A Comparison of Managers’ Perception of Short-Termism in Finland, Sweden and the U.S

Increased media exposure to layoffs and corporate quarterly financial reporting have created arguable a common perception – especially favored by the media itself – that the companies have been forced to improve their financial performance from quarter to quarter. Academically the relevant question is whether companies themselves feel that they are exposed to short-term pressure to perform even if it means that they have to compromise company’s long-term future. This paper studies this issue using results from a survey conducted among the 500 largest companies in Finland. The results show that companies in general feel moderate short-term pressure, with reasonable dispersion across firms. There seems to be a link between the degree of pressure felt, and the firm’s ownership structure, i.e. we find support for the existence of short-term versus long-term owners. We also find significant ownership related differences, in line with expectations, in how such short-term pressure is reflected in actual decision variables such as the investment criteria used.

Finnish Short-Term Stock Returns

Functioning capital markets are a crucial part of a competitive economy since they provide the mechanisms to allocate resources. In order to be well functioning a capital market has to be efficient. Market efficiency is defined as a market where prices at any time fully reflect all available information. Basically, this means that abnormal returns cannot be predicted since they are dependent on future, presently unknown, information. The debate of market efficiency has been going on for several decades. Most academics today would probably agree that financial markets are reasonably efficient since virtually nobody has been able to achieve continuous abnormal positive returns. However, it is clear that a set of return anomalies exists, although they are apparently to small to enable substantial economic profit. Moreover, these anomalies can often be attributed to market design. The motivation for this work is to expand the knowledge of short-term trading patterns and to offer some explanations for these patterns. In the first essay the return pattern during the day is examined. On average stock prices move during two time periods of the day, namely, immediately after the opening and around the formal close of the market. Since stock prices, on average, move upwards these abnormal returns are generally positive and cause the distinct U-shape of intraday returns. In the second essay the results in the first essay are examined further. The return pattern around the former close is shown to partly be the result of manipulative action by market participants. In the third essay the focus is shifted towards trading patterns of the underlying stocks on days when index options and index futures on the stocks expire. Generally no expiration day effect was found. However, some indication of an expiration day effect was found when a large amount of open in- or at-the-money contracts existed. Also, the effects were likelier to be found for shares with high index-weight but fairly low trading volume. Last, in the forth essay the attention is turned to the behaviour of different tax clienteles around the dividend ex-day. Two groups of investors showed abnormal trading behaviour. Domestic non-financial investors, especially domestic companies, showed a dividend capturing behaviour, i.e. buying cum-dividend and selling ex-dividend shares. The opposite behaviour was found for foreign investors and domestic financial institutions. The effect was more notable for high yield, high volume stocks.

Short-term Price Behavior and the Effect of Foreign Investors in Finnish Equity Markets (summary section only)

As globalization and capital free movement has increased, so has interest in the effects of that global money flow, especially during financial crises. The concern has been that large global money flows will affect the pricing of small local markets by causing, in particular, overreaction. The purpose of this thesis is to contribute to the body of work concerning short-term under- and overreaction and the short-term effects of foreign investment flow in the small Finnish equity markets. This thesis also compares foreign execution return to domestic execution return. This study’s results indicate that short-term under- and overreaction occurs in domestic-buy portfolios (domestic net buying) rather than in foreign-buy portfolios. This under- and overreaction, however, is not economically meaningful after controlling for the bid-ask bounce effect. Based on this finding, one can conclude that foreign investors do not have a destabilizing effect in the short-term in the Finnish markets. Foreign activity affects short-term returns. When foreign investors are net buyers (sellers) there are positive (negative) market adjusted returns. Literature related to nationality and institutional effect leads us to expect these kind of results. These foreign flows are persistent at a 5 % to 21 % level and the persistence of foreign buy flow is higher than the foreign sell flow. Foreign daily trading execution is worse than domestic execution. Literature which quantifies foreign investors as liquidity demanders and literature related to front-running leads us to expect poorer foreign execution than domestic execution.

An Empirical Investigation of Value-at-Risk in Long and Short Trading Positions

This paper uses the Value-at-Risk approach to define the risk in both long and short trading positions. The investigation is done on some major market indices(Japanese, UK, German and US). The performance of models that takes into account skewness and fat-tails are compared to symmetric models in relation to both the specific model for estimating the variance, and the distribution of the variance estimate used as input in the VaR estimation. The results indicate that more flexible models not necessarily perform better in predicting the VaR forecast; the reason for this is most probably the complexity of these models. A general result is that different methods for estimating the variance are needed for different confidence levels of the VaR, and for the different indices. Also, different models are to be used for the left respectively the right tail of the distribution.

