Institutional Herding, Business Groups, and Economic Regimes: Evidence from Japan

To gain new and important insights into institutional herding, we study Japan for the following reasons: we can examine a market that is known for its active institutional investors, we can investigate the impacts of business grouping (i.e., the keiretsu), and we can see if herding and feedback trading behaviors differ under three distinct economic regimes (i.e., a regulated period, a bubble economy, and a bear market). We argue that the culture in Japan causes institutions to have both a long-term focus and close relationships with management. Consistent with the first view, we find that herding in Japan occurs on a lower level than it does in the U.S., and that the subsequent short-run returns to herding seem to be unimportant. Consistent with the second view, we find that when herding does occur, it has a large impact on price movements, and the use of past information (feedback trading) on herding behavior seems only marginally important. Much of these findings are more pronounced for keiretsu firms. Lastly, the effects and behavior of institutional herding is dependent on the economic environment.

Risk Aversion, Entrepreneurial Risk, and Portfolio Selection

Do entrepreneurs consider the risk of their business equity when making investment portfolio allocations? Many people compartmentalize different risks and consider them separately, called mental accounting. Alternatively, the risk substitution hypothesis suggests that entrepreneurs would offset high business income risk by selecting a more conservative investment portfolio. we examine these two hypotheses which have implications for measuring risk tolerance. We find that households with proprietary income show higher risk tolerance than non-entrepreneurs do. Further evidence suggests that a comprehensive measure of relative risk aversion that incorporates households\u27 business income is more reliable and more consistent with their reported risk preference than other measures that do not include business income. In supportive of the risk substitution hypothesis, households do appear to hedge the risk from their private business by decreasing their portion of other risky assets in their investment portfolio

Paying attention to social media stocks

Social media has reshaped business models, economies, politics, and culture around the world. In this paper, we identified social media stocks from various sectors by using a strict, academic definition and then studied their performance and return characteristics. Multivariate regression results demonstrate that being recognized as a social media firm yields extra return. The performance of social media stocks is not associated with macro-level sentiment, but rather with firm-level attention paid by potential investors. Causality tests indicate that the default risk premium and volatility have incremental power in explaining the performance of social media stocks

Item Response Models to measure Corporate Social Responsibility

Corporate Social Responsibility (CSR) is a multidimensional con- cept that involves several aspects, ranging from Environment, to Social and Governance. Companies aiming to comply with CSR standards have to face challenges that vary from one aspect to the other and from one industry to the other. Latent variable models may be use- fully employed to provide a unidimensional measure of the grade of compliance of a firm with CSR standards that is both understand- able and theoretically solid. A methodology based on Item Response Theory has been implemented on the multidimensional sustainability rating as expressed by KLD dataset from 1991 to 2007. Results sug- gest that companies in the industry Oil & Gas together with firms in Industrials, Basic Materials and Telecommunications have a higher difficulty to meet the CSR standards. Criteria based on Human rights, Environment, Community and Product quality have a large capacity to select the best performing firms, as they are very discriminant, while Governance does not exhibit similar behavior. A stock selection based on the ranking of the firms according to the proposed CSR measure supports the hypothesis of a positive relationship between CSR and financial performanc

Towards Structure-Property-Function Relationships for Eumelanin

We discuss recent progress towards the establishment of important structure-property-function relationships in eumelanins - key functional bio-macromolecular systems responsible for photo-protection and immune response in humans, and implicated in the development of melanoma skin cancer. We focus on the link between eumelanin's secondary structure and optical properties such as broad band UV-visible absorption and strong non-radiative relaxation; both key features of the photo-protective function. We emphasise the insights gained through a holistic approach combining optical spectroscopy with first principles quantum chemical calculations, and advance the hypothesis that the robust functionality characteristic of eumelanin is related to extreme chemical and structural disorder at the secondary level. This inherent disorder is a low cost natural resource, and it is interesting to speculate as to whether it may play a role in other functional bio-macromolecular systems.Comment: 19 pages, 8 figures, Invited highlight article for Soft Matte

Genomewide Analyses Define Different Modes of Transcriptional Regulation by Peroxisome Proliferator-Activated Receptor-β/δ (PPARβ/δ)

Peroxisome proliferator-activated receptors (PPARs) are nuclear receptors with essential functions in lipid, glucose and energy homeostasis, cell differentiation, inflammation and metabolic disorders, and represent important drug targets. PPARs heterodimerize with retinoid X receptors (RXRs) and can form transcriptional activator or repressor complexes at specific DNA elements (PPREs). It is believed that the decision between repression and activation is generally governed by a ligand-mediated switch. We have performed genomewide analyses of agonist-treated and PPARβ/δ-depleted human myofibroblasts to test this hypothesis and to identify global principles of PPARβ/δ-mediated gene regulation. Chromatin immunoprecipitation sequencing (ChIP-Seq) of PPARβ/δ, H3K4me3 and RNA polymerase II enrichment sites combined with transcriptional profiling enabled the definition of 112 bona fide PPARβ/δ target genes showing either of three distinct types of transcriptional response: (I) ligand-independent repression by PPARβ/δ; (II) ligand-induced activation and/or derepression by PPARβ/δ; and (III) ligand-independent activation by PPARβ/δ. These data identify PPRE-mediated repression as a major mechanism of transcriptional regulation by PPARβ/δ, but, unexpectedly, also show that only a subset of repressed genes are activated by a ligand-mediated switch. Our results also suggest that the type of transcriptional response by a given target gene is connected to the structure of its associated PPRE(s) and the biological function of its encoded protein. These observations have important implications for understanding the regulatory PPAR network and PPARβ/δ ligand-based drugs

Can Monkeys Make Investments Based on Maximized Pay-off?

Animals can maximize benefits but it is not known if they adjust their investment according to expected pay-offs. We investigated whether monkeys can use different investment strategies in an exchange task. We tested eight capuchin monkeys (Cebus apella) and thirteen macaques (Macaca fascicularis, Macaca tonkeana) in an experiment where they could adapt their investment to the food amounts proposed by two different experimenters. One, the doubling partner, returned a reward that was twice the amount given by the subject, whereas the other, the fixed partner, always returned a constant amount regardless of the amount given. To maximize pay-offs, subjects should invest a maximal amount with the first partner and a minimal amount with the second. When tested with the fixed partner only, one third of monkeys learned to remove a maximal amount of food for immediate consumption before investing a minimal one. With both partners, most subjects failed to maximize pay-offs by using different decision rules with each partner' quality. A single Tonkean macaque succeeded in investing a maximal amount to one experimenter and a minimal amount to the other. The fact that only one of over 21 subjects learned to maximize benefits in adapting investment according to experimenters' quality indicates that such a task is difficult for monkeys, albeit not impossible

Children Base Their Investment on Calculated Pay-Off

To investigate the rise of economic abilities during development we studied children aged between 3 and 10 in an exchange situation requiring them to calculate their investment based on different offers. One experimenter gave back a reward twice the amount given by the children, and a second always gave back the same quantity regardless of the amount received. To maximize pay-offs children had to invest a maximal amount with the first, and a minimal amount with the second. About one third of the 5-year-olds and most 7- and 10-year-olds were able to adjust their investment according to the partner, while all 3-year-olds failed. Such performances should be related to the rise of cognitive and social skills after 4 years