Stock price reaction following large one-day price changes: UK evidence

We examine the short-term price reaction of 424 UK stocks to large one-day price changes. Using the GJR-GARCH(1,1), we find no statistical difference amongst the cumulative abnormal returns (CARs) of the Single Index, the Fama–French and the Carhart–Fama–French models. Shocks bigger or equal to 5% are followed by a significant one-day CAR of 1% for all the models. Whilst shocks smaller or equal to -5% are followed by a significant one-day CAR of -0.43% for the Single Index, the CARs are around -0.34% for the other two models. Positive shocks of all sizes and negative shocks maller or equal to -5% are followed by return continuations, whilst the market is efficient following larger negative shocks. The price reaction to shocks is unaffected when we estimate the CARs using the conditional covariances of the pricing variables.

Stock index reaction to large price changes:evidence frommajor Asian stock indexes

We examine the short-term price behavior of ten Asian stock market indexes following large price changes or “shocks”. Under the standard OLS regression, there is stronger support for return continuations particularly following positive and negative price shocks of less than 10% in absolute size. The results under the GJR-GARCH method provide stronger support for market efficiency, especially for large price shocks. For example, for the Hong Kong stock index, negative shocks of less than -5% but more than -10% generate a significant one day cumulative abnormal return (CAR) of-0.754% under the OLS method, but an insignificant CAR of 0.022% under the GJR-GARCH. We find no support for the uncertainty information hypothesis. Furthermore, the CARs following the period after the Asian financial crisis adjust more quickly to price shocks.

Innovation and export performance:evidence from UK and German manufacturing plants

Using comparable plant-level surveys we demonstrate significant differences between the determinants of export performance among the UK and German manufacturing plants. Product innovation, however measured, has a strong effect on the probability and propensity to export in both countries. Being innovative is positively related to export probability in both countries. In the UK the scale of plants’ innovation activity is also related positively to export propensity. In Germany, however, where levels of innovation intensity are higher but the proportion of sales attributable to new products is lower, there is some evidence of a negative relationship between the scale of innovation activity and export performance. Significant differences are identified between innovative and non-innovative plants, especially in their absorption of spill-over effects. Innovative UK plants are more effective in their ability to exploit spill-overs from the innovation activities of companies in the same sector. In Germany, by contrast, non-innovators are more likely to absorb regional and supply-chain spill-over effects. Co-location to other innovative firms is generally found to discourage exporting.

Corporate boards and incentives: empirical evidence from the UK in 1935

We investigate boardroom governance using UK historical data for 1935. We demonstrate that there is a negative relationship between risk and incentives in this year. Prior research has produced anomalous results (Prendergast, 2002). Second, we show that average (median) board ownership of ordinary shares is about 7.95% (2.88%). Heuristically this figure is less than previously reported estimates for the US also using 1935 data. Finally, we show the phenomenon of multiple board membership. UK directors in 1935 hold many directorships – sometimes exceeding 10 concurrent memberships.

Governance regimes, corruption and growth: theory and evidence

We study the role of political accountability as a determinant of corruption and economic growth. Our model identifies two governance regimes defined by the quality of political institutions and shows that the relationship between corruption and growth is regime specific. We use a threshold model to estimate the impact of corruption on growth where corruption is treated as an endogenous variable. We find two governance regimes, conditional on the quality of political institutions. In the regime with high quality political institutions, corruption has a substantial negative impact on growth. In the regime with low quality institutions, corruption has no impact on growth.