Short-Horizon Asymmetric Mean-Reversion and Overreactions: Evidence from the Nordic Stock Markets

This paper examines the asymmetric behavior of conditional mean and variance. Short-horizon mean-reversion behavior in mean is modeled with an asymmetric nonlinear autoregressive model, and the variance is modeled with an Exponential GARCH in Mean model. The results of the empirical investigation of the Nordic stock markets indicates that negative returns revert faster to positive returns when positive returns generally persist longer. Asymmetry in both mean and variance can be seen on all included markets and are fairly similar. Volatility rises following negative returns more than following positive returns which is an indication of overreactions. Negative returns lead to increased variance and positive returns leads even to decreased variance.

Owners' Way or the Highway: Short-term Expectations and Owner Impatience

Increased media exposure to layoffs and corporate quarterly financial reporting have created arguable a common perception – especially favored by the media itself – that the companies have been forced to improve their financial performance from quarter to quarter. Academically the relevant question is whether the companies themselves feel that they are exposed to short-term pressure to perform even if it means that they have to compromise company’s long-term future. This paper studies this issue using results from a survey conducted among the 500 largest companies in Finland. The results show that companies in general feel moderate short-term pressure, with reasonable dispersion across firms. There seems to be a link between the degree of pressure felt, and the firm’s ownership structure, i.e. we find support for the existence of short-term versus long-term owners. We also find significant ownership related differences, in line with expectations, in how such short-term pressure is reflected in actual decision variables such as the investment criteria used.

Detection, epidemiology and host spectrum of cowpox and Borna disease virus infections

Several orthopoxviruses (OPV) and Borna disease virus (BDV) are enveloped, zoonotic viruses with a wide geographical distribution. OPV antibodies cross-react, and former smallpox vaccination has therefore protected human populations from another OPV infection, rodent-borne cowpox virus (CPXV). Cowpox in humans and cats usually manifests as a mild, self-limiting dermatitis and constitutional symptoms, but it can be severe and even life-threatening in the immunocompromised. Classical Borna disease is a progressive meningoencephalomyelitis in horses and sheep known in central Europe for centuries. Nowadays the virus or its close relative infects humans and also several other species in central Europe and elsewhere, but the existence of human Borna disease with its suspected neuropsychiatric symptoms is controversial. The epidemiology of BDV is largely unknown, and the present situation is even more intriguing following the recent detection of several-million-year-old, endogenized BDV genes in primate and various other vertebrate genomes. The aims of this study were to elucidate the importance of CPXV and BDV in Finland and in possible host species, and particularly to 1) establish relevant methods for the detection of CPXV and other OPVs as well as BDV in Finland, 2) determine whether CPXV and BDV exist in Finland, 3) discover how common OPV immunity is in different age groups in Finland, 4) characterize possible disease cases and clarify their epidemiological context, 5) establish the hosts and possible reservoir species of these viruses and their geographical distribution in wild rodents, and 6) elucidate the infection kinetics of BDV in the bank vole. An indirect immunofluorescence assay and avidity measurement were established for the detection, timing and verification of OPV or BDV antibodies in thousands of blood samples from humans, horses, ruminants, lynxes, gallinaceous birds, dogs, cats and rodents. The mostly vaccine-derived OPV seroprevalence was found to decrease gradually according to the year of birth of the sampled human subjects from 100% to 10% in those born after 1977. On the other hand, OPV antibodies indicating natural contact with CPXV or other OPVs were commonly found in domestic and wild animals: the horse, cow, lynx, dog, cat and, with a prevalence occasionally even as high as 92%, in wild rodents, including some previously undetected species and new regions. Antibodies to BDV were detected in humans, horses, a dog, cats, and for the first time in wild rodents, such as bank voles (Myodes glareolus). Because of the controversy within the human Borna disease field, extra verification methods were established for BDV antibody findings: recombinant nucleocapsid and phosphoproteins were produced in Escherichia coli and in a baculovirus system, and peptide arrays were additionally applied. With these verification assays, Finnish human, equine, feline and rodent BDV infections were confirmed. Taken together, wide host spectra were evident for both OPV and BDV infections based on the antibody findings, and OPV infections were found to be geographically broadly distributed. PCR amplification methods were utilised for hundreds of blood and tissue samples. The methods included conventional, nested and real-time PCRs with or without the reverse transcription step and detecting four or two genes of OPVs and BDV, respectively. OPV DNA could be amplified from two human patients and three bank voles, whereas no BDV RNA was detected in naturally infected individuals. Based on the phylogenetic analyses, the Finnish OPV sequences were closely related although not identical to a Russian CPXV isolate, and clearly different from other CPXV strains. Moreover, the Finnish sequences only equalled each other, but the short amplicons obtained from German rodents were identical to monkeypox virus, in addition to German CPXV variants. This reflects the close relationship of all OPVs. In summary, RNA of the Finnish BDV variant could not be detected with the available PCR methods, but OPV DNA infrequently could. The OPV species infecting the patients of this study was proven to be CPXV, which is most probably also responsible for the rodent infections. Multiple cell lines and some newborn rodents were utilised in the isolation of CPXV and BDV from patient and wildlife samples. CPXV could be isolated from a child with severe, generalised cowpox. BDV isolation attempts from rodents were unsuccessful in this study. However, in parallel studies, a transient BDV infection of cells inoculated with equine brain material was detected, and BDV antigens discovered in archival animal brains using established immunohistology. Thus, based on several independent methods, both CPXV and BDV (or a closely related agent) were shown to be present in Finland. Bank voles could be productively infected with BDV. This experimental infection did not result in notable pathological findings or symptoms, despite the intense spread of the virus in the central and peripheral nervous system. Infected voles commonly excreted the virus in urine and faeces, which emphasises their possible role as a BDV reservoir. Moreover, BDV RNA was regularly reverse transcribed into DNA in bank voles, which was detected by amplifying DNA by PCR without reverse transcription, and verified with nuclease treatments. This finding indicates that BDV genes could be endogenized during an acute infection. Although further transmission studies are needed, this experimental infection demonstrated that the bank vole can function as a potential BDV reservoir. In summary, multiple methods were established and applied in large panels to detect two zoonoses novel to Finland: cowpox virus and Borna disease virus. Moreover, new information was obtained on their geographical distribution, host spectrum, epidemiology and infection kinetics.

