A Note on Shareholder Oversight and the Regulatory Environment: The Japanese Banking Experience

During a period where Japanese banks operated under a less restrictive regulatory environment, 1986-88, we find positive relationships between bank risk and ownership concentration. This empirical evidence reveals shareholder activism by the largest shareholders. During the periods immediately before and immediately after this particular subperiod, which are characterized by stricter regulatory environments, we do not observe evidence of shareholder activism. Taken together, these results are consistent with the argument that restrictive regulation and shareholder oversight are substitutes for one another. Time-series results and bank performance results yield consistent evidence.Large shareholders, Japanese banks, bank risk, shareholder oversight

Tax Effects on the Value of Incentive Stock Options (ISOs) and the Decision to Go Public

The incentive stock options (ISOs) are similar to the regular stock call options. However, when one considers various taxing laws regarding the ISO stocks, the ISOs have unique features differentiated from the regular stock call options. In general, no income from ISOs is realized, for tax purposes, either upon the grant or exercise of the ISOs, until the ISO stock is actually sold. This poses an interesting question to executives with ISOs about when the firm should go public. In fact, a significant wealth can accrue to executives with the ISO stocks, when the firm’s stock becomes publicly traded. Therefore, any changes in the tax law may affect the financial value of ISOs and also the firm’s decision to go public. The present paper examines the valuation process of the ISOs and investigates the economic effects of tax law changes on “going public.” The result suggests that the 1986 TRA may have delayed the firm’s decision to go public, while the U.S. Administration’s recent individual income tax hike to finance the government deficit may somewhat encourage the firm’s activity to go public

A patient preference study that evaluated fluticasone furoate and mometasone furoate nasal sprays for allergic rhinitis

Background: Corticosteroid nasal sprays are the mainstay of treatment for allergic rhinitis. These sprays have sensory attributes such as scent and/or odor, taste and aftertaste, and run down the throat and/or the nose, which, when unpleasant, can affect patient preference for, and compliance with, treatment. Objective: This study examined patient preference for fluticasone furoate nasal spray (FFNS) or mometasone furoate nasal spray (MFNS) based on their sensory attributes after administration in patients with allergic rhinitis. Methods: This was a multicenter, randomized, double-blind, cross-over study. Patient preferences were determined by using three questionnaires (Overall Preference, Immediate Attributes, and Delayed Attributes). Results: Overall, 56% of patients stated a preference for FFNS versus 32% for MFNS (p _ 0.001); the remaining 12% stated no preference. More patients stated a preference for FFNS versus MFNS for the attributes of “less drip down the throat” (p _ 0.001), “less run out of the nose” (p _ 0.05), “more soothing” (p _ 0.05), and “less irritating” (p _ 0.001). More patients responded in favor of FFNS versus MFNS for the immediate attributes, “run down the throat” (p _ 0.001), and “run out of the nose” (p _ 0.001), and, in the delayed attributes, “run down the throat” (p _ 0.001), “run out of the nose” (p _ 0.01), “presence of aftertaste” (p _ 0.01), and “no nasal irritation” (p _ 0.001). Conclusion: Patients with allergic rhinitis preferred FFNS versus MFNS overall and based on a number of individual attributes, including “less drip down the throat,” “less run out of the nose,” and “less irritating.” Greater preference may improve patient adherence and thereby improve symptom management of the patient’s allergic rhinitis

On Valuing Employee Stock Option Plans with the Requisite Service Period Requirement

This paper examines issues involving employee stock option plans as a part of employee compensation. In particular, employee stock options requiring a requisite service period are viewed as an option on options and hence, a compound option, as the employee’s future market wage rate is unknown. Non-transferability of employee stock options is overcome by the well-known put-call parity theorem. Difficulties arise, however, if a firm is privately held. The paper derives a simple formula to value equities for privately held firms

