Transfer pricing and multinational financial institutions : the case for replacing arm’s length price with a unitary approach

The international tax system, designed a century ago, has not kept pace with the modern multinational entity rendering it ineffective in taxing many modern businesses according to economic activity. One of those modern multinational entities is the multinational financial institution (MNFI). The recent global financial crisis provides a particularly relevant and significant example of the failure of the current system on a global scale. The modern MNFI is increasingly undertaking more globalised and complex trading operations. A primary reason for the globalisation of financial institutions is that they typically ‘follow-the-customer’ into jurisdictions where international capital and international investors are required. The International Monetary Fund (IMF) recently reported that from 1995-2009, foreign bank presence in developing countries grew by 122 per cent. The same study indicates that foreign banks have a 20 per cent market share in OECD countries and 50 per cent in emerging markets and developing countries. Hence, most significant is that fact that MNFIs are increasingly undertaking an intermediary role in developing economies where they are financing core business activities such as mining and tourism. IMF analysis also suggests that in the future, foreign bank expansion will be greatest in emerging economies. The difficulties for developing countries in applying current international tax rules, especially the current traditional transfer pricing regime, are particularly acute in relation to MNFIs, which are the biggest users of tax havens and offshore finance. This paper investigates whether a unitary taxation approach which reflects economic reality would more easily and effectively ensure that the profits of MNFIs are taxed in the jurisdictions which give rise to those profits. It has previously been argued that the uniqueness of MNFIs results in a failure of the current system to accurately allocate profits and that unitary tax as an alternative could provide a sounder allocation model for international tax purposes. This paper goes a step further, and examines the practicalities of the implementation of unitary taxation for MNFIs in terms of the key components of such a regime, along with their their implications. This paper adopts a two-step approach in considering the implications of unitary taxation as a means of improved corporate tax coordination which requires international acceptance and agreement. First, the definitional issues of the unitary MNFI are examined and second, an appropriate allocation formula for this sector is investigated. To achieve this, the paper asks first, how the financial sector should be defined for the purposes of unitary taxation and what should constitute a unitary business for that sector and second, what is the ‘best practice’ model of an allocation formula for the purposes of the apportionment of the profits of the unitary business of a financial institution.

Demand-side response model to avoid spike of electricity price

The aim of this work is to develop a demand-side-response model, which assists electricity consumers exposed to the market price to independently and proactively manage air-conditioning peak electricity demand. The main contribution of this research is to show how consumers can optimize the energy cost caused by the air conditioning load considering to several cases e.g. normal price, spike price, and the probability of a price spike case. This model also investigated how air-conditioning applies a pre-cooling method when there is a substantial risk of a price spike. The results indicate the potential of the scheme to achieve financial benefits for consumers and target the best economic performance for electrical generation distribution and transmission. The model was tested with Queensland electricity market data from the Australian Energy Market Operator and Brisbane temperature data from the Bureau of Statistics regarding hot days from 2011 to 2012.

Defining expected cost for the air conditioning to avoid a price spike of electricity market under DSR model

This work presents a demand side response model (DSR) which assists small electricity consumers, through an aggregator, exposed to the market price to proactively mitigate price and peak impact on the electrical system. The proposed model allows consumers to manage air-conditioning when as a function of possible price spikes. The main contribution of this research is to demonstrate how consumers can minimise the total expected cost by optimising air-conditioning to account for occurrences of a price spike in the electricity market. This model investigates how pre-cooling method can be used to minimise energy costs when there is a substantial risk of an electricity price spike. The model was tested with Queensland electricity market data from the Australian Energy Market Operator and Brisbane temperature data from the Bureau of Statistics during hot days on weekdays in the period 2011 to 2012.

