Multicollinearity and financial constraint in investment decisions: a Bayesian generalized ridge regression

This paper addresses the investment decisions considering the presence of financial constraints of 373 large Brazilian firms from 1997 to 2004, using panel data. A Bayesian econometric model was used considering ridge regression for multicollinearity problems among the variables in the model. Prior distributions are assumed for the parameters, classifying the model into random or fixed effects. We used a Bayesian approach to estimate the parameters, considering normal and Student t distributions for the error and assumed that the initial values for the lagged dependent variable are not fixed, but generated by a random process. The recursive predictive density criterion was used for model comparisons. Twenty models were tested and the results indicated that multicollinearity does influence the value of the estimated parameters. Controlling for capital intensity, financial constraints are found to be more important for capital-intensive firms, probably due to their lower profitability indexes, higher fixed costs and higher degree of property diversification.

The Controllership Relevance or Risk Management in non-Financial Companies: a study of risk managers` and controllers` perceptions

The purpose of this study is to analyze the Controllership relevance as support risk management in non-financial companies. Risk management is a widely discussed and disseminated subject amongst financial institutions. It is obvious that economic uncertainties and, consequently, prevention and. control must also exist in non-financial companies. To enable managers to take safe-decisions, it is essential for them to be able to count on instrumental support that provides timely and adequate information, to ensure lower levels of mistakes and risk exposure. However, discussion concerning risk management in non-financial companies is still in its early stages in Brazil. Considering this gap, this study aims at assessing how Controllership has been acting in? companies under the insight of risk and how it can contribute to risk management in non-financial companies. To achieve the proposed goal, a field research was. carried-out with non-financial companies that are located in the city Sao Paulo and listed in the Sao Paulo Stock Exchange (Bovespa). The research was carried out using questionnaires, which were sent do Risk Officers and Controllers of those companies with the purpose of evaluating their perception on the subject. The results,of the research allow us to conclude that Controllership offers support to risk management, through information that contributes to the mitigation of the risks in non-financial companies.

Diagnosis of Organizational Soft Problems in a Peruvian Financial Institution by Systemic Thinking

Managing financial institutions in an underdeveloped economic context has become a real challenge nowadays. In order to reach the organization`s planned goals, they have to deal with structural, behavioral and informational problems. From the systemic point of view, this situation gets even worse when the company does not present organizational boundaries and a cohesive identification for their stakeholders. Thus, European countries have some special financial lines in order to help the development of micro credit in Latin communities in an attempt to help the local economy. However, institutions like Caixa dos Andes in Peru present management problems when dealing with this complexity. Based on this, how can the systemic eye help in the diagnosis of soft problems of a Peruvian financial company? This study aims to diagnose soft problems of a Peruvian financial company based on soft variables like identity, communication and autonomy and also intends to identify possible ways to redesign its basic framework. The (VSM--Viable System Model) method from Beer (1967), applied in this diagnostic study, was used in a practical way as a management tool for organizations` analysis and planning. By describing the VSM`s five systems, the creation of a systemic vision or a total vision is possible, showing the organization`s complexity from the inside. Some company`s soft problems like double control, inefficient use of physical and human resources, low information flows, slowness, etc. The VSM presented an organizational diagnosis indicating effective solutions that do integrate its five systems.

Financial leverage and tangibility of assets of Brazilian companies of agribusiness in the post-real plan period

This paper aims to study the relationship between the debt level and the asset structure of Brazilian companies of the agribusiness sector, since it is considered a current and relevant discussion: to evaluate the mechanisms for fund-raising and guarantees. The methodology of Granger`s Causality test and Autoregressive Vectors was used to conduct a comparative analysis, applied to a financial database of companies with open capital of Brazilian agribusiness, in particular the agricultural sector and Fisheries and Food and Beverages in a period of 10 years (1997-2007) from quarterly series available in the database of Economatica(R). The results demonstrated that changes in leverage generate variations in the tangibility of the companies, a fact that can be explained by the large search of funding secured by fiduciary transfer of fixed assets, which facilitates access to credit by business of the Agribusiness sector, increasing the payment time and lowering interest rates.

