The Leverage of Growth Firms

Theories on the capital structure of growth firms produce inconsistent and puzzling results. We revisit the Modigliani and Miller (M&M) theory on capital structure and value of tax shields. Using the M&M’s arbitrage pricing arguments, we are able to extend the theory to growth firms and reconcile the theories of capital structure for growth firms with the M&M theory for no-growth firms. We unify the theories and resolve the puzzles raised in the literature

Does Underwriter Reputation Affect the Performance of IPO Issues?

In this paper we examine the relationship between performance of the Chinese IPO firms and the reputation of investment bankers underwriting their stocks. Similar to previous studies on well-developed stock markets, we find that the initial return on the first day of trading is strongly positive for Chinese IPO stocks due to underpricing. This initial return is negatively related to the underwriter\u27s reputation, suggesting that the better the reputation of the underwriter, the less underpricing and hence, the lower the initial return of the IPO stock. Extending the analysis to a ten-day window after the first trading day, we find that the cumulative return becomes negative but that stocks with more prestigious underwriters experience less decline. We also examine the three year return of the IPOs. Contrary to previous findings, we find a positive long-run return for the Chinese IPO stocks. This long-run return is positively correlated with underwriter reputation. Finally, we find some evidence of positive long-run operating performance for the IPO firms that employ more prestigious underwriters

Credit risk models: An analysis of default correlation

This paper examines one of the major problems in credit risk models widely used in the financial industry to forecast future defaults and bankruptcies. We find that even after proper calibration, a representative credit risk model can severely underestimate default correlation. We further find that a likely reason for the underestimation of default correlation is the problematic common practice in the financial industry of using observable equity correlation as a proxy for unobservable asset correlation when the model is applied to predict default correlation. However, our results show that this proxy in common practice is not valid

Targeted parallel sequencing of large genetically-defined genomic regions for identifying mutations in Arabidopsis

Large-scale genetic screens in Arabidopsis are a powerful approach for molecular dissection of complex signaling networks. However, map-based cloning can be time-consuming or even hampered due to low chromosomal recombination. Current strategies using next generation sequencing for molecular identification of mutations require whole genome sequencing and advanced computational devises and skills, which are not readily accessible or affordable to every laboratory. We have developed a streamlined method using parallel massive sequencing for mutant identification in which only targeted regions are sequenced. This targeted parallel sequencing (TPSeq) method is more cost-effective, straightforward enough to be easily done without specialized bioinformatics expertise, and reliable for identifying multiple mutations simultaneously. Here, we demonstrate its use by identifying three novel nitrate-signaling mutants in Arabidopsis

Inferring Default Correlation from Equity Return Correlation

This paper presents a new approach for estimating default correlation by linking default correlation to equity return correlation while preserving the fundamental relation between default and asset correlations in the structural framework. Our hybrid model thus overcomes a long‐standing empirical difficulty that default correlation estimation relies on the unobservable asset process. The empirical analysis shows that our hybrid model demonstrates a considerable improvement over the existing structural model of Zhou (2001) for the sample periods of 1970‐1993 and 1990‐2010. We also illustrate the difference between the two models in predicting default correlations over the period of the 2008 financial crisis.Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/110821/1/eufm12016.pd

A Feature Extraction Method Based on Information Theory for Fault Diagnosis of Reciprocating Machinery

This paper proposes a feature extraction method based on information theory for fault diagnosis of reciprocating machinery. A method to obtain symptom parameter waves is defined in the time domain using the vibration signals, and an information wave is presented based on information theory, using the symptom parameter waves. A new way to determine the difference spectrum of envelope information waves is also derived, by which the feature spectrum can be extracted clearly and machine faults can be effectively differentiated. This paper also compares the proposed method with the conventional Hilbert-transform-based envelope detection and with a wavelet analysis technique. Practical examples of diagnosis for a rolling element bearing used in a diesel engine are provided to verify the effectiveness of the proposed method. The verification results show that the bearing faults that typically occur in rolling element bearings, such as outer-race, inner-race, and roller defects, can be effectively identified by the proposed method, while these bearing faults are difficult to detect using either of the other techniques it was compared to

Cellular and clinical impact of Haploinsufficiency for genes involved in ATR signaling

Ataxia telangiectasia and Rad3-related (ATR) protein, a kinase that regulates a DNA damage-response pathway, is mutated in ATR-Seckel syndrome (ATR-SS), a disorder characterized by severe microcephaly and growth delay. Impaired ATR signaling is also observed in cell lines from additional disorders characterized by microcephaly and growth delay, including non-ATR-SS, Nijmegen breakage syndrome, and MCPH1 (microcephaly, primary autosomal recessive, 1)-dependent primary microcephaly. Here, we examined ATR-pathway function in cell lines from three haploinsufficient contiguous gene-deletion disorders--a subset of blepharophimosis-ptosis-epicanthus inversus syndrome, Miller-Dieker lissencephaly syndrome, and Williams-Beuren syndrome--in which the deleted region encompasses ATR, RPA1, and RFC2, respectively. These three genes function in ATR signaling. Cell lines from these disorders displayed an impaired ATR-dependent DNA damage response. Thus, we describe ATR signaling as a pathway unusually sensitive to haploinsufficiency and identify three further human disorders displaying a defective ATR-dependent DNA damage response. The striking correlation of ATR-pathway dysfunction with the presence of microcephaly and growth delay strongly suggests a causal relationship