The Effect of Voluntary Disclosure on Firm Risk and Firm Value: Evidence from Management Earnings Forecasts

This study investigates whether the voluntary disclosure of management earnings forecasts influences investors’ assessment of firm risk and firm value. We find a significant negative relationship between the issuance of management earnings forecasts and a variety of measures of firm risk (idiosyncratic risk, stock return volatility, beta, and bid-ask spreads), with more frequent, more precise and more accurate earnings forecasts further decreasing firm risk. Our results therefore suggest that information quality is an important determinant of both diversifiable risk and nondiversifiable systematic risk. We also demonstrate that management earnings forecasts are positively associated with firm value as captured by Tobin’s Q while more frequent, precise and accurate forecasts further enhance valuation premiums. Finally, we find that management earnings forecasts impact firm value not only through a reduction in firm risk, but also through changing investors\u27 perceptions about future cash flows. Our results are robust to various sensitivity checks. Overall, releasing high-quality management earnings forecasts is associated with important capital market benefits

General Tests of Latent Variable Models and Mean-Variance Spanning

The methods of Gibbons and Ferson (1985) are extended, relaxing the assumption that expected returns are linear functions of predetermined instruments. A model of conditional mean-variance spanning generalizes Huberman and Kandel (1987). The empirical results indicate that more than a single risk premium is needed to model expected stock and bond returns, but the number of common factors in the expected returns is small. However, when size-based common stock portfolios proxy for the risk factors, we reject the hypothesis that four of them describe the conditional expected returns of the other assets

Double Then Nothing: Why Stock Investments Relying on Simple Heuristics May Disappoint

ABSTRACT Behavioral researchers argue that while individuals often rely on heuristics or rules of thumb that reduce the complexity involved in predicting values, such heuristics can lead to severe and systematic errors. I test this argument in an investment context by focusing on a simple heuristic whereby momentum traders are attracted to buying stocks that have recently doubled in price in anticipation of further gains. I show that such a strategy can lead to predictable disappointment for these investors and severe underperformance relative to the market (-28% over a four-year period), whereas investors who avoid relying on this simple heuristic are likely to perform as expected, on average similar to the overall market. I also find that underperformance is more severe for stocks that have doubled faster. The "doubling" variable is a significant predictor of future price reversals in addition to past performance per se, as uncovered by JEL Codes: G11, G12, G1

In Vivo 3D Digital Atlas Database of the Adult C57BL/6J Mouse Brain by Magnetic Resonance Microscopy

In this study, a 3D digital atlas of the live mouse brain based on magnetic resonance microscopy (MRM) is presented. C57BL/6J adult mouse brains were imaged in vivo on a 9.4 Tesla MR instrument at an isotropic spatial resolution of 100 μm. With sufficient signal-to-noise (SNR) and contrast-to-noise ratio (CNR), 20 brain regions were identified. Several atlases were constructed including 12 individual brain atlases, an average atlas, a probabilistic atlas and average geometrical deformation maps. We also investigated the feasibility of using lower spatial resolution images to improve time efficiency for future morphological phenotyping. All of the new in vivo data were compared to previous published in vitro C57BL/6J mouse brain atlases and the morphological differences were characterized. Our analyses revealed significant volumetric as well as unexpected geometrical differences between the in vivo and in vitro brain groups which in some instances were predictable (e.g. collapsed and smaller ventricles in vitro) but not in other instances. Based on these findings we conclude that although in vitro datasets, compared to in vivo images, offer higher spatial resolutions, superior SNR and CNR, leading to improved image segmentation, in vivo atlases are likely to be an overall better geometric match for in vivo studies, which are necessary for longitudinal examinations of the same animals and for functional brain activation studies. Thus the new in vivo mouse brain atlas dataset presented here is a valuable complement to the current mouse brain atlas collection and will be accessible to the neuroscience community on our public domain mouse brain atlas website

A large genome-wide association study of age-related macular degeneration highlights contributions of rare and common variants.

