Raj Aggarwal

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Raj Aggarwal is an author and contributor to the fields of finance and international business studies. Aggarwal was the dean of the University of Akron College of Business Administration from 2006 until 2009. He was elected as a fellow of the Academy of International Business. [1] He has worked as an engineer, financial analyst, strategic planner, department chair, university budget planner and corporate board member. He has authored or co-authored over a dozen books or monographs and over a hundred scholarly articles that have cited over 5,000 times according to his profile in Google Scholar. [2]

Contents

Biography

Education

Aggarwal received his bachelor's degree in mechanical engineering from the Indian Institutes of Technology in 1968. He then earned his MBA in operations management from Kent State University in 1970, then studied international economics with Professor Harry Johnson at the University of Chicago from 1972 to 1973. He earned his doctorate in corporate finance and international business at Kent State in 1975. In 2000, he became a Chartered Financial Analyst (CFA) charterholder. [3]

Scholarly career

Aggarwal is the editor of the Journal of Teaching International Business, was the finance area editor for the Journal of International Business Studies and was an editor of Financial Education and Practice, a journal published by the Financial Management Association. [4] He has served on editorial boards of scholarly journals in international business and many journals in finance and economics. In a 2005 issue of the Journal of International Business Studies, Aggarwal was ranked as the most influential scholar in international business literature. [5] He has over 6700 citations with an H-Index of over 40 in Google Scholars.

He has held many elected and appointed leadership positions in academia and in business, including; president of the Eastern Finance Association and the Northeast Ohio Financial Executives International. He has been a consultant to the UN, the World Bank, the US SEC and Fortune 100 companies. He serves on business and non-profit boards including Manco Inc (Duck, LePage, and Loctite brands), Ancora Mutual Funds, [6] Financial Management Association, the Cleveland Council on World Affairs, [7] and the Financial Executive Research Foundation. He is or was on the Board of Directors of Goodwill Industries of Akron, Ohio and the Kent State University Foundation, Kent, Ohio. [8] The Eastern Finance Association [9] elected Raj Aggarwal as their president, and he has been a trustee since 1999. In 2002, Aggarwal co-founded the CIO Forum, which is an invitation only best practices group of large company CIOs in Northeast Ohio with meetings limited to CIOs with no direct reports. Aggarwal has spoken numerous times on WCPN and NPR, [10] including several interviews on NPR affiliate, WCPN concerning the financial crisis of 2007–2010. [11] Additionally, he has been considered an authority on Northeast Ohio's business and financial markets. [12] [13] Finally, Raj Aggarwal's academic leadership is reflected in Hoshino, M., "An Interview with Professor Raj Aggarwal, Department Editor for JIBS", [14] and his business leadership was reflected in, "The Super CFO: Changing Roles of the CFO". [15]

Academic career

Aggarwal was the Frank C. Sullivan Professor of International Business and Finance of the University of Akron College of Business Administration from 2006 to 2013 and was dean for three years. While Aggarwal was serving as dean, the College of Business Administration (CBA) received its first ever ranking of their business program in BusinessWeek , in 2009. [16] Additionally, the CBA received a 'Best Graduate Business School' ranking from The Princeton Review . [17]

Major research

International capital structure

The capital structure of a company is the proportion of its assets financed with other people's money, also defined as the proportion of its capitalization financed by long-term debt. Too little debt often means foregoing the tax, monitoring, and other advantages of debt, a less expensive form of capital compared to equity. However, too much debt can expose a company to a higher than acceptable risk [18] of default or not being able to pay its creditors (who can then sue to bankrupt the company). Trade-offs like these become more complicated when companies have operations and debt in many countries. Aggarwal has been writing about this topic for many years, and has demonstrated that average levels of debt used by companies differ in various countries in Asia, [19] Europe, [20] and Latin America. [21] Additionally, he has been able to show that this average proportion of corporate debt varies across national borders depending on a number of factors including the level of disclosure timeliness, institutional trading activities, and enforcement of anti-insider trading laws. [22] [23] Finally, Aggarwal showed that financing activities by the 300 largest banks in the world are determined first by the location (country) of the bank and second by the bank's size itself. [24]

