Executive compensation : a new look.

Thesis. 1978. M.S.--Massachusetts Institute of Technology. Alfred P. Sloan School of Management.MICROFICHE COPY AVAILABLE IN ARCHIVES AND DEWEY.Includes bibliographical references.M.S

Systemic Risk and the Refinancing Ratchet Effect

The confluence of three trends in the U.S. residential housing market-rising home prices, declining interest rates, and near-frictionless refinancing opportunities-led to vastly increased systemic risk in the financial system. Individually, each of these trends is benign, but when they occur simultaneously, as they did over the past decade, they impose an unintentional synchronization of homeowner leverage. This synchronization, coupled with the indivisibility of residential real estate that prevents homeowners from deleveraging when property values decline and homeowner equity deteriorates, conspire to create a "ratchet" effect in which homeowner leverage is maintained during good times without the ability to decrease leverage during bad times. If refinancing-facilitated homeowner-equity extraction is sufficiently widespread-as it was during the years leading up to the peak of the U.S. residential real-estate market-the inadvertent coordination of leverage during a market rise implies higher correlation of defaults during a market drop. To measure the systemic impact of this ratchet effect, we simulate the U.S. housing market with and without equity extractions, and estimate the losses absorbed by mortgage lenders by valuing the embedded put-option in non-recourse mortgages. Our simulations generate loss estimates of $1.5 trillion from June 2006 to December 2008 under historical market conditions, compared to simulated losses of$280 billion in the absence of equity extractions.Risk; Financial Crisis; Household Finance; Real Estate; Subprime

Systemic risk and the refinancing ratchet effect

The combination of rising home prices, declining interest rates, and near-frictionless refinancing opportunities can create unintentional synchronization of homeowner leverage, leading to a “ratchet” effect on leverage because homes are indivisible and owner-occupants cannot raise equity to reduce leverage when home prices fall. Our simulation of the U.S. housing market yields potential losses of $1.7 trillion from June 2006 to December 2008 with cash-out refinancing vs. only$330 billion in the absence of cash-out refinancing. The refinancing ratchet effect is a new type of systemic risk in the financial system and does not rely on any dysfunctional behaviors

Systemic Risk and the Refinancing Ratchet Effect

The confluence of three trends in the U.S. residential housing market - rising home prices, declining interest rates, and near-frictionless refinancing opportunities - led to vastly increased systemic risk in the financial system. Individually, each of these trends is benign, but when they occur simultaneously, as they did over the past decade, they impose an unintentional synchronization of homeowner leverage. This synchronization, coupled with the indivisibility of residential real estate that prevents homeowners from deleveraging when property values decline and homeowner equity deteriorates, conspire to create a “ratchet” effect in which homeowner leverage is maintained or increased during good times without the ability to decrease leverage during bad times. If refinancing-facilitated homeowner-equity extraction is sufficiently widespread - as it was during the years leading up to the peak of the U.S. residential real-estate market - the inadvertent coordination of leverage during a market rise implies higher correlation of defaults during a market drop. To measure the systemic impact of this ratchet effect, we simulate the U.S. housing market with and without equity extractions, and estimate the losses absorbed by mortgage lenders by valuing the embedded put-option in non-recourse mortgages. Our simulations generate loss estimates of $1.5 trillion from June 2006 to December 2008 under historical market conditions, compared to simulated losses of$280 billion in the absence of equity extractions.Research support from the MIT Laboratory for Financial Engineering is gratefully acknowledged

An exploration into the value and use of English language pop songs for vocabulary acquisition in the Thai lower intermediate level EFL classroom: a guide for materials development.

