Africa as an emerging market offers firms from Multinational Corporations (MNCs) significant opportunities to expand and capitalise on the continents economic growth and combined consumer spending. Africa has significantly higher levels of state fragility and political risk in comparison to the rest of the World. Managers of firms looking to enter the African market need to analyse political risk in Africa when the firm risk taking and financial return relationship is considered. The objective of this research study was to establish if there is a relationship between political risk and financial performance of firms in Africa. This study used various financial performance ratios of 406 firms operating in five African countries and numerous country political risk variables to investigate if such a relationship exist over an eight year period. The findings indicate that there is a positive political risk financial return relationship for firms operating in Africa. Firms seem to achieve higher financial performance results in countries with higher overall political risk. This study suggest that African countries need to be analysed on an individual basis when considering political risk and published political risk data should not be used for decision making without deeper understanding and analyses of the country. / Dissertation (MBA)--University of Pretoria, 2012. / Gordon Institute of Business Science (GIBS) / unrestricted

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Yes / Exposure to political corruption and political uncertainty separately demands opposing risk management responses: to reduce cash to minimize expropriation and to increase cash to hedge policy risk. We study how local political corruption and political uncertainty interact in their impact on corporate cash holdings within the United States. We find robust evidence that firms located in states with higher corruption scores react to increases in local political uncertainty by increasing cash holdings more than those in less corrupt settings. This behavior suggests that firms in more corrupt settings find it expedient to raise cash to facilitate influence of officials in the face of local political risk. We find further support for this conclusion by showing that politically engaged firms respond to our measure of political risk by increasing cash and increasing spending on campaign contributions. Our findings point to a potential channel through which different jurisdictions experience the entrenchment and persistence of corruption.

¡@The decision of company¡¦s capital structure should depend on each company¡¦s characteristic and environment for determining the proper debt level. Nowadays, in the global environment, corporation has been affected by the global variables. In addition to the involvement of international activity for corporation, the factor of global environment will also strike the corporation¡¦s characteristic and operating. ¡@This study uses the electronics industry as sample, and the sample period is from 2000 to 2006. This study will be divided into three parts. First, separate global activity into two dimensions: operating and finance, and to build respective measurement indicator of the internationalization. Second, discuss how these two dimensions influencing on the financial characteristic and capital structure for company. Finally, explore whether the international factors of exchange rate risk and political risk will affect the corporation capital structure. ¡@As a result, this study discovers three main conclusions. First, the international activity variables such as operating and financial characteristics actually exist in the electronics industry. Corporation can diversify the operating risk and reduce the cost of bankruptcy through the international activity of operating, however, that also restricts the investment opportunity and reduces the debt¡¦s agency cost at the same time. In addition, we find that the international level of operating will affect corporation¡¦s capital structure significantly. But if we control the variables of capital structure theory such as size, bankruptcy cost, debt¡¦s agency cost and the earning ability, it will become insignificant. However, the international level of finance always has significant and positive effect on corporation¡¦s capital structure no matter do we control the variables of capital structure theory or not. Third, as for the international environment factors, exchange rate risk is significant and positive factor for capital structure, conversely, political risk is significant and negative factor. Finally, this study exhibits that the decision of company¡¦s capital structure should consider the international environment for each company.

This paper studies if a change in political risk has a significant impact on the stock returns of countries. Additionally, the paper assesses if this change in political risk impacts stock returns differently in emerging and developed countries. The paper conducts a risk based portfolio analysis and a linear cross-sectional regression analysis in order to find a conclusive result. The portfolio analysis, which replicates a study carried out by Diamonte, Liew, and Stevens (1996), reveals that there is a difference in the impact that change in political risk has in developed and emerging countries. The regression analysis finds that change in political risk does impact stock returns but there is no statistically significant difference in this impact between emerging and developed countries. The regression analysis also finds that the existing level of risk does not significantly affect the impact that growth in political risk has on stock returns.

This thesis is based on four essays dealing with tourism development and its determinants. Chapter Two explores the different definitions of ‘tourism’ and ‘tourist’, as well as the factors that influence tourism arrivals. We discuss traditional and more recent theories that underlie the study of the tourism industry. The third chapter examines the effect of tourism upon economic growth, investigating the effects of tourism specialization within tourism-exporting countries and non-tourism-exporting countries annually over the period 1995–2007, applying panel-data methods in cross-sectional growth regressions. This study finds that tourism does not affect economic growth in either underdeveloped or developed countries. Moreover, tourism might cause Dutch Disease in tourism-exporting countries owing to their over-reliance on the exporting of non-traded goods. Chapter Four seeks to identify how institutional quality and aspects of infrastructure (internet access measured by size of country or per 100 people) influence tourist arrivals in a whole sample of 131 countries and in sub-samples comprising developed and developing countries (as defined by IMF criteria) using static and dynamic panel data. The findings indicate that internet access enhances the tourism industry, and most interestingly, that good governance is one of the most influential factors for improving and developing tourism. Chapter Five diagnoses the determinants of tourism flows using panel-data sets including 134 originating countries and 31 destination countries (selected depending on data availability) focusing on ICRG data for the period 2005–2009. The methodology makes use of basic and augmented gravity equations, together with the Hausman-Taylor and Poisson estimation techniques, whilst comparing the performance of the three gravity-equation methods. The results suggest that lower levels of political risk contribute to an increase in tourism flows. Furthermore, common language (positively), common currency (negatively) and political factors (particularly institutional quality) are the most prominent determinants in promoting (or deterring) tourism. Chapter Six gives concluding remarks.

