Impact at Scale: Policy Innovation for Institutional Investment With Social and Environmental Benefit

Explores policy options to maximize impact investing opportunities for institutional investors and accelerate the development of impact investing practices and products. Presents case studies of and insights from investors and service providers

Climate-Related Investing Across Asset Classes

Responsible investment -- understood as the incorporation of environmental, social, and governance (ESG) information into investment analysis -- is a discipline that allows investors to:- Better assess long-term risks and opportunities in their portfolios; and- Better align their investment strategies with opportunities to create longterm wealth for investors and society alike.It is a tool for investors who seek to improve long-term financial returns through enhanced ESG analysis. It also appeals to mission or impact investors, who seek to achieve defined social and/or environmental goals while achieving targeted rates of return. In both cases, investors use responsible investment as a tool to improve their ability to achieve their goals.Climate change is among the most important issues addressed by today's responsible investment universe. The physical risks of climate change, the likelihood of major changes in political and regulatory investment environments as a result of climate change, the opportunities associated with a radical global transformation to a low-carbon economy -- these issues create far-reaching implications for investors as they make decisions about their investment strategies, and as they evaluate particular fund managers and investment opportunities. New ideas, products, and methods have entered the market to address the long-term implications of climate change.This short handbook takes as its premise that a climate lens reveals risks and opportunities across all elements of an investor's portfolio. Every asset class offers investors an opportunity to pursue climate-friendly investments, to mitigate exposure to climate risk, and to engage stakeholders to improve climate-related performance across the range of investment opportunities

Investor Protection and Interest Group Politics

We model how lobbying by interest groups affects the level of investor protection. In our model, insiders in existing public companies, institutional investors (financial intermediaries), and entrepreneurs who plan to take companies public in the future, compete for influence over the politicians setting the level of investor protection. We identify conditions under which this lobbying game has an inefficiently low equilibrium level of investor protection. Factors that operate to reduce investor protection below its efficient level include the ability of corporate insiders to use the corporate assets they control to influence politicians, as well as the inability of institutional investors to capture the full value that efficient investor protection would produce for outside investors. The interest that entrepreneurs (and existing public firms) have in raising equity capital in the future reduces but does not eliminate the distortions arising from insiders' interest in extracting rents from the capital public firms already have. Our analysis generates testable predictions, and can explain existing empirical evidence, regarding the way in which investor protection varies over time and around the world.

New financial order : recommendations by the Issing Committee ; preparing G-20 – Washington, November 15, 2008

Content New Financial Architecture (Short Version) 1. Purpose of the paper – causes of the crisis 2. Recommendations 2.1. Incentives 2.2. Transparency 2.3. Regulation and Supervision 2.4. International Institutions 3. Concluding remarks Appendix (Full text) A 1. Causes of the crisis A 2. Improving the Framework A 2.1. Incentives A 2.2. Transparency A 2.3. Regulation and Supervision A 2.4. International Institutions A 3. Concluding remark

Enabling conditions for second pillars of pension systems

This note adds to the existing literature by examining the enabling conditions for the creation of mandatory funded pension funds, and identifying additional factors that are important to consider in the early stages of the reform. The note stresses the importance of some factors that had already been identified in previous literature but not fully observed by reforming countries, including the strong and lasting commitment of the authorities with the reform, the fiscal commitment with the reform, and some basic financial infrastructure. The analysis is also extended to analyze the role of supervision in the early stages of the reform and the role of the government in fostering the development of the domestic capital market.Debt Markets,Emerging Markets,,Access to Finance,Banks&Banking Reform

Management Tools for RetD Project Portfolios in Complex Organizations – the case of an international pharmaceutical firm

Project Portfolio Management (PPM) is a growing issue in both professional and academic circles. The typology of Cooper et al. (1998) has pictured the variety of PPM formalized approaches into four types (financial, strategic, scoring and “bubble diagram”). While the use of formalized methods by top performers is clearly attested, the choice of a specific approach and the precise benefits and limits of different instruments are still in debate. The present paper formalizes more precise contingency hypotheses between PPM practices and organizational variables such as R&D strategy, the structure and history of a firm's development, partnership policy and learning track in the project domain. Where managerial implications are concerned, the paper puts forward an analytical framework for the adjustment of portfolio instruments to fit specific situations and develops the conclusions of that framework for an international pharmaceutical group, Merck Lipha. The research underlying this paper adopts an interactive and experimental case-based methodology which has been on-going since 1997.Project; portfolios; pharmaceuticals; decision; processes; interactive research

