Klaus P. Fischer

JIT purchasing vs. EOQ with a price discount : An analytical comparison of inventory costs

Abstract The inventory costs of purchasing under economic order quantity (EOQ) model with a quantity discount is determined and compared to the costs under just-in-time (JIT). It is shown that at low levels of demand, JIT is the preferred method, whereas EOQ has the cost advantage for an item with a high demand. The model also predicts that the higher the value of the item, the carrying cost, or the ordering cost associated with the EOQ model, and the smaller the quantity discount rate, the wider will be the range of demand for which JIT remains preferable.

On the Determinants of Pyramidal Ownership: Evidence on Dilution of Minority Interests

We investigate the determinants, costs and benefits of corporate affiliation to pyramidal holdings. We find that there is a mismatch between cash flow rights and voting rights in firms affiliated to pyramidal holdings, and that corporate policies reflect cash distribution preferences of the ultimate owners. We also find a permanent depressive effect of pyramidal ownership on corporate value. This finding is consistent with the hypothesis that the layers of equity holdings within the pyramidal holding contribute to form an impervious veil behind which ultimate owners engage in expropriating behavior. Our investigation of affiliated firms suggests that ultimate owners, mostly families, are adept at combining their cash flow rights, voting power, and distance from affiliates in a way that minimizes sensitivity to negative events and maximizes sensitivity to positive events.

The impact of ethical ratings on Canadian security performance: Portfolio management and corporate governance implications

Abstract One approach that is gaining in popularity among portfolio managers uses ethical ratings, published by specialized research organizations, to screen securities for portfolio selection. Portfolio managers can thus gain a better understanding of the phenomenon and adopt a better and more consistent approach to ethical investment. By the same token, board of directors can measure the impact of their ethical policies on the market performance of the stock of their company. This paper provides new evidence about the impact of ethical ratings published in Canada on the risk-adjusted returns of the securities concerned, within the framework of a multi-factor Capital Asset Pricing Model, and gives an interpretation of the results from the perspective of portfolio composition and of corporate governance.

Microfinance and Market-Oriented Microfinance Institutions

Abstract The role of microfinance as a tool to fight against poverty by providing financial services to the poor and microenterprises has become an accepted principle worldwide. However, this key role can be accomplished only if the microfinance institutions (MFIs) assuming it are sustainable, i.e., can operate in the long run without subsidy. In this paper, we define market-based MFIs as MFIs that face competition in quality and price of their products in the market in which they operate, and operate under market discipline on the liability side of their balance sheet. Their ability to collect funds from sources under the discipline of funds providers helps them to be independent of subsidy and makes their operations sustainable. It is shown that several elements are fundamental to the success of market-based MFIs, including internalization of conflicts of interest, macroeconomic and sectorial policies, and an appropriate regulatory and supervisory environment.

The Impact of Ethical Ratings on Canadian Security Performance: Portfolio Management and Corporate Governance Implications

One approach that is gaining in popularity among portfolio managers uses ethical ratings, published by specialized research organizations, to screen securities for portfolio selection. Portfolio managers can thus gain a better understanding of the phenomenon and adopt a better and more consistent approach to ethical investment. By the same token, board of directors can measure the impact of their ethical policies on the market performance of the stock of their company. This paper provides new evidence about the impact of ethical ratings published in Canada on the risk-adjusted returns of the securities concerned, within the framework of a multi-factor Capital Asset Pricing Model, and gives an interpretation of the results from the perspective of portfolio composition and of corporate governance.

Risk Management and Corporate Governance in Imperfect Capital Markets

Successful business in the developing countries has often evolved into complex industrial ‘groups’ – a sort of conglomerates. Although their accomplishments are often impressive, these firms have rarely become fully publicly owned corporations. Little or no common stock is sold, and ownership and control remains tightly held in a circle of family members and friends. We contend that such behaviour is a rational response to risk bearing by investors in the absence of arms length financial markets. It is an efficient market solution to uncertainty and political risk when efficient markets do not exist.

Political Risk in Latin American Stock Markets: A Rational Expectations Approach

Emerging equities markets (EEM) are becoming the focus of much attention. There are two reasons for this. First, governments and international development agencies assign an increasing importance to the securitized markets to finance development and promote capital transfers. Second, they are an interesting target to internationally-minded portfolio managers seeking new opportunities to enhance the performance of their portfolios.