Three essays in dynamic corporate finance

Summary Throughout my thesis, I elaborate on how real and financing frictions affect corporate decision making under uncertainty, and I explore how firms time their investment and financing decisions given such frictions. While the macroeconomics literature has focused on the impact of real frictions on investment decisions assuming all equity financed firms, the financial economics literature has mainly focused on the study of financing frictions. My thesis therefore assesses the join interaction of real and financing frictions in firms' dynamic investment and financing decisions. My work provides a rationale for the documented poor empirical performance of neoclassical investment models based on the joint effect of real and financing frictions on investment. A major observation relies in how the infrequency of corporate decisions may affect standard empirical tests. My thesis suggests that the book to market sorts commonly used in the empirical asset pricing literature have economic content, as they control for the lumpiness in firms' optimal investment policies. My work also elaborates on the effects of asymmetric information and strategic interaction on firms' investment and financing decisions. I study how firms time their decision to raise public equity when outside investors lack information about their future investment prospects. I derive areal-options model that predicts either cold or hot markets for new stock issues conditional on adverse selection, and I provide a rational approach to study jointly the market timing of corporate decisions and announcement effects in stock returns. My doctoral dissertation therefore contributes to our understanding of how under real and financing frictions may bias standard empirical tests, elaborates on how adverse selection may induce hot and cold markets in new issues' markets, and suggests how the underlying economic behaviour of firms may induce alternative patterns in stock prices.

Recurrent dominant mutations affecting two adjacent residues in the motor domain of the monomeric kinesin KIF22 result in skeletal dysplasia and joint laxity.

Spondyloepimetaphyseal dysplasia with joint laxity, leptodactylic type (lepto-SEMDJL, aka SEMDJL, Hall type), is an autosomal dominant skeletal disorder that, in spite of being relatively common among skeletal dysplasias, has eluded molecular elucidation so far. We used whole-exome sequencing of five unrelated individuals with lepto-SEMDJL to identify mutations in KIF22 as the cause of this skeletal condition. Missense mutations affecting one of two adjacent amino acids in the motor domain of KIF22 were present in 20 familial cases from eight families and in 12 other sporadic cases. The skeletal and connective tissue phenotype produced by these specific mutations point to functions of KIF22 beyond those previously ascribed functions involving chromosome segregation. Although we have found Kif22 to be strongly upregulated at the growth plate, the precise pathogenetic mechanisms remain to be elucidated.

A new approach to accurate measurement of uniaxial joint angles based on a combination of accelerometers and gyroscopes.

A new method of measuring joint angle using a combination of accelerometers and gyroscopes is presented. The method proposes a minimal sensor configuration with one sensor module mounted on each segment. The model is based on estimating the acceleration of the joint center of rotation by placing a pair of virtual sensors on the adjacent segments at the center of rotation. In the proposed technique, joint angles are found without the need for integration, so absolute angles can be obtained which are free from any source of drift. The model considers anatomical aspects and is personalized for each subject prior to each measurement. The method was validated by measuring knee flexion-extension angles of eight subjects, walking at three different speeds, and comparing the results with a reference motion measurement system. The results are very close to those of the reference system presenting very small errors (rms = 1.3, mean = 0.2, SD = 1.1 deg) and excellent correlation coefficients (0.997). The algorithm is able to provide joint angles in real-time, and ready for use in gait analysis. Technically, the system is portable, easily mountable, and can be used for long term monitoring without hindrance to natural activities.

Clinical and ultrasonographic predictors of joint replacement for knee osteoarthritis: results from a large, 3-year, prospective EULAR study.

OBJECTIVES: To determine clinical and ultrasonographic predictors of joint replacement surgery across Europe in primary osteoarthritis (OA) of the knee. METHODS: This was a 3-year prospective study of a painful OA knee cohort (from a EULAR-sponsored, multicentre study). All subjects had clinical evaluation, radiographs and ultrasonography (US) at study entry. The rate of knee replacement surgery over the 3-year follow-up period was determined using Kaplan-Meier survival data analyses. Predictive factors for joint replacement were identified by univariate log-rank test then multivariate analysis using a Cox proportional-hazards regression model. Potential baseline predictors included demographic, clinical, radiographic and US features. RESULTS: Of the 600 original patients, 531 (88.5%), mean age 67+/-10 years, mean disease duration 6.1+/-6.9 years, had follow-up data and were analysed. During follow-up (median 3 years; range 0-4 years), knee replacement was done or required for 94 patients (estimated event rate of 17.7%). In the multivariate analysis, predictors of joint replacement were as follows: Kellgren and Lawrence radiographic grade (grade > or =III vs <III, hazards ratio (HR) = 4.08 (95% CI 2.34 to 7.12), p<0.0001); ultrasonographic knee effusion (> or =4 mm vs <4 mm) (HR = 2.63 (95% CI 1.70 to 4.06), p<0.0001); knee pain intensity on a 0-100 mm visual analogue scale (> or =60 vs <60) (HR = 1.81 (95% CI 1.15 to 2.83), p=0.01) and disease duration (> or =5 years vs <5 years) (HR=1.63 (95% CI 1.08 to 2.47), p=0.02). Clinically detected effusion and US synovitis were not associated with joint replacement in the univariate analysis. CONCLUSION: Longitudinal evaluation of this OA cohort demonstrated significant progression to joint replacement. In addition to severity of radiographic damage and pain, US-detected effusion was a predictor of subsequent joint replacement.

