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PurposeThis study explores how the firm’s proprietary information has an impact on the bank loan contracts. It explains the propensity of using the competitive bid option (CBO) in the syndicate loans to solicit the best bid for innovative firms and how it changes based on industry competition and the degree of innovations. This research also examines how the interstate banking deregulation (Interstate Banking and Branching Efficiency Act) in 1994 affected the private loan contracts for innovative borrowers.Design/methodology/approachThe study uses various econometric analyses. First, it uses the propensity score matching analysis to see the impact of patents on pricing terms. Second, it uses the two-stage least square (2SLS) analysis by implementing the litigation and non-NYSE variables. Finally, it studies the impact of the policy change of the Interstate Banking and Branching Efficiency Act of 1994 on the bank loan contracts.FindingsFirms with more proprietary information pays more annual facility fees but less other fees. The patents are the primary determinants of the usage of CBO in the syndicate loans to solicit the best bid. While innovative firms can have better contract conditions by the CBO, firms with more proprietary information will less likely to use the CBO option to minimize the leakage of private information and the severe monitoring from the banks. Finally, more proprietary information lowered the loan spread for firms dependent on the external capital after the interstate banking deregulation.Originality/valueThe findings of this research will help senior executives with responsibility for financing their innovative projects. In addition, these findings should prove helpful for the lawmakers to boost economies.

The objective of this report is to provide a methodology for examining bids and evaluating the performance of engineer's estimates in capturing the true cost of projects. This study reviews the cost development for transportation projects in addition to two sources of uncertainties in a cost estimate, including modeling errors and inherent variability. Sample projects are highway maintenance projects with a similar scope of the work, size, and schedule. Statistical analysis of engineering estimates and bids examines the adaptability of statistical models for sample projects. Further, the variation of engineering cost estimates from inception to implementation has been presented and discussed for selected projects. Moreover, the applicability of extreme values theory is assessed for available data. The results indicate that the performance of engineer's estimate is best evaluated based on trimmed average of bids, excluding discordant bids.

This report assesses the potential of electricity contract auctions as a procurement option for the World Bank's client countries. It focuses on the role of auctions of electricity contracts designed to expand and retain existing generation capacity. It is not meant to be a 'how-to' manual. Rather, it highlights some major issues and options that need to be taken into account when a country considers moving towards competitive electricity procurement through the introduction of electricity auctions. Auctions have played an important role in the effort to match supply and demand. Ever since the 1990s, the use of long-term contract auctions to procure new generation capacity, notably from private sector suppliers, has garnered increased affection from investors, governments, and multilateral agencies in general, as a means to achieve a competitive and transparent procurement process while providing certainty of supply for the medium to long term. However, the liberalization of electricity markets and the move from single-buyer procurement models increased the nature of the challenge facing system planners in their efforts to ensure an adequate and secure supply of electricity in the future at the best price. While auctions as general propositions are a means to match supply with demand in a cost-effective manner, they can also be and have been used to meet a variety of goals.

The author offers innovative approaches to 3 topics that are typically only briefly mentioned (if at all) in money and banking courses. The first topic is a Treasury bill auction experiment in which students have an opportunity to participate directly. The results from a class of 14 money and banking students are used to explain how an instructor might conduct such an experiment in the classroom. Relatively simple algebraic models are also developed for 2 types of stock market transactions: short selling and margin buying. Three analytical exercises are presented with complete solutions to demonstrate how an instructor might assign related problems for students. These experiments and models give students a lasting understanding of a number of rarely discussed topics in money and banking courses.

This chapter describes the IDCsr competitive bid process including effective transfer of the project definition and client requirements to the bidding IDCCs team leaders. It then describes the IDCCs bid preparations, concept design process, estimating, programming, preparing the design stage cost drawdown schedules and the assembly and presentation of the bid. The chapter also discusses the client's evaluation of the bids and selection of the preferred IDCC, agreeing any outstanding issues, signing the IDCsr Sale Agreement and activating the IDCsr project bank account. The purpose of the IDCsr competitive process is for the client to be able to identify and appoint the most appropriate IDCsr Constructor at the conclusion of the bidding stage. Under the IDCsr system, estimators can be directly involved in the design process from the transfer of the client brief to the design and construction stages.

