nep-cfn New Economics Papers
on Corporate Finance
Issue of 2007‒12‒08
three papers chosen by
Zelia Serrasqueiro
University of the Beira Interior

  1. INDIAN SMEs AND THEIR UNIQUENESS IN THE COUNTRY By Dr. Adya Prasad Pandey, Adya Prasad Pandey
  2. A Sum&Discount method for appraising firms:An illustrative example By Magni, Carlo Alberto
  3. Charting an Icarian Flightpath: The Implications of the Qantas Deal Collapse By Justin O'Brien

  1. By: Dr. Adya Prasad Pandey, Adya Prasad Pandey
    Abstract: The singular contribution of SMEs is on account of their unique characteristics .Their role in economic activity is manifest in both tangible and intangible ways. If this contribution is to be sustained, then their uniqueness needs to be nurtured in an overt and explicit manner. The Indian experience has shown that it is possible to design targeted interventions, be they area specific like in clusters or be they sector/Sub- sector or product specific. Other countries, be they Asian or OCED, also have policies which aim at similar support. The need of the hour is for us to learn from each other , drawing upon experiences and identify “best practice policies”. These in turn have to meet local conditions and circumstance. A “one size fits all” approach will not work. Nevertheless , there can be no two opinions about the priority that SME policies deserve for achieving the socio justice, along with the individual’s aspirations. * Reader , Department of Economics , Banaras Hindu University ,Varanasi 221005 ** B-Tech, M.B.A.
    Keywords: sme; india ;adya prasad pandey ;indian smes
    JEL: G00
    Date: 2007–12–06
  2. By: Magni, Carlo Alberto
    Abstract: This paper presents a new way of valuing firms and measuring residual income. The method, originally introduced in Magni (2000a, 2000b, 2000c, 2001), is here renamed lost-capital paradigm. In order to enhance comprehension the presentation relies on a very simple numerical example which shows that the new paradigm of residual income enjoys a property of abnormal earnings aggregation, according to which the NPV (and therefore the market value) of the firm does not change if each residual income changes, as long as the (uncapitalized) sum of all residual incomes do not change. While radically different from the standard residual income, the difference between the two notions is equal to the interest accrued on the past cumulated standard residual incomes, which has interesting implications for incentive compensation.
    Keywords: Firm valuation; residual income; lost capital; Discount∑ Sum&Discount; incentive compensation
    JEL: G11 G12 M41 G31 M40 G30 M21
    Date: 2007–11
  3. By: Justin O'Brien (Charles Sturt University)
    Abstract: The failed bid for control of Qantas reveals a multitude of weak points in the governance of management buyouts. The paper situates the Qantas collapse within the context of an increasingly acrimonious global debate over the utility of private equity financing. Regulators in the United States, Australia and the United Kingdom have expressed concern that unrestricted expansion increases the risk of market manipulation and macro-economic instability. The paper evaluates whether such concerns are justified by investigating the impact of private equity across a number of critical pressure points within the corporation and between it and those providing the intermediating services required to remain in or exit the public market.
    Keywords: private equity, corporate governance, leveraged buyouts
    Date: 2007–07

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