Analyst target price accuracy and the incidence of cash flow forecasts

Research shows that analyst target price accuracy is limited and yet evidence on the factors driving this limited accuracy is inconclusive. Complementing the results of recent studies that show that the increasing incidence of cash flow forecasts in analyst reports has helped mitigate accruals mispricing, we address the question: are analyst target prices more accurate when accompanied by cash flow forecasts than when they are not? Using propensity score matching to control for selection bias, we estimate the effect of disclosing cash flow forecasts on the target price accuracy of US stocks during 2000–2010. The results suggest that target prices are more accurate when analysts also disclose cash flow forecasts. The paper contributes to the continuing debate about the usefulness of analyst target prices as well as the usefulness of analyst cash flow forecasts

Do formal risk assessments improve analysts’ target price accuracy?

Equity analysts’ target price estimates are uncertain. Some analysts gauge this uncertainty by supplementing their target prices with a risk assessment in the form of a bull–bear analysis (BBA). We explore whether disclosing a BBA reduces analysts’ target price error or, alternatively, whether analysts disclose a BBA to make their forecasts seem more credible and distract attention from less accurate target prices. Using propensity score matching to control for selection bias, combined with a difference-in-differences estimation to allow for company- and analyst-specific effects, we estimate the effect of supplementing target prices with a BBA on the target price accuracy of US stocks. We find that target prices are significantly more accurate, both statistically and economically, when analysts supplement them with a BBA. Our results shed light on the role of risk and uncertainty assessments in improving analyst valuations

Corporate social responsibility and seasoned equity offerings

We examine whether corporate social responsibility (CSR) creates value for seasoned equity issuers. Using a sample of seasoned equity offerings (SEOs) by U.S. companies between 2004 and 2013, we find a positive association between CSR performance and the stock price reaction to SEO announcements. Surprisingly, however, further tests reveal that seasoned equity issuers with high CSR scores tend to have higher post-SEO increases in cash holdings, and lower investments in real assets, than issuers with low CSR scores. Moreover, high-CSR issuers have worse post-SEO operating and stock price performance than low-CSR issuers. Together, our findings suggest that high CSR scores mislead shareholders into attributing value-increasing motives to seasoned equity issues

The relative concentration of bad versus good news flows

This paper examines flows of bad and good news as a feature of the firm’s information environment. We argue that to the extent that managers delay reporting bad news, this leads to bad news being more concentrated. Measuring flows of bad and good news using flows of negative and positive abnormal stock returns, we find that firms with higher volatility of operations and managerial incentives to withhold bad news exhibit relatively more concentrated bad news flows. This relative concentration is also positively associated with lower earnings quality and a higher risk of shareholder litigation. Our results suggest that the relative concentration of bad and good news flows is related to the quality of the firm’s information environment

The cost-effectiveness of an updated theory-based online health behavior intervention for new university students: U@Uni2

Background: The transition to university marks a point where young people may be open to changing health behaviours such as smoking, exercise, diet and alcohol intake. This study aimed to estimate the cost-effectiveness of an updated online health behaviour intervention for new university students in the UK – “U@Uni2”, compared with both a control (measurement only) scenario and with the original intervention (“U@Uni1”). Methods: The economic analysis, based on a randomised controlled trial, comprised a detailed costing analysis, a within-trial cost-effectiveness analysis and long-term economic modelling. Cost-effectiveness of the U@Uni2 trial was estimated using 6-month data on costs and health-related quality of life. An individual patient simulation model was adapted for long-term economic analysis of U@Uni2. Probabilistic sensitivity analysis and value of information analysis accounted for uncertainty in model inputs and identified key parameters. Results: The U@Uni2 intervention costs £45.97 per person for full implementation, £10.43 per person for roll-out in a different institution and £3.03 per person for roll-out over five years. The U@Uni2 trial was not cost-effective because marginally fewer quality-adjusted life years (QALYs) were obtained in the intervention arm than control. However, modelled over a lifetime, U@Uni2 is estimated to produce more QALYs than control but fewer than U@Uni1, primarily due to the effect of the interventions on smoking. Roll-out of U@Uni2 is highly likely to be more cost-effective than doing nothing (ICER = £536 per QALY, 86% probability cost-effective). Decision uncertainty occurs primarily around the effectiveness of the U@Uni2 intervention and is worth up to £3.24m. Conclusions: The U@Uni2 intervention is highly likely to be cost-effective to roll-out compared with doing nothing. The results suggest that preventing uptake of smoking is the key driver of QALY gain and should be the primary target of such interventions. Trial Registration: Current Controlled Trials ISRCTN6768418

On the Relationship Between Molecular Hydrogen and Carbon Monoxide Abundances in Molecular Clouds

