Does market concentration of downstream buyers squeeze upstream suppliers’ market power?

Using a theoretical model, we examine both the relationship between a downstream dominant firm’s market share and an upstream monopoly’s Lerner index and the relationship between upstream and downstream price elasticities of demand, in a regulated industry context. We undertake an empirical study that confirms our theoretical predictions, namely that the market share of a leader downstream firm is significant in explaining the upstream producers’ Lerner indexes. Also in accordance with the results of the theoretical model, the Lerner index is negatively influenced by the competition that suppliers face and by the level of economies of density, amongst other variables.vertical relations, buyers’ market power

Are mutual fund investors in jail?

The absence of investor reaction to the poor performance of mutual funds is a widely reported phenomenon. This paper investigates the role of load costs as an explanation for the phenomenon and concludes that back-end load fees are an obstacle to reaction. We find that investors with a high likelihood of undergoing a liquidity crisis, preferring liquidity in decision making, act contrary to the reaction hypothesis, and investors with broader investment horizons do not react to poor performances due to the fact that they are “imprisoned” by back-end load fees.Mutual Fund, Performance Reaction, Load Costs, Investor Behaviour

Mutual fund flows’ performance reaction: does convexity apply to small markets?

In this paper we study the performance reaction of investors in a small market context. Instead of the asymmetrical investors’ reaction to winners and losers, as usually documented for the US, an absence of risk-adjusted performance reaction was observed. The absence of reaction can be attributed to either lower investor sophistication, conflicts of interests in the context of the Portuguese universal banking industry, or the existence of relevant back-end load cost which prevent investors from reacting. A high persistence of net investment flows was also noted. Our results are consistent with the idea that the financial groups with larger market shares have the capacity “to drive” their customers to funds with larger fees. This practice emerges as a non-transparent means of increasing prices.Mutual Funds, Performance Reaction, Investor Behaviour, Small Markets and Regulation

The Informativeness of Quarterly Financial Reporting: The Portuguese Case

With the Directive 2004/109/EC, of December 15, 2004 – Transparency Directive –, the European Union decided not to require listed companies to disclose financial information in the first and third quarters of each year. Each EU country now has to decide whether to oblige its companies to disclose this information. Using a sample of 1751 firm-earnings announcements between 1994 and 2004, this paper ascertains the informativeness of quarterly financial reporting in Portugal, one of the seven European countries where the disclosure of such information is currently compulsory in all quarters. Evidence suggests that the information of the first and third quarters, both in terms of price volatility and trading volume, is significant and not inferior to that of the remaining earnings announcements.Capital markets-based research; interim accounting disclosure; market reaction; market regulation

Knotted solutions, from electromagnetism to fluid dynamics

Knotted solutions to electromagnetism and fluid dynamics are investigated, based on relations we find between the two subjects. We can write fluid dynamics in electromagnetism language, but only on an initial surface, or for linear perturbations, and we use this map to find knotted fluid solutions, as well as new electromagnetic solutions. We find that knotted solutions of Maxwell electromagnetism are also solutions of more general nonlinear theories, like Born-Infeld, and including ones which contain quantum corrections from couplings with other modes, like Euler-Heisenberg and string theory DBI. Null configurations in electromagnetism can be described as a null pressureless fluid, and from this map we can find null fluid knotted solutions. A type of nonrelativistic reduction of the relativistic fluid equations is described, which allows us to find also solutions of the (nonrelativistic) Euler's equations.Comment: 36 pages, 3 figure

O Efeito da Família Jurídica na Transposição da Directiva das Ofertas Públicas de Aquisição

The Takeovers Directive conferred some degrees of freedom to the EU member countries. The real level of harmonization of the anti-takeover regimen after the transposition of the Directive was, concomitantly, reduced. This study investigates whether, in terms of investor protection, the hierarchy of legal systems established in La Porta et al. (1998) has had any impact on the transposition of the Directive. The paper concludes that countries of civil law of French origin chose solutions which were less favorable to the functioning of the market for corporate control. However, vis-à-vis countries with common law, countries with civilian law of Scandinavian or German origin chose solutions more favorable to the functioning of this market. Moreover, the paper finds evidence that countries made their choices in conformity with the importance of the respective stock markets.

The profitability and distance to distress of European banks: do business choices matter?

This paper examines which business choices are more likely to increase the profitability and distance to distress of banks, and whether changing business model pays off. We find that the profitability and distance to distress increase with the use of customer deposits and equity, and decrease with size; also, the top performers tend to have a high relationship banking orientation and/or operate a retail focused business model. Furthermore, we document that income diversification only bears a positive impact on the distance to distress of banks highly focused on relationship banking, and size only bears a negative effect on the profitability of these banks as well; additionally, only banks with a low relationship banking orientation significantly benefit from customer deposits. With respect to the effects of business model changes, we find that shifts from the retail diversified funding model to either the retail focused or the large diversified models improve profitability in the medium term. Finally, we find evidence that large diversified banks benefited from internal capital markets during the twin financial crisis by tapping into low-cost funding from subsidiaries. Our results are robust to changes to our baseline model that account for endogeneity and persistency issues.info:eu-repo/semantics/acceptedVersio

The Infrared Extinction Law at Extreme Depth in a Dark Cloud Core

We combined sensitive near-infrared data obtained with ground-based imagers on the ESO NTT and VLT telescopes with space mid-infrared data acquired with the IRAC imager on the Spitzer Space Telescope to calculate the extinction law A_\lambda/A_K as a function of \lambda between 1.25 and 7.76 micron to an unprecedented depth in Barnard 59, a star forming, dense core located in the Pipe Nebula. The ratios A_\lambda/A_K were calculated from the slopes of the distributions of sources in color-color diagrams \lambda-K vs. H-K. The distributions in the color-color diagrams are fit well with single slopes to extinction levels of A_K ~ 7 (A_V ~ 59 mag). Consequently, there appears to be no significant variation of the extinction law with depth through the B59 line of sight. However, when slopes are translated into the relative extinction coefficients A_\lambda/A_K, we find an extinction law which departs from the simple extrapolation of the near-infrared power law extinction curve, and agrees more closely with a dust extinction model for a cloud with a total to selective absorption R_V=5.5 and a grain size distribution favoring larger grains than those in the diffuse ISM. Thus, the difference we observe could be possibly due to the effect of grain growth in denser regions. Finally, the slopes in our diagrams are somewhat less steep than those from the study of Indebetouw et al. (2005) for clouds with lower column densities, and this indicates that the extinction law between 3 and 8 micron might vary slightly as a function of environment.Comment: 22 pages manuscript, 4 figures (2 multipart), 1 tabl