Improved Parameters and New Lensed Features for Q0957+561 from WFPC2 Imaging

New HST WFPC2 observations of the lensed double QSO 0957+561 will allow improved constraints on the lens mass distribution and hence will improve the derived value of H$_0$. We first present improved optical positions and photometry for the known components of this lens. The optical separation between the A and B quasar images agrees with VLBI data at the 10 mas level, and the optical center of the primary lensing galaxy G1 coincides with the VLBI source G' to within 10 mas. The best previous model for this lens (Grogin and Narayan 1996) is excluded by these data and must be reevaluated. Several new resolved features are found within 10\arcsec of G1, including an apparent fold arc with two bright knots. Several other small galaxies are detected, including two which may be multiple images of each other. We present positions and crude photometry of these objects.Comment: 7 pages including 2 postscript figures, LaTeX, emulateapj style. Also available at http://www.astro.lsa.umich.edu:80/users/philf/www/papers/list.htm

Warm dust in the terrestrial planet zone of a sun-like Pleiad: collisions between planetary embryos?

Only a few solar-type main sequence stars are known to be orbited by warm dust particles; the most extreme is the G0 field star BD+20 307 that emits ~4% of its energy at mid-infrared wavelengths. We report the identification of a similarly dusty star HD 23514, an F6-type member of the Pleiades cluster. A strong mid-IR silicate emission feature indicates the presence of small warm dust particles, but with the primary flux density peak at the non-standard wavelength of ~9 micron. The existence of so much dust within an AU or so of these stars is not easily accounted for given the very brief lifetime in orbit of small particles. The apparent absence of very hot (>~1000 K) dust at both stars suggests the possible presence of a planet closer to the stars than the dust. The observed frequency of the BD+20 307/HD 23514 phenomenon indicates that the mass equivalent of Earth's Moon must be converted, via collisions of massive bodies, to tiny dust particles that find their way to the terrestrial planet zone during the first few hundred million years of the life of many (most?) sun-like stars. Identification of these two dusty systems among youthful nearby solar-type stars suggests that terrestrial planet formation is common.Comment: ApJ in press, 19 pages including 3 figures and 2 tables, minor changes to the tables and figure

The Ellipticity and Orientation of Clusters of Galaxies from N-Body Experiments

In this study we use simulations of 128$^3$ particles to study the ellipticity and orientation of clusters of galaxies in N-body simulations of differing power-law initial spectra (P(k) \propto k^n ,n = +1, 0, -1, -2$), and density parameters ($\Omega_0 = 0.2$to 1.0). Furthermore, unlike most theoretical studies we mimic most observers by removing all particles which lie at distances greater than 2 1/h Mpc from the cluster center of mass. We computed the axial ratio and the principal axes using the inertia tensor of each cluster. The mean ellipticity of clusters increases strongly with increasing$n$. We also find that clusters tend to become more spherical at smaller radii. We compared the orientation of a cluster to the orientation of neighboring clusters as a function of distance (correlation). In addition, we considered whether a cluster's major axis tends to lie along the line connecting it to a neighboring cluster, as a function of distance (alignment). Both alignments and correlations were computed in three dimensions and in projection to mimic observational surveys. Our results show that significant alignments exist for all spectra at small separations ($D < 15 h^{-1}$Mpc) but drops off at larger distance in a strongly$n-$dependent way.Comment: 22 pages, requires aaspp4.sty, flushrt.sty, and epsf.sty Revised manuscript, accepted for publication in Ap

Ending “Too Big To Fail”: Government Promises Versus Investor Perceptions

Can a government credibly promise not to bailout firms whose failure would have major negative systemic consequences? Our analysis of Korea’s 1997–98 crisis suggests an answer: No. Despite a general “no bailout” policy during the crisis, the largest Korean corporate groups—facing severe financial and governance problems—could still borrow heavily from households by issuing bonds at prices implying very low expected default risk. The evidence suggests “too big to fail” beliefs were not eliminated by government promises because investors believed that this policy was not time consistent. Subsequent bailouts confirmed the market view that creditors would be protected