Three essays in dynamic corporate finance

The three essays constituting this thesis focus on financing and cash management policy. The first essay aims to shed light on why firms issue debt so conservatively. In particular, it examines the effects of shareholder and creditor protection on capital structure choices. It starts by building a contingent claims model where financing policy results from a trade-off between tax benefits, contracting costs and agency costs. In this setup, controlling shareholders can divert part of the firms' cash ows as private benefits at the expense of minority share- holders. In addition, shareholders as a class can behave strategically at the time of default leading to deviations from the absolute priority rule. The analysis demonstrates that investor protection is a first order determinant of firms' financing choices and that conflicts of interests between firm claimholders may help explain the level and cross-sectional variation of observed leverage ratios. The second essay focuses on the practical relevance of agency conflicts. De- spite the theoretical development of the literature on agency conflicts and firm policy choices, the magnitude of manager-shareholder conflicts is still an open question. This essay proposes a methodology for quantifying these agency conflicts. To do so, it examines the impact of managerial entrenchment on corporate financing decisions. It builds a dynamic contingent claims model in which managers do not act in the best interest of shareholders, but rather pursue private benefits at the expense of shareholders. Managers have discretion over financing and dividend policies. However, shareholders can remove the manager at a cost. The analysis demonstrates that entrenched managers restructure less frequently and issue less debt than optimal for shareholders. I take the model to the data and use observed financing choices to provide firm-specific estimates of the degree of managerial entrenchment. Using structural econometrics, I find costs of control challenges of 2-7% on average (.8-5% at median). The estimates of the agency costs vary with variables that one expects to determine managerial incentives. In addition, these costs are sufficient to resolve the low- and zero-leverage puzzles and explain the time series of observed leverage ratios. Finally, the analysis shows that governance mechanisms significantly affect the value of control and firms' financing decisions. The third essay is concerned with the documented time trend in corporate cash holdings by Bates, Kahle and Stulz (BKS,2003). BKS find that firms' cash holdings double from 10% to 20% over the 1980 to 2005 period. This essay provides an explanation of this phenomenon by examining the effects of product market competition on firms' cash holdings in the presence of financial constraints. It develops a real options model in which cash holdings may be used to cover unexpected operating losses and avoid inefficient closure. The model generates new predictions relating cash holdings to firm and industry characteristics such as the intensity of competition, cash flow volatility, or financing constraints. The empirical examination of the model shows strong support of model's predictions. In addition, it shows that the time trend in cash holdings documented by BKS can be at least partly attributed to a competition effect.

Population pharmacokinetic study to evaluate dosing strategies of imipenem in neonates and infants

Objective: Imipenem is a broad spectrum antibiotic used to treat severe infections in critically ill patients. Imipenem pharmacokinetics (PK) was evaluated in a cohort of neonates treated in the Neonatal Intensive Care Unit of the Lausanne University Hospital. The objective of our study was to identify key demographic and clinical factors influencing imipenem exposure in this population. Method: PK data from neonates and infants with at least one imipenem concentration measured between 2002 and 2013 were analyzed applying population PK modeling methods. Measurement of plasma concentrations were performed upon the decision of the physician within the frame of a therapeutic drug monitoring (TDM) programme. Effects of demographic (sex, body weight, gestational age, postnatal age) and clinical factors (serum creatinine as a measure of kidney function; co-administration of furosemide, spironolactone, hydrochlorothiazide, vancomycin, metronidazole and erythromycin) on imipenem PK were explored. Model-based simulations were performed (with a median creatinine value of 46 μmol/l) to compare various dosing regimens with respect to their ability to maintain drug levels above predefined minimum inhibitory concentrations (MIC) for at least 40 % of the dosing interval. Results: A total of 144 plasma samples was collected in 68 neonates and infants, predominantly preterm newborns, with median gestational age of 27 weeks (24 - 41 weeks) and postnatal age of 21 days (2 - 153 days). A two-compartment model best characterized imipenem disposition. Actual body weight exhibited the greatest impact on PK parameters, followed by age (gestational age and postnatal age) and serum creatinine on clearance. They explain 19%, 9%, 14% and 9% of the interindividual variability in clearance respectively. Model-based simulations suggested that 15 mg/kg every 12 hours maintain drug concentrations over a MIC of 2 mg/l for at least 40% of the dosing interval during the first days of life, whereas neonates older than 14 days of life required a dose of 20 mg/kg every 12 hours. Conclusion: Dosing strategies based on body weight and post-natal age are recommended for imipenem in all critically ill neonates and infants. Most current guidelines seem adequate for newborns and TDM should be restricted to some particular clinical situations.

