What Do Institutional Investors Know and Act on Before Almost Everyone Else: Evidence from Corporate Bankruptcies

We analyze investment behavior of institutional managers who hold and trade shares of firms that file for bankruptcy. We find that during the five-year period preceding a bankruptcy filing, institutional investors (except those managing investment companies) are net buyers with a positive abnormal net number of shares traded during the period. Institutional managers start to sell shares of bankrupt firms sooner in some firms than in others; these earlier sales are of smaller firms with weaker operating performance, and lower equity risk. We do not find evidence that institutional stockholders trade strategically and avoid material price declines before they occur

Acquisitions of Bankrupt and Distressed Firms

In this paper we focus on acquisitions of bankrupt firms and firms that recently emerged from Chapter 11 and compare these firms with acquired distressed firms to determine whether or not transaction timing plays a role in the outcomes of the mergers. We analyze deal premiums (or lack thereof) and evaluate post-merger operating cash flows to determine whether or not timing of the transactions impacts their effectiveness and success. We also evaluate targets and their acquirers’ stock price reactions to the announcements of acquisitions. We find that distressed targets sell their assets at a premium or at a discount smaller than bankrupt firms do, thereby benefiting from acquisitions more than bankrupt targets—and the announcement day abnormal returns are reflective of the disparity of these purchases with bankrupt firms having significant negative abnormal returns and distressed firms having significant positive announcement day abnormal returns and acquirers of both having material announcement day abnormal returns. We also find that abnormal post-merger cash flow and cumulative abnormal return changes are more pronounced for bankrupt than distressed firms, indicating that acquisitions in Chapter 11 add greater economic value for both target and its acquirer than do acquisitions outside of bankruptcy. We also find post-merger market performance improvements for bankrupt and not distressed firms. In summary, distressed firms get a merger announcement premium and bankrupt firms give it away to their acquirers whose shareholders benefit from acquisition premiums in a year after the mergers

Analyst Ratings for Firms Filing and Reorganizing Under Chapter 11

Purpose The purpose of this paper is to examine analyst followings of firms starting from one year prior to their filing for Chapter 11 and as the firms progress through bankruptcy proceedings with a focus on firms receiving “Hold” or better recommendations. The authors attempt to answer questions such as what the common characteristics of the firms receiving stronger than expected recommendations one year prior to filing for bankruptcy reorganization or while in bankruptcy are, and how the market reacts to the issuance of stronger ratings for those firms. Design/methodology/approach The authors design various regressions and apply them to a total of 2,754 sell-side analyst recommendations and 325 firms that are either approaching bankruptcy filing or in the process of reorganizing. In each analysis, the authors control for several firm and performance characteristics. Findings The authors find that the probability of securing stronger ratings is higher for small firms and for those followed by a greater number of analysts than for large firms and firms followed by fewer analysts. The market becomes more skeptical of optimistic evaluations closer to the date of bankruptcy filing (perhaps reflecting some anticipation) and reacts more positively to rating upgrades issued during bankruptcy protection than to the upgrades issued before the bankruptcy filing. Research limitations/implications The conclusions are based on the analysis of analyst recommendations issued shortly before Chapter 11 filings and during bankruptcy proceedings. The conclusions could be strengthened by further analysis of firms’ post-bankruptcy recovery and performance and examination of analyst recommendations issued for the firms after they emerge from Chapter 11.. Practical implications Analyst security ratings that are more positive than expected are perhaps the result of superior expertise and access to private information. During bankruptcy proceedings, when information disclosure is limited, investors could greatly benefit from reports issued by security analysts. Originality/value This study contributes to the literature in a number of ways. First, the authors contribute to the literature on the analyst ratings of firms in distress by considering the period between bankruptcy filing and emergence, while the existing literature provides analysis of pre-bankruptcy recommendations and forecasts. Second, the authors focus on better than expected ratings rather than all types of ratings as the firms approach bankruptcy filings and proceed through reorganization. Finally, they evaluate how investors react to stronger than expected analyst ratings