Structural joint inversion of time-lapse crosshole ERT and GPR traveltime data

Time-lapse geophysical monitoring and inversion are valuable tools in hydrogeology for monitoring changes in the subsurface due to natural and forced (tracer) dynamics. However, the resulting models may suffer from insufficient resolution, which leads to underestimated variability and poor mass recovery. Structural joint inversion using cross-gradient constraints can provide higher-resolution models compared with individual inversions and we present the first application to time-lapse data. The results from a synthetic and field vadose zone water tracer injection experiment show that joint 3-D time-lapse inversion of crosshole electrical resistance tomography (ERT) and ground penetrating radar (GPR) traveltime data significantly improve the imaged characteristics of the point injected plume, such as lateral spreading and center of mass, as well as the overall consistency between models. The joint inversion method appears to work well for cases when one hydrological state variable (in this case moisture content) controls the time-lapse response of both geophysical methods. Citation: Doetsch, J., N. Linde, and A. Binley (2010), Structural joint inversion of time-lapse crosshole ERT and GPR traveltime data, Geophys. Res. Lett., 37, L24404, doi: 10.1029/2010GL045482.

Characteristics and outcome of knee prosthetic joint infections (PJI): A 10-year cohort study (2000-2009)

Background: Prosthetic joint infections (PJI) lead to significant long-term morbidity with high cost of healthcare. We evaluated characteristics of infections and the infection and functional outcome of knee PJI over a 10-year period. Methods: All patients hospitalized at our institution from 1/2000 through 12/2009 with knee PJI (defined as growth of the same microorganism in ≥2 tissue or synovial fluid cultures, visible purulence, sinus tract or acute inflammation on tissue histopathology) were included. Patients, their relatives and/or treating physicians were contacted to determine the outcome. Results: During the study period, 61 patients with knee PJI were identified. The median age at the time of diagnosis of infection was 73 y (range, 53-94 y); 52% were men. Median hospital stay was 37 d (range, 1-145 d). Most reasons for primary arthroplasty was osteoarthritis (n = 48), trauma (n = 9) and rheumatoid arthritis (n = 4). 23 primary surgeries (40%) were performed at CHUV, 34 (60%) elsewhere. After surgery, 8 PJI were early (<3 months), 16 delayed (3-24 months) and 33 late (>24 months). PJI were treated with (i) open or arthroscopic debridement with prosthesis retention in 26 (46%), (ii) one-stage exchange in 1, (iii) two-stage exchange in 22 (39%) and (iv) prosthesis removal in 8 (14%). Isolated pathogens were S. aureus (13), coagulase-negative staphylococci (10), streptococci (5), enterococci (3), gram-negative rods (3) and anaerobes (3). Patients were followed for a median of 3.1 years, 2 patients died (unrelated to PJI). The outcome of infection was favorable in 50 patients (88%), whereas the functional outcome was favorable in 33 patients (58%). Conclusions: With the current treatment concept, the high cure rate of infection (88%) is associated with a less favorable functional outcome o 58%. Earlier surgical intervention and more rapid and improved diagnosis of infection may improve the functional outcome of PJI.

Official Positions for FRAX® clinical regarding international differences from Joint Official Positions Development Conference of the International Society for Clinical Densitometry and International Osteoporosis Foundation on FRAX®.

Osteoporosis is a serious worldwide epidemic. Increased risk of fractures is the hallmark of the disease and is associated with increased morbidity, mortality and economic burden. FRAX® is a web-based tool developed by the Sheffield WHO Collaborating Center team, that integrates clinical risk factors, femoral neck BMD, country specific mortality and fracture data and calculates the 10 year fracture probability in order to help health care professionals identify patients who need treatment. However, only 31 countries have a FRAX® calculator at the time paper was accepted for publication. In the absence of a FRAX® model for a particular country, it has been suggested to use a surrogate country for which the epidemiology of osteoporosis most closely approximates the index country. More specific recommendations for clinicians in these countries are not available. In North America, concerns have also been raised regarding the assumptions used to construct the US ethnic specific FRAX® calculators with respect to the correction factors applied to derive fracture probabilities in Blacks, Asians and Hispanics in comparison to Whites. In addition, questions were raised about calculating fracture risk in other ethnic groups e.g., Native Americans and First Canadians. In order to provide additional guidance to clinicians, a FRAX® International Task Force was formed to address specific questions raised by physicians in countries without FRAX® calculators and seeking to integrate FRAX® into their clinical practice. The main questions that the task force tried to answer were the following: The Task Force members conducted appropriate literature reviews and developed preliminary statements that were discussed and graded by a panel of experts at the ISCD-IOF joint conference. The statements approved by the panel of experts are discussed in the current paper.

