IPO Liability and Entrepreneurial Response

This paper explores how legal liability in the IPO context can impact an entrepreneur\u27s decision of whether and how to take a firm public. Liability under the Securities Act of 1933 effectively embeds a put option in an IPO security, where the entrepreneur must insure the shareholder against poor firm performance, which inflates the price of the security and exposes the entrepreneur to risk. This may cause IPO firms to appear to underperform relative to non-IPO firms as the option value decays, and may lead the entrepreneur to undertake strategic (but destructive) responses to minimize the put value and his exposure to risk. Because of the value-destroying characteristics of these responses—which include initial underpricing, entrenchment, lower NPV projects, asset partitioning, and reduced disclosure—this state of affairs is inefficient compared to a system where the entrepreneur can simply allocate the risk to shareholders. While the Securities Act’s risk-allocation regime may provide some benefits in the form of more accurate disclosure, the availability of substitute responses by the entrepreneur makes any such benefit uncertain

The Coasian Firm and Insider Trading, Revisited

I present an economic model of insider trading building upon Haddock & Macey’s classic analysis of trading by the manager of a Coasian firm (i.e., a firm in which agency costs do not exist). Due to current shareholders’ status as expected sellers of shares, Coasian insider trading allows shareholders to expropriate outsiders via the managerial proxy and any signaling value of insider trading is eliminated by shareholders’ biased incentives. Adverse selection results. If a system of credible disclosure exists, an insider trading ban results in more disclosure, more efficient prices, and lower illiquidity costs. While the case for insider trading in the Coasian firm may be weak, insider trading can provide positive social benefits where some form of agency cost exists. Insights from the Coasian model include that shareholder incentives may lead to undesirable capital markets activity, greater agency costs may result in preferable social outcomes, and deterrent penalties must take into account shareholder incentives

Conflict or Credibility: Analyst Conflicts of Interest and the Market for Underwriting Business

This paper argues that, contrary to conventional wisdom, conflicts of interest among equities research analysts (i.e., where investment banks would offer positive analyst research in quid pro quos for underwriting business) were beneficial to the capital markets. First, conflicted analyst research credibly signaled positive inside information that is otherwise too costly to communicate under 1933 Act liability, correcting adverse-selection problems. Second, conflicted analyst research mitigated agency costs between issuer and underwriter by allowing the underwriter to credibly commit to seek a higher offering price than the underwriter would prefer. Third, analyst research quid pro quos took the form of a competitive bidding market among underwriters, and may have improved competition in the underwriting industry. In light of these conclusions, recent reforms prohibiting analyst conflicts of interest do more harm than good. Preferable modes of regulation include liberalizing 1933 Act liability, increasing mandatory disclosure of conflicts, and increasing fraud penalties

Corporate Heroin: A Defense of Perks, Executive Loans, and Conspicuous Consumption

We argue that firms undertake to reduce employee savings in order to avoid final period problems that occur when employees accumulate enough wealth to retire and leave the industry. Normally, reputation constrains employee behavior, since an employee who cheats at one firm will then find herself unable to get a job at another However, employees who have saved such that they no longer care about continued employment will act opportunistically in the final periods of employment, which can destroy much or all of the surplus otherwise created by the employment relationship. We believe that this sort of final period cheating creates significant problems for employees in positions of delicate trust, particularly those with a large variable compensation component, such as corporate CEOs, securities professionals, and even corporate lawyers. Payment-in-kind (perks), deferred compensation (corporate loans), and the encouragement of employees\u27 conspicuous consumption-through screening, inculcation, or signaling-are strategies that firms enact to combat this final period problem of employee cheating. Employees who reduce savings are more reliable over the long term than employees who do not, since reduced savings makes employees more dependent upon remaining employed into the future; these employees will invest in their reputations by engaging in less cheating. We make an analogy to drug dependency: The employee who consumes all her resources immediately enjoys large present utility, as does the addict, but is ultimately dependent on the firm to provide her with the same opportunities in the future. Applying the theoretical framework we develop to the real world can help explain much of observable behavior and compensation practice. Thus, far from being prima facie evidence of corporate fraud-the picture painted by the media, academia, and prosecutors at recent corporate trials--high levels of in-kind compensation, corporate loans, and personal consumption may be evidence of optimal incentivization, where principal and agent have contracted (explicitly or implicitly) for just the amount and type of remuneration that maximizes their joint welfare

An exploratory study to assess the activity of the acarine growth inhibitor, fluazuron, against Sarcoptes scabei infestation in pigs

