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Diversification will buffer a portfolio from declines in specific asset classes.
But central bank officials say they do not want to take tough action like raising interest rates to stamp out speculation in specific asset classes, because such a response may unnecessarily cool large sectors of the real economy that are not frothy.
It's not a suitable tool for controlling longer-term problems, such as price bubbles in specific asset classes, because the interest rate weapon is a very blunt one.
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But on May 30th, the firm's annual general meeting is likely to approve a plan (passed by the board this week) that seems to leave most people happy.Its essence is that the government's remaining shares in specific assets, such as local generating companies, will be auctioned but only to existing UES shareholders.
Previous studies find that US auto firms insource complex parts that require investments in specific assets.
The RBV proposes that companies choose greater integration and more hierarchical governance mechanisms, because with greater investment in specific assets these forms of governance are more efficient (Poppo and Zenger 1997).
Note, however, that this problem can be alleviated by breaking down the analysis in two parts: one examining the impact of the recession on asset ownership, and the second one addressing the effect of the downturn on the wealth accumulated in specific assets by their owners.
At the same time, investors expressed interest in opportunities to invest directly in specific assets--fisheries, floodplains, forests and more.
Elan's chief executive, G. Kelly Martin, said the deal would help Elan to diversify its business and "should benefit our shareholders by spreading the inherent risk embedded in any one specific asset".
Although the focus of this paper is on uncovering a tendency in a highly specific asset class within a narrow geographical area, the preliminary conclusions and related discussions can be extended to detecting such bubbles in other countries and regions that could possibly warn against the eruption of the next big financial crisis.
Whilst the US joint venture partners considered controls to be particularly useful for the selective transmission and protection of their knowledge, the Chinese partners viewed these same controls as a means to selectively share and protect their specific asset investments in the ventures.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com