Food reward sensitivity predicts overconsumption of high-fat snack food

Overconsumption of snack foods has been linked to rising rates of obesity, with our ‘obesogenic’ environment and its abundance of palatable, high-calorie foods and associated cues especially implicated. However, it is clear that some individuals are particularly susceptible to overconsumption and weight gain. It was hypothesised that individuals sensitive to the rewarding properties of palatable foods, and associated stimuli, would show elevated consumption. Snack food intake was measured in 50 adults (mean age 34.5 years, BMI 23.9 kg/m2, 56% female) in a repeated measures design, both with and without a ‘food cue’. Trait (BIS/BAS scales), behavioural (computerised CARROT) and food reward were assessed. Sensitivity to food reward, but not generalised reward, was positively associated with snack food intake. This relationship was not affected by the presence of a food cue. Findings are discussed in the context of implications for weight management.

TNF and TNF receptor expression and insulin sensitivity in human omental and subcutaneous adipose tissue--influence of BMI and adipose distribution

Tumour necrosis factor (TNF)alpha is implicated in the relationship between obesity and insulin resistance/ type 2 diabetes. In an effort to understand this association better we (i) profiled gene expression patterns of TNF, TNFR1 and TNFR2 and (ii) investigated the effects of TNF on glucose uptake in isolated adipocytes and adipose tissue explants from omental and subcutaneous depots from lean, overweight and obese individuals. TNF expression correlated with expression of TNFR2, but not TNFR1, and TNF and TNFR2 expression increased in obesity. TNFR1 expression was higher in omental than in subcutaneous adipocytes. Expression levels of TNF or either receptor did not differ between adipocytes from individuals with central and peripheral obesity. TNF only suppressed glucose uptake in insulin-stimulated subcutaneous tissue and this suppression was only observed in tissue from lean subjects. These data support a relationship between the TNF system and body mass index (BMI), but not fat distribution, and suggest depot specificity of the TNF effect on glucose uptake. Furthermore, adipose tissue from obese subjects already appears insulin 'resistant' and this may be a result of the increased TNF levels.

A simple model for the establishment of tick-borne pathogens of Ixodes scapularis : a global sensitivity analysis of R0

The basic reproduction number of a pathogen, R 0, determines whether a pathogen will spread (R0>1R 0>1), when introduced into a fully susceptible population or fade out (R0<1R 0<1), because infected hosts do not, on average, replace themselves. In this paper we develop a simple mechanistic model for the basic reproduction number for a group of tick-borne pathogens that wholly, or almost wholly, depend on horizontal transmission to and from vertebrate hosts. This group includes the causative agent of Lyme disease, Borrelia burgdorferi, and the causative agent of human babesiosis, Babesia microti, for which transmission between co-feeding ticks and vertical transmission from adult female ticks are both negligible. The model has only 19 parameters, all of which have a clear biological interpretation and can be estimated from laboratory or field data. The model takes into account the transmission efficiency from the vertebrate host as a function of the days since infection, in part because of the potential for this dynamic to interact with tick phenology, which is also included in the model. This sets the model apart from previous, similar models for R0 for tick-borne pathogens. We then define parameter ranges for the 19 parameters using estimates from the literature, as well as laboratory and field data, and perform a global sensitivity analysis of the model. This enables us to rank the importance of the parameters in terms of their contribution to the observed variation in R0. We conclude that the transmission efficiency from the vertebrate host to Ixodes scapularis ticks, the survival rate of Ixodes scapularis from fed larva to feeding nymph, and the fraction of nymphs finding a competent host, are the most influential factors for R0. This contrasts with other vector borne pathogens where it is usually the abundance of the vector or host, or the vector-to-host ratio, that determine conditions for emergence. These results are a step towards a better understanding of the geographical expansion of currently emerging horizontally transmitted tick-borne pathogens such as Babesia microti, as well as providing a firmer scientific basis for targeted use of acaricide or the application of wildlife vaccines that are currently in development.

