Capital structure of Finnish firms – Estimating the effects of firm characteristics on capital structure

One of the most disputable matters in the theory of finance has been the theory of capital structure. The seminal contributions of Modigliani and Miller (1958, 1963) gave rise to a multitude of studies and debates. Since the initial spark, the financial literature has offered two competing theories of financing decision: the trade-off theory and the pecking order theory. The trade-off theory suggests that firms have an optimal capital structure balancing the benefits and costs of debt. The pecking order theory approaches the firm capital structure from information asymmetry perspective and assumes a hierarchy of financing, with firms using first internal funds, followed by debt and as a last resort equity. This thesis analyses the trade-off and pecking order theories and their predictions on a panel data consisting 78 Finnish firms listed on the OMX Helsinki stock exchange. Estimations are performed for the period 2003–2012. The data is collected from Datastream system and consists of financial statement data. A number of capital structure characteristics are identified: firm size, profitability, firm growth opportunities, risk, asset tangibility and taxes, speed of adjustment and financial deficit. A regression analysis is used to examine the effects of the firm characteristics on capitals structure. The regression models were formed based on the relevant theories. The general capital structure model is estimated with fixed effects estimator. Additionally, dynamic models play an important role in several areas of corporate finance, but with the combination of fixed effects and lagged dependent variables the model estimation is more complicated. A dynamic partial adjustment model is estimated using Arellano and Bond (1991) first-differencing generalized method of moments, the ordinary least squares and fixed effects estimators. The results for Finnish listed firms show support for the predictions of profitability, firm size and non-debt tax shields. However, no conclusive support for the pecking-order theory is found. However, the effect of pecking order cannot be fully ignored and it is concluded that instead of being substitutes the trade-off and pecking order theory appear to complement each other. For the partial adjustment model the results show that Finnish listed firms adjust towards their target capital structure with a speed of 29% a year using book debt ratio.

Tensor Completion for Multidimensional Inverse Problems with Applications to Magnetic Resonance Relaxometry

This thesis deals with tensor completion for the solution of multidimensional inverse problems. We study the problem of reconstructing an approximately low rank tensor from a small number of noisy linear measurements. New recovery guarantees, numerical algorithms, non-uniform sampling strategies, and parameter selection algorithms are developed. We derive a fixed point continuation algorithm for tensor completion and prove its convergence. A restricted isometry property (RIP) based tensor recovery guarantee is proved. Probabilistic recovery guarantees are obtained for sub-Gaussian measurement operators and for measurements obtained by non-uniform sampling from a Parseval tight frame. We show how tensor completion can be used to solve multidimensional inverse problems arising in NMR relaxometry. Algorithms are developed for regularization parameter selection, including accelerated k-fold cross-validation and generalized cross-validation. These methods are validated on experimental and simulated data. We also derive condition number estimates for nonnegative least squares problems. Tensor recovery promises to significantly accelerate N-dimensional NMR relaxometry and related experiments, enabling previously impractical experiments. Our methods could also be applied to other inverse problems arising in machine learning, image processing, signal processing, computer vision, and other fields.

Modeling height-diameter relationship in pinus pinaster ait. in the forest intervention zone of Lomba, NE-Portugal

In this work, the relationship between diameter at breast height (d) and total height (h) of individual-tree was modeled with the aim to establish provisory height-diameter (h-d) equations for maritime pine (Pinus pinaster Ait.) stands in the Lomba ZIF, Northeast Portugal. Using data collected locally, several local and generalized h-d equations from the literature were tested and adaptations were also considered. Model fitting was conducted by using usual nonlinear least squares (nls) methods. The best local and generalized models selected, were also tested as mixed models applying a first-order conditional expectation (FOCE) approximation procedure and maximum likelihood methods to estimate fixed and random effects. For the calibration of the mixed models and in order to be consistent with the fitting procedure, the FOCE method was also used to test different sampling designs. The results showed that the local h-d equations with two parameters performed better than the analogous models with three parameters. However a unique set of parameter values for the local model can not be used to all maritime pine stands in Lomba ZIF and thus, a generalized model including covariates from the stand, in addition to d, was necessary to obtain an adequate predictive performance. No evident superiority of the generalized mixed model in comparison to the generalized model with nonlinear least squares parameters estimates was observed. On the other hand, in the case of the local model, the predictive performance greatly improved when random effects were included. The results showed that the mixed model based in the local h-d equation selected is a viable alternative for estimating h if variables from the stand are not available. Moreover, it was observed that it is possible to obtain an adequate calibrated response using only 2 to 5 additional h-d measurements in quantile (or random) trees from the distribution of d in the plot (stand). Balancing sampling effort, accuracy and straightforwardness in practical applications, the generalized model from nls fit is recommended. Examples of applications of the selected generalized equation to the forest management are presented, namely how to use it to complete missing information from forest inventory and also showing how such an equation can be incorporated in a stand-level decision support system that aims to optimize the forest management for the maximization of wood volume production in Lomba ZIF maritime pine stands.

