ABSTRACT

LQJV ,WLVDOVREHVHWZLWKPXFKPLVXQGHUVWDQGLQJ GXHLQQRVPDOOSDUWWRODFNRIFODULW\ LQWKHPHDQLQJRINH\WHUPVDQGFRQFHSWV %HIRUHSURFHHGLQJWRP\VXEVWDQWLYHGLVFXV VLRQDQGDQDO\VLV ,EHOLHYHWKDWLWZLOOEHKHOSIXOWRGHILQHDVFOHDUO\DVSRVVLEOHKRZ, ZLOOXVHFHUWDLQLPSRUWDQWWHUPVWKDWZLOOUHFXUWKURXJKRXWWKHERRN 7KH PHDQLQJ RI´DIILUPDWLYH DFWLRQµ KDV HYROYHG RYHU WLPH LQ WKH 86 :KHQ

3UHVLGHQW -RKQ ) .HQQHG\ ILUVW XVHG WKH WHUP LQ KHPHDQW DQ DIILUPDWLYH HIIRUW WR DVVXUH HTXDOLW\ RI RSSRUWXQLW\ WR DOO $PHULFDQV DQG WR HQG GLVFULPLQDWLRQ DJDLQVW PHPEHUV RI JURXSV WKDW KDG KLVWRULFDOO\ EHHQ H[SRVHG WR D JUHDW GHDO RI GLVFULPLQDWLRQ²PRVWREYLRXVO\$IULFDQ$PHULFDQV $IILUPDWLYHDFWLRQSROLFLHVLQWKH IROORZLQJ\HDUVFRQVLVWHGRIYLJRURXVHIIRUWVWRDVVXUHWKDWQRSHUVRQZRXOGEHGHQLHG RSSRUWXQLWLHVVLPSO\EHFDXVHRIWKHJURXSKHRUVKHKDSSHQHGWREHERUQLQWR %\WKH

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´UHVHUYDWLRQSROLFLHVµ KDVQRWYDULHGRYHUWLPHLQ,QGLD 7KLVWHUP

KDVDOZD\VEHHQXQGHUVWRRGWRGHQRWHWKHUHVHUYLQJRIDFHUWDLQQXPEHURIVHDWVRUSRVL WLRQV LQ D GHVLUDEOH LQVWLWXWLRQ RU RFFXSDWLRQ IRU PHPEHUV RI JURXSV WKDW ZHUH XQGHUUHSUHVHQWHG LQ VXFKSRVLWLRQV +HUH WRR WKHXQGHUO\LQJREMHFWLYH LV WR UHGXFH WKH H[WHQWRIWKHXQGHUUHSUHVHQWDWLRQRIWKHVHJURXSPHPEHUV ,WKDVDOZD\VEHHQFOHDUWKDW UHVHUYDWLRQSROLFLHVLQYROYHDQHIIRUWWRGLVFULPLQDWHLQIDYRURIPHPEHUVRIVXFKJURXSV VXFK SROLFLHV KDYH DOVR EHHQ ODEHOHG ´FRPSHQVDWRU\ GLVFULPLQDWLRQµ RU ´SURWHFWLYH GLVFULPLQDWLRQµ ,ZLOOXVHWKHWHUP´ SRVLWLYHGLVFULPLQDWLRQµ WRHQFRPSDVVWKHSUDFWLFHRISUHIHUHQWLDO

VHOHFWLRQRIPHPEHUVRIXQGHUUHSUHVHQWHGJURXSVWRZLGHO\HVWHHPHGSRVLWLRQV²LQRWKHU ZRUGV ZKHQPHPEHUVKLSLQVXFKDJURXSLQFUHDVHVRQH·VOLNHOLKRRGRIEHLQJVHOHFWHGWR VXFKDSRVLWLRQ 3RVLWLYHGLVFULPLQDWLRQWKXVLQFOXGHVERWKDIILUPDWLYHDFWLRQDVSUDFWLFHG LQWKH86DQGUHVHUYDWLRQSROLFLHVDVSUDFWLFHG LQ,QGLD $Q\NLQGRIGLVFULPLQDWLRQ LQYROYHVPDNLQJGLVWLQFWLRQV EHWZHHQSHRSOH DFFRUGLQJ WR WKHLU JURXSPHPEHUVKLSDQG VHOHFWLQJPHPEHUVRIDSDUWLFXODUJURXSIRUVSHFLDODWWHQWLRQ:KDWPDNHVGLVFULPLQDWLRQ ´SRVLWLYHµ LVWKDWLWLVGHVLJQHGWRIDYRUPHPEHUVRIJURXSVWKDWDUHXQGHUUHSUHVHQWHGLQ ZLGHO\ HVWHHPHG SRVLWLRQV DQG KHQFH XQGHUUHSUHVHQWHG LQ WKH XSSHU VWUDWD RI WKHLU VRFLHW\ 3RVLWLYHGLVFULPLQDWLRQLVWKHUHIRUHDSROLF\DLPLQJDWWKHLQFOXVLRQ RIPHPEHUV RIJURXSVZKRVHPHPEHUVKDYHJDLQHGUHODWLYHO\OLPLWHGDFFHVVWRVRFLHW\·VPRVWHVWHHPHG SRVLWLRQV 1HJDWLYH GLVFULPLQDWLRQ E\ FRQWUDVW GHQRWHV D SROLF\ RI H[FOXVLRQ RI PHPEHUVRIVXFKJURXSV 7KHUHDUHYDULRXVNLQGVRIJURXSVWKDWPLJKWEHGHHPHGHOLJLEOHIRUSRVLWLYHGLVFULPL