The lateral and ventromedial prefrontal cortex work as a dynamic integrated system:evidence from FMRI connectivity analysis

Recent functional magnetic resonance imaging (fMRI) investigations of the interaction between cognition and reward processing have found that the lateral prefrontal cortex (PFC) areas are preferentially activated to both increasing cognitive demand and reward level. Conversely, ventromedial PFC (VMPFC) areas show decreased activation to the same conditions, indicating a possible reciprocal relationship between cognitive and emotional processing regions. We report an fMRI study of a rewarded working memory task, in which we further explore how the relationship between reward and cognitive processing is mediated. We not only assess the integrity of reciprocal neural connections between the lateral PFC and VMPFC brain regions in different experimental contexts but also test whether additional cortical and subcortical regions influence this relationship. Psychophysiological interaction analyses were used as a measure of functional connectivity in order to characterize the influence of both cognitive and motivational variables on connectivity between the lateral PFC and the VMPFC. Psychophysiological interactions revealed negative functional connectivity between the lateral PFC and the VMPFC in the context of high memory load, and high memory load in tandem with a highly motivating context, but not in the context of reward alone. Physiophysiological interactions further indicated that the dorsal anterior cingulate and the caudate nucleus modulate this pathway. These findings provide evidence for a dynamic interplay between lateral PFC and VMPFC regions and are consistent with an emotional gating role for the VMPFC during cognitively demanding tasks. Our findings also support neuropsychological theories of mood disorders, which have long emphasized a dysfunctional relationship between emotion/motivational and cognitive processes in depression.

Service innovation, embeddedness and business performance:evidence from Northern Ireland

This paper explores the factors that determine innovation by service firms, and in particular the contribution of intra- and extra-regional connectivity. Subsequently, it is examined how service firms' innovation activity relates to productivity and export behaviour. The empirical analysis is based on matched data from the 2005 UK Innovation Survey - the UK component of the 4th Community Innovation Survey (CIS) - and the Annual Business Inquiry for Northern Ireland. Evidence is found of negative intra-regional embeddedness effects, but there is a positive contribution to innovation from extra-regional connectivity, particularly links to customers. Relationships between innovation, exporting, and productivity prove complex, but suggest that innovation itself is not sufficient to generate productivity improvements. Only when innovation is combined with increased export activity are productivity gains evident.

Indigenous and foreign innovation efforts and drivers of technological upgrading:evidence from China

This paper explores the role of indigenous and foreign innovation efforts in technological upgrading in developing countries, taking into account sectoral specificities in technical change. Using a Chinese firm-level panel dataset covering 2001–05, the paper decomposes productivity growth into technical change and efficiency improvement and examines the impact of indigenous and foreign innovation efforts on these changes. Indigenous firms are found to be the leading force on the technological frontier in the low- and medium-technology industries, while foreign-invested firms enjoy a clear lead in the high-technology sector. Collective indigenous R&D activities at the industry level are found to be the major driver of technology upgrading of indigenous firms that push out the technology frontier. While foreign investment appears to contribute to static industry capabilities, R&D activities of foreign-invested firms have exerted a significant negative effect on the technical change of local firms over the sample period.

Brain connectivity in positive and negative syndrome schizophrenia

If, as is widely believed, schizophrenia is characterized by abnormalities of brain functional connectivity, then it seems reasonable to expect that different subtypes of schizophrenia could be discriminated in the same way. However, evidence for differences in functional connectivity between the subtypes of schizophrenia is largely lacking and, where it exists, it could be accounted for by clinical differences between the patients (e.g. medication) or by the limitations of the measures used. In this study, we measured EEG functional connectivity in unmedicated male patients diagnosed with either positive or negative syndrome schizophrenia and compared them with age and sex matched healthy controls. Using new methodology (Medkour et al., 2009) based on partial coherence, brain connectivity plots were constructed for positive and negative syndrome patients and controls. Reliable differences in the pattern of functional connectivity were found with both syndromes showing not only an absence of some of the connections that were seen in controls but also the presence of connections that the controls did not show. Comparing connectivity graphs using the Hamming distance, the negative-syndrome patients were found to be more distant from the controls than were the positive syndrome patients. Bootstrap distributions of these distances were created which showed a significant difference in the mean distances that was consistent with the observation that negative-syndrome diagnosis is associated with a more severe form of schizophrenia. We conclude that schizophrenia is characterized by widespread changes in functional connectivity with negative syndrome patients showing a more extreme pattern of abnormality than positive syndrome patients.

