Washington meets Wall Street: a closer examination of the presidential cycle puzzle

We show that average excess returns during the last two years of the presidential cycle are significantly higher than during the first two years: 9.8 percent over the period 1948 – 2008. This pattern in returns cannot be explained by business-cycle variables capturing time-varying risk premia, differences in risk levels, or by consumer and investor sentiment. In this paper, we formally test the presidential election cycle (PEC) hypothesis as the alternative explanation found in the literature for explaining the presidential cycle anomaly. PEC states that incumbent parties and presidents have an incentive to manipulate the economy (via budget expansions and taxes) to remain in power. We formulate eight empirically testable propositions relating to the fiscal, monetary, tax, unexpected inflation and political implications of the PEC hypothesis. We do not find statistically significant evidence confirming the PEC hypothesis as a plausible explanation for the presidential cycle effect. The existence of the presidential cycle effect in U.S. financial markets thus remains a puzzle that cannot be easily explained by politicians employing their economic influence to remain in power. JEL Classification: E32; G14; P16 Keywords: Political Economy, Market Efficiency, Anomalies, Calendar Effect

Cost analysis of robot-assisted versus open transthoracic esophagectomy for resectable esophageal cancer. Results of the ROBOT randomized clinical trial

Background: The previously published ROBOT trial demonstrated that robot assisted minimally invasive esophagectomy (RAMIE) is associated with a lower percentage of postoperative complications compared to open esophagectomy (OTE) for patients with esophageal cancer. The implications of these results on healthcare costs are important given the increased attention for cost-reduction in healthcare. Therefore the aim of this study was to report the hospital costs of RAMIE compared to OTE as treatment for esophageal cancer. Methods: The ROBOT trial randomized 112 patients with esophageal cancer between RAMIE and OTE through January 2012 and August 2016 in a single tertiary care academic centre in the Netherlands. The primary outcome of the current study was hospital costs from the day of esophagectomy until 90 days after discharge based on Time-Driven Activity-Based Costing methodology. Secondary outcomes included the incremental cost-effectiveness ratio per complication prevented and risk factors for increased hospital costs. Results: Of the 112 included patients, 109 patients underwent an esophagectomy, of whom 54 RAMIE and 55 OTE. The mean total hospital costs were comparable between RAMIE €40211 and OTE €39495 (mean difference €-715; bias-corrected and accelerated confidence interval € −14831 to 14783, p = 0.932). At a willingness-to-pay threshold of €20.000 to €25.000 (i.e. estimated additional costs to the hospital to treat patients with a complication) RAMIE had a probability 62%–70% of being cost effective to prevent postoperative complications. In multivariable regression analysis, major postoperative complications were the main driver of hospital costs after esophagectomy (€31839, p = 0.009). Conclusion: In this randomized trial RAMIE resulted in fewer postoperative complications compared to OTE without increasing total hospital costs

Nationwide Association of Surgical Performance of Minimally Invasive Esophagectomy With Patient Outcomes

