With Good Reputation Size Does not Matter: Issue Frequency and the Determinants of Debt Maturity

This paper examines empirically the effect firm reputation has on the determinants of debt maturity. Utilising data from European primary bond market between 1999 and 2005, I find that the maturity choice of issuers with a higher reputation is less sensitive to macroeconomic conditions, market credit risk-premiums, prevailing firm credit quality and size of the debt issue. The annualised coupon payments are shown to be a significant factor in determining the debt maturity and reveal a monotonously increasing relationship between credit quality and debt maturity once controlled for. Finally, I show that issuers lacking a credit rating have an implied credit quality positioned between investment-grade and speculative-grade debt.

Overconfidence and investor size

Recent research documents that institutional or large investors act as antagonists to other investors by showing opposite behavior following disclosure of new information. Using an extremely comprehensive official transactions data set from Finland, we set out to explore the interrelation between investor size and behavior. More specifically, we test whether investor size is positively (negatively) correlated with investor reaction following positive (negative) news. We document robust evidence of that investor size affects investor behavior under new information, as larger investors on average react more positively (negatively) to good (bad) news than smaller investors. In the light of this study it seems increasingly feasible that several recent findings of heterogeneous investor behavior are functions of differences in overconfidence.

What Determines Stock Option Contract Design?

This paper analyzes factors driving the design of stock option plans for Finnish firms. We examine determinants of the scope of plans, exercise price, target group, and dividend protection. The scope is found to be negatively related to Tobin’s Q and positively related to proxies for monitoring costs. The scope is also greater in broad-based plans, and in plans with dividend protection. Prior stock return is found to be negatively related to the size of the premium (out-of-the-moneyness), whereas dividend protection increases the premium. The results also suggest that investment intensity, cash flow, and monitoring costs are associated with the likelihood of granting premium (out-of-the-money) stock options. Furthermore, the likelihood of granting broad-based plans is increasing in institutional ownership and cash flow constraints, and decreasing in firm size. Broad-based plans are also more likely among firms in growth industries. We find support that the likelihood of dividend protection is decreasing in foreign ownership. In addition, firms paying zero-dividends are less likely to include dividend protection, whereas higher unsystematic risk is associated with a greater likelihood of including dividend protection.

Appropriate Institutions and Economic Growth - one size fits no-one

Modern-day economics is increasingly biased towards believing that institutions matter for growth, an argument that has been further enforced by the recent economic crisis. There is also a wide consensus on what these growth-promoting institutions should look like, and countries are periodically ranked depending on how their institutional structure compares with the best-practice institutions, mostly in place in the developing world. In this paper, it is argued that ”non-desirable” or “second-best” institutions can be beneficial for fostering investment and thus providing a starting point for sustained growth, and that what matters is the appropriateness of institutions to the economy’s distance to the frontier or current phase of development. Anecdotal evidence from Japan and South-Korea is used as a motivation for studying the subject and a model is presented to describe this phenomenon. In the model, the rigidity or non-rigidity of the institutions is described by entrepreneurial selection. It is assumed that entrepreneurs are the ones taking part in the imitation and innovation of technologies, and that decisions on whether or not their projects are refinanced comes from capitalists. The capitalists in turn have no entrepreneurial skills and act merely as financers of projects. The model has two periods, and two kinds of entrepreneurs: those with high skills and those with low skills. The society’s choice of whether an imitation or innovation – based strategy is chosen is modeled as the trade-off between refinancing a low-skill entrepreneur or investing in the selection of the entrepreneurs resulting in a larger fraction of high-skill entrepreneurs with the ability to innovate but less total investment. Finally, a real-world example from India is presented as an initial attempt to test the theory. The data from the example is not included in this paper. It is noted that the model may be lacking explanatory power due to difficulties in testing the predictions, but that this should not be seen as a reason to disregard the theory – the solution might lie in developing better tools, not better just better theories. The conclusion presented is that institutions do matter. There is no one-size-fits-all-solution when it comes to institutional arrangements in different countries, and developing countries should be given space to develop their own institutional structures that cater to their specific needs.

Novel Approaches to the Sampling of Atmospheric Aerosols and Determination of Chemical Composition

