Leverage and firm growth: The European evidences

Abstract This thesis sets out to provide contribution to the on-going discussion of firm leverage and its effects on firm growth (measured in employment, capital expenditure growth and net investments) by applying similar methods as originated in Lang et al. (1996). However, this study presents additional insights dissimilar to existing research in three ways: 1) expand scope by including smaller firms with annual net sales less than $1 billion 2) verify US results in European setting and 3) explore deeper into the data set by introducing additional variables into the mix, such as firm size and legal systems to which the firms belong to. A set of European data from 13 countries during 1990-2010 is used in this study. Firms included must have a SIC code between 2000 and 3999 (in order to minimize regulation effects) and at least$500 million annual sales in any given year in 1990 USD. The final data sample consists of 523 companies and around 5,000-6,000 firm-year observations depending on which one of the five growth measures are investigated: net investment, one and three-year employment growth rate and one and three-year capital expenditure growth rate. In addition to book leverage, the independent variable, sales growth, capital expenditures, cash flow and Tobin's q are added to the regression model as control variables. The pooled European data of 13 countries shows that there is a comparable level of statistically significant negative correlation between book leverage and firm growth as the US results, only slightly stronger. There are also convincing evidence to the notion of stronger limiting effects of debt for firms with poor growth opportunities (approximated by low Tobin's q). However, in contrast to previous studies, no correlation is found between leverage and capital expenditure in this study. In addition, the regression results shows partial support to the hypothesis of company size being inversely related to the severity of debt hindering growth. However, such effect is only limited to the smallest 30% of the firms in Europe concerning net investment but consistently so for all firms with 1-year employment growth measures. With regards to legal systems, the negative correlation between book leverage and net investment is found to be the strongest in the French legal system, where it provides the least amount of investor protection. Hence results show some support for identifying legal system as a factor in leverage/debt dynamic but such conclusion is far from irrefutable

Facial expressions modulate the interpretation of spoken quantifiers in communication

Face-to-face communication is multimodal and involves different information channels between interacting individuals, including speech, hand/arm gestures, vocalizations, and facial expressions. However, due to methodological challenges, most studies of multimodal communication have focused primarily on (1) hand/arm gestures while neglecting facial expressions and (2) the production of these gestures rather than their perception and interpretation. Consequently, it remains unknown how facial expressions contribute to multimodal communication, including how they interact with speech. We addressed this knowledge gap by investigating whether and how facial expressions influence the interpretation of spoken utterances of vague quantifiers (e.g., many or several). In each trial, participants viewed different faces identities who each uttered a sentence using a vague quantifier—e.g., ‘Of these, several are cows’— while displaying one of two facial expressions—opening or closing— or neutral. We expected that the opening facial expression would lead to larger number responses and the closing facial expression to lead to smaller number responses, analogous to hand gestures. We therefore examined whether participant number estimations shift in these expected directions. Results show that facial expressions modulated the participants’ number responses as expected. Specifically, four out of ten participants’ responses increased with opening facial expressions and decreased with closing facial expressions. This result suggests that facial expressions can represent quantities in a similar way as iconic hand gestures. Further, two participants increased their responses regardless of facial expression type, two participants increased their responses only for opening facial expression, and two participants showed no significant effect. Together, these results suggest that facial expressions serve several pragmatic functions in communication by operating as iconic gestures or as emphasizers. To our knowledge, this is the first study showing that facial expressions can influence the interpretation of vague quantifiers. Our results lay a foundation for future work examining how people interpret multimodal signals in daily conversation

A Practical Algorithm for Topic Modeling with Provable Guarantees

Topic models provide a useful method for dimensionality reduction and exploratory data analysis in large text corpora. Most approaches to topic model inference have been based on a maximum likelihood objective. Efficient algorithms exist that approximate this objective, but they have no provable guarantees. Recently, algorithms have been introduced that provide provable bounds, but these algorithms are not practical because they are inefficient and not robust to violations of model assumptions. In this paper we present an algorithm for topic model inference that is both provable and practical. The algorithm produces results comparable to the best MCMC implementations while running orders of magnitude faster.Comment: 26 page

SmartUnit: Empirical Evaluations for Automated Unit Testing of Embedded Software in Industry

In this paper, we aim at the automated unit coverage-based testing for embedded software. To achieve the goal, by analyzing the industrial requirements and our previous work on automated unit testing tool CAUT, we rebuild a new tool, SmartUnit, to solve the engineering requirements that take place in our partner companies. SmartUnit is a dynamic symbolic execution implementation, which supports statement, branch, boundary value and MC/DC coverage. SmartUnit has been used to test more than one million lines of code in real projects. For confidentiality motives, we select three in-house real projects for the empirical evaluations. We also carry out our evaluations on two open source database projects, SQLite and PostgreSQL, to test the scalability of our tool since the scale of the embedded software project is mostly not large, 5K-50K lines of code on average. From our experimental results, in general, more than 90% of functions in commercial embedded software achieve 100% statement, branch, MC/DC coverage, more than 80% of functions in SQLite achieve 100% MC/DC coverage, and more than 60% of functions in PostgreSQL achieve 100% MC/DC coverage. Moreover, SmartUnit is able to find the runtime exceptions at the unit testing level. We also have reported exceptions like array index out of bounds and divided-by-zero in SQLite. Furthermore, we analyze the reasons of low coverage in automated unit testing in our setting and give a survey on the situation of manual unit testing with respect to automated unit testing in industry.Comment: In Proceedings of 40th International Conference on Software Engineering: Software Engineering in Practice Track, Gothenburg, Sweden, May 27-June 3, 2018 (ICSE-SEIP '18), 10 page