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.

Dynamic drag modeling of submerged aquatic vegetation canopy flows

Vegetation has a profound effect on flow and sediment transport processes in natural rivers, by increasing both skin friction and form drag. The increase in drag introduces a drag discontinuity between the in-canopy flow and the flow above, which leads to the development of an inflection point in the velocity profile, resembling a free shear layer. Therefore, drag acts as the primary driver for the entire canopy system. Most current numerical hydraulic models which incorporate vegetation rely either on simple, static plant forms, or canopy-scaled drag terms. However, it is suggested that these are insufficient as vegetation canopies represent complex, dynamic, porous blockages within the flow, which are subject to spatially and temporally dynamic drag forces. Here we present a dynamic drag methodology within a CFD framework. Preliminary results for a benchmark cylinder case highlight the accuracy of the method, and suggest its applicability to more complex cases.

Research resource: the dynamic transcriptional profile of sertoli cells during the progression of spermatogenesis.

Sertoli cells (SCs), the only somatic cells within seminiferous tubules, associate intimately with developing germ cells. They not only provide physical and nutritional support but also secrete factors essential to the complex developmental processes of germ cell proliferation and differentiation. The SC transcriptome must therefore adapt rapidly during the different stages of spermatogenesis. We report comprehensive genome-wide expression profiles of pure populations of SCs isolated at 5 distinct stages of the first wave of mouse spermatogenesis, using RNA sequencing technology. We were able to reconstruct about 13 901 high-confidence, nonredundant coding and noncoding transcripts, characterized by complex alternative splicing patterns with more than 45% comprising novel isoforms of known genes. Interestingly, roughly one-fifth (2939) of these genes exhibited a dynamic expression profile reflecting the evolving role of SCs during the progression of spermatogenesis, with stage-specific expression of genes involved in biological processes such as cell cycle regulation, metabolism and energy production, retinoic acid synthesis, and blood-testis barrier biogenesis. Finally, regulatory network analysis identified the transcription factors endothelial PAS domain-containing protein 1 (EPAS1/Hif2α), aryl hydrocarbon receptor nuclear translocator (ARNT/Hif1β), and signal transducer and activator of transcription 1 (STAT1) as potential master regulators driving the SC transcriptional program. Our results highlight the plastic transcriptional landscape of SCs during the progression of spermatogenesis and provide valuable resources to better understand SC function and spermatogenesis and its related disorders, such as male infertility.

Fire management, climate change and their interacting effects on birds in complex Mediterranean landscapes: dynamic distribution modelling of an early-successional species - the near-threatened Dartford Warbler (Sylvia undata)

The current challenge in a context of major environmental changes is to anticipate the responses of species to future landscape and climate scenarios. In the Mediterranean basin, climate change is one the most powerful driving forces of fire dynamics, with fire frequency and impact having markedly increased in recent years. Species distribution modelling plays a fundamental role in this challenge, but better integration of available ecological knowledge is needed to adequately guide conservation efforts. Here, we quantified changes in habitat suitability of an early-succession bird in Catalonia, the Dartford Warbler (Sylvia undata) ― globally evaluated as Near Threatened in the IUCN Red List. We assessed potential changes in species distributions between 2000 and 2050 under different fire management and climate change scenarios and described landscape dynamics using a spatially-explicit fire-succession model that simulates fire impacts in the landscape and post-fire regeneration (MEDFIRE model). Dartford Warbler occurrence data were acquired at two different spatial scales from: 1) the Atlas of European Breeding Birds (EBCC) and 2) Catalan Breeding Bird Atlas (CBBA). Habitat suitability was modelled using five widely-used modelling techniques in an ensemble forecasting framework. Our results indicated considerable habitat suitability losses (ranging between 47% and 57% in baseline scenarios), which were modulated to a large extent by fire regime changes derived from fire management policies and climate changes. Such result highlighted the need for taking the spatial interaction between climate changes, fire-mediated landscape dynamics and fire management policies into account for coherently anticipating habitat suitability changes of early succession bird species. We conclude that fire management programs need to be integrated into conservation plans to effectively preserve sparsely forested and early succession habitats and their associated species in the face of global environmental change.

