The valuation of European financial firms

We extend the recent literature concerning accounting based valuation models to investigate financial firms from six European countries with substantial financial sectors: France, Germany, Italy, Netherlands, Switzerland and the UK. Not only are these crucial industries worthy of study in their own right, but unusual accounting practices, and inter-country differences in those accounting practices, provide valuable insights into the accounting-value relationship. Our sample consists of 7,714 financial firm/years observations from 1,140 companies drawn from 1989-2000. Sub-samples include 1,309 firm/years for banks, 650 for insurance companies, 1,705 for real estate firms, and 3,239 for investment companies. In most countries we find that the valuation models work as well or better in explaining cross-sectional variations in the market-to-book ratio for financial firms as they do for industrial and commercial firms in the same countries, although Switzerland is an exception to this generalization. As expected, the results are sensitive to industrial differences, accounting regulation and accounting practices. In particular, marking assets to market value reduces the relevance of earnings figures and increases that of equity

National culture and earnings management in developed and emerging countries

Purpose This study investigates how the association between national culture and earnings management compares between developed and emerging countries. Design/methodology/approach The empirical analysis relies on a sample of 6,313 firm-year observations from 11 emerging markets and 27,605 firm-year observations from 22 developed countries. The authors use ordinary least squares regression methods to test the hypotheses of the study. Findings Based on Hofstede's (2011) cultural dimensions, the authors find that firms from countries with a higher level of uncertainty avoidance and individualism are less likely to engage in earnings management, but the effect of uncertainty avoidance (individualism) is more (less) pronounced in the emerging countries. Moreover, the authors demonstrate that firms from emerging (developed) countries with higher levels of power distance and masculinity are less (more) likely to engage in earnings management. Finally, the authors find evidence of a trade-off between accruals-based and real earnings management in firms from countries with greater long-term orientation and an indulgence cultural dimension. Originality/value This paper adds to the literature by theoretically discussing and empirically analysing the role that developed and emerging countries' development plays on the effect of national culture on earnings management.info:eu-repo/semantics/acceptedVersio

Salmonella Pathogenesis and Processing of Secreted Effectors by Caspase-3

The enteric pathogen Salmonella enterica serovar Typhimurium causes food poisoning resulting in gastroenteritis. The S. Typhimurium effector Salmonella invasion protein A (SipA) promotes gastroenteritis by functional motifs that trigger either mechanisms of inflammation or bacterial entry. During infection of intestinal epithelial cells, SipA was found to be responsible for the early activation of caspase-3, an enzyme that is required for SipA cleavage at a specific recognition motif that divided the protein into its two functional domains and activated SipA in a manner necessary for pathogenicity. Other caspase-3 cleavage sites identified in S. Typhimurium appeared to be restricted to secreted effector proteins, which indicates that this may be a general strategy used by this pathogen for processing of its secreted effectors

Mandatory adoption of IFRS and earnings management in emerging countries: the role of national culture

This study examines whether the characteristics of national culture, as proposed by Hofstede, Hofstede and Minkov (2010), are moderating factors on the potential impact of IFRS mandatory adoption on the quality of accounting information in emerging countries. The quality of information was measured through earnings management by accruals, based on the model of Jones (1991) modified by Dechow, Sloan and Sweeney (1995). Through a sample of 2,458 companies from 13 countries, totaling 18,163 firm-year observations, we identified that the dimensions of individualism, masculinity, aversion to uncertainty, long-term orientation and indulgence moderates the impact of IFRS adoption on earnings management levels in emerging countries. It was not possible to identify evidence that the power distance dimension exerts such influence. Overall, this study adds to the literature on the effect of cultural factors on accounting quality.info:eu-repo/semantics/publishedVersio

Increases in Waist Circumference and Weight As Predictors of Type 2 Diabetes in Individuals With Impaired Fasting Glucose: Influence of Baseline BMI: Data from the DESIR study

