The Impact of Institutional Differences on Derivatives Usage

This paper examines the influence of institutional differences on risk management practices in the US andthe Netherlands. This comparison is interesting because the Dutch firms' institutional setting differs fromthe US setting with respect to shareholder orientation, international trade, disclosure regulation, andreliance on financial markets. In contrast with previous comparisons, we apply a matching and weightingstrategy that corrects for differences over industry and size classes across the Dutch and US samples.After these corrections, the remaining results can be attributed more directly to institutional differences.We find that due to the greater openness of the Netherlands, Dutch firms hedge more financialrisk, especially more currency risk, than US firms. Dutch firms, however, show a lower level of concernover derivatives usage, which is consistent with having less active minority shareholders and less strictdisclosure requirements than the US has. Dutch firms focus le ss on stabilizing accounting earnings withderivatives than US firms, which is likely attributable to the strong shareholder orientation in the USversus the stakeholder orientation in the Netherlands. Whereas Dutch firms tend to rely almostexclusively on OTC-transactions, US firms use exchange-traded derivatives and more counter-parties.This results in US firms imposing stricter requirements on counter-party rating for derivativestransactions. This distinction can be attributed to the differences in the financial environments betweenthe US and the Netherlands. These, and other results, strongly suggest that institutional differencesbetween the US and the Netherlands have an important impact on risk management practices andderivatives use across US and Dutch firms.hedging;risk management;derivatives;international finance

A Firm-Specific Analysis of the Exchange-Rate Exposure of Dutch Firms

We examine the relationship between exchange-rate changes and stockreturns for a sample of Dutch firms over 1994-1998. We find that over50% of the firms are significantly exposed to exchange-rate risk.Furthermore, all firms with significant exchange-rate exposure benefitfrom a depreciation of the Dutch guilder relative to a trade-weightedcurrency index. This result confirms that firms in open economies,such as the Netherlands, exhibit significant exchange-rate exposure.We collect unique information on the most relevant individualcurrencies for each firm with respect to their influence on firmvalue. Our results indicate that the use of a trade-weighted currencyindex and the use of individual exchange rates are complements. Wealso measure the determinants of exchange-rate exposure. As expected,we find that firm size and the foreign sales ratio are significantlyand positively related to exchange-rate exposure. In contrast with ourhypothesis, off-balance hedging using derivatives has no significanteffects. Finally, in line with theory, we find that exposure issignificantly reduced through on-balance sheet hedging, i.e. throughforeign loans and by producing in factories abroad.risk management;The Netherlands;foreign exchange rates;international finance;exposure measurement

The Impact of Institutional Differences on Derivatives Usage: A Comparative Study of US and Dutch Firms

This paper tests the influence of institutional differences on risk management practices.Several survey studies have investigated derivatives usage for risk management purposes in the US (see, among others, Bodnar, Hayt, Marston and Smithson, 1995 and Bodnar, Hayt and Marston, 1996, 1998).In this paper, we compare derivative practices of US and Dutch firms.This comparison is interesting because the institutional setting for Dutch firms differs from the US setting with respect to shareholder orientation, international trade, disclosure regulation, and the reliance on financial markets.In a number of survey studies additional countries have been studied, such as New Zealand (Berkman, Bradbury and Magan, 1997), Sweden (Alkebäck and Hagelin, 1999) and Germany (Bodnar and Gebhardt, 1999).In contrast with these papers, we facilitate a comparison by applying a matching and a weighting strategy, which corrects for different distributions over industry and size classes in the Dutch and US samples.After these corrections, the remaining results can be attributed to institutional differences.We find that Dutch firms hedge more financial risk. Because of the greater openness of the Netherlands, Dutch firms experience far more foreign exchange exposure and hedge more currency risk.US firms have more concerns regarding derivative usage, which may be linked to the stricter disclosure requirements in the US.US firms also focus more on accounting earnings, which may be attributable to the shareholder orientation in the US versus the stakeholder orientation in the Netherlands.Whereas Dutch firms tend to rely on OTC-transactions, US firms use exchange-traded derivatives and therefore require a higher counter party rating for derivatives transactions. This distinction can be accredited to the differences in the financial environments between the US and the Netherlands.The aforementioned results indicate that institutional differences between the US and the Netherlands have a significant effect on the risk management practices and derivatives use of US and Dutch firms.risk management;hedging;derivatives

