On the utility of input selection and pruning for financial distress prediction models

Analyzes the use of linear and neural network models for financial distress classification, with emphasis on the issues of input variable selection and model pruning. A data-driven method for selecting input variables (financial ratios, in this case) is proposed. A case study involving 60 British firms in the period 1997-2000 is used for illustration. It is shown that the use of the Optimal Brain Damage pruning technique can considerably improve the generalization ability of a neural model. Moreover, the set of financial ratios obtained with the proposed selection procedure is shown to be an appropriate alternative to the ratios usually employed by practitioners.

Liability of country foreignness and liability of regional foreignness: their effects on geographic diversification and firm performance

The costs of inter- and intra-regional diversification have been widely discussed in the existing international business literature, but the findings are mixed. Explanations for the mixed findings have important managerial implications, because business managers have to estimate accurately the costs of doing business within and across regions before they make their internationalization decisions. To explain the existing mixed findings, this study differentiates between liabilities of foreignness at the country and regional levels, and explores the joint effects of liability of country foreignness (LCF) and liability of regional foreignness (LRF) on the performance of internationalizing firms. Using data from 167 Canadian firms, we find that LCF may not necessarily be negatively correlated with intra-regional diversification, but LRF is positively correlated with inter-regional diversification. LCF moderates the relationship between LRF and inter-regional diversification, and also mediates the relationship between intra-regional diversification and firm performance. LRF mediates the relationship between inter-regional diversification and firm performance. Missing one or more of these variables may result in different cost estimates. Identification of the relationships between these variables helps to improve the accuracy of estimating the costs of doing business aboard.

Proactive R&D management and firm growth: a punctuated equilibrium model

The external environment is characterized by periods of relative stability interspersed with periods of extreme change, implying that high performing firms must practice exploration and exploitation in order to survive and thrive. In this paper, we posit that R&D expenditure volatility indicates the presence of proactive R&D management, and is evidence of a firm moving from exploitation to exploration over time. This is consistent with a punctuated equilibrium model of R&D investment where shocks are induced by reactions to external turbulence. Using an unbalanced panel of almost 11,000 firm-years from 1997 to 2006, we show that greater fluctuations in the firm's R&D expenditure over time are associated with higher firm growth. Developing a contextual view of the relationship between R&D expenditure volatility and firm growth, we find that this relationship is weaker among firms with higher levels of corporate diversification and negative among smaller firms and those in slow clockspeed industries.

Host selection and performance of the giant willow aphid, Tuberolachnus salignus (Gmelin) - Implications for pest management

1 The recent increase in planting of selected willow clones as energy crops for biomass production has resulted in a need to understand the relationship between commonly grown, clonally propagated genotypes and their pests. 2 For the first time, we present a study of the interactions of six willow clones and a previously unconsidered pest, the giant willow aphid Tuberolachnus salignus. 3 Tuberolachnus salignus alatae displayed no preference between the clones, but there was genetic variation in resistance between the clones; Q83 was the most resistant and led to the lowest reproductive performance in the aphid 4 Maternal effects buffered changes in aphid performance. On four tested willow clones fecundity of first generation aphids on the new host clone was intermediate to that of the second generation and that of the clone used to maintain the aphids in culture. 5 In the field, patterns of aphid infestation were highly variable between years, with the duration of attack being up to four times longer in 1999. In both years there was a significant effect of willow clone on the intensity of infestation. However, whereas Orm had the lowest intensity of infestation in the first year, Dasyclados supported a lower population level than other monitored clones in the second year.

The road not taken: observing a process of issue selection and model conceptualization

This article describes a case study involving information technology managers and their new programmer recruitment policy, but the primary interest is methodological. The processes of issue generation and selection and model conceptualization are described. Early use of “magnetic hexagons” allowed the generation of a range of issues, most of which would not have emerged if system dynamics elicitation techniques had been employed. With the selection of a specific issue, flow diagraming was used to conceptualize a model, computer implementation and scenario generation following naturally. Observations are made on the processes of system dynamics modeling, particularly on the need to employ general techniques of knowledge elicitation in the early stages of interventions. It is proposed that flexible approaches should be used to generate, select, and study the issues, since these reduce any biasing of the elicitation toward system dynamics problems and also allow the participants to take up the most appropriate problem- structuring approach.

The compositional and configurational heterogeneity of matrix habitats shape woodland carabid communities in wooded-agricultural landscapes

Landscape heterogeneity (the composition and configuration of matrix habitats) plays a major role in shaping species communities in wooded-agricultural landscapes. However, few studies consider the influence of different types of semi-natural and linear habitats in the matrix, despite their known ecological value for biodiversity. Objective To investigate the importance of the composition and configuration of matrix habitats for woodland carabid communities and identify whether specific landscape features can help to maintain long-term populations in wooded-agricultural environments. Methods Carabids were sampled from woodlands in 36 tetrads of 4 km2 across southern Britain. Landscape heterogeneity including an innovative representation of linear habitats was quantified for each tetrad. Carabid community response was analysed using ordination methods combined with variation partitioning and additional response trait analyses. Results Woodland carabid community response was trait-specific and better explained by simultaneously considering the composition and configuration of matrix habitats. Semi-natural and linear features provided significant refuge habitat and functional connectivity. Mature hedgerows were essential for slow-dispersing carabids in fragmented landscapes. Species commonly associated with heathland were correlated with inland water and woodland patches despite widespread heathland conversion to agricultural land, suggesting that species may persist for some decades when elements representative of the original habitat are retained following landscape modification. Conclusions Semi-natural and linear habitats have high biodiversity value. Landowners should identify features that can provide additional resources or functional connectivity for species relative to other habitat types in the landscape matrix. Agri-environment options should consider landscape heterogeneity to identify the most efficacious changes for biodiversity.