Resection of the flexor digitorum superficialis for trigger finger with proximal interphalangeal joint positional contracture

Open release of the Al pulley is a widely known procedure for the treatment of trigger finger. However, a subset of patients present trigger finger with a positional contracture of the proximal interphalangeal joint. These patients usually have a long history of trigger finger or have already undergone one surgery to treat trigger finger. In both instances, surgical intervention with only transection of the Al pulley is ineffective. In this study, 36 patients (39 fingers) were treated by resection of the flexor digitorum superficialis after section of the Al pulley (mean age: 63 y). We performed a retrospective review with a mean follow up of 30 months. The mean pre-operative extension deficit of the proximal interphalangeal articulation was 24 degrees, and 28 of the 39 affected fingers achieved filli extension following the surgical intervention. All of the resected tendons had histological damage. This technique is a useful treatment for selected patients whose trigger finger is associated with a positional contracture.

FRAX(®) Clinical Task Force of the 2010 Joint International Society for Clinical Densitometry & International Osteoporosis Foundation Position Development Conference.

The World Health Organization fracture risk assessment tool, FRAX(®), is an advance in clinical care that can assist in clinical decision-making. However, with increasing clinical utilization, numerous questions have arisen regarding how to best estimate fracture risk in an individual patient. Recognizing the need to assist clinicians in optimal use of FRAX(®), the International Osteoporosis Foundation (IOF) in conjunction with the International Society for Clinical Densitometry (ISCD) assembled an international panel of experts that ultimately developed joint Official Positions of the ISCD and IOF advising clinicians regarding FRAX(®) usage. As part of the process, the charge of the FRAX(®) Clinical Task Force was to review and synthesize data surrounding a number of recognized clinical risk factors including rheumatoid arthritis, smoking, alcohol, prior fracture, falls, bone turnover markers and glucocorticoid use. This synthesis was presented to the expert panel and constitutes the data on which the subsequent Official Positions are predicated. A summary of the Clinical Task Force composition and charge is presented here.

Failure of the surgical treatment in 115 infected hip arthroplasties-­analysis of a 12-­year prosthetic joint cohort study (1999-­2010)

Background:¦Infection after total or partial hip arthroplasty (HA) leads to significant long-­term morbidity and high healthcare cost. We evaluated reasons for treatment failure of different surgical modalities in a 12-­year prosthetic hip joint infection cohort study.¦Method:¦All patients hospitalized at our institution with infected HA were included either retrospectively (1999-­‐2007) or prospectively¦(2008-­‐2010). HA infection was defined as growth of the same microorganism in ≥2 tissues or synovialfluid culture, visible purulence, sinus tract or acute inflammation on tissue histopathology. Outcome analysis was performed at outpatient visits, followed by contacting patients, their relatives and/or treating physicians afterwards.¦Results:¦During the study period, 117 patients with infected HA were identified. We excluded 2 patients due to missing data. The average age was 69 years (range, 33-­‐102 years); 42% were female. HA was mainly performed for osteoarthritis (n=84), followed by trauma (n=22), necrosis (n=4), dysplasia(n=2), rheumatoid arthritis (n=1), osteosarcoma (n=1) and tuberculosis (n=1). 28 infections occurred early(≤3 months), 25 delayed (3-­‐24 months) and 63 late (≥24 months after surgery). Infected HA were¦treated with (i) two-­‐stage exchange in 59 patients (51%, cure rate: 93%), (ii) one-­‐stage exchange in 5 (4.3%, cure rate: 100%), (iii) debridement with change of mobile parts in 18 (17%, cure rate: 83%), (iv) debridement without change of mobile¦parts in 17 (14%, cure rate : 53% ), (v) Girdlestone in 13 (11%, cure rate: 100%), and (vi) two-­‐stage exchange followed by¦removal in 3 (2.6%). Patients were followed for an average of 3.9 years (range, 0.1 to 9 years), 7 patients died unrelated to the infected HA. 15 patients (13%) needed additional operations, 1 for mechanical reasons(dislocation of spacer) and 14 for persistent infection: 11 treated with debridement and retention (8 without change; and 3 with change of mobile parts) and 3 with two-­‐stage exchange. The average number of surgery was 2.2 (range, 1 to 5). The infection was finally eradicated in all patients, but the functional outcome remained unsatisfactory in 20% (persistent pain or impaired mobility due to spacer or Girdlestone situation).¦Conclusions:¦Non-­‐respect of current treatment concept leads to treatment failure with subsequent operations. Precise analysis of each treatment failure can be used for improving the treatment algorithm leading to better results.