Ownership Structure, Corporate Governance, And Firm Value: Evidence from the East Asian Financial Crisis

We study the effect of ownership structure on firm value during the East Asian financial crisis that began in July 1997. The crisis represents a negative shock to the investment opportunities of firms in these markets that raises the incentives of controlling shareholders to expropriate minority shareholders. Moreover, the large separation between cash flow and control rights that often arise from the use of pyramidal ownership structures and cross-holdings in these markets suggests that insiders have both the incentive and the ability to engage in expropriation. Using data from over 800 firms in eight East Asian countries, we find evidence consistent with this view. Tobin's Q ratios of those firms in which minority shareholders are potentially most subject to expropriation decline twelve percent more than Q ratios in other firms during the crisis period. A similar result holds for stock returns - firms in which minority shareholders are most likely to experience expropriation underperform other firms by about nine percent per year during the crisis period. Further, during the pre-crisis period we find no evidence that firms with a separation between cash flow rights and control rights exhibit performance changes different from firms with no such separation. All of these results are robust to controls for country and industry effects, as well as proxies for differences in risk across firms and the strength of the country's legal institutions. The evidence indicates that corporate ownership structure plays an important role in determining the incentives of insiders to expropriate minority shareholders during the times of declining investment opportunities. Our results add to the literature that examines the link between ownership structure and firm performance and provide additional guidance to policymakers engaged in the ongoing debate about the proper role and design of corporate governance features and legal institutions in developing economies.http://deepblue.lib.umich.edu/bitstream/2027.42/39777/3/wp393.pd

Ownership Structure, Corporate Governance, And Firm Value: Evidence from the East Asian Financial Crisis

We study the effect of ownership structure on firm value during the East Asian financial crisis that began in July 1997. The crisis represents a negative shock to the investment opportunities of firms in these markets that raises the incentives of controlling shareholders to expropriate minority shareholders. Moreover, the large separation between cash flow and control rights that often arise from the use of pyramidal ownership structures and cross-holdings in these markets suggests that insiders have both the incentive and the ability to engage in expropriation. Using data from over 800 firms in eight East Asian countries, we find evidence consistent with this view. Tobin's Q ratios of those firms in which minority shareholders are potentially most subject to expropriation decline twelve percent more than Q ratios in other firms during the crisis period. A similar result holds for stock returns - firms in which minority shareholders are most likely to experience expropriation underperform other firms by about nine percent per year during the crisis period. Further, during the pre-crisis period we find no evidence that firms with a separation between cash flow rights and control rights exhibit performance changes different from firms with no such separation. All of these results are robust to controls for country and industry effects, as well as proxies for differences in risk across firms and the strength of the country's legal institutions. The evidence indicates that corporate ownership structure plays an important role in determining the incentives of insiders to expropriate minority shareholders during the times of declining investment opportunities. Our results add to the literature that examines the link between ownership structure and firm performance and provide additional guidance to policymakers engaged in the ongoing debate about the proper role and design of corporate governance features and legal institutions in developing economies.

Structural Models and Endogeneity in Corporate Finance: the Link Between Managerial Ownership and Corporate Performance

This paper presents a parsimonious, structural model that captures primary economic determinants of the relation between firm value and managerial ownership. Supposing that observed firm size and managerial pay-performance sensitivity (PPS) maximize value, we invert our model to panel data on size and PPS to obtain estimates of the productivity of physical assets and managerial input. Variation of these productivity parameters, optimizing firm size and compensation contract, and the way the parameters and choices interact in the model, all combine to deliver the well-known hump-shaped relation between Tobin’s Q and managerial ownership (e.g., McConnell and Servaes (1990)). Our structural approach illustrates how a quantitative model of the firm can isolate important aspects of organization structure, quantify the economic significance of incentive mechanisms, and minimize the endogeneity and causation problems that so commonly plague empirical corporate finance. Doing so appears to be essential because, by simulating panel data from the model and applying standard statistical tools, we confirm that the customary econometric remedies for endogeneity and causation can be ineffective in application.

Aggressive Surveillance Is Needed to Detect Endoleaks and Junctional Separation between Device Components after Zenith Fenestrated Aortic Reconstruction

Background Junctional separation and resulting type IIIa endoleak is a well-known problem after EVAR (endovascular aneurysm repair). This complication results in sac pressurization, enlargement, and eventual rupture. In this manuscript, we review the incidence of this late finding in our experience with the Cook Zenith fenestrated endoprosthesis (ZFEN, Bloomington, IN). Methods A retrospective review was performed of a prospectively maintained institutional ZFEN fenestrated EVAR database capturing all ZFENs implanted at a large-volume, academic hospital system. Patients who experienced junctional separation between the fenestrated main body and distal bifurcated graft (with or without type IIIa endoleak) at any time after initial endoprosthesis implantation were subject to further evaluation of imaging and medical records to abstract clinical courses. Results In 110 ZFENs implanted from October 2012 to December 2017 followed for a mean of 1.5 years, we observed a 4.5% and 2.7% incidence of clinically significant junctional separation and type IIIa endoleak, respectively. Junctional separation was directly related to concurrent type Ib endoleak in all 5 patients. Three patients presented with sac enlargement. One patient did not demonstrate any evidence of clinically significant endoleak and had a decreasing sac size during follow-up imaging. The mean time to diagnosis of modular separation in these patients was 40 months. Junctional separation was captured in surveillance in 2 patients and reintervened upon before manifestation of endoleak. However, the remaining 3 patients completed modular separation resulting in rupture and emergent intervention in 2 and an aortic-related mortality in the other. Conclusions Junctional separation between the fenestrated main and distal bifurcated body with the potential for type IIIa endoleak is an established complication associated with the ZFEN platform. Therefore, we advocate for maximizing aortic overlap during the index procedure followed by aggressive surveillance and treatment of stent overlap loss captured on imaging

