Governance through trading: does institutional trading discipline empire building and earnings management?

Accounting Session 1: Earnings ManagementThe Conference program's website is located at http://areas.kenan-flagler.unc.edu/conferences/2013cfea/Pages/Final%20Schedule.aspxThis paper empirically identifies an important external corporate governance mechanism through which the institutional trading improves firm values and disciplines managers from conducting value-destroying activities. We propose a reward-punishment intensity (RPI) measure, and show that it is positively related to firm’s subsequent Tobin’s Q. Importantly, we find that firms with higher RPI exhibit less subsequent empire building and earnings management. Furthermore, we show that the exogenous liquidity shock of Decimalization augments the governance effect of institutional trading. We also find that the discipline effect is more pronounced for firms with moderate institutional ownership concentration, higher managers’ wealth-performance sensitivity, and higher trading liquidity, which further supports the governance role of the RPI. The results are robust to using a subsample containing firms with reduced institutional ownership and to using two instrumental variables.postprin

Does short selling discipline managerial empire building?

The Conference program's website is located at http://www.fma.org/Tokyo/TokyoProgramPrelim.htmSession 20 - Monitors and Governance QualityThis paper explores the discipline effect of short selling on managerial empire building. Employing short-selling data from 2002-2011, we document a negative association between the stock lending supply and the subsequent abnormal capital investment. We also find a positive association between the lending supply and the mergers and acquisitions announcement returns of acquiring firms. Firms with higher lending supplies also have higher Tobin’s Q in the subsequent year. In addition, the discipline effect is stronger for firms with higher managers’ wealth-performance sensitivity and with lower financial constraints, and for stock-financing acquisition deals. Alleviating the endogeneity concern, our multivariate difference-in-difference analysis shows that the lending supply is a more effective discipline force for firms that are in the Regulation SHO-Pilot Program during 2005 to 2007.postprin

Does short selling discipline overinvestment?

We explore the disciplining effect of short selling on overinvestment. Firms with more stock lending supply have higher abnormal announcement stock returns of acquiring firms, lower subsequent abnormal capital investments, and longer spells between large investments, and higher subsequent Tobin’s Q and ROA. Alleviating the endogeneity concern, our multivariate difference-in-difference analysis shows that this disciplinary force of lending supply is more effective for firms in the Regulation SHO-PILOT Program. We identify two mechanisms through which short selling disciplines managers: managers’ wealth-performance sensitivity and likelihood of hostile takeovers. Additionally, the disciplinary force only exists for non-financial-constrained firms and nonall-cash M&A deals.postprin

Reconstructing the Star Formation History of the Galaxy

The evolution of the star formation rate in the Galaxy is one of the key ingredients quantifying the formation and determining the chemical and luminosity evolution of galaxies. Many complementary methods exist to infer the star formation history of the components of the Galaxy, from indirect methods for analysis of low-precision data, to new exact analytic methods for analysis of sufficiently high quality data. We summarise available general constraints on star formation histories, showing that derived star formation rates are in general comparable to those seen today. We then show how colour-magnitude diagrams of volume- and absolute magnitude-limited samples of the solar neighbourhood observed by Hipparcos may be analysed, using variational calculus techniques, to reconstruct the local star formation history. The remarkable accuracy of the data coupled to our maximum-likelihood variational method allows objective quantification of the local star formation history with a time resolution of ~ 50 Myr. Over the past 3Gyr, the solar neighbourhood star formation rate has varied by a factor of ~ 4, with characteristic timescale about 0.5Gyr, possibly triggered by interactions with spiral arms.Comment: 12 pages, Proc. of the Sept. 20-24, 1999 Vulcano Workshop ``The chemical evolution of the Milky Way: stars vs. clusters'', eds. F. Matteucci & F. Giovanell

Ex-Day Returns of Stock Distributions: An Anchoring Explanation

We offer a new anchoring explanation for the ex-day abnormal returns of stock distributions including stock dividend distributions, splits, and reverse splits. We propose that investors tend to anchor on cum-day prices in valuating ex-distribution stocks, resulting in a positive association between ex-day returns and adjustment factors. We find that this positive return-factor relation exists for all three types of stock distributions and in both the pre- and post-decimalization periods. Furthermore, we find that this positive return-factor relation is more pronounced among events that are more subject to investors’ anchoring propensity, featured by less investor attention, greater arbitrage difficulty, greater valuation uncertainty, less investor sophistication, and higher market sentiment. Lastly, using brokerage account data, we show that stocks that are traded by investors with more investment experience demonstrate a weaker return-factor relation.postprin

Monetary reward and punishment to response inhibition modulate activation and synchronization within the inhibitory brain network

© 2018 Chikara, Chang, Lu, Lin, Lin and Ko. A reward or punishment can modulate motivation and emotions, which in turn affect cognitive processing. The present simultaneous functional magnetic resonance imaging-electroencephalography study examines neural mechanisms of response inhibition under the influence of a monetary reward or punishment by implementing a modified stop-signal task in a virtual battlefield scenario. The participants were instructed to play as snipers who open fire at a terrorist target but withhold shooting in the presence of a hostage. The participants performed the task under three different feedback conditions in counterbalanced order: a reward condition where each successfully withheld response added a bonus (i.e., positive feedback) to the startup credit, a punishment condition where each failure in stopping deduced a penalty (i.e., negative feedback), and a no-feedback condition where response outcome had no consequences and served as a control setting. Behaviorally both reward and punishment conditions led to significantly down-regulated inhibitory function in terms of the critical stop-signal delay. As for the neuroimaging results, increased activities were found for the no-feedback condition in regions previously reported to be associated with response inhibition, including the right inferior frontal gyrus and the pre-supplementary motor area. Moreover, higher activation of the lingual gyrus, posterior cingulate gyrus (PCG) and inferior parietal lobule were found in the reward condition, while stronger activation of the precuneus gyrus was found in the punishment condition. The positive feedback was also associated with stronger changes of delta, theta, and alpha synchronization in the PCG than were the negative or no-feedback conditions. These findings depicted the intertwining relationship between response inhibition and motivation networks

