Risk management and the potential of cattle insurance in Tigray, Northern Ethiopia

This study explores the role of livestock insurance to complement existing risk management strategies adopted by smallholder farmers. Using survey data, first, it provides insights into farmers’ risk perception of livestock farming, in terms of likelihood and severity of risk, attitude to risk and their determinants. Second, it examines farmers’ risk management strategies and their determinants. Third, it investigates farmers’ potential engagement with a hypothetical cattle insurance decision and their intensity of participation. Factor analysis is used to analyse risk sources and risk management, multiple regressions are used to identify the determinants; a Heckman model was used to investigate cattle insurance participation and intensity of participation. The findings show different groups of farmers display different risk attitude in their decision-making related to livestock farming. Production risk (especially livestock diseases) was perceived as the most likely and severe source of risk. Disease control was perceived as the best strategy to manage risk overall. Disease control and feed management were important strategies to mitigate the production risks. Disease control and participation on safety net program were found to be important to counter households’ financial risks. With regard to the hypothetical cattle insurance scheme, 94.38% of households were interested to participate in cattle insurance. Of those households that accepted cattle insurance, 77.38% of the households were willing to pay the benchmark annual premium of 4% of the animal value while for the remaining households this was not affordable. The average number of cattle that farmers were willing to insure was 2.71 at this benchmark. Results revealed that income (log income) and education levels influenced positively and significantly farmers’ participation in cattle insurance and the number of cattle to insure. The findings prompt policy makers to consider livestock insurance as a complement to existing risk management strategies to reduce poverty in the long-run.

Survival analysis of adult tuberculosis disease

Background: We conducted a survival analysis of all the confirmed cases of Adult Tuberculosis (TB) patients treated in Cork-City, Ireland. The aim of this study was to estimate Survival time (ST), including median time of survival and to assess the association and impact of covariates (TB risk factors) to event status and ST. The outcome of the survival analysis is reported in this paper. Methods: We used a retrospective cohort study research design to review data of 647 bacteriologically confirmed TB patients from the medical record of two teaching hospitals. Mean age 49 years (Range 18–112). We collected information on potential risk factors of all confirmed cases of TB treated between 2008–2012. For the survival analysis, the outcome of interest was ‘treatment failure’ or ‘death’ (whichever came first). A univariate descriptive statistics analysis was conducted using a non- parametric procedure, Kaplan -Meier (KM) method to estimate overall survival (OS), while the Cox proportional hazard model was used for the multivariate analysis to determine possible association of predictor variables and to obtain adjusted hazard ratio. P value was set at <0.05, log likelihood ratio test at >0.10. Data were analysed using SPSS version 15.0. Results: There was no significant difference in the survival curves of male and female patients. (Log rank statistic = 0.194, df = 1, p = 0.66) and among different age group (Log rank statistic = 1.337, df = 3, p = 0.72). The mean overall survival (OS) was 209 days (95%CI: 92–346) while the median was 51 days (95% CI: 35.7–66). The mean ST for women was 385 days (95%CI: 76.6–694) and for men was 69 days (95%CI: 48.8–88.5). Multivariate Cox regression showed that patient who had history of drug misuse had 2.2 times hazard than those who do not have drug misuse. Smokers and alcohol drinkers had hazard of 1.8 while patients born in country of high endemicity (BICHE) had hazard of 6.3 and HIV co-infection hazard was 1.2. Conclusion: There was no significant difference in survival curves of male and female and among age group. Women had a higher ST compared to men. But men had a higher hazard rate compared to women. Anti-TNF, immunosuppressive medication and diabetes were found to be associated with longer ST, while alcohol, smoking, RICHE, BICHE was associated with shorter ST.

The quality of financial information in the extractive industries: a value relevance analysis

The extractive industry is characterized by high levels of risk and uncertainty. These attributes create challenges when applying traditional accounting concepts (such as the revenue recognition and matching concepts) to the preparation of financial statements in the industry. The International Accounting Standards Board (2010) states that the objective of general purpose financial statements is to provide useful financial information to assist the capital allocation decisions of existing and potential providers of capital. The usefulness of information is defined as being relevant and faithfully represented so as to best aid in the investment decisions of capital providers. Value relevance research utilizes adaptations of the Ohlson (1995) to assess the attribute of value relevance which is one part of the attributes resulting in useful information. This study firstly examines the value relevance of the financial information disclosed in the financial reports of extractive firms. The findings reveal that the value relevance of information disclosed in the financial reports depends on the circumstances of the firm including sector, size and profitability. Traditional accounting concepts such as the matching concept can be ineffective when applied to small firms who are primarily engaged in nonproduction activities that involve significant levels of uncertainty such as exploration activities or the development of sites. Standard setting bodies such as the International Accounting Standards Board and the Financial Accounting Standards Board have addressed the financial reporting challenges in the extractive industry by allowing a significant amount of accounting flexibility in industryspecific accounting standards, particularly in relation to the accounting treatment of exploration and evaluation expenditure. Therefore, secondly this study examines whether the choice of exploration accounting policy has an effect on the value relevance of information disclosed in the financial reports. The findings show that, in general, the Successful Efforts method produces value relevant information in the financial reports of profitable extractive firms. However, specifically in the oil & gas sector, the Full Cost method produces value relevant asset disclosures if the firm is lossmaking. This indicates that investors in production and non-production orientated firms have different information needs and these needs cannot be simultaneously fulfilled by a single accounting policy. In the mining sector, a preference by large profitable mining companies towards a more conservative policy than either the Full Cost or Successful Efforts methods does not result in more value relevant information being disclosed in the financial reports. This finding supports the fact that the qualitative characteristic of prudence is a form of bias which has a downward effect on asset values. The third aspect of this study is an examination of the effect of corporate governance on the value relevance of disclosures made in the financial reports of extractive firms. The findings show that the key factor influencing the value relevance of financial information is the ability of the directors to select accounting policies which reflect the economic substance of the particular circumstances facing the firms in an effective way. Corporate governance is found to have an effect on value relevance, particularly in the oil & gas sector. However, there is no significant difference between the exploration accounting policy choices made by directors of firms with good systems of corporate governance and those with weak systems of corporate governance.

Pairs trading in the UK equity market: risk and return

In this paper, we provide the first comprehensive UK evidence on the profitability of the pairs trading strategy. Evidence suggests that the strategy performs well in crisis periods, so we control for both risk and liquidity to assess performance. To evaluate the effect of market frictions on the strategy, we use several estimates of transaction costs. We also present evidence on the performance of the strategy in different economic and market states. Our results show that pairs trading portfolios typically have little exposure to known equity risk factors such as market, size, value, momentum and reversal. However, a model controlling for risk and liquidity explains a far larger proportion of returns. Incorporating different assumptions about bid-ask spreads leads to reductions in performance estimates. When we allow for time-varying risk exposures, conditioned on the contemporaneous equity market return, risk-adjusted returns are generally not significantly different from zero.