Foreign financial risk management

Financial risk management takes a new meaning when applied to companies operating internationally with many currencies as currency values can change abruptly and unexpectedly. [25] To combat the associated foreign exchange risks, companies have implemented many of the following tactics and strategies; First, multinational companies have to assess at the individual country and consolidated levels three kinds of foreign exchange exposure for various future time horizons, transactions exposure, [26] accounting exposure, [27] [28] and economic exposure. [29] [30] Once a company has these measures, it can develop policies and hedge these various exposures directly by buying or selling offsetting currencies in spot and futures markets or indirectly by making appropriate offsetting operating changes. [31] Additionally, his research focused on countertrade opportunities that allow MNCs to take money out of restricted countries. [32] Aggarwal began writing about these topics when he discussed the importance of FASB 8 within the multinational corporation's needs. [33]

Third World multinational corporations

A recent development in the evolution of multinational corporations (MNCs) is that they have started originating in emerging markets. While traditional MNCs from the industrialized countries have used brand names and technology to overcome the liability of foreignness when they invest overseas, there is much interest in understanding how the new MNCs from the emerging economies overcome the liability of being foreign when they invest overseas. Research in this field is important and shows how large companies in emerging markets develop. Especially, how they overcome the liabilities incurred when investing overseas and this research has exposed specific dynamics of these entities. [34] Beginning two decades ago, Aggarwal began writing and researching on this topic. His research began by determining the dynamics and characteristics of MNCs in developing nations. [35] He has also modeled the business-government relations during the process of firm nationalization, which accompany the economic development of several nearly industrialized countries. [36] He has also focused his research on the challenges that Western firms face because of the emergence of multinational corporations [37] from developing countries. [38]

Related Research Articles

<span class="mw-page-title-main">International Finance Corporation</span> World Bank Group member financial institution

The International Finance Corporation (IFC) is an international financial institution that offers investment, advisory, and asset-management services to encourage private-sector development in less developed countries. The IFC is a member of the World Bank Group and is headquartered in Washington, D.C. in the United States.

A multinational corporation (MNC), also referred to as a multinational enterprise (MNE), a transnational enterprise (TNE), a transnational corporation (TNC), an international corporation or a stateless corporation with subtle but contrasting senses, is a corporate organization that owns and controls the production of goods or services in at least one country other than its home country. Control is considered an important aspect of an MNC, to distinguish it from international portfolio investment organizations, such as some international mutual funds that invest in corporations abroad simply to diversify financial risks. Black's Law Dictionary suggests that a company or group should be considered a multinational corporation "if it derives 25% or more of its revenue from out-of-home-country operations".

<span class="mw-page-title-main">Global financial system</span> Global framework for capital flows

The global financial system is the worldwide framework of legal agreements, institutions, and both formal and informal economic actors that together facilitate international flows of financial capital for purposes of investment and trade financing. Since emerging in the late 19th century during the first modern wave of economic globalization, its evolution is marked by the establishment of central banks, multilateral treaties, and intergovernmental organizations aimed at improving the transparency, regulation, and effectiveness of international markets. In the late 1800s, world migration and communication technology facilitated unprecedented growth in international trade and investment. At the onset of World War I, trade contracted as foreign exchange markets became paralyzed by money market illiquidity. Countries sought to defend against external shocks with protectionist policies and trade virtually halted by 1933, worsening the effects of the global Great Depression until a series of reciprocal trade agreements slowly reduced tariffs worldwide. Efforts to revamp the international monetary system after World War II improved exchange rate stability, fostering record growth in global finance.

<span class="mw-page-title-main">Central Bank of Ireland</span> Central Bank of Ireland

The Central Bank of Ireland is Ireland's central bank, and as such part of the European System of Central Banks (ESCB) and a founder member of the European Central Bank (ECB). It is the country's financial services regulator for most categories of financial firms. It was the issuer of Irish pound banknotes and coinage until the introduction of the euro in 1999 and now provides this service for the European Central Bank.

Credit risk is the possibility of losing a lender holds due to a risk of default on a debt that may arise from a borrower failing to make required payments. In the first resort, the risk is that of the lender and includes lost principal and interest, disruption to cash flows, and increased collection costs. The loss may be complete or partial. In an efficient market, higher levels of credit risk will be associated with higher borrowing costs. Because of this, measures of borrowing costs such as yield spreads can be used to infer credit risk levels based on assessments by market participants.

<span class="mw-page-title-main">Financial services</span> Economic service provided by the finance industry

Financial services are economic services provided by the finance industry, which together encompass a broad range of service sector firms that provide financial management, including credit unions, banks, credit-card companies, insurance companies, accountancy companies, consumer-finance companies, stock brokerages, investment funds, individual asset managers, and some government-sponsored enterprises.

