REVISE AND RESUBMIT Corporate Governance and Investor Rationality: Evidence from the 1990s' Technology Bubble

Several studies document irrational investor behavior related to Internet firms during the 1990s' technology bubble. This paper investigates whether investors display the same behavior towards nonInternet firms that adopt Internet technology in the same time period. I find a positive association between short-and long-term metrics of firm performance related to the launching of commercial web sites by non-Internet companies. However, the extent to which this positive association exists is largely driven by the quality of the firms' corporate governance. These results indicate that investors were not universally irrational during the 1990s technology bubble. In addition, my findings also highlight the relevance of corporate governance in mitigating information asymmetry when technological innovations with an uncertain impact on firm value affect the economy. Why did the launching of a commercial web site generate opposite market responses for two retailers in the same industry? Differences between the two firms, reported in Another difference of potential importance between ShopKo and Cost Plus is the level of protection these firms grant their shareholders as measured by the Gompers, Ishii, and Metrick 2 In this paper, I use a broad sample of firms to study whether, based on the way companies are governed, investors react differently to firms' adoptions of new technologies. I also study whether investors' reactions to the adoption of new technologies are rational. The 1990s technology bubble provides an excellent setting to study these research questions. This period witnessed the emergence of the Internet as new commercial medium. The efficacy of this new technology was the source of considerable uncertainty. Several finance studies, discussed in the next section, document irrational investor behavior around tech stocks during the 1990s technology bubble. 2 However, none of the existing studies document whether investors were universally irrational during the period. That is, whether the irrational behavior was limited to tech stocks or whether investors were able to moderate uncertainty and act rationally. To address my research questions, as in the case-study of ShopKo and Cost Plus, I examine the effect of launching a commercial web site during the 1990s on firm value in non-Internet companies. This choice is motivated by the notion that establishing a web site is a necessary --though not sufficient--condition for any firm in order to adopt and implement the new technology and perhaps conduct business on the Internet. 3 I recognize that results supporting irrational investor behavior might also be consistent with investors' short-term or myopic behavior, (Stein (1989)), and with the notion that stock prices fail to reflect future earnings 4 Both short-and long-term payoffs are necessary to test for rational investor behavior because, under efficient markets, one would only expect to observe meaningful short term stock revaluations for events that investors believe will have a lasting and positive effect on the firm's future cash flows and profitability. In addition, the study of short-and long-term performance metrics enables me to dispel concerns over myopic investor behavior. 2. For example, 3 My initial proxy for corporate governance is the G-index, which counts restrictions on shareholder rights. Therefore, a lower (higher) G-index is commonly interpreted to proxy for strong (weak) shareholder rights and stronger (weaker) governance quality. I am aware that the use of the Gindex as an appropriate proxy for corporate governance is also the subject of debate. In robustness tests, the G-index is replaced with alternative governance metrics which yield qualitatively similar results. Initial results show that, on average, investors receive the introduction of commercial web sites enthusiastically, but I also find that operating performance declines in the years following the launching. Taken together, these results suggest that investors were overly excited in their initial evaluation of the impact of web sites on firm value and profitability, and appear consistent with both irrational and myopic behavior by investors. However, further tests which incorporate corporate governance to the analysis, do not lend support to the either one of these conjectures and allow me to reject irrational and myopic behavior hypotheses. Subsequent analyses show that the extent to which investors react positively to web site introductions is largely driven by whether the firm's level of investor protection is strong. Moreover,

Enhanced Post-Stationary-Phase Survival of a Clinical Thymidine-Dependent Small-Colony Variant of Staphylococcus aureus Results from Lack of a Functional Tricarboxylic Acid Cycle

The mechanisms underlying the persistence of the Staphylococcus aureus small-colony variant (SCV) are not fully elucidated. In this study, clinical thymidine-dependent SCVs displayed altered expression of citB, clpC, and arcA genes, reduced acetate catabolization, and enhanced survival. These results implicate the importance of changes in tricarboxylic acid cycle and acetic acid metabolism in SCV survival and persistence

Bootstrapping MDE Development from ROS Manual Code - Pt.1: Metamodeling

Ten years after its first release, the Robot Operating System (ROS) is arguably the most popular software framework used to program robots. It achieved such status despite its shortcomings compared to alternatives similarly centered on manual programming and, perhaps surprisingly, to model-driven engineering (MDE) approaches. Based on our experience as users and developers of both ROS and MDE tools, we identified possible ways to leverage the accessibility of ROS and its large software ecosystem, while providing quality assurance measures through selected MDE techniques. After describing our vision on how to combine MDE and manually written code, we present the first technical contribution in this pursuit: a family of three metamodels to respectively model ROS nodes, communication interfaces, and systems composed from subsystems. Such metamodels can be used, through the accompanying Eclipse-based tooling made publicly available, to model ROS systems of arbitrary complexity and generate with correctness guarantees the software artifacts for their composition and deployment. Furthermore, they account for specifications on these aspects by the Object Management Group (OMG), in order to be amenable to hybrid systems coupling ROS and other frameworks. We also report on our experience with a large and complex corpus of ROS software used in a commercially deployed robot (the Care-O-bot 4), to explain the rationale of the presented work, including the shortcomings of standard ROS tools and of previous efforts on ROS modeling