Background: The most common treatments for scabies in human and veterinary settings are topical 5% permethrin or systemic treatment with ivermectin. However, these treatments have very little activity against arthropod eggs, and therefore repeated treatment is frequently required. In-vitro, biochemical and molecular studies have demonstrated that human mites are becoming increasingly resistant to both acaricides. To identify alternate acaricides, we undertook a pilot study of the in vivo activity of the benzoylphenyl urea inhibitor of chitin synthesis, fluazuron, in pigs with sarcoptic mange. Findings. Pigs (n = 5) were infested with S. scabei var suis, and randomised to treatment at the start of peak infestation with fluazuron at a dose of 10 mg/kg/day per os for 7 days (n = 3) or no treatment (n = 2). Clinical scores, skin scrapings for mite counts and blood sampling for pharmacokinetic analysis were undertaken. Fluazuron was well absorbed in treated pigs with measureable blood levels up to 4 weeks post treatment. No adverse effects were observed. Modest acaricidal activity of the compound was observed, with a reduction in severity of skin lesions in treated pigs, as well as a reduction in number of scabies mite's early life stages. Conclusions: The moderate efficacy of fluazuron against scabies mites indicates a lead to the development of alternate treatments for scabies, such as combination therapies that maybe applicable for human use in the future

Clinical outcomes after anterior cruciate ligament injury: panther symposium ACL injury clinical outcomes consensus group

© 2020, The Author(s). Purpose: A stringent outcome assessment is a key aspect for establishing evidence-based clinical guidelines for anterior cruciate ligament (ACL) injury treatment. The aim of this consensus statement was to establish what data should be reported when conducting an ACL outcome study, what specific outcome measurements should be used and at what follow-up time those outcomes should be assessed. Methods: To establish a standardized approach to assessment of clinical outcome after ACL treatment, a consensus meeting including a multidisciplinary group of ACL experts was held at the ACL Consensus Meeting Panther Symposium, Pittsburgh, PA; USA, in June 2019. The group reached consensus on nine statements by using a modified Delphi method. Results: In general, outcomes after ACL treatment can be divided into four robust categories—early adverse events, patient-reported outcomes, ACL graft failure/recurrent ligament disruption and clinical measures of knee function and structure. A comprehensive assessment following ACL treatment should aim to provide a complete overview of the treatment result, optimally including the various aspects of outcome categories. For most research questions, a minimum follow-up of 2 years with an optimal follow-up rate of 80% is necessary to achieve a comprehensive assessment. This should include clinical examination, any sustained re-injuries, validated knee-specific PROs and Health-Related Quality of Life questionnaires. In the mid- to long-term follow-up, the presence of osteoarthritis should be evaluated. Conclusion: This consensus paper provides practical guidelines for how the aforementioned entities of outcomes should be reported and suggests the preferred tools for a reliable and valid assessment of outcome after ACL treatment. Level of evidence: V

The Availability Heuristic, Intuitive Cost-Benefit Analysis, and Climate Change

Because risks are on all sides of social situations, it is not possible to be “precautionary” in general. The availability heuristic ensures that some risks stand out as particularly salient, whatever their actual magnitude. Taken together with intuitive cost-benefit balancing, the availability heuristic helps to explain differences across groups, cultures, and even nations in the assessment of precautions to reduce the risks associated with climate change. There are complex links among availability, social processes for the spreading of information, and predispositions. If the United States is to take a stronger stand against climate change, it is likely to be a result of available incidents that seem to show that climate change produces serious and tangible harm

Establishing optimal quantitative-polymerase chain reaction assays for routine diagnosis and tracking of minimal residual disease in JAK2-V617F-associated myeloproliferative neoplasms: a joint European LeukemiaNet/MPN&MPNr-EuroNet (COST action BM0902) study

Item does not contain fulltextReliable detection of JAK2-V617F is critical for accurate diagnosis of myeloproliferative neoplasms (MPNs); in addition, sensitive mutation-specific assays can be applied to monitor disease response. However, there has been no consistent approach to JAK2-V617F detection, with assays varying markedly in performance, affecting clinical utility. Therefore, we established a network of 12 laboratories from seven countries to systematically evaluate nine different DNA-based quantitative PCR (qPCR) assays, including those in widespread clinical use. Seven quality control rounds involving over 21,500 qPCR reactions were undertaken using centrally distributed cell line dilutions and plasmid controls. The two best-performing assays were tested on normal blood samples (n=100) to evaluate assay specificity, followed by analysis of serial samples from 28 patients transplanted for JAK2-V617F-positive disease. The most sensitive assay, which performed consistently across a range of qPCR platforms, predicted outcome following transplant, with the mutant allele detected a median of 22 weeks (range 6-85 weeks) before relapse. Four of seven patients achieved molecular remission following donor lymphocyte infusion, indicative of a graft vs MPN effect. This study has established a robust, reliable assay for sensitive JAK2-V617F detection, suitable for assessing response in clinical trials, predicting outcome and guiding management of patients undergoing allogeneic transplant