of the gradual withdrawal of customers from the financial institution on account of the loss of confidence suffered as a result of the losses that the institution has been through."
Abstract This paper reviews three of the more prominent rating agencies who are globally recognized and who assist issuers in entering capitalmarkets more economically and at frequent levels. These three rating agencies work in all countries that utilize the universal rating scale.
This paper also takes a look at the history of rating agencies and how their findings influenced major business decisions.
From the Paper "Three prominent credit rating agencies are widely acknowledged globally. They are Moody's Investor Service, Standard & Poor's and Fitch Ratings. They accord domestic and external ratings at the request of borrowers. They are present in almost all the countries having a universal rating scale. The Standard & Poor's rating agency was first instituted by Henry Varnum Poor in 1860 with the guiding principle 'the investor has the right to know'. In the year 1906, Standard Statistics Bureau Company was established to entail the financial information on US companies that in 1916 started to assign debt ratings to corporate and sovereign debt. During 1940 it introduced Municipal bond ratings. (International Credit Rating Agencies)"
Abstract The thesis of this paper examines the present state of securities markets in Egypt in light of the country's needs for economic growth and analyzes their problems with the institutional measures currently existing. Following an introductory chapter on the importance of capitalmarkets development for Egypt, especially with regard to the privatization policy currently adopted by the government, the thesis addresses the capitalmarkets in Egypt under several points. It emphasizes the existing securities market and the securities stock exchange, with the available operations of the stock exchanges and the supply and demand of securities and the institutional investor interest in securities; determines the role of existing financial (non-banking) intermediaries as a source of capita for both the private and public sector that can be used to activate the capitalmarket; discusses the role of the National Investment Bank (NIB) with its role as an intermediate chain between the various saving sources and the government commands, in addition to the rest of its roles; and analyzes the crucial role of the CapitalMarket Authority as the key organization and influence for capitalmarkets development in Egypt. The paper also deals with the legal and tax framework, which serves as the background in which the capitalmarket operates. Under this section, a study of the general laws that facilitate formations, operations, and issuance of securities by corporations is presented, as well as a study of the tax incentives and the financial accounting and auditing standards. In addition. the paper discusses the new capitalmarket law.
From the Paper "In studying the failure of the Egyptian Stock Market to live up to expectations or, at the minimum, stabilize and expand to emerge as a coherent and viable economic entity, one can identify a number of causal factors, ranging from a general lack of awareness of the potentials of the stock market as an investment arena, to government interferences. While each of the many causal factors plays a significant role in explaining the stated failure, all pale in comparison to the politico-legal factors underlying that failure. Briefly and simply stated, the Egyptian stock market is subject to seemingly arbitrary investment laws which encourage neither stabilization nor investments. Over and above, the laws are constantly changed, or undergoing endless reform processes which communicate to potential investors that the market has yet to develop a tight and stable framework as would motivate investment."
Abstract An analysis of what stopped Adam Smith's free marketcapitalism from existing using the socialist and liberal arguments to explain the historical context of governmental and worker advocacy of regulation.
From the Paper "Adam Smith's upheld the concept of free market capitalism at a time when the world did not trade in such complex environment. Each state was economically independent of the other. In saying that market capitalism could remain unregulated stem from the fact that at the time governments were too keen on taxing its nations. During the Gold system, a nation depended on the free flow of coinage to be able to trade. A stoppage in the free flow would mean there is hindrance to trade and hence a slump in the economy. On the adverse side if government provides free flow of the coinage system even to "foreigner" then it would mean to cut down barriers to trade and allow foreigners to trade freely with the local market thereby increasing competition to the level that local market would become suffocated. "
This research examines the theory of optimal capital structure, explaining it as the composition of the liabilities and stockholders? equity side of a firm's balance sheet.
Abstract An examination of the theory of optimal capital structure. Emphasis is placed on the conflict between the traditional approach to the assessment of the role of capital structure and that of the MM theory holding that capital structure is irrelevant in a perfect capitalmarket. The literature indicates that the jury is still out on the question of the relevance of capital structure to stockholders? value.
From the Paper "Some theorists contend that a firm's optimal capital structure is that combination of debt and equity at which agency costs are minimized. Agency costs are the incremental costs associated with having an agent make decisions for a principal. Within the context of this consideration of the determination of optimal capital structure, management is an agent, while stockholders are the principals. Other theorists point out, however, that, while issuing debt typically produces positive outcomes for firms, the determination of an optimal capital structure for a firm is a dynamic process that, in addition to agency costs, must account for the effects of both corporate and personal income taxes, potential bankruptcy costs, transaction costs, and the degree of control over a firm's investments that will be delegated by stockholders to the firm's management (Brealey & Myers, 1996)."
Abstract Brief Analysis of Money & CapitalMarkets in the United States For The Five-Years Period 1995-1999 Inclusive
This research examines the money and capitalmarkets in the United States for the five-year period 1995-1999 inclusive. As a part of this examination underlying re
From the Paper "Brief Analysis of Money & Capital Markets in the United States For The Five-Years Period 1995-1999 Inclusive
This research examines the money and capital markets in the United States for the five-year period 1995-1999 inclusive. As a part of this examination underlying reasons for shifts in interest rates and interest rate differentials are sought.
