nep-ppm New Economics Papers
on Project, Program and Portfolio Management
Issue of 2013‒08‒31
seven papers chosen by
Arvi Kuura
Parnu College - Tartu University

  1. Elite Capture in Urban Development: Evidence from Indonesia By Rivayani Darmawan; Stephan Klasen
  2. Mega Sporting Events, Real Estate, and Urban Social Economics – The Case of Brazil 2014/2016 By Thêmis Aragão; Wolfgang Maennig
  3. Common Risk Factors of Infrastructure Firms By Ben Ammar, Semir; Eling, Martin
  4. Default and Renegotiation in PPP Auctions By Matthew Ryan; Flávio Menezes
  5. Business Angels' practices in the screening stage: A study of knowledge transfer to the entrepreneur By Gilles Certhoux; Alexandre Perrin
  6. Syndication in private equity industry: comparing the strategies of independent and captive venture capitalists By Dominique Dufour; Eric Nasica; Dominique Torre
  7. Реформа РАН: Экспертный анализ: Часть I. Реформа РАН: проект Минобрнауки By Polterovich, Victor

  1. By: Rivayani Darmawan (Georg-August-University Göttingen); Stephan Klasen (Georg-August-University Göttingen)
    Abstract: It has been argued that the potential gains of community-driven development (CDD) poverty programs are large as these can foster sustained poverty reduction. However, recent literature shows that community involvement can increase the risk of elite capture, particularly in more unequal communities. The risk is higher when the gap between the poor and the non-poor is larger with limited mobility between groups, the poor find it difficult to increase their bargaining power or voice their preferences. This paper contributes to the limited empirical literature on the existence of elite capture in social programs. Using community and household data from the Second Urban Poverty Project in Indonesia, we find robust evidence for the existence of elite capture under unequal communities. We further find that only when decision makers share similar characteristics with non-elites in terms of wealth, education and social networks, the share of pro-poor projects increases.
    Keywords: Elite capture; Community-driven Development; Inequality; Poverty; Indonesia
    JEL: H42 I32 D63
    Date: 2013–08–23
  2. By: Thêmis Aragão (Chair for Economic Policy, University of Hamburg); Wolfgang Maennig (Chair for Economic Policy, University of Hamburg)
    Abstract: These events promise to improve the urban quality of life and to induce social legacy because of investments in urban infrastructure, transportation, and sporting facilities. Our analysis of the case of Brazil, especially in Rio de Janeiro (host of the 2014 World Cup and 2016 Olympic Games) shows that such benefits may differ locally and may accentuate the process of socio-spatial segregation. Urban projects often include forced evictions of low-income populations and the consequent expansion of social segregation. In public opinion, mega events are also responsible for increasing rents and (real estate) prices. However, such inflationary phenomenon occurs in most Brazilian cities, including non-host cities. The appreciation of real estate is explained largely by population and economic growth and the reduction of interest rates through mortgage programs, as well as reduced social inequality. Public investments in mega events account for only approximately 0.15% of Brazilian GDP from 2007 to 2016 and are thus too small to be responsible for the (increasing) social problems. Obviously, the perceived lack of public accountability for mega event finances as well as the perceived lack of susceptibility to social issues by the mega sporting projects may harm the public opinion of mega events. International sporting federations should thus have every interest in ensuring that their mega events target social inclusion and pay more attention to the needs of local urban and social policies.
    Keywords: Housing Prices, Real Estate, FIFA World Cup, Olympics, Mega Sporting Events, Rio de Janeiro 2016, Urban Planning, Accountability
    Date: 2013–08–20
  3. By: Ben Ammar, Semir; Eling, Martin
    Abstract: The risk of infrastructure firms is driven by unique factors that cannot be well described by standard asset class factor models. We thus create a seven-factor model based on infrastructure-specific risk exposure, i.e., market risk, cash flow volatility, leverage, investment growth, term risk, default risk, and regulatory risk. We empirically test our model on a large dataset of U.S. infrastructure stocks in different subsectors (utility, telecommunication, and transportation) and over a long period of time (1980 to 2011). The new factor model is able to capture the variation of infrastructure returns better than the Fama/French three-factor or the Carhart four-factor models. Thus, our model helps to better determine the cost of capital of infrastructure firms, something that is increasingly relevant in light of the growing need for privately financed infrastructure projects.
    Keywords: Infrastructure, Asset class, Factor model, Fama/French factors, Leverage, Cash ow volatility, Investment factor.
    JEL: G11 G12 G19 O18
    Date: 2013–05
  4. By: Matthew Ryan (The University of Auckland); Flávio Menezes (School of Economics, The University of Queensland)
