Financial distress, financial constraint and investment decision: Evidence from Brazil

This paper analyses the presence of financial constraint in the investment decisions of 367 Brazilian firms from 1997 to 2004, using a Bayesian econometric model with group-varying parameters. The motivation for this paper is the use of clustering techniques to group firms in a totally endogenous form. In order to classify the firms we used a hybrid clustering method, that is, hierarchical and non-hierarchical clustering techniques jointly. To estimate the parameters a Bayesian approach was considered. Prior distributions were assumed for the parameters, classifying the model in random or fixed effects. Ordinate predictive density criterion was used to select the model providing a better prediction. We tested thirty models and the better prediction considers the presence of 2 groups in the sample, assuming the fixed effect model with a Student t distribution with 20 degrees of freedom for the error. The results indicate robustness in the identification of financial constraint when the firms are classified by the clustering techniques. (C) 2010 Elsevier B.V. All rights reserved.

Sampled Control for Mean-Variance Hedging in a Jump Diffusion Financial Market

In this technical note we consider the mean-variance hedging problem of a jump diffusion continuous state space financial model with the re-balancing strategies for the hedging portfolio taken at discrete times, a situation that more closely reflects real market conditions. A direct expression based on some change of measures, not depending on any recursions, is derived for the optimal hedging strategy as well as for the ""fair hedging price"" considering any given payoff. For the case of a European call option these expressions can be evaluated in a closed form.

Multicollinearity and financial constraint in investment decisions: a Bayesian generalized ridge regression

This paper addresses the investment decisions considering the presence of financial constraints of 373 large Brazilian firms from 1997 to 2004, using panel data. A Bayesian econometric model was used considering ridge regression for multicollinearity problems among the variables in the model. Prior distributions are assumed for the parameters, classifying the model into random or fixed effects. We used a Bayesian approach to estimate the parameters, considering normal and Student t distributions for the error and assumed that the initial values for the lagged dependent variable are not fixed, but generated by a random process. The recursive predictive density criterion was used for model comparisons. Twenty models were tested and the results indicated that multicollinearity does influence the value of the estimated parameters. Controlling for capital intensity, financial constraints are found to be more important for capital-intensive firms, probably due to their lower profitability indexes, higher fixed costs and higher degree of property diversification.

The Controllership Relevance or Risk Management in non-Financial Companies: a study of risk managers` and controllers` perceptions

The purpose of this study is to analyze the Controllership relevance as support risk management in non-financial companies. Risk management is a widely discussed and disseminated subject amongst financial institutions. It is obvious that economic uncertainties and, consequently, prevention and. control must also exist in non-financial companies. To enable managers to take safe-decisions, it is essential for them to be able to count on instrumental support that provides timely and adequate information, to ensure lower levels of mistakes and risk exposure. However, discussion concerning risk management in non-financial companies is still in its early stages in Brazil. Considering this gap, this study aims at assessing how Controllership has been acting in? companies under the insight of risk and how it can contribute to risk management in non-financial companies. To achieve the proposed goal, a field research was. carried-out with non-financial companies that are located in the city Sao Paulo and listed in the Sao Paulo Stock Exchange (Bovespa). The research was carried out using questionnaires, which were sent do Risk Officers and Controllers of those companies with the purpose of evaluating their perception on the subject. The results,of the research allow us to conclude that Controllership offers support to risk management, through information that contributes to the mitigation of the risks in non-financial companies.

Diagnosis of Organizational Soft Problems in a Peruvian Financial Institution by Systemic Thinking

Managing financial institutions in an underdeveloped economic context has become a real challenge nowadays. In order to reach the organization`s planned goals, they have to deal with structural, behavioral and informational problems. From the systemic point of view, this situation gets even worse when the company does not present organizational boundaries and a cohesive identification for their stakeholders. Thus, European countries have some special financial lines in order to help the development of micro credit in Latin communities in an attempt to help the local economy. However, institutions like Caixa dos Andes in Peru present management problems when dealing with this complexity. Based on this, how can the systemic eye help in the diagnosis of soft problems of a Peruvian financial company? This study aims to diagnose soft problems of a Peruvian financial company based on soft variables like identity, communication and autonomy and also intends to identify possible ways to redesign its basic framework. The (VSM--Viable System Model) method from Beer (1967), applied in this diagnostic study, was used in a practical way as a management tool for organizations` analysis and planning. By describing the VSM`s five systems, the creation of a systemic vision or a total vision is possible, showing the organization`s complexity from the inside. Some company`s soft problems like double control, inefficient use of physical and human resources, low information flows, slowness, etc. The VSM presented an organizational diagnosis indicating effective solutions that do integrate its five systems.

