“Does the tail wag the dog? The effect of credit default swaps on credit risk”

Credit default swaps (CDS) are derivative contracts that are widely used as tools for credit risk management. However, in recent years, concerns have been raised about whether CDS trading itself affects the credit risk of the reference entities. We use a unique, comprehensive sample covering CDS trading of 901 North American corporate issuers, between June 1997 and April 2009, to address this question. We find that the probability of both a credit rating downgrade and bankruptcy increase, with large economic magnitudes, after the inception of CDS trading. This finding is robust to controlling for the endogeneity of CDS trading. Beyond the CDS introduction effect, we show that firms with relatively larger amounts of CDS contracts outstanding, and those with relatively more “no restructuring” contracts than other types of CDS contracts covering restructuring, are more adversely affected by CDS trading. Moreover, the number of creditors increases after CDS trading begins, exacerbating creditor coordination failure for the resolution of financial distress

Does the Tail Wag the Dog? The Effect of Credit Default Swaps on Credit Risk

Concerns have been raised, especially since the global financial crisis, about whether trading in credit default swaps (CDS) increases the credit risk of the reference entities. This study examines this issue by quantifying the impact of CDS trading on the credit risk of firms. We use a unique, comprehensive sample covering 901 CDS introductions on North American corporate issuers between June 1997 and April 2009 to address this question. We present evidence that the probability of a credit downgrade and of bankruptcy both increase after the inception of CDS trading. The effect is robust to controlling for the endogeneity of CDS introduction, i.e., the possibility that firms selected for CDS trading are more likely to suffer a subsequent deterioration in creditworthiness. We show that the CDS-protected lenders’ reluctance to restructure is the most likely cause of the increase in credit risk. We present evidence that firms with relatively large amounts of CDS contracts outstanding, and those with “No Restructuring” contracts, are more likely to be adversely affected by CDS trading. We also document that CDS trading increases the level of participation of bank lenders to the firm. Our findings are broadly consistent with the predictions of the “empty creditor” model of Bolton and Oehmke (2011)

Credit default swaps and corporate innovation

We show that credit default swap (CDS) trading on a firm’s debt positively influences its technological innovation output measured by patents and patent citations. This positive effect is more pronounced in firms relying more on debt financing or being more subject to continuous monitoring by lenders prior to CDS trade initiation. Moreover, after CDS trade initiation, firms pursue more risky and original innovations and generate patents with higher economic value. Further analysis suggests that CDSs improve borrowing firms’ innovation output by enhancing lenders’ risk tolerance and borrowers’ risk taking in the innovation process rather than by increasing R&D investment. Taken together, our findings reveal the real effects of CDSs on companies’ investments and technological progress

The use of sensitive chemical antibodies for diagnosis: detection of low levels of Epcam in breast cancer

EpCAM is expressed at low levels in a variety of normal human epithelial tissues, but is overexpressed in 70–90% of carcinomas. From a clinico-pathological point of view, this has both prognostic and therapeutic significance. EpCAM was first suggested as a therapeutic target for the treatment of epithelial cancers in the 1990s. However, following several immunotherapy trials, the results have been mixed. It has been suggested that this is due, at least in part, to an unknown level of EpCAM expression in the tumors being targeted. Thus, selection of patients who would benefit from EpCAM immunotherapy by determining EpCAM status in the tumor biopsies is currently undergoing vigorous evaluation. However, current EpCAM antibodies are not robust enough to be able to detect EpCAM expression in all pathological tissues. Here we report a newly developed EpCAM RNA aptamer, also known as a chemical antibody, which is not only specific but also more sensitive than current antibodies for the detection of EpCAM in formalin-fixed paraffin-embedded primary breast cancers. This new aptamer, together with our previously described aptamer, showed no non- specific staining or cross-reactivity with tissues that do not express EpCAM. They were able to reliably detect target proteins in breast cancer xenograft where an anti-EpCAM antibody (323/A3) showed limited or no reactivity. Our results demonstrated a more robust detection of EpCAM using RNA aptamers over antibodies in clinical samples with chromogenic staining. This shows the potential of aptamers in the future of histopathological diagnosis and as a tool to guide targeted immunotherapy

Can central banks boost corporate investment? Evidence from ECB liquidity injections

Liquidity injections by central banks have become frequent and massive, but their real effects on corporate investment remain unclear. We examine the longer-term refinancing operations (LTROs) of the European Central Bank (ECB) during the euro-zone sovereign crisis and show that greater LTRO funding to banks is associated with lower corporate investment. Riskier banks received funds through the LTROs and subsequently increased their holdings of risky sovereign debt. Corporate investment reductions are associated with these banks. Further, concurrent fiscal and regulatory policies impeded the effectiveness of the ECB liquidity injections. Our findings identify the contributing factors for these failures of monetary policy

