Quality of financial information and liquidity

This paper examines the relationship between liquidity and quality of financial information by analyzing long-term trends in Amihud\u27s (2002) illiquidity measure for firms that restate financial statements. I find that for most income decreasing restatements illiquidity increases several months before restatement announcement and remains at elevated levels one year after restatement. The result is most pronounced for firms listed on NASDAQ. Increase in illiquidity is greater upon restatements due to revenue recognition, those prompted by party other than auditor, those made by larger firms with high volatility of returns and low price levels. Income increasing restatements do not affect information asymmetry of the firm. Overall, my results indicate a positive relationship between quality of financial information and liquidity

Hedonic pricing with redevelopment options: A new approach to estimating depreciation effects

The standard hedonic model of durable assets is a special case of a more general model that contains two additive terms: (1) use value of the existing hedonic vector and (2) the value of the option to reconfigure hedonic characteristics. One empirical implication is that the two parts of value are related: e.g., use value increases with interior area whereas option value decreases with “intensity,” the ratio of structure value divided by land value. Increases in building age reduce use value but increase option value. Data from Greenwich Connecticut indicate that intensity has the expected negative effect. Coefficients on building age are shown to be better measures of depreciation when intensity variables are included in the regression

Equity and debt issuance by firms violating GAAP

We examine security issuance in restated periods by firms that misreport financial statements and find that only a small per cent of such firms issues securities in the restated period. Investors are misled by mistakes made by firms issuing equity more so than other restating firms at the initial announcement of misreported earnings, but are not misled by mistakes made by debt-issuing firms. Equity-issuing firms that manage earnings to beat analyst expectations experience abnormally high returns in the restated period prior to security issuance. Firms that restated more reports and have higher pre-mistake returns are more likely to issue equity. High leverage, firm size and number of restated periods are positively associated with the likelihood of debt issuance by restating firms

Financial Restatements, Litigation, and Implied Cost of Equity

We re-examine the effect of financial restatements on the cost of equity vis-a-vis litigation risk. Specifically, we study the effect of litigation on post-restatement financing costs and whether market anticipates litigation before restatement announcement as evident from its effect on financing costs. In a sample of 91 restatements, although we find that the cost of equity increases subsequent to a financial restatement for all restating firms, the increase is substantially greater for firms facing litigation as a result of the restatement. We also find that investors do not adjust for the cost of equity before the announcement of a financial restatement for firms facing post-restatement litigation. Overall, our findings suggest that most of the increase in the cost of equity after restatement is concentrated in sued sub-sample and that the cost of equity is an important channel through which litigation associated with financial restatement is priced. The economic effect of post-restatement litigation is approximately 259 basis points increase in the firm’s cost of equity

Risk Dynamics Around Restatement Announcements

We investigate the dynamic nature and temporal daily changes in systematic (beta), as well as idiosyncratic and total risk around restatement announcements. We find that beta increases by 51% at restatement announcement but it reverts to the pre-restatement level within 1 month. However, idiosyncratic risk experiences a longer-term increase of approximately 20% following a restatement. Cross-sectional analysis shows that the results are more pronounced with restatements associated with irregularity. Overall, our findings suggest that risk components are time-varying with the systematic component rapidly mean-reverting but the idiosyncratic component experiencing a longer-term increase

Empirical estimation of the option premium for residential redevelopment

This paper presents and validates a novel empirical approach for measuring the value of the option to redevelop using a standard hedonic dataset. Our analysis generalizes the standard hedonic model to account for the option value of reconfiguring hedonic characteristics. We test this model with over 162,000 real estate transactions in 53 towns in Connecticut between 1994 and 2007 by adding a non-linear intensity variable, which increases with the aggregate value of structure and decreases with land value. A conservative estimate is that about 20% of towns have significantly positive option value, with a mean value of 29–34% for properties most similar to vacant land. Multiple tests across towns support predictions of real options theory. Positive option value towns have higher house price volatility and estimated option value varies positively with price volatility, a finding inconsistent with NPV theory. We also find positive association between option value and drift in house prices and a U-shape relation with house price adjusted for structural characteristics. Higher property taxes reduce the value of option to redevelop

Do investors see through mistakes in reported earnings?