Real options and demographic decisions:empirical evidence from East and West Germany

Iyer and Velu (2006) have convincingly argued that contemporary analyses of fertility behaviour fail to explain why a woman (or a couple) will choose to postpone childbirth, and in particular to consider the role of uncertainty in this regard. They have addressed this lacuna in the literature by using a real options approach to model fertility decisions by relating uncertainty experienced by individuals to the likelihood of childbirth. However, they did not present empirical evidence. Since the theory implies the existence of two offsetting effects of uncertainty on fertility decisions, a positive insurance effect and a negative option value effect, it is not easy to reject the theory on the basis of empirical analysis, when one of these effects offsets the other. We construct such a test for East (and also West) Germany during that country's reunification, which takes advantage of the fact that because of the country's strong welfare system, the insurance effect should be dominated by the option value effect, thereby suggesting that the net relationship should be negative. The results provide rather strong support for the real options link, especially for Eastern Germany.

Privatisation, corporate control and employment growth:evidence from a panel of large Polish firms, 1996-2002

Using data on Polish firms this paper examines the relationship between corporate control structures, sales growth and the determinants of employment change. Privatised and de novo firms are the main drivers of employment growth; in the case of de novo firms, it is foreign ownership which underpins the result. Being privatised has a positive impact on employment but this is concentrated within a range of 3–6 years after privatisation. There are no systematic differences in employment response to negative sales growth across the ownership categories. Employment in state firms is less responsive to positive sales growth. From these results we infer that the behaviour of state firms is affected by both insider rent sharing and binding budget constraints.

Privatisation, corporate control and employment growth:evidence from a panel of large Polish firms, 1996-2002

Using panel data on large Polish firms this paper examines the relationship between corporate control structures, sales growth and the determinants of employment change during the period 1996-2002. We find that privatised and de novo firms are the main drivers of employment growth and that, in the case of de novo firms, it is foreign ownership which underpins the result. Interestingly, we find that being privatised has a positive impact on employment growth but that this impact is concentrated within a range of three to six years after privatisation. In contrast with the findings of earlier literature, we find evidence that there are no systematic differences in employment response to negative sales growth across the ownership categories. On the other hand, employment in state firms is less responsive to positive sales growth. From these combined results we infer that the behaviour of state firms is constrained by both insider rent sharing and binding budget constraints. Consistent with this, we find that privatised companies, three to six years post-privatisation, are the firms for whom employment is most responsive to positive sales growth and as such, offer the best hope for rapid labour market expansion.

An overview of psychological and neurobiological mechanisms by which early negative experiences increase risk of mood disorders

Objective: Early life experiences are associated with severe and long-lasting effects on behavioural and emotional functioning, which in turn are thought to increase the risk for unipolar depression and other disorders of affect regulation. The neurobiological and psychological mechanisms through which adverse early life experiences confer risk are poorly understood. Method: Alterations in brain structure and function in limbic and prefrontal cortical regions have been linked to early negative experiences and to mood disorders. Results: There are a number of psychological domains that may be dysfunctional in people with mood disorders, and which, if the dysfunction occurs prior to onset of mood symptoms, may signify a risk factor for depression. Cognitive dysfunction has been examined in patients with mood disorders, with some suggestion that changes in cognitive function may antedate the onset of mood symptoms, and may be exacerbated in those who experienced early negative trauma. Social cognition, including emotion comprehension, theory of mind and empathy, represent under-studied domains of psychological function that may be negatively influenced by early adverse experience. Temperament and personality factors may also leave people vulnerable to mood instability. Conclusion: This review summarizes the evidence for dysfunction in each of these domains for people with mood disorders.

