IN SEARCH OF THE CORPORATE GOVERNANCE RISK PREMIUM EMBEDDED INTO THE COST OF CAPITAL

The paper proposes to intend the firm as a “nexus of stakeholders”, each bearing return-to-risk expectations about the sharing of the corporate performance. All the stakeholders must achieve their own satisfaction through the bargaining of contracts that must be sustainable, i.e. keep both the firm and its stakeholders-network alive in the long term. Governance is intended as the mechanism that gives solution to the above puzzle. When both market and contracts are complete, optimal solution can be easily found. But when incompleteness emerges, governance solutions can misallocate the firm performance among the stakeholders. This is the case when an incomplete Governance emerges. In fact, in incomplete contests, the stakeholders will negotiate the visible-only arguments of their contracts, this way binding also the invisible ones, i.e. those impacting anyway on their ex-post performance. This being the case, a Governance Risk Premium (GRP) emerges in the medium-long run, impacting on the return-to-risk performance for equity investors, thus incentivizing a governance repackage. Such a GRP depends both on the actual grade of market completeness and the one of contracts as per the risk allocation made through time.. The proposed methodology to detect GRP is then applied into the Italian case to test its strength. Results show that GRP inflate 39bp the cost of equity capital with the following break-down: 123bp as basic-GRP from operations which is increased +98bp for the GRP-informative component and reduced -191bp by GRP-managerial component; a GRP-behavioural component +90bp would lead GRP from operations up-to 120bp, while sharing 81bp with debt capital leads the final figure down to 39bp (i.e. 123+98-191+90-81)

The effect of the enterprise risk management implementation on the firm value of European companies

We aim to investigate the impact of the Enterprise Risk Management (ERM) on the enterprise value and to discover the determinants of this adoption. Several economic actors have decided to face the current economic and financial complexity shifting from a Traditional silo-based Risk Management approach (TRM) to a more comprehensive one: the ERM. Some academics have investigated this topic, focusing mainly on the financial industry, but results are still controversial. In this study we try to understand if the ERM implementation affects firm value on a sample of 200 European companies, both financial and non-financial; second, we test which are the determinants of the ERM adoption. We do this through a FE panel regression analysis and a FE logistic analysis. We find a positive statistically significant relation between the ERM adoption and firm value. As for the probability that a firm engages in an ERM protocol, size, beta and profitability are the statistically significant determinants

High-efficiency, long-pulse operation of MW-level dual-frequency gyrotron, 84/126GHz, for the TCV Tokamak

The first unit of the dual-frequency gyrotron, 84126GHz/1MW/2s, for the upgrade of the TCV ECH system has been delivered and is presently being commissioned. During a first phase, long-pulse operation (TRF gt 0.5 mathrm{s}) has been achieved and powers in excess of 0.93MW/1.1s and 1MW/1.2s have been measured in the evacuated RF-load at the two frequencies, 84GHz (TE {17,5} mode) and 126GHz (TE {26,7} mode), respectively. Considering the different rf losses in the experimental setup, the power level generated in the gyrotron cavity is in excess of 1.1MW and 1.2MW, with a corresponding electronic efficiency of 35% and 36%. These values are in excellent agreement with the design parameters and would likely lead to a gyrotron total efficiency higher than 50% in case of implementation of a depressed collector. The gyrotron behavior is remarkably reliable and robust with the pulse length extension to 2s presently only limited by external auxiliary systems

A PM10 chemically characterised nation-wide dataset for Italy. Geographical influence on urban air pollution and source apportionment

: Urban textures of the Italian cities are peculiarly shaped by the local geography generating similarities among cities placed in different regions but comparable topographical districts. This suggested the following scientific question: can such different topographies generate significant differences on the PM10 chemical composition at Italian urban sites that share similar geography despite being in different regions? To investigate whether such communalities can be found and are applicable at Country-scale, we propose here a novel methodological approach. A dataset comprising season-averages of PM10 mass concentration and chemical composition data was built, covering the decade 2005-2016 and referring to urban sites only (21 cities). Statistical analyses, estimation of missing data, identification of latent clusters and source apportionment modelling by Positive Matrix Factorization (PMF) were performed on this unique dataset. The first original result is the demonstration that a dataset with atypical time resolution can be successfully exploited as an input matrix for PMF obtaining Country-scale representative chemical profiles, whose physical consistency has been assessed by different tests of modelling performance. Secondly, this dataset can be considered a reference repository of season averages of chemical species over the Italian territory and the chemical profiles obtained by PMF for urban Italian agglomerations could contribute to emission repositories. These findings indicate that our approach is powerful, and it could be further employed with datasets typically available in the air pollution monitoring networks

Does the earnings quality matter? Evidence from a quasi-experimental setting

Investor preference for local stocks provides a quasi-experimental setting to investigate whether the market rewards firms that comply with generally accepted accounting principles. We show firms with low earnings quality trade at a premium compared to firms in compliance with accounting principles; the difference in values is greater when the role of local investor over-trading is stronger in stock price-formation, in other words for the more isolated firms. The value of the information not conveyed to the market through accounting disclosure accounts for 30% of the market-to-book. Results are robust to earnings quality definition, and show while non-local investors are sensitive to the quality of accounting information, local and better-informed investors are not. Overall, accounting quality matters. (C) 2016 Published by Elsevier Inc