The effect of financial leverage on real and accrual-based earnings management

Past research has documented a substitution effect between real earnings management (RM) and accrual-based earnings management (AM), depending on relative costs. This study contributes to this research by examining whether levels of (and changes in) financial leverage have an impact on this empirically documented trade-off. We hypothesise that in the presence of high leverage, firms that engage in earnings manipulation tactics will exhibit a preference for RM due to a lower possibility—and subsequent costs—of getting caught. We show that leverage levels and increases positively and significantly affect upward RM, with no significant effect on income-increasing AM, while our findings point towards a complementarity effect between unexpected levels of RM and AM for firms with very high leverage levels and changes. This is interpreted as an indication that high leverage could attract heavy outsider scrutiny, making it necessary for firms to use both forms of earnings management in order to achieve earnings targets. Furthermore, we document that equity investors exhibit a significantly stronger penalising reaction to AM vs. RM, indicating that leverage-induced RM is not as easily detectable by market participants as debt-induced AM, despite the fact that the former could imply deviation from optimal business practices.

N-Substituent effect of maleimides on acrylate polymerization initiated by three-component systems

In this paper, the relative photopolymerization efficiency for polymerization of a difunctional acrylate initiated by various N-substituted maleimides in the presence of amine and benzophenone are compared on the basis of a photo-differential scanning calorimetry (photo-DSC) study. The trends in the polymerization rates were obtained from the photopolymerization profiles and expressed in terms of a photoinitiation index, I-p. An N-substituent index, I-s, which indicates whether each N-substituent plays either a positive (when I-s > 1) or a negative (when I-s < 1) role in the initiation process relative to MI (unsubstituted maleimide), was determined. (C) 2003 Society of Chemical Industry.

The effect of timeliness and credit ratings on the information content of earnings announcements

Abstract: This paper investigates the impact of timeliness and credit ratings on the information content of the earnings announcements of Greek listed firms from 2001 to 2008. Using the classical event study methodology and regression analysis, we find that firms tend to release good news on time and are inclined to delay the release of bad news. We also provide evidence that the level of corporate risk differentiates the information content of earnings according to the credit rating category. Specifically, firms displaying high creditworthiness enjoy positive excess returns on earnings announcement dates. In contrast, firms with low creditworthiness undergo significant share price erosions on earnings announcement days. We also observe a substitution effect between timeliness and credit ratings in relation to the information content of earnings announcements. Specifically, we find that as the credit category of earnings-announcing firms improves, the informational role of timeliness is mitigated.

Association of SNPs on CAPN1 and CAST genes with tenderness in Nellore cattle

We examined whether single-nucleotide polymorphisms (SNPs) in the calpain (CAPN) and calpastatin (CAST) genes, described from Bos primigenius taurus, are polymorphic in Nellore cattle. We also looked for a possible association of linkage disequilibrium of this polymorphism with tenderness of the longissimus dorsi muscle after 7, 14 and 21 days of postmortem aging in 638 purebred Nellore bulls. Meat tenderness was measured as Warner-Bratzler shear force. Additive and dominance effects were tested for SNPs of the three genotypic classes; the substitution effect was tested for SNPs with missing genotypic classes. Genotypic and gene frequencies were also calculated for the different SNPs. An increase in tenderness was observed from 7 to 21 days; the average values for shear force at 7, 14 and 21 days of aging were 5.92 +/- 0.06, 4.92 +/- 0.05, and 4.38 +/- 0.04 kg, respectively. All markers showed polymorphism, but there was no CC genotype for CAPN316, and few animals showed the AA genotype for CAPN530. The alleles CAPN4751, UOGCAST1, and WSUCAST were found to have additive and dominance effects for shear force at 7, 14 and 21 days, while CAPN316 showed a substitution effect for shear force at 7 and 21 days. An additive-by-additive epistatic interaction was observed between CAPN4751 and markers on the CAST gene. In conclusion, these markers should be considered for use in breeding programs.

A systematic study of the microwave and thermal cure kinetics of the TGDDM/DDS and TGDDM/DDM epoxy-amine resin systems

The microwave and thermal cure processes for the epoxy-amine systems N,N,N',N'-tetraglycidyl-4,4'-diaminodiphenyl methane (TGDDM) with diaminodiphenyl sulfone (DDS) and diaminodiphenyl methane (DDM) have been investigated. The DDS system was studied at a single cure temperature of 433 K and a single stoichiometry of 27 wt% and the DDM system was studied at two stoichiometries, 19 and 32 wt%, and a range temperatures between 373 and 413 K. The best values the kinetic rate parameters for the consumption of amines have been determined by a least squares curve Ft to a model for epoxy-amine cure. The activation energies for the rate parameters for the MY721/DDM system were determined as was the overall activation energy for the cure reaction which was found to be 62 kJ mol(-1). No evidence was found for any specific effect of the microwave radiation on the rate parameters, and the systems were both found to be characterized by a negative substitution effect. Copyright (C) 2001 John Wiley & Sons, Ltd.