The Impact of Internal Market Orientation on Staff Service Behaviours

The impact of service direction, service training and staff behaviours on perceptions of service delivery are examined. The impact of managerial behaviour in the form of internal market orientation (IMO) on the attitudes of frontline staff towards the firm and its consequent influence on their customer oriented behaviours is also examined. Frontline service staff working in the consumer transport industry were surveyed to provide subjective data about the constructs of interest in this study, and the data were analysed using structural equations modelling employing partial least squares estimation. The data indicate significant relationships between internal market orientation (IMO), the attitudes of the employees to the firm and their consequent behaviour towards customers. Customer orientation, service direction and service training are all identified as antecedents to high levels of service delivery. The study contributes to marketing theory by providing quantitative evidence to support assumptions that internal marketing has an impact on services success. For marketing practitioners, the research findings offer additional information about the management, training and motivation of service staff towards service excellence.

Trust and strong ties in the selection and evaluation of business advisors by small firms

Principal Topic A small firm is unlikely to possess internally the full range of knowledge and skills that it requires or could benefit from for the development of its business. The ability to acquire suitable external expertise - defined as knowledge or competence that is rare in the firm and acquired from the outside - when needed thus becomes a competitive factor in itself. Access to external expertise enables the firm to focus on its core competencies and removes the necessity to internalize every skill and competence. However, research on how small firms access external expertise is still scarce. The present study contributes to this under-developed discussion by analysing the role of trust and strong ties in the small firm's selection and evaluation of sources of external expertise (henceforth referred to as the 'business advisor' or 'advisor'). Granovetter (1973, 1361) defines the strength of a network tie as 'a (probably linear) combination of the amount of time, the emotional intensity, the intimacy (mutual confiding) and the reciprocal services which characterize the tie'. Strong ties in the context of the present investigation refer to sources of external expertise who are well known to the owner-manager, and who may be either informal (e.g., family, friends) or professional advisors (e.g., consultants, enterprise support officers, accountants or solicitors). Previous research has suggested that strong and weak ties have different fortes and the choice of business advisors could thus be critical to business performance) While previous research results suggest that small businesses favour previously well known business advisors, prior studies have also pointed out that an excessive reliance on a network of well known actors might hamper business development, as the range of expertise available through strong ties is limited. But are owner-managers of small businesses aware of this limitation and does it matter to them? Or does working with a well-known advisor compensate for it? Hence, our research model first examines the impact of the strength of tie on the business advisor's perceived performance. Next, we ask what encourages a small business owner-manager to seek advice from a strong tie. A recent exploratory study by Welter and Kautonen (2005) drew attention to the central role of trust in this context. However, while their study found support for the general proposition that trust plays an important role in the choice of advisors, how trust and its different dimensions actually affect this choice remained ambiguous. The present paper develops this discussion by considering the impact of the different dimensions of perceived trustworthiness, defined as benevolence, integrity and ability, on the strength of tie. Further, we suggest that the dimensions of perceived trustworthiness relevant in the choice of a strong tie vary between professional and informal advisors. Methodology/Key Propositions Our propositions are examined empirically based on survey data comprising 153 Finnish small businesses. The data are analysed utilizing the partial least squares (PLS) approach to structural equation modelling with SmartPLS 2.0. Being non-parametric, the PLS algorithm is particularly well-suited to analysing small datasets with non-normally distributed variables. Results and Implications The path model shows that the stronger the tie, the more positively the advisor's performance is perceived. Hypothesis 1, that strong ties will be associated with higher perceptions of performance is clearly supported. Benevolence is clearly the most significant predictor of the choice of a strong tie for external expertise. While ability also reaches a moderate level of statistical significance, integrity does not have a statistically significant impact on the choice of a strong tie. Hence, we found support for two out of three independent variables included in Hypothesis 2. Path coefficients differed between the professional and informal advisor subsamples. The results of the exploratory group comparison show that Hypothesis 3a regarding ability being associated with strong ties more pronouncedly when choosing a professional advisor was not supported. Hypothesis 3b arguing that benevolence is more strongly associated with strong ties in the context of choosing an informal advisor received some support because the path coefficient in the informal advisor subsample was much larger than in the professional advisor subsample. Hypothesis 3c postulating that integrity would be more strongly associated with strong ties in the choice of a professional advisor was supported. Integrity is the most important dimension of trustworthiness in this context. However, integrity is of no concern, or even negative, when using strong ties to choose an informal advisor. The findings of this study have practical relevance to the enterprise support community. First of all, given that the strength of tie has a significant positive impact on the advisor's perceived performance, this implies that small business owners appreciate working with advisors in long-term relationships. Therefore, advisors are well advised to invest into relationship building and maintenance in their work with small firms. Secondly, the results show that, especially in the context of professional advisors, the advisor's perceived integrity and benevolence weigh more than ability. This again emphasizes the need to invest time and effort into building a personal relationship with the owner-manager, rather than merely maintaining a professional image and credentials. Finally, this study demonstrates that the dimensions of perceived trustworthiness are orthogonal with different effects on the strength of tie and ultimately perceived performance. This means that entrepreneurs and advisors should consider the specific dimensions of ability, benevolence and integrity, rather than rely on general perceptions of trustworthiness in their advice relationships.

