Regulating Infrastructure: The Impact on Risk and Investment

Abstract

The last thirty years have witnessed a fundamental change in the regulation of infrastructure industries. Whereas firms were subject to rate of return regulation and protected from entry in the past, they now face various forms of incentive regulation, competition is actively promoted by many regulators, and both regulators and the firms they regulate must often confront rapid technological progress. This paper surveys the literature on the investment implications of different regulatory schemes, highlighting the relevance of modern investment theory, which puts risk and intertemporal issues, such as the irreversibility of much infrastructure investment, center stage. It discusses the impact on regulated monopolists? investment behavior of key regulatory characteristics, namely the price flexibility allowed by the regulator, the length of the regulatory cycle, and the costs the regulator will allow the firm to recover at future regulatory hearings. It also considers the impact of competition, especially the situation where a vertically integrated firm has its operation of a bottleneck asset regulated, on investment by regulated firms and their competitors.

The Effectiveness of Accounting Information System towards Financial Statement Quality with the Organizational Commitment as the Moderating Variable

“…Computer system technology components as data processing of local government financial transactions are able to meet the pillars of financial information on time. This is in line with previous research that the effectiveness of accounting information systems can improve and directly influence the quality of financial statements, (Al-Hiyari, Al-Mashregy, & Mat, 2013;Fardinal, 2013;Sajady & Dastgir, n.d.2008). Organizational commitment included as a moderating role in explaining the effect of the effectiveness of accounting information systems on the quality of financial statements.…”

“…Research that states accounting information systems affect the quality of financial statements include (Sajady & Dastgir, n.d. 2008) stating accounting information systems make an increase in the quality of financial statements. According to (Fardinal, 2013) the results of his research stated that the quality of accounting information systems can improve the quality of financial statements. The quality of financial statements will be enhanced by the effectiveness of the accounting information system.…”

Regulation and Investment

“…whereȲ is average real output demanded,P the average price level, and ε the elasticity of demand. 6 As in Blanchard and Giavazzi (2003), we assume that the 6. If the demand functions are derived from Dixit-Stiglitz preferences,P has the standard CES form.…”

Enhanced Cash Flow Valuation in Real Estate Management by Integrating Innovative Materials and Risk Assessment

“…In the last decade, sustainable aspects and their impact on real estate projects have become more important [37][38][39]. Green materials and products have been applied by architects, developers, and construction companies [40], with hallmarks including extensive life cycles [6], large and mainly irreversible investments [7], and the extensive use of natural resources and energy [8,9] to direct the focus of investors, clients, and the government toward sustainability issues [38]. Thus, it can be considered that the higher the ranking in a sustainable building certification, the lower the risk for a certain project.…”

“…Real estate is a flagship industry regarding these aspects, as its associated projects are characterized by very long life cycles [6], large investments [7] which are often irreversible, enormous greenhouse gas emissions, and significant depletion of natural resources and energy [8,9]. A building's impact on the environment must be classified as being low in order for it to be certified.…”