Inflection Points, Kinks, and Jumps: A Statistical Approach to Detecting Nonlinearities

Arın, K. Peren; Minniti, Maria; Murtinu, Samuele; Spagnolo, Nicola

doi:10.1177/10944281211058466

Cited by 15 publications

(14 citation statements)

References 103 publications

(120 reference statements)

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“…The identification of switch points is also important, and we will test our data for their possible existence. According to Arin et al (2022), inflection points, kinks, and jumps allow us to identify places where the relationship between dependent and independent variables switches in some important way. The identification of endogenous switch points may lead to significantly different conclusions from those obtained when switch points are ignored or their existence is conjectured arbitrarily (Arin et al 2022, 1).…”

Section: Methodsmentioning

confidence: 99%

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The impact of concentration among venture capitalists: revisiting the determinants of venture capital

2022

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This article analyzes the impact of the level of concentration among Venture Capitalists (VCs) on the supply of venture capital (VC), through the reduced form model for the equilibrium amount of VC (using a simultaneous equation model on aggregated data from 15 European countries). It is shown that the level of concentration among VCs has a positive effect on VC supply, so creating conditions to increase the level of concentration can stimulate VC supply. The findings reveal the importance of unemployment and personal income rate on VC demand and the positive impact of stock market capitalization on VC supply.

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Section: Methodsmentioning

confidence: 99%

“…The identification of endogenous switch points may lead to significantly different conclusions from those obtained when switch points are ignored or their existence is conjectured arbitrarily (Arin et al 2022, 1). We will apply the methodology developed by Arin et al (2022) to all variables used and analyze the results obtained.…”

Section: Methodsmentioning

confidence: 99%

The impact of concentration among venture capitalists: revisiting the determinants of venture capital

2022

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“…We also ensured that the observed functional form is indeed quadratic and, in turn, that alternative and more complex specifications can be ruled out, such as a cubic (S-shaped) functional form. We follow prior suggestions (e.g., Arin, Minniti, Murtinu, & Spagnolo, 2022) and leverage semiparametric techniques to inspect and explore alternative specifications of curvilinear functional forms.…”

Section: Alternative Functional Formsmentioning

confidence: 99%

Cash holdings and firm value: Evidence for increasing marginal returns

Theissen,

Jung,

Theissen

et al. 2023

Journal of Management Scientific Reports

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Cash is an important strategic asset for firms and scholars have a longstanding interest in the optimum level of a firm's cash holdings. In this study, we revisit the relationship between cash holdings and firm value by conducting a re-examination of Kim and Bettis , who hypothesized and found positive but decreasing marginal returns of cash. We argue and demonstrate that the regression model configuration of Kim and Bettis leads to distorted regression results. Once we adjust their regression model configuration, our results show that the benefits of cash do not diminish but instead increase with increasing cash holdings. In further analyses, we find indicative evidence that these results may be driven by firms with very high investment opportunities. We also employ a larger sample over a longer period of time to corroborate the time generalizability of our findings, we perform several checks to establish their robustness, and we discuss their theoretical implications.

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“…With regard to H3, being that it is tested by means of an interaction term between a continuously bounded variable Political Relations and SWF Politicization, there is no theoretical motivation for using a threshold regression. However, following Arin et al (2022) discontinuities at different values of Political Relations * SWF Politicization. As an example, in Figure 1 we show this graphical test at the value zero, where we display two smoothed fifthorder polynomial approximations fitting the relationship between the dependent variable and Political Relations * SWF Politicization, before and after the value zero.…”

Section: Additional Evidencementioning

confidence: 99%

“…Following the procedure recently proposed by Arin et al (2022), in Table 7 we estimate an endogenous threshold regression. Namely, we re‐estimate our main model in Table 5 (column (1)), as many times as there are possible switch points in the distribution of SWF Politicization .…”

Section: Additional Evidencementioning

confidence: 99%

Cross‐border acquisitions by sovereign wealth funds: A legitimacy‐based view

Murtinu,

Scalera,

Strange

2023

Global Strategy Journal

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Research SummaryDrawing on institutional economics and the legitimacy‐based view of political risk, we investigate the factors determining the realization of cross‐border investments by sovereign wealth funds (SWFs), whose investments often suffer from a lack of legitimacy in host countries. Using matching models on all the realized and potential investments, we find that investments are more likely to materialize when the SWF home country and the host country enjoy cordial political relations or are involved in a trade agreement. Contrary to the theoretical predictions, SWF politicization does not per se represent an impediment to the realization of investments. Rather, it has a negative effect on the likelihood of an investment's realization only in the presence of trade agreements.Managerial SummaryA recent trend in the global economy is the increasing cross‐border investment activity undertaken by sovereign wealth funds (SWFs), large investment vehicles where financial and political goals often co‐exist. On the grounds of possible financial or political destabilization, SWFs' cross‐border investments attract scrutiny and suspicion in host countries, hindering their realization. We analyze SWF‐ and country‐level factors that may determine the successful realization of SWFs' cross‐border acquisitions. We suggest that managers ex ante select target firms and host countries by considering their fund's governance and degree of independence from home‐country politics in interaction with bilateral (home‐host country) political and economic relations, so as to secure legitimacy for their investments and maximize the chances that cross‐border investment strategies may materialize.

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Inflection Points, Kinks, and Jumps: A Statistical Approach to Detecting Nonlinearities

Cited by 15 publications

References 103 publications

The impact of concentration among venture capitalists: revisiting the determinants of venture capital

The impact of concentration among venture capitalists: revisiting the determinants of venture capital

Cash holdings and firm value: Evidence for increasing marginal returns

Cross‐border acquisitions by sovereign wealth funds: A legitimacy‐based view

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