ABCB5-Targeted chemoresistance reversal inhibits merkel cell carcinoma growth

Merkel cell carcinoma (MCC) is a highly aggressive neuroendocrine skin cancer with profound but poorly understood resistance to chemotherapy, which poses a significant barrier to clinical MCC treatment. Here we show that ATP-binding cassette member B5 (ABCB5) confers resistance to standard-of-care MCC chemotherapeutic agents and provide proof-of-principle that ABCB5 blockade can inhibit human MCC tumor growth through sensitization to drug-induced cell cytotoxicity. ABCB5 expression was detected in both established MCC lines and clinical MCC specimens at levels significantly higher than those in normal skin. Carboplatin- and etoposide-resistant MCC cell lines exhibited increased expression of ABCB5, along with enhanced ABCB1 and ABCC3 transcript expression. ABCB5-expressing MCC cells in heterogeneous cancers preferentially survived treatment with carboplatin and etoposide in vitro and in human MCC xenograft-bearing mice in vivo. Moreover, patients with MCC also exhibited enhanced ABCB5 positivity after carboplatin- and etoposide-based chemotherapy, pointing to clinical significance of this chemoresistance mechanism. Importantly, ABCB5 blockade reversed MCC drug resistance and impaired tumor growth in xenotransplantation models in vivo. Our results establish ABCB5 as a chemoresistance mechanism in MCC and suggest utility of this molecular target for improved MCC therapy. © 2016 The Author

Cross-National Differences in Victimization : Disentangling the Impact of Composition and Context

Varying rates of criminal victimization across countries are assumed to be the outcome of countrylevel structural constraints that determine the supply ofmotivated o¡enders, as well as the differential composition within countries of suitable targets and capable guardianship. However, previous empirical tests of these ‘compositional’ and ‘contextual’ explanations of cross-national di¡erences have been performed upon macro-level crime data due to the unavailability of comparable individual-level data across countries. This limitation has had two important consequences for cross-national crime research. First, micro-/meso-level mechanisms underlying cross-national differences cannot be truly inferred from macro-level data. Secondly, the e¡ects of contextual measures (e.g. income inequality) on crime are uncontrolled for compositional heterogeneity. In this paper, these limitations are overcome by analysing individual-level victimization data across 18 countries from the International CrimeVictims Survey. Results from multi-level analyses on theft and violent victimization indicate that the national level of income inequality is positively related to risk, independent of compositional (i.e. micro- and meso-level) di¡erences. Furthermore, crossnational variation in victimization rates is not only shaped by di¡erences in national context, but also by varying composition. More speci¢cally, countries had higher crime rates the more they consisted of urban residents and regions with lowaverage social cohesion.

Metal-driven Operation of the Human Large-conductance Voltage- and Ca^(2+)-dependent Potassium Channel (BK) Gating Ring Apparatus

Large-conductance voltage- and Ca^(2+)-dependent K^+ (BK, also known as MaxiK) channels are homo-tetrameric proteins with a broad expression pattern that potently regulate cellular excitability and Ca^(2+) homeostasis. Their activation results from the complex synergy between the transmembrane voltage sensors and a large (>300 kDa) C-terminal, cytoplasmic complex (the “gating ring”), which confers sensitivity to intracellular Ca^(2+) and other ligands. However, the molecular and biophysical operation of the gating ring remains unclear. We have used spectroscopic and particle-scale optical approaches to probe the metal-sensing properties of the human BK gating ring under physiologically relevant conditions. This functional molecular sensor undergoes Ca^(2+)- and Mg^(2+)-dependent conformational changes at physiologically relevant concentrations, detected by time-resolved and steady-state fluorescence spectroscopy. The lack of detectable Ba^(2+)-evoked structural changes defined the metal selectivity of the gating ring. Neutralization of a high-affinity Ca^(2+)-binding site (the “calcium bowl”) reduced the Ca^(2+) and abolished the Mg^(2+) dependence of structural rearrangements. In congruence with electrophysiological investigations, these findings provide biochemical evidence that the gating ring possesses an additional high-affinity Ca^(2+)-binding site and that Mg^(2+) can bind to the calcium bowl with less affinity than Ca^(2+). Dynamic light scattering analysis revealed a reversible Ca^(2+)-dependent decrease of the hydrodynamic radius of the gating ring, consistent with a more compact overall shape. These structural changes, resolved under physiologically relevant conditions, likely represent the molecular transitions that initiate the ligand-induced activation of the human BK channel