This study explored the attitudes and actions of 50 Thai teen and adult lower intermediate level English as a Foreign Language (EFL) students at a private language school in Bangkok towards using English language pop songs for vocabulary acquisition. The purpose of this was to better understand the educational value of the media in question, with the intention of developing a guide for materials design that could support teachers in the creation of their own related classroom activities and worksheets. This was achieved by using a questionnaire and follow-up focus groups that asked the students about general attitudes towards English language pop songs and how they might use them for learning new words. The questionnaire itself was designed with reference to an earlier study by Schmitt (1997), which had helped to inform the development of his taxonomy of vocabulary learning strategies (Ibid.). The materials design aspect of the present study was discussed with reference to a principled framework for pop song activity development that was adapted from the work of Tomlinson (2010) and Jolly & Bolitho (2011). The results section of this paper showed that the participants held an overall positive view of English language pop songs, and the media motivated them to learn encountered new words, including in a classroom context. The questionnaire also revealed some similarities between the vocabulary learning strategy preferences of those surveyed in this research and the Japanese students that took part in Schmitt’s (1997) investigation. The conclusion of this paper suggests that the present study offers a starting point for teachers in a similar educational context to conduct their own research on the topic. It also provides guidance for the development of classroom materials based on pop songs that encourage vocabulary learning, and ultimately, learner autonomy

Systemic Risk and the Refinancing Ratchet Effect

The confluence of three trends in the U.S. residential housing market---rising home prices, declining interest rates, and near-frictionless refinancing opportunities---led to vastly increased systemic risk in the financial system. Individually, each of these trends is benign, but when they occur simultaneously, as they did over the past decade, they impose an unintentional synchronization of homeowner leverage. This synchronization, coupled with the indivisibility of residential real estate that prevents homeowners from deleveraging when property values decline and homeowner equity deteriorates, conspire to create a "ratchet" effect in which homeowner leverage is maintained or increased during good times without the ability to decrease leverage during bad times. If refinancing-facilitated homeowner-equity extraction is sufficiently widespread---as it was during the years leading up to the peak of the U.S. residential real-estate market---the inadvertent coordination of leverage during a market rise implies higher correlation of defaults during a market drop. To measure the systemic impact of this ratchet effect, we simulate the U.S. housing market with and without equity extractions, and estimate the losses absorbed by mortgage lenders by valuing the embedded put-option in non-recourse mortgages. Our simulations generate loss estimates of $1.5 trillion from June 2006 to December 2008 under historical market conditions, compared to simulated losses of$280 billion in the absence of equity extractions.

Current use was established and Cochrane guidance on selection of social theories for systematic reviews of complex interventions was developed

Objective: To identify examples of how social theories are used in systematic reviews of complex interventions to inform production of Cochrane guidance. Study Design and Setting: Secondary analysis of published/unpublished examples of theories of social phenomena for use in reviews of complex interventions identified through scoping searches, engagement with key authors and methodologists supplemented by snowball- ing and reference searching. Theories were classified (low-level, mid-range, grand). Results: Over 100 theories were identified with evidence of proliferation over the last 5 years. New low-level theories (tools, taxon- omies, etc) have been developed for classifying and reporting complex interventions. Numerous mid-range theories are used; one example demonstrated how control theory had changed the review’s findings. Review-specific logic models are increasingly used, but these can be challenging to develop. New low-level and mid-range psychological theories of behavior change are evolving. No reviews using grand the- ory (e.g., feminist theory) were identified. We produced a searchable Wiki, Mendeley Inventory, and Cochrane guidance. Conclusions: Use of low-level theory is common and evolving; incorporation of mid-range theory is still the exception rather than the norm. Methodological work is needed to evaluate the contribution of theory. Choice of theory reflects personal preference; application of theory is a skilled endeavor

Default Risk and Equity Returns: A Comparison of the Bank-Based German and the U.S. Financial System

In this paper, we address the question whether the impact of default risk on equity returns depends on the financial system firms operate in. Using an implementation of Merton's option-pricing model for the value of equity to estimate firms' default risk, we construct a factor that measures the excess return of firms with low default risk over firms with high default risk. We then compare results from asset pricing tests for the German and the U.S. stock markets. Since Germany is the prime example of a bank-based financial system, where debt is supposedly a major instrument of corporate governance, we expect that a systematic default risk effect on equity returns should be more pronounced for German rather than U.S. firms. Our evidence suggests that a higher firm default risk systematically leads to lower returns in both capital markets. This contradicts some previous results for the U.S. by Vassalou/Xing (2004), but we show that their default risk factor looses its explanatory power if one includes a default risk factor measured as a factor mimicking portfolio. It further turns out that the composition of corporate debt affects equity returns in Germany. Firms' default risk sensitivities are attenuated the more a firm depends on bank debt financing