Managerial Attributes, Incentives, and Performance

We examine the relative importance of observed and unobserved firm- and manager-specific heterogeneities in determining executive compensation incentives and firm policy, risk, and performance. First, we decompose executive incentives into time-variant and time-invariant firm and manager components. Manager fixed effects supply 73% (60%) of explained variation in delta (vega). Second, controlling for manager fixed effects alters parameter estimates and corresponding inference on observed firm and manager characteristics. Third, larger CEO delta (vega) fixed effects predict better firm performance (riskier corporate policies and higher firm risk). These results suggest that the delta (vega) fixed effect captures managerial ability (risk aversion)

An Empirical Assessment of Empirical Corporate Finance

We empirically evaluate 20 prominent contributions to a broad range of areas in the empirical corporate finance literature. We assemble the necessary data and then apply a single, simple econometric method, the connected-groups approach of Abowd, Karmarz, and Margolis (1999), to appraise the extent to which prevailing empirical specifications explain variation of the dependent variable, differ in composition of fit arising from various classes of independent variables, and exhibit resistance to omitted variable bias and other endogeneity problems. In particular, we identify and estimate the role of observed and unobserved firm- and manager-specific characteristics in determining primary features of corporate governance, financial policy, payout policy, investment policy, and performance. Observed firm characteristics do best in explaining market leverage and CEO pay level and worst for takeover defenses and outcomes. Observed manager characteristics have relatively high power to explain CEO contract design and low power for firm focus and investment policy. Estimated specifications without firm and manager fixed effects do poorly in explaining variation in CEO duality, corporate control variables, and capital expenditures, and best in explaining executive pay level, board size, market leverage, corporate cash holdings, and firm risk. Including manager and firm fixed effects, along with firm and manager observables, delivers the best fit for dividend payout, the propensity to adopt antitakeover defenses, firm risk, board size, and firm focus. In terms of source, unobserved manager attributes deliver a high proportion of explained variation in the dependent variable for executive wealth-performance sensitivity, board independence, board size, and sensitivity of expected executive compensation to firm risk. In contrast, unobserved firm attributes provide a high proportion of variation explained for dividend payout, antitakeover defenses, book and market leverage, and corporate cash holdings. In part, these results suggest where empiricists could look for better proxies for what current theory identifies as important and where theorists could focus in building new models that encompass economic forces not contained in existing models. Finally, we assess the relevance of omitted variables and endogeneity for conventional empirical designs in the various subfields. Including manager and firm fixed effects significantly alters inference on primary explanatory variables in 17 of the 20 representative subfield specifications

Structural Models and Endogeneity in Corporate Finance: The Link Between Managerial Ownership and Corporate Performance

NOTICE: this is the author’s version of a work that was accepted for publication in Journal of Financial Economics. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Financial Economics, Volume 103, Issue 1, January 2012. DOI:10.1016/j.jfineco.2011.04.002.This paper presents a parsimonious, structural model that isolates primary economic determinants of the level and dispersion of managerial ownership, firm scale, and performance and the empirical associations among them. In particular, variation across firms and through time of estimated productivity parameters for physical assets and managerial input and corresponding variation in optimal compensation contract and firm size combine to deliver the well-known hump-shaped relation between Tobin's Q and managerial ownership. To assess the effectiveness of standard econometric approaches to the endogeneity problem, we apply those remedies to panel data generated from the model. The unfortunate conclusion is that, at least in the ownership-performance context, proxy variables, fixed effects, and instrumental variables do not generally provide reliable solutions to simultaneity bias. Note: Previously titled "Structural Models and Endogeneity in Corporate FinanceStructural Models and Endogeneity in Corporate Finance: The Link Between Managerial Ownership and Corporate Performance

Facial Curvature Detects and Explicates Ethnic Differences in Effects of Prenatal Alcohol Exposure

