The SEC's "Fair Value" Standard for Mutual Fund Investment in Restricted Shares and Other Illiquid Securities

Mutual funds generally do not invest in venture capital, private equity, or restricted shares of public companies. Consequently, individuals who desire to invest in such securities are unable to do so through diversified mutual funds. In this paper, we identify public policies and regulations that discourage mutual fund involvement in the markets for illiquid equity. We also present evidence that changes in SEC policy caused mutual funds to retreat from investing in illiquid equity. Under the Investment Company Act of l940, the SEC requires mutual fund boards to determine and report the “fair value” of their investments in restricted shares and other illiquid equity claims. The SEC interprets fair value to mean value in current sale. Under the Investment Company Act, fair value reporting is a “certification” standard that presumes investors rely on the value representations of the fund board and its auditors. We consider whether alternatives to certification and current sale valuation could reduce barriers to mutual fund investment, without exposing individuals who invest in mutual funds to excessive risk or potential manipulation. To assess the effects of public policies, we analyze recent efforts of the SEC to apply the fair-value standard and examine court decisions arising from subsequent litigation. We also analyze the financial economics literature concerning discounts for illiquidity and the implications for valuing restricted shares. The paper concludes with a discussion of policy alternatives, including allowing funds to rely more on “transparency” in lieu of certification and allowing funds more latitude in determining and reporting the values of their illiquid securities.

The association between socioeconomic status and adult fast-food consumption in the U.S.

Health follows a socioeconomic status (SES) gradient in developed countries, with disease prevalence falling as SES rises. This pattern is partially attributed to differences in nutritional intake, with the poor eating the least healthy diets. This paper examines whether there is an SES gradient in one specific aspect of nutrition: fast-food consumption. Fast food is generally high in calories and low in nutrients. We use data from the 2008, 2010, and 2012 waves of the National Longitudinal Survey of Youth (NLSY79) to test whether adult fast-food consumption in the United States falls as monetary resources rise (n = 8136). This research uses more recent data than previous fast-food studies and includes a comprehensive measure of wealth in addition to income to measure SES. We find little evidence of a gradient in adult fast-food consumption with respect to wealth. While adults in the highest quintile are 54.5% less likely to report fast-food consumption than those in the lowest quintile, adults in the second and third quintiles are no less likely to report fast food–food intake than the poorest. Contrary to popular belief, fast-food consumption rises as income rises from the lowest to middle quintiles. The variation in adult fast-food consumption across income and wealth groups is, however, small. Those in the wealthiest quintile ate about one less fast-food meal on average than those in the lowest quintile. Other factors play a bigger role in explaining fast-food consumption: reading ingredient labels is negatively associated while soda consumption and hours of work are positively associated with fast-food consumption.Accepted manuscrip

“Do I look fat?” Self-perceived body weight and labor market outcomes

Research reporting that greater body weight is associated with lower wages and employment, particularly among women, focuses on how employers perceive workers. In contrast, we examine whether workers’ own perceptions of body weight influence labor market outcomes. Numerous studies find that misperception of body weight influences health behaviors and health, both mental and physical. For example, anorexia nervosa involves the over-perception of weight and raises the risk of cardiovascular disease. Do the health consequences of inaccurate self-perceived weight carry through to the labor market? We use the National Longitudinal Survey of Youth 1997 (NLSY97) to investigate patterns in weight misperception and three labor market outcomes. We find little evidence that either over-perception or under-perception of weight is associated with wages, weeks worked, or the number of jobs held for women and men.Accepted manuscrip

Does asthma impair wealth accumulation or does wealth protect against asthma?

OBJECTIVE: We investigate the association between adult asthma and wealth, testing whether the disease impairs wealth accumulation (social selection model) or if wealth protects against asthma (social causation model). METHODS: We use the National Longitudinal Survey of Youth (n = 7,644) and linear and logistic regressions to estimate the association between wealth and asthma. Changes in relative wealth following an asthma diagnosis and asthma status by increases in wealth through inheritance provide evidence on the causal direction. RESULTS: Asthma, particularly severe asthma, is associated with lower wealth. Wealth ranking does not change after a diagnosis of asthma, but inheriting a substantial sum is associated with a lower risk of severe asthma. CONCLUSION: Wealth appears to protect against severe asthma, supporting the social causation model of disease.Accepted manuscrip

New Venture Opportunity Cost of Capital and Financial Contracting

Investments in new ventures involve financial contracts between an entrepreneur and outside investors. Investors, such as venture capital firms, represent well-diversified investors. In contrast, the entrepreneur must commit a substantial fraction of human and financial capital to the venture. Consequently, the entrepreneur's required rate of return depends on total risk, in the context of the entrepreneur’s other assets. In this paper, we use the Capital Asset Pricing Model as an approximation of the asset pricing model used by well-diversified investors. Accordingly, the entrepreneur faces the risk-return tradeoff of the CAPM as the opportunity cost of holding an under-diversified portfolio that includes investment in the venture. We model the required rate of return of the entrepreneur, assuming investment in the venture is one of two assets in the portfolio and that the other is the market portfolio. We explore opportunities for value creation when the parties to a financial contract have different costs of bearing risk. We also present empirical data on factors relevant to new venture cost of capital estimation.