IMPORTANCE: Suboptimal surgical performance is hypothesized to be associated with less favorable patient outcomes in minimally invasive esophagectomy (MIE). Establishing this association may lead to programs that promote better surgical performance of MIE and improve patient outcomes.OBJECTIVE: To investigate associations between surgical performance and postoperative outcomes after MIE.DESIGN, SETTING, AND PARTICIPANTS: In this nationwide cohort study of 15 Dutch hospitals that perform more than 20 MIEs per year, 7 masked expert MIE surgeons assessed surgical performance using videos and a previously developed and validated competency assessment tool (CAT). Each hospital submitted 2 representative videos of MIEs performed between November 4, 2021, and September 13, 2022. Patients registered in the Dutch Upper Gastrointestinal Cancer Audit between January 1, 2020, and December 31, 2021, were included to examine patient outcomes.EXPOSURE: Hospitals were divided into quartiles based on their MIE-CAT performance score. Outcomes were compared between highest (top 25%) and lowest (bottom 25%) performing quartiles. Transthoracic MIE with gastric tube reconstruction.MAIN OUTCOME AND MEASURE: The primary outcome was severe postoperative complications (Clavien-Dindo ≥3) within 30 days after surgery. Multilevel logistic regression, with clustering of patients within hospitals, was used to analyze associations between performance and outcomes.RESULTS:In total, 30 videos and 970 patients (mean [SD] age, 66.6 [9.1] years; 719 men [74.1%]) were included. The mean (SD) MIE-CAT score was 113.6 (5.5) in the highest performance quartile vs 94.1 (5.9) in the lowest. Severe postoperative complications occurred in 18.7% (41 of 219) of patients in the highest performance quartile vs 39.2% (40 of 102) in the lowest (risk ratio [RR], 0.50; 95% CI, 0.24-0.99). The highest vs the lowest performance quartile showed lower rates of conversions (1.8% vs 8.9%; RR, 0.21; 95% CI, 0.21-0.21), intraoperative complications (2.7% vs 7.8%; RR, 0.21; 95% CI, 0.04-0.94), and overall postoperative complications (46.1% vs 65.7%; RR, 0.54; 95% CI, 0.24-0.96). The R0 resection rate (96.8% vs 94.2%; RR, 1.03; 95% CI, 0.97-1.05) and lymph node yield (mean [SD], 38.9 [14.7] vs 26.2 [9.0]; RR, 3.20; 95% CI, 0.27-3.21) increased with oncologic-specific performance (eg, hiatus dissection, lymph node dissection). In addition, a high anastomotic phase score was associated with a lower anastomotic leakage rate (4.6% vs 17.7%; RR, 0.14; 95% CI, 0.06-0.31).CONCLUSIONS AND RELEVANCE: These findings suggest that better surgical performance is associated with fewer perioperative complications for patients with esophageal cancer on a national level. If surgical performance of MIE can be improved with MIE-CAT implementation, substantially better patient outcomes may be achievable.</p

Nationwide Association of Surgical Performance of Minimally Invasive Esophagectomy With Patient Outcomes

IMPORTANCE: Suboptimal surgical performance is hypothesized to be associated with less favorable patient outcomes in minimally invasive esophagectomy (MIE). Establishing this association may lead to programs that promote better surgical performance of MIE and improve patient outcomes.OBJECTIVE: To investigate associations between surgical performance and postoperative outcomes after MIE.DESIGN, SETTING, AND PARTICIPANTS: In this nationwide cohort study of 15 Dutch hospitals that perform more than 20 MIEs per year, 7 masked expert MIE surgeons assessed surgical performance using videos and a previously developed and validated competency assessment tool (CAT). Each hospital submitted 2 representative videos of MIEs performed between November 4, 2021, and September 13, 2022. Patients registered in the Dutch Upper Gastrointestinal Cancer Audit between January 1, 2020, and December 31, 2021, were included to examine patient outcomes.EXPOSURE: Hospitals were divided into quartiles based on their MIE-CAT performance score. Outcomes were compared between highest (top 25%) and lowest (bottom 25%) performing quartiles. Transthoracic MIE with gastric tube reconstruction.MAIN OUTCOME AND MEASURE: The primary outcome was severe postoperative complications (Clavien-Dindo ≥3) within 30 days after surgery. Multilevel logistic regression, with clustering of patients within hospitals, was used to analyze associations between performance and outcomes.RESULTS:In total, 30 videos and 970 patients (mean [SD] age, 66.6 [9.1] years; 719 men [74.1%]) were included. The mean (SD) MIE-CAT score was 113.6 (5.5) in the highest performance quartile vs 94.1 (5.9) in the lowest. Severe postoperative complications occurred in 18.7% (41 of 219) of patients in the highest performance quartile vs 39.2% (40 of 102) in the lowest (risk ratio [RR], 0.50; 95% CI, 0.24-0.99). The highest vs the lowest performance quartile showed lower rates of conversions (1.8% vs 8.9%; RR, 0.21; 95% CI, 0.21-0.21), intraoperative complications (2.7% vs 7.8%; RR, 0.21; 95% CI, 0.04-0.94), and overall postoperative complications (46.1% vs 65.7%; RR, 0.54; 95% CI, 0.24-0.96). The R0 resection rate (96.8% vs 94.2%; RR, 1.03; 95% CI, 0.97-1.05) and lymph node yield (mean [SD], 38.9 [14.7] vs 26.2 [9.0]; RR, 3.20; 95% CI, 0.27-3.21) increased with oncologic-specific performance (eg, hiatus dissection, lymph node dissection). In addition, a high anastomotic phase score was associated with a lower anastomotic leakage rate (4.6% vs 17.7%; RR, 0.14; 95% CI, 0.06-0.31).CONCLUSIONS AND RELEVANCE: These findings suggest that better surgical performance is associated with fewer perioperative complications for patients with esophageal cancer on a national level. If surgical performance of MIE can be improved with MIE-CAT implementation, substantially better patient outcomes may be achievable.</p