This chapter is devoted to various control activities that address a wide range of issues that can exist within transaction processes. Two all‐encompassing operational questions help guide the development of these processes: “How does money go out of our organization?” and “How does money come in to our organization?” It should be understood that numerous areas are interrelated in connection with money going in and out of an organization. Because of these interrelated components, this chapter presents these control activities that relate to general processes as a whole.

The countries of Southeast Europe have undergone a significant transition over the past decade. Helped by macroeconomic stabilization and efforts in advancing structural reforms, real GDP growth has picked up this century. Fiscal adjustment has been an integral part of the transition. Expenditure cuts have helped trim spending relative to GDP in most countries in the region and cut fiscal deficits everywhere except in Serbia. Progress in fiscal consolidation has been substantial, but in several of the countries the government's presence in the economy remains oversized. Costs related to advancing EU integration and completing reforms are expected to generate further pressures for public spending. Creating the fiscal space for addressing such pressures would require a further reduction in existing spending, given that there is still scope for increasing tax rates. The report identifies key remaining challenges and proposes a menu of options in further reforms in sectors that account for the largest shares of public spending, and where reforms are likely to have significant budgetary implications. The sectors discussed in the report are social protection, health, education, public administration, and infrastructure.

Bid-rigging has long been a problem in the construction area. This research identified the existing problems in evaluating damages from bid-rigging in Design-Bid-Build (DBB) and lowest-bid construction projects. Traditional econometric assessment based on stochastics requires sufficient historical data to obtain reliable estimates. Thus, it is crucial to collect and analyze data from pertinent projects for its utilization. To ensure the accuracy of the estimation, a substantial amount of data on the outcomes of DBB bids should have been gathered. In many construction projects, that requirement could not be met. Furthermore, econometric analysis cannot reflect the differences caused by the details of individual projects. This study proposes an alternative approach based on detailed cost estimates, weights of major work groups and their historical bid rates when historical data from similar projects are scarce. This approach can reflect the distinct characteristics of individual projects. The proposed model was applied to 23 gas pipeline construction projects under DBB and the lowest bid. This study identified the impacts of the different compositions of major work groups. Bid rates of the main work groups could not only be used to evaluate the damages caused by bid-rigging, but could also be used to determine reliable bid prices and provide a bidding strategy to aid the bidder’s decision-making process in future bids for similar projects.

Display advertising is a major source of revenue for many online publishers and content providers. Historically, display advertising impressions have been sold through prenegotiated contracts, known as reservation contracts , between publishers and advertisers. In recent years, a growing number of impressions are being sold in real-time bidding (RTB), where advertisers bid for impressions in real time, as consumers visit publishers’ websites. RTB allows advertisers to target consumers at an individual level using browser cookie information, and enables them to customize their ads for each individual. The rapid growth of RTB has created new challenges for advertisers and publishers on how much budget and ad inventory to allocate to RTB. In this paper, we use a game theory model with two advertisers and a publisher to study the effects of RTB on advertisers’ and publishers’ strategies and their profits. We show that symmetric advertisers use asymmetric strategies where one advertiser buys all of his impressions in RTB, whereas the other advertiser focuses on reservation contracts. Interestingly, we find that while both advertisers benefit from the existence of RTB, the advertiser that focuses on reservation contracts benefits more than the advertiser that focuses on RTB. We show that while RTB lowers the equilibrium price of impressions in reservation contracts, it increases the publisher’s total revenue. Despite many analysts’ belief that, because of being more efficient, RTB will replace reservation contracts in the future, we show that publishers have to sell a sufficiently large fraction of their impressions in reservation contracts to maximize their revenue. We extend our model to consider premium consumers, publisher’s uncertainty about the number of future visitors, and effectiveness of ad customization. The online appendix is available at https://doi.org/10.1287/mksc.2017.1083 .

Energy firms are the beneficiaries and initiators of innovation, and energy investments are a crucial area of business activity that is specially protected in any country. This is no wonder, as energy security is the basis for the functioning of states and economies. The Internet of Things and Big Data create both new challenges and new threats. This study aimed to identify the potential threats and determine preventive measures, as well as to establish the agile principles related to energy firms’ logistics. The method of the narrative summary in combination with the literature searching method was used. Two conclusions emerged: first, research serves to develop the discipline of management science; second, the identification of risks associated with innovation serves practitioners. In addition, the study defined further research directions.