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.

A novel hanging spherical drop system for the generation of cellular spheroids and high throughput combinatorial drug screening

We propose a novel hanging spherical drop system for anchoring arrays of droplets of cell suspension based on the use of biomimetic superhydrophobic flat substrates, with controlled positional adhesion and minimum contact with a solid substrate. By facing down the platform, it was possible to generate independent spheroid bodies in a high throughput manner, in order to mimic in vivo tumour models on the lab-on-chip scale. To validate this system for drug screening purposes, the toxicity of the anti-cancer drug doxorubicin in cell spheroids was tested and compared to cells in 2D culture. The advantages presented by this platform, such as feasibility of the system and the ability to control the size uniformity of the spheroid, emphasize its potential to be used as a new low cost toolbox for high-throughput drug screening and in cell or tissue engineering.

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

NIPE WP 04/ 2016