Bootstrapping MDE Development from ROS Manual Code. Pt.2: Model Generation

In principle, Model-Driven Engineering (MDE) ad-dresses central aspects of robotics software development. Domain experts could leverage the expressiveness of models; implementation details over different hardware could be handled by automatic code generation. In practice, most evidence points to manual code development as the norm, despite several MDE efforts in robotics. Possible reasons for this disconnect are the wide ranges of applications and target platforms making all-encompassing MDE IDEs hard to develop and maintain, with developers reverting to writing code manually. Acknowledging this, and given the opportunity to leverage a large corpus of open-source software widely adopted by the robotics community, we pursue modeling as a complement, rather than an alternative, to manually written code. Our previous work introduced metamodels to describe components, their interactions, and their resulting composition, as inspired by, but not limited to, the de-facto standard Robot Operating System (ROS). In this paper we put such metamodels into use through two contributions. First, we automate the generation of models from manually written artifacts through extraction from source code and runtime system monitoring. Second, we make available an easy-to-use web infrastructure to perform the extraction, together with a growing database of models so generated. Our aim with this tooling, publicly available both as-a-service and as source code, is to lower the MDE barrier for practitioners and leverage models to 1) improve the understanding of manually written code; 2) perform correctness checks; and 3) systematize the definition and adoption of best practices through large-scale generation of models from existing code. A comprehensive example is provided as a walk-through for robotics software practitioners

Staphylococcus aureus RN6390 Replicates and Induces Apoptosis in a Pulmonary Epithelial Cell Line

Staphylococcus aureus frequently colonizes the airways of patients with compromised airway defenses (e.g., cystic fibrosis [CF] patients) for extended periods. Persistent and relapsing infections may be related to live S. aureus bacteria actively residing inside epithelial cells. In this study, we infected a respiratory epithelial cell line, which was derived from a CF patient, with S. aureus RN6390. Internalization of S. aureus was found to be time and dose dependent and could be blocked by cytochalasin D. Transmission electron microscopy revealed that internalized bacteria resided within endocytic vacuoles without any evidence of lysosomal fusion in a 24-h period. The results of internalization experiments and time-lapse fluorescence microscopy of epithelial cells infected with green fluorescent S. aureus indicate that, after an initial lag period of 7 to 9 h, intracellular bacteria began to replicate, with three to five divisions in a 24-h period, leading to apoptosis of infected cells. Induction of apoptosis required bacterial internalization and is associated with intracellular replication. The slow and gradual replication of S. aureus inside epithelial cells hints at the role of host factors or signals in bacterial growth and further suggests possible cross talk between host cells and S. aureus

Thymidine-Dependent Staphylococcus aureus Small-Colony Variants Are Associated with Extensive Alterations in Regulator and Virulence Gene Expression Profiles

Chronic airway infection is a hallmark of cystic fibrosis (CF) and many CF patients are infected persistently by Staphylococcus aureus. Thymidine-dependent trimethoprim-sulfamethoxazole (SXT)-resistant S. aureus small-colony variants (SCVs), often in combination with isogenic normal S. aureus phenotypes, are highly prevalent and persistent in airway secretions of CF patients due to long-term SXT therapy (B. Kahl, M. Herrmann, A. S. Everding, H. G. Koch, K. Becker, E. Harms, R. A. Proctor, and G. Peters, J. Infect. Dis. 177:1023-1029, 1998). In this report, SCVs were compared to normal S. aureus by transcription analysis of important regulator (sigB, sarA, and agr) and virulence (α-hemolysin, hla, and protein A, spa) genes. Growth curve analyses revealed longer doubling times and lower final densities for SCVs than for normal strains. sigB activity was measured by transcription analysis of the sigB target gene asp23. For nearly all SCVs, expression of all regulators was decreased as assessed by asp23 reverse transcription-PCR for sigB and Northern analysis for sarA and agr. These results are in agreement with diminished hla signals in all SCVs and increased spa signals in 5 of 10 SCVs compared to the isogenic normal S. aureus. Both supplementation of SCVs with thymidine and activation of the agr quorum-sensing system by the supernatant of the isogenic normal strain reversed transcription to almost normal levels. In conclusion, multiple changes in growth characteristics and in regulator and virulence gene expression render SCVs less virulent and allow them to survive in the hostile environment present in the airways of CF patients, thereby illustrating adaptation of the bacteria during long-term persistence

In Vivo Mutations of Thymidylate Synthase (Encoded by thyA) Are Responsible for Thymidine Dependency in Clinical Small-Colony Variants of Staphylococcus aureus▿

Trimethoprim-sulfamethoxazole (SXT)-resistant Staphylococcus aureus thymidine-dependent small-colony variants (TD-SCVs) are frequently isolated from the airways of cystic fibrosis (CF) patients, often in combination with isogenic normal strains if patients were treated with SXT for extended periods. As SXT inhibits the synthesis of tetrahydrofolic acid, which acts as a cofactor for thymidylate synthase (thyA), the survival of TD-SCVs depends exclusively on the availability of external thymidine. Since the underlying mechanism for thymidine dependency is unknown, we investigated if alterations in the thyA nucleotide sequences were responsible for this phenomenon. Sequence analysis of several clinical TD-SCVs and their isogenic normal strains with reference to previously published S. aureus thyA nucleotide sequences was performed. Three clinical TD-SCVs were complemented by transforming TD-SCVs with the vector pCX19 expressing ThyA from S. aureus 8325-4. Transcriptional analysis of metabolic and virulence genes and regulators (agr, hla, spa, citB, thyA, and nupC) was performed by quantitative reverse transcription-PCR. The previously published sequences of thyA and two normal clinical strains were highly conserved, while thyA of four normal strains and four SCVs had nonsynonymous point mutations. In 8/10 SCVs, deletions occurred, resulting in stop codons which were located in 4/10 SCVs close to or within the active site of the protein (dUMP binding). Complementation of TD-SCVs with thyA almost fully reversed the phenotype, growth characteristics, and transcription patterns. In conclusion, we demonstrated that mutations of the thyA gene were responsible for the phenotype of TD-SCVs. Complementation of TD-SCVs with thyA revealed that a functional ThyA protein is necessary and sufficient to change the SCV phenotype and behavior back to normal