A comparison of alternative bankruptcy prediction models

Early models of bankruptcy prediction employed financial ratios drawn from pre-bankruptcy financial statements and performed well both in-sample and out-of-sample. Since then there has been an ongoing effort in the literature to develop models with even greater predictive performance. A significant innovation in the literature was the introduction into bankruptcy prediction models of capital market data such as excess stock returns and stock return volatility, along with the application of the Black–Scholes–Merton option-pricing model. In this note, we test five key bankruptcy models from the literature using an upto- date data set and find that they each contain unique information regarding the probability of bankruptcy but that their performance varies over time. We build a new model comprising key variables from each of the five models and add a new variable that proxies for the degree of diversification within the firm. The degree of diversification is shown to be negatively associated with the risk of bankruptcy. This more general model outperforms the existing models in a variety of in-sample and out-of-sample tests.

Cloning and characterization of a novel human gene related to vascular endothelial growth factor

This paper describes the cloning and characterization of a new member of the vascular endothelial growth factor (VEGF) gene family, which we have designated VRF for VEGF-related-factor. Sequencing of cDNAs from a human fetal brain library and RT-PCR products from normal and tumor tissue cDNA pools indicate two alternatively spliced messages with open reading frames of 621 and 564 bp, respectively. The predicted proteins differ at their carboxyl ends resulting from a shift in the open reading frame. Both isoforms show strong homology to VEGF at their amino termini, but only the shorter isoform maintains homology to VEGF at its carboxyl terminus and conserves all 16 cysteine residues of VEGF165. Similarity comparisons of this isoform revealed overall protein identity of 48% and conservative substitution of 69% with VEGF189. VRF is predicted to contain a signal peptide, suggesting that it may be a secreted factor. The VRF gene maps to the D11S750 locus at chromosome band 11q13, and the protein coding region, spanning approximately 5 kb, is comprised of 8 exons that range in size from 36 to 431 bp. Exons 6 and 7 are contiguous and the two isoforms of VRF arise through alternate splicing of exon 6. VRF appears to be ubiquitously expressed as two transcripts of 2.0 and 5.5 kb; the level of expression is similar among normal and malignant tissues.

Targeting mutant fibroblast growth factor receptors in cancer

Fibroblast growth factor receptors (FGFRs) play diverse roles in the control of cell proliferation, cell differentiation, angiogenesis and development. Activating the mutations of FGFRs in the germline has long been known to cause a variety of skeletal developmental disorders, but it is only recently that a similar spectrum of somatic FGFR mutations has been associated with human cancers. Many of these somatic mutations are gain-of-function and oncogenic and create dependencies in tumor cell lines harboring such mutations. A combination of knockdown studies and pharmaceutical inhibition in preclinical models has further substantiated genomically altered FGFR as a therapeutic target in cancer, and the oncology community is responding with clinical trials evaluating multikinase inhibitors with anti-FGFR activity and a new generation of specific pan-FGFR inhibitors.

Stochastic analysis of the VEGF receptor response curve

Recently, an analysis of the response curve of the vascular endothelial growth factor (VEGF) receptor and its application to cancer therapy was described in [T. Alarcón, and K. Page, J. R. Soc. Lond. Interface 4, 283–304 (2007)]. The analysis is significantly extended here by demonstrating that an alternative computational strategy, namely the Krylov FSP algorithm for the direct solution of the chemical master equation, is feasible for the study of the receptor model. The new method allows us to further investigate the hypothesis of symmetry in the stochastic fluctuations of the response. Also, by augmenting the original model with a single reversible reaction we formulate a plausible mechanism capable of realizing a bimodal response, which is reported experimentally but which is not exhibited by the original model. The significance of these findings for mechanisms of tumour resistance to antiangiogenic therapy is discussed.