"The Natural Instability of Financial Markets"

This paper contrasts the economic incentives implicit in the Keynes-Minsky approach to inherent financial market instability with the incentives behind the traditional equilibrium approach leading to market stability to provide a framework for analyzing the stability induced by the recent changes in bank regulation to modernize financial services and the evolution of financial engineering innovations in the U.S. financial system. It suggests that the changes that have occurred in the profit incentives for bank holding companies have modified the provision of liquidity to the financial system by banks, and the way credit assessment has moved from banks to other actors in the system. It takes the current experience in financial instability created by the expansion, through securitization, of the mortgage market as an example of these changes.

Persistence of outstanding performance and shareholder value among diversified firms: The impact of past performance, efficient internal capital market, and relatedness of business segments

The research domain that attempts to study the relationship between diversification and performance has not yet reached definitive and interpretable findings, and recent studies challenge the existence of a "diversification discount" and explain it partially by a data artefact. None of these studies centred their research on the question: does there exist a specific performance pattern among diversified firms? This research aims to identify persistence in performance heterogeneity by measuring the shareholder value creation of diversified firms using alternative indicators other than the excess value methodology. It also aims to measure the impact on the performance according to the degree of efficiency of the internal capital market and the degree of relatedness among business segments. A sample of 164 diversified firms with turnover higher than 1$ billion during the period 1999-2006 is examined. Because of the presence of the firm's specific effect and the length of the time series, the persistence performance is tested through the instrumental variables (IV) system generalized method of moments (GMM) dynamic panel data and the persistence of shareholder value creation and destruction is estimated according to different estimators from top tercile and lower tercile portfolios of diversified firms. Some diversified firms persistently create value as well as beat the market index while others persistently underperform. Finally, if the efficiency of the internal capital market gives certain explanatory power of the performance pattern, but limited compared to the past performance, important insights might be drawn from the findings that diversified firms with segments in many unrelated industries perform better than others in few industries or with a high number of segments; hence the inverted-U curvilinear relationship between diversification and performance is here not confirmed.diversification; performance persistence; internal capital market; relatedness obusiness segments;

Corporate real estate management in the retail sector: a study of the relationship between the management of the corporate real estate and corporate performance

Retail organisations have often been cited as being at the forefront of corporate real estate management. This research found that the retail sector can be characterised by diversity both in terms of the degree to which organisations are vertically integrated and in terms of the range of modes of retailing they engage in. This in turn led to highly diverse real estate portfolios. Given this diversity it may be surprising that the over riding strategy which the vast majority of sample firms adopted was focused on supporting the core retail activity. However the way in which they implement this strategy, again reflected the diversity in the sector. In terms of the future, the senior real estate managers were focusing on the medium term particularly looking at the way change would impact their functional strategy. This study provides a snap-shot of current practice and contributes to the debate however it also recognised that there is a need to answer the more fundamental questions

Where do we stand in the theory of finance? : a selective overview with reference to Erich Gutenberg

For the past 20 years, financial markets research has concerned itself with issues related to the evaluation and management of financial securities in efficient capital markets and with issues of management control in incomplete markets. The following selective overview focuses on key aspects of the theory and empirical experience of management control under conditions of asymmetric information. The objective is examine the validity of the recently advanced hypothesis on the myths of corporate control. The present overview is based on Gutenberg's position that there exists a discrete corporate interest, as distinct from and separate from the interests of the shareholders or other stakeholders. In the third volume of Grundlagen der BWL: Die Finanzen, published in 1969, this position of Gutenberg's is coupled with an appeal for a so-called financial equilibrium to be maintained. Not until recently have models grounded in capital market theory been developed which also allow for a firm's management to exercise autonomy vis-à-vis its stakeholder. This paper was prepared for the Erich Gutenberg centenary conference on December 12 and 13, 1997 in Cologne