This study investigates whether investors see through materially misstated earnings, and whether they anticipate earnings restatements. For firms that restate at least one annual report, we find that investors are misled by mistakes in reported earnings at the time of initial earnings announcements. Investors react positively to the component of the favorable earnings surprise that will subsequently be restated, and attach the same valuation to it as to the true earnings surprise. We also find that investors anticipate the subsequent downward restatements and start marking stock prices down several months before a restatement announcement, so that the full impact of a restatement is about three times as large as the initial announcement effect. Overall our findings indicate that although investors anticipate restatements several months before its announcement, they are misled by misstated earnings for several years and therefore would benefit from better quality of financial information

CEO-to-Employee Pay Ratio and CEO Diversity

Purpose: The motivation behind Section 953(b) of Dodd–Frank Act was the increasing pay inequality and supposed CEOs\u27 rent extraction. It required public companies to disclose CEO-to-employee pay ratios. Using the ratios reported by S&P 1500 firms in 2017–18, this paper examines whether companies led by women and minority CEOs have lower ratios than those led by white male CEOs. Design/methodology/approach: This paper uses multivariate regression along with a matched sample analysis to examine whether female and minority CEOs have higher CEO-to-employee pay ratios compared to male and white CEOs, controlling for other determinants of pay ratios. Findings: Results indicate that CEO-to-employee pay ratios are 22–28% higher for female CEOs compared to their male counterparts, controlling for other determinants of pay ratios. There is, however, no statistically significant difference between the pay ratios of minority vs white male CEOs. Minority female CEOs have lower CEO-to-employee pay ratios than white female CEOs. Consistent with literature, larger and more profitable firms have higher CEO-to-employee pay ratios. Originality/value: While prior studies on determinants of CEO-to-employee pay ratios have used either industry-level or self-reported data for a small subset of firms (resulting in selection bias), this paper uses firm-level data that are available for all S&P 1500 firms due to new disclosure requirements due to the Dodd–Frank Act Section 953(b). Moreover, this is the first paper to test whether gender or ethnicity of a CEO affects within-firm pay inequality

Demonstration of Feeding Vehicle-Integrated Photovoltaic-Converted Energy into the High-Voltage On-Board Network of Practical Light Commercial Vehicles for Range Extension

The setting up of a practical electrically driven light commercial demonstration vehicle with integrated photovoltaics (PV) is reported. The demonstrator vehicle is equipped with 15 modules based on the crystalline Si/amorphous Si heterojunction technology. The nominal total peak power under standard testing conditions is 2180 Wp. Specifically, the PV-converted energy is fed into the high-voltage (HV; 400 V) board-net for a utilization of the large capacity of the HV battery and thus for direct range extension. The demonstrator vehicle is equipped with irradiation, wind, temperature, magnetic, and global positioning system sensors. Irradiation and temperature as well as the energy flows from modules, maximum power point trackers (MPPTs), low-voltage buffer battery to HV battery via DC/DC, and from the HV battery to the loads during an exemplarily test drive day (May 31, 2021) are monitored. The range extension obtained at this day on our test route (51° 59′ N, 9° 31′ E) was 36 km, the corresponding CO2 savings account for ≈2.3 kg. The chain efficiency of the electronic components from the input side of the MPPTs to the HV output side of the DC/DC was 68.6%, whereas the DC/DC itself has an average efficiency of 90%. © 2021 The Authors. Solar RRL published by Wiley-VCH Gmb

Характер адаптационных механизмов при формировании паразито-хозяинных отношений у млекопитающих

It has been experimentally established that the processes of adaptation of organism under the influence of parasites occur in stages: the stage of anxiety, equilibration and oppression. The are accompanied by a change in behavioral and functional reactions, as well as hematological and biochemical changes in the blood of laboratory animals. At the same time, changes in these parameters were observed in acute and chronic course of the invasive process. The results of the research are the basis for the development and application of drugs-adaptogens, which allow reducing the recovery time of the body against the background of anthelmintic therapy.Communicated by Academician Mikhail E. NikiforovЭкспериментально на лабораторных животных установлено, что адаптационные процессы в организме млекопитающих под воздействием паразитов происходят стадийно: стадия беспокойства, уравновешивания и угнетения. Они сопровождаются изменением поведенческих и функциональных реакций, а также гематологических и биохимических показателей крови лабораторных животных. При этом отмечены различные изменения данных показателей при остром и хроническом течении инвазионного процесса. Результаты исследований являются основанием для разработки комплекса мероприятий по оздоровлению животных от инвазий, включающих препараты, позволяющие ускорить восстановительные процессы и адаптацию к изменениям окружающей среды.Представлено академиком М. Е. Никифоровы