Pathology reporting of breast cancer: trends in 1989-1999, following the introduction of mammographic screening in Western Australia

Background: A survey of pathology reporting of breast cancer in Western Australia in 1989 highlighted the need for improvement. The current study documents (1) changes in pathology reporting from 1989 to 1999 and (2) changes in patterns of histopathological prognostic indicators for breast cancer following introduction of mammographic screening in 1989. Methods: Data concerning all breast cancer cases reported in Western Australia in 1989, 1994 and 1999 were retrieved using the State Cancer Registry, Hospital Morbidity data system, and pathology laboratory records. Results: Pathology reports improved in quality during the decade surveyed. For invasive carcinoma, tumour size was not recorded in 1.2% of pathology reports in 1999 compared with 16.1% in 1989 (rho<0.001). Corresponding figures for other prognostic factors were: tumour grade 3.3% and 51.6% (rho<0.001), tumour type 0.2% and 4.1% (rho<0.001), vascular invasion 3.7% and 70.9% (rho<0.001), and lymph node status 1.9% and 4.5% (rho=0.023). In 1999, 5.9% of reports were not in a synoptic/checklist format, whereas all reports were descriptive in 1989 (rho<0.001). For the population as a whole, the proportion of invasive carcinomas <1 cm was 20.9% in 1999 compared with 14.5% in 1989 (rho<0.001); for tumours <2 cm the corresponding figures were 65.4% and 59.7% (rho=0.013). In 1999, 30.5% of tumours were histologically well-differentiated compared with 10.6% in 1989 (rho<0.001), and 61.7% were lymph node negative in 1999 compared with 57.1% in 1989 (rho=0.006). Pure ductal carcinoma in situ (DCIS) constituted 10.9% and 7.9% of total cases of breast carcinoma in 1999 and 1989, respectively (rho=0.01). Conclusions: Quality of pathology reporting improved markedly over the period, in parallel with adoption of stanclardised synoptic pathology reports. By 1999, recording of important prognostic information was almost complete. Frequency of favourable prognostic factors generally increased over time, reflecting expected effects of mammographic screening.

Validity of the self reporting questionnaire-20 in epidemiological studies with older adults

This study examined the validity of the self-reporting questionnaire (SRQ-20) in a population-based survey with older adults in Sao Paulo, Brazil. The study sample consisted of 2,008 individuals aged 65 years or more who were living in an economically disadvantaged area of the city. The geriatric mental state (GMS) was used as the gold standard for the assessment of common mental disorders (CMD). The optimal SRQ-20 threshold for case definition was 4/5 (sensitivity = 76.1%, specificity = 74.6%, area under ROC curve = 0.82). Women, older participants and those with lower income were more likely to be misclassified by the questionnaire. The inclusion of older persons with dementia or psychosis did not change the ability of the SRQ-20 to identify cases of CMD. The SRQ-20 may be a useful instrument to be used in large epidemiological studies in resource-poor settings for the identification of cases of depression and anxiety in later life. The performance of the SRQ-20 among older adults was similar to that observed with the adult population in Brazil.

A practical approach to assess depression risk and to guide risk reduction strategies in later life

Background: Many factors have been associated with the onset and maintenance of depressive symptoms in later life, although this knowledge is yet to be translated into significant health gains for the population. This study gathered information about common modifiable and non-modifiable risk factors for depression with the aim of developing a practical probabilistic model of depression that can be used to guide risk reduction strategies. \Methods: A cross-sectional study was undertaken of 20,677 community-dwelling Australians aged 60 years or over in contact with their general practitioner during the preceding 12 months. Prevalent depression (minor or major) according to the Patient Health Questionnaire (PHQ-9) assessment was the main outcome of interest. Other measured exposures included self-reported age, gender, education, loss of mother or father before age 15 years, physical or sexual abuse before age 15 years, marital status, financial stress, social support, smoking and alcohol use, physical activity, obesity, diabetes, hypertension, and prevalent cardiovascular diseases, chronic respiratory diseases and cancer. Results: The mean age of participants was 71.7 +/- 7.6 years and 57.9% were women. Depression was present in 1665 (8.0%) of our subjects. Multivariate logistic regression showed depression was independently associated with age older than 75 years, childhood adverse experiences, adverse lifestyle practices (smoking, risk alcohol use, physical inactivity), intermediate health hazards (obesity, diabetes and hypertension), comorbid medical conditions (clinical history of coronary heart disease, stroke, asthma, chronic obstructive pulmonary disease, emphysema or cancers), and social or financial strain. We stratified the exposures to build a matrix that showed that the probability of depression increased progressively with the accumulation of risk factors, from less than 3% for those with no adverse factors to more than 80% for people reporting the maximum number of risk factors. Conclusions: Our probabilistic matrix can be used to estimate depression risk and to guide the introduction of risk reduction strategies. Future studies should now aim to clarify whether interventions designed to mitigate the impact of risk factors can change the prevalence and incidence of depression in later life.

Introduction to Discounted Cash Flow Analysis and Financial Functions in Excel

The financial and economic analysis of investment projects is typically carried out using the technique of discounted cash flow (DCF) analysis. This module introduces concepts of discounting and DCF analysis for the derivation of project performance criteria such as net present value (NPV), internal rate of return (IRR) and benefit to cost (B/C) ratios. These concepts and criteria are introduced with respect to a simple example, for which calculations using MicroSoft Excel are demonstrated.