    Abstract: The winners of auctions for PPP contracts, especially for major infrastructure projects such as highways, often enter financial distress, requiring the concession to either be re-allocated or re-negotiated. We build a simple model to identify the causes and consequences of such problems. In the model, firms bid toll charges for a fixed-term high- way concession, with the lowest bid winning the auction. The winner builds and operates the highway for the fixed concession period. Each bidder has a privately known construction cost and there is common uncertainty regarding the level of demand that will result for the com- pleted highway. Because it is costly for the Government to re-assign the concession, it is exposed to a hold-up problem, which bidders can exploit through the strategic use of debt. Each firm chooses its finan- cial structure to provide optimal insurance against downside demand risk: the credible threat of default is used to extort an additional transfer payment from the Government. We derive the optimal finan- cial structure and equilibrium bidding behaviour and show that (i) the auction remains efficient, but (ii) bids are lower than they would be if all bidders were cash financed, and (iii) the more efficient the winning firm, the more likely it is to require a Government bail-out.
    Date: 2013–08–20
  5. By: Gilles Certhoux (Audencia Recherche - Audencia); Alexandre Perrin (EDHEC Business School - Edhec Business School)
    Abstract: Are Business Angels likely to influence the entrepreneur before any investment decisions have been taken? If such is the case, what are the reasons for doing so and in what way do they influence the entrepreneur? In this article we examine knowledge transfer from angel to entrepreneur at the pre-investment phase which is seldom treated in depth in literature. Through the use of an original theoretical framework (the activity system model), we describe the activities which are at the heart of the interactions between Business Angels and entrepreneurs. Our methodology is therefore qualitative and founded on an inductive reasoning. The analysis and comparison of four French cases show that, in spite of the absence of a relationship bound by contracts, business angels can modify a venture's content and the entrepreneur can accept these changes due to the former's expertise in terms of explicit and tacit knowledge.
    Keywords: Business Angels ; Knowledge transfer ; Activity system
    Date: 2013–06–26
  6. By: Dominique Dufour (IAE Nice - Institut d'Administration des Entreprises - Nice - Université Nice Sophia Antipolis [UNS]); Eric Nasica (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR7321 - Université Nice Sophia Antipolis [UNS]); Dominique Torre (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR7321 - Université Nice Sophia Antipolis [UNS])
    Abstract: This paper aims to connect two strands of the venture capital literature: the inter-relationships among venture capitalists (VCs) on the one hand, and between VCs and their funds providers on the other hand. It examines the existence of a relationship between type of fund provider and skill characteristics of the VCs partners in a syndication deal. In other words, it examines whether captive/independent VCs privilege partnerships with firms with specific skills? We develop a theoretical analysis to compare the syndication behaviors of independent and captive VCs. Based on a game-theoretical approach, we model whether the type of lead VC has an influence on the optimal (related to skill levels) partnerships established with syndicate members. Our paper highlights that the source of finance matters for the syndication choice. Its influence takes two forms. The first is related to the heterogeneity between a captive and an independent VC in relation to the returns from the funded project: independent VCs (IVCs) tend to participate in higher profitability syndicated funding projects than captive VCs (CVCs). The second is related to heterogeneity among captive and independent VCs in the ability to syndicate. This is related strongly to the types of financial incentives funds providers employ to align the VC's interests with their own goals. Our analysis suggests that these incentives play a decisive role in the bargaining power of the lead VC and generally make IVCs more attractive syndication partners for other venture capitalists.
    Keywords: Syndication; Private equity; venture capital; captive; independent; skills; experience specialization
    Date: 2013–07–30
  7. By: Polterovich, Victor
    Abstract: The theory of reforms usually assumes that a designer aims to increase public welfare under existing constraints. In practice, however, initiators of reforms quite often proceed from false premises, and pursue political and-or self-interested goals. In this paper, we analyze an example of such an initiative - the project of reform of the Russian Academy of Science, offered by The Ministry of Education and Science in June 2013. It is shown, that among the political motives which stimulated the appearance of the project, the main one was the intention to deprive the community of researchers of its organizational independence. This motive was supported by the erroneous thesis, according to which Russian Academy of Science is not capable to provide innovation-based development whereas for successful imitation of technologies, fundamental researches are ostensibly not necessary at all. The analysis shows the exigency of reforming the Russian system of preparation and realization of reforms.
    Keywords: reform design; costs of reform; civil society; fundamental research; catching up development; science and authorities
    JEL: B52 O43 P11
    Date: 2013

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