Influence of heart motion on cardiac output estimation by means of electrical impedance tomography: a case study.

Electrical impedance tomography (EIT) is a non-invasive imaging technique that can measure cardiac-related intra-thoracic impedance changes. EIT-based cardiac output estimation relies on the assumption that the amplitude of the impedance change in the ventricular region is representative of stroke volume (SV). However, other factors such as heart motion can significantly affect this ventricular impedance change. In the present case study, a magnetic resonance imaging-based dynamic bio-impedance model fitting the morphology of a single male subject was built. Simulations were performed to evaluate the contribution of heart motion and its influence on EIT-based SV estimation. Myocardial deformation was found to be the main contributor to the ventricular impedance change (56%). However, motion-induced impedance changes showed a strong correlation (r = 0.978) with left ventricular volume. We explained this by the quasi-incompressibility of blood and myocardium. As a result, EIT achieved excellent accuracy in estimating a wide range of simulated SV values (error distribution of 0.57 ± 2.19 ml (1.02 ± 2.62%) and correlation of r = 0.996 after a two-point calibration was applied to convert impedance values to millilitres). As the model was based on one single subject, the strong correlation found between motion-induced changes and ventricular volume remains to be verified in larger datasets.

Dynamic single cell measurements of kinase activity by synthetic kinase activity relocation sensors.

BACKGROUND: Mitogen activated protein kinases (MAPK) play an essential role in integrating extra-cellular signals and intra-cellular cues to allow cells to grow, adapt to stresses, or undergo apoptosis. Budding yeast serves as a powerful system to understand the fundamental regulatory mechanisms that allow these pathways to combine multiple signals and deliver an appropriate response. To fully comprehend the variability and dynamics of these signaling cascades, dynamic and quantitative single cell measurements are required. Microscopy is an ideal technique to obtain these data; however, novel assays have to be developed to measure the activity of these cascades. RESULTS: We have generated fluorescent biosensors that allow the real-time measurement of kinase activity at the single cell level. Here, synthetic MAPK substrates were engineered to undergo nuclear-to-cytoplasmic relocation upon phosphorylation of a nuclear localization sequence. Combination of fluorescence microscopy and automated image analysis allows the quantification of the dynamics of kinase activity in hundreds of single cells. A large heterogeneity in the dynamics of MAPK activity between individual cells was measured. The variability in the mating pathway can be accounted for by differences in cell cycle stage, while, in the cell wall integrity pathway, the response to cell wall stress is independent of cell cycle stage. CONCLUSIONS: These synthetic kinase activity relocation sensors allow the quantification of kinase activity in live single cells. The modularity of the architecture of these reporters will allow their application in many other signaling cascades. These measurements will allow to uncover new dynamic behaviour that previously could not be observed in population level measurements.

Eye lens monitoring for interventional radiology personnel: dosemeters, calibration and practical aspects of H p (3) monitoring. A 2015 review.

