Do financial distress and liquidity crises affect value and size premiums?

This study investigates the impact of liquidity crises on the relationship between stock (value and size) premiums and default risk in the US market. It first examines whether financial distress can explain value and size premiums, and then, subsequently, aims to determine whether liquidity crises increase the risk of value and size premium investment strategies. The study employs a time-varying approach and a sample of US stock returns for the period between January 1982 and March 2011, a period which includes the current liquidity crisis, so as to examine the relationship between default risk, liquidity crises and value and size premiums. The findings indicate that the default premium has explanatory power for value and size and premiums, which affect firms with different characteristics. We also find that liquidity crises may actually increase the risks related to size and value premium strategies.

Modulation of CYP1A1 by PKC Inhibitors and TPA Pre-Treatments in MH1C1 Rat Hepatoma Cells Exposed to 3 -Methylcholanthrene

Cytochrome P4501A1 (CYP1A1), an enzyme known to metabolize polycyclic aromatic hydrocarbons, is regulated by the aryl hydrocarbon receptor (AhR). The involvement of protein kinase C (PKC) in the regulation of AhR signal transduction pathway, has been widely studied but the role of specific PKC isoform(s) involved in this process it is not well clarified. To study which PKC isoform(s) is implicated in the regulation of CYP1A1, in the poorly tumorigenic MH1C1 rat hepatoma cells, we examined the effects of some PKC pharmacological inhibitors, Calphostin C (CAL), Staurosporine (STA) and H7, and of 12-0-tetradecanoyl phorbol 13-acetate (TPA), a PKC activator, on basal and 3- methylcholanthrene (MC)-induced CYP1A1 protein expression and mediated ethoxyresorufin O-deethylation (EROD) activity. In parallel, the activities of PKC-α, -βI, -δ and -ε isoforms, the most expressed in MH1C1 cells, were monitored. After pre-treatment with CAL, STA and H7, the MC-induced CYP1A1 protein and EROD activity were rapidly reduced with temporal profile similar to the profile of the activity of α and β1 PKC isoforms. Moreover, TPA pre-treatment induced a biphasic effect on EROD activity, and a decline of PKC -βI and -α, in first instance, and -δ and -ε activities later on. These findings clearly show that, in MH1C1 cells, PKC is involved in CYP1A1 regulation and that α and βI classic PKC isoforms play an active role in modulating this process.