Investor Sentiment and Corporate Finance: Micro and Macro

We document that net equity issuance is considerably more sensitive to aggregate stock returns and Q's than to firm-level stock returns and Q's. Very similar patterns also emerge when we look at merger activity. In light of earlier work (Campbell 1991, Vuolteenaho 2002) which finds that aggregate stock returns are less informative about future cashflows than are firm-level stock returns--and thus, potentially more strongly influenced by investor sentiment--these results suggest that both equity issuance and mergers are to a significant extent driven by market-timing considerations, as opposed to by purely fundamental factors.

Aggregate Short Interest and Market Valuations

We examine some basic data on the evolution of aggregate short interest, both during the dot-com era, and at other times in history. Total short interest moves in a countercyclical fashion. For example, short interest in NASDAQ stocks actually declines as the NASDAQ index approaches its peak. Moreover, this decline does not seem to reflect a substitution away from outright short-selling and towards put options, as the ratio of put-to-call volume displays the same countercyclical tendency. The evidence suggests that: i) arbitrageurs are reluctant to bet against aggregate mispricings; and ii) short-selling does not play a particularly helpful role in stabilizing the overall stock market.

Aggregate Short Interest and Market Valuations

We examine some basic data on the evolution of aggregate short interest, both during the dot-com era, and at other times in history. Total short interest moves in a countercyclical fashion. For example, short interest in NASDAQ stocks actually declines as the NASDAQ index approaches its peak. Moreover, this decline does not seem to reflect a substitution away from outright short-selling and towards put options, as the ratio of put-to-call volume displays the same countercyclical tendency. The evidence suggests that: i) arbitrageurs are reluctant to bet against aggregate mispricings; and ii) short-selling does not play a particularly helpful role in stabilizing the overall stock market.

Universal thermodynamic bounds on nonequilibrium response with biochemical applications

Diverse physical systems are characterized by their response to small perturbations. Near thermodynamic equilibrium, the fluctuation-dissipation theorem provides a powerful theoretical and experimental tool to determine the nature of response by observing spontaneous equilibrium fluctuations. In this spirit, we derive here a collection of equalities and inequalities valid arbitrarily far from equilibrium that constrain the response of nonequilibrium steady states in terms of the strength of nonequilibrium driving. Our work opens new avenues for characterizing nonequilibrium response. As illustrations, we show how our results rationalize the energetic requirements of two common biochemical motifs.Comment: 21 pages, 15 figure

Investigation of Network Architecture Development and Properties in Thermoset Matrices

Matrices employed in composite materials directly influence overall composite properties. In all thermoset materials, molecular level interactions and transformations during cure result in heterogeneous architecture. Variability in connectivity results from the often dramatic spatial and topological changes that occur during the crosslinking process. Compatibility (fillers, pigments, additives), temperature gradients and reactivity differences in the precursors only serve to increase the complexity of network formation. The objective of the research herein is to characterize and understand the relationships between cure conditions, conversion, connectivity, network architecture and properties in glassy thermosetting matrix resins. In this research, epoxy and vinyl ester resins (VERs) were characterized to identify controlling factors in the development of network architecture and understand how they affect the mechanical properties. VERs cure under low temperature conditions (\u3c 50 °C) via redox catalysis resulted in vitrification limiting conversion with resulting glass transition temperatures (Tgs) approximately 15 °C above the cure temperature. Subsequently, in situ ligand exchange altered the activity of the metal catalyst, and the reduced connectivity of the resulting networks translated into a 30% reduction in stiffness above Tg. Network architecture was further manipulated by changing the chemical composition of the backbone. Incorporation of POSS nanoparticles into VERs resulted in changes to initial network development, with higher levels of conversion prior to vitrification. 3,3’-DDS was cured with a variety of epoxies and examined for conversion, connectivity and mechanical properties. Comparison with 4,4’-DDS revealed significant correlations between molecular level structure and properties. The research established relationships between cure conditions, conversion, connectivity and properties in glassy thermosetting matrix resins. Specifically, the importance of early stages of network development was correlated to ultimate properties. Network architecture is sensitive to the mobility, concentration and rate of matrix development. These parameters can be altered through changes in temperature or initiating system. Control of the network architecture and ultimately mechanical properties can be achieved by tailoring reaction rate and mobility appropriately. Rapid conversion with inadequate mobility increases heterogeneity and reduces mechanical viability through poor connectivity. Conversion must occur at rates comparable to mobility to ensure high conversion and excellent connectivity to maximize mechanical properties

BREXIT and the Scottish Financial Services Sector

This paper explores the potential impact of BREXIT on the Scottish financial services sector. For the purpose of this discussion the assumption is that Scotland remains part of the UK. At present there is clarity neither as to what BREXIT will mean for the UK nor how this will play out for the UK financial sector. There is also a good deal of uncertainty regarding Scotland’s future constitutional arrangements with regard to relationships both with the UK and with the EU. Given the extent of these uncertainties, we decided to omit reference to the possibility of a second independence referendum and what that might mean for the sector. That could be another topic for another day. The paper is structured as follows. First we summarise the key issues related to the financial sector for the UK as a whole. Next we turn to the Scottish sector, first providing an overview of the sector and then considering the critical issues so far as each major component of the Scottish sector is concerned. Finally we summarise our conclusions. We note possible ’glimmers of hope’ for the sector, related to: 1. A possible ‘soft’ BREXIT 2. A special deal for UK financial services on skilled non-UK labour or, failing that 3. An analogous special deal for Scotlan

Self-Organized Resonance during Search of a Diverse Chemical Space

Recent studies of active matter have stimulated interest in the driven self-assembly of complex structures. Phenomenological modeling of particular examples has yielded insight, but general thermodynamic principles unifying the rich diversity of behaviors observed have been elusive. Here, we study the stochastic search of a toy chemical space by a collection of reacting Brownian particles subject to periodic forcing. We observe the emergence of an adaptive resonance in the system matched to the drive frequency, and show that the increased work absorption by these resonant structures is key to their stabilization. Our findings are consistent with a recently proposed thermodynamic mechanism for far-from-equilibrium self-organization

Fintech : Hype or Reality?

Fintech is a term given to financial technology in the digital age. At its core sit the twin concepts of blockchain and distributed ledgers. These technology solutions bring with them the promise of faster, cheaper, more secure and transparent financial transactions over the internet. In a more widely used context, Fintech is conceived and even defined as enabling disruptive innovation in financial markets and financial services. This briefing explains what Fintech is and investigates whether the promise of Fintech is hype or reality. It also highlights the resultant policy implications that are generated by the phenomena and what issues lawmakers should be cognisant of

Thermodynamic bounds on ultrasensitivity in covalent switching

Switch-like motifs are among the basic building blocks of biochemical networks. A common motif that can serve as an ultrasensitive switch consists of two enzymes acting antagonistically on a substrate, one making and the other removing a covalent modification. To work as a switch, such covalent modification cycles must be held out of thermodynamic equilibrium by continuous expenditure of energy. Here, we exploit the linear framework for timescale separation to establish tight bounds on the performance of any covalent-modification switch, in terms of the chemical potential difference driving the cycle. The bounds apply to arbitrary enzyme mechanisms, not just Michaelis-Menten, with arbitrary rate constants, and thereby reflect fundamental physical constraints on covalent switching.Comment: 29 pages, 6 figure