South African Multinational Corporations (MNCs) are expanding their operations and seeking investment opportunities elsewhere bedsides South Africa. Some of these opportunities present themselves in unfamiliar environments which are politically risky nonetheless South African MNCs continue to invest in such countries. The aim of this research paper is to establish the impact of political risk on foreign direct investment decisions by South African MNCs. The paper seeks to establish key political risk factors that South African MNCs consider prior to investing in a country deemed politically risky. Once they have indentified these political risk factors, what are the Foreign Direct Investment (FDI) drivers attracting them to a specific country despite its political climate? The paper attempts to understand the decision making process of MNCs when seeking to invest in a politically risky country and to what extent do MNCs involve the incumbent government and other local stakeholders in this process. Lastly the paper seeks to establish how MNCs manage the impact of political risk in a country.A qualitative research methodology with an exploratory design was used to collect the data. In-depth face-to-face interviews were conducted with eight representatives from South African MNCs which are doing business in politically risky countries.The results reveal that political risk has a significant impact on the FDI decision making process of South African MNCs and how they go about conducting this process has a far reaching impact on the success of the MNC in a politically risky country. Conducting a thorough political environment assessment is critical, by engaging the incumbent government and all relevant stakeholders is key when seeking to invest in politically risky countries. Politics drive economics therefore one cannot separate economics and politics. / Dissertation (MBA)--University of Pretoria, 2012. / Gordon Institute of Business Science (GIBS) / unrestricted

This thesis is dedicated to developing a concept that allows for predicting the magnitude of political instability periods. To that end existing literature is consulted to explore the most appropriate definitions and explanatory models for creating a elaborated approach to political instability. On the basis of this refined concept, that defines political instability as a latent condition rather than an occurrence, hypotheses are devised. These hypotheses are tested by employing a exploratory correlation analysis on a limited sample, which yields results that encourage confidence in the predictive potential of the developed concept. As suggested in the explanatory framework the analysis finds that the magnitude of conflict, resulting from political instability, is positively correlated with social fragmentation and individual deprivation, while being negatively correlated to military professionalism. A fourth explanatory component - viable alternatives to conflict - was not found to have any effect.

Using a dataset of 7757 firms in Brazil, China, India, and Russia from 2009 to 2014, this article examines the effect of political risk variables on financial flexibility and the effects of financial flexibility on future firm value, capital investment, cash holdings and the probability of default while controlling for firm-level effects and political variables. Effective representation of the majority is found to be associated with a higher level of financial flexibility. In terms of the effects of financial flexibility on firm value, results that are much stronger than previously reported are found. However, unlike previous work, the current research does not find that increased financial flexibility leads to increased capital expenditures. It is found that financially flexible firms in these countries lower their probability of default on average by about 0.6 %. It is also found that giving greater voice to the majority and greater adherence to the rule of law adds to the value of firms.

「政治風險」近來成為台商海外投資時討論的重要議題，但國內目前在這方面的探討多僅限於個案式的報導，本研究的貢獻即在於將國外學者對政治風險的討論統整歸納，建立整合性的理論架構，在此架構中將澄清政治風險的慨念、找出可能導致政治風險的事件來源、討論政治風險的評估機制並提出管理政治風險的方式。研究中將政治風險的來源分為地主國的政治情況、地主國政府政策、地主國政府行為、當地社會情況及地主國與他國的關係五類；其會影響企業海外投資的管控權、營運、利潤與績效及個人生命財產安全；其因應策略則有經濟上的嚇阻、規避及適應策略三類。而為試驗此一架構的實用性，本研究以台商的海外投資行為作一驗証。 　　本研究的發現如下： 　　1. 大部份台商不認為其海外投資面臨了高度政治風險，而其對政治風險的認知著重在「地主國的政治情況穩定度」，忽略其他來源（如：地主國與他國的關係），顯示政治風險的慨念尚待推展。 　　2. 七成的台商有進行海外投資相關訊息的搜集，但基本上台商大多缺乏系統性的評估機制，以主觀的評估為主，但多會將評估的結果納入長期規劃的考量中；而評估機制的完善與否會影響公司海外投資的績效。 　　3. 進入策略的選擇與政治風險有關，當面臨高度政治風險時，台商多不願進入投資，若必須進入則會採取「合資」的方式，以降低風險。 　　4. 台商對政治風險的管理會因風險所造成的影響不同而有異，但普遍說來，台商主要是採「適應策略」與「規避策略」，主控性較高的「經濟上的嚇阻策略」在運用上尚不普遍。這與台商對投資國的依賴度太深有關。 　　5. 研究中發現不同的產業別其所面臨的政治風險並無顯著不同，這與國外文獻的採討結果有所差異。 　　6. 海外投資的規模與企業所面臨的政治風險無顯著相關，公司的規模愈大，其評估證制會較有系統，但未達統計上的顯著性。 　　7. 高階管理者的個人特質會影響公司對政治風險的因應對策：主管特質為「混合型」者，偏向於採行建立人際網路、從事公關活動的方式來降候風險；具「冒險／好挑戰」特質的高階主管喜採取經濟上的嚇阻策略來因應政治風險；「保守型」的高階主管則較常以規避風險策略來因應。 　　8. 針對上述發現，本研究的建議為：(1)台商應擴大對政治風險的認知、將風險的評估機制制度化、並在進行海外投資時掌握關鍵活動，如此一來可以增加管理政治風險的彈性；(2)由於目前台商偏向以規避的方式來因應政治風險，因此政府應扮演更積極的角色，提供管理政治風險的具體協助，如：與投資國訂定保障投資條款、非商業風險投保的推動等。