Deep-Market by IAS-19: A Unified Cross-Country Approach for Discount Rate Selection
Multinational Finance Journal, 2020, vol. 24, no. 3/4, pp. 119–154
Haim Kedar-Levy, Ben Gurion University of the Negev, Israel
Elroi Hadad, Shamoon Collage of Engineering (SCE), Israel
Gitit Gur-Gershgoren, Ono Academic College, Israel
Abstract:
The discount rate reporting entities apply for future employee benefits obligations has a profound impact on their present value, both at the firm and at the country level. The IAS-19 accounting standard requires the existence of a ‘deep market’ in high-quality corporate bonds in order to use their yields as the discount rate, and in its absence, the often-lower government bond yields should be used. From a financial economics perspective, the term ‘deep market’ is vaguely defined in IAS-19, therefore we propose a dual approach. First, from the macro-economic perspective, we explore funding liquidity, and second, from the micro-economic perspective, we measure the illiquidity premium in high-quality corporate bonds. We argue that both aspects are essential because they are inter-connected. Our approach is tested empirically on a sample of 32 countries, with detailed analysis of the Israeli market as a case in point.
Keywords:IAS-19; deep market; employee benefits; market liquidity; funding liquidity
Citation (Format 1)
Kedar-Levy, Haim, Elroi Hadad, and Gitit Gur-Gershgoren, 2020, Deep-Market by IAS-19: A Unified Cross-Country Approach for Discount Rate Selection, Multinational Finance Journal 24, 119-154.
Citation (Format 2)
Kedar-Levy, H., Hadad, E., Gur-Gershgoren, G., 2020. Deep-Market by IAS-19: A Unified Cross-Country Approach for Discount Rate Selection. Multinational Finance Journal 24, 119-154.
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U.S. FDI and Shareholder Rights Protection in Developed and Developing Economies
Multinational Finance Journal, 2020, vol. 24, no. 3/4, pp. 155–182
Vishaal Baulkaran, University of Lethbridge, Canada
Nathaniel C. Lupton, San Jose State University, USA
Abstract:
We examine the impact of shareholder rights protection on U.S multinational firms’ Foreign Direct Investments (FDI). We hypothesize that the expropriation of wealth is less likely to occur in countries with strong shareholder rights and hence, these countries will attract more FDI relative to countries with weaker shareholder rights protection. We also hypothesize that this relationship will be more important for developing countries compared to developed countries. Based on an analysis of US FDI data over the period 1997-2016, we find support for our predictions. These findings emphasize the importance of institutional development for economic development, via the attraction of FDI.
Keywords:FDI; expropriation; shareholder rights; multinational firms
Citation (Format 1)
Baulkaran, Vishaal, and Nathaniel C. Lupton, 2020, U.S. FDI and Shareholder Rights Protection in Developed and Developing Economies, Multinational Finance Journal 24, 155-182.
Citation (Format 2)
Baulkaran, V., Lupton, N., 2020. U.S. FDI and Shareholder Rights Protection in Developed and Developing Economies. Multinational Finance Journal 24, 155-182.
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The M&A Exit Outcome of High-Tech Startups
Multinational Finance Journal, 2020, vol. 24, no. 3/4, pp. 183–209
Carmen Cotei, University of Lethbridge, Canada
Joseph Farhatn, Central Connecticut State University, USA
Abstract:
In this paper we analyze which factors explain the M&A exit outcome of high-technology startups using the confidential version of the Kauffman Firm Survey data. Our findings reveal that innovation activity is the most important factor in explaining the M&A exit outcome which indicates that acquirers value the growth potential signaled through intellectual property rights, research and development activity and therefore, businesses with high quality innovations are the most attractive targets for acquisitions. We also show that new, high-tech ventures owned by highly educated entrepreneurs are more likely to exit via M&A. These owners have better access to financial and social capital, which positively impacts the entrepreneur’s ability to create a business that is harvestable and increases the chance that the business will, indeed, be harvested.
Keywords: Mergers and acquisitions; entrepreneurial exit; innovation; technology-based startups
Citation (Format 1)
Cotei, Carmen, and Joseph Farhat, 2020, The M&A Exit Outcome of High-Tech Startups, Multinational Finance Journal 24, 183-209.
Citation (Format 2)
Cotei, C., Farhat, J., 2020. The M&A Exit Outcome of High-Tech Startups. Multinational Finance Journal 24, 183-209.
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Monetary Policy, Risk Aversion and Uncertainty in an International Context
Multinational Finance Journal, 2020, vol. 24, no. 3/4, pp. 211-266
Sakshi Saini, Institute of Economic Growth, India
Sanjay Sehgaln, University of Delhi, India
Florent Deisting, Groupe ESC Pau, France
Abstract:
This paper analyses the interaction of monetary policy (both domestic and global), risk aversion and uncertainty for a set of advanced and emerging economies in vector autoregressive (VAR) framework. Variance risk premium (VRP) is used as a measure of risk aversion and computed as the difference between the risk-neutral and the physical expectation of the return variance. VRP is positive on average for all economies and exhibits significant inter-temporal variation. Results reveal that expansionary monetary policy leads to a short-term increase in risk aversion and a decrease in uncertainty. Central banks respond by reducing the policy rate in response to risk aversion and uncertainty shocks. Both risk aversion and uncertainty exhibit a higher magnitude of response to domestic as compared to the global monetary policy shocks. Further, we find that risk aversion positively affects risk premium and thus, considerably explains variations in excess returns in the market.
Keywords: Monetary policy; risk aversion; uncertainty; variance risk premium; structural VAR; panel VAR
Citation (Format 1)
Saini, Sakshi, Sanjay Sehgal, and Florent Deisting, 2020, Monetary Policy, Risk Aversion and Uncertainty in an International Context, Multinational Finance Journal 24, 211-266.
Citation (Format 2)
Saini, S., Sehgal, S., Deisting, F., 2020. Monetary Policy, Risk Aversion and Uncertainty in an International Context. Multinational Finance Journal 24, 211-266.