nep-cfn New Economics Papers
on Corporate Finance
Issue of 2014‒03‒30
four papers chosen by
Zelia Serrasqueiro
University of the Beira Interior

  1. "Use the financial health of an organization in financial planning." By Paulina Tomasik
  2. Managing the value and the risk of the enterprise on the example: of enterprise producing products from metal, the non-profit organization providing fire services and financial institutions from the scope of Open pension funds. By Martyna Rosik; Weronika Śmierczyńska; Marta Tomczak; Weronika Szczepaniak; Anna Ziółkowska; Małgorzata Jańska
  3. Interactions Between Risk-Taking, Capital, and Reinsurance for Property- Liability Insurance Firms By Selim Mankaï; Aymen Belgacem
  4. Discounting Cashflows from Illiquid Assets on Bank Balance Sheets By Nauta, Bert-Jan

  1. By: Paulina Tomasik (Paulina Tomasik - Wroclaw University of Economics)
    Abstract: A main purpose of our project is to examine the financial condition of 3 chosen companies: a financial institution, a non-profit organizations, as well as the production company. All companies are existing at the Polish market. To make the calculations and tests we used the method of John Zietlowacontained in the publication: "A Financial Health Index for Achieving Financial Sustainbility." To receive the PHI index is necessary to calculate the several component indicators, which also provide us with the information needed to analyze the company on several different levels. The calculations shown in our paper are made on the basis of the companies' financial statements for the years 2009, 2010 and 2011
    Keywords: PHI ratio, ratio analysis, liquidity, stability, company condition, financial analyze
    Date: 2014–03–19
  2. By: Martyna Rosik (Financial Analysis - Wroclove Univarsity of Economics); Weronika Śmierczyńska (Financial Analysis - Wroclove Univarsity of Economics); Marta Tomczak (Financial Analysis - Wroclove Univarsity of Economics); Weronika Szczepaniak (Financial Analysis - Wroclove Univarsity of Economics); Anna Ziółkowska (Financial Analysis - Wroclove Univarsity of Economics); Małgorzata Jańska (Financial Analysis - Wroclove Univarsity of Economics)
    Abstract: A way of managing the goodwill on the example of the enterprise producing products from metal, non-profit organization providing fire services, financial institutions from the scope is reporting back of Open pension funds. Calculations were conducted at using the method Eva. all data for calculations was taken from financial statements of chosen business entities.
    Keywords: managing the value and the risk, EVA, cost of capital, NOPAT
    Date: 2014–03–13
  3. By: Selim Mankaï; Aymen Belgacem
    Abstract: Theory and empirical evidence recognize interactions between capital and risk. This paper analyzes the effect of reinsurance, as a new endogenous decision variable, on this policy mix using simultaneous equations model. Empirical results obtained from a sample of U.S. property-liability insurance firms reveal significant interactions between capital, risk, and reinsurance. The relationship between risk and capital is positive, highlighting the effectiveness of regulatory mechanisms. Reinsurance is negatively associated with capital, for which it appears to act as a substitute. These results are strongly sensitive to the level of capital held in excess of the regulatory minimum requirements. Weakly capitalized firms adjust their reinsurance and risk levels more extensively and try to rebuild an appropriate capital buffer. Unlike other decision variables, the capital ratio converges toward a target level.
    Keywords: Risk-taking, Capital Regulation, Reinsurance, Simultaneous Equations, Instrumental Variables.
    JEL: G22 G28 G32
    Date: 2014–02–25
  4. By: Nauta, Bert-Jan
    Abstract: Most of the assets on the balance sheet of typical banks are illiquid. This exposes banks to liquidity risk, which is one of the key risks for banks. Since the value of assets is determined by their risks, liquidity risk should be included in valuation. This paper develops a valuation framework for liquidity risk. An important element of the framework is the definition and derivation of an optimal admissible liquidation strategy that describes the assets a bank will liquidate in case of a liquidity stress event (LSE). The main result is that the discount rate includes a liquidity spread that is composed of three elements: 1. the probability of an LSE, 2. the severity of an LSE, and 3. the liquidation value of the asset. The framework is illustrated by application to a stylized bank balance sheet.
    Keywords: valuation; liquidity spread; discounting; liquidity risk;
    JEL: G12 G13 G21
    Date: 2013–04–01

This nep-cfn issue is ©2014 by Zelia Serrasqueiro. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.