Initial losses, corporate governance and earnings management

This thesis examines the relationship between initial loss events and the corporate governance and earnings management behaviour of these firms. This is done using four years of corporate governance information spanning the report of an initial loss for companies listed on the UK Stock Exchange. An industry- and sizematched control sample is used in a difference-in-difference analysis to isolate the impact of the initial loss event during the period. It is reported that, in general, an initial loss motivates an improvement in corporate governance in those loss firms where a relative weakness existed prior to the loss and that these changes mainly occur before the initial loss is announced. Firms with stronger (i.e. better quality) corporate governance have less need to alter it in response to the loss. It is also reported that initial loss firms use positive abnormal accruals in the year before the loss in an attempt to defer/avoid the loss — the weaker corporate governance the more likely is it that loss firms manage earnings in this manner. Abnormal accruals are also found to be predictive of an initial loss and when used as a conditioning variable, the quality of corporate governance is an important mitigating factor in this regard. Once the loss is reported, loss firms unwind these abnormal accruals although no evidence of big-bath behaviour is found. The extent to which these abnormal accruals are subsequently unwound are also found to be a function of both the quality of corporate governance as well as the severity of the initial loss.

Management technologies - are they worth it? A normative study of ISO 9001 and project management

This research inquires into the value of two common ‘management technologies’, namely ISO 9001 and project management. To avoid certain methodological problems, we study the value of these micro-level practices by inductively analysing macro-level data, specifically the intensity of project management and ISO 9001 certification (termed project management score and ISO 9001 score) in different countries against national measures of wealth and innovation. There is no correlation between ISO 9001 score and innovation, while high ISO 9001 scores are correlated with decreasing levels of wealth. The project management score is positively correlated with wealth and with innovation, though very high project management scores are negatively correlated with innovation. The study includes a cluster analysis which finds that, with one exception, countries tend to adopt either project management or ISO 9001 but not both. The analysis indicates that project management is more likely to be associated with high innovation and high wealth than ISO 9001.

Bifidobacterium longum 1714 as a translational psychobiotic: modulation of stress, electrophysiology and neurocognition in healthy volunteers

The emerging concept of psychobiotics—live microorganisms with a potential mental health benefit—represents a novel approach for the management of stress-related conditions. The majority of studies have focused on animal models. Recent preclinical studies have identified the B. longum 1714 strain as a putative psychobiotic with an impact on stress-related behaviors, physiology and cognitive performance. Whether such preclinical effects could be translated to healthy human volunteers remains unknown. We tested whether psychobiotic consumption could affect the stress response, cognition and brain activity patterns. In a within-participants design, healthy volunteers (N=22) completed cognitive assessments, resting electroencephalography and were exposed to a socially evaluated cold pressor test at baseline, post-placebo and post-psychobiotic. Increases in cortisol output and subjective anxiety in response to the socially evaluated cold pressor test were attenuated. Furthermore, daily reported stress was reduced by psychobiotic consumption. We also observed subtle improvements in hippocampus-dependent visuospatial memory performance, as well as enhanced frontal midline electroencephalographic mobility following psychobiotic consumption. These subtle but clear benefits are in line with the predicted impact from preclinical screening platforms. Our results indicate that consumption of B. longum 1714 is associated with reduced stress and improved memory. Further studies are warranted to evaluate the benefits of this putative psychobiotic in relevant stress-related conditions and to unravel the mechanisms underlying such effects.