Does chemometrics enhance the performance of electroanalysis?

This review explores the question whether chemometrics methods enhance the performance of electroanalytical methods. Electroanalysis has long benefited from the well-established techniques such as potentiometric titrations, polarography and voltammetry, and the more novel ones such as electronic tongues and noses, which have enlarged the scope of applications. The electroanalytical methods have been improved with the application of chemometrics for simultaneous quantitative prediction of analytes or qualitative resolution of complex overlapping responses. Typical methods include partial least squares (PLS), artificial neural networks (ANNs), and multiple curve resolution methods (MCR-ALS, N-PLS and PARAFAC). This review aims to provide the practising analyst with a broad guide to electroanalytical applications supported by chemometrics. In this context, after a general consideration of the use of a number of electroanalytical techniques with the aid of chemometrics methods, several overviews follow with each one focusing on an important field of application such as food, pharmaceuticals, pesticides and the environment. The growth of chemometrics in conjunction with electronic tongue and nose sensors is highlighted, and this is followed by an overview of the use of chemometrics for the resolution of complicated profiles for qualitative identification of analytes, especially with the use of the MCR-ALS methodology. Finally, the performance of electroanalytical methods is compared with that of some spectrophotometric procedures on the basis of figures-of-merit. This showed that electroanalytical methods can perform as well as the spectrophotometric ones. PLS-1 appears to be the method of practical choice if the %relative prediction error of not, vert, similar±10% is acceptable.

Small molecule–biopolymer interactions : Ultraviolet–visible and fluorescence spectroscopy and chemometrics

Interactions between small molecules with biopolymers e.g. the bovine serum albumin (BSA protein), are important, and significant information is recorded in the UV–vis and fluorescence spectra of their reaction mixtures. The extraction of this information is difficult conventionally and principally because there is significant overlapping of the spectra of the three analytes in the mixture. The interaction of berberine chloride (BC) and the BSA protein provides an interesting example of such complex systems. UV–vis and fluorescence spectra of BC and BSA mixtures were investigated in pH 7.4 Tris–HCl buffer at 37 °C. Two sample series were measured by each technique: (1) [BSA] was kept constant and the [BC] was varied and (2) [BC] was kept constant and the [BSA] was varied. This produced four spectral data matrices, which were combined into one expanded spectral matrix. This was processed by the multivariate curve resolution–alternating least squares method (MCR–ALS). The results produced: (1) the extracted pure BC, BSA and the BC–BSA complex spectra from the measured heavily overlapping composite responses, (2) the concentration profiles of BC, BSA and the BC–BSA complex, which are difficult to obtain by conventional means, and (3) estimates of the number of binding sites of BC.

