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Hiroyuki Odagiri

growth-maximizing firms invest in R&D to increase labor productivity because, otherwise, labor supply constraint binds the equilibrium economic growth rate to the rate of population growth. If they do invest more on such R&D, the rate of labor productivity increase becomes higher. In consequence, the rate of macro labor supply in efficiency units, that is, Harrod’s (1939) natural rate of economic growth, also becomes higher, exceeding the rate of population growth. Also, the managers’ choice of a higher growth rate results in higher investment in machines and plants

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On Kit Tam and Celina Ping Yu

the form of bank deposits under regulated low interest rates, which have in turn allowed Chinese banks to rely on interest differentials as a major source of income. It has long been recognized that there is a need to address the lack of alternative financial investment channels for most households other than low-yielding bank deposits or investing in the more volatile stock markets. The rising corporate savings, primarily in retained earnings, provide another impetus for broader and deeper reform of China’s financial system to provide more varieties of financial

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Lynn McGregor

), stating ‘large South African companies are well underway to establish international best corporate governance’, South Africa rates just above the European average with a score of 59 out of 77. There is, however, considerable variation between companies. The Heidrick and Struggles Corporate Governance Report finds that South African companies perform better in terms of transparency, possibly because of shareholder activism. Because of the policy of diversity and black economic empowerment, the size of boards is relatively large. Emphasis has shifted to work done by

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Alexander Settles, James Gillies and Olga Melitonyan

of the natural resource and manufacturing sectors of the economy. The global downturn has caused a 7.9 per cent decline in GDP in 2009 after nearly ten years of economic expansion. Corporations are struggling for their existence and in this climate good corporate governance practices have been to some degree lost. The 2008 crisis has not been as catastrophic as the 1998 crash. The Russian government entered the period with over $650 billion in foreign reserves and little debt. In fact the Russian government plans to issue new debt in 2010 to help with

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Oliver E. Williamson

Corporate boards of directors 81 firms where the debt–equity ratio is too low, which seems to be borne out by the data (Williamson, 1988, pp. 585–6). Also, a series of empirical studies of debt and equity find a negative correlation between asset specificity and debt (Titman and Wessels, 1988; Balakrishnan and Fox, 1993; Kochar, 1996; Mocnik, 2001).3 And the recent and carefully executed empirical study by Efraim Benmelech et al. (2005) is corroborative of the proposition that interest rates on commercial property loan contracts increase with the non-redeployability of the

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Michel Aglietta and Antoine Rebérioux

cost of deterioration in credit quality. These two variables are determined in the following way: Rate of return on loansϭrate of credit Ϫcost of financing Ϫcost of constitution of economic capital This rate of return forms a bell curve as a function of the deterioration in credit quality. It starts by increasing with the margin of interest and then decreases, because the rise in the cost of economic capital takes the lead with increased unexpected losses when the debtors are in high-risk credit categories. Expected cost of deterioration in credit quality ϭrisk

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Corporate Strategy and Firm Growth

Creating Value for Shareholders

Angelo Dringoli

This book explores the conditions for growth that can create value for shareholders, focusing on the main strategies adopted by firms including horizontal expansion, vertical integration and product diversification. To evaluate whether or not a particular growth strategy is successful, the author examines the economic fundamentals of each strategy and presents analytical models of both internal development and external acquisition. He moves on to present four case studies of successful companies to highlight how a firm chooses and implements a defined growth strategy.
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Michel Aglietta and Antoine Rebérioux

not control, but the formation of a collective interest, a goal recognized and accepted by the company’s stakeholders. The second result concerns finance. The last 30 years have seen a major evolution from intermediary finance towards market finance. This evolution signifies a paradigm shift in risk assessment and management. The digital revolution allowed risk to be broken down into basic elements, arranged into tradable financial products and transferred to all financial institutions. The consequences of this revolution are far-reaching, yet ambivalent. This is not a

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Michel Aglietta and Antoine Rebérioux

essentially composed of financial instruments. The changes represented by the full fair value project would be considerable in the end. For banks, intermediation activities would be hit directly, since the value of deposits (on the liability side) would change according to market conditions. On the asset side, the value of fixed rate loans would evolve with the Accounting, finance and the firm 131 interest rate curve, which determines the discount rate applied to expected repayment flows. Furthermore, and this is the object of the following section, the fact of applying fair

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Alexander Styhre

, not the least characterized by dramatic economic events such as the hyperinflation of the Weimar Republic in the 1920s, and the Wall Street Crash of 1929 and the Great Depression, the role of money supply, interest rates, and economic stimulus to stabilize the economy were attended to and examined by economists. In the post- orld War II period, the path- reaking and pragW b matic Keynesian economic theories, advanced in The General Theory of Employment, Interest and Money (Keynes, 1953), served as the dominant theoretical framework for policy- aking and the