The Impact of the Introduction of the Euro on Foreign Exchange Rate Risk Exposures

This paper examines whether the introduction of the Euro in 1999 was associated with lower stock return volatility, market risk exposures and foreign exchange rate risk exposures for 12,821 nonfinancial firms in Europe, the United States, and Japan. We show that though the Euro led to a significant decrease in the volatility of trade-weighted exchange rates of European countries, stock return variances of nonfinancial firms increased after its introduction. However, the Euro was also accompanied by significant reductions in market risk exposures for nonfinancial firms in and outside of Europe. We show that the reduction in market risk was not as a result of changes in financial leverage, and that it is concentrated in firms with a high fraction of foreign sales in Europe, a high fraction of total foreign sales and larger market capitalizations. In addition to its impact on market betas, the Euro has a positive effect on the incremental foreign exchange rate exposures, particularly for multinationals.Foreign exchange rates, exposure, Euro, corporate finance, risk management, derivatives

Are Financial Assets Priced Locally or Globally?

We review the international finance literature to assess the extent to which international factors affect financial asset demands and prices. International asset pricing models with mean-variance investors predict that an asset's risk premium depends on its covariance with the world market portfolio and, possibly, with exchange rate changes. The existing empirical evidence shows that a country's risk premium depends on its covariance with the world market portfolio and that there is some evidence that exchange rate risk affects expected returns. However, the theoretical asset pricing literature relying on mean-variance optimizing investors fails in explaining the portfolio holdings of investors, equity flows, and the time-varying properties of correlations across countries. The home bias has the effect of increasing local influences on asset prices, while equity flows and cross-country correlations increase global influences on asset prices.

What is Different about Government-Controlled Acquirers in Cross-Border Acquisitions?

We examine the motives for and consequences of 5,317 failed and completed cross-border acquisitions constituting $619 billion of total activity that were led by government-controlled acquirers over the period from 1990 to 2008. We benchmark this activity at the aggregate country level and also at the deal level with cross-border acquisitions involving corporate acquirers over the same period. We find that government-led deal activity is relatively more intense for geographically-closer countries, but also relatively less sensitive to differences in the level of economic development of the acquirer’s and target’s home countries, in the quality of their legal institutions and accounting standards, and to how stringent are restrictions on FDI flows in their countries. Government-led acquirers are more likely to pursue larger targets with greater growth opportunities and more financial constraints. But, the share-price reactions to the announcements of such acquisitions are not different. Among those deals involving government-controlled acquirers, we do find important differences involving sovereign wealth funds (SWFs). SWF-led acquisitions are less likely to fail, they are more likely to pursue acquirers that are larger in total assets and with fewer financial constraints, and the market reactions to SWF-led acquisitions, while positive, are statistically and economically much smaller. We discuss policy implications in terms of recent regulatory changes in the U.S. and other countries that seek to restrict foreign acquisitions by government-controlled entities.Government-controlled Acquirers, Cross-Border Acquisitions