A Reality Check on Hedge Funds Returns

In this article we examine the backfill bias or instant history bias for hedge funds using additional information from the Tass database. This is information about the exact date a hedge fund starts to reporting to Tass. Using this information we are able to reveal the length of the instant histories. We find these to be just over 3 years on average. This number is far greater than previously documented. More than half of the recorded returns in the database are backfilled. The magnitude of the overall backfill bias is about 4 percent per annum on average. Again this number exceeds all previous estimates of the backfill bias we are aware of. We elaborate further across different time periods styles. Next, we eliminate backfilled returns and use survivorship free data to create a universe in which we could invest in real time. We introduce an investor who invests an equal amount in each fund that is in the universe. Conditional on this investment strategy our results indicate that the backfill bias is underestimated, and has a substantial downward effect on the returns across most hedge fund styles and is consistent over time for the whole sample. We have no reasons to believe that our conclusions are limited to the Tass database

A Reality Check on Hedge Funds Returns

In this article we examine the backfill bias or instant history bias for hedge funds using additional information from the Tass database. This is information about the exact date a hedge fund starts to reporting to Tass. Using this information we are able to reveal the length of the instant histories. We find these to be just over 3 years on average. This number is far greater than previously documented. More than half of the recorded returns in the database are backfilled. The magnitude of the overall backfill bias is about 4 percent per annum on average. Again this number exceeds all previous estimates of the backfill bias we are aware of. We elaborate further across different time periods styles. Next, we eliminate backfilled returns and use survivorship free data to create a universe in which we could invest in real time. We introduce an investor who invests an equal amount in each fund that is in the universe. Conditional on this investment strategy our results indicate that the backfill bias is underestimated, and has a substantial downward effect on the returns across most hedge fund styles and is consistent over time for the whole sample. We have no reasons to believe that our conclusions are limited to the Tass database.Backfill bias; Hedge funds; Performance persistence; Self-selection bias

The Implementation Shortfall of Institutional Equity Trades

This paper is the first to analyze the price effects of equity trading by a pension fund. We find that, on average, these effects are nonðnegligible: 20 basis points for buys and 26 basis points for sells. Furðthermore, we show that (relative) trade size and market capitalization, commonly found to play an important role, have only limited influðence on the price impact of a trade. The most important determinants of the price effect are investment style, trade type (agency, single, or principal), momentum, stock price volatility, and trading venue.Implementation shortfall; Institutional equity trading; Pension funds; Transaction costs

Market Impact Costs of Institutional Equity Trades

This paper is the first to analyze market impact and execution costs of equity trading by a pension fund. We find that, on average, these costs are nonnegligible. Average market impact costs equal 20 basis points for buys and 30 basis points for sells; average execution costs equal 27 basis points and 38 basis points, respectively. Furthermore, we show that relative trade size and market capitalization, commonly found to play an important role, have only limited influence on the market impact of a trade. The most important determinants of the price effect are momentum, stock price volatility, investment style, trade type (agency, single, or principal), and trading venue.market impact costs; trading costs; price effects; institutional equity trading; pension funds