Adherence to prophylaxis in adolescents and young adults with severe haemophilia, A qualitative study with patients

© 2018 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group.Abstract Introduction: Reported levels of adherence to prophylaxis among young people with haemophilia (YPH) vary widely and are predominately based on estimations made by healthcare professionals and parents. Reasons for (non)adherence among YPH in particular have not been evidenced. Aim: to examine experiences in relation to prophylaxis with YPH themselves, and barriers and facilitators to their adherence. Methods: 11 Participants were recruited in five haemophilia centres across England and Wales. All patients who met the inclusion criteria (aged 12-25, diagnosed with haemophilia, on prophylaxis) were approached during a routine check-up appointment, and all participants who agreed to take part were interviewed. Interviews were audio recorded, transcribed and analysed using Interpretative Phenomenological Analysis. Results: Self-reported adherence to prophylaxis was good. Few participants admitted to intentionally skipping injections although they reported sometimes forgetting. However, due to the increasingly personalised and flexible approach to prophylaxis, adherence is not straightforward to define. Barriers to adherence included a busy lifestyle, dislike of the intravenous injection, venous access issues, anxiety or stress and being out of one’s normal routine. Support was an important facilitator to adherence, including support from health professionals at the haemophilia centre as well as friends. Parents appear to be very involved with their sons’ haemophilia management, even after their sons leave home. Conclusion: What this study adds is that the increasingly flexible and personalized approach to managing prophylaxis in haemophilia may sometimes lead to confusion around treatment frequency and dosing. This may lead to accidental non-adherence, which is distinct from both skipping and forgetting. Advice from haemophilia teams may not always be consistent, and is likely to be interpreted differently by different individuals. Some additional training and education of patients and their families to increase their knowledge and skills around prophylaxis may reduce this confusion and therefore is likely to improve adherence further.Peer reviewedFinal Published versio

A simple model for the kinetics of packaging of DNA in to a capsid against an external force

We propose a simple model for the kinetics of packaging of viral DNA in to a capsid against an external force trying to prevent it. The model leads to a Butler-Volmer type dependence of the rate of packaging on the pulling force F

Variation in Lepidopteran Occurrence in Hemlock-Dominated and Deciduous-Dominated Forests of Central Appalachia

Eastern hemlock, (Tsuga canadensis Carrière, Pinaceae), is threatened with extirpation by an exotic invasive herbivore, the hemlock woolly adelgid, (Adelges tsugae Annand, Homoptera: Adelgidae). Given this threat, a broader and more detailed knowledge of the community associated with eastern hem- lock is merited. As Lepidoptera are important members of forest communities, this study was initiated to determine the relative occurrence of Lepidoptera in hemlock-dominated and deciduous-dominated habitats by evaluating abundance, species richness, temporal variation, and composition overlap. Lepidoptera were surveyed using blacklight traps from May – August 2010 at two collection sites in the Appalachian region of eastern Kentucky. The first collection site was within a forest stand dominated by mixed deciduous species, the second site possessed an overstory of eastern hemlock. Lepidoptera ≥ 20 mm in wingspan were identified and enumerated, yielding a total of 1,020 individuals of ≥ 137 species and 18 families. The total number of Lepidoptera captured in May and June was fewer than in July and August (P ≤ 0.05). The composition of the assemblage varied between collection sites as well as seasonally; 85 species were identified at the deciduous site and 107 species were identified at the hemlock site. While 27 species were recorded only at the deciduous site, 49 species were unique to the hemlock site. Of those unique to the hemlock site, five species were either detritivores or conifer specialists. These data demonstrate the importance of both deciduous and hemlock-dominated forest habitats for many species of Lepidoptera in Appalachia. Our study forms a foundation for understanding species richness patterns of Lepidoptera in hemlock forests in North America and is a useful baseline for comparisons of richness and diversity post invasion by the hemlock woolly adelgid

High-power ac/dc variable load simulator

Design of medium-power dynamic electrical load simulator has been extended to permit simulation of ac as well as dc loads and to provide for operation at higher power levels. Simulator is internally protected against reverse voltage, overvoltage, overcurrent, and overload conditions

Propagation effects on spread-spectrum mobile satellite systems

In contrast to the situation at L-band, wide bandwidths of 500 MHz or more have been allocated for mobile satellite service at frequencies between 20 and 50 GHz. These broad bandwidths are well suited for the use of spread-spectrum. Certain system considerations about the use of such high frequencies for mobile satellite service are mentioned first, and attention is then given to propagation effects on high-frequency broad-band systems. Attenuation due to rain is a constant at 20 to 50 MHz, but would not be a serious problem if outages occurring for one to three percent of the time, depending on location, are considered to be acceptable. Clear air absorption becomes a significant factor above 40 GHz, but should not exceed 2 dB at a 10 degree elevation angle and frequencies below 40 GHz. Spread-spectrum provides a form of frequency diversity that helps to minimize the effects of multipath