RISK AVERSION BEHAVIOR. RELATIONSHIPS BETWEEN RISK AVERSION, PRUDENCE AND CAUTIOUSNESS

This paper defines decreasing absolute risk aversion in purely behavioral termswithout any assumption of differentiability and shows that a strictly increasing and riskaverse utility function with decreasing absolute risk aversion is necessarily differentiable withan absolutely continuous derivative. A risk averse utility function has decreasing absolute riskaversion if and only if it has a decreasing absolute risk aversion density, and if and only if thecumulative absolute risk aversion function is increasing and concave. This leads to acharacterization of all such utility functions. Analogues of these results also hold forincreasing absolute and for increasing and decreasing relative risk aversion.risk aversion, prudence, cautiousness

The Foreign Direct Investments and Economic and Politic Freedoms or Could We Trust the Words of the Local Landlord?

The foreign direct investments are depending not only of economic resources, structures, mechanisms and performances of hosting countries but also on their socio-economic, cultural and political conditions. The objective of this paper is to provide a general framework of the connections between economic and politic freedoms and the foreign investment inflows (FDI). Some empirical supports are obtaining from a sample of developing and emergent countries. The main conclusion is that “economic and politic freedoms matters for the evolution of foreign direct investments”.FDI, freedoms, STABILITY, index of economic freedom, Freedom in the World Index.

PUBLIC DEBT SUSTAINABILITY ANALYSIS: EU CASE

The global crisis has caused a serious fiscal deterioration that leaves the world economy with serious challenges. In many developed markets as well as in a few emerging markets (Emerging markets) public finances have already become, or are at least at risk of becoming, unsustainable. Commonly, public debt sustainability is defined as a sovereign's ability to service debt without large adjustments to public revenue and/or expenditure and without ever-increasing public-debt-to-GDP ratios. Hence, this definition refers to both a country\'s ability and willingness to repay its debt. We also have to add the fact that there isn`t an universal accepted definition of fiscal or debt sustainability. In light of the growing public debt, the issue of debt sustainability has increasingly attracted attention. In this paper we analyse public debt sustainability scenario in EU economies. At least half of the EU countries will have to implement stringent fiscal consolidation programmes over the next few years in order to prevent already high public-debt-to-GDP ratios from a further significant rise, also the case of Romania. However, drastic fiscal policy adjustment may be not feasible in the short term and hence public debt is likely to grow further. In some scenarios the public-debt-to-GDP ratio is predicted to soar to 133% in 2020, from just over 100% in 2010. By contrast, nearly all EM countries, including major economies, appear to be well positioned to stabilise or even outgrow their current debt ratios without drastic fiscal adjustment. Institutional improvements may help European countries to maintain fiscal credibility. In light of the future fiscal challenges, many European governments may introduce new or more effective national debt limits, similar to those put in place in the past with good results by some Emerging markets. Such institutional reforms could help to insulate fiscal policies from political pressure and to anchor financial market expectations.public debt, fiscal policy, fiscal sustainability, GDP, fiscal consolidation

Opportunities offered by the capital market for financing public administration

Nowadays, covering the financial deficit of public administration in Romania is a difficult task, taking into consideration the fact that in a continous way, this institutional sector must implement and manage investment projects, that suit the local needs of Romanian colectivity and dynamize their adaption to the social,economical and political requirements of the integration in the European Union. Therefore, the alternative of financing through the capital market is well received by the public authorities, especially because there is a lack of flexibility and variety of financing possibilities for the public administration. The interest for this type of financing has increased over the time, once with becoming familiar with the mechanisms and advantages of such a type of financing by all entities that operate on the market (issuers, investors, intermediaries).capital market, T-bonds, public debt management

ROMANIAN CAPITAL MARKET AND THE INFORMATIONAL EFFICIENCY

Many financial studies are based on the efficient capital markets hypothesis. In this context, testing the existence of this concept becomes an interesting field of study for the emerging capital market. The aim of this paper is to enlighten the difficulties of portfolio construction in a capital market with institutional and structural deficiencies, like the Romanian one, and to propose an alternative approach to the problem. The main features of our analysis are an empirical test for the efficient market hypothesis in the Romanian capital market case. The output of this approach could be resumed by the thesis that, even in a situation when the capital market is affected by severe dysfunctions, there is a possibility to build an "optimal" portfolio.efficiency, prices, information

THE ROLE OF STRATEGIC PLANNING IN MODERN ORGANIZATIONS

There is a very important relationship between strategic planning andperformance management. Performance management is really about setting andachieving goals at the employee level, and identifying and fixing barriers related toachieving those goals. But where do the goals come from? That's where strategicplanning comes in. Strategic planning (and also tactical planning), are methods acompany, and its individual work-units define their goals and objectives. In turn, thosegoals and objectives are used to determine and analyze the goals and objectives of eachemployee in a work unit. This is called cascading of goals. When done properly, settingemployee goals should rely on the goals of the particular work-unit, which gets its goalsfrom the planning done by the next bigger work unit, and so on. That's why the setting ofindividual goals and objectives should be done once the goals and objectives of the work-unit are established. No enterprise will be successful today without a solid, integratedstrategic plan driven by a clear vision and supported by a strong performancemanagement system.strategic planning, organization, performance management.

THE IMPACT OF FINANCING POLICY ON THE COMPANY’S VALUE

National and international financial system offers companies a wide range of funding sources. The choice of one or more of the available sources and their combination are major aspects of the company's financing policy. Managers must keep in mind that the call to one or other of potential funding sources is not a minor and independent decision, but has profound implications on the company’s value. Weighted average cost of capital can be used as the discount rate or the selection of investment projects.financing policy, cost of capital, capital structure, company’s value

The companies financial architecture and the market values: is there an interlinkage ? The case of Bucharest Stock Exchange

Nowadays there is a large debate on whether the financial information proves any relevance for the investors´ prediction of the securities market values/stock prices. The paper focuses, besides reviewing some important literature concerning this issue, on an empirical analysis taking into consideration 44 companies listed on Bucharest Stock Exchange based on pool data linear regressions. It is true that the most recent research state that there is an important evidence of a deterioration of the relationship between accounting information and stock prices. Although, the main findings of this paper consist in that there are certain aspects which should be further examined for a more reliable conceptual approach. In addition, it concludes that - even in the case of an emergent capital market as Bucharest Stock Exchange - it can be found mixed evidences to support the importance of financial information in portfolio’ management decisions. In a sense or another, the paper state overall that the financial information matter for market determination of financial assets’ values.capital markets, financial information, financial assets’ valuation

Corporate strategies during the global crisis

The global downturn has hit many businesses as they were implementing global strategies to create, transfer and exploit competences across operations and locations world-wide. In an increasingly integrated world economy, multinational enterprises (MNEs) pursue opportunities for international growth, and thus manage global competition and develop strategies that create and exploit complementarities and linkages in the global net of their operations. Many conglomerates thus have in recent years accelerated their internationalization while simultaneously reducing their product diversification, a process known as “globalfocusing”. This process has been driven by shifts in barriers to entry across industries and countries due to the globalisation of markets, resources, supply chains and business models.global crisis, globalization, international growth

An empirical analysis of the interlinkages between financial sector and economic growth

There is a growing literature body which examines the connections between financial status and economic growth. The aim of this paper is to examine the mechanism through which this positive connection is realized. The methodology is based on a pool data regression with dynamic of real GDP as dependent variable and some key variables of the financial sector. The main output of our study consists in the thesis that the financial status matter for the economic growth.finance, growth, cost of capital, yield