Financial leverage and tangibility of assets of Brazilian companies of agribusiness in the post-real plan period

This paper aims to study the relationship between the debt level and the asset structure of Brazilian companies of the agribusiness sector, since it is considered a current and relevant discussion: to evaluate the mechanisms for fund-raising and guarantees. The methodology of Granger`s Causality test and Autoregressive Vectors was used to conduct a comparative analysis, applied to a financial database of companies with open capital of Brazilian agribusiness, in particular the agricultural sector and Fisheries and Food and Beverages in a period of 10 years (1997-2007) from quarterly series available in the database of Economatica(R). The results demonstrated that changes in leverage generate variations in the tangibility of the companies, a fact that can be explained by the large search of funding secured by fiduciary transfer of fixed assets, which facilitates access to credit by business of the Agribusiness sector, increasing the payment time and lowering interest rates.

Small airway remodeling in acute respiratory distress syndrome: a study in autopsy lung tissue

Introduction: Airway dysfunction in patients with the Acute Respiratory Distress Syndrome (ARDS) is evidenced by expiratory flow limitation and dynamic hyperinflation. These functional alterations have been attributed to closure/obstruction of small airways. Airway morphological changes have been reported in experimental models of acute lung injury, characterized by epithelial necrosis and denudation in distal airways. To date, however, no study has focused on the morphological airway changes in lungs from human subjects with ARDS. The aim of this study is to evaluate structural and inflammatory changes in distal airways in ARDS patients. Methods: We retrospectively studied autopsy lung tissue from subjects who died with ARDS and from control subjects who died of non pulmonary causes. Using image analysis, we quantified the extension of epithelial changes (normal, abnormal and denudated epithelium expressed as percentages of the total epithelium length), bronchiolar inflammation, airway wall thickness, and extracellular matrix (ECM) protein content in distal airways. The Student`s t test or the Mann-Whitney test was used to compare data between the ARDS and control groups. Bonferroni adjustments were used for multiple tests. The association between morphological and clinical data was analyzed by Pearson rank test. Results: Thirty-one ARDS patients (A: PaO(2)/FiO(2) <= 200, 45 +/- 14 years, 16 males) and 11 controls (C:52 +/- 16 years, 7 males) were included in the study. ARDS airways showed a shorter extension of normal epithelium (A:32.9 +/- 27.2%, C:76.7 +/- 32.7%, P < 0.001), a larger extension of epithelium denudation (A:52.6 +/- 35.2%, C:21.8 +/- 32.1%, P < 0.01), increased airway inflammation (A:1(3), C:0(1), P = 0.03), higher airway wall thickness (A:138.7 +/- 54.3 mu m, C:86.4 +/- 33.3 mu m, P < 0.01), and higher airway content of collagen I, fibronectin, versican and matrix metalloproteinase-9 (MMP-9) compared to controls (P = 0.03). The extension of normal epithelium showed a positive correlation with PaO(2)/FiO(2) (r(2) = 0.34; P = 0.02) and a negative correlation with plateau pressure (r(2) = 0.27; P = 0.04). The extension of denuded epithelium showed a negative correlation with PaO(2)/FiO(2) (r(2) = 0.27; P = 0.04). Conclusions: Structural changes in small airways of patients with ARDS were characterized by epithelial denudation, inflammation and airway wall thickening with ECM remodeling. These changes are likely to contribute to functional airway changes in patients with ARDS.

Fatal acute respiratory distress syndrome in a patient with paracoccidioidomycosis: first case report

Paracoccidioidomycosis is a systemic mycosis that is usually acquired early in life by inhalation of conidia which convert in the lungs into yeast forms; these in turn trigger an inflammatory process. This mycosis may appear as an acute/subacute form or a chronic, adult form. Acute/subacute presentations can be observed in children and young adults, with the reticuloendothelial system frequently involved but the lungs are usually spared or present with mild clinical or radiological alterations. Acute respiratory distress syndrome (ARDS), an extensive dysfunction of the lungs alveolar-capillary barrier has occasionally been observed in other endemic mycoses such as coccidioidomycosis, cryptococcosis, histoplasmosis and blastomycosis. We describe the first patient with acute paracoccidioidomycosis who developed fatal ARDS accompanied by multiple organ injuries. The basis of the rarity of this entity in patients with paracoccidioidomycosis, as well as the reasons that may have lead to the development of ARDS in this patient are discussed.