This is the author accepted manuscript. The final version is available from Nature Publishing Group via http://dx.doi.org/10.1038/ng.3448Advanced age-related macular degeneration (AMD) is the leading cause of blindness in the elderly, with limited therapeutic options. Here we report on a study of >12 million variants, including 163,714 directly genotyped, mostly rare, protein-altering variants. Analyzing 16,144 patients and 17,832 controls, we identify 52 independently associated common and rare variants (P < 5 × 10(-8)) distributed across 34 loci. Although wet and dry AMD subtypes exhibit predominantly shared genetics, we identify the first genetic association signal specific to wet AMD, near MMP9 (difference P value = 4.1 × 10(-10)). Very rare coding variants (frequency <0.1%) in CFH, CFI and TIMP3 suggest causal roles for these genes, as does a splice variant in SLC16A8. Our results support the hypothesis that rare coding variants can pinpoint causal genes within known genetic loci and illustrate that applying the approach systematically to detect new loci requires extremely large sample sizes.We thank all participants of all the studies included for enabling this research by their participation in these studies. Computer resources for this project have been provided by the high-performance computing centers of the University of Michigan and the University of Regensburg. Group-specific acknowledgments can be found in the Supplementary Note. The Center for Inherited Diseases Research (CIDR) Program contract number is HHSN268201200008I. This and the main consortium work were predominantly funded by 1X01HG006934-01 to G.R.A. and R01 EY022310 to J.L.H

Phase 3 trials of ixekizumab in moderate-to-severe plaque psoriasis

BACKGROUND Two phase 3 trials (UNCOVER-2 and UNCOVER-3) showed that at 12 weeks of treatment, ixekizumab, a monoclonal antibody against interleukin-17A, was superior to placebo and etanercept in the treatment of moderate-to-severe psoriasis. We report the 60-week data from the UNCOVER-2 and UNCOVER-3 trials, as well as 12-week and 60-week data from a third phase 3 trial, UNCOVER-1. METHODS We randomly assigned 1296 patients in the UNCOVER-1 trial, 1224 patients in the UNCOVER-2 trial, and 1346 patients in the UNCOVER-3 trial to receive subcutaneous injections of placebo (placebo group), 80 mg of ixekizumab every 2 weeks after a starting dose of 160 mg (2-wk dosing group), or 80 mg of ixekizumab every 4 weeks after a starting dose of 160 mg (4-wk dosing group). Additional cohorts in the UNCOVER-2 and UNCOVER-3 trials were randomly assigned to receive 50 mg of etanercept twice weekly. At week 12 in the UNCOVER-3 trial, the patients entered a long-term extension period during which they received 80 mg of ixekizumab every 4 weeks through week 60; at week 12 in the UNCOVER-1 and UNCOVER-2 trials, the patients who had a response to ixekizumab (defined as a static Physicians Global Assessment [sPGA] score of 0 [clear] or 1 [minimal psoriasis]) were randomly reassigned to receive placebo, 80 mg of ixekizumab every 4 weeks, or 80 mg of ixekizumab every 12 weeks through week 60. Coprimary end points were the percentage of patients who had a score on the sPGA of 0 or 1 and a 75% or greater reduction from baseline in Psoriasis Area and Severity Index (PASI 75) at week 12. RESULTS In the UNCOVER-1 trial, at week 12, the patients had better responses to ixekizumab than to placebo; in the 2-wk dosing group, 81.8% had an sPGA score of 0 or 1 and 89.1% had a PASI 75 response; in the 4-wk dosing group, the respective rates were 76.4% and 82.6%; and in the placebo group, the rates were 3.2% and 3.9% (P<0.001 for all comparisons of ixekizumab with placebo). In the UNCOVER-1 and UNCOVER-2 trials, among the patients who were randomly reassigned at week 12 to receive 80 mg of ixekizumab every 4 weeks, 80 mg of ixekizumab every 12 weeks, or placebo, an sPGA score of 0 or 1 was maintained by 73.8%, 39.0%, and 7.0% of the patients, respectively. Patients in the UNCOVER-3 trial received continuous treatment of ixekizumab from weeks 0 through 60, and at week 60, at least 73% had an sPGA score of 0 or 1 and at least 80% had a PASI 75 response. Adverse events reported during ixekizumab use included neutropenia, candidal infections, and inflammatory bowel disease. CONCLUSIONS In three phase 3 trials involving patients with psoriasis, ixekizumab was effective through 60 weeks of treatment. As with any treatment, the benefits need to be weighed against the risks of adverse events. The efficacy and safety of ixekizumab beyond 60 weeks of treatment are not yet known