Management and the Financial Crisis (We have met the enemy and he is us …)

The financial crisis of 2008-9 has revealed that our broad model of corporate governance is broken, independent of the shortcomings in the regulatory system. Managers and boards of directors in scores of systemically important firms failed to protect employees, customers, or shareholders, and placed the global financial system at risk. I assert that the root cause of the crisis can be found in five related systems: incentives; risk management and control; accounting; human capital; and culture. The worst firms had lethal combinations of strong incentives, weak control and risk management, flawed internal and external accounting, low skill and/or low integrity people, and corrosive cultures. Piecemeal attempts to fix elements of corporate governance will fail. The problem, to illustrate, is not just the structure of compensation. Nor will increasing required capital prevent problems at companies with strong incentives and weak controls. I believe that we may need a new kind of external agency for systemically risky firms that would take a holistic look at the five systems to identify weaknesses, make recommendations to managers and boards, and set regulatory policies, including assessing charges for insuring against losses. Without such a comprehensive assessment and improvement plan, boards cannot do their jobs, and the system will remain as subject to calamitous events as it was before the crisis.

The Entrepreneurial Venture -2/E.

Newly updated, this comprehensive text covers basic concepts and emerging issues on entrepreneurship. Emphasizing that new venture creation requires planning and skill as well as inspiration, these readings portray the entrepreneur as the ultimate general manager, responsible for orchestrating the relationships among all parts of the organization. Profiles and examples from variety of companies and fields illustrate the diverse, imaginative ways in which entrepreneurs think and act. These readings provide a practical-oriented grounding that can function alone or be interwoven with case studies and other material. The accompanying questions will provoke new ideas and fuel discussion. For entrepreneur, this book can be used as both a handbook and an authoritative source of reference. The readings cover every phase of entrepreneur’s experience: generating and assessing ideas, preparing a business plan and enlisting stakeholder support, raising capital, and managing the operations and finances of the growing venture

Towards new background independent representations for Loop Quantum Gravity

Recently, uniqueness theorems were constructed for the representation used in Loop Quantum Gravity. We explore the existence of alternate representations by weakening the assumptions of the so called LOST uniqueness theorem. The weakened assumptions seem physically reasonable and retain the key requirement of explicit background independence. For simplicity, we restrict attention to the case of gauge group U(1).Comment: 22 pages, minor change

A Soft Budget Constraint Explanation for the Venture Capital Cycle

We explore why venture capital funds limit the amount of capital they raise and do not reinvest the proceeds. This structure is puzzling because it leads to a succession of several funds financing each new venture which multiplies the well known agency problems. We argue that an inside investor cannot provide a hard budget constraint while a less well informed outsider can. Therefore, the venture capitalist delegates the continuation decision to the outsider by ex ante restricting the amount of capital he has under management. The soft budget constraint problem becomes the more important the higher the entrepreneur’s private benefits are and the higher the probability of failure of a project is

The Performance of Private Equity Funds: Does Diversification Matter?

This paper is the first systematic analysis of the impact of diversification on the performance of private equity funds. A unique data set allows the exact evaluation of diversification across the dimensions financing stages, industries, and countries. Very different levels of diversification can be observed across sample funds. While some funds are highly specialized others are highly diversified. The empirical results show that the rate of return of private equity funds declines with diversification across financing stages, but increases with diversification across industries. Accordingly, the fraction of portfolio companies which have a negative return or return nothing at all, increase with diversification across financing stages. Diversification across countries has no systematic effect on the performance of private equity funds

Assessing Cut-off Points of Eosinophils, Nasal Polyp, and Lund-Mackay Scores to Predict Surgery in Nasal Polyposis : A Real-World Study

