Financial exposure and technology innovation investment: measuring project results in Brazilian commodity industries

Detalhes bibliográficos
Autor(a) principal: Quintella, Vitor da Mata
Data de Publicação: 2017
Outros Autores: Silva Júnior, Antônio Francisco de Almeida da, Almeida, José Ricardo Uchôa Cavalcanti, Embiruçu, Marcelo
Tipo de documento: Artigo
Idioma: eng
Título da fonte: Repositório Institucional da UFBA
Texto Completo: http://repositorio.ufba.br/ri/handle/ri/27999
Resumo: The purpose of this paper is to identify, measure and optimise financial risk and its effect on returns from innovation projects on an accrual basis and on a cash basis in a commodity industry. A hypothetical case study, based on a real case, of a petrochemical commodity industry in Brazil was analysed with commodities pricing rules based on actual contracts. Earnings at risk (EaR) and cash flow at risk (CFaR) measures were applied, as well as a metric proposed in this paper called cash balance at risk (CBaR). The paper demonstrates that financial risk measurement and optimisation are important issues in the decision-making process in the petrochemical industry. EaR, CFaR and CBaR measures are helpful when used alongside standard procedures of project evaluation. The findings also show that innovative technologies, in certain conditions, may act as “natural hedging”. It was found that the time delay between revenues and expenses leads to financial risk exposure to changes in prices and foreign exchange rates. Projects can use financing and hedging to boost their results. An innovative project was compared with an expansion project in a petrochemical industry. A model for petrochemical commodities contract pricing was added in an analysis that included financing and hedging. The findings in this paper suggest that it is important to consider financial risk measures in project evaluation.
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spelling Quintella, Vitor da MataSilva Júnior, Antônio Francisco de Almeida daAlmeida, José Ricardo Uchôa CavalcantiEmbiruçu, Marcelo2018-11-20T19:35:40Z2018-11-20T19:35:40Z20171012-8255http://repositorio.ufba.br/ri/handle/ri/27999v. 30, n. 4, p. 547-564The purpose of this paper is to identify, measure and optimise financial risk and its effect on returns from innovation projects on an accrual basis and on a cash basis in a commodity industry. A hypothetical case study, based on a real case, of a petrochemical commodity industry in Brazil was analysed with commodities pricing rules based on actual contracts. Earnings at risk (EaR) and cash flow at risk (CFaR) measures were applied, as well as a metric proposed in this paper called cash balance at risk (CBaR). The paper demonstrates that financial risk measurement and optimisation are important issues in the decision-making process in the petrochemical industry. EaR, CFaR and CBaR measures are helpful when used alongside standard procedures of project evaluation. The findings also show that innovative technologies, in certain conditions, may act as “natural hedging”. It was found that the time delay between revenues and expenses leads to financial risk exposure to changes in prices and foreign exchange rates. Projects can use financing and hedging to boost their results. An innovative project was compared with an expansion project in a petrochemical industry. A model for petrochemical commodities contract pricing was added in an analysis that included financing and hedging. The findings in this paper suggest that it is important to consider financial risk measures in project evaluation.Submitted by Núcleo de Pós-Graduação Administração (npgadm@ufba.br) on 2018-11-13T19:23:58Z No. of bitstreams: 1 Financial exposure and technology innovation investment.pdf: 309496 bytes, checksum: 446ed70e12f80bdba4ab747f951c7e57 (MD5)Approved for entry into archive by Maria Angela Dortas (dortas@ufba.br) on 2018-11-20T19:35:40Z (GMT) No. of bitstreams: 1 Financial exposure and technology innovation investment.pdf: 309496 bytes, checksum: 446ed70e12f80bdba4ab747f951c7e57 (MD5)Made available in DSpace on 2018-11-20T19:35:40Z (GMT). No. of bitstreams: 1 Financial exposure and technology innovation investment.pdf: 309496 bytes, checksum: 446ed70e12f80bdba4ab747f951c7e57 (MD5) Previous issue date: 2017Emerald Publishing LimitedBrasilhttps://doi.org/10.1108/ARLA-06-2016-0165reponame:Repositório Institucional da UFBAinstname:Universidade Federal da Bahia (UFBA)instacron:UFBACorporate riskRisk managementProject evaluationPetrochemical commodity industryStochastic simulationFinancial exposure and technology innovation investment: measuring project results in Brazilian commodity industriesAcademia Revista Latinoamericana de Administracióninfo:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/articleinfo:eu-repo/semantics/openAccessengORIGINALFinancial exposure and technology innovation investment.pdfFinancial exposure and technology innovation investment.pdfapplication/pdf309496https://repositorio.ufba.br/bitstream/ri/27999/1/Financial%20exposure%20and%20technology%20innovation%20investment.pdf446ed70e12f80bdba4ab747f951c7e57MD51LICENSElicense.txtlicense.txttext/plain1345https://repositorio.ufba.br/bitstream/ri/27999/2/license.txt0d4b811ef71182510d2015daa7c8a900MD52TEXTFinancial exposure and technology innovation investment.pdf.txtFinancial exposure and technology innovation investment.pdf.txtExtracted texttext/plain64161https://repositorio.ufba.br/bitstream/ri/27999/3/Financial%20exposure%20and%20technology%20innovation%20investment.pdf.txt2c61f6004b518bbd965d9fca138c23d7MD53ri/279992022-03-09 20:33:05.172oai:repositorio.ufba.br:ri/27999VGVybW8gZGUgTGljZW4/YSwgbj9vIGV4Y2x1c2l2bywgcGFyYSBvIGRlcD9zaXRvIG5vIFJlcG9zaXQ/cmlvIEluc3RpdHVjaW9uYWwgZGEgVUZCQS4KCiBQZWxvIHByb2Nlc3NvIGRlIHN1Ym1pc3M/byBkZSBkb2N1bWVudG9zLCBvIGF1dG9yIG91IHNldSByZXByZXNlbnRhbnRlIGxlZ2FsLCBhbyBhY2VpdGFyIAplc3NlIHRlcm1vIGRlIGxpY2VuP2EsIGNvbmNlZGUgYW8gUmVwb3NpdD9yaW8gSW5zdGl0dWNpb25hbCBkYSBVbml2ZXJzaWRhZGUgRmVkZXJhbCBkYSBCYWhpYSAKbyBkaXJlaXRvIGRlIG1hbnRlciB1bWEgYz9waWEgZW0gc2V1IHJlcG9zaXQ/cmlvIGNvbSBhIGZpbmFsaWRhZGUsIHByaW1laXJhLCBkZSBwcmVzZXJ2YT8/by4gCkVzc2VzIHRlcm1vcywgbj9vIGV4Y2x1c2l2b3MsIG1hbnQ/bSBvcyBkaXJlaXRvcyBkZSBhdXRvci9jb3B5cmlnaHQsIG1hcyBlbnRlbmRlIG8gZG9jdW1lbnRvIApjb21vIHBhcnRlIGRvIGFjZXJ2byBpbnRlbGVjdHVhbCBkZXNzYSBVbml2ZXJzaWRhZGUuCgogUGFyYSBvcyBkb2N1bWVudG9zIHB1YmxpY2Fkb3MgY29tIHJlcGFzc2UgZGUgZGlyZWl0b3MgZGUgZGlzdHJpYnVpPz9vLCBlc3NlIHRlcm1vIGRlIGxpY2VuP2EgCmVudGVuZGUgcXVlOgoKIE1hbnRlbmRvIG9zIGRpcmVpdG9zIGF1dG9yYWlzLCByZXBhc3NhZG9zIGEgdGVyY2Vpcm9zLCBlbSBjYXNvIGRlIHB1YmxpY2E/P2VzLCBvIHJlcG9zaXQ/cmlvCnBvZGUgcmVzdHJpbmdpciBvIGFjZXNzbyBhbyB0ZXh0byBpbnRlZ3JhbCwgbWFzIGxpYmVyYSBhcyBpbmZvcm1hPz9lcyBzb2JyZSBvIGRvY3VtZW50bwooTWV0YWRhZG9zIGVzY3JpdGl2b3MpLgoKIERlc3RhIGZvcm1hLCBhdGVuZGVuZG8gYW9zIGFuc2Vpb3MgZGVzc2EgdW5pdmVyc2lkYWRlIGVtIG1hbnRlciBzdWEgcHJvZHU/P28gY2llbnQ/ZmljYSBjb20gCmFzIHJlc3RyaT8/ZXMgaW1wb3N0YXMgcGVsb3MgZWRpdG9yZXMgZGUgcGVyaT9kaWNvcy4KCiBQYXJhIGFzIHB1YmxpY2E/P2VzIHNlbSBpbmljaWF0aXZhcyBxdWUgc2VndWVtIGEgcG9sP3RpY2EgZGUgQWNlc3NvIEFiZXJ0bywgb3MgZGVwP3NpdG9zIApjb21wdWxzP3Jpb3MgbmVzc2UgcmVwb3NpdD9yaW8gbWFudD9tIG9zIGRpcmVpdG9zIGF1dG9yYWlzLCBtYXMgbWFudD9tIGFjZXNzbyBpcnJlc3RyaXRvIAphbyBtZXRhZGFkb3MgZSB0ZXh0byBjb21wbGV0by4gQXNzaW0sIGEgYWNlaXRhPz9vIGRlc3NlIHRlcm1vIG4/byBuZWNlc3NpdGEgZGUgY29uc2VudGltZW50bwogcG9yIHBhcnRlIGRlIGF1dG9yZXMvZGV0ZW50b3JlcyBkb3MgZGlyZWl0b3MsIHBvciBlc3RhcmVtIGVtIGluaWNpYXRpdmFzIGRlIGFjZXNzbyBhYmVydG8uCg==Repositório InstitucionalPUBhttp://192.188.11.11:8080/oai/requestopendoar:19322022-03-09T23:33:05Repositório Institucional da UFBA - Universidade Federal da Bahia (UFBA)false
dc.title.pt_BR.fl_str_mv Financial exposure and technology innovation investment: measuring project results in Brazilian commodity industries
dc.title.alternative.pt_BR.fl_str_mv Academia Revista Latinoamericana de Administración
title Financial exposure and technology innovation investment: measuring project results in Brazilian commodity industries
spellingShingle Financial exposure and technology innovation investment: measuring project results in Brazilian commodity industries
Quintella, Vitor da Mata