Background Our objective is to help clinicians detect the facial effects of prenatal alcohol exposure by developing computer-based tools for screening facial form. Methods All 415 individuals considered were evaluated by expert dysmorphologists and categorized as (i) healthy control (HC), (ii) fetal alcohol syndrome (FAS), or (iii) heavily prenatally alcohol exposed (HE) but not clinically diagnosable as FAS; 3D facial photographs were used to build models of facial form to support discrimination studies. Surface curvature-based delineations of facial form were introduced. Results (i) Facial growth in FAS, HE, and control subgroups is similar in both cohorts. (ii) Cohort consistency of agreement between clinical diagnosis and HC-FAS facial form classification is lower for midline facial regions and higher for nonmidline regions. (iii) Specific HC-FAS differences within and between the cohorts include: for HC, a smoother philtrum in Cape Coloured individuals; for FAS, a smoother philtrum in Caucasians; for control-FAS philtrum difference, greater homogeneity in Caucasians; for control-FAS face difference, greater homogeneity in Cape Coloured individuals. (iv) Curvature changes in facial profile induced by prenatal alcohol exposure are more homogeneous and greater in Cape Coloureds than in Caucasians. (v) The Caucasian HE subset divides into clusters with control-like and FAS-like facial dysmorphism. The Cape Coloured HE subset is similarly divided for nonmidline facial regions but not clearly for midline structures. (vi) The Cape Coloured HE subset with control-like facial dysmorphism shows orbital hypertelorism. Conclusions Facial curvature assists the recognition of the effects of prenatal alcohol exposure and helps explain why different facial regions result in inconsistent control-FAS discrimination rates in disparate ethnic groups. Heavy prenatal alcohol exposure can give rise to orbital hypertelorism, supporting a long-standing suggestion that prenatal alcohol exposure at a particular time causes increased separation of the brain hemispheres with a concomitant increase in orbital separation

Climate change promotes parasitism in a coral symbiosis.

Coastal oceans are increasingly eutrophic, warm and acidic through the addition of anthropogenic nitrogen and carbon, respectively. Among the most sensitive taxa to these changes are scleractinian corals, which engineer the most biodiverse ecosystems on Earth. Corals' sensitivity is a consequence of their evolutionary investment in symbiosis with the dinoflagellate alga, Symbiodinium. Together, the coral holobiont has dominated oligotrophic tropical marine habitats. However, warming destabilizes this association and reduces coral fitness. It has been theorized that, when reefs become warm and eutrophic, mutualistic Symbiodinium sequester more resources for their own growth, thus parasitizing their hosts of nutrition. Here, we tested the hypothesis that sub-bleaching temperature and excess nitrogen promotes symbiont parasitism by measuring respiration (costs) and the assimilation and translocation of both carbon (energy) and nitrogen (growth; both benefits) within Orbicella faveolata hosting one of two Symbiodinium phylotypes using a dual stable isotope tracer incubation at ambient (26 °C) and sub-bleaching (31 °C) temperatures under elevated nitrate. Warming to 31 °C reduced holobiont net primary productivity (NPP) by 60% due to increased respiration which decreased host %carbon by 15% with no apparent cost to the symbiont. Concurrently, Symbiodinium carbon and nitrogen assimilation increased by 14 and 32%, respectively while increasing their mitotic index by 15%, whereas hosts did not gain a proportional increase in translocated photosynthates. We conclude that the disparity in benefits and costs to both partners is evidence of symbiont parasitism in the coral symbiosis and has major implications for the resilience of coral reefs under threat of global change

Alemtuzumab improves preexisting disability in active relapsing-remitting MS patients

$\textbf{Objective:}$ To characterize effects of alemtuzumab treatment on measures of disability improvement in patients with relapsing-remitting multiple sclerosis (RRMS) with inadequate response (≥1 relapse) to prior therapy. $\textbf{Methods:}$ Comparison of Alemtuzumab and Rebif Efficacy in Multiple Sclerosis (CARE-MS) II, a 2-year randomized, rater-blinded, active-controlled, head-to-head, phase 3 trial, compared efficacy and safety of alemtuzumab 12 mg with subcutaneous interferon-β-1a (SC IFN-β-1a) 44 μg in patients with RRMS. Prespecified and post hoc disability outcomes based on Expanded Disability Status Scale (EDSS), Multiple Sclerosis Functional Composite (MSFC), and Sloan low-contrast letter acuity (SLCLA) are reported, focusing on improvement of preexisting disability in addition to slowing of disability accumulation. $\textbf{Results:}$ Alemtuzumab-treated patients were more likely than SC IFN-β-1a-treated patients to show improvement in EDSS scores ($p$ < 0.0001) on all 7 functional systems. Significantly more alemtuzumab patients demonstrated 6-month confirmed disability improvement. The likelihood of improved vs stable/worsening MSFC scores was greater with alemtuzumab than SC IFN-β-1a ($p$ = 0.0300); improvement in MSFC scores with alemtuzumab was primarily driven by the upper limb coordination and dexterity domain. Alemtuzumab-treated patients had more favorable changes from baseline in SLCLA (2.5% contrast) scores ($p$ = 0.0014) and MSFC + SLCLA composite scores ($p$ = 0.0097) than SC IFN-β-1a-treated patients. $\textbf{Conclusions:}$ In patients with RRMS and inadequate response to prior disease-modifying therapies, alemtuzumab provides greater benefits than SC IFN-β-1a across several disability outcomes, reflecting improvement of preexisting disabilities. $\textbf{Classification of evidence:}$ This study provides Class I evidence (based on rater blinding and a balance in baseline characteristics between arms) that alemtuzumab modifies disability measures favorably compared with SC IFN-β-1a.Sanofi Genzyme, Bayer HealthCare Pharmaceutical

