Who Underreacts to Cash-Flow News? Evidence from Trading between Individuals and Institutions

A large body of literature suggests that firm-level stock prices 'underreact' to news about future cash flows, i.e., shocks to a firm's expected cash flows are positively correlated with shocks to expected returns on its stock. We estimate a vector autoregession to examine the joint behavior of returns, cash-flow news, and trading between individuals and institutions. Our main finding is that institutions buy shares from individuals in response to good cash-flow news, thus exploiting the underreaction phenomenon. Institutions are not simply following price momentum strategies: When price goes up in the absence of positive cash-flow news, institutions sell shares to individuals. Although institutions are trading in the 'right' direction, institutions as a group outperform individuals by only 1.44 percent per annum before transaction and other costs, because they are extremely conservative in deviating from the value-weight market index.

Genetic and Immune Predictors for Hypersensitivity Syndrome to Antiepileptic Drugs

Hypersensitivity syndrome reactions (HSR) to antiepileptic drugs (AED) are associated with severe clinical cutaneous adverse reactions (SCAR).Our aims are: to assess HSRs to AEDs using the in vitro lymphocyte toxicity assay (LTA) in patients who manifested HSRs clinically, to correlate LTA results with the clinical syndrome, to correlate LTA results with the human leukocyte antigen (HLA) allele B*1502 (HLA-B*1502) positivity in a Han Chinese-Canadian population, and to determine the cytokine network in this population. HSR patients developed fever and cutaneous eruptions in the presence or absence of organ involvement within 8 weeks of exposure to carbamazepine (CBZ), phenytoin (PHY) or lamotrigine (LTG). Control patients received AEDs without presenting HSR. We investigated 10 CBZ-HSR (4 presented with Stevens-Johnson syndrome (SJS)), 24 CBZ-controls, 10 PHY-HSR (4 presented with drug-induced liver injury (DILI)), 24 PHY-controls, 6 LTG-HSR (1 SJS and 1 DILI) and 24 LTG-controls. There were 30 Han Chinese individuals (14 HSR patients and 16 controls) in our cohort. LTA toxicity greater than 12.5%±2.5% was considered positive. Differences among groups were determined by analysis of variance. In addition, we measured cytokine secretion in the patient sera between 1 month and 3 years after the event. All Han Chinese individuals and 30% of Caucasians were genotyped for HLA-B*1502.A perfect correlation (r=0.92) was observed between positive LTA and clinical diagnosis of DILI and SJS/toxic epidermal necrolysis (TEN). HLA-B*1502 positivity in Han Chinese is a predictor of CBZ-HSR and PHY-HSR. HLA-B*1502-negative Han Chinese receiving only CBZ or a combination of CBZ-PHY tolerated the drug(s) clinically, presenting negative CBZ-LTA and PHY-LTA. However, 3 patients presenting negative CBZ-LTA and PHY-LTA, as well as negative HLA-B*1502, showed positive LTG-LTA (38%, 28% and 25%, respectively), implying that they should not be prescribed LTG. Three patients had LTA positive to both PHY and CBZ, and 3 others had LTA positive to both PHY and LTG. Clinically, all six patients presented HSR to both drugs that they tested positive to (cross-reactivity). Patients were grouped based on the clinical presentation of their symptoms as only rash and fever or a triad that characterizes "true" HSR (rash, fever and DILI or SJS/TEN). Levels of pro-inflammatory cytokines were significantly higher in patient sera compared to control sera. More specifically, the highest levels of tumor necrosis factor (TNF)-α was measured in patients presenting "true" HSR, as were the apoptotic markers Fas, caspase 8 activity and M30. We concluded that LTA is sensitive for DILI and SJS/TEN regardless of drug or ethnicity. HSR prediction will prevent AED-induced morbidity. In Han Chinese, HLA-B*1502 positivity is a predictor for CBZ-HSR and PHY-HSR. Its negativity does not predict a negative LTG-HSR. There is cross-reactivity between AEDs. Additionally, T-cell cytokines and chemokines control the pathogenesis of SJS/TEN and DILI, contributing to apoptotic processes in the liver and in the skin

The Porter Hypothesis at 20: can Environmental Regulation Enhance Innovation and Competitiveness?