Differential Informativeness of Accrual Measures to Analysts’ Forecast Accuracy

This paper evaluates whether analysts incorporate formal measures of earnings quality into their earnings forecasts. It examines whether the accrual ratio and abnormal accruals, measured with the Modified Jones (1991) Model of discretionary accruals, differentially inform analysts’ earnings forecasts. It uses the accuracy of analysts’ forecast as a context in which to evaluate how well analysts incorporate effects of the information contained in accrual ratio and abnormal accruals. The results indicate that the accrual ratio is negatively related to the absolute value of analysts’ forecast errors while the Modified Jones (1991) Model of discretionary accruals have virtually no economic effect on analysts’ forecast error. The insignificant effect of discretionary accruals on analysts’ forecast may be attributed to analysts having already incorporated the information therein in their earnings forecasts, effect of the accrual anomaly having been largely arbitraged away by market participants or both. This paper contributes to the research on analysts’ earnings forecast and earnings quality and helps bridge the gap between practice and theory by demonstrating the differential impact of discretionary accruals (favored by academics) and the accrual ratio (favored by analysts) on analysts’ forecast accuracy. This study informs researchers and policy makers interested in better understanding how analysts affects the financial markets including how they may have learned from previously documented market anomalies such as the accrual anomaly. This is important as ultimately, efficient economy-wide capital allocation decisions are based partly on outputs of analysts’ forecasting processes

Low Birth Weight Inequities in Context: Racial Segregation, Neighborhood Factors, and Preconception Care.

Black women experience disproportionately higher rates of low birth weight, preterm delivery, and infant mortality. At least some amount of this disparity results from differences in exposure to detrimental social factors. Segregation is one social force shaping the distribution of power and resources and, therefore, women’s exposure to negative social environments. Using data from California Vital Records and the US Census, paper 1 evaluates the relationship between racial isolation and low birth weight for black, Hispanic, and Asian/Pacific Islander women. Isolation from whites predicts higher risk of low birth weight for black women specifically through an increased risk of small for gestational age births. For Hispanic women, isolation from whites predicts and increase in low birth weight for US-born women, but not foreign-born women, suggesting that ethnic enclave effects may not persist in this group. Finally, for Asian/Pacific Islander women, isolation predicts lower risk of low birth weight as a result of decreased risk of appropriate for gestational age preterm birth. Social capital is one mechanism through which segregation may impact birth outcomes. In Paper 2, analyses using data from California Vital Records and LAFANS suggest that higher levels of perceived social reciprocity are associated with lower risk of low birth weight for foreign-born women, but not for US-born women. Reciprocity predicts higher rates of low birth weight for Hispanic women, indicating that social reciprocity may be a unique stressor for US-born Hispanic women. For black women, social capital measures did not predict low birth weight outcomes. Paper 3 explores the potential for preconception care – a proposed public health intervention – to alleviate racial inequities in pregnancy outcomes. Preconception care may have positive impacts on individual women’s health. However, preconception care utilizes a clinical, individualistic, non-specific approach that does not address either the clinical or social drivers of racial inequities in birth outcomes, and should be reconsidered as a strategy for reducing these gaps. Taken together, these analyses provide insight into inequities in birth outcomes for women of color living in segregated neighborhoods, and evaluate policies aimed at mitigating this disparity.PHDHealth Services Organization & PolicyUniversity of Michigan, Horace H. Rackham School of Graduate Studieshttp://deepblue.lib.umich.edu/bitstream/2027.42/97930/1/mdebbink_1.pd

Cognitive outcome in children and adolescents treated for acute lymphoblastic leukaemia with chemotherapy only

Objective: To examine cognitive outcome in children and adolescents with acute lymphoblastic leukaemia (ALL) in remission, treated with central nervous system prophylactic chemotherapy only

A meta-analysis of the neuropsychological sequelae of chemotherapy-only treatment for pediatric acute lymphoblastic leukemia