Transcriptome diversity among rice root types during asymbiosis and interaction with arbuscular mycorrhizal fungi.

Root systems consist of different root types (RTs) with distinct developmental and functional characteristics. RTs may be individually reprogrammed in response to their microenvironment to maximize adaptive plasticity. Molecular understanding of such specific remodeling-although crucial for crop improvement-is limited. Here, RT-specific transcriptomes of adult rice crown, large and fine lateral roots were assessed, revealing molecular evidence for functional diversity among individual RTs. Of the three rice RTs, crown roots displayed a significant enrichment of transcripts associated with phytohormones and secondary cell wall (SCW) metabolism, whereas lateral RTs showed a greater accumulation of transcripts related to mineral transport. In nature, arbuscular mycorrhizal (AM) symbiosis represents the default state of most root systems and is known to modify root system architecture. Rice RTs become heterogeneously colonized by AM fungi, with large laterals preferentially entering into the association. However, RT-specific transcriptional responses to AM symbiosis were quantitatively most pronounced for crown roots despite their modest physical engagement in the interaction. Furthermore, colonized crown roots adopted an expression profile more related to mycorrhizal large lateral than to noncolonized crown roots, suggesting a fundamental reprogramming of crown root character. Among these changes, a significant reduction in SCW transcripts was observed that was correlated with an alteration of SCW composition as determined by mass spectrometry. The combined change in SCW, hormone- and transport-related transcript profiles across the RTs indicates a previously overlooked switch of functional relationships among RTs during AM symbiosis, with a potential impact on root system architecture and functioning.

Impact of model complexity on cross-temporal transferability in Maxent species distribution models: An assessment using paleobotanical data

Maximum entropy modeling (Maxent) is a widely used algorithm for predicting species distributions across space and time. Properly assessing the uncertainty in such predictions is non-trivial and requires validation with independent datasets. Notably, model complexity (number of model parameters) remains a major concern in relation to overfitting and, hence, transferability of Maxent models. An emerging approach is to validate the cross-temporal transferability of model predictions using paleoecological data. In this study, we assess the effect of model complexity on the performance of Maxent projections across time using two European plant species (Alnus giutinosa (L.) Gaertn. and Corylus avellana L) with an extensive late Quaternary fossil record in Spain as a study case. We fit 110 models with different levels of complexity under present time and tested model performance using AUC (area under the receiver operating characteristic curve) and AlCc (corrected Akaike Information Criterion) through the standard procedure of randomly partitioning current occurrence data. We then compared these results to an independent validation by projecting the models to mid-Holocene (6000 years before present) climatic conditions in Spain to assess their ability to predict fossil pollen presence-absence and abundance. We find that calibrating Maxent models with default settings result in the generation of overly complex models. While model performance increased with model complexity when predicting current distributions, it was higher with intermediate complexity when predicting mid-Holocene distributions. Hence, models of intermediate complexity resulted in the best trade-off to predict species distributions across time. Reliable temporal model transferability is especially relevant for forecasting species distributions under future climate change. Consequently, species-specific model tuning should be used to find the best modeling settings to control for complexity, notably with paleoecological data to independently validate model projections. For cross-temporal projections of species distributions for which paleoecological data is not available, models of intermediate complexity should be selected.