A thorough literature review about the current situation on the implementation of eye lens monitoring has been performed in order to provide recommendations regarding dosemeter types, calibration procedures and practical aspects of eye lens monitoring for interventional radiology personnel. Most relevant data and recommendations from about 100 papers have been analysed and classified in the following topics: challenges of today in eye lens monitoring; conversion coefficients, phantoms and calibration procedures for eye lens dose evaluation; correction factors and dosemeters for eye lens dose measurements; dosemeter position and influence of protective devices. The major findings of the review can be summarised as follows: the recommended operational quantity for the eye lens monitoring is H p (3). At present, several dosemeters are available for eye lens monitoring and calibration procedures are being developed. However, in practice, very often, alternative methods are used to assess the dose to the eye lens. A summary of correction factors found in the literature for the assessment of the eye lens dose is provided. These factors can give an estimation of the eye lens dose when alternative methods, such as the use of a whole body dosemeter, are used. A wide range of values is found, thus indicating the large uncertainty associated with these simplified methods. Reduction factors from most common protective devices obtained experimentally and using Monte Carlo calculations are presented. The paper concludes that the use of a dosemeter placed at collar level outside the lead apron can provide a useful first estimate of the eye lens exposure. However, for workplaces with estimated annual equivalent dose to the eye lens close to the dose limit, specific eye lens monitoring should be performed. Finally, training of the involved medical staff on the risks of ionising radiation for the eye lens and on the correct use of protective systems is strongly recommended.

Development of a systematic computer vision-based method to analyse and compare images of false identity documents for forensic intelligence purposes-Part I: acquisition, calibration and validation issues

Following their detection and seizure by police and border guard authorities, false identity and travel documents are usually scanned, producing digital images. This research investigates the potential of these images to classify false identity documents, highlight links between documents produced by a same modus operandi or same source, and thus support forensic intelligence efforts. Inspired by previous research work about digital images of Ecstasy tablets, a systematic and complete method has been developed to acquire, collect, process and compare images of false identity documents. This first part of the article highlights the critical steps of the method and the development of a prototype that processes regions of interest extracted from images. Acquisition conditions have been fine-tuned in order to optimise reproducibility and comparability of images. Different filters and comparison metrics have been evaluated and the performance of the method has been assessed using two calibration and validation sets of documents, made up of 101 Italian driving licenses and 96 Portuguese passports seized in Switzerland, among which some were known to come from common sources. Results indicate that the use of Hue and Edge filters or their combination to extract profiles from images, and then the comparison of profiles with a Canberra distance-based metric provides the most accurate classification of documents. The method appears also to be quick, efficient and inexpensive. It can be easily operated from remote locations and shared amongst different organisations, which makes it very convenient for future operational applications. The method could serve as a first fast triage method that may help target more resource-intensive profiling methods (based on a visual, physical or chemical examination of documents for instance). Its contribution to forensic intelligence and its application to several sets of false identity documents seized by police and border guards will be developed in a forthcoming article (part II).

Determination of Rod and Cone Influence to the Early and Late Dynamic of the Pupillary Light Response.

PURPOSE: This study aims to identify which aspects of the pupil light reflex are most influenced by rods and cones independently by analyzing pupil recordings from different mouse models of photoreceptor deficiency. METHODS: One-month-old wild type (WT), rodless (Rho-/-), coneless (Cnga3-/-), or photoreceptor less (Cnga3-/-; Rho-/- or Gnat1-/-) mice were subjected to brief red and blue light stimuli of increasing intensity. To describe the initial dynamic response to light, the maximal pupillary constriction amplitudes and the derivative curve of the first 3 seconds were determined. To estimate the postillumination phase, the constriction amplitude at 9.5 seconds after light termination was related to the maximal constriction amplitude. RESULTS: Rho-/- mice showed decreased constriction amplitude but more prolonged pupilloconstriction to all blue and red light stimuli compared to wild type mice. Cnga3-/- mice had constriction amplitudes similar to WT however following maximal constriction, the early and rapid dilation to low intensity blue light was decreased. To high intensity blue light, the Cnga3-/- mice demonstrated marked prolongation of the pupillary constriction. Cnga3-/-; Rho-/- mice had no pupil response to red light of low and medium intensity. CONCLUSIONS: From specific gene defective mouse models which selectively voided the rod or cone function, we determined that mouse rod photoreceptors are highly contributing to the pupil response to blue light stimuli but also to low and medium red stimuli. We also observed that cone cells mainly drive the partial rapid dilation of the initial response to low blue light stimuli. Thus photoreceptor dysfunction can be derived from chromatic pupillometry in mouse models.