Polyploidy breaks speciation barriers in Australian burrowing frogs Neobatrachus

Polyploidy has played an important role in evolution across the tree of life but it is still unclear how polyploid lineages may persist after their initial formation. While both common and well-studied in plants, polyploidy is rare in animals and generally less understood. The Australian burrowing frog genus Neobatrachus is comprised of six diploid and three polyploid species and offers a powerful animal polyploid model system. We generated exome-capture sequence data from 87 individuals representing all nine species of Neobatrachus to investigate species-level relationships, the origin and inheritance mode of polyploid species, and the population genomic effects of polyploidy on genus-wide demography. We describe rapid speciation of diploid Neobatrachus species and show that the three independently originated polyploid species have tetrasomic or mixed inheritance. We document higher genetic diversity in tetraploids, resulting from widespread gene flow between the tetraploids, asymmetric inter-ploidy gene flow directed from sympatric diploids to tetraploids, and isolation of diploid species from each other. We also constructed models of ecologically suitable areas for each species to investigate the impact of climate on differing ploidy levels. These models suggest substantial change in suitable areas compared to past climate, which correspond to population genomic estimates of demographic histories. We propose that Neobatrachus diploids may be suffering the early genomic impacts of climate-induced habitat loss, while tetraploids appear to be avoiding this fate, possibly due to widespread gene flow. Finally, we demonstrate that Neobatrachus is an attractive model to study the effects of ploidy on the evolution of adaptation in animals

791–6 Prospective Application of RAND Expert Panel Ratings, ACC/AHA Guidelines, and the University of Maryland Revascularizatlon Appropriateness Score (RAS): Only RAS Predicts Clinical Outcome

Several scoring systems exist for evaluating the appropriateness of PTCA and CABG. However, they have not been prospectively correlated with outcome. We prospectively studied 61 pts referred to the catheterization laboratory who were treated with PTCA (33). CABG (15) or medical therapy (13). Forty-five were male; the mean age was 60.2±12.8 years (range 32–87). During a mean followup of 9.3±3.8 months (range 3–16.1),66 events occurred in 35 patients including angina (25), MI (3), death (6), cardiac readmission (17). PTCA (4), CABG (7), CHF (4).For all patients, revascularization appropriateness was ranked by the RAS, ACC/AHA. and RAND Scoring systems. Application of RAS yielded revascularization appropriateness ratings of Necessary (N), Appropriate (A), or Inappropriate (1). Of 11 patients ranked N who did not receive revascularization, 10 had adverse events, compared with 17 of 35 who received revascularization (p=0.02). Of 5 pts ranked I for revascularization who received either PTCA or CABG, 3 had adverse events. In total, 13 of 16 pts who received treatment that was discordant with a N or I RAS rating had adverse events, compared with 20 of 45 who received concordant treatment. (p=0.02)s. These discordant treatments included unnecessary PTCA (5). failure to perform CABG (1), PTCA (3), or either (7). Statistical significance persisted when only “hard” events (excluding angina) were considered (p=0.03). Concordance of treatment with RAND and ACC/AHA revascularization appropriateness scores for PTCA and CABG were not predictive of adverse events in this population.ConclusionRevascularization appropriateness scoring systems differ in their ability to predict outcomes. Of the 3 approaches studied, only treatment concordant with RAS treatment recommendations reduced subsequent adverse events

Reliable Dynamic Packet Scheduling over Lossy Real-Time Wireless Networks

Along with the rapid development and deployment of real-time wireless network (RTWN) technologies in a wide range of applications, effective packet scheduling algorithms have been playing a critical role in RTWNs for achieving desired Quality of Service (QoS) for real-time sensing and control, especially in the presence of unexpected disturbances. Most existing solutions in the literature focus either on static or dynamic schedule construction to meet the desired QoS requirements, but have a common assumption that all wireless links are reliable. Although this assumption simplifies the algorithm design and analysis, it is not realistic in real-life settings. To address this drawback, this paper introduces a novel reliable dynamic packet scheduling framework, called RD-PaS. RD-PaS can not only construct static schedules to meet both the timing and reliability requirements of end-to-end packet transmissions in RTWNs for a given periodic network traffic pattern, but also construct new schedules rapidly to handle abruptly increased network traffic induced by unexpected disturbances while minimizing the impact on existing network flows. The functional correctness of the RD-PaS framework has been validated through its implementation and deployment on a real-life RTWN testbed. Extensive simulation-based experiments have also been performed to evaluate the effectiveness of RD-PaS, especially in large-scale network settings