Kemijski sastav i kakvoća istarskog pršuta

Chemical properties of 18 months old Istrian dry-cured hams were analysed. The samples (n=10) of m. Semimembranosus were analysed for chemical composition (water, protein, fat and ash), and NaCl content, free amino acids profile, as well as content of fatty acids in intramuscular fat. High values were found for dry matter content (40.73 % protein, 16.91 % fat and 8.37 % ash) and free amino acid content (6.264 g/100g). The average value of NaCl in dry-cured hams was 6.45%, while the cholesterol content (85.2 mg/100g) and omega-6/omega-3 fatty acid ratio (12.91) were high, as typical for pork.PROŠIRENI SAŽETAK UVOD Pršut nastaje djelomičnom dehidracijom i polaganim kemijsko-enzimatskim transformacijama suho salamurenog mesa svinjskog buta pod određenim uvjetima temperature, vlažnosti i strujanja zraka. Tijekom procesa proizvodnje u pršutu se dešavaju kompleksne promjene bjelančevina i masti u mesu, gubitak vode i porast koncentracije suhe tvari i soli (NaCl). Te su promjene veoma značajne za finalnu kakvoću, nutritivna i organoleptička svojstva gotovog proizvoda. Tradicionalni Istarski pršut, proizveden iz buta teških, zrelih svinja, soljen morskom soli uz dodatak prirodnih začina, nastaje polaganim sušenjem i zrenjem na zraku više od godine dana. Osnovna razlika Istarskog u odnosu na dalmatinski tip pršuta je drugačija obrada buta (but se obrađuje najčešće s zdjeličnim kostima i sa buta se skida koža i potkožno masno tkivo) i činjenica da se Istarski pršut ne podvrgava dimljenju. U radu dat je prikaz kemijskih analiza (voda, suha tvar, bjelančevine, masti, pepeo, sadržaj NaCl-a, sadržaj slobodnih aminokiselina, sadržaj kolesterola te sadržaj masnih kiselina u intramuskularnoj masti) uz opis organoleptičkih svojstava Istarskih pršuta starih 18 mjeseci. MATERIJAL I METODE Analizirano je 10 uzoraka (m. semimembranosus) pršuta nakon 18 mjeseci zrenja. Pršuti su proizvedeni od svinja pasmine švedski landras na tradicionalni istarski način, primjenom uobičajenih tehnoloških postupaka obrade buta, suhog soljenja i prešanja, odsoljavanja, sušenja i zrenja. Osnovnom kemijskom analizom (AOAC, 1990) u uzorcima su određeni sadržaji suhe tvari, vlage, bjelančevina, masti i pepela. Određivanje kolesterola obavljeno je prema postupku Csapó i suradnika (2000). Sadržaj intramuskularne masti određen je Stoldt metodom (Hungarian Standard No. 6830-66), a masno-kiselinski sastav određen su primjenom plinske kromatografije HPLC (Chromopack CP 9000) (Csapó i suradnici, 1986; 2000). Sadržaj slobodnih aminokiselina određen je korištenjem aminokiselinskog analizatora (LKB Model 4101 automatic AA analyser) i HPLC prema postupku kojeg su razvili Csapó i suradnici (1986a). Rezultati su prikazani kao prosječna vrijednost i standardna devijacija (x ± SD) analiziranog svojstva u uzorcima. REZULTATI I RASPRAVA U Tablici 1. prikazan je osnovni kemijski sastav i sadržaj NaCl-a u Istarskim pršutima starim 1,5 godinu. Kod Istarskog pršuta ukupni kalo redovito je preko 40 %, ponekad i do 50 %, zbog većeg stupnja dehidracije uslijed skidanja kože i potkožnog masnog tkiva te posljedično tome izravne izloženosti mišićnog tkiva ambijentalnim uvjetima. Zbog toga je sadržaj vode u Istarskom pršutu obično niži, pa je viši (koncentriraniji) sadržaj i bjelančevina i lipida. Sadržaj NaCl u pršutima općenito je viši što je u fazi soljenja dodano više soli, te što je sol sitnija a trajanje soljenje duže. Također, sadržaj NaCl viši je kod pršuta kod kojih je veća površina mišićnog tkiva nepokrivenog mašću, kod pršuta manje težine i brzog sušenja. Kod analiziranih uzoraka Istarskog pršuta, nakon faze soljenja primijenjen je postupak odsoljavanja u čistoj vodi tijekom 24 h. Prosječni sadržaj soli na kraju zrenja iznosio je 6,45 %. Sa stajališta ljudske prehrane, posebno je zanimljiv sadržaj slobodnih aminokiselina i masno kiselinski sastav lipida pršuta. U usporedbi sa svježim mesom, sadržaj slobodnih aminokiselina u pršutu značajno je viši zbog proteolitičkih promjena do kojih dolazi tijekom zrenja (Toldrà i sur., 1992; Toldrà i Aristoy 1993). Kod analiziranih uzoraka Istarskog pršuta (Tablica 2), sadržaj slobodnih aminokiselina i amonijaka u prosjeku je iznosio 6,264 g u 100 g uzorka, uz visoke razine slobodnog lizina, leucina, valina, arginina, fenilalanina te glutaminske kiseline, alanina, asparginske kiseline i prolina (Grafikon 1). U intramuskularnoj masti (m. semimembranosus) Istarskog pršuta (Tablica 3), na zasićene masne kiseline otpadalo je 40,51 %, na mononezasićene masne kiseline 44,67 %, a na polinezasićene masne kiseline 12,50 % od ukupno identificiranih estera masnih kiselina. Odnos polinezasićenih/zasićenih masnih kiselina iznosio je 0,31. Na esencijalne masne kiseline iz skupine “omega - 6” (C18:2ω6 linolna, C20:4ω6 i C20:2ω6) otpadalo je 11,83 %, a na skupinu “omega -3” (C18:3ω3 linolenska, C20:5ω3, C22:5ω3 i C22:6ω3) 0,92 % od ukupnih polinezasićenih masnih kiselina, uz odnos omega - 6/omega - 3 od 12,91. Sadržaj lipida i masno - kiselinski profil masti analiziranih pršuta, u nutritivnom smislu odgovaraju karakterističnim vrijednostima za svinjetinu uz utvrđeni odnos polinezasićenih/zasićenih masnih kiselina nešto ispod zdravstveno preporučenih vrijednosti (> 0,4; Enser 2001; Wood i sur., 2003; Raes i sur., 2004) i tipično visoki omega - 6/omega - 3 omjer (nutritivno poželjne vrijednosti iznose ≤ 4; Enser 2001; Raes i sur., 2004). Sa stajališta zdravlja, važan je i sadržaj kolesterola, koji je kod analiziranih uzoraka Istarskog pršuta iznosio u prosjeku 85,21 mg/100g. ZAKLJUČCI Tijekom soljenja, sušenja i zrenja svinjskog buta u mišićnom i masnom tkivu dešava se čitav niz modifikacija koje stvaraju proizvod tipičnih organoleptičkih osobina, koje pršut čine veoma atraktivnom hranom. U usporedbi sa svježim mesom, uslijed dehidracije u pršutu se povećava sadržaja suhe tvari a time i koncentracija bjelančevina, masti i drugih hranjivih sastojaka. Uslijed razgradnje bjelančevina dolazi do značajnog povećanja sadržaja slobodnih aminokiselina pa pršut predstavlja koncentrirani izvor esencijalnih aminokiselina. Razgradnja lipida, posebice unutar-mišićne masti (intramuskularne), te naknadna oksidacija slobodnih masnih kiselina vodi ka formiranju brojnih hlapivih spojeva kao što su: aldehidi, alkoholi, alifatski i aromatski ugljikovodici, kratkolančane masne kiseline, esteri, derivati furana i drugi spojevi. Navedeni spojevi imaju važnu ulogu u stvaranju karakteristične arome zrelog pršuta. Osim navedenih činjenica o kemijskom sastavu, treba istaknuti vrhunska organoleptička svojstva pršuta: ružičastu do svijetlo-crvenu boju, bez naglašenih diskoloracija osim bijele boje u području masnog tkiva, specifičnu aromu, ugodan miris i okus, povoljnu konzistenciju i otpor pri žvakanju, koja Istarski pršut čine vrlo traženim i cijenjenim proizvodom na tržištu. Također treba naglasiti da se pri salamurenju Istarskog pršuta ne koriste nitritne soli ni drugi aditivi, niti se pršut dimi što Istarski pršut, čini dodatno vrijednijom namirnicom. Manje poželjnu činjenicu, međutim, predstavlja visok sadržaj NaCl -a u pršutu, te za svinjsko meso karakteristično visoki sadržaj kolesterola i visoki omjer omega - 6/omega -3 polinezasićenih masnih kiselina u sastavu masti

