THE ROLE OF EARNINGS PERSISTENCE IN VALUATION ACCURACY AND THE TIME HORIZON

ABSTRACT Based on the assumption that earnings persistence has implications for both financial analysis and compensation contracts, the aim of this paper is to investigate the role of earnings persistence assuming that (i) more persistent earnings are likely to be a better input to valuation models and (ii) more persistent earnings are likely to serve as a proxy for long-term market and managerial orientation. The analysis is based on Brazilian listed firms from 1995 to 2013, and while we document strong support for the relevance of earnings persistence in financial analysis and valuation, we fail to document a significant relationship between earnings persistence and long-term value orientation. These results are sensitive to different specifications, and additional results suggest that firms' idiosyncratic risk (total risk) is relevant to explain the focus on short-term outcomes (short-termism) across firms. The main contribution of this paper is to offer empirical evidence for the relevance of accounting numbers in both valuation and contractual theories in an emergent market.

The generation and re-generation of social capital and enterprises in multi-stakeholders social cooperative enterprises: a system dynamic approach

Theories on social capital and on social entrepreneurship have mainly highlighted the attitude of social capital to generate enterprises and to foster good relations between third sector organizations and the public sector. This paper considers the social capital in a specific third sector enterprise; here, multi-stakeholder social cooperatives are seen, at the same time, as social capital results, creators and incubators. In the particular enterprises that identify themselves as community social enterprises, social capital, both as organizational and relational capital, is fundamental: SCEs arise from but also produce and disseminate social capital. This paper aims to improve the building of relational social capital and the refining of helpful relations drawn from other arenas, where they were created and from where they are sometimes transferred to other realities, where their role is carried on further (often working in non-profit, horizontally and vertically arranged groups, where they share resources and relations). To represent this perspective, we use a qualitative system dynamic approach in which social capital is measured using proxies. Cooperation of volunteers, customers, community leaders and third sector local organizations is fundamental to establish trust relations between public local authorities and cooperatives. These relations help the latter to maintain long-term contracts with local authorities as providers of social services and enable them to add innovation to their services, by developing experiences and management models and maintaining an interchange with civil servants regarding these matters. The long-term relations and the organizational relations linking SCEs and public organizations help to create and to renovate social capital. Thus, multi-stakeholder cooperatives originated via social capital developed in third sector organizations produce new social capital within the cooperatives themselves and between different cooperatives (entrepreneurial components of the third sector) and the public sector. In their entrepreneurial life, cooperatives have to contrast the "working drift," as a result of which only workers remain as members of the cooperative, while other stakeholders leave the organization. Those who are not workers in the cooperative are (stake)holders with "weak ties," who are nevertheless fundamental in making a worker's cooperative an authentic social multi-stakeholders cooperative. To maintain multi-stakeholder governance and the relations with third sector and civil society, social cooperatives have to reinforce participation and dialogue with civil society through ongoing efforts to include people that provide social proposals. We try to represent these processes in a system dynamic model applied to local cooperatives, measuring the social capital created by the social cooperative through proxies, such as number of volunteers and strong cooperation with public institutions. Using a reverse-engineering approach, we can individuate the determinants of the creation of social capital and thereby give support to governance that creates social capital.

Networks in Argentine agriculture: a multiple-case study approach

Argentina is among the four largest producers of soybeans, sunflower, corn, and wheat, among other agricultural products. Institutional and policy changes during the 1990s fostered the development of Argentine agriculture and the introduction of innovative process and product technologies (no-till, agrochemicals, GMO, GPS) and new investments in modern, large-scale sunflower and soybean processing plants. In addition to technological changes, a "quiet revolution" occurred in the way agricultural production was carried out and organized: from self-production or ownership agriculture to a contract-based agriculture. The objective of this paper is to explore and describe the emergence of networks in the Argentine crop production sector. The paper presents and describes four cases that currently represent about 50% of total grain and oilseed production in Argentina: "informal hybrid form", "agricultural trust fund", "investor-oriented corporate structure", and "network of networks". In all cases, hybrid forms involve a group of actors linked by common objectives, mainly to gain scale, share resources, and improve the profitability of the business. Informal contracts seem to be the most common way of organizing the agriculture process, but using short-term contracts and sequential interfirm collaboration. Networks of networks involve long-term relationships and social development, and reciprocal interfirm collaboration. Agricultural trust fund and investor-oriented corporate structures have combined interfirm collaboration and medium-term relationships. These organizational forms are highly flexible and show a great capacity to adapt to challenges; they are competitive because they enjoy aligned incentives, flexibility, and adaptability.