A systematic study of the microwave and thermal cure kinetics of the DGEBA/DDS and DGEBA/DDM epoxy-amine resin systems

The microwave and thermal cure processes for the epoxy-amine systems (epoxy resin diglycidyl ether of bisphenol A, DGEBA) with 4,4'-diaminodiphenyl sulphone (DDS) and 4,4'-diaminodiphenyl methane (DDM) have been investigated for 1:1 stoichiometries by using fiber-optic FT-NIR spectroscopy. The DGEBA used was in the form of Ciba-Geigy GY260 resin. The DDM system was studied at a single cure temperature of 373 K and a single stoichiometry of 20.94 wt% and the DDS system was studied at a stoichiometry of 24.9 wt% and a range of temperatures between 393 and 443 K. The best values of the kinetic rate parameters for the consumption of amines have been determined by a least squares curve fit to a model for epoxy/amine cure. The activation energies for the polymerization of the DGEBA/DDS system were determined for both cure processes and found to be 66 and 69 kJ mol(-1) for the microwave and thermal cure processes, respectively. No evidence was found for any specific effect of the microwave radiation on the rate parameters, and the systems were both found to be characterized by a negative substitution effect. Copyright (C) 2002 John Wiley Sons, Ltd.

Migrant Remittances and Information Flows: Evidence from a Field Experiment*

Do information flows matter for remittance behavior? We design and implement a randomized control trial to quantitatively assess the role of communication between migrants and their contacts abroad on the extent and value of remittance flows. In the experiment, a random sample of 1,500 migrants residing in Ireland was offered the possibility of contacting their networks outside the host country for free over a varying number of months. We find a sizable, positive impact of our intervention on the value of migrant remittances sent. Our results exclude that the remittance effect we identify is a simple substitution effect. Instead, our analysis points to this effect being a likely result of improved information via factors such as better migrant control over remittance use, enhanced trust in remittance channels due to experience sharing, or increased remittance recipients’ social pressure on migrants.

Determinants of Portuguese bank’s provisioning policies: Discretionary behaviour of generic and specific allowances

In this paper we test for the impact of the regulatory environment on a bank’s discretionary provisioning practices. We develop a model that structures the dynamics of the provision policy for the two classes of provisions: generic provisions and specific provisions. The model is tested using a comprehensive database of all financial institutions operating in Portugal for 1990-2000. This unique dataset comprises banks subject to the Portuguese rules as well as bank subsidiaries subject to their home-country regulation and we were able to identify distinct behaviours between them. Our results show the importance of handling he two types of provisions separately. They support the hypothesis that banks have a discretionary behaviour in setting up their provisions, and find evidence of income smoothing and capital management. We also find that the regulatory regime impacts on discretionary provisioning policies because banks when forced to increase one type of provision react by reducing the iscretionary component of the other, a finding we designated as a substitution effect.

The determinants of net interest margins & net interest spreads in the Russian & Japanese Commercial Banking sectors

This study presents an empirical investigation of the determinants of net interest margins and spreads in the Russian and Japanese banking sectors with a particular focus on commercial banks. Net interest mar-gins and spreads serve as indicators of financial intermediation efficiency. This paper employed a bank-level unbalanced panel dataset prolonging from 2005 to 2014. My main empirical results show that bank characteristics explain the most of the variation in not only net interest margins but also in spreads. Capi-talization, liquidity risk, inflation, economic growth, private and government debt are important determi-nants of margin in Russia. In Japan to the contrary loan and deposit market concentration along with bank size do predominate. Common significant variables in both countries are the substitution effect, cost effi-ciency and profitability. Turning to net interest spreads, micro- and macro-specific variables are the main significant drivers in Russia. I reach the conclusion that there are no significant determinants of net interest spreads in Japan within the original selection of variables, but operating efficiency and deposits to total funding seem to prevail. In both countries, there are solid differences in the net interest margins as well as spreads once the pre- and the post-crisis periods are considered.

