Default Risk and Equity Returns: A Comparison of the Bank-Based German and the U.S. Financial System

In this paper, we address the question whether the impact of default risk on equity returns depends on the financial system firms operate in. Using an implementation of Merton's option-pricing model for the value of equity to estimate firms' default risk, we construct a factor that measures the excess return of firms with low default risk over firms with high default risk. We then compare results from asset pricing tests for the German and the U.S. stock markets. Since Germany is the prime example of a bank-based financial system, where debt is supposedly a major instrument of corporate governance, we expect that a systematic default risk effect on equity returns should be more pronounced for German rather than U.S. firms. Our evidence suggests that a higher firm default risk systematically leads to lower returns in both capital markets. This contradicts some previous results for the U.S. by Vassalou/Xing (2004), but we show that their default risk factor looses its explanatory power if one includes a default risk factor measured as a factor mimicking portfolio. It further turns out that the composition of corporate debt affects equity returns in Germany. Firms' default risk sensitivities are attenuated the more a firm depends on bank debt financing.Asset pricing; Stochastic Discount Factor; Default Risk

An exact analysis of two-dimensional radiative transfer in an absorbing and emitting gray medium

The exact formulations for the radiative flux and the emissive power are presented for a two-dimensional, finite, planar, absorbing and emitting, gray medium in radiative equilibrium. Exact expressions are obtained for the medium subjected to the following types of boundary conditions: (1) cosine varying diffuse, (2) cosine varying collimated, (3) constant temperature strip, and (4) the strip illuminated by a uniform collimated flux. The solutions for the physically unrealistic cosine varying models are used to construct the solutions for the more practical finite strip models. The two-dimensional equations are reduced to one-dimensional equations by the method of separation of variables. This simplification is made possible by the cosine form of the boundary radiation. The corresponding equations for the semi-infinite medium are obtained from the equations for the finite optical thick medium by letting the optical thickness become infinite. The reduced one-dimensional equations are then solved exactly by techniques from one-dimensional radiative theory for the emissive power and radiative flux at the boundaries for both the finite and semi-infinite models. A wide range of exact numerical data is presented. The cosine varying collimated boundary condition generates functions which are analogous to the one-dimensional X- and Y-functions of Chandrasekhar for the finite model and the H-function of Chandrasekhar for the semi-infinite model. These generalized functions represent the dimensionless emissive power at the boundaries and appear in the radiative flux and emissive power at the boundaries for the cosine varying diffuse model as well as for both finite strip models. The generalized H-, X- and Y-functions are tabulated exactly for a wide range of numerical values. In addition to the generalized H-, X- and Y-functions, a function analogous to the exponential integral function is introduced. Generalized exponential integral functions of the first, second, and third order are defined and the recurrence formulas and series expansions are developed. The generalized exponential integral functions are tabulated for a wide range of numerical values --Abstract, pages ii-iii

An analysis of Dirac delta generated spherical waves in an infinite Maxwell medium

It is an accepted fact that the simple Maxwell and Voigt models do not usually represent the behavior of real materials. In order to make the results of a model more realistic, other combinations of springs and dashpots must be considered. To understand the more complicated models, it is desirable to have a knowledge of the Maxwell model since this element usually occurs either in series or in parallel in the advanced models. This investigation reports solutions of the spherical wave equation in both the elastic and viscoelastic media. Laplace transform techniques are used to obtain the parameters; stress, velocity, and acceleration for the Maxwell solid and velocity, acceleration, displacement, stress, and strain for the elastic solid. The delta pressure pulse was chosen because of its simple transform (unity) and because the solution for any other pressure pulse can be obtained by convolution. Simpson integration was performed to obtain the numerical data --Abstract, page ii

Atomic hydrogen and nitrogen distributions from atmosphere explorer measurements

We were selective as to our approach to research activities, and devoted primary attention to two investigations concerning the global behavior of atomic hydrogen in the Earth's upper atmosphere. We derive the thermospheric concentration of H by applying the condition of charge-exchange equilibrium between hydrogen and oxygen atoms and ions to in-situ measurements of F-region composition and temperature from the series of Atmosphere Explorer (AE) aeronomy satellites. Progress and accomplishments on these chosen research projects are summarized

Qualitative Assessment of Psychological Safety and Ethics in Corrections Officers