Zins-Spreads als Einnahmequelle für Kantone : Die Abhängigkeit des Passivzinssatzes von den Bruttoschulden und damit einhergehende Renditemöglichkeiten am Kapitalmarkt

Über eine längere Zeitdauer betrachtet, weisen staatliche Schulden tendenziell tiefere Zinssätze respektive Renditen auf als andere auf dem Markt gehandelte papiere, was teilweise durch das geringere Risiko erklärt werden kann (Mehra & Prescott, 2003: S.892). Indem die Abhängigkeit der Schuldzinssätze von den Schuldenquoten der Schweizer Kantone modelliert und in Beziehung zu einer adäquaten Marktrendite gebracht wird, zeigt diese Arbeit, welches Einnahmepotential sich aus diesem Zins-Spread für die Schweizer Kantone ergibt. Zur Schätzung der Zinskurve wird vom Marktgleichgewicht ausgegangen, bei welchem die investoren mit einem Default Premium für einen möglichen Ausfall des Kantons als Schuldner, im Vergleich zu einer risikolosen Anlage, abgegolten werden müssen (Bayoumi, Goldstein und Woglom, 1995: S. 1048-1051). Dazu werden die für den Schweizer Kontext spezifischen Determinanten für die Ausfallswahrscheinlichkeit identifiziert (Daldoss und Foraita, 2003: S. 87). Empirisch überprüft wird dieses Modell anhand eines quantitativen Ansatzes, wobei in erster Linie die Generalisierte Momenten-Methode (GMM) angewandt wird. Als Datenbasis dient hauptsächlich die Finanzstatistik der Eidgenössischen Finanzverwaltung (EFV), wobei alle 26 Schweizer Kantone im Zeitraum von 1981 bis 2011 betrachtet werden. Als Marktrendite wird die durchschnittliche Rendite der Schweizer Pensionskassen verwendet. Mit den verwendeten Daten und Modellen kann die Form der Zinskurve jedoch nicht eindeutig bestimmt werden, was grösstenteils auf die Endogenitätsproblematik zurückzuführen ist. Diese kann aufgrund ungenügender und mangelhafter Instrumente ohne zusätzliche Daten nicht überwunden werden. Folglich kann auch keine optimale Schuldenquote bestimmt werden. Die quantitativen Resultate deuten dennoch auf ein gewisses Einnahmepotential hin. Wie das Fallbeispiel Kanton Aargau zeigt, kann dieses punktuell auch gebraucht werden und findet in der Praxis Anwendung (Anonymer Interviewpartner, 2013).

Present standards and future perspectives in the treatment of metastatic non-small cell lung cancer.

The development of novel effective immunotherapeutic agents and early clinical data hinting at significant activity in non-small cell lung cancer (NSCLC) has introduced yet another player in the field of management of advanced disease. At present, first-line cytotoxic chemotherapy is generally withheld pending results of molecular testing for any actionable genetic alteration that could lead to targeted treatment, and in their absence chemotherapy is prescribed as a default therapy. Phase III trials comparing head-to-head immune checkpoint inhibitors with standard platinum-based doublet chemotherapy are underway. Second-line chemotherapy is likewise being challenged in phase III trials, one of which having recently reported positive results in advanced squamous cell carcinoma. In tumors harboring actionable transforming genetic alterations such as EGFR mutations and ALK rearrangements, second- and third-generation inhibitors allow for multiple lines of targeted treatment beyond initial resistance, postponing the use of cytotoxic chemotherapy to very late lines of therapy. Chemotherapy as a longstanding but still present standard of care capable of prolonging survival, improving quality of life, and relieving symptoms sees its role increasingly restricted to clinical, immunological, and molecular subsets of patients where its activity and efficacy have never been tested prospectively.

Les neurosciences au Tribunal : de la responsabilité à la dangerosité, enjeux éthiques soulevés par la nouvelle loi française