QDWLRQ ,QSUDFWLFH KRZHYHU SRVLWLYHGLVFULPLQDWLRQSROLFLHVDUHDOPRVWDOZD\VRULHQWHG WRPHPEHUVRIDQ´ LGHQWLW\JURXSµ ²LH DJURXSWKDWLVGHILQHGLQWHUPVRIFKDUDFWHU LVWLFVWKDWDUHQRWDPDWWHURIYROXQWDU\FKRLFH JHQHUDOO\GHWHUPLQHGDWELUWK DQGUDUHO\ DOWHUDEOHRUDOWHUHG 7KHGHILQLQJFKDUDFWHULVWLFVRIDQLGHQWLW\JURXSDUHW\SLFDOO\SK\V LFDORUFXOWXUDO VXFKDV´ UDFHµ FDVWH WULEH HWKQLFLW\ DQGJHQGHU 7KLVLVFHUWDLQO\WUXH RIWKHEHQHILFLDULHVRIDIILUPDWLYHDFWLRQLQWKH86DQGUHVHUYDWLRQSROLFLHVLQ,QGLD $OWKRXJKSRVLWLYHGLVFULPLQDWLRQSROLFLHVKDYHEHHQLPSOHPHQWHGLQIDYRURIZRPHQ

LQWKH86DQG²WRDFRQVLGHUDEO\OHVVHUH[WHQW²LQ,QGLD ,ZLOOFRQILQHP\DWWHQWLRQ LQWKLVERRNWRSRVLWLYHGLVFULPLQDWLRQLQIDYRURIPHPEHUVRILGHQWLW\JURXSVGHILQHGLQ HWKQLFWHUPVGHILQHGEURDGO\WRLQFOXGHUDFH FDVWH DQGWULEH %HFDXVHWKHUHODWLRQVKLS EHWZHHQZRPHQDQGPHQLVLQLPSRUWDQWUHVSHFWVYHU\GLIIHUHQWWRWKDWEHWZHHQXQGHU UHSUHVHQWHGDQGRYHUUHSUHVHQWHGHWKQLFJURXSV WKHLVVXHVUDLVHGE\JHQGHUEDVHGSRVLWLYH GLVFULPLQDWLRQ DUH TXDOLWDWLYHO\ GLIIHUHQW IURP WKRVH UDLVHG E\ HWKQLFLW\EDVHG SRVLWLYH

GLVFULPLQDWLRQ ,ZLOOXVHWKHWHUP´ XQGHUUHSUHVHQWHGHWKQLFJURXSµ WRGHQRWHWKHNLQG RILGHQWLW\JURXSWKDWLVWKHIRFXVRIP\DWWHQWLRQLQWKLVERRN 7KHJURXSVRIWKLVNLQG WKDWKDYHEHHQIDYRUHGE\DIILUPDWLYHDFWLRQLQWKH86DUH$IULFDQ$PHULFDQV +LVSDQLF $PHULFDQV DQG1DWLYH$PHULFDQV ,Q LQGHSHQGHQW,QGLD WKHXQGHUUHSUHVHQWHGHWKQLF JURXSVIDYRUHGE\UHVHUYDWLRQSROLFLHVKDYHLQFOXGHG'DOLWVWKHIRUPHU´XQWRXFKDEOHVµ RIILFLDOO\FODVVLILHGDV´ 6FKHGXOHG&DVWHVµ $GLYDVLVWULEDOJURXSVZKRJHQHUDOO\OLYHLQ VRPHZKDW UHPRWHJHRJUDSKLFDODUHDV RIILFLDOO\ FODVVLILHGDV´6FKHGXOHG7ULEHVµ DQGD YDULHW\RI´ 2WKHU%DFNZDUG&ODVVHVµ 0HPEHUVRIDQ\JLYHQXQGHUUHSUHVHQWHGHWKQLFJURXSDUHLGHQWLILHGDVEHORQJLQJWR

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·VJURXSLGHQWLW\ EXWDOZD\VDWWKHULVNRIGLVFRYHU\ 7KHSHUPDQHQFHRI JURXS LGHQWLW\ FRQWUDVWV ZLWK WKH PDOOHDELOLW\ RI VRFLRHFRQRPLF VWDWXV $ SRRU DQG XQHGXFDWHGFKLOGPD\EHDEOH WKURXJKKDUGZRUNDQGRUJRRGIRUWXQH WRULVHODWHULQ OLIH WR D KLJK SRVLWLRQ LQ VRFLHW\ EXW DQ$IULFDQ$PHULFDQ RU D'DOLWZLOO YLUWXDOO\ DOZD\VUHPDLQDQ$IULFDQ$PHULFDQRUD'DOLWWKURXJKRXWKLVKHUOLIHWLPH