The Information Content of Operational Efficiency

We address whether and why a firm's operational efficiency has information content for investors and whether it is associated with prolonged price discovery at quarterly earnings announcements. We measure operational efficiency using the cash conversion cycle (CCC), where shorter CCC reflects better operational efficiency. We find that CCC has information content for investors in that shorter CCC is positively related to abnormal stock returns and trading volume at quarterly earnings announcements. We also find that shorter CCC is associated with higher future earnings and cash flows, which helps explain the positive announcement return and volume reactions. In addition, our findings reveal that CCC is associated with prolonged price discovery in that shorter CCC is associated with less timely and less efficient incorporation of information into stock prices and larger post-earnings-announcement drift. However, these findings largely are attributable to firms that announce bad earnings news

Market Reaction to the Adoption of IFRS in Europe

This study examines the European stock market reaction to sixteen events associated with the adoption of International Financial Reporting Standards (IFRS) in Europe. European IFRS adoption represented a major milestone towards financial reporting convergence yet spurred controversy reaching the highest levels of government. We find a more positive reaction for firms with lower quality pre-adoption information, which is more pronounced in banks, and with higher pre-adoption information asymmetry, consistent with investors expecting net information quality benefits from IFRS adoption. We also find that the reaction is less positive for firms domiciled in code law countries, consistent with investors' concerns over enforcement of IFRS in those countries. Finally, we find a positive reaction to IFRS adoption events for firms with high quality pre-adoption information, consistent with investors expecting net convergence benefits from IFRS adoption. Overall, the findings suggest that investors in European firms perceived net benefits associated with IFRS adoption.IFRS, IAS 39, Convergence, Europe, Event Study

Erratum to: The contribution of bank regulation and fair value accounting to procyclical leverage

Abstract Our analysis of how banks’ responses to asset price changes can result in procyclical leverage reveals that, for banks with a binding regulatory leverage constraint, absent differences in regulatory risk weights across assets, procyclical leverage does not occur. For banks without a binding constraint, fair value and bank regulation both can contribute to procyclical leverage. Empirical findings based on a large sample of U.S. commercial banks reveal that bank regulation explains procyclical leverage for banks relatively close to the regulatory leverage constraint and contributes to procyclical leverage for those that are not. We also show that fair value accounting does not contribute to procyclical leverage

Why Do Pro Forma and Street Earnings not Reflect Changes in GAAP? Evidence From SFAS 123R

This study examines how key market participants—managers and analysts—responded to SFAS 123R’s controversial requirement that firms recognize stock-based compensation expense. Despite mandated recognition of the expense, some firms’ managers exclude it from pro forma earnings and some firms’ analysts exclude it from Street earnings. We find evidence consistent with managers opportunistically excluding the expense to increase earnings, smooth earnings, and meet earnings benchmarks but no evidence that these exclusions result in an earnings measure that better predicts future firm performance. In contrast, we find that analysts exclude the expense from earnings forecasts when exclusion increases earnings’ predictive ability for future performance and that opportunism generally does not explain exclusion by analysts incremental to exclusion by managers. Thus our findings indicate that opportunism is the primary explanation for exclusion of the expense from pro forma earnings and predictive ability is the primary explanation for exclusion from Street earnings. Our findings suggest the controversy surrounding the recognition of stock-based compensation expense may be attributable to cross-sectional variation in the relevance of the expense for equity valuation, as well as to differing incentives of market participants

Reply to Sopek Merkaš, I.; Lakušić, N. Comment on "von Känel et al. Early Trauma-Focused Counseling for the Prevention of Acute Coronary Syndrome-Induced Posttraumatic Stress: Social and Health Care Resources Matter. J. Clin. Med. 2022, 11, 1993".

We thank Merkaš and Lakušić for commenting on our recently published paper; in the paper, we suggested that resources in a patient's social environment may moderate the benefit of one single-session trauma-focused counseling in the prevention of acute coronary syndrome (ACS)-induced posttraumatic stress disorder (PTSD) symptoms [...]

Reply to Sopek Merkaš, I.; Lakušić, N. Comment on “von Känel et al. Early Trauma-Focused Counseling for the Prevention of Acute Coronary Syndrome-Induced Posttraumatic Stress: Social and Health Care Resources Matter. J. Clin. Med. 2022, 11, 1993”

We thank Merkaš and Lakušić for commenting on our recently published paper; in the paper, we suggested that resources in a patient’s social environment may moderate the benefit of one single-session trauma-focused counseling in the prevention of acute coronary syndrome (ACS)-induced posttraumatic stress disorder (PTSD) symptoms [1]. Their comment gives a comprehensive summary on the topic of ACS-induced PTSD and its treatment [2]. We agree with the authors that guidelines and standards regarding the identification and treatment of patients at high risk for developing PTSD after ACS remain lacking. We designed the MI-SPRINT study to test whether trauma-focused psychological counseling is more effective than stress-focused counseling in preventing PTSD symptoms after acute ACS [3]. Our study showed no beneficial effect of trauma-focused counseling on PTSD symptoms; after 3 and 12 months, we found no difference in the severity of PTSD symptoms between patients with early trauma-focused counseling and those with stress-focused counseling in the total sample. However, our results suggested that psychological counseling in general might help distressed patients to prevent posttraumatic psychological responses compared with no intervention [4,5]. Importantly, PTSD symptoms that had developed after 3 months were shown to have been persistent up to 12 months after ACS, despite the delivery of one session of early psychological counseling [6]. Furthermore, as alluded to above, we showed that social support and cardiac rehabilitation act as moderators of the intervention; specifically, trauma-focused counseling was associated with fewer PTSD symptoms compared with stress-focused counseling in patients with high social support and with longer participation in cardiac rehabilitation [1]. Moreover, the data of MI-SPRINT showed that several factors contribute to identifying patients at risk for ACS-induced PTSD symptoms, such as high perceived distress during ACS [6], perception of higher harmful consequences of the illness [7], perception of a hectic hospital environment [8], sleep problems [9], and low trait resilience [10]. Screening for risk factors or specific symptoms—e.g., in the cardiac rehabilitation setting, as indicated by the Merkaš and Lakušić [1]—is important. However, we believe that screening alone may have little clinical benefit. It will be much more crucial to offer effective treatment to patients identified at high risk of developing PTSD or patients with established PTSD symptoms. In summary, further studies are needed to develop a standardized approach for the screening of patients at risk of clinically relevant, ACS-induced PTSD symptoms and to establish efficacious interventions that can be applied in a clinical setting. For instance, multisession early counseling could be elaborated and tested based on our findings to prevent the development of PTSD symptoms in patients at risk