Microscopic origin of non-Gaussian distributions of financial returns

In this paper we study the possible microscopic origin of heavy-tailed probability density distributions for the price variation of financial instruments. We extend the standard log-normal process to include another random component in the so-called stochastic volatility models. We study these models under an assumption, akin to the Born-Oppenheimer approximation, in which the volatility has already relaxed to its equilibrium distribution and acts as a background to the evolution of the price process. In this approximation, we show that all models of stochastic volatility should exhibit a scaling relation in the time lag of zero-drift modified log-returns. We verify that the Dow-Jones Industrial Average index indeed follows this scaling. We then focus on two popular stochastic volatility models, the Heston and Hull-White models. In particular, we show that in the Hull-White model the resulting probability distribution of log-returns in this approximation corresponds to the Tsallis (t-Student) distribution. The Tsallis parameters are given in terms of the microscopic stochastic volatility model. Finally, we show that the log-returns for 30 years Dow Jones index data is well fitted by a Tsallis distribution, obtaining the relevant parameters. (c) 2007 Elsevier B.V. All rights reserved.

Diagnostic value of interleukin-6 and C-reactive protein on early onset bacterial infection in preterm neonates with respiratory distress

Aims: To evaluate the C-reactive protein (CRP) and interleukin-6 (IL-6) as diagnostic tools for early onset infection in preterm infants with early respiratory distress (RD). Methods: CRP and IL-6 were quantified at identification of RD and 24 h after in 186 newborns. Effects of maternal hypertension, mode of delivery, Apgar score, birth weight, gestational age, mechanical ventilation, being small for gestational age (SGA), and the presence of infection were analyzed. Results: Forty-four infants were classified as infected, 42 as possibly infected, and 100 as uninfected. Serum levels of IL-6 (0 h), CRP (0 h), and CRP (24 h), but not IL-6 (24 h) were significantly higher in infected infants compared to the remaining groups. The best test for identification of infection was the combination of IL-6 (0 h) 36 pg/dL and/or CRP (24 h) 0.6 mg/dL, which yielded 93% sensitivity and 37% specificity. The presence of infection and vaginal delivery independently increased IL-6 (0 h), CRP (0 h) and CRP (24 h) levels. Being SGA also increased the CRP (24 h) levels. IL-6 (24 h) was independently increased by mechanical ventilation. Conclusions: The combination of IL-6 (0 h) and/or CRP (24 h) is helpful for excluding early onset infection in preterm infants with RD but the poor specificity limits its potential benefit as a diagnostic tool.

Pain and distress reactivity and recovery as early predictors of temperament in toddlers born preterm

Background: Pain reactivity may reflect underlying mechanisms of constitutional aspects of temperament. Aim: To examine whether the neonatal biobehavioral reactivity and recovery responses from pain and distress, as well as the gestational age, the illness severity and the amount of painful procedures undergone the Neonatal Intensive Care Unit (NICU) stay, predict temperament later in toddlerhood, in vulnerable children born preterm. Study design: Prospective-longitudinal study. Subjects: Twenty-six preterm and very low birth weight infants followed from birth to toddlerhood. Outcome measures: Illness severity was assessed with the Clinical Risk Index for Babies (CRIB) score. The medical charts were reviewed prospectively for obtaining the amount of pain exposure in NICU. For assessing the behavioral and cardiac reactivity and recovery from pain and distress, the neonates were evaluated during routine blood collection in the NICU in the first 10 days of life. Pain and distress reactivity and recovery was measured using the Neonatal Facial Coding System score, the duration of crying. and the magnitude of average heart rate. At toddlerhood, mothers answered the Early Childhood Behavior Questionnaire. Results: Higher biobehavioral reactivity to pain and distress predicted higher temperamental Negative Affect, above and beyond gestational age, illness severity and amount of pain exposure in NICU. However, we did not find a predictive relation between gestational age, CRIB score and number of painful procedures undergone NICU and toddler`s temperament. Conclusions: The findings highlight the relevance of the neonatal individual characteristics of reactivity for identifying more vulnerable infants for future problems in biobehavioral regulation. (C) 2009 Elsevier Ireland Ltd. All rights reserved.