The usefulness of fair values in improving the predictive ability of earnings: Evidence from international banks

One of the objectives of general-purpose financial reporting is to provide information about the financial position, financial performance and cash flows of an entity that is useful to a wide range of users in making economic decisions. The current focus on potentially increased relevance of fair value accounting weighed against issues of reliability has failed to consider the potential impact on the predictive ability of accounting. Based on a sample of international (non-U.S.) banks from 24 countries during 2009-2012, we test the usefulness of fair values in improving the predictive ability of earnings. First, we find that the increasing use of fair values on balance-sheet financial instruments enhances the ability of current earnings to predict future earnings and cash flows. Second, we provide evidence that the fair value hierarchy classification choices affect the ability of earnings to predict future cash flows and future earnings. More precisely, we find that the non-discretionary fair value component (Level 1 assets) improves the predictability of current earnings whereas the discretionary fair value components (Level 2 and Level 3 assets) weaken the predictive power of earnings. Third, we find a consistent and strong association between factors reflecting country-wide institutional structures and predictive power of fair values based on discretionary measurement inputs (Level 2 and Level 3 assets and liabilities). Our study is timely and relevant. The findings have important implications for standard setters and contribute to the debate on the use of fair value accounting.

Ship collision avoidance and COLREGS compliance using simulation-based control behavior selection with predictive hazard assessment

This paper describes a concept for a collision avoidance system for ships, which is based on model predictive control. A finite set of alternative control behaviors are generated by varying two parameters: offsets to the guidance course angle commanded to the autopilot and changes to the propulsion command ranging from nominal speed to full reverse. Using simulated predictions of the trajectories of the obstacles and ship, compliance with the Convention on the International Regulations for Preventing Collisions at Sea and collision hazards associated with each of the alternative control behaviors are evaluated on a finite prediction horizon, and the optimal control behavior is selected. Robustness to sensing error, predicted obstacle behavior, and environmental conditions can be ensured by evaluating multiple scenarios for each control behavior. The method is conceptually and computationally simple and yet quite versatile as it can account for the dynamics of the ship, the dynamics of the steering and propulsion system, forces due to wind and ocean current, and any number of obstacles. Simulations show that the method is effective and can manage complex scenarios with multiple dynamic obstacles and uncertainty associated with sensors and predictions.

Safety of Repair, Maintenance, Minor Alteration, and Addition (RMAA) Works: A New Focus of Construction Safety

"Safety of RMAA works is an almost uncharted topic of rising importance internationally. Small construction contractors are particularly dependant on RMAA work, especially during times of recession, and they undertake more risks on these jobs than large companies do. This book is based on unique international research and consultancy projects which detail, investigate, and suggest solutions to the specific challenges of safety in RMAA works, based on case studies. Starting with an overview of safety in the wider construction industries of developed countries, the first half of this book also provides a comprehensive summary of relevant rules, regulations, and the resulting safety performances. The systems in the UK, US and Hong Kong are described and contrasted, giving the reader an understanding of how different regulatory approaches have yielded a variety of results. From this solid introduction, specific problems observed in RMAA work are examined through case studies, with reference to the underlying cultural and demographic factors, and a variety of practical engineering and management solutions are explored. This important and practical international work is essential reading for postgraduate students of health and safety in construction, construction project management, or construction in developing countries, as well as policy-makers and construction project managers."--Publisher website

Analysis of the impact of a uracil DNA glycosylase attenuated in AP-DNA binding in maintenance of the genomic integrity in Escherichia coli