AIM: In the past few years, spectacular progress in neuroscience has led to the emergence of a new interdisciplinary field, the so-called "neurolaw" whose goal is to explore the effects of neuroscientific discoveries on legal proceedings and legal rules and standards. In the United States, a number of neuroscientific researches are designed specifically to explore legally relevant topics and a case-law has already been developed. In Europe, neuroscientific evidence is increasingly being used in criminal courtrooms, as part of psychiatric testimony, nourishing the debate about the legal implications of brain research in psychiatric-legal settings. Though largely debated, up to now the use of neuroscience in legal contexts had not specifically been regulated by any legislation. In 2011, with the new bioethics law, France has become the first country to admit by law the use of brain imaging in judicial expertise. According to the new law, brain imaging techniques can be used only for medical purposes, or scientific research, or in the context of judicial expertise. This study aims to give an overview of the current state of the neurolaw in the US and Europe, and to investigate the ethical issues raised by this new law and its potential impact on the rights and civil liberties of the offenders. METHOD: An overview of the emergence and development of "neurolaw" in the United States and Europe is given. Then, the new French law is examined in the light of the relevant debates in the French parliament. Consequently, we outline the current tendencies in Neurolaw literature to focus on assessments of responsibility, rather than dangerousness. This tendency is analysed notably in relation to the legal context relevant to criminal policies in France, where recent changes in the legislation and practice of forensic psychiatry show that dangerousness assessments have become paramount in the process of judicial decision. Finally, the potential interpretations of neuroscientific data introduced into psychiatric testimonies by judges are explored. RESULTS: The examination of parliamentary debates showed that the new French law allowing neuroimaging techniques in judicial expertise was introduced in the aim to provide a legal framework that would protect the subject against potential misuses of neuroscience. The underlying fear above all, was that this technology be used as a lie detector, or as a means to predict the subject's behaviour. However, the possibility of such misuse remains open. Contrary to the legislator's wish, the defendant is not fully guaranteed against uses of neuroimaging techniques in criminal courts that would go against their interests and rights. In fact, the examination of the recently adopted legislation in France shows that assessments of dangerousness and of risk of recidivism have become central elements of the criminal policy, which makes it possible, if not likely that neuroimaging techniques be used for the evaluation of the dangerousness of the defendant. This could entail risks for the latter, as judges could perceive neuroscientific data as hard evidence, more scientific and reliable than the soft data of traditional psychiatry. If such neuroscientific data are interpreted as signs of potential dangerousness of a subject rather than as signs of criminal responsibility, defendants may become subjected to longer penalties or measures aiming to ensure public safety in the detriment of their freedom. CONCLUSION: In the current context of accentuated societal need for security, the judge and the expert-psychiatrist are increasingly asked to evaluate the dangerousness of a subject, regardless of their responsibility. Influenced by this policy model, the judge might tend to use neuroscientific data introduced by an expert as signs of dangerousness. Such uses, especially when they subjugate an individual's interest to those of society, might entail serious threats to an individual's freedom and civil liberties.

How institutions shaped the last major evolutionary transition to large-scale human societies.

What drove the transition from small-scale human societies centred on kinship and personal exchange, to large-scale societies comprising cooperation and division of labour among untold numbers of unrelated individuals? We propose that the unique human capacity to negotiate institutional rules that coordinate social actions was a key driver of this transition. By creating institutions, humans have been able to move from the default 'Hobbesian' rules of the 'game of life', determined by physical/environmental constraints, into self-created rules of social organization where cooperation can be individually advantageous even in large groups of unrelated individuals. Examples include rules of food sharing in hunter-gatherers, rules for the usage of irrigation systems in agriculturalists, property rights and systems for sharing reputation between mediaeval traders. Successful institutions create rules of interaction that are self-enforcing, providing direct benefits both to individuals that follow them, and to individuals that sanction rule breakers. Forming institutions requires shared intentionality, language and other cognitive abilities largely absent in other primates. We explain how cooperative breeding likely selected for these abilities early in the Homo lineage. This allowed anatomically modern humans to create institutions that transformed the self-reliance of our primate ancestors into the division of labour of large-scale human social organization.

Nouvelle jurisprudence concernant le traitement des subventions au regard de la TVA

La Commission fédérale de recours en matière de contributions (ci-après «CRC») vient de rendre deux décisions relatives à la TVA en matière de subventions et leur impact sur la récupération de l'impôt préalable. Ces deux jugements s'inscrivent dans la ligne de la jurisprudence de la CRC en matière de subventions. Ils conduisent à un résultat conforme au principe même de la TVA, en ce sens que, selon le type de subventions, leur traitement TVA et en particulier leur influence sur le droit à la récupération de l’impôt préalable varie. Ces deux jugements ont toutefois une portée plus large que pour les seules subventions. En effet, le projet de loi sur la TVA qui reprend la réglementation prévue dans l’OTVA, applique le même traitement aux dons. Compte tenu de l’importance des concepts relatifs aux subventions développés dans les deux décisions de la CRC, il nous a paru opportun de retranscrire de manière détaillée les considérants des deux décisions, avant d’ajouter quelques remarques et commentaires sur ces deux arrêts et de les mettre en relation avec le projet de loi sur la TVA.