Response of fungal and actinobacterial communities to water-level drawdown in boreal peatland sites

"We used PCR-DGGE fingerprinting and direct sequencing to analyse the response of fungal and actinobacterial communities to changing hydrological conditions at 3 different sites in a boreal peatland complex in Finland. The experimental design involved a short-term (3 years; STD) and a long-term (43 years; LTD) water-level drawdown. Correspondence analyses of DGGE bands revealed differences in the communities between natural sites representing the nutrient-rich mesotrophic fen, the nutrient-poorer oligotrophic fen, and the nutrient-poor ombrotrophic bog. Still, most fungi and actinobacteria found in the pristine peatland seemed robust to the environmental variables. Both fungal and actinobacterial diversity was higher in the fens than in the bog. Fungal diversity increased significantly after STD whereas actinobacterial diversity did not respond to hydrology. Both fungal and actinobacterial communities became more similar between peatland types after LTD, which was not apparent after STD. Most sequences clustered equally between the two main fungal phyla Ascomycota and Basidiomycota. Sequencing revealed that basidiomycetes may respond more (either positively or negatively) to hydrological changes than ascomycetes. Overall, our results suggest that fungal responses to water-level drawdown depend on peatland type. Actinobacteria seem to be less sensitive to hydrological changes, although the response of some may similarly depend on peatland type. (C) 2009 Elsevier Ltd. All rights reserved."

Seasonal and short-term variation in denitrification and anammox at a coastal station on the Gulf of Finland, Baltic Sea

Benthic processes were measured at a coastal deposition area in the northern Baltic Sea, covering all seasons. The N-2 production rates, 90-400 mu mol N m(-2) d(-1), were highest in autumn-early winter and lowest in spring. Heterotrophic bacterial production peaked unexpectedly late in the year, indicating that in addition to the temperature, the availability of carbon compounds suitable for the heterotrophic bacteria also plays a major role in regulating the denitrification rate. Anaerobic ammonium oxidation (anammox) was measured in spring and autumn and contributed 10% and 15%, respectively, to the total N-2 production. The low percentage did, however, result in a significant error in the total N-2 production rate estimate, calculated using the isotope pairing technique. Anammox must be taken into account in the Gulf of Finland in future sediment nitrogen cycling research.