Uracil DNA glycosylase (Ung)initiates the uracil excision repair pathway. We have earlier characterized the Y66W and Y66H mutants of Ung and shown that they are compromised by similar to 7- and similar to 170-fold, respectively in their uracil excision activities. In this study, fluorescence anisotropy measurements show that compared with the wild-type, the Y66W protein is moderately compromised and attenuated in binding to AP-DNA. Allelic exchange of ung in Escherichia coli with ung::kan, ungY66H:amp or ungY66W:amp alleles showed similar to 5-, similar to 3.0- and similar to 2.0-fold, respectively increase in mutation frequencies. Analysis of mutations in the rifampicin resistance determining region of rpoB revealed that the Y66W allele resulted in an increase in A to G (or T to C) mutations. However, the increase in A to G mutations was mitigated upon expression of wild-type Ung from a plasmid borne gene. Biochemical and computational analyses showed that the Y66W mutant maintains strict specificity for uracil excision from DNA. Interestingly, a strain deficient in AP-endonucleases also showed an increase in A to G mutations. We discuss these findings in the context of a proposal that the residency of DNA glycosylase(s) onto the AP-sites they generate shields them until recruitment of AP-endonucleases for further repair.

Parathyroid hormone as an outcome indicator in old age

Serum parathyroid hormone (PTH) and vitamin D are the major regulators of extracellular calcium homeostasis. The inverse association between PTH and vitamin D and the common age-related elevation of the PTH concentration are well known phenomena. However, the confounding or modifying factors of this relationship and their impact on the response of PTH levels to vitamin D supplementation need further investigation. Clinical conditions such as primary hyperparathyroidism (PHPT), renal failure and vitamin D deficiency, characterized by an elevation of the PTH concentration, have been associated with impaired long-term health outcomes. Curative treatments for these conditions have also been shown to decreases PTH concentration and attenuate some of the adverse health effects. In PHPT it has also been commonly held that hypercalcaemia, the other hallmark of the disease, is the key mediator of the adverse health outcomes. In chronic kidney disease the systemic vascular disease has been proposed to have the most important impact on general health. Some evidence also indicates that vitamin D may have significant extraskeletal actions. However, the frank elevation of PTH concentration seen in advanced PHPT and in end-stage renal failure have also been suggested to be at least partly causally related to an increased risk of death as well as cognitive dysfunction. However, the exact mechanisms have remained unclear. Furthermore, the predictive value of elevated PTH in unselected older populations has been less well studied. The studies presented in this thesis investigated the impact of age and mobility on the responses of PTH levels to vitamin D deficiency and supplementation. Furthermore, the predictive value of PTH for long-term survival and cognitive decline was addressed in an unselected population of older people. The hypothesis was that age and chronic immobility are related to a persistently blunted elevation of PTH concentration, even in the presence of chronic vitamin D deficiency, and to attenuated responses of PTH to vitamin D supplementation. It was also further hypothesized that a slightly elevated or even high-normal PTH concentration is an independent indicator of an increased risk of death and cognitive decline in the general aged population. The data of this thesis are based on three samples: a meta-analysis of published vitamin D supplementation trials, a randomized placebo controlled six-month vitamin D supplementation trial, and a longitudinal prospective cohort study on a general aged population. Based on a PubMed search, a meta-analysis of 52 clinical trials with 6 290 adult participants was performed to evaluate the impact of age and immobility on the responses of PTH to 25-OHD levels and vitamin D supplementation. A total of 218 chronically immobile, very old inpatients were also enrolled into a vitamin D supplementation trial. Mortality data for these patients was also collected after a two-year follow-up. Finally, data from the Helsinki Aging Study, which followed three random age cohorts (75, 80 and 85 years) until death in almost all subjects, was used to evaluate the predictive value of PTH for long-term survival and cognitive decline. This series of studies demonstrated that in older people without overt renal failure or severe hypercalcaemia, serum 25-OHD and PTH were closely associated, but this relationship was also affected by age and immobility. Furthermore, a substantial proportion of old chronically bedridden patients did not respond to vitamin D deficiency by elevating PTH, and the effect of a high-dose (1200 IU/d) six-month cholecalciferol supplementation on the PTH concentration was minor. This study demonstrated longitudinally for the first time that the blunted PTH also persisted over time. Even a subtle elevation of PTH to high-normal levels predicted impaired long-term health outcomes. Slightly elevated PTH concentrations indicated an increased risk of clinically significant cognitive decline and death during the last years of life in a general aged population. This association was also independent of serum ionized calcium (Ca2+) and the estimated glomerular filtration rate (GFR). A slightly elevated PTH also indicated impaired two-year survival during the terminal years of frail elderly subjects independently of Ca2+, GFR, and of 25-OHD levels. The interplay between PTH and vitamin D in the regulation of calcium homeostasis is more complex than has been generally considered. In addition to muskuloskeletal health parathyroid hormone is also related to the maintenance of other important domains of health in old age. Higher PTH concentrations, even within conventional laboratory reference ranges, seem to be an independent indicator of an increased risk of all-cause and of cardiovascular mortality, independently of established cardiovascular risk factors, disturbances in mineral metabolism, and renal failure. Limited and inconsistent evidence supports the role of vitamin D deficiency-related lack of neuroprotective effects over the causal association between PTH and impaired cognitive functions. However, the causality of these associations remains unclear. The clinical implications of the observed relationships remain to be elucidated by future studies interfering with PTH concentrations, especially by long-term interventions to reduce PTH.

