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Art as an investment alternative: the case of Argentina

Art as an investment alternative: the case of Argentina <jats:sec> <jats:title content-type="abstract-subheading">Purpose</jats:title> <jats:p>The purpose of this paper is to present the formulation of the first exhaustive price index for Argentinian (and other Latin American countries) visual artists using 5,069 works sold in auctions by 71 Argentinian artists during the years 1980-2014.</jats:p> </jats:sec> <jats:sec> <jats:title content-type="abstract-subheading">Design/methodology/approach</jats:title> <jats:p>The authors estimated a regression of hedonic prices using the ordinary least squares method. When the regression was run and the results were analysed, the authors then estimated the annual price index of Argentinian artists’ work to then compare them with different financial and economic variables.</jats:p> </jats:sec> <jats:sec> <jats:title content-type="abstract-subheading">Findings</jats:title> <jats:p>The average annual nominal arithmetic rate of return in dollars for Argentinian art during this period was 6.81 per cent, with a 29.11 per cent standard deviation. Argentinian art shows a low correlation with Argentinian and US companies’ shares and a slightly negative correlation with US bonds. This is the reason for artworks to be included in investors’ portfolios despite the relatively high volatility.</jats:p> </jats:sec> <jats:sec> <jats:title content-type="abstract-subheading">Research limitations/implications</jats:title> <jats:p>Valuating works of art in Argentina can be explained by a series of their attributes. The benefits of art as an investment should be contrasted with factors including illiquidity and high transaction costs that are inherent when investing in works of art.</jats:p> </jats:sec> <jats:sec> <jats:title content-type="abstract-subheading">Practical implications</jats:title> <jats:p>Argentinian artists’ works have higher prices when, <jats:italic>ceteris paribus</jats:italic>, they are dated; they are auctioned in either Christie’s, Sotheby’s, Galería Arroyo, Roldan &amp; Cia, Meeting Art, or Naon &amp; Cia; they are oil or acrylic paintings; they are larger in size – although the price increase is decreasing when the size of the painting increases; and when the artist dies before their work is auctioned.</jats:p> </jats:sec> <jats:sec> <jats:title content-type="abstract-subheading">Originality/value</jats:title> <jats:p>This work presents the first rigorous price index of Argentinian artists’ works. Additionally, and as far as the authors have been able to observe, the time-period in this article is the longest that has been used in studies on art as an investment in emerging markets.</jats:p> </jats:sec> http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Academia Revista Latinoamericana de Administración CrossRef

Art as an investment alternative: the case of Argentina

Academia Revista Latinoamericana de Administración , Volume 30 (3): 362-382 – Aug 7, 2017

Art as an investment alternative: the case of Argentina


Abstract

<jats:sec>
<jats:title content-type="abstract-subheading">Purpose</jats:title>
<jats:p>The purpose of this paper is to present the formulation of the first exhaustive price index for Argentinian (and other Latin American countries) visual artists using 5,069 works sold in auctions by 71 Argentinian artists during the years 1980-2014.</jats:p>
</jats:sec>
<jats:sec>
<jats:title content-type="abstract-subheading">Design/methodology/approach</jats:title>
<jats:p>The authors estimated a regression of hedonic prices using the ordinary least squares method. When the regression was run and the results were analysed, the authors then estimated the annual price index of Argentinian artists’ work to then compare them with different financial and economic variables.</jats:p>
</jats:sec>
<jats:sec>
<jats:title content-type="abstract-subheading">Findings</jats:title>
<jats:p>The average annual nominal arithmetic rate of return in dollars for Argentinian art during this period was 6.81 per cent, with a 29.11 per cent standard deviation. Argentinian art shows a low correlation with Argentinian and US companies’ shares and a slightly negative correlation with US bonds. This is the reason for artworks to be included in investors’ portfolios despite the relatively high volatility.</jats:p>
</jats:sec>
<jats:sec>
<jats:title content-type="abstract-subheading">Research limitations/implications</jats:title>
<jats:p>Valuating works of art in Argentina can be explained by a series of their attributes. The benefits of art as an investment should be contrasted with factors including illiquidity and high transaction costs that are inherent when investing in works of art.</jats:p>
</jats:sec>
<jats:sec>
<jats:title content-type="abstract-subheading">Practical implications</jats:title>
<jats:p>Argentinian artists’ works have higher prices when, <jats:italic>ceteris paribus</jats:italic>, they are dated; they are auctioned in either Christie’s, Sotheby’s, Galería Arroyo, Roldan &amp; Cia, Meeting Art, or Naon &amp; Cia; they are oil or acrylic paintings; they are larger in size – although the price increase is decreasing when the size of the painting increases; and when the artist dies before their work is auctioned.</jats:p>
</jats:sec>
<jats:sec>
<jats:title content-type="abstract-subheading">Originality/value</jats:title>
<jats:p>This work presents the first rigorous price index of Argentinian artists’ works. Additionally, and as far as the authors have been able to observe, the time-period in this article is the longest that has been used in studies on art as an investment in emerging markets.</jats:p>
</jats:sec>

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Publisher
CrossRef
ISSN
1012-8255
DOI
10.1108/arla-08-2016-0226
Publisher site
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Abstract

<jats:sec> <jats:title content-type="abstract-subheading">Purpose</jats:title> <jats:p>The purpose of this paper is to present the formulation of the first exhaustive price index for Argentinian (and other Latin American countries) visual artists using 5,069 works sold in auctions by 71 Argentinian artists during the years 1980-2014.</jats:p> </jats:sec> <jats:sec> <jats:title content-type="abstract-subheading">Design/methodology/approach</jats:title> <jats:p>The authors estimated a regression of hedonic prices using the ordinary least squares method. When the regression was run and the results were analysed, the authors then estimated the annual price index of Argentinian artists’ work to then compare them with different financial and economic variables.</jats:p> </jats:sec> <jats:sec> <jats:title content-type="abstract-subheading">Findings</jats:title> <jats:p>The average annual nominal arithmetic rate of return in dollars for Argentinian art during this period was 6.81 per cent, with a 29.11 per cent standard deviation. Argentinian art shows a low correlation with Argentinian and US companies’ shares and a slightly negative correlation with US bonds. This is the reason for artworks to be included in investors’ portfolios despite the relatively high volatility.</jats:p> </jats:sec> <jats:sec> <jats:title content-type="abstract-subheading">Research limitations/implications</jats:title> <jats:p>Valuating works of art in Argentina can be explained by a series of their attributes. The benefits of art as an investment should be contrasted with factors including illiquidity and high transaction costs that are inherent when investing in works of art.</jats:p> </jats:sec> <jats:sec> <jats:title content-type="abstract-subheading">Practical implications</jats:title> <jats:p>Argentinian artists’ works have higher prices when, <jats:italic>ceteris paribus</jats:italic>, they are dated; they are auctioned in either Christie’s, Sotheby’s, Galería Arroyo, Roldan &amp; Cia, Meeting Art, or Naon &amp; Cia; they are oil or acrylic paintings; they are larger in size – although the price increase is decreasing when the size of the painting increases; and when the artist dies before their work is auctioned.</jats:p> </jats:sec> <jats:sec> <jats:title content-type="abstract-subheading">Originality/value</jats:title> <jats:p>This work presents the first rigorous price index of Argentinian artists’ works. Additionally, and as far as the authors have been able to observe, the time-period in this article is the longest that has been used in studies on art as an investment in emerging markets.</jats:p> </jats:sec>

Journal

Academia Revista Latinoamericana de AdministraciónCrossRef

Published: Aug 7, 2017

References