The Case for Mandatory Ownership Disclosure

The use of equity derivatives to conceal economic ownership of shares (“hidden ownership”) is increasingly drawing attention from the financial community, as is the exercise of voting power without corresponding economic interest (“empty voting”). Market participants and commentators have called for expansion of ownership disclosure rules, and policymakers on both sides of the Atlantic are now contemplating how to respond. Yet, in order to design appropriate responses it is key to understand why we have ownership disclosure rules in the first place. This understanding currently appears to be lacking, which may explain why we observe divergent approaches between countries. The case for mandatory ownership disclosure has also received remarkably little attention in the literature, which has focused almost exclusively on mandatory issuer disclosure. Perhaps this is because most people assume that ownership disclosure is a good thing. But why is such information important, and to whom? This paper aims to answer these fundamental questions, using the European disclosure regime as an example. First, the paper identifies two main objectives of ownership disclosure: improving market efficiency and corporate governance. Next, the paper explores the various mechanisms through which ownership disclosure performs these tasks. This sets the stage for an analysis of hidden ownership and empty voting that demonstrates why these phenomena are so problematic.ownership disclosure; market efficiency; corporate governance; monitoring; hidden ownership; empty voting; hedge fund activism

Error threshold in optimal coding, numerical criteria and classes of universalities for complexity

The free energy of the Random Energy Model at the transition point between ferromagnetic and spin glass phases is calculated. At this point, equivalent to the decoding error threshold in optimal codes, free energy has finite size corrections proportional to the square root of the number of degrees. The response of the magnetization to the ferromagnetic couplings is maximal at the values of magnetization equal to half. We give several criteria of complexity and define different universality classes. According to our classification, at the lowest class of complexity are random graph, Markov Models and Hidden Markov Models. At the next level is Sherrington-Kirkpatrick spin glass, connected with neuron-network models. On a higher level are critical theories, spin glass phase of Random Energy Model, percolation, self organized criticality (SOC). The top level class involves HOT design, error threshold in optimal coding, language, and, maybe, financial market. Alive systems are also related with the last class. A concept of anti-resonance is suggested for the complex systems.Comment: 17 page

Equity trend prediction with neural networks

This paper presents results of neural network based trend prediction for equity markets. Raw equity exchange data is pre-processed before being fed into a series of neural networks. The use of Self Organising Maps (SOM) is investigated as a data classification method to limit neural network inputs and training data requirements. The resulting primary simulation is a neural network that can prediction whether the next trading period will be, on average, higher or lower than the current. Combinations of pre-processing and feature extracting SOM’s are investigated to determine the more optimal system configuration

Neural networks for small scale ORC optimization

This study concerns a thermodynamic and technical optimization of a small scale Organic Rankine Cycle system for waste heat recovery applications. An Artificial Neural Network (ANN) has been used to develop a thermodynamic model to be used for the maximization of the production of power while keeping the size of the heat exchangers and hence the cost of the plant at its minimum. R1234yf has been selected as the working fluid. The results show that the use of ANN is promising in solving complex nonlinear optimization problems that arise in the field of thermodynamics

The Role of Technology Support Centres in stimulating Entrepreneurship and Innovation in SME Clusters

The Innovative Product Development Centre (IPDC) was established at the University of Wolverhampton in the West Midlands region of the UK with a mission “to help small and medium sized companies improve their business, secure jobs and contribute to the economic regeneration of the West Midlands Region”. Since 2000, the IPDC has helped several hundred enterprises to develop their businesses through innovation and new product development. Demand for help is high, which reflects a healthy desire by the SMEs to innovate. The assistance given is time limited, but its impact on the business is extremely varied. This paper will discuss the role that a university based product development and technology centre can play in supporting a regional agenda for developing entrepreneurship and innovation in SMEs. Using case studies drawn from the experiences of working with SMEs from the West Midlands region, the paper will consider key issues such as: • Entrepreneurial leadership in SMEs • Formalised approaches for managing NPD • Technology support for innovation • Product innovation • Business networks and entrepreneurial clusters The paper will conclude that university based centres like IPDC can play a vital role in regional development programmes by helping minimise the risks for entrepreneurs to develop new products or adopt new process technologies. Importantly, investments in such centres by regional development agencies can be pivotal for stimulating access to new technology for the exploitation of entrepreneurial clusters and creating attractive inward investment opportunities

Screening, Competition, and Job Design

In recent decades, many firms offered more discretion to their employees, often increasing the productivity of effort but also leaving more opportunities for shirking. These “high-performance work systems” are difficult to understand in terms of standard moral hazard models. We show experimentally that complementarities between high effort discretion, rent-sharing, screening opportunities, and competition are important driving forces behind these new forms of work organization. We document in particular the endogenous emergence of two fundamentally distinct types of employment strategies. Employers either implement a control strategy, which consists of low effort discretion and little or no rent-sharing, or they implement a trust strategy, which stipulates high effort discretion and substantial rent-sharing. If employers cannot screen employees, the control strategy prevails, while the possibility of screening renders the trust strategy profitable. The introduction of competition substantially fosters the trust strategy, reduces market segmentation, and leads to large welfare gains for both employers and employees

Designing Market Based Instruments: Beyond Round One of the Australian MBI Pilot Program

Most markets have evolved as buyers and sellers constantly search for ways to create value, however this has not occurred naturally in all areas of the economy markets are missing for some goods, including the environment. In such cases, transaction costs linked to property rights, asymmetric and hidden information and packaging problems have often prevented otherwise valuable deals from being negotiated in relation to the environment. However new capabilities and a better knowledge and understanding of the problems at hand now mean that where the objective is clear, and the knowledge, skills and capability exist to understand, model and measure the relevant characteristics of the problem transaction costs are low enough that economists can, in certain cases, design market based instruments that match demand with supply. In general the findings from the National MBI Pilot Program indicate that cap-and-trade systems, auctions and offsets systems can be effective tools to achieve natural resource management. The type of mechanism that is appropriate in a particular circumstance will depend on the transaction costs involved, which are strongly influenced by the features of the problem at hand. Mechanisms therefore require careful design to ensure they are tailored to each particular case.Transaction Costs, Property Rights, Asymmetric and Private Information, Public Goods, Government Policy, Marketing,