Power and selection of contract terms: The case from the Brazilian orange juice sector

ABSTRACT We propose a model to explain how contract terms are selected in the presence of a form of economic power: contract power. The orange juice sector is used to illustrate an analysis that demonstrates the effects of contract power on the economic organization of the sector. We define contract power as the ability to exploit contractual gaps or failures of contractual provisions, which are strategically left incomplete. Empirical evidence from content analysis of antitrust documents supports the logic of contract power in the orange juice sector in three forms: avoiding changes to payment methods from weight to solid contents (quality); using information asymmetries to manipulate indexes that calculate the formula of orange prices; and deliberately harvesting oranges late in order to dehydrate the fruit, which consequently reduces weight and price. The paper contributes to understanding the selection of contract terms and the debate about how antitrust offices can deal with this issue.

Petri Net approach for modelling system integration in intelligent buildings

In this paper, a Petri Net approach is introduced for modelling and simulation of control strategies in Intelligent Building. In this context, it is claimed that integration with other building systems can be achieved in a more systematic way considering a mechatronic approach (i.e. multidisciplinary concepts applied to the development of systems). The case study is the Ambulatory Building of Medical School Hospital of University of São Paulo. Particularly, the developed methodology is applied to the elevator system and to the HVAC (Heating, Ventilation and Air Conditioning) system. It is shown that using this approach, the control systems could be integrated, improving performance.

Binding sites and actions of Tx1, a neurotoxin from the venom of the spider Phoneutria nigriventer, in guinea pig ileum

Tx1, a neurotoxin isolated from the venom of the South American spider Phoneutria nigriventer, produces tail elevation, behavioral excitation and spastic paralysis of the hind limbs after intracerebroventricular injection in mice. Since Tx1 contracts isolated guinea pig ileum, we have investigated the effect of this toxin on acetylcholine release, as well as its binding to myenteric plexus-longitudinal muscle membranes from the guinea pig ileum. [125I]-Tx1 binds specifically and with high affinity (Kd = 0.36 ± 0.02 nM) to a single, non-interacting (nH = 1.1), low capacity (Bmax 1.1 pmol/mg protein) binding site. In competition experiments using several compounds (including ion channel ligands), only PhTx2 and PhTx3 competed with [125I]-Tx1 for specific binding sites (K0.5 apparent = 7.50 x 10-4 g/l and 1.85 x 10-5 g/l, respectively). PhTx2 and PhTx3, fractions from P. nigriventer venom, contain toxins acting on sodium and calcium channels, respectively. However, the neurotoxin PhTx2-6, one of the isoforms found in the PhTx2 pool, did not affect [125I]-Tx1 binding. Tx1 reduced the [3H]-ACh release evoked by the PhTx2 pool by 33%, but did not affect basal or KCl-induced [3H]-ACh release. Based on these results, as well as on the homology of Tx1 with toxins acting on calcium channels (w-Aga IA and IB) and its competition with [125I]-w-Cono GVIA in the central nervous system, we suggest that the target site for Tx1 may be calcium channels.

Evaluation of the cholinomimetic actions of trimethylsulfonium, a compound present in the midgut gland of the sea hare Aplysia brasiliana (Gastropoda, Opisthobranchia)

Trimethylsulfonium, a compound present in the midgut gland of the sea hare Aplysia brasiliana, negatively modulates vagal response, indicating a probable ability to inhibit cholinergic responses. In the present study, the pharmacological profile of trimethylsulfonium was characterized on muscarinic and nicotinic acetylcholine receptors. In rat jejunum the contractile response induced by trimethylsulfonium (pD2 = 2.46 ± 0.12 and maximal response = 2.14 ± 0.32 g) was not antagonized competitively by atropine. The maximal response (Emax) to trimethylsulfonium was diminished in the presence of increasing doses of atropine (P<0.05), suggesting that trimethylsulfonium-induced contraction was not related to muscarinic stimulation, but might be caused by acetylcholine release due to presynaptic stimulation. Trimethylsulfonium displaced [³H]-quinuclidinyl benzilate from rat cortex membranes with a low affinity (Ki = 0.5 mM). Furthermore, it caused contraction of frog rectus abdominis muscles (pD2 = 2.70 ± 0.06 and Emax = 4.16 ± 0.9 g), which was competitively antagonized by d-tubocurarine (1, 3 or 10 µM) with a pA2 of 5.79, suggesting a positive interaction with nicotinic receptors. In fact, trimethylsulfonium displaced [³H]-nicotine from rat diaphragm muscle membranes with a Ki of 27.1 µM. These results suggest that trimethylsulfonium acts as an agonist on nicotinic receptors, and thus contracts frog skeletal rectus abdominis muscle and rat jejunum smooth muscle via stimulation of postjunctional and neuronal prejunctional nicotinic cholinoreceptors, respectively.

