Financial distress, corporate takeovers and the distress anomaly

Purpose: This paper examines the relation between takeover likelihood and the documented underperformance of distressed company stocks while exploring two competing hypotheses. The failure risk explanation predicts lower returns to distressed firms with high probability of being acquired because the acquisition reduces risk and investors\u27 required return. Conversely, the agency conflicts explanation predicts lower returns when acquisition is unlikely. Design/methodology/approach: The likelihood of receiving a takeover bid is estimated, and portfolio tests explore the underperformance of distressed company stocks relative to non-distressed stocks across varying levels of takeover likelihood. Predictive regressions subsequently examine the relation between distress, takeover exposure and future firm operating performance including how the relation is affected by state anti-takeover laws. Findings: Distressed stocks underperform non-distressed company stocks by economically and statistically significant margins when takeover likelihood is low, yet there is no evidence of underperformance among distressed stocks with moderate or high takeover exposure. Consistent with agency conflicts playing a key role, distressed firms that are disciplined by takeover threats invest more, use more leverage and experience higher future profitability. State-level anti-takeover legislation limits this disciplinary effect, however. Originality/value: The results show that the well-documented distress anomaly is driven by a subset of distressed firms whose managers face limited pressure from the external takeover market. The evidence casts doubt on the failure risk explanation and suggests that agency conflicts play a key role

Cryptocurrency return reversals

Analysing a set of 200 cryptocurrencies over the period from 2015 to 2019, we document a significant return reversal effect that holds at the daily, weekly, and monthly rebalancing frequencies and is robust to controls for differences in size, turnover, and illiquidity. Moreover, the reversal effect persists during both halves of our sample period and following periods of both high and low market implied volatility. Consistent with the effect being driven by a combination of market inefficiency and compensation for liquidity provision, we find reversals are most pronounced among smaller capitalization and less liquid cryptocurrencies

Advanced Environmental Barrier Coating Development for SiC-SiC Ceramic Matrix Composite Components

This presentation reviews the NASA advanced environmental barrier coating (EBC) system development for SiC-SiC Ceramic Matrix Composite (CMC) combustors particularly under the NASA Environmentally Responsible Aviation, Fundamental Aeronautics and Transformative Aeronautics Concepts Programs. The emphases have been placed on the current design challenges of the 2700-3000F capable environmental barrier coatings for low NOX emission combustors for next generation turbine engines by using advanced plasma spray based processes, and the coating processing and integration with SiC-SiC CMCs and component systems. The developments also have included candidate coating composition system designs, degradation mechanisms, performance evaluation and down-selects; the processing optimizations using TriplexPro Air Plasma Spray Low Pressure Plasma Spray (LPPS), Plasma Spray Physical Vapor Deposition and demonstration of EBC-CMC systems. This presentation also highlights the EBC-CMC system temperature capability and durability improvements under the NASA development programs, as demonstrated in the simulated engine high heat flux, combustion environments, in conjunction with high heat flux, mechanical creep and fatigue loading testing conditions

Applying human factors principles to alert design increases efficiency and reduces prescribing errors in a scenario-based simulation

OBJECTIVE: To apply human factors engineering principles to improve alert interface design. We hypothesized that incorporating human factors principles into alerts would improve usability, reduce workload for prescribers, and reduce prescribing errors. MATERIALS AND METHODS: We performed a scenario-based simulation study using a counterbalanced, crossover design with 20 Veterans Affairs prescribers to compare original versus redesigned alerts. We redesigned drug-allergy, drug-drug interaction, and drug-disease alerts based upon human factors principles. We assessed usability (learnability of redesign, efficiency, satisfaction, and usability errors), perceived workload, and prescribing errors. RESULTS: Although prescribers received no training on the design changes, prescribers were able to resolve redesigned alerts more efficiently (median (IQR): 56 (47) s) compared to the original alerts (85 (71) s; p=0.015). In addition, prescribers rated redesigned alerts significantly higher than original alerts across several dimensions of satisfaction. Redesigned alerts led to a modest but significant reduction in workload (p=0.042) and significantly reduced the number of prescribing errors per prescriber (median (range): 2 (1-5) compared to original alerts: 4 (1-7); p=0.024). DISCUSSION: Aspects of the redesigned alerts that likely contributed to better prescribing include design modifications that reduced usability-related errors, providing clinical data closer to the point of decision, and displaying alert text in a tabular format. Displaying alert text in a tabular format may help prescribers extract information quickly and thereby increase responsiveness to alerts. CONCLUSIONS: This simulation study provides evidence that applying human factors design principles to medication alerts can improve usability and prescribing outcomes

Links Between Communication and Relationship Satisfaction Among Patients With Cancer and Their Spouses: Results of a Fourteen-Day Smartphone-Based Ecological Momentary Assessment Study