Unrealized expectations of jumps in volatility: An explanation to the low and time-varying predictive power of implied volatility

The low predictive power of implied volatility in forecasting the subsequently realized volatility is a well-documented empirical puzzle. As suggested by e.g. Feinstein (1989), Jackwerth and Rubinstein (1996), and Bates (1997), we test whether unrealized expectations of jumps in volatility could explain this phenomenon. Our findings show that expectations of infrequently occurring jumps in volatility are indeed priced in implied volatility. This has two important consequences. First, implied volatility is actually expected to exceed realized volatility over long periods of time only to be greatly less than realized volatility during infrequently occurring periods of very high volatility. Second, the slope coefficient in the classic forecasting regression of realized volatility on implied volatility is very sensitive to the discrepancy between ex ante expected and ex post realized jump frequencies. If the in-sample frequency of positive volatility jumps is lower than ex ante assessed by the market, the classic regression test tends to reject the hypothesis of informational efficiency even if markets are informationally effective.

Predictive testing for familial adenomatous polyposis in a rural South Indian community

During the course of genome studies in a rural community in the South Indian state of Karnataka, DNA-based investigations and counselling for familial adenomatous polyposis (FAP) were requested via the community physician. The proposita died in 1940 and FAP had been clinically diagnosed in 2 of her 5 children, both deceased. DNA samples from 2 affected individuals in the third generation were screened for mutations in the APC gene, and a frame-shift mutation was identified in exon 15 with a common deletion at codon 1061. Predictive testing for the mutation was then organized on a voluntary basis. There were 11 positive tests, including confirmatory positives on 2 persons diagnosed by colonoscopy, and to date surgery has been successfully undertaken on 3 previously undiagnosed adults. The ongoing success of the study indicates that, with appropriate access to the facilities offered by collaborating centres, predictive testing is feasible for diseases such as FAP and could be of significant benefit to communities in economically less developed countries.

Analysis of the beta-glucoside utilization (bgl) genes of Shigella sonnei: evolutionary implications for their maintenance in a cryptic state

The pattern of expression of the genes involved in the utilization of aryl beta-glucosides such as arbutin and salicin is different in the genus Shigella compared to Escherichia coli. The results presented here indicate that the homologue of the cryptic bgl operon of E. coli is conserved in Shigella sonnei and is the primary system involved in beta-glucoside utilization in the organism. The organization of the bgl genes in 5. sonnei is similar to that of E. coli; however there are three major differences in terms of their pattern of expression. (i) The bglB gene, encoding phospho-beta-glucosidase B, is insertionally inactivated in 5. sonnei. As a result, mutational activation of the silent bgl promoter confers an Arbutin-positive (Arb(+)) phenotype to the cells in a single step; however, acquiring a Salicin-positive (Sal(+)) phenotype requires the reversion or suppression of the bglB mutation in addition. (ii) Unlike in E. coli, a majority of the activating mutations (conferring the Arb(+) phenotype) map within the unlinked hns locus, whereas activation of the E. coli bgl operon under the same conditions is predominantly due to insertions within the bglR locus. (iii) Although the bgl promoter is silent in the wild-type strain of 5. sonnei (as in the case of E. coli), transcriptional and functional analyses indicated a higher basal level of transcription of the downstream genes. This was correlated with a 1 bp deletion within the putative Rho-independent terminator present in the leader sequence preceding the homologue of the bglG gene. The possible evolutionary implications of these differences for the maintenance of the genes in the cryptic state are discussed.

