Why Do Firms Smooth Earnings?

We explain why a firm may smooth reported earnings. Greater earnings volatility leads to a bigger informational advantage for informed investors over uninformed investors. If sufficiently many current shareholders are uninformed and may need to trade in the future for liquidity reasons, an increase in the volatility of reported earnings will magnify these shareholders' trading losses. They will, therefore, want the manager to smooth reported earnings as much as possible. Empirical implications are drawn out that link earnings smoothing to managerial compensation contracts, uncertainty about the volatility of earnings, and ownership structure.

Abdominal aortic aneurysm is associated with a variant in low-density lipoprotein receptor-related protein 1

Abdominal aortic aneurysm (AAA) is a common cause of morbidity and mortality and has a significant heritability. We carried out a genome-wide association discovery study of 1866 patients with AAA and 5435 controls and replication of promising signals (lead SNP with a p value < 1 × 10-5) in 2871 additional cases and 32,687 controls and performed further follow-up in 1491 AAA and 11,060 controls. In the discovery study, nine loci demonstrated association with AAA (p < 1 × 10-5). In the replication sample, the lead SNP at one of these loci, rs1466535, located within intron 1 of low-density-lipoprotein receptor-related protein 1 (LRP1) demonstrated significant association (p = 0.0042). We confirmed the association of rs1466535 and AAA in our follow-up study (p = 0.035). In a combined analysis (6228 AAA and 49182 controls), rs1466535 had a consistent effect size and direction in all sample sets (combined p = 4.52 × 10-10, odds ratio 1.15 [1.10-1.21]). No associations were seen for either rs1466535 or the 12q13.3 locus in independent association studies of coronary artery disease, blood pressure, diabetes, or hyperlipidaemia, suggesting that this locus is specific to AAA. Gene-expression studies demonstrated a trend toward increased LRP1 expression for the rs1466535 CC genotype in arterial tissues; there was a significant (p = 0.029) 1.19-fold (1.04-1.36) increase in LRP1 expression in CC homozygotes compared to TT homozygotes in aortic adventitia. Functional studies demonstrated that rs1466535 might alter a SREBP-1 binding site and influence enhancer activity at the locus. In conclusion, this study has identified a biologically plausible genetic variant associated specifically with AAA, and we suggest that this variant has a possible functional role in LRP1 expression

Genome-wide association identifies nine common variants associated with fasting proinsulin levels and provides new insights into the pathophysiology of type 2 diabetes.

OBJECTIVE: Proinsulin is a precursor of mature insulin and C-peptide. Higher circulating proinsulin levels are associated with impaired β-cell function, raised glucose levels, insulin resistance, and type 2 diabetes (T2D). Studies of the insulin processing pathway could provide new insights about T2D pathophysiology. RESEARCH DESIGN AND METHODS: We have conducted a meta-analysis of genome-wide association tests of ∼2.5 million genotyped or imputed single nucleotide polymorphisms (SNPs) and fasting proinsulin levels in 10,701 nondiabetic adults of European ancestry, with follow-up of 23 loci in up to 16,378 individuals, using additive genetic models adjusted for age, sex, fasting insulin, and study-specific covariates. RESULTS: Nine SNPs at eight loci were associated with proinsulin levels (P < 5 × 10(-8)). Two loci (LARP6 and SGSM2) have not been previously related to metabolic traits, one (MADD) has been associated with fasting glucose, one (PCSK1) has been implicated in obesity, and four (TCF7L2, SLC30A8, VPS13C/C2CD4A/B, and ARAP1, formerly CENTD2) increase T2D risk. The proinsulin-raising allele of ARAP1 was associated with a lower fasting glucose (P = 1.7 × 10(-4)), improved β-cell function (P = 1.1 × 10(-5)), and lower risk of T2D (odds ratio 0.88; P = 7.8 × 10(-6)). Notably, PCSK1 encodes the protein prohormone convertase 1/3, the first enzyme in the insulin processing pathway. A genotype score composed of the nine proinsulin-raising alleles was not associated with coronary disease in two large case-control datasets. CONCLUSIONS: We have identified nine genetic variants associated with fasting proinsulin. Our findings illuminate the biology underlying glucose homeostasis and T2D development in humans and argue against a direct role of proinsulin in coronary artery disease pathogenesis