Cannabis use trajectories among Swiss adolescents

Introduction: Swiss data indicate that one fifth of current 16-20 yearold cannabis users do not use tobacco and seem to do better than those smoking both substances. The aim of this research is to assess the substance use trajectories of cannabis users who do not use tobacco and those who use both substances from age 17 to age 23. Methods: Using data from the TREE longitudinal data base, 328 out of 1796 youth 18.3%; 45% females) who smoked cannabis only (Group CAN; N = 46; 36% females) or concurrently with tobacco (Group CANTAB; N = 284; 46% females) at T1 (2001; age 17) were followed at T4 (2004; age 20) and T7 (2007; age 23). Two additional outcome groups were included at T4 and T7: those using only tobacco (Group TOB) and those not using any of these substances (Group NONE). Data were analyzed separately by gender. Results: Females in group CAN at T1 were as likely to be in group TOB (35%) or NONE (35%) at T4 and the percentages increased to 41% and 47%, respectively, at T7. Males in group CAN at T1 were more likely to be in group TOB at T4 (33%) and T7 (61%) than in group NONE (23% and 15%, respectively). Females in group CANTOB at T1 were mainly in group TOB at T4 (52%) and T7 (61%), while males in CANTOB at T1 remained mainly in the same group at T4 (75%) and T7 (61%). Only 10% of females and 5% of males in group CANTOB at T1 were in group NONE at T4 and 15% and 12%, respectively, at T7. Conclusions: Adolescents using only cannabis are globally less likely to continue using cannabis in young adulthood than those using both substances, although a fair percentage (specially males) switch to tobacco use. This result confirms previous research indicating that nicotine dependence and persistent cigarette smoking may be the main public health consequences of cannabis use. A gender difference arises among those using tobacco and cannabis at age 17: while females become mainly tobacco smokers, the majority of males continue to use both substances. Although these results could be explained by a substitution effect, teenagers using both substances seem to have gone beyond the experimentation phase and should be a motive for concern.

The effects of Ikea and external shopping centers on regional trade and retail growth : A comparative analysis of Ikea’s establishment in Kalmar and Karlstad

This paper examines the effects of Ikea store establishment in Kalmar and Karlstad on the trade and retail inside the two cities, and as well on the trade and retail in the close neighboring municipalities and in further peripheral municipalities in both regions. After the establishment of Ikea store, Kalmar and Karlstad have experienced significant growth in trade and retail. The question, however, is how big this growth is in both cities? And how different locations on different distances from Ikea have been affected? What impact there was on different segments of the retail? How different business branches have been affected? How large the catchment area for the emerging new large-scale retail locations is? These questions, in addition to few others, are investigated in this paper. The thesis starts with an introduction chapter containing a background of the topic, problem description, the investigated questions, the purpose, and the outline of the paper. The next chapter includes the frame of reference which consists of literature review and theoretical framework about the external shopping centers and their impact on retail and regional trade development. It includes also information gathered from previous studies technical reports and other available sources about the subject. The third chapter includes description for the methods used to collect the primary and secondary data needed for the purpose of this study. Then the empirical framework which demonstrates the results of the conducted research followed by analysis and concluded in discussion and conclusion. Mixed methods are used as research strategy in this thesis, and the method to conduct the research is based on telephone interviews for the primary (qualitative) data, and documents and desk research for the secondary (quantitative) data. The gathered data is analyzed and designed in a way that allows the usage of comparative analysis technique to present the findings and draw conclusions. The results showed that new established Ikea retail store outside the city boundaries results with many effects on the city center and on the neighboring municipalities as well. The city center seems not to be affected negatively, but on the contrary positive effects were witnessed in both regions, these positive effects are linked to the increase inflow of customers from the external retail area which is known as spillover effect. III On the other hand, the neighboring towns and municipalities are more negatively affected especially with the trade of con-convenience goods as the consumers in these towns and municipalities start to go to the area of Ikea and the large external retail center to do their purchasing, the substitution effect is then said to be occurred. Moreover, the further far municipalities do not seem to be significantly affected by the establishment of Ikea. These effects whether positive or negative could be monitored by looking to few trade parameters such as the turnover, the sales index, and the consumers’ expenditure, these parameters can be very useful to measure the developments and changes in the trade and retail in a given place. 

Unemployment insurance an analysis of optimal mechanisms under aggregate shocks

The purpose of this work is to provide a brief overview of the literature on the optimal design of unemployment insurance systems by analyzing some of the most influential articles published over the last three decades on the subject and extend the main results to a multiple aggregate shocks environment. The properties of optimal contracts are discussed in light of the key assumptions commonly made in theoretical publications on the area. Moreover, the implications of relaxing each of these hypothesis is reckoned as well. The analysis of models of only one unemployment spell starts from the seminal work of Shavell and Weiss (1979). In a simple and common setting, unemployment benefits policies, wage taxes and search effort assignments are covered. Further, the idea that the UI distortion of the relative price of leisure and consumption is the only explanation for the marginal incentives to search for a job is discussed, putting into question the reduction in labor supply caused by social insurance, usually interpreted as solely an evidence of a dynamic moral hazard caused by a substitution effect. In addition, the paper presents one characterization of optimal unemployment insurance contracts in environments in which workers experience multiple unemployment spells. Finally, an extension to multiple aggregate shocks environment is considered. The paper ends with a numerical analysis of the implications of i.i.d. shocks to the optimal unemployment insurance mechanism.