Air-fleet and maintenance facility planning

This paper describes the use of simulation in the planning and operation of a small fleet of aircraft typical of the air force of a developing country. We consider a single flying base, where the opera tionally ready aircraft are stationed, and a repair depot, where the planes are overhauled. The measure of effectiveness used is "system availability, the percentage of airplanes that are usable. The system is modeled in GPSS as a cyclic queue process. The simulation model is used to perform sensitivity analyses and to validate the principal assumptions of the analytical model on which the simulation model is based.

Systems analysis for planning of air fleets and maintenance facilities

The high cost and extraordinary demands made on sophisticated air defence systems, pose hard challenges to the managers and engineers who plan the operation and maintenance of such systems. This paper presents a study aimed at developing simulation and systems analysis techniques for the effective planning and efficient operation of small fleets of aircraft, typical of the air force of a developing country. We consider an important aspect of fleet management: the problem of resource allocation for achieving prescribed operational effectiveness of the fleet. At this stage, we consider a single flying-base, where the operationally ready aircraft are stationed, and a repair-depot, where the planes are overhauled. An important measure of operational effectiveness is ‘ availability ’, which may be defined as the expected fraction of the fleet fit for use at a given instant. The tour of aircraft in a flying-base, repair-depot system through a cycle of ‘ operationally ready ’ and ‘ scheduled overhaul ’ phases is represented first by a deterministic flow process and then by a cyclic queuing process. Initially the steady-state availability at the flying-base is computed under the assumptions of Poisson arrivals, exponential service times and an equivalent singleserver repair-depot. This analysis also brings out the effect of fleet size on availability. It defines a ‘ small ’ fleet essentially in terms of the important ‘ traffic ’ parameter of service rate/maximum arrival rate.A simulation model of the system has been developed using GPSS to study sensitivity to distributional assumptions, to validate the principal assumptions of the analytical model such as the single-server assumption and to obtain confidence intervals for the statistical parameters of interest.