Reducing the environmental impact of surgery on a global scale: systematic review and co-prioritization with healthcare workers in 132 countries

Abstract Background Healthcare cannot achieve net-zero carbon without addressing operating theatres. The aim of this study was to prioritize feasible interventions to reduce the environmental impact of operating theatres. Methods This study adopted a four-phase Delphi consensus co-prioritization methodology. In phase 1, a systematic review of published interventions and global consultation of perioperative healthcare professionals were used to longlist interventions. In phase 2, iterative thematic analysis consolidated comparable interventions into a shortlist. In phase 3, the shortlist was co-prioritized based on patient and clinician views on acceptability, feasibility, and safety. In phase 4, ranked lists of interventions were presented by their relevance to high-income countries and low–middle-income countries. Results In phase 1, 43 interventions were identified, which had low uptake in practice according to 3042 professionals globally. In phase 2, a shortlist of 15 intervention domains was generated. In phase 3, interventions were deemed acceptable for more than 90 per cent of patients except for reducing general anaesthesia (84 per cent) and re-sterilization of ‘single-use’ consumables (86 per cent). In phase 4, the top three shortlisted interventions for high-income countries were: introducing recycling; reducing use of anaesthetic gases; and appropriate clinical waste processing. In phase 4, the top three shortlisted interventions for low–middle-income countries were: introducing reusable surgical devices; reducing use of consumables; and reducing the use of general anaesthesia. Conclusion This is a step toward environmentally sustainable operating environments with actionable interventions applicable to both high– and low–middle–income countries

Career concerns and resource allocation in conglomerates

http://deepblue.lib.umich.edu/bitstream/2027.42/35647/2/b207350x.0001.001.pdfhttp://deepblue.lib.umich.edu/bitstream/2027.42/35647/1/b207350x.0001.001.tx

The role of overconfidence within financial markets and firms.

I study the implications of overconfidence in financial markets and within firms. The first essay is about asset pricing and considers a setting in which overconfident investors impact prices. In this setting, I find that if there are some rational investors along with overconfident investors, a financial intermediary run by rational investor emerges to exploit mispricing by developing a reputation based on its past performance. The intermediary makes profits and alleviates, but does not eliminate, predictability in prices. The second essay examines the leadership process in organizations and investigates how overconfidence impacts the leadership struggle. I find that overconfident managers are more likely to be chosen leaders of organizations. A moderately overconfident CEO increases shareholder value but an excessively overconfident CEO can reduce firm value.Ph.D.BankingFinanceSocial SciencesUniversity of Michigan, Horace H. Rackham School of Graduate Studieshttp://deepblue.lib.umich.edu/bitstream/2027.42/123175/2/3068868.pd

Rationality, overconfidence and leadership

http://deepblue.lib.umich.edu/bitstream/2027.42/35648/2/b2034712.0001.001.pdfhttp://deepblue.lib.umich.edu/bitstream/2027.42/35648/1/b2034712.0001.001.tx

Why do firms smooth earnings?

http://deepblue.lib.umich.edu/bitstream/2027.42/35649/2/b2034992.0001.001.pdfhttp://deepblue.lib.umich.edu/bitstream/2027.42/35649/1/b2034992.0001.001.tx

Career Concerns and Resource Allocation in Conglomerates

We investigate resource allocation decisions in conglomerates when managers are motivated by career concerns. When divisional cash flows are differentially informative about managerial ability, we show that it is in the managers' interest to overallocate unobservable intangible resources to the more informative divisions. Anticipating this bias, it is optimal for the firm's owners to also overallocate observable capital to the more informative divisions. The model provides rationale for corporate socialism and corporate hedging. It also highlights a cost of segment reporting and tracking stocks, namely, that they allow managers to distort their perceived ability at the expense of investors. Copyright 2004, Oxford University Press.