Alemtuzumab CARE-MS II 5-year follow-up: Efficacy and safety findings.

OBJECTIVE: To evaluate 5-year efficacy and safety of alemtuzumab in patients with active relapsing-remitting multiple sclerosis and inadequate response to prior therapy. METHODS: In the 2-year Comparison of Alemtuzumab and Rebif Efficacy in Multiple Sclerosis (CARE-MS) II study (NCT00548405), alemtuzumab-treated patients received 2 courses (baseline and 12 months later). Patients could enter an extension (NCT00930553), with as-needed alemtuzumab retreatment for relapse or MRI activity. Annualized relapse rate (ARR), 6-month confirmed disability worsening (CDW; ≥1-point Expanded Disability Status Scale [EDSS] score increase [≥1.5 if baseline EDSS = 0]), 6-month confirmed disability improvement (CDI; ≥1-point EDSS decrease [baseline score ≥2.0]), no evidence of disease activity (NEDA), brain volume loss (BVL), and adverse events (AEs) were assessed. RESULTS: Most alemtuzumab-treated patients (92.9%) who completed CARE-MS II entered the extension; 59.8% received no alemtuzumab retreatment. ARR was low in each extension year (years 3-5: 0.22, 0.23, 0.18). Through 5 years, 75.1% of patients were free of 6-month CDW; 42.9% achieved 6-month CDI. In years 3, 4, and 5, proportions with NEDA were 52.9%, 54.2%, and 58.2%, respectively. Median yearly BVL remained low in the extension (years 1-5: -0.48%, -0.22%, -0.10%, -0.19%, -0.07%). AE exposure-adjusted incidence rates in the extension were lower than in the core study. Thyroid disorders peaked at year 3, declining thereafter. CONCLUSIONS: Alemtuzumab provides durable efficacy through 5 years in patients with an inadequate response to prior therapy in the absence of continuous treatment. CLASSIFICATION OF EVIDENCE: This study provides Class III evidence that alemtuzumab provides efficacy and slowing of brain atrophy through 5 years

LSST: from Science Drivers to Reference Design and Anticipated Data Products

(Abridged) We describe here the most ambitious survey currently planned in the optical, the Large Synoptic Survey Telescope (LSST). A vast array of science will be enabled by a single wide-deep-fast sky survey, and LSST will have unique survey capability in the faint time domain. The LSST design is driven by four main science themes: probing dark energy and dark matter, taking an inventory of the Solar System, exploring the transient optical sky, and mapping the Milky Way. LSST will be a wide-field ground-based system sited at Cerro Pach\'{o}n in northern Chile. The telescope will have an 8.4 m (6.5 m effective) primary mirror, a 9.6 deg$^2$ field of view, and a 3.2 Gigapixel camera. The standard observing sequence will consist of pairs of 15-second exposures in a given field, with two such visits in each pointing in a given night. With these repeats, the LSST system is capable of imaging about 10,000 square degrees of sky in a single filter in three nights. The typical 5$\sigma$ point-source depth in a single visit in $r$ will be $\sim 24.5$ (AB). The project is in the construction phase and will begin regular survey operations by 2022. The survey area will be contained within 30,000 deg$^2$ with $\delta<+34.5^\circ$, and will be imaged multiple times in six bands, $ugrizy$, covering the wavelength range 320--1050 nm. About 90\% of the observing time will be devoted to a deep-wide-fast survey mode which will uniformly observe a 18,000 deg$^2$ region about 800 times (summed over all six bands) during the anticipated 10 years of operations, and yield a coadded map to $r\sim27.5$. The remaining 10\% of the observing time will be allocated to projects such as a Very Deep and Fast time domain survey. The goal is to make LSST data products, including a relational database of about 32 trillion observations of 40 billion objects, available to the public and scientists around the world.Comment: 57 pages, 32 color figures, version with high-resolution figures available from https://www.lsst.org/overvie