Twenty years ago, Harvard Business School economist and strategy professor Michael Porter stood conventional wisdom about the impact of environmental regulation on business on its head by declaring that well designed regulation could actually enhance competitiveness. The traditional view of environmental regulation held by virtually all economists until that time was that requiring firms to reduce an externality like pollution necessarily restricted their options and thus by definition reduced their profits. After all, if there are profitable opportunities to reduce pollution, profit maximizing firms would already be taking advantage of those opportunities. Over the past 20 years, much has been written about what has since become known simply as the Porter Hypothesis (“PH”). Yet, even today, there is conflicting evidence, alternative theories that might explain the PH, and oftentimes a misunderstanding of what the PH does and does not say. This paper provides an overview of the key theoretical and empirical insights on the PH to date, draw policy implications from these insights, and sketches out major research themes going forward.Porter Hypothesis, environmental policy, innovation, performance.

Individual Insurance: Health Insurers Try to Tap Potential Market Growth

Examines the challenges the current individual health insurance market poses for insurers and consumers, the market's growth potential, market and regulatory conditions across states, and trends in marketing strategies. Considers policy implications

Doubly heavy hadrons and the domain of validity of doubly heavy diquark--anti-quark symmetry

In the limit of heavy quark masses going to infinity, a symmetry is known to emerge in QCD relating properties of hadrons with two heavy quarks to analogous states with one heavy anti-quark. A key question is whether the charm mass is heavy enough so that this symmetry is manifest in at least an approximate manner. The issue is crucial in attempting to understand the recent reports by the SELEX Collaboration of doubly charmed baryons. We argue on very general grounds that the charm quark mass is substantially too light for the symmetry to emerge automatically via colour coulombic interactions. However, the symmetry could emerge approximately depending on the dynamical details.Comment: 9 page

Accrual-Based and Real Earnings Management Activities Around Seasoned Equity Offerings

We examine earnings management behavior around SEOs, focusing on both real activities and accrual-based manipulation, and how this behavior varies over time and cross-sectionally. Although research has addressed the issues of earnings management around SEOs and earnings management via real activities manipulation, ours is the first paper to put these two issues together. We make three contributions to the literature. First, we document that firms use real, as well as accrual-based, earnings management tools around SEOs. Second, consistent with the expectation that the Sarbanes-Oxley Act (SOX) has made accrual-based earnings management more costly, we find that firms have substituted from accrual to real earnings management after SOX. Finally, we show how the tendency for firms to tradeoff real versus accrual-based earnings management activities around SEOs varies cross-sectionally. We find that firms’ choices vary predictably as a function of the firm’s ability to use accrual management and the costs of doing so. Our model is a first step in examining how firms tradeoff between real versus accrual methods of earnings management

On the Existence of Heavy Pentaquarks: The large Nc and Heavy Quark Limits and Beyond

We present a very general argument that the analogue of a heavy pentaquark (a state with the quantum numbers of a baryon combined with an additional light quark and a heavy antiquark) must exist as a particle stable under strong interactions in the combined heavy quark and large Nc limits of QCD. Moreover, in the combined limit these heavy pentaquark states fill multiplets of SU(4)xO(8)xSU(2). We explore the question of whether corrections in the combined 1/Nc and 1/mQ expansions are sufficiently small to maintain this qualitative result. Since no model-independent way is known to answer this question, we use a class of ``realistic'' hadronic models in which a pentaquark can be formed via nucleon-heavy meson binding through a pion-exchange potential. These models have the virtue that they necessarily yield the correct behavior in the combined limit, and the long-distance parts of the interactions are model independent. If the long-distance attraction in these models were to predict bound states in a robust way (i.e., largely insensitive to the details of the short-range interaction), then one could safely conclude that heavy pentaquarks do exist. However, in practice the binding does depend very strongly on the details of the short-distance physics, suggesting that the real world is not sufficiently near the combined large Nc, mQ limit to use it as a reliable guide. Whether stable heavy pentaquarks exist remains an open question.Comment: 11 pages; references adde

Temperature Dependence of the Band Gap of Semiconducting Carbon Nanotubes

The temperature dependence of the band gap of semiconducting single-wall carbon nanotubes (SWNTs) is calculated by direct evaluation of electron-phonon couplings within a ``frozen-phonon'' scheme. An interesting diameter and chirality dependence of $E_g(T)$ is obtained, including non-monotonic behavior for certain tubes and distinct ``family'' behavior. These results are traced to a strong and complex coupling between band-edge states and the lowest-energy optical phonon modes in SWNTs. The $E_g(T)$ curves are modeled by an analytic function with diameter and chirality dependent parameters; these provide a valuable guide for systematic estimates of $E_g(T)$ for any given SWNT. Magnitudes of the temperature shifts at 300 K are smaller than 12 meV and should not affect $(n,m)$ assignments based on optical measurements.Comment: To appear in Phys. Rev. Let