Autoimmune Regulator (AIRE) in the Maintenance of Immunological Tolerance

Autoimmune regulator (AIRE) is the gene mutated in the human polyglandular autoimmune disease called Autoimmune polyendocrinopathy, candidiasis, and ectodermal dystrophy (APECED) that belongs to the Finnish disease heritage. Murine Aire has been shown to be important in the generation of the T cell central tolerance in the thymus by promoting the expression of ectopic tissue-specific antigens in the thymic medulla. Aire is also involved in the thymus tissue organization during organogenesis. In addition to the thymus, AIRE/Aire is expressed in the secondary lymphoid organs. Accordingly, a role for AIRE/Aire in the maintenance of peripheral tolerance has been suggested. Peripheral tolerance involves mechanisms that suppress immune responses in secondary lymphoid organs. Regulatory T cells (Tregs) are an important suppressive T cell population mediating the peripheral tolerance. Tregs are generated in the thymus but also in the peripheral immune system T cells can acquire the Treg-phenotype. The aim of this study was to characterize Tregs in APECED patients and in the APECED mouse model (Aire-deficient mice). In the mouse model, it was possible to separate Aire expression in the thymus and in the secondary lymphoid organs. The relative importance of thymic and peripheral Aire expression in the maintenance of immunological tolerance was studied in an experimental model that was strongly biased towards autoimmunity, i.e. lymphopenia-induced proliferation (LIP) of lymphocytes. This experimental model was also utilised to study the behaviour of T cells with dual-specific T cell receptors (TCR) during the proliferation. The Treg phenotype was studied by flow cytometry and relative gene expression with real-time polymerase chain reaction. TCR repertoires of the Tregs isolated from APECED patients and healthy controls were also compared. The dual-specific TCRs were studied with the TCR repertoire analysis that was followed with sequencing of the chosen TCR genes in order to estimate changes in the dual-specific TCR diversity. The Treg function was tested with an in vitro suppression assay. The APECED patients had normal numbers of Tregs but the phenotype and suppressive functions of the Tregs were impaired. In order to separate Aire functions in the thymus from its yet unknown role in the secondary lymphoid organs, the phenomenon of LIP was utilised. In this setting, the lymphocytes that are adoptively transferred to a lymphopenic recipient proliferate to stimuli from self-originating antigens. This proliferation can result in autoimmunity if peripheral tolerance is not fully functional. When lymphocytes that had matured without Aire in the thymus were transferred to lymphopenic Aire-sufficient recipients, no clinical autoimmunity followed. The Aire-deficient donor-originating lymphocytes hyperproliferated, and other signs of immune dysregulation were also found in the recipients. Overt autoimmunity, however, was prevented by the Aire-deficient donor-originating Tregs that hyperproliferated in the recipients. Aire-deficient lymphopenic mice were used to study whether peripheral loss of Aire had an impact on the maintenance of peripheral tolerance. When normal lymphocytes were transferred to these Aire-deficient lymphopenic recipients, the majority of recipients developed a clinically symptomatic colitis. The colitis was confirmed also by histological analysis of the colon tissue sections. In the Aire-deficient lymphopenic recipients Tregs were proliferating significantly less than in the control group s recipients that had normal Aire expression in their secondary lymphoid organs. This study shows that Aire is not only important in the central tolerance but is also has a significant role in the maintenance of the peripheral tolerance both in mice and men. Aire expressed in the secondary lymphoid organs is involved in the functions of Tregs during an immune response. This peripheral expression appears to be relatively more important in some situations since only those lymphopenic recipients that had lost peripheral expression of Aire developed a symptomatic autoimmune disease. This AIRE-related Treg defect could be clinically important in understanding the pathogenesis of APECED.

Small Ubiquitin-related Modifier Ligase Activity of Mms21 Is Required for Maintenance of Chromosome Integrity during the Unperturbed Mitotic Cell Division Cycle in Saccharomyces cerevisiae

The SUMO ligase activity of Mms21/Nse2, a conserved member of the Smc5/6 complex, is required for resisting extrinsically induced genotoxic stress. We report that the Mms21 SUMO ligase activity is also required during the unchallenged mitotic cell cycle in Saccharomyces cerevisiae. SUMO ligase-defective cells were slow growing and spontaneously incurred DNA damage. These cells required caffeine-sensitive Mec1 kinase-dependent checkpoint signaling for survival even in the absence of extrinsically induced genotoxic stress. SUMO ligase-defective cells were sensitive to replication stress and displayed synthetic growth defects with DNA damage checkpoint-defective mutants such as mec1, rad9, and rad24. MMS21 SUMO ligase and mediator of replication checkpoint 1 gene (MRC1) were epistatic with respect to hydroxyurea-induced replication stress or methyl methanesulfonate-induced DNA damage sensitivity. Subjecting Mms21 SUMO ligase-deficient cells to transient replication stress resulted in enhancement of cell cycle progression defects such as mitotic delay and accumulation of hyperploid cells. Consistent with the spontaneous activation of the DNA damage checkpoint pathway observed in the Mms21-mediated sumoylation-deficient cells, enhanced frequency of chromosome breakage and loss was detected in these mutant cells. A mutation in the conserved cysteine 221 that is engaged in coordination of the zinc ion in Loop 2 of the Mms21 SPL-RING E3 ligase catalytic domain resulted in strong replication stress sensitivity and also conferred slow growth and Mec1 dependence to unchallenged mitotically dividing cells. Our findings establish Mms21-mediated sumoylation as a determinant of cell cycle progression and maintenance of chromosome integrity during the unperturbed mitotic cell division cycle in budding yeast.