Impacto dos fatores climáticos nas vendas do varejo no Brasil. Uma abordagem com dados de painel com efeito fixo.

Os impactos das variações climáticas tem sido um tema amplamente pesquisado na macroeconomia mundial e também em setores como agricultura, energia e seguros. Já para o setor de varejo, uma busca nos principais periódicos brasileiros não retornou nenhum estudo específico. Em economias mais desenvolvidas produtos de seguros atrelados ao clima são amplamente negociados e através deste trabalho visamos também avaliar a possibilidade de desenvolvimento deste mercado no Brasil. O presente trabalho buscou avaliar os impactos das variações climáticas nas vendas do varejo durante período de aproximadamente 18 meses (564 dias) para 253 cidades brasileiras. As informações de variações climáticas (precipitação, temperatura, velocidade do vento, umidade relativa, insolação e pressão atmosférica) foram obtidas através do INMET (Instituto Nacional de Meteorologia) e cruzadas com as informações transacionais de até 206 mil clientes ativos de uma amostra não balanceada, oriundos de uma instituição financeira do ramo de cartões de crédito. Ambas as bases possuem periodicidade diária. A metodologia utilizada para o modelo econométrico foram os dados de painel com efeito fixo para avaliação de dados longitudinais através dos softwares de estatística / econometria EViews (software proprietário da IHS) e R (software livre). A hipótese nula testada foi de que o clima influencia nas decisões de compra dos clientes no curto prazo, hipótese esta provada pelas análises realizadas. Assumindo que o comportamento do consumidor do varejo não muda devido à seleção do meio de pagamento, ao chover as vendas do varejo em moeda local são impactadas negativamente. A explicação está na redução da quantidade total de transações e não o valor médio das transações. Ao excluir da base as cidades de São Paulo e Rio de Janeiro não houve alteração na significância e relevância dos resultados. Por outro lado, a chuva possui efeito de substituição entre as vendas online e offline. Quando analisado setores econômicos para observar se há comportamento diferenciado entre consumo e compras não observou-se alteração nos resultados. Ao incluirmos variáveis demográficas, concluímos que as mulheres e pessoas com maior faixa de idade apresentam maior histórico de compras. Ao avaliar o impacto da chuva em um determinado dia e seu impacto nos próximos 6 à 29 dias observamos que é significante para a quantidade de transações porém o impacto no volume de vendas não foi significante.

Predição do consumo de pasto de capim-elefante (Pennisetum purpureum, Schumack) por vacas mestiças Holandês x Zebu em lactação

Foram desenvolvidas equações de predição de consumo de pasto de capim-elefante (Pennisetum purpureum, Schumack) por vacas mestiças Holandês x Zebu em lactação, utilizando-se procedimentos de stepwise em regressões múltiplas, aplicados a um banco de dados de experimentos conduzidos ao longo de três anos na Empresa Brasileira de Pesquisa Agropecuária (EMBRAPA) Gado de Leite (Coronel Pacheco, MG). As variáveis independentes disponíveis foram relacionadas a características inerentes às vacas (dias em lactação; teores de proteína, gordura e extrato seco total e produções destes componentes no leite; produção de leite in natura ou corrigida para 4% de gordura; ordem de lactação; peso vivo atual; peso vivo ao parto e grau de sangue Holandês x Zebu); ao manejo (dias de pastejo; disponibilidade de forragem e período de descanso da pastagem); ao ambiente (estação do ano e precipitação pluviométrica) e à alimentação (digestibilidade in vitro e parâmetros da composição química do pasto de capim-elefante e da cana-de-açúcar - Saccharum officinarum (L.) corrigida com 1% de uréia; consumos de suplemento volumoso (cana corrigida com uréia) e concentrado; concentrações fecais de proteína bruta e de fibras em detergente neutro e ácido). Efeitos linear e quadrático e transformações logarítmicas foram adicionalmente incluídos no banco de dados. Foram obtidas equações de predição de consumo de pasto de capim-elefante (expresso em kg/vaca/dia ou % do peso vivo) com coeficientes de determinação de 65,2 a 67,0%. As principais variáveis independentes incluídas nas equações foram o consumo do suplemento volumoso usado na estação seca do ano (cana corrigida com uréia); a digestibilidade in vitro do pasto de capim-elefante; a precipitação pluviométrica; a produção de leite corrigida para 4% de gordura; o peso vivo atual ou, em alternativa a este, o valor da pesagem realizada após o parto da vaca; além do consumo de suplemento concentrado, que evidenciou um efeito de substituição àquele do pasto de capim-elefante.

Single nucleotide polymorphisms in the bovine genome are associated with the number of oocytes collected during ovum pick up

Fundação de Amparo à Pesquisa do Estado de São Paulo (FAPESP)