Is there an accruals or a cash flow anomaly in UK stock returns?

In this paper, we apply a modified version of the Mishkin (1983) test to companies in the UK stock market in order to investigate the presence of accruals and cash flow effects on UK firms’ annual returns. First, we find that accruals decile rankings have U-shaped, or inverted U-shaped, or no relationships with most of the risk variables. Accruals decile rankings have, however, a negative relationship with the ratio of research and development to market value which is known to have a positive relationship with returns. Second, regarding the relationship between risk controls and returns, we find evidence associated with an RD effect and some evidence in favour of earnings-price and past return effects. We find little evidence of firm size, book to-market, and firm leverage effects, once the other variables are controlled for. Third, for the period 1990-2007, we report little evidence of general accruals mispricing in the UK in which accruals have a negative relationship with future returns, once risk has been accounted for. Additionally, after treatment of extreme observations, evidence of cash flow mispricing is found for the UK stock market. An alternative interpretation of our results is that there is no separate accruals effect, at least in the way predicted by the conventional mispricing stories, once other effects are taken into account, but there is a separate cash flow effect.Accruals anomaly, accrual based accounting, cash flows, financial statement analysis

Information Systems, Incentives and the Timing of Investment

The purpose of this paper is to study the effects of introducing information systems into a model featuring managerial incentive problems and investment opportunities that are mutually exclusive over time. In a principal-agent model in which a manager (agent) has superior information about investment costs, we introduce information systems, the signals from which are available to both the manager and the owner of the investment opportunity, which allow the owner to decrease the manager's informational advantage. We examine (i) the characteristics of the optimal information systems; (ii) the effects of such information systems on the owner's investment and compensation choices and on the value of the investment opportunity to the owner; (iii) the effects of such information systems on the timing of investment; (iv) the effects of such information systems on the overall probability of investment; and (v) when the owner might want to improve the information system at a particular point in time.Labor and Human Capital,

Incentive Problems and Investment Timing Options

We characterize optimal investment and compensation strategies in a model of an investment opportunity with managerial incentive problems, caused by asymmetric information over investment costs and the manager's desire to consume slack, and flexibility over the timing of its acceptance. The flexibility over timing consists of the opportunity to invest immediately, delay investment for one period, or not invest at all. The timing option provides an opportunity to invest when circumstances are most favorable. However, the timing option also gives the manager an incentive to influence the timing of the investment to circumstances in which he gets more slack. Under the assumption that investment costs are distributed independently over time, the optimal investment policy consists of a sequence of target costs, below which investment takes place and above which it does not. The timing option reduce optimal cost targets, relative to the case when no timing option is present. The first cost target is lowered because the compensation function calls for the payment of an amount equal to the manager's option to generate future slack, should investment take place. This increases the cost of investing at the first opportunity, thus reducing its attractiveness. In order to ease the incentive problem at the initial investment opportunity, the second target cost is also lowered, even though no further timing options remain. Making the additional assumption that costs are uniformly distributed, we generate additional insights. We find circumstances in which the profitability of investing initially exceeds the profitability of investing at the second opportunity, a result that is impossible in the first-best context. Second, we identify circumstances under which the initial target cost is increased by incentive effects. Third, we identify the conditions under which the option to wait is effectively shut down when incentive problems exist. The implications of relaxing several key assumptions, such as investment cost independence, the owner's commitment to the manager and not to renegotiate, are explored.Labor and Human Capital,

Dense, Parsec-Scale Clumps near the Great Annihilator

We report on Combined Array for Research in Millimeter-Wave Astronomy (CARMA) and James Clerk Maxwell Telescope (JCMT) observations toward the Einstein source 1E 1740.7-2942, a LMXB commonly known as the "Great Annihilator." The Great Annihilator is known to be near a small, bright molecular cloud on the sky in a region largely devoid of emission in 12-CO surveys of the Galactic Center. The region is of interest because it is interior to the dust lanes which may be the shock zones where atomic gas from HI nuclear disk is converted into molecular gas. We find that the region is populated with a number of dense (n ~ 10^5 cm^-3) regions of excited gas with small filling factors, and estimate that up to 1-3 x 10^5 solar masses of gas can be seen in our maps. The detection suggests that a significant amount of mass is transported from the shock zones to the GC star-forming regions in the form of small, dense bundles.Comment: 26 pages, 7 figures, accepted for publication by the Astrophysical Journal, abstract abridge

