Managerial incentives and changes in corporate investments following the inception of credit default swap trade

A credit default swap (CDS) enables a lender to hedge its risk exposure on a loan given to reference client. The lender then reduces the monitoring of the client’s activities as well as aiding the distressed client. Two contrasting predictions can be made about how the borrower would respond to the altered lender-borrower relationship. (1) The borrower reduces risky investments to lower its vulnerability to financial distress. (2) The borrower pursues volatility-enhancing projects to increase the value of call options built into its shareholder investments. We find that a borrower shifts to a more conservative policy when its managers have low portfolio sensitivity to stock volatility (vega). A borrower with high managerial vega, however, seeks volatility-enhancing projects. Shareholders then increase vega incentives for managers to maintain investments in risky, positive NPV projects at pre CDS levels. This action, however, also results in higher bankruptcy risk. Our study shows a unique interaction between the manager-shareholder and lender-shareholder conflicts arising from CDS inception, which alters the course of the borrower’s operating policy

Heightened Shareholder Interest in Firm Affairs following the Inception of Credit Default Swap Trade

The literature shows that a lender reduces its monitoring of client activities and decreases the accommodation it offers to a distressed client after the lender receives insurance on its outstanding client debt via a credit default swap (CDS). These changes in lender behavior can exacerbate downside risk but can also create upside potential for the reference firm’s shareholders. We predict that the firm’s shareholders, being the residual claimholders, would then increase their interest in firm affairs, by demanding improved corporate governance and the quality of financial reports. We find an increase in independence of the board of directors and a decline in the dual position of chief executive officer and board chairman following the onset of CDS trading. We also find higher earnings response coefficient and trading volumes around the earnings announcement dates and lower post–earnings announcement drift. Overall, our results suggest that shareholders demand and obtain higher quality of, or pay greater attention to, financial reports in the years following the onset of CDS trading

Heterotic Action in SUGRA-SYM Background

We consider the generalization of the heterotic action considered by Cherkis and Schwarz where the chiral bosons are introduced in a manifestly covariant way using an auxiliary field. In particular, we construct the kappa-symmetric heterotic action in ten-dimensional supergravity background coupled to super Yang-Mills theory and prove its kappa-symmetry. The usual Bianchi identity of Type I supergravity with super Yang-Mills dH_3= -\tr F\wedge F is crucially used. For technical reason, the Yang-Mills field is restricted to be abelian.Comment: 12 pages, no figures, added comments in the acknowledgmen

Dispersive coupling between MoSe2 and an integrated zero-dimensional nanocavity

Establishing a coherent interaction between a material resonance and an optical cavity is a necessary first step to study semiconductor quantum optics. Here we report on the signature of a coherent interaction between a two-dimensional excitonic transition in monolayer MoSe2 and a zero-dimensional, ultra-low mode volume, V∼ 2(λ/n)^3, on-chip photonic crystal nanocavity. This coherent interaction manifests as a dispersive shift of the cavity transmission spectrum, when the exciton-cavity detuning is decreased via temperature tuning. The exciton-cavity coupling is estimated to be about 6.5 meV, with a cooperativity of about 4.0 at 80 K, showing our material system is on the verge of strong coupling. The small mode-volume of the resonator is instrumental in reaching the strongly nonlinear regime, while on-chip cavities will help create a scalable quantum photonic platform

Bandgap and Band Offsets Determination of Semiconductor Heterostructures using Three-terminal Ballistic Carrier Spectroscopy