Geometric sensitivity of patient-specific finite element models of the spine to variability in user-selected anatomical landmarks

Software to create individualised finite element (FE) models of the osseoligamentous spine using pre-operative computed tomography (CT) data-sets for spinal surgery patients has recently been developed. This study presents a geometric sensitivity analysis of this software to assess the effect of intra-observer variability in user-selected anatomical landmarks. User-selected landmarks on the osseous anatomy were defined from CT data-sets for three scoliosis patients and these landmarks were used to reconstruct patient-specific anatomy of the spine and ribcage using parametric descriptions. The intra-observer errors in landmark co-ordinates for these anatomical landmarks were calculated. FE models of the spine and ribcage were created using the reconstructed anatomy for each patient and these models were analysed for a loadcase simulating clinical flexibility assessment. The intra-observer error in the anatomical measurements was low in comparison to the initial dimensions, with the exception of the angular measurements for disc wedge and zygapophyseal joint (z-joint) orientation and disc height. This variability suggested that CT resolution may influence such angular measurements, particularly for small anatomical features, such as the z-joints, and may also affect disc height. The results of the FE analysis showed low variation in the model predictions for spinal curvature with the mean intra-observer variability substantially less than the accepted error in clinical measurement. These findings demonstrate that intra-observer variability in landmark point selection has minimal effect on the subsequent FE predictions for a clinical loadcase.

Recursive pathways to marginal likelihood estimation with prior-sensitivity analysis

We investigate the utility to computational Bayesian analyses of a particular family of recursive marginal likelihood estimators characterized by the (equivalent) algorithms known as "biased sampling" or "reverse logistic regression" in the statistics literature and "the density of states" in physics. Through a pair of numerical examples (including mixture modeling of the well-known galaxy dataset) we highlight the remarkable diversity of sampling schemes amenable to such recursive normalization, as well as the notable efficiency of the resulting pseudo-mixture distributions for gauging prior-sensitivity in the Bayesian model selection context. Our key theoretical contributions are to introduce a novel heuristic ("thermodynamic integration via importance sampling") for qualifying the role of the bridging sequence in this procedure, and to reveal various connections between these recursive estimators and the nested sampling technique.

Comparison of high sensitivity troponin T and I assays in the diagnosis of non-ST elevation acute myocardial infarction in emergency patients with chest pain

Objectives: Concentrations of troponin measured with high sensitivity troponin assays are raised in a number of emergency department (ED) patients; however many are not diagnosed with acute myocardial infarction (AMI). Clinical comparisons between the early use (2 h after presentation) of high sensitivity cardiac troponin T (hs-cTnT) and I (hs-cTnI) assays for the diagnosis of AMI have not been reported. Design and methods: Early (0 h and 2 h) hs-cTnT and hs-cTnI assay results in 1571 ED patients with potential acute coronary syndrome (ACS) without ST elevation on electrocardiograph (ECG) were evaluated. The primary outcome was diagnosis of index MI adjudicated by cardiologists using the local cTnI assay results taken ≥6 h after presentation, ECGs and clinical information. Stored samples were later analysed with hs-cTnT and hs-cTnI assays. Results: The ROC analysis for AMI (204 patients; 13.0%) for hs-cTnT and hs-cTnI after 2 h was 0.95 (95% CI: 0.94–0.97) and 0.98 (95% CI: 0.97–0.99) respectively. The sensitivity, specificity, PLR, and NLR of hs-cTnT and hs-cTnI for AMI after 2 h were 94.1% (95% CI: 90.0–96.6) and 95.6% (95% CI: 91.8–97.7), 79.0% (95% CI: 76.8–81.1) and 92.5% (95% CI: 90.9–93.7), 4.48 (95% CI: 4.02–5.00) and 12.86 (95% CI: 10.51–15.31), and 0.07 (95% CI: 0.04–0.13) and 0.05 (95% CI:0.03–0.09) respectively. Conclusions: Exclusion of AMI 2 h after presentation in emergency patients with possible ACS can be achieved using hs-cTnT or hs-cTnI assays. Significant differences in specificity of these assays are relevant and if using the hs-cTnT assay, further clinical assessment in a larger proportion of patients would be required.

Investigating the sensitivity of OSLD responses for varying field sizes across matched linear accelerators

When radiation therapy centres are equipped with two or more linear accelerators from the same vendor, they are usually beam-matched. This work tested the sensitivity of optically stimulated luminescence dosimeters (OSLDs) across matched linear accelerators. The responses were compared with an unshielded diode detector for varying field sizes. Clinical studies are currently done with thermoluminescent dosimeters (TLD), which absorb radiation then emit some levels of light determined by the radiation absorption when heated.