The response of social anxiety disorder patients to threat scenarios differs from that of healthy controls

The objective of the present study was to evaluate the response of social anxiety disorder (SAD) patients to threat scenarios. First-choice responses to 12 scenarios describing conspecific threatening situations and mean scores of defensive direction and defensive intensity dimensions were compared between 87 SAD patients free of medication and 87 matched healthy controls (HC). A significant gender difference in the first-choice responses was identified for seven scenarios among HCs but only for two scenarios among SAD patients. A significantly higher proportion of SAD patients chose "freezing" in response to "Bush" and "Noise" scenarios, whereas the most frequent response by HCs to these scenarios was "check out". SAD males chose "run away" and "yell" more often than healthy men in response to the scenarios "Park" and "Elevator", respectively. There was a positive correlation between the severity of symptoms and both defensive direction and defensive intensity dimensions. Factorial analysis confirmed the gradient of defensive reactions derived from animal studies. SAD patients chose more urgent defensive responses to threat scenarios, seeming to perceive them as more dangerous than HCs and tending to move away from the source of threat. This is consistent with the hypothesis that the physiopathology of anxiety disorders involves brain structures responsible for defensive behaviors.

Origens e desenvolvimento das Township and Village Enterprises (TVEs) chinesas

Origins and development of Chinese Township and Village Enterprises. Township and Village Enterprises (TVEs) performed an important role during China’s rapid economic development. Based on a review of the recent literature on these "engines of growth", this study characterizes TVEs and their contribution to China’s development trajectory. It draws attention to institutions that are key to explaining TVEs, including responsibility contracts and organizational structure. It concludes that the paradigmatic experiences of TVEs have played an important role in terms of employment and export generation which contributed to China’s sustained levels of economic growth and development.

Federalismo e endividamento subnacional: uma discussão sobre a sustentabilidade da dívida estadual

The subnational debt in Brazil was marked by successive bailouts by the federal government. The path of subnational debt induced some locals and state authorities to claim for further renegotiations. More specifically, some governors and mayors demanded a revision of the refinancing contracts. This article intends to present arguments sustained by simulations of the evolution of the path of the subnational debt, denying the necessity of changes in legal framework, which rules the state debt. The first section consists of a brief overview. The following section treats the institutional framework designed to safeguard the fiscal intertemporal balance. In the third section, the implications of new institutional framework on the subnational debt are approached; in the fourth, the possible causes that distorted the expected path of the debt are discussed. The fifth section analyses the future perspectives for the debt in general terms and focuses some specific cases, while the sixth section discusses the problem under a federal optics. Finally, the conclusion is presented.

A note on the Pazos-Simonsen mechanism and Kaldor's early research on Latin American inflation

In contrast with the inflationary finance story, inflation acceleration in Latin America has been explained as the result of the interaction of inflation dynamics and the frequency of wage adjustments. Accordingly, small inflation disturbances are connected with a shift from moderate to high inflation (or beyond to hyperinflation) though a mechanism that makes adjustment intervals in wage contracts endogenous. Rudiger Dornbusch (1986) labeled this process the "Pazos-Simonsen mechanism". In this note we summarize the basic contribution of both Felipe Pazos (1978) and Mario Henrique Simonsen (1983) and find crucial differences between their views on wage dynamics, specifically regarding the endogeneity of the time interval between wage readjustments. A remarkable affinity with Pazos's view on wage dynamics and inflation is found in an early and almost unknown essay written by Nicholas Kaldor in 1957 (inspired in his brief experience in Latin America).