Cost of equity of Internet stocks: A downside risk approach, The

Beta as a measure of risk has been under fire for many years. Although practitioners still widely use the CAPM to estimate the cost of equity of companies, they are aware of its problems and are looking for alternatives. One possible alternative is to estimate the cost of equity based on the semideviation, a well-known and intuitively plausible measure of downside risk. Complementing evidence reported elsewhere about the ability of the semideviation to explain the cross-section of returns in emerging markets and that of industries in emerging markets, this article reports results showing that the semideviation also explains the cross-section of Internet stock returns.downside risk; semideviation; asset pricing;

Tropidophis celiae

Number of pages: 8Geological SciencesIntegrative Biolog

Dissecting the sharp response of a canonical developmental enhancer reveals multiple sources of cooperativity.

Developmental enhancers integrate graded concentrations of transcription factors (TFs) to create sharp gene expression boundaries. Here we examine the hunchback P2 (HbP2) enhancer which drives a sharp expression pattern in the Drosophila blastoderm embryo in response to the transcriptional activator Bicoid (Bcd). We systematically interrogate cis and trans factors that influence the shape and position of expression driven by HbP2, and find that the prevailing model, based on pairwise cooperative binding of Bcd to HbP2 is not adequate. We demonstrate that other proteins, such as pioneer factors, Mediator and histone modifiers influence the shape and position of the HbP2 expression pattern. Comparing our results to theory reveals how higher-order cooperativity and energy expenditure impact boundary location and sharpness. Our results emphasize that the bacterial view of transcription regulation, where pairwise interactions between regulatory proteins dominate, must be reexamined in animals, where multiple molecular mechanisms collaborate to shape the gene regulatory function

Mean-semivariance behavior: An alternative behavioral model

The most widely-used measure of an asset's risk, beta, stems from an equilibrium in which investors display mean-variance behavior. This behavioral criterion assumes that portfolio risk is measured by the variance (or standard deviation) of returns, which is a questionable measure of risk. The semivariance of returns is a more plausible measure of risk (as Markowitz himself admits) and is backed by theoretical, empirical, and practical considerations. It can also be used to implement an alternative behavioral criterion, mean-semivariance behavior, that is almost perfectly correlated to both expected utility and the utility of mean compound return.downside risk; semideviation; asset pricing;

Insider trading: regulation, securities markets, and welfare under risk neutrality

I evaluate in this paper the impact of insider trading regulation (ITR) on a securities market and on social welfare. I show that ITR has both beneficial and detrimental effects on a securities market. In terms of welfare, I show that ITR has a purely redistributive effect; that is, it generates trading gains and trading losses that cancel out at the aggregate level. However, the goods and services that could have been produced with the resources allocated to enforce such a wealth redistribution are a net social cost of restricting insider trading. Finally, although I establish two conditions under which ITR is beneficial, I argue that neither condition provides sufficient support to the imposition of such a regulation

Mean-semivariance behavior (II): The D-CAPM

For over 30 years academics and practitioners have been debating the merits of the CAPM. One of the characteristics of this model is that it measures risk by beta, which follows from an equilibrium in which investors display mean-variance behavior. In that framework, risk is assessed by the variance of returns, a questionable and restrictive measure of risk. The semivariance of returns is a more plausible measure of risk and can be used to generate an alternative behavioral hypothesis (mean-semivariance behavior), an alternative measure of risk for diversified investors (the downside beta), and an alternative pricing model (the D-CAPM). The empirical evidence discussed in this article for the entire MSCI database of developed and emerging markets clearly supports the downside beta and the D-CAPM over beta and the CAPM.downside risk; semideviation; asset pricing;

Insider trading: regulation, risk reallocation, and welfare.

I argue in this paper that the imposition of insider trading regulations on a securities market generates not on1y a reallocation of wealth from insiders to liquidity traders, but also a reallocation of risk from the former to the latter. I further argue that, although the wealth reallocation has no impact on social welfare, under plausible assumptions, the risk reallocation imposes a cost on society.Insider trading; Securities Regulation;

Leiocephalus onaneyi

Number of pages: 7Geological SciencesIntegrative Biolog

Insider trading: regulation, securities markets, and welfare under risk aversion

I analyze in this paper the impact of insider trading regulation (ITR) on a securities market and on social welfare. I argue below that the imposition of ITR forces a reallocation of wealth and risk that decreases social welfare. Three reasons explain this resulto First, ITR increases the volatility of securities prices, thus making the market more risky; second, it worsens the risk sharing among investors; and, third, it diverts resources from the productive sector of the economy. Further, although I formally establish conditions under which ITR makes society better off, largue that those conditions cannot be used to justify the imposition of this regulation