Simultaneous determination of three synthetic glucocorticoids by differential pulse stripping voltammetry with the aid of chemometrics

A novel voltammetric method for simultaneous determination of the glucocorticoid residues prednisone, prednisolone, and dexamethasone was developed. All three compounds were reduced at a mercury electrode in a Britton-Robinson buffer (pH 3.78), and well-defined voltammetric waves were observed. However, the voltammograms of these three compounds overlapped seriously and showed nonlinear character, and thus, it was difficult to analyze the compounds individually in their mixtures. In this work, two chemometrics methods, principal component regression (PCR) and partial least squares (PLS), were applied to resolve the overlapped voltammograms, and the calibration models were established for simultaneous determination of these compounds. Under the optimum experimental conditions, the limits of detection (LOD) were 5.6, 8.3, and 16.8 µg l-1 for prednisone, prednisolone, and dexamethasone, respectively. The proposed method was also applied for the determination of these glucocorticoid residues in the rabbit plasma and human urine samples with satisfactory results.

A differential kinetic spectrophotometric method for determination of three sulphanilamide artificial sweeteners with the aid of chemometrics

A simple and sensitive spectrophotometric method for the simultaneous determination of acesulfame-K, sodium cyclamate and saccharin sodium sweeteners in foodstuff samples has been researched and developed. This analytical method relies on the different kinetic rates of the analytes in their oxidative reaction with KMnO4 to produce the green manganate product in an alkaline solution. As the kinetic rates of acesulfame-K, sodium cyclamate and saccharin sodium were similar and their kinetic data seriously overlapped, chemometrics methods, such as partial least squares (PLS), principal component regression (PCR) and classical least squares (CLS), were applied to resolve the kinetic data. The results showed that the PLS prediction model performed somewhat better. The proposed method was then applied for the determination of the three sweeteners in foodstuff samples, and the results compared well with those obtained by the reference HPLC method.

Simultaneous kinetic-spectrophotometric determination of maltol and ethyl maltol in food samples by using chemometrics

A fast and accurate procedure has been researched and developed for the simultaneous determination of maltol and ethyl maltol, based on their reaction with iron(III) in the presence of o-phenanthroline in sulfuric acid medium. This reaction was the basis for an indirect kinetic spectrophotometric method, which followed the development of the pink ferroin product (λmax = 524 nm). The kinetic data were collected in the 370–900 nm range over 0–30 s. The optimized method indicates that individual analytes followed Beer’s law in the concentration range of 4.0–76.0 mg L−1 for both maltol and ethyl maltol. The LOD values of 1.6 mg L−1 for maltol and 1.4 mg L−1 for ethyl maltol agree well with those obtained by the alternative high performance liquid chromatography with ultraviolet detection (HPLC-UV). Three chemometrics methods, principal component regression (PCR), partial least squares (PLS) and principal component analysis–radial basis function–artificial neural networks (PC–RBF–ANN), were used to resolve the measured data with small kinetic differences between the two analytes as reflected by the development of the pink ferroin product. All three performed satisfactorily in the case of the synthetic verification samples, and in their application for the prediction of the analytes in several food products. The figures of merit for the analytes based on the multivariate models agreed well with those from the alternative HPLC-UV method involving the same samples.