Several factors, including global market forces, the current and expected rates of inflation, and Federal Reserve implemented monetary policy, affect the demand for and supply of money in the economy. The demand for and the supply of money, in turn, affects interest rates and interest rate differentials, and, in turn, the demand for and the supply of money are affected by interest rates and interest rate differentials. Thus, the relationships between interest rates..."
Abstract This paper examines how one of the most exciting stories recently in capitalmarkets has been the sharp appreciation in the Australian dollar from historic lows in April 2001 to 7 year highs at the start of 2004. It looks at how this has had implications for financial instruments and markets both in Australia and abroad.
From the Paper "While the US dollar's long slump against major currencies has largely driven the ascent of the Australian dollar, the gains also result from Australia's strong economy, relatively high interest rates compared to other developed countrie and strong commodity prices. Part of the reason for the phenomenal swing from a record low of US47.75c on 3/4/2001 to US80.07c on 18/2/2004 is that in April 2001, investors were still pouring money into the US tech equities - however this began to change with the so called "tech wreck" which sent US markets into a decline and introduced a recession in the United States. The Australian dollar continues to thrive because investors are borrowing in places like Japan and Switzerland where interest rates are almost zero and are depositing in Australia and earning 5.25%. "
Abstract Within the framework of a globalized political economy, aiming towards the eradication of any and all artificial barriers to trade, the question of capital liberalization has become an increasingly critical one. Consequent to the free trade philosophy of globalization, the IMF and World Bank have always argued against the implementation of capital controls or the imposition of barriers towards the free movement of capital across the world. This paper explains that such barriers are negatively perceived as threats to globalization or obstacles to the realization of a global economic system. This paper shows that several member countries, especially those impacted by the Asian financial crisis, adopted a contrary policy, whereby they either tightened existing controls on either capital outflow or inflow or adopted even more stringent capital control mechanisms. Such a policy appears to be contrary to the goal of establishing a liberalized and stable global capitalmarket, functioning in accordance with the principles of rational choice and comparative advantage. However, careful assessment of the arguments for and against capital controls in this paper, together with a review of a pertinent body of factual formal evidence, illustrates that the imposition of capital controls, as opposed to the full liberalization of the global capitalmarket, better serves the purposes of capitalmarket stabilization, efficient allocation of resources, and protection of national economies.
From the Paper "The third argument in favour of capital liberalization is intimately connected to the factor of financial instability and the importance of equilibrating balance of payments. As noted by Sebastian Edwards (1999), all economies are vulnerable to such external shocks as would upset balance of payments. In order to redress that situation and minimize its negative consequences, it is necessary to balance the current account through capital movements as would restore the equilibrium of the balance of payments and offset potential inflation. The free and unrestricted global movement of capital is, thus, a necessary corollary to the maintenance of balanced current account (Edwards 1999). Consequently, from within the parameters of this last argument, liberalization of capital and the concomitant creation of a thoroughly globalized capital market is strongly founded upon the imperatives of maintaining balanced current accounts."
This paper examines to what extent security prices are a good estimate of "Intrinsic Value" on modern developed capitalmarkets, based on a philosophy of analyst Eugene Fama.
Abstract A paper which discusses Fama's philosophy, which concedes that in a efficient market the price of securities is a good estimate of the intrinsic value of the capitalmarket, that information should flow freely and that the price of the securities should reflect the information that is available. In addition, the participants in the market should make decisions about the based on the information that they already have. The paper defines Intrinsic value, capitalmarkets and securities, the types of securities that exist and current events involving the Enron Corporation and its collapse to determine whether or not we indeed have an efficient market in which securities are a good estimate of the intrinsic value of the modern day capitalmarket.
From the Paper "With all this information being understood lets discuss whether or not Fama's beliefs are valid in the modern capital market. First of all let's examine whether or not by definition today's capital markets are efficient. Fama believes that an efficient market is one in which there is an almost free flow of current information. The efficiency of our current market is questionable at best. While Enron was sinking its shareholders were not given current accurate information pertaining to the financial state of the company. Another aspect of this inefficiency is that the market will make decisions based on what has already occurred or what may occur in the future. "
Tags: NASDAQ, New, York, Stock, Exchange, NYSE, American, Stock, Exchange, AMEX, virtual, company
Abstract This paper discusses how social capital is the currency of civil society by demonstrating the role of its mobilisation within social movements. It proposes that social capital is the currency of civil society in much the same way that financial capital is a component of the market sector. The first section briefly outlines three integral elements of social capital, networks, norms and social trust. It is followed by a discussion of the mobilisation of social capital as it pertains to social movements and promotes civic engagement. The conclusion reflects that the social capital/civil society and the financial capital/market sector analogy is justified, as social capital acts as civil society's bargaining tool.