Cancer treatment poses significant challenges not just for those diagnosed with the disease but also for their intimate partners. Evidence suggests that couples' communication plays a major role in the adjustment of both individuals and in the quality of their relationship. Most descriptive studies linking communication to adjustment have relied on traditional questionnaire methodologies and cross-sectional designs, limiting external validity and discernment of temporal patterns. Using the systemic-transactional model of dyadic coping as a framework, we examined intra- and inter-personal associations between communication (both enacted and perceived) and relationship satisfaction (RS) among patients with stage II–IV breast or colorectal cancer and their spouses (N = 107 couples). Participants (mean age = 51, 64.5% female patients, and 37.4% female spouses) independently completed twice-daily ecological momentary assessments (EMA) via smartphone for 14 consecutive days. Items assessed RS and communication (expression of feelings, holding back from expression, support and criticism of partner, and parallel ratings of partner behavior). Linear mixed models employing an Actor Partner Interdependence Model were used to examine concurrent, time-lagged, and cross-lagged associations between communication and RS. Expressing one's feelings was unassociated with RS. Holding back from doing so, in contrast, was associated with lower RS for both patients and spouses in concurrent models. These effects were both intrapersonal and interpersonal, meaning that when individuals held back from expressing their feelings, they reported lower RS and so too did their partner. Giving and receiving support were associated with one's own higher RS for both patients and spouses in concurrent models, and for patients in lagged models. Conversely, criticizing one's partner and feeling criticized were maladaptive, associated with lower RS (own and in some cases, partner's). Cross-lagged analyses (evening RS to next-day afternoon communication) yielded virtually no effects, suggesting that communication may have a stronger influence on short-term RS than the reverse. Findings underscore the importance of responsive communication, more so than expression per se, in explaining both concurrent and later relationship adjustment. In addition, a focus on holding back from expressing feelings may enhance the understanding of RS for couples coping with cancer

The Changing Landscape for Stroke\ua0Prevention in AF: Findings From the GLORIA-AF Registry Phase 2

Background GLORIA-AF (Global Registry on Long-Term Oral Antithrombotic Treatment in Patients with Atrial Fibrillation) is a prospective, global registry program describing antithrombotic treatment patterns in patients with newly diagnosed nonvalvular atrial fibrillation at risk of stroke. Phase 2 began when dabigatran, the first non\u2013vitamin K antagonist oral anticoagulant (NOAC), became available. Objectives This study sought to describe phase 2 baseline data and compare these with the pre-NOAC era collected during phase 1. Methods During phase 2, 15,641 consenting patients were enrolled (November 2011 to December 2014); 15,092 were eligible. This pre-specified cross-sectional analysis describes eligible patients\u2019 baseline characteristics. Atrial fibrillation disease characteristics, medical outcomes, and concomitant diseases and medications were collected. Data were analyzed using descriptive statistics. Results Of the total patients, 45.5% were female; median age was 71 (interquartile range: 64, 78) years. Patients were from Europe (47.1%), North America (22.5%), Asia (20.3%), Latin America (6.0%), and the Middle East/Africa (4.0%). Most had high stroke risk (CHA2DS2-VASc [Congestive heart failure, Hypertension, Age  6575 years, Diabetes mellitus, previous Stroke, Vascular disease, Age 65 to 74 years, Sex category] score  652; 86.1%); 13.9% had moderate risk (CHA2DS2-VASc = 1). Overall, 79.9% received oral anticoagulants, of whom 47.6% received NOAC and 32.3% vitamin K antagonists (VKA); 12.1% received antiplatelet agents; 7.8% received no antithrombotic treatment. For comparison, the proportion of phase 1 patients (of N = 1,063 all eligible) prescribed VKA was 32.8%, acetylsalicylic acid 41.7%, and no therapy 20.2%. In Europe in phase 2, treatment with NOAC was more common than VKA (52.3% and 37.8%, respectively); 6.0% of patients received antiplatelet treatment; and 3.8% received no antithrombotic treatment. In North America, 52.1%, 26.2%, and 14.0% of patients received NOAC, VKA, and antiplatelet drugs, respectively; 7.5% received no antithrombotic treatment. NOAC use was less common in Asia (27.7%), where 27.5% of patients received VKA, 25.0% antiplatelet drugs, and 19.8% no antithrombotic treatment. Conclusions The baseline data from GLORIA-AF phase 2 demonstrate that in newly diagnosed nonvalvular atrial fibrillation patients, NOAC have been highly adopted into practice, becoming more frequently prescribed than VKA in Europe and North America. Worldwide, however, a large proportion of patients remain undertreated, particularly in Asia and North America. (Global Registry on Long-Term Oral Antithrombotic Treatment in Patients With Atrial Fibrillation [GLORIA-AF]; NCT01468701

Share-pledging and the cost of debt

We examine how corporate insiders pledging their equity stakes to collateralise personal loans influences firm cost of debt. Pledging enables managers to diversify personal holdings, potentially increasing risk-taking incentives. However, exposure to contingent risks creates potentially stronger risk-reducing incentives. Using hand-collected data with OLS, difference-in-differences, and instrumental variables models, we find significant decreases in yield spreads associated with executive share-pledging. Reductions in spreads surrounding share-pledge disclosures suggest investors update their risk assessment to reflect pledging managers’ risk-taking incentives. Consistent with risk-reducing incentives, firms with share-pledging executives subsequently reduce leverage

Entrenchment or Efficiency? CEO-to-Employee Pay Ratio and the Cost of Debt

Using new data on S&P 1500 firms’ chief executive officer (CEO)‐to‐employee pay ratios disclosed by mandate of Section 953(b) of the Dodd–Frank Act, we examine the effect of within‐firm pay inequality on bond yield spreads. We find a significant negative relation between industry‐adjusted CEO‐to‐employee pay ratio and yield spreads while controlling for covariates and endogeneity. This result is strongest in financially constrained, labor‐intensive, and small‐to‐medium‐sized firms. The evidence supports the incentive‐provision explanation of CEO‐to‐employee pay disparity, reflecting efficient CEO compensation rather than rent extraction. We also document selection bias in self‐reported pay ratios, highlighting the efficacy of the Dodd–Frank provisions