AbstractIn this qualitative study, I explored psychological safety, team learning, and ethical and moral perception among correctional officers that worked in the prison industry. Former officers provided data by participating in an open-ended question interviews. I used a phenomenological approach to gather information from former officers about their psychological safety experience and their ethical and moral perceptions. Participants gave insight into their training and their work as individuals and as teams exploring individual and team psychological safety and ethical and moral perception while interacting with each other in the prison workplace. Research questions were about officer preparation, officer collaboration quality, quality indications of their workplace relations, their experience in raising process and operational issues, and what resources they used to maintain ethical and moral behavior with officers in the workplace. Social exchange theory was used to understand officer progression while advancing benefits over costs. The thematic results (leadership, maturity, moral foundation, and preparedness) call for more research about individual officer and team training priorities within prison industry limitations. The positive social change impact of this study is corrections officer team learning supported by psychological safety and by advancing officer ethical and moral perception

Information Exchange in Global Production Networks: Increasing Transparency by Simulation, Statistical Experiments and Selection of Digitalization Activities

Today, companies of all industries are part of global production networks. They have a variety of performance relationships with suppliers and customers. Digitalization offers the potential to exchange more information between the partners of global production networks. This may improve operational performance. Especially within the three business processes order management, quality problem solving and engineering change management, a targeted increase in transparency promises a better handling of disruptions and an increase in robustness. This paper presents a simulation-based methodology for modeling production and business processes as well as information exchange in global production networks. Following the principles of Design of Experiment (DoE), screening test plans first carve out the impact of disruptions and information exchange on the performance of the production network. This is followed by the determination of the disruption-robust information exchange using Taguchi-experiments. Starting from the actual state of information exchange, digitalization activities to increase transparency are finally determined. The activities consist of the implementation of digitalization technologies and the stronger linkage of information systems. The paper ends with an application of the methodology to a global production network for plastic-metal components in the automotive supplier industry

Обеспечение доступности правосудия в Германии

The subject. The article is devoted to problems of institute of legal aid in German civil procedure law.The purpose of the article is to confirm or disprove hypothesis that financial support is the main but not exclusive form of legal aid in Germany.The methodology of the study includes analysis and synthesis of German civil procedure legislation, description of decisions of German Federal Court of Justice and interpretation of legal studies concerning legal aid issues.The main results and scope of their application. The right to state support for equal access to judicial protection, regardless of property status, has constitutional grounds. The fundamental aspect of the principle of the rule of law is the prohibition of unauthorized enforcement of legal claims, and, therefore, the need to go to the court. Thus, ensuring equal access to judicial protection for all, including the needy persons, is a duty of a state governed by the rule of law. An important guarantee in this case is legal aid. In Germany, this aid, enshrined in civil procedure law, is a special reflection of the General social and legal institution of social assistance.The author reveals the structure of the main costs associated with the conduct of the process and covered by the legal aid, as well as conditions for the provision of such assistance in Germany – personal preconditions and prerequisites regarding the prospects for the conduct of the process. The provision of legal aid does not exclude the risk of a poor party that arise in connection with the loss process and the reimbursement court costs to the prevailing party. In addition, the provision of legal aid does not exempt from the obligation of its subsequent reimbursement to the Federal land budget from free revenues.The compilation and maintenance of statistics on the cost of certain types of proceedings by the Federal States of Germany, which account for the lion's share of the costs of maintaining the judicial system, seems justified from a fiscal point of view. However, it does not mean that the judicial system as a whole should be subordinated to the logic of economic profitability of "services" for dispute resolution.Conclusions. The provision of legal aid in Germany requires the identification of a set of conditions-relating to both the person and the prospects of the case. However, financial assistance in the conduct of proceedings is not the only way to ensure legal aid, another is, for example, the simplification of judicial procedure. It is at the discretion of the state to choose the means of legal aid to ensure effective protection of rights, however it may not be possible without qualified legal assistance.Раскрывается структура помощи в ведении процесса, а также условия ее предоставления в Германии – относящиеся как к личности, так и к перспективам рассмотрения дела. Отмечается, что предоставление помощи в ведении процесса не исключает риски малоимущей стороны, которые возникают в связи с отказом в удовлетворении ее требований и необходимостью возмещения выигравшей стороне судебных издержек; кроме того, предоставление помощи в ведении процесса не освобождает получателя от обязанности ее последующего возмещения в бюджет федеральной земли из свободных доходов. Делается вывод, что выбор средств обеспечения эффективного доступа к правосудию находится в усмотрении государства