From the Paper "The final continuous element of social capital is social trust. As an attribute of social capital trust encourages society to overcome quiescence and to take part in political activism by instilling confidence. Underpinning this confidence is a sense of mutual supportiveness of each other and for the cause, that has united them. Interwoven with social trust is the notion of reciprocity, or the implicit assumption that those participating will get something in return for supporting any form of civil action (Onyx, 2000:60-1). This assumption also motivates social movements, the link between social capital, civil society and bargaining becomes apparent. Davis argues that the public has a distinct lack of trust in government and its processes, he goes on to say that those possessing social capital are better equipped to initiate civic engagement (2001:2-4). Which brings us to one of the most common mechanisms for collective action, that of social movements."
Abstract This paper looks at how Arthur Miller's play of 1949, "Death of a Salesman", offers a strong commentary on capitalism's expectation that all persons can and will participate strongly in a capitalist environment. Related ideas are those of capitalism best serving 'human nature' in an assumption that all human beings are decisive; strongly motivated by acquiring success or belongings, and that conforming to a capitalist system will bring rewards. It discusses how, however, as Miller's "Death of a Salesman" indicates, some personalities are not at all suited to this range of activities and also, how capitalism will always leave behind some persons who for whatever reason cannot compete ably, or cannot summon all of their resources for the very competitive approach that is required. The paper discusses the myth of capitalism, as seen in the play, and looks at how it relates to what is happening in Canada.
Outline:
Introduction
Capitalism as a System and Culture
Capitalism's Dream
More on Markets and Opportunities
From the Paper "In relation to Canadian capitalism, Phillips identified three ways in which the present system has not pleased or served Canadians in, first, the market's failure to provide a level of social services or other social infrastructure for the best or 'equal' welfare of the people, second, its production of social gaps so large that the cohesion of the society is threatened and may very well collapse in immense differences between the income levels and living experiences of the poor and the 'middle' classes, and third, no mechanism in the market system to guarantee or even just promote full employment and economic growth. (Political Economy 20) In short, Canadian capitalism has become rather like its American counterpart that so worships market forces while indiscriminately ostracizing or just leaving behind one sector and then another. "
Abstract This paper discusses Karl Marx's development of communism or socialism in response to what he saw as the evils of capitalism. The author describes the industrial revolution, which brought about the social changes and conditions that Marx saw as unjust to the working class majority. He believed that capitalism and mass production destroyed the cohesion of fellow human beings and made self-interest more important than shared values and goals, thereby dehumanizing the worker. The author provides a brief overview of American society before the industrial revolution and explains how industrialization led to the exploitation of African Americans, immigrants and women as cheap labor. The author explains the concept of market socialism, a modern theoretical cure for both the ills of capitalism and the weakness of traditional communism, and discusses why Marxism failed. The author concludes by suggesting that what is most needed might be a blending of the two systems, in which capitalism and socialism could each counteract the evils of the other.
Outline:
Labor as a Commodity
History of Values and Attitudes
Strengths and Weaknesses in Marxism
Failures of Marxism
From the Paper "In an effort to explain the philosophical differences between capitalism and Marxism, it is helpful to ponder how philosophical values and ideas are shaped. According to Kolakowski (2005), the history of philosophy has two opposing viewpoints--materialism and idealism. Idealists theorize that spirit existed before nature, and materialists theorize that spirit materialized after nature. There have been countless creeds in the history of philosophy that have tried, unsuccessfully, to find a balance between the two main viewpoints."
An analysis of the strengths and weaknesses of the research paper, "The Market Pricing of Accruals Quality", by Jennifer Francis, Ryan LaFond, Per Olsson, Katherine Schipper.
Abstract This paper analyzes the theoretical and methodological strengths and weaknesses of the research paper, "The Market Pricing Of Accruals Quality" by Jennifer Francis, Ryan LaFond, Per Olsson, Katherine Schipper. The paper summarizes the strengths of the research and underlines the weaknesses of the empirical method. Finally, this paper discusses the limitations of the theoretical approach.
Table of Contents:
Synthesis Of Strengths
Accruals Quality Has An Impact On The Information Risk And The Cost Of Capital Innate Accruals Quality Has A Larger Impact Than Discretionary Accruals Quality Has
Methodological Weaknesses
The Specific Sample Cannot Be Applied Generally
Hypotheses And Methods Are Questionable
There Are Variances Between Empirical Findings And Other Results
Theoretical Limitations
Only The Systematic Component Of Earning Quality Risk Contributes To The Equity Risk Premium
The Relation Between Accruals Quality And Cost Of Capital Depends On The Fundamental Risk
Accruals Quality Is Neither A Priced Risk Factor Nor A Determinant Of The Cost Of Capital
From the Paper "In the paper Earnings quality and the equity risk premium: a benchmark model, Yee makes a distinction between the fundamental earnings and the reported earnings: the fundamental earnings are the accounting profits generating future dividend cash flows, while the reported earnings are the imperfect signal of fundamental earnings. He also makes the difference between the two sources of associated earnings risk: the fundamental risk and the earnings quality risk. The fundamental risk is the uncertainty of future dividends payments, whereas the earnings quality risk or information risk is the uncertainty that the reported earnings may not be announced quickly and precisely. Only the systematic components of earnings risk contribute to the equity risk premium, while all the components, either systematic or diversifiable, affect the earnings capitalization factors."