The iron-chelating drug M30 down-regulates carbon tetrachloride (CCI4)-induced hepatic oxidative stress, inflammation and apoptosis in vitro

Topic: 2 Acute Liver FailureThis journal suppl. entitled: APASL Liver Week 2013BACKGROUND/AIMS: The novel multifunctional brain permeable ironchelator M30 possesses neuroprotective activities against several insults applicable to various neurodegenerative diseases. However, the effect of M30 on CCl4 induced acute liver damage is still unknown. The aim of this study is to investigate whether the multifunctional drug M30 could ameliorate CCl4 induced hepatic injury in human HepG2 cell line. METHODS: HepG2 cells were grown in DMEM supplemented with ...postprin

Successful cryopreservation of coral larvae using vitrification and laser warming.

Climate change has increased the incidence of coral bleaching events, resulting in the loss of ecosystem function and biodiversity on reefs around the world. As reef degradation accelerates, the need for innovative restoration tools has become acute. Despite past successes with ultra-low temperature storage of coral sperm to conserve genetic diversity, cryopreservation of larvae has remained elusive due to their large volume, membrane complexity, and sensitivity to chilling injury. Here we show for the first time that coral larvae can survive cryopreservation and resume swimming after warming. Vitrification in a 3.5 M cryoprotectant solution (10% v/v propylene glycol, 5% v/v dimethyl sulfoxide, and 1 M trehalose in phosphate buffered saline) followed by warming at a rate of approximately 4,500,000 °C/min with an infrared laser resulted in up to 43% survival of Fungia scutaria larvae on day 2 post-fertilization. Surviving larvae swam and continued to develop for at least 12 hours after laser-warming. This technology will enable biobanking of coral larvae to secure biodiversity, and, if managed in a high-throughput manner where millions of larvae in a species are frozen at one time, could become an invaluable research and conservation tool to help restore and diversify wild reef habitats

Assessing the Health of Richibucto Estuary with the Latent Health Factor Index

The ability to quantitatively assess the health of an ecosystem is often of great interest to those tasked with monitoring and conserving ecosystems. For decades, research in this area has relied upon multimetric indices of various forms. Although indices may be numbers, many are constructed based on procedures that are highly qualitative in nature, thus limiting the quantitative rigour of the practical interpretations made from these indices. The statistical modelling approach to construct the latent health factor index (LHFI) was recently developed to express ecological data, collected to construct conventional multimetric health indices, in a rigorous quantitative model that integrates qualitative features of ecosystem health and preconceived ecological relationships among such features. This hierarchical modelling approach allows (a) statistical inference of health for observed sites and (b) prediction of health for unobserved sites, all accompanied by formal uncertainty statements. Thus far, the LHFI approach has been demonstrated and validated on freshwater ecosystems. The goal of this paper is to adapt this approach to modelling estuarine ecosystem health, particularly that of the previously unassessed system in Richibucto in New Brunswick, Canada. Field data correspond to biotic health metrics that constitute the AZTI marine biotic index (AMBI) and abiotic predictors preconceived to influence biota. We also briefly discuss related LHFI research involving additional metrics that form the infaunal trophic index (ITI). Our paper is the first to construct a scientifically sensible model to rigorously identify the collective explanatory capacity of salinity, distance downstream, channel depth, and silt-clay content --- all regarded a priori as qualitatively important abiotic drivers --- towards site health in the Richibucto ecosystem.Comment: On 2013-05-01, a revised version of this article was accepted for publication in PLoS One. See Journal reference and DOI belo

Microevolution of Helicobacter pylori during prolonged infection of single hosts and within families

Our understanding of basic evolutionary processes in bacteria is still very limited. For example, multiple recent dating estimates are based on a universal inter-species molecular clock rate, but that rate was calibrated using estimates of geological dates that are no longer accepted. We therefore estimated the short-term rates of mutation and recombination in Helicobacter pylori by sequencing an average of 39,300 bp in 78 gene fragments from 97 isolates. These isolates included 34 pairs of sequential samples, which were sampled at intervals of 0.25 to 10.2 years. They also included single isolates from 29 individuals (average age: 45 years) from 10 families. The accumulation of sequence diversity increased with time of separation in a clock-like manner in the sequential isolates. We used Approximate Bayesian Computation to estimate the rates of mutation, recombination, mean length of recombination tracts, and average diversity in those tracts. The estimates indicate that the short-term mutation rate is 1.4×10−6 (serial isolates) to 4.5×10−6 (family isolates) per nucleotide per year and that three times as many substitutions are introduced by recombination as by mutation. The long-term mutation rate over millennia is 5–17-fold lower, partly due to the removal of non-synonymous mutations due to purifying selection. Comparisons with the recent literature show that short-term mutation rates vary dramatically in different bacterial species and can span a range of several orders of magnitude