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Archive for the ‘investments’ Category

New From the GAO

October 22, 2014 Comments off

New GAO Report
Source: Government Accountability Office

Reissue

1. Individual Retirement Accounts: Preliminary Information on IRA Balances Accumulated as of 2011, by James R. McTigue, director, strategic issues, and Charles A. Jeszeck, director, education, workforce, and income security issues, to the Senate Committee on Finance. GAO-14-878T, September 16.
http://www.gao.gov/products/GAO-14-878T
Highlights – http://www.gao.gov/assets/670/665805.pdf

This statement was amended on October 22, 2014, to revise the estimated individual retirement account and defined contribution plan accumulations for our illustrative contribution scenarios with balances invested in an S&P 500 portfolio. The original estimates used a price index that did not include reinvested dividends. Table 2 and the text on page 8 have been updated to reflect total returns on the investments.

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CRS — Conflict Minerals and Resource Extraction: Dodd-Frank, SEC Regulations, and Legal Challenges (October 15, 2014)

October 20, 2014 Comments off

Conflict Minerals and Resource Extraction: Dodd-Frank, SEC Regulations, and Legal Challenges (PDF)
Source: Congressional Research Service (via Federation of American Scientists)

Two sections of the Dodd-Frank Wall Street Reform and Protection Act (Dodd-Frank) require that the Securities and Exchange Commission (SEC or Commission) issue regulations to make public the involvement of U.S. companies in conflict minerals and in resource extraction payments. Supporters of the Dodd-Frank conflict minerals statute and the SEC implementing rule believe that such disclosures could have an impact on the amount of violence involved with the mining of conflict minerals. Opponents of the statute and rule argue that they require disclosures that are arbitrary and capricious and that some of the required disclosures violate the First Amendment guarantee of freedom of speech. Supporters of the resource extraction statute and the SEC implementing rule believe that they are needed to achieve the goal of the transparency of payments made by resource extraction issuers to governments in order to foster reform and anticorruption and to improve the tax collection process. Opponents believe that they are arbitrary and capricious and violate the First Amendment. Legal challenges to the statutes and regulations have occurred, based primarily on administrative law and First Amendment grounds.

UK — Social Investment by Charities: The Law Commission’s Recommendations

October 15, 2014 Comments off

Social Investment by Charities: The Law Commission’s Recommendations (PDF)
Source: Law Commission

We are pleased to announce the publication of our recommendations on social investment by charities as part of our ongoing project on selected issues in charity law.

Social investment provides financial returns while at the same time generating social benefits. It is an important and developing area for charities that helps them meet their charitable objectives by combining investment and spending.

We have been told that some charity trustees lack the confidence to make social investments because they are unsure whether their legal powers and duties permit them to do so. To clarify and simplify the law, we are recommending that charity trustees be given a specific statutory power to make social investments.

Law Commissioner Professor Elizabeth Cooke said: “Social investment represents a significant opportunity for charities, but the existing law is unclear. Our recommended reforms will clarify the law for trustees as to their powers and duties. They will make social investment more straightforward in law and give trustees the confidence to make the best of the opportunities it offers.”

2014 Environmental Finance Innovation Summit (White Paper)

October 14, 2014 Comments off

2014 Environmental Finance Innovation Summit (PDF)
Source: Goldman Sachs

The underlying thesis for investing in solutions that benefit the environment is increasingly compelling, given the macro trends of a rapidly growing population and increased urbanization, the social pressures to more effectively manage the environmental spillovers that come with growth, and the security imperatives of protecting against extreme weather. At the same time, capital flow into environmentally beneficial opportunities is often constrained by uncertainties around public policy, budgetary challenges, and the natural fits and starts of nascent technologies. In response to the opportunities and challenges, a number of innovative financing mechanisms and capital markets solutions are being deployed to scale-up investments in clean technology, energy efficiency, water and green infrastructure solutions.

To raise awareness about these developments and to facilitate dialogue, Goldman Sachs hosted the Environmental Finance Innovation Summit on February 13, 2014. The Summit coincided with the powerful nor’easter Pax, which underscored the importance of the topic at hand. With a group of nearly 200 participants, the Summit provided a forum to discuss emerging innovative financing vehicles, identify obstacles and solutions to scaling up these financing mechanisms, offer policy input, and foster partnerships to drive further progress.

The following paper summarizes key takeaways from the summit.

The Price of Silence: When No One Asks Questions During Conference Calls

October 6, 2014 Comments off

The Price of Silence: When No One Asks Questions During Conference Calls
Source: Social Science Research Network

We document economically significant indirect costs of providing conference calls — increase in information asymmetry and more negative immediate market reaction — when managers fail to elicit questions during the calls’ question-and-answer (Q&A) session. We establish this result by focusing on earnings calls where managers fetch either zero questions or “too few” questions when they open the floor for questions. We extend the literature on conference calls as an important corporate communication medium by examining hereto unexamined costs, and propose remedies for firms to avoid such indirect costs of corporate communication.

Hat tip: PW

An Industrial Organization Approach to International Portfolio Diversification: Evidence from the U.S. Mutual Fund Families

October 3, 2014 Comments off

An Industrial Organization Approach to International Portfolio Diversification: Evidence from the U.S. Mutual Fund Families (PDF)
Source: Federal Reserve Board

Although the lack of international portfolio diversification has long interested the financial economics literature, the role of financial intermediaries in the market for diversified portfolios has rarely been studied. In this paper, I introduce a microeconomic aspect of under-diversification by examining a new data on U.S.-based mutual fund families’ global diversification. I document the fund families’ investments in global equity markets and explore features of supply and demand in the mutual fund market to explain their limited global diversification. Demand estimation confirms that consumers are not only sensitive to the fund families’ portfolio characteristics such as global diversification, but also to the non-portfolio characteristics such as fund family age and size. On the supply side, the model of fund families’ global investment decisions uses a revealed preference approach and shows small cross-border investment frictions can justify the fund families’ observed limited global diversification. Other factors such as destination country’s investor protection level and fund family’s investment experience significantly affect the degree of diversification as well.

Selling Visas and Citizenship: Policy Questions from the Global Boom in Investor Immigration

October 2, 2014 Comments off

Selling Visas and Citizenship: Policy Questions from the Global Boom in Investor Immigration
Source: Migration Policy Institute

Over the past decade, the number of countries with immigrant investor programs has increased dramatically. Although governments have long extended residence permits or citizenship to wealthy individuals willing to invest large amounts in their economies, the forces of globalization and rapidly increasing interest among prospective immigrant investors are challenging policymakers to step up to meet this demand. About half of Member States in the European Union now have dedicated immigrant investor routes, while Malta and countries in the Caribbean have developed their own “citizenship-by-investment” programs, sparking public debate.

In theory, the benefits of immigrant investor programs for both newcomers and destination countries are straightforward. For potential investors, these initiatives make doing business abroad attractive by offering a faster or easier route to resettlement, insurance against political or economic upheaval at home, or access to visa-free travel, among other things. In exchange, destination countries enjoy the perks of new investment, including revenues and job creation. In practice, however, policymakers have been disappointed to find the economic impacts of immigrant investment are often modest at best, and designing a program to control where and how money is invested, thereby maximizing economic benefits, can be a challenge.

This report offers an overview of immigrant investor programs around the world, ranging from the United States, Canada, Australia, and the United Kingdom to Bulgaria, Greece, Latvia, Portugal, Spain, and St. Kitts and Nevis.

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