The Earth s climate is a highly dynamic and complex system in which atmospheric aerosols have been increasingly recognized to play a key role. Aerosol particles affect the climate through a multitude of processes, directly by absorbing and reflecting radiation and indirectly by changing the properties of clouds. Because of the complexity, quantification of the effects of aerosols continues to be a highly uncertain science. Better understanding of the effects of aerosols requires more information on aerosol chemistry. Before the determination of aerosol chemical composition by the various available analytical techniques, aerosol particles must be reliably sampled and prepared. Indeed, sampling is one of the most challenging steps in aerosol studies, since all available sampling techniques harbor drawbacks. In this study, novel methodologies were developed for sampling and determination of the chemical composition of atmospheric aerosols. In the particle-into-liquid sampler (PILS), aerosol particles grow in saturated water vapor with further impaction and dissolution in liquid water. Once in water, the aerosol sample can then be transported and analyzed by various off-line or on-line techniques. In this study, PILS was modified and the sampling procedure was optimized to obtain less altered aerosol samples with good time resolution. A combination of denuders with different coatings was tested to adsorb gas phase compounds before PILS. Mixtures of water with alcohols were introduced to increase the solubility of aerosols. Minimum sampling time required was determined by collecting samples off-line every hour and proceeding with liquid-liquid extraction (LLE) and analysis by gas chromatography-mass spectrometry (GC-MS). The laboriousness of LLE followed by GC-MS analysis next prompted an evaluation of solid-phase extraction (SPE) for the extraction of aldehydes and acids in aerosol samples. These two compound groups are thought to be key for aerosol growth. Octadecylsilica, hydrophilic-lipophilic balance (HLB), and mixed phase anion exchange (MAX) were tested as extraction materials. MAX proved to be efficient for acids, but no tested material offered sufficient adsorption for aldehydes. Thus, PILS samples were extracted only with MAX to guarantee good results for organic acids determined by liquid chromatography-mass spectrometry (HPLC-MS). On-line coupling of SPE with HPLC-MS is relatively easy, and here on-line coupling of PILS with HPLC-MS through the SPE trap produced some interesting data on relevant acids in atmospheric aerosol samples. A completely different approach to aerosol sampling, namely, differential mobility analyzer (DMA)-assisted filter sampling, was employed in this study to provide information about the size dependent chemical composition of aerosols and understanding of the processes driving aerosol growth from nano-size clusters to climatically relevant particles (>40 nm). The DMA was set to sample particles with diameters of 50, 40, and 30 nm and aerosols were collected on teflon or quartz fiber filters. To clarify the gas-phase contribution, zero gas-phase samples were collected by switching off the DMA every other 15 minutes. Gas-phase compounds were adsorbed equally well on both types of filter, and were found to contribute significantly to the total compound mass. Gas-phase adsorption is especially significant during the collection of nanometer-size aerosols and needs always to be taken into account. Other aims of this study were to determine the oxidation products of β-caryophyllene (the major sesquiterpene in boreal forest) in aerosol particles. Since reference compounds are needed for verification of the accuracy of analytical measurements, three oxidation products of β-caryophyllene were synthesized: β-caryophyllene aldehyde, β-nocaryophyllene aldehyde, and β-caryophyllinic acid. All three were identified for the first time in ambient aerosol samples, at relatively high concentrations, and their contribution to the aerosol mass (and probably growth) was concluded to be significant. Methodological and instrumental developments presented in this work enable fuller understanding of the processes behind biogenic aerosol formation and provide new tools for more precise determination of biosphere-atmosphere interactions.

Intraspecific variation in brain size and architecture : population divergence and phenotypic plasticity

Brain size and architecture exhibit great evolutionary and ontogenetic variation. Yet, studies on population variation (within a single species) in brain size and architecture, or in brain plasticity induced by ecologically relevant biotic factors have been largely overlooked. Here, I address the following questions: (i) do locally adapted populations differ in brain size and architecture, (ii) can the biotic environment induce brain plasticity, and (iii) do locally adapted populations differ in levels of brain plasticity? In the first two chapters I report large variation in both absolute and relative brain size, as well as in the relative sizes of brain parts, among divergent nine-spined stickleback (Pungitius pungitius) populations. Some traits show habitat-dependent divergence, implying natural selection being responsible for the observed patterns. Namely, marine sticklebacks have relatively larger bulbi olfactorii (chemosensory centre) and telencephala (involved in learning) than pond sticklebacks. Further, I demonstrate the importance of common garden studies in drawing firm evolutionary conclusions. In the following three chapters I show how the social environment and perceived predation risk shapes brain development. In common frog (Rana temporaria) tadpoles, I demonstrate that under the highest per capita predation risk, tadpoles develop smaller brains than in less risky situations, while high tadpole density results in enlarged tectum opticum (visual brain centre). Visual contact with conspecifics induces enlarged tecta optica in nine-spined sticklebacks, whereas when only olfactory cues from conspecifics are available, bulbus olfactorius become enlarged.Perceived predation risk results in smaller hypothalami (complex function) in sticklebacks. Further, group-living has a negative effect on relative brain size in the competition-adapted pond sticklebacks, but not in the predation-adapted marine sticklebacks. Perceived predation risk induces enlargement of bulbus olfactorius in pond sticklebacks, but not in marine sticklebacks who have larger bulbi olfactorii than pond fish regardless of predation. In sum, my studies demonstrate how applying a microevolutionary approach can help us to understand the enormous variation observed in the brains of wild animals a point-of-view which I high-light in the closing review chapter of my thesis.

Dependence of the large-scale vortex instability on latitude, stratification and domain size

In an earlier study, we reported on the excitation of large-scale vortices in Cartesian hydrodynamical convection models subject to rapid enough rotation. In that study, the conditions for the onset of the instability were investigated in terms of the Reynolds (Re) and Coriolis (Co) numbers in models located at the stellar North pole. In this study, we extend our investigation to varying domain sizes, increasing stratification, and place the box at different latitudes. The effect of the increasing box size is to increase the sizes of the generated structures, so that the principal vortex always fills roughly half of the computational domain. The instability becomes stronger in the sense that the temperature anomaly and change in the radial velocity are observed to be enhanced. The model with the smallest box size is found to be stable against the instability, suggesting that a sufficient scale separation between the convective eddies and the scale of the domain is required for the instability to work. The instability can be seen upto the colatitude of 30 degrees, above which value the flow becomes dominated by other types of mean flows. The instability can also be seen in a model with larger stratification. Unlike the weakly stratified cases, the temperature anomaly caused by the vortex structures is seen to depend on depth.