Executive Stock Options: Exercise Policy and Market Reaction

In this paper I investigate the exercise policy, and the market reaction to that, of the executive stock option holders in Finland. The empirical tests are conducted with aggregated firm level data from 34 firms and 41 stock option programs. I find some evidence of an inverse relation between the exercise intensity of the options holders and the future abnormal return of the company share price. This finding is supported by the view that information about future company prospect seems to be the only theoretical attribute that could delay the exercise of the options. Moreover, a high concentration of exercises in the beginning of the exercise window is predicted and the market is expected to react to deviations from this. The empirical findings however show that the market does not react homogenously to the information revealed by the late exercises.

Seasonal variation in nitrification and nitrate-reduction pathways in coastal sediments in the Gulf of Finland, Baltic Sea

The Baltic Sea is one of the most eutrophic marine areas in the world. The role of nitrogen as a eutrophicating nutrient in the Baltic Sea has remained controversial, due to lack of understanding of nitrogen cycling in the area. We investigated the seasonal variation in sediment nitrification, denitrification, anaerobic ammonium oxidation (anammox), and dissimilatory nitrate reduction to ammonium (DNRA) at two coastal sites in the Gulf of Finland. In addition to the in situ rates, we assessed the potential for these processes in different seasons. The nitrification and nitrogen removal processes were maximal during the warm summer months, when the sediment organic content was highest. In colder seasons, the in situ rates of the nitrification and nitrate reduction processes decreased, but the potential for nitrification remained equal to or higher than that during the warm months. The denitrification and nitrification rates were usually higher in the accumulation basin, where the organic content of the sediment was higher, but the transportation area, despite lower denitrification rates and potential, typically had higher potential for nitrification than the accumulation basin. Anammox and DNRA were not significant nitrate sinks in any of the seasons sampled. The results also show that the denitrification rates in the coastal Gulf of Finland sediment have decreased, and that benthic denitrification might be a less important sink for fixed nitrogen than previously assumed.

Monetary policy rules and estimated reaction functions for the European Central Bank

This thesis studies the interest-rate policy of the ECB by estimating monetary policy rules using real-time data and central bank forecasts. The aim of the estimations is to try to characterize a decade of common monetary policy and to look at how different models perform at this task.The estimated rules include: contemporary Taylor rules, forward-looking Taylor rules, nonlinearrules and forecast-based rules. The nonlinear models allow for the possibility of zone-like preferences and an asymmetric response to key variables. The models therefore encompass the most popular sub-group of simple models used for policy analysis as well as the more unusual non-linear approach. In addition to the empirical work, this thesis also contains a more general discussion of monetary policy rules mostly from a New Keynesian perspective. This discussion includes an overview of some notable related studies, optimal policy, policy gradualism and several other related subjects. The regression estimations are performed with either least squares or the generalized method of moments depending on the requirements of the estimations. The estimations use data from both the Euro Area Real-Time Database and the central bank forecasts published in ECB Monthly Bulletins. These data sources represent some of the best data that is available for this kind of analysis. The main results of this thesis are that forward-looking behavior appears highly prevalent, but that standard forward-looking Taylor rules offer only ambivalent results with regard to inflation. Nonlinear models are shown to work, but on the other hand do not have a strong rationale over a simpler linear formulation. However, the forecasts appear to be highly useful in characterizing policy and may offer the most accurate depiction of a predominantly forward-looking central bank. In particular the inflation response appears much stronger while the output response becomes highly forward-looking as well.

The roles of nitrification and nitrate reduction pathways in nitrogen cycling of Baltic Sea

The Baltic Sea is one of the largest brackish water bodies in the world. Primary production in the Baltic Sea is limited by nitrogen (N) availability with the exception of river outlets and the northernmost phosphorus limited basin. The excess human induced N load from the drainage basin has caused severe eutrophication of the sea. The excess N loads can be mitigated by microbe mediated natural N removal processes that are found in the oxic-anoxic interfaces in sediments and water column redoxclines. Such interfaces allow the close coupling between the oxic nitrification process, and anoxic denitrification and anaerobic ammonium oxidation (anammox) processes that lead to the formation of molecular nitrogen gas. These processes are governed by various environmental parameters. The effects of these parameters on N processes were investigated in the northern Baltic Sea sediments. During summer months when the sediment organic content is at its highest, nitrification and denitrification reach their maximum rates. However, nitrification had no excess potential, which was probably because of high competition for molecular oxygen (O2) between heterotrophic and nitrification microbes. Subsequently, the limited nitrate (NO3-) availability inhibited denitrification. In fall, winter and spring, nitrification was limited by ammonium availability and denitrification limited by the availability of organic carbon and occasionally by NO3-. Anaerobic ammonium oxidation (anammox) was not an important N removal process in the northern Baltic Sea. Modeling studies suggest that when hypoxia expands in the Baltic Sea, N removal intensifies. However, the results of this study suggest the opposite because bottom water hypoxia (O2< 2 ml l-1) decreased the denitrification rates in sediments. Moreover, N was recycled by the dissimilatory nitrate reduction to ammonium (DNRA) process instead of being removed from the water ecosystem. High N removal potentials were found in the anoxic water column in the deep basins of the Baltic Proper. However, the N removal in the water column appeared to be limited by low substrate availability, because the water at the depths at which the substrate producing nitrification process occurred, rarely mix with the water at the depths at which N removal processes were found. Overall, the natural N removal capacity of the northern Baltic Sea decreased compared to values measured in mid 1990s and early 2000. The reason for this appears to be increasing hypoxia.