Equity offerings, stock price crash risk, and the impact of securities regulation: international evidence

We examine whether earnings manipulation around seasoned equity offerings (SEOs) is associated with an increase in the likelihood of a stock price crash post-issue and test whether the enactment of securities regulations attenuate the relation between SEOs and crash risk. Empirical evidence documents that managerial tendency to conceal bad news increases the likelihood of a stock price crash (Jin and Myers, 2006; Hutton, Marcus, and Tehranian, 2009). We test this hypothesis using a sample of firms from 29 EU countries that enacted the Market Abuse Directive (MAD). Consistent with our hypothesis, we find that equity issuers that engage in earnings management experience a significant increase in crash risk post-SEO relative to control groups of non-issuers; this effect is stronger for equity issuers with poor information environments. In addition, our findings show a significant decline in crash risk post-issue after the enactment of MAD that is stronger for firms that actively manage earnings. This decline in post-issue crash risk is more effective in countries with high ex-ante institutional quality and enforcement. These results suggest that the implementation of MAD helps to mitigate managers’ ability to manipulate earnings around SEOs.

Sensorimotor synchronization when walking side by side with a point light walker

[Excerpt] Synchronization of periodic movements like side-by-side walking [7] is frequently modeled by coupled oscillators [5] and the coupling strength is defined quantitatively [3]. In contrast, in most studies on sensorimotor synchronization (SMS), simple movements like finger taps are synchronized with simple stimuli like metronomes [4]. While the latter paradigm simplifies matters and allows for the assessment of the relative weights of sensory modalities through systematic variation of the stimuli [1], it might lack ecological validity. Conversely, using more complex movements and stimuli might complicate the specification of mechanisms underlying coupling. We merged the positive aspects of both approaches to study the contribution of auditory and visual information on synchronization during side-by-side walking. As stimuli, we used Point Light Walkers (PLWs) and auralized steps sound; both were constructed from previously captured walking individuals [2][6]. PLWs were retro-projected on a screen and matched according to gender, hip height, and velocity. The participant walked for 7.20m side by side with 1) a PLW, 2) steps sound, or 3) both displayed in temporal congruence. Instruction to participants was to synchronize with the available stimuli. [...]