Utilizing three-terminal tunnel emission of ballistic electrons and holes, we have developed a method to self-consistently measure the bandgap of semiconductors and band discontinuities at semiconductor heterojunctions without any prerequisite material parameter. Measurements are performed on lattice-matched GaAs/AlxGa1-xAs and GaAs/(AlxGa1-x)0.51In0.49P single-barrier heterostructures. The bandgaps of AlGaAs and AlGaInP are measured with a resolution of several meV at 4.2 K. For the GaAs/AlGaAs interface, the measured Gamma band offset ratio is 60.4:39.6 (+/-2%). For the GaAs/AlGaInP interface, this ratio varies with the Al mole fraction and is distributed more in the valence band. A non-monotonic Al composition dependence of the conduction band offset at the GaAs/AlGaInP interface is observed in the indirect-gap regime.Comment: 4 pages, 4 figures, submitted to Phys. Rev. Lett

Gauge Symmetry Enhancement and Radiatively Induced Mass in the Large N Nonlinear Sigma Model

We consider a hybrid of nonlinear sigma models in which two complex projective spaces are coupled with each other under a duality. We study the large N effective action in 1+1 dimensions. We find that some of the dynamically generated gauge bosons acquire radiatively induced masses which, however, vanish along the self-dual points where the two couplings characterizing each complex projective space coincide. These points correspond to the target space of the Grassmann manifold along which the gauge symmetry is enhanced, and the theory favors the non-Abelian ultraviolet fixed point.Comment: 11 pages, REVTEX, typos are corrected, version to appear in Phys. Rev.

Chiral primary cubic interactions from pp-wave supergravity

We explicitly construct cubic interaction light-cone Hamiltonian for the chiral primary system involving the metric fields and the self-dual four-form fields in the IIB pp-wave supergravity. The background fields representing pp-waves exhibit SO(4)*SO(4)*Z_2 invariance. It turns out that the interaction Hamiltonian is precisely the same as that for the dilaton-axion system, except for the fact that the chiral primary system fields have the opposite parity to that of the dilaton-axion fields under the Z_2 transformation that exchanges two SO(4)'s.Comment: 14 pages, A few comments are adde

Subaru Hyper Suprime-Cam Survey for An Optical Counterpart of GW170817

We perform a $z$-band survey for an optical counterpart of a binary neutron star coalescence GW170817 with Subaru/Hyper Suprime-Cam. Our untargeted transient search covers $23.6$ deg$^2$ corresponding to the $56.6\%$ credible region of GW170817 and reaches the $50\%$ completeness magnitude of $20.6$ mag on average. As a result, we find 60 candidates of extragalactic transients, including J-GEM17btc (a.k.a. SSS17a/DLT17ck). While J-GEM17btc is associated with NGC 4993 that is firmly located inside the 3D skymap of GW170817, the other 59 candidates do not have distance information in the GLADE v2 catalog or NASA/IPAC Extragalactic Database (NED). Among 59 candidates, 58 are located at the center of extended objects in the Pan-STARRS1 catalog, while one candidate has an offset. We present location, $z$-band apparent magnitude, and time variability of the candidates and evaluate the probabilities that they are located inside of the 3D skymap of GW170817. The probability for J-GEM17btc is $64\%$ being much higher than those for the other 59 candidates ($9.3\times10^{-3}-2.1\times10^{-1}\%$). Furthermore, the possibility, that at least one of the other 59 candidates is located within the 3D skymap, is only $3.2\%$. Therefore, we conclude that J-GEM17btc is the most-likely and distinguished candidate as the optical counterpart of GW170817.Comment: 14 pages, 9 figures. Accepted for publication in PASJ (Publications of the Astronomical Society of Japan

Duality and Enhanced Gauge Symmetry in 2+1 Dimensions

We investigate the enlarged CP(N) model in 2+1 dimensions. This is a hybrid of two CP(N) models coupled with each other in a dual symmetric fashion, and it exhibits the gauge symmetry enhancement and radiative induction of the finite off-diagonal gauge boson mass as in the 1+1 dimensional case. We solve the mass gap equations and study the fixed point structure in the large-N limit. We find an interacting ultraviolet fixed point which is in contrast with the 1+1 dimensional case. We also compute the large-N effective gauge action explicitly.Comment: 26 pags, latex, 5 .eps figures, typos corrected. To appear in J. Phys.