<span class="mw-page-title-main">Swap (finance)</span> Exchange of derivatives or other financial instruments

In finance, a swap is an agreement between two counterparties to exchange financial instruments, cashflows, or payments for a certain time. The instruments can be almost anything but most swaps involve cash based on a notional principal amount.

<span class="mw-page-title-main">Foreign exchange market</span> Global decentralized trading of international currencies

The foreign exchange market is a global decentralized or over-the-counter (OTC) market for the trading of currencies. This market determines foreign exchange rates for every currency. It includes all aspects of buying, selling and exchanging currencies at current or determined prices. In terms of trading volume, it is by far the largest market in the world, followed by the credit market.

In finance, leverage is any technique involving borrowing funds to buy things, estimating that future profits will be many times more than the cost of borrowing. This technique is named after a lever in physics, which amplifies a small input force into a greater output force, because successful leverage amplifies the smaller amounts of money needed for borrowing into large amounts of profit. However, the technique also involves the high risk of not being able to pay back a large loan. Normally, a lender will set a limit on how much risk it is prepared to take and will set a limit on how much leverage it will permit, and would require the acquired asset to be provided as collateral security for the loan.

Financial risk management is the practice of protecting economic value in a firm by managing exposure to financial risk - principally operational risk, credit risk and market risk, with more specific variants as listed aside. As for risk management more generally, financial risk management requires identifying the sources of risk, measuring these, and crafting plans to address them. See Finance § Risk management for an overview.

International finance is the branch of financial economics broadly concerned with monetary and macroeconomic interrelations between two or more countries. International finance examines the dynamics of the global financial system, international monetary systems, balance of payments, exchange rates, foreign direct investment, and how these topics relate to international trade.

<span class="mw-page-title-main">Financial risk</span> Any of various types of risk associated with financing

Financial risk is any of various types of risk associated with financing, including financial transactions that include company loans in risk of default. Often it is understood to include only downside risk, meaning the potential for financial loss and uncertainty about its extent.

International business refers to the trade of goods, services, technology, capital and/or knowledge across national borders and at a global or transnational scale.

Foreign exchange risk is a financial risk that exists when a financial transaction is denominated in a currency other than the domestic currency of the company. The exchange risk arises when there is a risk of an unfavourable change in exchange rate between the domestic currency and the denominated currency before the date when the transaction is completed.

The following outline is provided as an overview of and topical guide to finance:

In finance, an asset–liability mismatch occurs when the financial terms of an institution's assets and liabilities do not correspond. Several types of mismatches are possible. An asset-liability mismatch presents a material risk at institutions with significant debt exposure, such as banks or sovereign governments. A significant mismatch may lead to insolvency or illiquidity, which can cause financial failure. Such risks were among the principal causes of economic crises such as the 1980s Latin American Debt Crisis, the 2007 Subprime Mortgage Crisis, the U.S. Savings and Loan Crisis, and the collapse of Silicon Valley Bank in 2023.

A foreign exchange hedge is a method used by companies to eliminate or "hedge" their foreign exchange risk resulting from transactions in foreign currencies. This is done using either the cash flow hedge or the fair value method. The accounting rules for this are addressed by both the International Financial Reporting Standards (IFRS) and by the US Generally Accepted Accounting Principles as well as other national accounting standards.

A non-banking financial institution (NBFI) or non-bank financial company (NBFC) is a financial institution that is not legally a bank; it does not have a full banking license or is not supervised by a national or international banking regulatory agency. NBFC facilitate bank-related financial services, such as investment, risk pooling, contractual savings, and market brokering. Examples of these include insurance firms, pawn shops, cashier's check issuers, check cashing locations, payday lending, currency exchanges, and microloan organizations. Alan Greenspan has identified the role of NBFIs in strengthening an economy, as they provide "multiple alternatives to transform an economy's savings into capital investment which act as backup facilities should the primary form of intermediation fail."

A sudden stop in capital flows is defined as a sudden slowdown in private capital inflows into emerging market economies, and a corresponding sharp reversal from large current account deficits into smaller deficits or small surpluses. Sudden stops are usually followed by a sharp decrease in output, private spending and credit to the private sector, and real exchange rate depreciation. The term “sudden stop” was inspired by a banker’s comment on a paper by Rüdiger Dornbusch and Alejandro Werner about Mexico, that “it is not speed that kills, it is the sudden stop”.

<span class="mw-page-title-main">Convergence of accounting standards</span>

The convergence of accounting standards refers to the goal of establishing a single set of accounting standards that will be used internationally. Convergence in some form has been taking place for several decades, and efforts today include projects that aim to reduce the differences between accounting standards.

