ESG/Green Investment and Allocation of Portfolio Assets

This article examines the current portfolio allocation in ESG and Green projects. Traditional investments focus on rates of return and risks associated with investment. Environmental, Social and Governance (ESG) or Green factors are additional components that investors have to pay attention to. Environmental protection is very important. However, as we see the current different definitions of ESG or Green factors lead to distorted allocations in portfolio investments. In order to bring portfolio allocations to a desirable direction, global taxation on pollution or creation of an accurate Green credit rating based on emissions of various pollutants are recommended.

Nonunitary Parties, Government Formation, and Gamson’s Law

Following the coalition literature highlighting intraparty politics (e.g., Giannetti and Benoit 2009; Laver 1999; Strøm 2003), I address the well-known “portfolio allocation paradox” (Warwick and Druckman 2006) by introducing a new model of government formation based on two main assumptions. First, no actor has a structural advantage in the negotiations leading to government formation. Second, all actors who can deprive the coalition of a majority (or other critical threshold size) must be included in the negotiations—not just parties. Whereas standard bargaining models are inconsistent with Gamson’s Law, the model proposed here implies that equilibrium portfolio allocations should be mostly Gamsonian but with a small-party bias, as the empirical literature has long found. Empirically, I show that my model outperforms the literature’s standard specification (due to Browne and Franklin 1973). Moreover, one of the model’s new predictions—that candidate-centered electoral rules should promote more Gamsonian portfolio allocations—is supported.

The Duration Puzzle in Life-Cycle Investment*

By analyzing the portfolio allocations of target date funds (TDFs), we document that the observed durations of TDF portfolios are inconsistent with the durations predicted by classical portfolio theory. We call this stylized fact the duration puzzle. We investigate to what extent several extensions of classical portfolio theory can explain the duration puzzle. More specifically, we consider the impact of human capital, inflation risk, and portfolio restrictions on the duration of the optimal portfolio. We find that it is difficult to explain the duration puzzle, especially for individuals aged between 35 and 65 years.

PORTFOLIO ALLOCATION AS THE PRESIDENT'S CALCULATIONS: LOYALTY, COPARTISANSHIP, AND POLITICAL CONTEXT IN SOUTH KOREA

How do the president's calculations in achieving policy goals shape the allocation of cabinet portfolios? Despite the growing literature on presidential cabinet appointments, this question has barely been addressed. I argue that cabinet appointments are strongly affected not only by presidential incentives to effectively deliver their key policy commitments but also by their interest in having their administration maintain strong political leverage. Through an analysis of portfolio allocations in South Korea after democratization, I demonstrate that the posts wherein ministers can influence the government's overall reputation typically go to nonpartisan professionals ideologically aligned with presidents, while the posts wherein ministers can exert legislators' influence generally go to senior copartisans. My findings highlight a critical difference in presidential portfolio allocation from parliamentary democracies, where key posts tend to be reserved for senior parliamentarians from the ruling party.