Why Do Countries Matter So Much for Corporate Governance?

This paper develops and tests a model of how country characteristics, such as legal protections for minority investors, and the level of economic and financial development, influence firms' costs and benefits in implementing measures to improve their own governance and transparency. The model focuses on an entrepreneur who needs to raise funds to finance the firm's investment opportunities and who decides whether or not to invest in better firm-level governance mechanisms to reduce agency costs. We show that, for a given level of country investor protection, the incentives to adopt better governance mechanisms at the firm level increase with a country's financial and economic development. When economic and financial development is poor, the incentives to improve firm-level governance are low because outside finance is expensive and the adoption of better governance mechanisms is expensive. Using firm-level data on international corporate governance and transparency ratings for a large sample of firms from around the world, we find evidence consistent with this prediction. Specifically, we show that (1) almost all of the variation in governance ratings across firms in less developed countries is attributable to country characteristics rather than firm characteristics typically used to explain governance choices, (2) firm characteristics explain more of the variation in governance ratings in more developed countries, and (3) access to global capital markets sharpens firm incentives for better governance, but decreases the importance of home-country legal protections of minority investors.

Indirect Robust Estimation of the Short-term interest Rate Process

We introduce Indirect Robust Generalized Method of Moments (IRGMM), a new simulation-based estimation methodology, to model short-term interest rate processes. The primary advantage of IRGMM relative to classical estimators of the continuous-time short-rate diffusion processes is that it corrects both errors due to discretization and the errors due to model misspecification. We apply this new approach to various monthly and weekly Eurocurrency interest rate series.GMM and RGMM estimators; CKLS one factor model; indirect inference