References

  1. ↑ "AIB Fellow - Raj Aggarwal :: Academy of International Business (AIB)".
  2. ↑ Raj AggarwalCitations scholar.google.com
  3. ↑ "The University of Akron : Profile". Archived from the original on 22 July 2010. Retrieved 9 March 2011.
  4. ↑ "Archived copy". Archived from the original on 22 March 2012. Retrieved 9 March 2011.{{cite web}}: CS1 maint: archived copy as title (link)
  5. ↑ Journal of International Business Studies 2005, 36#4
  6. ↑ "ANCORA TRUST, Form 497, Filing Date Aug 29, 2008" (PDF). secdatabase.com. Retrieved 15 May 2018.
  7. ↑ "Cleveland Council on WORLD AFFAIRS - Board Leadership". Archived from the original on 25 August 2009. Retrieved 29 August 2009.
  8. ↑ "New trustees announced. (The FEI Research Foundation). - Free Online Library".
  9. ↑ "Eastern Finance Association". etnpconferences.net. Archived from the original on 10 February 2008.
  10. ↑ Speaking on NPR concerning the 2002 US Recession: "90.3 WCPN ideastream® | Investment Bank Failures Will Affect Northeast Ohio". Archived from the original on 19 September 2008. Retrieved 28 October 2009.
  11. ↑ Speaking about investment bank failures in NorthEast Ohio: "90.3 WCPN ideastream® | Investment Bank Failures Will Affect Northeast Ohio". Archived from the original on 19 September 2008. Retrieved 28 October 2009.
  12. ↑ Discussing Goodyear's layoffs during 2009 recession: "Goodyear Cutting Jobs | Ohio News Network (ONN)". Archived from the original on 15 June 2011. Retrieved 29 October 2009.
  13. ↑ Discussing the federal government's scrutiny of Cleveland's AmTrust Bank in the wake of the 2008 financial crisis: "90.3 WCPN ideastream / Northeast Ohio Public Radio, Television and Multiple Media". Archived from the original on 27 September 2011. Retrieved 29 October 2009.
  14. ↑ Japanese Journal of Administrative Science 19 (No. 1, Dec. 2005): 45-51
  15. ↑ Washington CEO (January 2006), 55-61
  16. ↑ "These Are the Best Business Schools in the World". Bloomberg.com. Archived from the original on 29 May 2004.
  17. ↑ "Business School Admissions | Find a Business School | the Princeton Review".
  18. ↑ Aggarwal, Raj, Cynthia Harrington, Adam Kobor, and Pamela Peterson Drake, "Capital Structure and Leverage", Chapter 4 in Michelle R. Clayman, Martin S. Fridson and George H. Troughton, (eds.) (Discussing risk factors and how leverage can prevent these risks).
  19. ↑ "Capital Structure Differences Among Large Asian Companies" ASEAN Economic Bulletin 7 (No. 1, July 1990): 39-53. (Demonstrates that industry and country are significant factors influencing the capital structure in Asia).
  20. ↑ http://findarticles.com/p/articles/mi_hb3265/is_nSPEISS_v34/ai_n28649849/?tag=content;col1 (Size by itself or in conjunction with other variables is not a significant determinant of capital structure, both country and industry classifications seem to be significant determinants of capital structure. Furthermore, the country factor is even a more important determinant of capital structure among large industrials than is industry classification)
  21. ↑ http://www.emeraldinsight.com/Insight/viewContentItem.do;jsessionid=21797B72768B2D5F27C996898CB15EC5?contentType=Article&contentId=1648907 (both country and industry are significant determinants of capital structure in Latin America not only in bivariate tests but also in multivariate statistical tests)
  22. ↑ https://ssrn.com/abstract=1317931 (transparency that reduces owner-creditor agency costs that helps creditors control business risks, such as disclosure timeliness, institutional trading activities, and enforcement of anti-insider trading laws, are associated with higher corporate debt levels. Among other transparency measures, levels of financial and governance disclosures are negatively associated with debt ratios and higher levels of audit intensity and accounting disclosures are positively associated with debt ratios. Further, transparency factors are more important for large firms and for firms in services and high technology.)
  23. ↑ https://ideas.repec.org/a/eee/riibaf/v22y2008i3p409-439.html (Showing that MNC affiliates substitute external debt with parent debt using internal capital markets to overcome weak external financial markets and institutional environments)
  24. ↑ Aggarwal, Raj, "Variations in the Capital Ratios of the World's Largest Bank's." Management International Review 22 (No. 4, 1982): 45-54.
