The impact of slow privatisation in the beverage and textile industry in Eritrea

In many developing countries the privatisation of state owned enterprises is receiving increased attention but the selling of the enterprises is difficult. In Eritrea state owned enterprises were offered for sale at the end of 1996, but many of the relatively large companies are not privatised yet. This created the possibility to study the impact of slow privatisation in a developing country. After the privatisation announcement the state owned enterprises in both the profitable beverage industry as well as in the unprofitable textile industry showed negative effects on profitability. Moreover, managers in both industries complained about slow privatisation, but the complaints were different. In the profitable beverage industry privatisation frustrated the orientation on the future because the privatisation authorities restricted investments. The managers of the loss making textile industry were more involved with survival and they complained about the long duration of privatisation that made it impossible to get outside financing quickly.

Multinational cash management and conglomerate discounts in the euro zone

We discuss the impact of liberalisation, deregulation and the introduction of a single currency on cash management within multinationals in the euro zone. The developments in the euro zone reduce financial market imperfections in transferring cash and diminish the need for separate local cash holdings. This facilitates the centralisation of cash management and headquarters' financial control. Increased financial power of multinational headquarters, moreover, offers opportunities for disintermediation. By exploiting these options multinationals in the euro zone can start to reap additional benefits of internal financing and conglomerate discounts of euro zone multinationals may diminish.

Negative Interest Rates, COVID-19, and the Finances of Listed Euro Firms

Aim: The paper measures the impact of negative interest rates on listed firms in the original euro zone countries. It also measures the impact of the first COVID-19 year.Design / research methods: The paper uses panel data to measure the influence of the short-term ECB deposit rate and the 10-years German bond yield on short-term and long-term firm variables. Cross section fixed effects are applied to first differences and dummy variables. For liquidity and non-liquid assets the effects are also measured for small and large companies, for sectors, and for countries.Conclusions / findings: Corporate liquidity ratios and creditor ratios decline when short-term ECB-rates fall. If ECB rates are negative, liquidity ratios are further reduced by 0.6 percentage points. Declining long-term German government bond yields increase non-liquid assets, while negative yields boost these assets by 4.5% extra. In the first COVID-19 year, the investments in non-liquid assets were 7.6% smaller, while liquidity ratios increased by 2.3 percentage points.Originality / value of the article: Papers on the influence of negative interest rates and of COVID-19 on European firms are unavailable. This makes the paper relevant for firm managers and policy makers and a benchmark for future research.Implications of the research: Because the issues addressed are new, further research is valuable. One may think of comparable studies for different countries. Many other suggestions for further research are given in the conclusions

Is there a ´privatization trap´? : the case of the manufacturing industries in Eritrea

Privatization is a popular topic in many countries. However, the more a country needs development, efficiency and the proceeds of the sales, the more difficult privatization will be. This can result in a long period of privatization in developing countries. But when privatization takes a long time, the vitality of companies may reduce. In this paper we present the case of the manufacturing industries in Eritrea, where privatization has been slow. After the privatization announcement the companies deteriorated quickly with respect to operations, investments and finance. This makes it even more difficult to sell the companies and the implied vicious circle results into a 'privatization trap'.

IPO-related organizational change and long-term performance

Mainstream literature on long-term performance of initial public offerings focuses on long-term underperformance. Because underperformance is an anomalous phenomenon, many authors search for explanations based on financial market imperfections. More recently, however, the attention shifts from underperformance to long-term performance in general. This induces the search for other than financial market imperfections in explaining under- or outperformance. This article presents the idea that in many companies the preparation for the IPO and the IPO itself may bring organizational change. It searches for IPO-related organizational change in The Netherlands with interviews of Dutch corporate officers. The research shows that an IPO primarily changes financial management and financial reporting, but that other types of organizational change may also be relevant. Moreover, long-term stock market performance was on average higher in companies where IPO-related organizational changes were reported than in companies where the changes were not reported.

Social Simulation of Stock Markets: Taking It to the Next Level

This paper studies the use of social simulation in linking micro level investor behaviour and macro level stock market dynamics. Empirical data from a survey on individual investors\' decision-making and social interaction was used to formalize the trading and interaction rules of the agents of the artificial stock market SimStockExchange. Multiple simulation runs were performed with this artificial stock market, which generated macro level results, like stock market prices and returns over time. These outcomes were subsequently compared to empirical macro level data from real stock markets. Partial qualitative as well as quantitative agreement between the simulated asset returns distributions and the asset returns distributions of the real stock markets was found.Agent-Based Computational Finance, Artificial Stock Markets, Behavioral Finance, Micro-Macro Links, Multi-Agent Simulation, Stock Market Characteristics