Defective peroxisomal proliferators activated receptor gamma activity due to dominant-negative mutation synergizes with hypertension to accelerate cardiac fibrosis in mice

Aims: Humans with inactivating mutations in peroxisomal proliferators activated receptor gamma (PPAR?) typically develop a complex metabolic syndrome characterized by insulin resistance, diabetes, lipodystrophy, hypertension, and dyslipidaemia which is likely to increase their cardiovascular risk. Despite evidence that the activation of PPAR? may prevent cardiac fibrosis and hypertrophy, recent evidence has suggested that pharmacological activation of PPAR? causes increased cardiovascular mortality. In this study, we investigated the effects of defective PPAR? function on the development of cardiac fibrosis and hypertrophy in a murine model carrying a human dominant-negative mutation in PPAR?. Methods and results: Mice with a dominant-negative point mutation in PPAR? (P465L) and their wild-type (WT) littermates were treated with either subcutaneous angiotensin II (AngII) infusion or saline for 2 weeks. Heterozygous P465L and WT mice developed a similar increase in systolic blood pressure, but the mutant mice developed significantly more severe cardiac fibrosis to AngII that correlated with increased expression of profibrotic genes. Both groups similarly increased the heart weight to body weight ratio compared with saline-treated controls. There were no differences in fibrosis between saline-treated WT and P465L mice. Conclusion: These results show synergistic pathogenic effects between the presence of defective PPAR? and AngII-induced hypertension and suggest that patients with PPAR? mutation and hypertension may need more aggressive therapeutic measures to reduce the risk of accelerated cardiac fibrosis. © The Author 2009.

Negative brand personality:the construct, its antecedents and outcome variables

By evolving brands and building on the importance of self-expression, Aaker (1997) developed the brand personality framework as a means to understand brand-consumer relationships. The brand personality framework captures the core values and characteristics described in human personality research in an attempt to humanize brands. Although influential across many streams of brand personality research, the current conceptualization of brand personality only offers a positively-framed approach. To date, no research, both conceptually and empirically, has thoroughly incorporated factors reflective of Negative Brand Personality, despite the fact that almost all researchers in personality are in agreement that factors akin to Extraversion (positive) and Neuroticism (negative) should be in a comprehensive personality scale to accommodate consumers’ expressions. As a result, the study of brand personality is only half complete since the current research trend is to position brand personality under brand image. However, with the brand personality concept being confused with brand identity at the empirical stage, factors reflective of Negative Brand Personality have been neglected. Accordingly, this thesis extends the current conceptualization of brand personality by demarcating the existing typologies of desirable brand personality and incorporating the characteristics reflective of consumers’ discrepant self-meaning to provide a more complete understanding of brand personality. However, it is not enough to interpret negative factors as the absence of positive factors. Negative factors reflect consumers’ anxious and frustrated feelings. Therefore, this thesis contributes to the current conceptualization of brand personality by, firstly, presenting a conceptual definition of Negative Brand Personality in order to provide a theoretical basis for the development of a Negative Brand Personality scale, then, secondly, identifying what constitutes Negative Brand Personality and to what extent consumers’ cognitive dissonance explains the nature of Negative Brand Personality, and, thirdly, ascertaining the impact Negative Brand Personality has on attitudinal constructs, namely: Negative Attitude, Detachment, Brand Loyalty and Satisfaction, which have proven to predict behaviors such as choice and (re-)purchasing. In order to deliver on the three main contributions, two comprehensive studies were conducted to a) develop a valid, parsimonious, yet relatively short measure of Negative Brand Personality, and b) ascertain how the Negative Brand Personality measure behaves within a network of related constructs. The mixed methods approach, grounded in theoretical and empirical development, provides evidence to suggest that there are four factors to Negative Brand Personality and, tested through use of a structural equation modeling technique, that these are influenced by Brand Confusion, Price Unfairness, Self- Incongruence and Corporate Hypocrisy. Negative Brand Personality factors mainly determined Consumers Negative Attitudes and Brand Detachment. The research contributes to the literature on brand personality by improving the consumer-brand relationship by means of engaging in a brandconsumer conversation in order to reduce consumers’ cognitive strain. The study concludes with a discussion on the theoretical and practical implications of the findings, its limitations, and potential directions for future research.