Corporate risk
Risk management
Project evaluation
Petrochemical commodity industry
Stochastic simulation
title_short Financial exposure and technology innovation investment: measuring project results in Brazilian commodity industries
title_full Financial exposure and technology innovation investment: measuring project results in Brazilian commodity industries
title_fullStr Financial exposure and technology innovation investment: measuring project results in Brazilian commodity industries
title_full_unstemmed Financial exposure and technology innovation investment: measuring project results in Brazilian commodity industries
title_sort Financial exposure and technology innovation investment: measuring project results in Brazilian commodity industries
author Quintella, Vitor da Mata
author_facet Quintella, Vitor da Mata
Silva Júnior, Antônio Francisco de Almeida da
Almeida, José Ricardo Uchôa Cavalcanti
Embiruçu, Marcelo
author_role author
author2 Silva Júnior, Antônio Francisco de Almeida da
Almeida, José Ricardo Uchôa Cavalcanti
Embiruçu, Marcelo
author2_role author
author
author
dc.contributor.author.fl_str_mv Quintella, Vitor da Mata
Silva Júnior, Antônio Francisco de Almeida da
Almeida, José Ricardo Uchôa Cavalcanti
Embiruçu, Marcelo
dc.subject.por.fl_str_mv Corporate risk
Risk management
Project evaluation
Petrochemical commodity industry
Stochastic simulation
topic Corporate risk
Risk management
Project evaluation
Petrochemical commodity industry
Stochastic simulation
description The purpose of this paper is to identify, measure and optimise financial risk and its effect on returns from innovation projects on an accrual basis and on a cash basis in a commodity industry. A hypothetical case study, based on a real case, of a petrochemical commodity industry in Brazil was analysed with commodities pricing rules based on actual contracts. Earnings at risk (EaR) and cash flow at risk (CFaR) measures were applied, as well as a metric proposed in this paper called cash balance at risk (CBaR). The paper demonstrates that financial risk measurement and optimisation are important issues in the decision-making process in the petrochemical industry. EaR, CFaR and CBaR measures are helpful when used alongside standard procedures of project evaluation. The findings also show that innovative technologies, in certain conditions, may act as “natural hedging”. It was found that the time delay between revenues and expenses leads to financial risk exposure to changes in prices and foreign exchange rates. Projects can use financing and hedging to boost their results. An innovative project was compared with an expansion project in a petrochemical industry. A model for petrochemical commodities contract pricing was added in an analysis that included financing and hedging. The findings in this paper suggest that it is important to consider financial risk measures in project evaluation.
publishDate 2017
dc.date.issued.fl_str_mv 2017
dc.date.accessioned.fl_str_mv 2018-11-20T19:35:40Z
dc.date.available.fl_str_mv 2018-11-20T19:35:40Z
dc.type.status.fl_str_mv info:eu-repo/semantics/publishedVersion
dc.type.driver.fl_str_mv info:eu-repo/semantics/article
format article
status_str publishedVersion
dc.identifier.uri.fl_str_mv http://repositorio.ufba.br/ri/handle/ri/27999
dc.identifier.issn.none.fl_str_mv 1012-8255
dc.identifier.number.pt_BR.fl_str_mv v. 30, n. 4, p. 547-564
identifier_str_mv 1012-8255
v. 30, n. 4, p. 547-564
url http://repositorio.ufba.br/ri/handle/ri/27999
dc.language.iso.fl_str_mv eng
language eng
dc.rights.driver.fl_str_mv info:eu-repo/semantics/openAccess
eu_rights_str_mv openAccess
dc.publisher.none.fl_str_mv Emerald Publishing Limited
dc.publisher.country.fl_str_mv Brasil
publisher.none.fl_str_mv Emerald Publishing Limited
dc.source.pt_BR.fl_str_mv https://doi.org/10.1108/ARLA-06-2016-0165
dc.source.none.fl_str_mv reponame:Repositório Institucional da UFBA
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reponame_str Repositório Institucional da UFBA
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