The most usual tracer of molecular gas is line emission from CO. However, the reliability of that tracer has long been questioned in environments different from the Milky Way. We study the relationship between H2 and CO abundances using a fully dynamical model of magnetized turbulence coupled to a chemical network simplified to follow only the dominant pathways for H2 and CO formation and destruction, and including photodissociation using a six-ray approximation. We find that the abundance of H2 is primarily determined by the amount of time available for its formation, which is proportional to the product of the density and the metallicity, but insensitive to photodissociation. Photodissociation only becomes important at extinctions under a few tenths of a visual magnitude, in agreement with both observational and prior theoretical work. On the other hand, CO forms quickly, within a dynamical time, but its abundance depends primarily on photodissociation, with only a weak secondary dependence on H2 abundance. As a result, there is a sharp cutoff in CO abundance at mean visual extinctions A_V < 3. At lower values of A_V we find that the ratio of H2 column density to CO emissivity X_CO is proportional to A_V^(-3.5). This explains the discrepancy observed in low metallicity systems between cloud masses derived from CO observations and other techniques such as infrared emission. Our work predicts that CO-bright clouds in low metallicity systems should be systematically larger or denser than Milky Way clouds, or both. Our results further explain the narrow range of observed molecular cloud column densities as a threshold effect, without requiring the assumption of virial equilibrium.Comment: 16 pages, 11 figures. Updated to match version accepted by MNRA

Nuclear starburst-driven evolution of the central region in NGC 6764

We study the CO and the radiocontinuum emission in an active galaxy to analyze the interplay between the central activity and the molecular gas. We present new high-resolution observations of the CO(1-0) and CO(2-1) emission lines, and 3.5 cm and 20 cm radio continuum emission in the central region of the LINER/starburst galaxy NGC 6764. The galaxy has an outflow morphology in radio continuum, spatially coincident with the CO and H$\alpha$ emission, and centered slightly off the radio continuum peak at the LINER nucleus. The total molecular gas mass in the center is about 7x10^8 \msun, using a CO luminosity to total molecular gas conversion factor that is three times lower than the standard one. CO(1-0) emission is found near the boundaries of the radio continuum emission cone. The outflow has a projected expansion velocity of 25 km/s relative to the systemic velocity of NGC6764. About 4x 10^6 \msun of molecular gas is detected in the outflow. The approximate location (~1 kpc) of the dynamical inner Lindblad resonance has been derived from the rotation curve. The peak of the CO emission is slightly (< 200 pc) offset from the peak of the radio continuum. The molecular gas has most likely been ejected by the stellar winds from the recent starburst, but the CO line ratios show indication of an interaction with the AGN. The energy released by the nuclear starburst is sufficient to explain the observed outflow, even if the data cannot exclude the AGN from being the major energy source. Comparison of the outflow with hydrodynamical simulations suggests that the nuclear starburst is 3--7 Myr old and the bubble-like outflow is still confined and not freely expanding.Comment: Accepted for publication in A&

Ultra High Energy Cosmic Rays from Cosmological Relics

The current status of origin of Ultra High Energy Cosmic Rays (UHECR) is reviewed, with emphasis given to elementary particle solutions to UHECR problem, namely to Topological Defects and Super-Heavy Dark Matter (SHDM) particles. The relic superheavy particles are very efficiently produced at inflation. Being protected by gauge discrete symmetries, they can be long lived. They are clustering in the Galactic halo, producing thus UHECR without Greisen-Zatsepin-Kuzmin cutoff. Topological Defects can naturally produce particles with energies as observed and much higher, but in most cases fail to produce the observed fluxes. Cosmic necklaces, monopoles connected by strings and vortons are identified as most plausible sources. The latter two of them are also clustering in the halo and their observational predictions are identical to those of SHDM particles.Comment: Invited talk at TAUP-99, Paris, September 6 - 10, 1999. Several references are adde

Larkin-Ovchinnikov-Fulde-Ferrell state in quasi-one-dimensional superconductors

The properties of a quasi-one-dimensional (quasi-1D) superconductor with {\it an open Fermi surface} are expected to be unusual in a magnetic field. On the one hand, the quasi-1D structure of the Fermi surface strongly favors the formation of a non-uniform state (Larkin-Ovchinnikov-Fulde-Ferrell (LOFF) state) in the presence of a magnetic field acting on the electron spins. On the other hand, a magnetic field acting on an open Fermi surface induces a dimensional crossover by confining the electronic wave-functions wave-functions along the chains of highest conductivity, which results in a divergence of the orbital critical field and in a stabilization at low temperature of a cascade of superconducting phases separated by first order transistions. In this paper, we study the phase diagram as a function of the anisotropy. We discuss in details the experimental situation in the quasi-1D organic conductors of the Bechgaard salts family and argue that they appear as good candidates for the observation of the LOFF state, provided that their anisotropy is large enough. Recent experiments on the organic quasi-1D superconductor (TMTSF)$_2$ClO$_4$ are in agreement with the results obtained in this paper and could be interpreted as a signature of a high-field superconducting phase. We also point out the possibility to observe a LOFF state in some quasi-2D organic superconductors.Comment: 24 pages+17 figures (upon request), RevTex, ORSAY-LPS-24109