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.

Earnings management and stock price crashes post-crossdelisting

We test whether cross-delisted firms from the major U.S. stock exchanges experience an increase in crash risk associated with earnings management. Consistent with our prediction, we find that earnings management have a greater positive impact on stock price crash risk post-cross-delisting when compared to a sample of still cross-listed firms. Moreover, our results suggest that this effect is more pronounced for crossdelisted firms from countries with weaker investor protection and poorer quality of their information environment. We further examine whether managers’ ability to manipulate earnings increases post-cross-delisting around seasoned equity offerings. Our evidence shows that cross-delisted firms that engage in earnings management to inflate reported earnings prior to a seasoned equity offering are more likely to observe a subsequent stock price crash.

Reasons and benefits associated with ISO 9001 - Certification for sugar and ethanol companies

With increasing business competitiveness, companies have sought to adapt their processes and / or products to worldwide established quality standards in order to achieve a greater share of consumers having as favorable aspect the quality assurance of the products and/or services provided. It was observed that companies of different sizes have different challenges regarding the certification however, the degree of difficulty is the same for all of them. The objective of this paper is to verify the reasons for the implementation of ISO 9001, the obstacles encountered during the implementation, the benefits arising from the use of the quality management system and the degree of difficulty to implement this standard. This work was developed based on a survey involving companies certified with ISO 9001:2008 from the productive sector of sugar, ethanol and derivatives of sugarcane, located in all Brazilian states. It was observed that companies of different sizes have different challenges regarding the certification however the degree of difficulty is the same for all of them. Thus, we believe that expected results represent a very important contribution to examining the reasons, benefits and difficulties of the ISO 9001 to both, the companies and certification bodies, and to researchers.

Behavior-based price discrimination in a multi-dimensional preferences market

NIPE WP 04/ 2016

Optimization of low-cost nutritional supplementation for lignocellulosic ethanol fermentation

[Excerpt] Bioethanol from lignocellulosic materials (LCM), also called second generation bioethanol, is considered a promising alternative to first generation bioethanol. An efficient production process of lignocellulosic bioethanol involves an effective pretreatment of LCM to improve the accessibility of cellulose and thus enhance the enzymatic saccharification. One interesting approach is to use the whole slurry from treatment, since allows economical and industrial benefits: washing steps are avoided, water consumption is lower and the sugars from liquid phase can be used, increasing ethanol concentration [1]. However, during the pretreatment step some compounds (such as furans, phenolic compounds and weak acids) are produced. These compounds have an inhibitory effect on the microorganisms used for hydrolysate fermentation [2]. To overcome this, the use of a robust industrial strain together with agro-industrial by-products as nutritional supplementation was proposed to increase the ethanol productivities and yields. (...)

Developing novel strains for butanol production

[Excerpt] The growing global demand for new energy sources combined with environmental concerns had motivated the search for alternative fuels, produced from renewable raw materials. During the last decade, ethanol was considered the next generation of biofuels. But more recently, n-butanol gained attention due to its superior fuel properties when compared with ethanol. Although n-butanol is naturally produced by solventogenic bacteria through ABE fermentation, the low productivities obtained with this bioprocess discouraged its use. Thus, most of n-butanol produced nowadays is chemical synthesized via petrochemical routes and its price is extremely sensitive to crude oil’s price. One possible approach to overcome this issue is to express non-native pathways in microbial factories. (...)