Curing the Dutch Disease: Lessons for United States Disability Policy

In the 1990s, the United States reformed welfare programs targeted on single mothers and dramatically reduced their benefit receipt while increasing their employment and economic wellbeing. Despite increasing calls to do the same for working age people with disabilities in the U.S., disability cash transfer program rolls continue to grow as their employment rates fall and their economic well-being stagnates. In contrast to the failure to reform United States disability policy, the Netherlands, once considered to have the most out of control disability program among OECD nations, initiated reforms in 2002 that have dramatically reduced their disability cash transfer rolls, while maintaining a strong but less generous social minimum safety net for all those who do not work. Here we review disability program growth in the United States and the Netherlands, link it to changes in their disability policies and show that while difficult to achieve, fundamental disability reform is possible. We argue that shifts in SSI policies that focus on better integrating working age men and women with disabilities into the work force along the lines of those implemented for single mothers in the 1990s, together with SSDI program changes that better integrate private and public disability insurance programs along the lines of the reforms in the Netherlands, offer the best hope of improving their employment rates and economic well-being as well as reducing SSDI/SSI program growth.

High-energy emission from NGC 5506, the brightest hard X-ray Narrow Line Seyfert 1 galaxy

We present results on the hard X-ray emission of NGC 5506, the brightest narrow line Seyfert 1 galaxy above 20 keV. All the recent observations by INTEGRAL, Swift and Suzaku have been analysed and spectral analysis during nine separated time periods has been performed. While flux variations by a factor of 2 were detected during the last 7 years, only moderate spectral variations have been observed, with the hint of a hardening of the X-ray spectrum and a decrease of the intrinsic absorption with time. Using Suzaku observations it is possible to constrain the amount of Compton reflection to R = 0.6-1.0, in agreement with previous results on the source. The signature of Comptonisation processes can also be found in the detection of a high-energy cut-off during part of the observations, at Ec = 40-100 keV. When a Comptonisation model is applied to the Suzaku data, the temperature and the optical depth of the Comptonising electron plasma are measured at kT = 60-80 keV and tau = 0.6-1.0, respectively. The properties inferred for NGC 5506 in this study agree with those based on other data sets for the same AGN, and fit the picture of NLS1 having in general lower high-energy cut-offs at hard X-rays than their broad line equivalent.Comment: 8 pages, 3 figures, 1 table. Proceedings of the Workshop "Narrow-Line Seyfert 1 Galaxies and Their Place in the Universe", Milano, April 4-6, 2011 (Proceedings of Science, http://pos.sissa.it/cgi-bin/reader/conf.cgi?confid=126

Searching for galaxy clusters in the VST-KiDS Survey

We present the methods and first results of the search for galaxy clusters in the Kilo Degree Survey (KiDS). The adopted algorithm and the criterium for selecting the member galaxies are illustrated. Here we report the preliminary results obtained over a small area (7 sq. degrees), and the comparison of our cluster candidates with those found in the RedMapper and SZ Planck catalogues; the analysis to a larger area (148 sq. degrees) is currently in progress. By the KiDS cluster search, we expect to increase the completeness of the clusters catalogue to z = 0.6-0.7 compared to RedMapper.Comment: 5 pages, 4 figures, to be published in the Proceedings of the Conference "The Universe of Digital Sky Surveys", Naples, November 25-28 201

Towards an ecological index for tropical soil quality based on soil macrofauna

The objective of this work was to construct a simple index based on the presence/absence of different groups of soil macrofauna to determine the ecological quality of soils. The index was tested with data from 20 sites in South and Central Tabasco, Mexico, and a positive relation between the model and the field observations was detected. The index showed that diverse agroforestry systems had the highest soil quality index (1.00), and monocrops without trees, such as pineapple, showed the lowest soil quality index (0.08). Further research is required to improve this model for natural systems that have very low earthworm biomass

Gravitino Dark Matter and Neutrino Masses in Partial Split Supersymmetry

Partial Split Supersymmetry with bilinear R-parity violation allows to reproduce all neutrino mass and mixing parameters. The viable dark matter candidate in this model is the gravitino. We study the hypothesis that both possibilities are true: Partial Split Supersymmetry explains neutrino physics and that dark matter is actually composed of gravitinos. Since the gravitino has a small but non-zero decay probability, its decay products could be observed in astrophysical experiments. Combining bounds from astrophysical photon spectra with the bounds coming from the mass matrix in the neutrino sector we derive a stringent upper limit for the allowed gravitino mass. This mass limit is in good agreement with the results of direct dark matter searches.Comment: 22 pages, 3 figure