Multicomponent kinetic spectrophotometric determination of pefloxacin and norfloxacin in pharmaceutical preparations and human plasma samples with the aid of chemometrics

A spectrophotometric method for the simultaneous determination of the important pharmaceuticals, pefloxacin and its structurally similar metabolite, norfloxacin, is described for the first time. The analysis is based on the monitoring of a kinetic spectrophotometric reaction of the two analytes with potassium permanganate as the oxidant. The measurement of the reaction process followed the absorbance decrease of potassium permanganate at 526 nm, and the accompanying increase of the product, potassium manganate, at 608 nm. It was essential to use multivariate calibrations to overcome severe spectral overlaps and similarities in reaction kinetics. Calibration curves for the individual analytes showed linear relationships over the concentration ranges of 1.0–11.5 mg L−1 at 526 and 608 nm for pefloxacin, and 0.15–1.8 mg L−1 at 526 and 608 nm for norfloxacin. Various multivariate calibration models were applied, at the two analytical wavelengths, for the simultaneous prediction of the two analytes including classical least squares (CLS), principal component regression (PCR), partial least squares (PLS), radial basis function-artificial neural network (RBF-ANN) and principal component-radial basis function-artificial neural network (PC-RBF-ANN). PLS and PC-RBF-ANN calibrations with the data collected at 526 nm, were the preferred methods—%RPET not, vert, similar 5, and LODs for pefloxacin and norfloxacin of 0.36 and 0.06 mg L−1, respectively. Then, the proposed method was applied successfully for the simultaneous determination of pefloxacin and norfloxacin present in pharmaceutical and human plasma samples. The results compared well with those from the alternative analysis by HPLC.

Spectrometric and voltammetric studies of the interaction between quercetin and bovine serum albumin using warfarin as site marker with the aid of chemometrics

The interaction of quercetin, which is a bioflavonoid, with bovine serum albumin (BSA) was investigated under pseudo-physiological conditions by the application of UV–vis spectrometry, spectrofluorimetry and cyclic voltammetry (CV). These studies indicated a cooperative interaction between the quercetin–BSA complex and warfarin, which produced a ternary complex, quercetin–BSA–warfarin. It was found that both quercetin and warfarin were located in site I. However, the spectra of these three components overlapped and the chemometrics method – multivariate curve resolution-alternating least squares (MCR-ALS) was applied to resolve the spectra. The resolved spectra of quercetin–BSA and warfarin agreed well with their measured spectra, and importantly, the spectrum of the quercetin–BSA–warfarin complex was extracted. These results allowed the rationalization of the behaviour of the overlapping spectra. At lower concentrations ([warfarin] < 1 × 10−5 mol L−1), most of the site marker reacted with the quercetin–BSA, but free warfarin was present at higher concentrations. Interestingly, the ratio between quercetin–BSA and warfarin was found to be 1:2, suggesting a quercetin–BSA–(warfarin)2 complex, and the estimated equilibrium constant was 1.4 × 1011 M−2. The results suggest that at low concentrations, warfarin binds at the high-affinity sites (HAS), while low-affinity binding sites (LAS) are occupied at higher concentrations.

Modelling water droplet movement on a leaf surface

The central aim for the research undertaken in this PhD thesis is the development of a model for simulating water droplet movement on a leaf surface and to compare the model behavior with experimental observations. A series of five papers has been presented to explain systematically the way in which this droplet modelling work has been realised. Knowing the path of the droplet on the leaf surface is important for understanding how a droplet of water, pesticide, or nutrient will be absorbed through the leaf surface. An important aspect of the research is the generation of a leaf surface representation that acts as the foundation of the droplet model. Initially a laser scanner is used to capture the surface characteristics for two types of leaves in the form of a large scattered data set. After the identification of the leaf surface boundary, a set of internal points is chosen over which a triangulation of the surface is constructed. We present a novel hybrid approach for leaf surface fitting on this triangulation that combines Clough-Tocher (CT) and radial basis function (RBF) methods to achieve a surface with a continuously turning normal. The accuracy of the hybrid technique is assessed using numerical experimentation. The hybrid CT-RBF method is shown to give good representations of Frangipani and Anthurium leaves. Such leaf models facilitate an understanding of plant development and permit the modelling of the interaction of plants with their environment. The motion of a droplet traversing this virtual leaf surface is affected by various forces including gravity, friction and resistance between the surface and the droplet. The innovation of our model is the use of thin-film theory in the context of droplet movement to determine the thickness of the droplet as it moves on the surface. Experimental verification shows that the droplet model captures reality quite well and produces realistic droplet motion on the leaf surface. Most importantly, we observed that the simulated droplet motion follows the contours of the surface and spreads as a thin film. In the future, the model may be applied to determine the path of a droplet of pesticide along a leaf surface before it falls from or comes to a standstill on the surface. It will also be used to study the paths of many droplets of water or pesticide moving and colliding on the surface.