The value relevance of US firms’ mandated financial risk disclosures attributable to the impact of climate change

The impact of climate change on firms and, by extension, on economies is considered important for economic outcomes. This leads to the question of whether disclosures made by US firms concerning financial risks attributable to climate change, as mandated by general SEC regulations for reporting material financial risks during the period studied, have economic content. Our research explores the economic relevance of financial risk disclosures. attributable to climate change. We employ the level of analyst following as a measure of economic relevance and find that, all other things being equal, more disclosures of financial risk attributable to climate change are associated with higher levels of analyst followings in subsequent years. This suggests that such disclosures provide economically relevant information. Lastly, we outline the limitations of our study and suggest potential avenues for future research

The Effects of Pictorial Realism, Delay of Visual Feedback, and Observer Interactivity on the Subjective Sense of Presence

Two experiments examined the effects of pictorial realism, observer interactivity, and delay of visual feedback on the sense of presence. Subjects were presented pairs of virtual enviornments (a simulated driving task) that differed in one or more ways from each other. After subjects had completed the second member of each pair they reported which of the two had produced the greater amount of presence and indicated the size of this difference by means of a 1-100 scale. As predicted, realism and interactivity increased presence while delay of visual feedback diminished it. According to subjects\u27 verbal responses to a postexperiment interview, pictorial realism was the least influential of the three variables examined. Further, although some subjects reported an increase in the sense of presence over the course of the experiment, most said it reamined unchanged or became weaker

Synchronizing Sequencing Software to a Live Drummer

Copyright 2013 Massachusetts Institute of Technology. MIT allows authors to archive published versions of their articles after an embargo period. The article is available at

Transformational leadership practice in the world’s leading academic libraries

This article analyzes 12 semi-structured interviews within the framework of transformational leadership, using a set of open-ended questions addressed to 12 directors (six men and six women) of academic libraries in high-ranking universities in four different countries (Australia, New Zealand, the United Kingdom, and the United States of America). It also investigates the interviewees’ approach to managing and leading their library organizations within the context of the opportunities and challenges facing their organizations as well as their parent institutions. The interpretation of the participants’ responses is based on the four ‘I’s, the four dimensions of the concept of transformational leadership: (1) Idealized influence, (2) Inspirational motivation, (3) Intellectual stimulation, and (4) Individualized consideration. The findings indicated that academic library directors who chose to implement transformational leadership noted its significance as a major contributing factor to the enhancement of inner communication and building mutual trust, and respect within the library organization. This, in turn, has fostered a motivated and creative work environment that has ensured personal and collective success and institutional advancement. Transformational leadership contributes to promoting sustained organizational performance based on adaptability to the rapidly changing environment of academic libraries worldwide

Environmental, social and governance disclosure, integrated reporting, and the accuracy of analyst forecasts

The International Integrated Reporting Council advocates that integrated reporting (IR) should become the worldwide norm for corporate reporting aimed at serving the needs of investors. Nonetheless, only in South Africa has IR been mandated. We study the impact of the reporting regime change in South Africa on analyst forecast accuracy over the period 2008 to 2012, as a way of evaluating users’ perceptions of the usefulness of IR. We theorise that any effects of IR will be greater the greater is the level of disclosures of environmental, social and governance performance. We find results consistent with those who support IR and our theory that the level of environmental, social and governance disclosures is a mediating variable in determining the effectiveness of IR. The results are driven by the levels of environmental disclosure and, to a lesser extent, governance disclosure. Our results provide some support for those who advocate the virtues of integrated reporting

Linear modeling of possible mechanisms for parkinson tremor generation

The power of Parkinson tremor is expressed in terms of possibly changed frequency response functions between relevant variables in the neuromuscular system. The derivation starts out from a linear loopless equivalent model of mechanisms for general tremor generation. Hypothetical changes in this model from the substrate of the disease are indicated, and possible ones are inferred from literature about experiments on patients. The result indicates that in these patients tremor appears to have been generated in loops, which did not include the brain area which in surgery usually is inactivated. For some patients in the literature, these loops could involve muscle length receptors, the static sensitivity of which may have been enlarged by pathological brain activity