Altered Trabecular Bone Structure and Delayed Cartilage Degeneration in the Knees of Collagen VI Null Mice

Mutation or loss of collagen VI has been linked to a variety of musculoskeletal abnormalities, particularly muscular dystrophies, tissue ossification and/or fibrosis, and hip osteoarthritis. However, the role of collagen VI in bone and cartilage structure and function in the knee is unknown. In this study, we examined the role of collagen VI in the morphology and physical properties of bone and cartilage in the knee joint of Col6a1−/− mice by micro-computed tomography (microCT), histology, atomic force microscopy (AFM), and scanning microphotolysis (SCAMP). Col6a1−/− mice showed significant differences in trabecular bone structure, with lower bone volume, connectivity density, trabecular number, and trabecular thickness but higher structure model index and trabecular separation compared to Col6a1+/+ mice. Subchondral bone thickness and mineral content increased significantly with age in Col6a1+/+ mice, but not in Col6a1−/− mice. Col6a1−/− mice had lower cartilage degradation scores, but developed early, severe osteophytes compared to Col6a1+/+mice. In both groups, cartilage roughness increased with age, but neither the frictional coefficient nor compressive modulus of the cartilage changed with age or genotype, as measured by AFM. Cartilage diffusivity, measured via SCAMP, varied minimally with age or genotype. The absence of type VI collagen has profound effects on knee joint structure and morphometry, yet minimal influences on the physical properties of the cartilage. Together with previous studies showing accelerated hip osteoarthritis in Col6a1−/− mice, these findings suggest different roles for collagen VI at different sites in the body, consistent with clinical data

Ingested histamine and serotonin interact to alter Anopheles stephensi feeding and flight behavior and infection with Plasmodium parasites

Blood levels of histamine and serotonin (5-HT) are altered in human malaria, and, at these levels, we have shown they have broad, independent effects on Anopheles stephensi following ingestion by this invasive mosquito. Given that histamine and 5-HT are ingested together under natural conditions and that histaminergic and serotonergic signaling are networked in other organisms, we examined effects of combinations of these biogenic amines provisioned to A. stephensi at healthy human levels (high 5-HT, low histamine) or levels associated with severe malaria (low 5-HT, high histamine). Treatments were delivered in water (priming) before feeding A. stephensi on Plasmodium yoelii-infected mice or via artificial blood meal. Relative to effects of histamine and 5-HT alone, effects of biogenic amine combinations were complex. Biogenic amine treatments had the greatest impact on the first oviposition cycle, with high histamine moderating low 5-HT effects in combination. In contrast, clutch sizes were similar across combination and individual treatments. While high histamine alone increased uninfected A. stephensi weekly lifetime blood feeding, neither combination altered this tendency relative to controls. The tendency to re-feed 2 weeks after the first blood meal was altered by combination treatments, but this depended on mode of delivery. For blood delivery, malaria-associated treatments yielded higher percentages of fed females relative to healthy-associated treatments, but the converse was true for priming. Female mosquitoes treated with the malaria-associated combination exhibited enhanced flight behavior and object inspection relative to controls and healthy combination treatment. Mosquitoes primed with the malaria-associated combination exhibited higher mean oocysts and sporozoite infection prevalence relative to the healthy combination, with high histamine having a dominant effect on these patterns. Compared with uninfected A. stephensi, the tendency of infected mosquitoes to take a second blood meal revealed an interaction of biogenic amines with infection. We used a mathematical model to project the impacts of different levels of biogenic amines and associated changes on outbreaks in human populations. While not all outbreak parameters were impacted the same, the sum of effects suggests that histamine and 5-HT alter the likelihood of transmission by mosquitoes that feed on hosts with symptomatic malaria versus a healthy host