Background: Developing tools to identify chronic rhinosinusitis with nasal polyps (CRSwNP) patients requiring surgical treatment would help clinicians treat patients more effectively. The aim of this retrospective cross-sectional study was to identify cut-off values for eosinophil percentage, nasal polyps (NP), and Lund-Mackay (LM) scores that may predict the need for surgical treatment in Finnish CRSwNP patients. Methods: Data of CRSwNP patients (N = 378) undergoing consultation for ESS in 2001-19 were used. Data was collected from patient records and Lund-Mackay scores were determined from sinus computed tomography scans. The percentage of eosinophils was microscopically evaluated from the polyp samples available (n = 81). Associations were analyzed by Mann Whitney U test, and cut-off values by the area under the receiver operating characteristic curve (AUROC). Results: ESS was performed to 293 (77.5%) of patients. Polyp eosinophilia was associated significantly with ESS (p = 0.001), whereas peripheral blood eosinophil count, LM- score and endoscopic NP- score were not (p > 0.05). AUROC values (95% CI) for detecting those needing ESS were for polyp eosinophilia 0.71 (0.60-0.83), p = 0.001, for LM score 0.59 (0.50-0.67), p = 0.054; for NP score 0.56 (0.48-0.64), p = 0.17, and for blood eosinophil count 0.68 (0.46-0.90), p = 0.08. With the threshold value of polyp eosinophilia (>25%), the sensitivity and specificity were optimal for detecting the group needing ESS from the group not undergoing ESS. The cut-off value of blood eosinophil count (>0.26 x 10(9)/L) had relatively good, yet statistically insignificant (underpowered), predictive potential. Moderate cut-off values were found for endoscopic LM score (>= 14/24) and NP score (>= 4/8). Conclusions: Polyp eosinophilia (>25%) predicted ESS among Finnish hospital-level CRSwNP patients. A future challenge would be to find less invasive and cost-effective clinical factors predicting uncontrolled CRSwNP.Peer reviewe

A terminal assessment of stages theory : introducing a dynamic states approach to entrepreneurship

Stages of Growth models were the most frequent theoretical approach to understanding entrepreneurial business growth from 1962 to 2006; they built on the growth imperative and developmental models of that time. An analysis of the universe of such models (N=104) published in the management literature shows no consensus on basic constructs of the approach, nor is there any empirical confirmations of stages theory. However, by changing two propositions of the stages models, a new dynamic states approach is derived. The dynamic states approach has far greater explanatory power than its precursor, and is compatible with leading edge research in entrepreneurship

Cardiovascular disease, cancer and mortality among people with type 2 diabetes and alcoholic or non-alcoholic fatty liver disease hospital admission

OBJECTIVE: To describe associations between alcoholic fatty liver disease (ALD) or non-alcoholic fatty liver disease (NAFLD) hospital admission and cardiovascular disease (CVD), cancer, and mortality in people with T2DM. RESEARCH DESIGN AND METHODS: We performed a retrospective cohort study using linked population-based routine data from the diabetes register, hospital, cancer and death records for people aged 40-89 years, diagnosed with T2DM in Scotland 2004-2013 who had one or more hospital admission records. Liver disease and outcomes were identified using International Classification of Diseases codes. We estimated hazard ratios from Cox proportional hazards models, adjusted for key risk factors (aHRs). RESULTS: There were 134,368 people with T2DM (1707 with ALD and 1452 with NAFLD) with mean follow-up of 4.3 years for CVD and 4.7 years for mortality. Among people with ALD, NAFLD or without liver disease hospital records respectively there were: 378, 320 and 21,873 CVD events, 268, 176 and 15,101 cancers and 724, 221 and 16,203 deaths. For ALD and NAFLD respectively, aHRs (95% CIs) compared to the group with no record of liver disease were: 1.59 (1.43, 1.76) and 1.70 (1.52, 1.90), for CVD; 40.3 (28.8, 56.5) and 19.12(11.71 31.2), for hepatocellular cancer (HCC); 1.28 (1.12, 1.47) and 1.10 (0.94, 1.29) for non-HCC cancer; 4.86 (4.50, 5.24) and 1.60 (1.40, 1.83) for all-cause mortality. CONCLUSIONS: Hospital records of ALD or NAFLD are associated, to varying degrees, with increased risk of CVD, cancer and mortality in people with T2DM

The price of rapid exit in venture capital-backed IPOs

This paper proposes an explanation for two empirical puzzles surrounding initial public offerings (IPOs). Firstly, it is well documented that IPO underpricing increases during “hot issue” periods. Secondly, venture capital (VC) backed IPOs are less underpriced than non-venture capital backed IPOs during normal periods of activity, but the reverse is true during hot issue periods: VC backed IPOs are more underpriced than non-VC backed ones. This paper shows that when IPOs are driven by the initial investor’s desire to exit from an existing investment in order to finance a new venture, both the value of the new venture and the value of the existing firm to be sold in the IPO drive the investor’s choice of price and fraction of shares sold in the IPO. When this is the case, the availability of attractive new ventures increases equilibrium underpricing, which is what we observe during hot issue periods. Moreover, I show that underpricing is affected by the severity of the moral hazard problem between an investor and the firm’s manager. In the presence of a moral hazard problem the degree of equilibrium underpricing is more sensitive to changes in the value of the new venture. This can explain why venture capitalists, who often finance firms with more severe moral hazard problems, underprice IPOs less in normal periods, but underprice more strongly during hot issue periods. Further empirical implications relating the fraction of shares sold and the degree of underpricing are presented