Early Trauma-Focused Counseling for the Prevention of Acute Coronary Syndrome-Induced Posttraumatic Stress: Social and Health Care Resources Matter.

BACKGROUND A one-size-fits-all approach might explain why early psychological interventions are largely ineffective in preventing the development of posttraumatic stress disorder (PTSD) symptoms triggered by acute medical events. We examined the hypothesis that social and health care resources are moderators of an intervention effect. METHODS Within 48 h of hospital admission, 129 patients (mean age 58 years, 83% men) with acute coronary syndrome (ACS) self-rated their social support and were randomized to one single session of trauma-focused counseling (TFC) or stress-focused counseling (SFC) (active control intervention). Clinician-rated PTSD symptoms, use of cardiac rehabilitation (CR) and use of psychotherapy were assessed at 3 and 12 months. Random mixed regression multivariable models were used to analyze associations with PTSD symptoms over time. RESULTS TFC did not prevent ACS-induced PTSD symptom onset better than SFC; yet, there were significant and independent interactions between "intervention" (TFC or SFC) and social support (p = 0.013) and between "intervention" and duration of CR in weeks (p = 0.034). Patients with greater social support or longer participation in CR had fewer PTSD symptoms in the TFC group compared with the SFC group. The number of psychotherapy sessions did not moderate the intervention effect. CONCLUSIONS Early psychological intervention after ACS with a trauma-focused approach to prevent the development of PTSD symptoms may be beneficial for patients who perceive high social support or participate in CR for several weeks

Relationship between a Self-Reported History of Depression and Persistent Elevation in C-Reactive Protein after Myocardial Infarction.

BACKGROUND Elevated levels of C-reactive protein (CRP) are associated with both an increased risk of cardiovascular disease (CVD) and depression. We aimed to test the hypothesis that a self-report history of depression is associated with a smaller decrease in CRP levels from hospital admission to 3-month follow-up in patients with acute myocardial infarction (MI). METHODS We assessed 183 patients (median age 59 years; 84% men) with verified MI for a self-report history of lifetime depression and plasma CRP levels within 48 h of an acute coronary intervention and again for CRP levels at three months. CRP values were categorized according to their potential to predict CVD risk at hospital admission (acute inflammatory response: 0 to <5 mg/L, 5 to <10 mg/L, 10 to <20 mg/L, and ≥20 mg/L) and at 3 months (low-grade inflammation: 0 to <1 mg/L, 1 to <3 mg/L, and ≥3 mg/L). Additionally, in a subsample of 84 patients showing admission CRP levels below 20 mg/L, changes in continuous CRP values over time were also analyzed. RESULTS After adjustment for a range of potentially important covariates, depression history showed a significant association with a smaller decrease in both CRP risk categories (r = 0.261, p < 0.001) and log CRP levels (r = 0.340, p = 0.005) over time. CONCLUSIONS Self-reported history of depression may be associated with persistently elevated systemic inflammation three months after MI. This finding warrants studies to test whether lowering of inflammation in patients with an acute MI and a history of depression may improve prognosis

Relationship between a Self-Reported History of Depression and Persistent Elevation in C-Reactive Protein after Myocardial Infarction

Background: Elevated levels of C-reactive protein (CRP) are associated with both an increased risk of cardiovascular disease (CVD) and depression. We aimed to test the hypothesis that a self-report history of depression is associated with a smaller decrease in CRP levels from hospital admission to 3-month follow-up in patients with acute myocardial infarction (MI). Methods: We assessed 183 patients (median age 59 years; 84% men) with verified MI for a self-report history of lifetime depression and plasma CRP levels within 48 h of an acute coronary intervention and again for CRP levels at three months. CRP values were categorized according to their potential to predict CVD risk at hospital admission (acute inflammatory response: 0 to <5 mg/L, 5 to <10 mg/L, 10 to <20 mg/L, and ≥20 mg/L) and at 3 months (low-grade inflammation: 0 to <1 mg/L, 1 to <3 mg/L, and ≥3 mg/L). Additionally, in a subsample of 84 patients showing admission CRP levels below 20 mg/L, changes in continuous CRP values over time were also analyzed. Results: After adjustment for a range of potentially important covariates, depression history showed a significant association with a smaller decrease in both CRP risk categories (r = 0.261, p < 0.001) and log CRP levels (r = 0.340, p = 0.005) over time. Conclusions: Self-reported history of depression may be associated with persistently elevated systemic inflammation three months after MI. This finding warrants studies to test whether lowering of inflammation in patients with an acute MI and a history of depression may improve prognosis