Stochastic modelling of financial time series with memory and multifractal scaling

Financial processes may possess long memory and their probability densities may display heavy tails. Many models have been developed to deal with this tail behaviour, which reflects the jumps in the sample paths. On the other hand, the presence of long memory, which contradicts the efficient market hypothesis, is still an issue for further debates. These difficulties present challenges with the problems of memory detection and modelling the co-presence of long memory and heavy tails. This PhD project aims to respond to these challenges. The first part aims to detect memory in a large number of financial time series on stock prices and exchange rates using their scaling properties. Since financial time series often exhibit stochastic trends, a common form of nonstationarity, strong trends in the data can lead to false detection of memory. We will take advantage of a technique known as multifractal detrended fluctuation analysis (MF-DFA) that can systematically eliminate trends of different orders. This method is based on the identification of scaling of the q-th-order moments and is a generalisation of the standard detrended fluctuation analysis (DFA) which uses only the second moment; that is, q = 2. We also consider the rescaled range R/S analysis and the periodogram method to detect memory in financial time series and compare their results with the MF-DFA. An interesting finding is that short memory is detected for stock prices of the American Stock Exchange (AMEX) and long memory is found present in the time series of two exchange rates, namely the French franc and the Deutsche mark. Electricity price series of the five states of Australia are also found to possess long memory. For these electricity price series, heavy tails are also pronounced in their probability densities. The second part of the thesis develops models to represent short-memory and longmemory financial processes as detected in Part I. These models take the form of continuous-time AR(∞) -type equations whose kernel is the Laplace transform of a finite Borel measure. By imposing appropriate conditions on this measure, short memory or long memory in the dynamics of the solution will result. A specific form of the models, which has a good MA(∞) -type representation, is presented for the short memory case. Parameter estimation of this type of models is performed via least squares, and the models are applied to the stock prices in the AMEX, which have been established in Part I to possess short memory. By selecting the kernel in the continuous-time AR(∞) -type equations to have the form of Riemann-Liouville fractional derivative, we obtain a fractional stochastic differential equation driven by Brownian motion. This type of equations is used to represent financial processes with long memory, whose dynamics is described by the fractional derivative in the equation. These models are estimated via quasi-likelihood, namely via a continuoustime version of the Gauss-Whittle method. The models are applied to the exchange rates and the electricity prices of Part I with the aim of confirming their possible long-range dependence established by MF-DFA. The third part of the thesis provides an application of the results established in Parts I and II to characterise and classify financial markets. We will pay attention to the New York Stock Exchange (NYSE), the American Stock Exchange (AMEX), the NASDAQ Stock Exchange (NASDAQ) and the Toronto Stock Exchange (TSX). The parameters from MF-DFA and those of the short-memory AR(∞) -type models will be employed in this classification. We propose the Fisher discriminant algorithm to find a classifier in the two and three-dimensional spaces of data sets and then provide cross-validation to verify discriminant accuracies. This classification is useful for understanding and predicting the behaviour of different processes within the same market. The fourth part of the thesis investigates the heavy-tailed behaviour of financial processes which may also possess long memory. We consider fractional stochastic differential equations driven by stable noise to model financial processes such as electricity prices. The long memory of electricity prices is represented by a fractional derivative, while the stable noise input models their non-Gaussianity via the tails of their probability density. A method using the empirical densities and MF-DFA will be provided to estimate all the parameters of the model and simulate sample paths of the equation. The method is then applied to analyse daily spot prices for five states of Australia. Comparison with the results obtained from the R/S analysis, periodogram method and MF-DFA are provided. The results from fractional SDEs agree with those from MF-DFA, which are based on multifractal scaling, while those from the periodograms, which are based on the second order, seem to underestimate the long memory dynamics of the process. This highlights the need and usefulness of fractal methods in modelling non-Gaussian financial processes with long memory.