Parameter estimation of structural commodity price models

Commodity price modeling is normally approached in terms of structural time-series models, in which the different components (states) have a financial interpretation. The parameters of these models can be estimated using maximum likelihood. This approach results in a non-linear parameter estimation problem and thus a key issue is how to obtain reliable initial estimates. In this paper, we focus on the initial parameter estimation problem for the Schwartz-Smith two-factor model commonly used in asset valuation. We propose the use of a two-step method. The first step considers a univariate model based only on the spot price and uses a transfer function model to obtain initial estimates of the fundamental parameters. The second step uses the estimates obtained in the first step to initialize a re-parameterized state-space-innovations based estimator, which includes information related to future prices. The second step refines the estimates obtained in the first step and also gives estimates of the remaining parameters in the model. This paper is part tutorial in nature and gives an introduction to aspects of commodity price modeling and the associated parameter estimation problem.

MCF7/LCC2: A 4-hydroxytamoxifen resistant human breast cancer variant that retains sensitivity to the steroidal antiestrogen ICI 182,780

The development of resistance to the antiestrogen tamoxifen occurs in a high percentage of initially responsive patients. We have developed a new model in which to investigate acquired resistance to triphenylethylenes. A stepwise in vitro selection of the hormone-independent human breast cancer variant MCF-7/LCC1 against 4-hydroxytamoxifen produced a stable resistant population designated MCF7/LCC2. MCF7/LCC2 cells retain levels of estrogen receptor expression comparable to the parental MCF7/LCC1 and MCF-7 cells. Progesterone receptor expression remains estrogen inducible in MCF7/LCC2 cells, although to levels significantly lower than observed in MCF-7 and MCF7/LCC1 cells. MCF7/ LCC2 cells form tumors in ovariectomized nude mice without estrogen supplementation, and these tumors are tamoxifen resistant but can be tstrogen stimulated. Significantly, MCF7/LCC2 cells have retained sensitivity to the steroidal antiestrogen ICI 182,780. These data suggest that some breast cancer patients who acquire resistance to tamoxifen may not develop cross-resistance to treatment with steroidal antiestrogens.

A securities market operator's use of the "please explain" price query and its impact on compliance

Market operators in New Zealand and Australia, such as the New Zealand Exchange (NZX) and the Australian Securities Exchange (ASX), have the regulatory power in their listing rules to issue queries to their market participants to explain unusual fluctuations in trading price and/or volume in the market. The operator will issue a price query where it believes that the market has not been fully informed as to price relevant information. Responsive regulation theory has informed much of the regulatory debate in securities laws in the region. Price queries map onto the lower level of the enforcement pyramid envisaged by responsive regulation and are one strategy that a market operator can use in communicating its compliance expectations to its stakeholders. The issue of a price query may be a precursor to more severe enforcement activities. The aim of this study is to investigate whether increased use of price queries by the securities market operator in New Zealand corresponded with an increase in disclosure frequency by all participating companies. The study finds that an increased use of price queries did correspond with an increase in disclosure frequency. A possible explanation for this finding is that price queries are an effective means of appealing to the factors that motivate corporations, and the individuals who control them, to comply with the law and regulatory requirements. This finding will have implications for both the NZX and the ASX as well as for regulators and policy makers generally.

Does the price of oil interact with clean energy prices in the stock market?

In this paper, we analyze the relationships among oil prices, clean energy stock prices, and technology stock prices, endogenously controlling for structural changes in the market. To this end, we apply Markov-switching vector autoregressive models to the economic system consisting of oil prices, clean energy and technology stock prices, and interest rates. The results indicate that there was a structural change in late 2007, a period in which there was a significant increase in the price of oil. In contrast to the previous studies, we find a positive relationship between oil prices and clean energy prices after structural breaks. There also appears to be a similarity in terms of the market response to both clean energy stock prices and technology stock prices. © 2013 Elsevier B.V.