OBJECTIVE To evaluate in impaired fasting glucose (IFG) the relative importance of increases in waist circumference and weight on progression to type 2 diabetes. RESEARCH DESIGN AND METHODS The 9-year incidence of diabetes was studied in 979 men and women with baseline IFG, from the Data from an Epidemiological Study on the Insulin Resistance Syndrome (DESIR) cohort. RESULTS Increases in both waist circumference and weight were significantly associated with diabetes incidence. Standardized odds ratios (95% CI) were 1.79 (1.45–2.21) and 1.86 (1.51–2.30), respectively, after controlling for baseline risk factors. The impact of waist circumference increase was greater for BMI <25 kg/m2 (2.40 [1.63–3.52]) than for BMI ≥25 kg/m2 (1.66 [1.28–2.16]) and persisted after adjusting for concurrent changes in either insulinemia or the homeostasis model assessment of insulin resistance index. Weight change had a similar impact in both BMI groups. CONCLUSIONS In individuals with IFG, it is important to monitor and prevent increases in waist circumference, in particular for those with BMI <25 kg/m2

Risk scoring models for trade credit in small and medium enterprises

Trade credit refers to providing goods and services on a deferred payment basis. Commercial credit management is a matter of great importance for most small and medium enterprises (SMEs), since it represents a significant portion of their assets. Commercial lending involves assuming some credit risk due to exposure to default. Thus, the management of trade credit and payment delays is strongly related to the liquidation and bankruptcy of enterprises. In this paper we study the relationship between trade credit management and the level of risk in SMEs. Despite its relevance for most SMEs, this problem has not been sufficiently analyzed in the existing literature. After a brief review of existing literature, we use a large database of enterprises to analyze data and propose a multivariate decision-tree model which aims at explaining the level of risk as a function of several variables, both of financial and non-financial nature. Decision trees replace the equation in parametric regression models with a set of rules. This feature is an important aid for the decision process of risk experts, as it allows them to reduce time and then the economic cost of their decisions

Terminal valuations, growth rates and the implied cost of capital

This article is published with open access at Springerlink.comWe develop a model based on the notion that prices lead earnings, allowing for a simultaneous estimation of the implied growth rate and the cost of equity capital for US industrial sectors. The major difference between our approach and that in prior literature is that ours avoids the necessity to make assumptions about terminal values and consequently about future growth rates. In fact, growth rates are an endogenous variable, which is estimated simultaneously with the implied cost of equity capital. Since we require only 1-year-ahead forecasts of earnings and no assumptions about dividend payouts, our methodology allows us to estimate ex ante aggregate growth and risk premia over a larger sample of firms than has previously been possible. Our estimate of the risk premium being between 3.1 and 3.9 % is at the lower end of recent estimates, reflecting the inclusion of these short-lived companies. Our estimate of the long run growth is from 4.2 to 4.7 %

COMPASS server for homology detection: improved statistical accuracy, speed and functionality

COMPASS is a profile-based method for the detection of remote sequence similarity and the prediction of protein structure. Here we describe a recently improved public web server of COMPASS, http://prodata.swmed.edu/compass. The server features three major developments: (i) improved statistical accuracy; (ii) increased speed from parallel implementation; and (iii) new functional features facilitating structure prediction. These features include visualization tools that allow the user to quickly and effectively analyze specific local structural region predictions suggested by COMPASS alignments. As an application example, we describe the structural, evolutionary and functional analysis of a protein with unknown function that served as a target in the recent CASP8 (Critical Assessment of Techniques for Protein Structure Prediction round 8). URL: http://prodata.swmed.edu/compas

Isolation of Flow and Nonflow Correlations by Two- and Four-Particle Cumulant Measurements of Azimuthal Harmonics in sNN=\sqrt{s_{_{\rm NN}}} = 200 GeV Au+Au Collisions

A data-driven method was applied to measurements of Au+Au collisions at $\sqrt{s_{_{\rm NN}}} =$ 200 GeV made with the STAR detector at RHIC to isolate pseudorapidity distance $\Delta\eta$-dependent and $\Delta\eta$-independent correlations by using two- and four-particle azimuthal cumulant measurements. We identified a component of the correlation that is $\Delta\eta$-independent, which is likely dominated by anisotropic flow and flow fluctuations. It was also found to be independent of $\eta$ within the measured range of pseudorapidity $|\eta|<1$. The relative flow fluctuation was found to be $34\% \pm 2\% (stat.) \pm 3\% (sys.)$ for particles of transverse momentum $p_{T}$ less than $2$ GeV/$c$. The $\Delta\eta$-dependent part may be attributed to nonflow correlations, and is found to be $5\% \pm 2\% (sys.)$ relative to the flow of the measured second harmonic cumulant at $|\Delta\eta| > 0.7$