Background Mixed findings on the neuropsychological sequelae of chemotherapy-only treatment for pediatric acute lymphoblastic leukemia (ALL), without radiation, indicate the need for a comprehensive meta-analytic review. The purpose of the current study was to conduct a meta-analysis assessing neuropsychological and academic functioning differences between children with ALL treated solely with chemotherapy and comparison groups. Procedure Thirteen articles met inclusion criteria for the meta-analysis and were analyzed using a random effects model, weighted least squares methods. Results Mean effect sizes were significantly different from zero for multiple domains of intelligence and academic achievement; processing speed; verbal memory; and some aspects of executive functioning and fine motor skills, indicating worse functioning in ALL survivors. Effect sizes for visual-motor skills and visual memory were not significantly different from zero. Conclusions Results support the presence of neuropsychological and academic sequelae for ALL survivors treated solely with chemotherapy and highlight the need for ongoing follow-up of children with ALL using a standardized neuropsychological test battery and research methodology. Pediatr Blood Cancer 2008;51:99–104. © 2008 Wiley-Liss, Inc.Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/58651/1/21544_ftp.pd

Long-term effects of cranial irradiation and intrathecal chemotherapy in treatment of childhood leukemia: a MEG study of power spectrum and correlated cognitive dysfunction

<p>Abstract</p> <p>Background</p> <p>Prophylaxis to prevent relapses in the central nervous system after childhood acute lymphoblastic leukemia (ALL) used to consist of both intrathecal chemotherapy (CT) and cranial irradiation (CRT). CRT was mostly abolished in the eighties because of its neurotoxicity, and replaced with more intensive intrathecal CT. In this study, a group of survivors treated with CRT before 1983 and another group treated without CRT thereafter are investigated 20–25 years later, giving a much stronger perspective on long-term quality of life than previous studies. The outcomes will help to better understand these groups’ current needs and will aid in anticipating late effects of prophylactic CRT that is currently applied for other diseases. This study evaluates oscillatory neuronal activity in these long-term survivors. Power spectrum deviations are hypothesized to correlate with cognitive dysfunction.</p> <p>Methods</p> <p>Resting state eyes-closed magnetoencephalography (MEG) recordings were obtained from 14 ALL survivors treated with CT + CRT, 18 treated with CT alone and 35 controls. Relative spectral power was calculated in the δ, θ, α1, α2, β and γ frequency bands. The Amsterdam Neuropsychological Tasks (ANT) program was used to assess cognition in the executive functions domain. MEG data and ANT scores were correlated.</p> <p>Results</p> <p>In the CT + CRT group, relative θ power was slightly increased (p = 0.069) and α2 power was significantly decreased (p = 0.006). The CT + CRT group performed worse on various cognitive tests. A deficiency in visuomotor accuracy, especially of the right hand, could be clearly associated with the deviating regional θ and α2 powers (0.471 < r < 0.697). A significant association between decreased regional α2 power and less attentional fluctuations was found for CT + CRT patients as well as controls (0.078 < r < 0.666). Patients treated with CT alone displayed a power spectrum similar to controls, except for a significantly increased level of left frontal α2 power (p = 0.030).</p> <p>Conclusions</p> <p>The tendency towards global slowing of brain oscillatory activity, together with the fact that dementia has been reported as a late effect of CRT and the neuropsychological deficiencies currently present, suggest that the irradiated brain might be aging faster and could be at risk for early‐onset dementia. The CT group showed no signs of early aging.</p

On the Perception of Newcomers: Toward an Evolved Psychology of Intergenerational Coalitions

Human coalitions frequently persist through multiple, overlapping membership generations, requiring new members to cooperate and coordinate with veteran members. Does the mind contain psychological adaptations for interacting within these intergenerational coalitions? In this paper, we examine whether the mind spontaneously treats newcomers as a motivationally privileged category. Newcomers—though capable of benefiting coalitions—may also impose considerable costs (e.g., they may free ride on other members, they may be poor at completing group tasks). In three experiments we show (1) that the mind categorizes coalition members by tenure, including newcomers; (2) that tenure categorization persists in the presence of orthogonal and salient social dimensions; and (3) that newcomers elicit a pattern of impressions consistent with their probable ancestral costs. These results provide preliminary evidence for a specialized component of human coalitional psychology: an evolved concept of newcomer