  25. ↑ Aggarwal, Raj, and L. Soenen, "Cash and Foreign Exchange Management: Theory and Corporate Practice in Three Countries." Journal of Business Finance and Accounting 16 (No. 5, Winter 1989): 599-619. (comparing the corporate practices in cash and foreign exchange management in Great Britain, the Netherlands and Belgium).
  26. ↑ http://www.emeraldinsight.com/Insight/viewContentItem.do;jsessionid=EFA8D4FB63329F2C94F48279646551BF?contentType=Article&contentId=1649008 Archived 14 May 2010 at the Wayback Machine (contrary to conventional wisdom it may be rational to hedge translation exposure. Empirical evidence of agency costs and the managerial tendency to report higher levels of translated income, based on the early adoption of Financial Accounting Standard No. 52).
  27. ↑ Aggarwal, Raj, "The Translation Problem in International Accounting: Insights for Financial Management." Management International Review 15 (Nos. 2-3, 1975): 67-79. (Proposed accounting framework for evaluating and developing translation procedures for multinational corporations).
  28. ↑ Aggarwal, Raj, and A. Hosseini, "Evaluating Foreign Affiliates: Impact of Alternative Currency Translation Methods." International Journal of Accounting 19 (No. 1, Fall 1983): 63- 87. (Examines the impact of procedures used for the translation of foreign currency accounts on the management of multinational enterprises. Generally accepted accounting principles; Description of subsidiary types; Patterns of exchange rate movement; Absolute deviation of reported return on investment from internal rate of return).
  29. ↑ Aggarwal, Raj, and L. Soenen, "Managing Persistent Real Changes in Currency Values: The Role of Multinational Operating Strategies" Columbia Journal of World Business 24 (No. 3, Fall 1989): 60-67 (Hypothesizing that traditional hedging is not appropriate for MNCs, who need to protect against losses from long-term exchange rate fluctuations using their marketing, production and financial strategies).
  30. ↑ http://www.iijournals.com/doi/abs/10.3905/jpm.1997.409611 (Discusses the benefits for hedging in foreign currencies for MNCs).
  31. ↑ https://ssrn.com/abstract=645141 (In exchange rate fluctuations, the Closing Rate Method is preferred because the greater relative importance of foreign operations which are carried out in an independent way, vis-a-vis those which are mere extensions of the parent company's).
  32. ↑ Aggarwal, Raj, "Seeking Out Profitable Countertrade Opportunities: A Proactive Approach." Industrial Marketing Management 18 (No. 1, January 1989): 65-71. (with A. Reisman and D. C. Fuh). (The paper analyzes the demand and supply of countertraded goods, and defines and uses the Likelihood of Profitable Countertrade and the Market Synergy concepts, directing the trader to those industries that show the greatest benefit potential).
  33. ↑ Aggarwal, Raj, "FASB No. 8 and Reported Results of Multinational Operations: Hazards for Managers and Investors" Journal of Accounting Auditing and Finance 1 (No. 3, Spring 1978): 197-216. (The translation process and the effect of FASB No. 8 on reported financial statements, and spotlights operating and accounting changes—and attendant problems—induced in MNCs by its use).
  34. ↑ Aggarwal, Raj, "Emerging Third World Multinationals: A Case Study of the Foreign Operations of Singapore Firms." Contemporary Southeast Asia 7 (No. 3, December 1985): 193-208. (Case study on emerging multinationals in Singapore and the high percentage, almost 80% of those firms having foreign operations and these implications).
  35. ↑ Aggarwal, Raj; Weekly, James K. (1 January 1982). "Foreign Operations of Third World Multinationals: A Literature Review and Analysis of Indian Companies". The Journal of Developing Areas. 17 (1): 13–30. JSTOR   4191088.
  36. ↑ Aggarwal, Raj and Tamir Agmon, "The International Success of Developing Country Firms: Role of Government-Directed Comparative Advantage" Management International Review 30 (No. 2, 1990): 163-180.
  37. ↑ Aggarwal, Raj and J.K. Weekly, "Western Firms Face Challenge of Third World Multinationals." Modern Asia (October 1982): 51-52. (with J. K. Weekly). (How 1,000 new multinationals in the developing world are pressuring US and European trading giants)
  38. ↑ Aggarwal, Raj, "Third World Multinationals: A New Strategic Challenge for Western Multinationals," in Guth, William D. (ed.) Handbook of Business Strategy: 1985/1986 Yearbook (New York: Warren, Gorham & Lamont, 1985): 3-1 - 3-5.
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