Measuring driver responses at railway level crossings

Railway level crossings are amongst the most complex of road safety control systems, due to the conflicts between road vehicles and rail infrastructure, trains and train operations. Driver behaviour at railway crossings is the major collision factor. The main objective of the present paper was to evaluate the existing conventional warning devices in relation to driver behaviour. The common conventional warning devices in Australia are a stop sign (passive), flashing lights and a half boom-barrier with flashing lights (active). The data were collected using two approaches, namely: field video recordings at selected sites and a driving simulator in a laboratory. This paper describes and compares the driver response results from both the field survey and the driving simulator. The conclusion drawn is that different types of warning systems resulted in varying driver responses at crossings. The results showed that on average driver responses to passive crossings were poor when compared to active ones. The field results were consistent with the simulator results for the existing conventional warning devices and hence they may be used to calibrate the simulator for further evaluation of alternative warning systems.

Hyaluronic acid : evaluation as a potential delivery vehicle for vitronectin:growth factor complexes in wound healing applications

We have previously reported that novel vitronectin:growth factor (VN:GF) complexes significantly increase re-epithelialization in a porcine deep dermal partial-thickness burn model. However, the potential exists to further enhance the healing response through combination with an appropriate delivery vehicle which facilitates sustained local release and reduced doses of VN:GF complexes. Hyaluronic acid (HA), an abundant constituent of the interstitium, is known to function as a reservoir for growth factors and other bioactive species. The physicochemical properties of HA confer it with an ability to sustain elevated pericellular concentrations of these species. This has been proposed to arise via HA prolonging interactions of the bioactive species with cell surface receptors and/or protecting them from degradation. In view of this, the potential of HA to facilitate the topical delivery of VN:GF complexes was evaluated. Two-dimensional (2D) monolayer cell cultures and 3D de-epidermised dermis (DED) human skin equivalent (HSE) models were used to test skin cell responses to HA and VN:GF complexes. Our 2D studies revealed that VN:GF complexes and HA stimulate the proliferation of human fibroblasts but not keratinocytes. Experiments in our 3D DED-HSE models showed that VN:GF complexes, both alone and in conjunction with HA, led to enhanced development of both the proliferative and differentiating layers in the DED-HSE models. However, there was no significant difference between the thicknesses of the epidermis treated with VN:GF complexes alone and VN:GF complexes together with HA. While the addition of HA did not enhance all the cellular responses to VN:GF complexes examined, it was not inhibitory, and may confer other advantages related to enhanced absorption and transport that could be beneficial in delivery of the VN:GF complexes to wounds.

Work-related subjective experiences among community residents with schizophrenia or schizoaffective disorder

Objective: To develop a self-report scale of subjective experiences of illness perceived to impact on employment functioning, as an alternative to a diagnostic perspective, for anticipating the vocational assistance needs of people with schizophrenia or schizoaffective disorders. Method: A repeated measures pilot study (n1 = 26, n2 = 21) of community residents with schizophrenia identified a set of work-related subjective experiences perceived to impact on employment functioning. Items with the best psychometric properties were applied in a 12 month longitudinal survey of urban residents with schizophrenia or schizoaffective disorder (n1 = 104; n2 = 94; n3 = 94). Results: Construct validity, factor structure, responsiveness, internal consistency, stability, and criterion validity investigations produced favourable results. Work-related subjective experiences provide information about the intersection of the person, the disorder, and expectations of employment functioning, which suggest new opportunities for vocational professionals to explore and discuss individual assistance needs. Conclusion: Further psychometric investigations of test-retest reliability, discriminant and predictive validity, and research applications in supported employment and vocational rehabilitation, are recommended. Subject to adequate psychometric properties, the new measure promises to facilitate exploring: individuals' specific subjective experiences; how each is perceived to contribute to employment restrictions; and the corresponding implications for specialized treatment, vocational interventions and workplace accommodations.

Corporate governance mechanisms and earnings management in transitional countries – evidence from Chinese listed firms

The objective of this thesis is to investigate whether the corporate governance practices adopted by Chinese listed firms are associated with the quality of earnings information. Based on a review of agency and institutional theory, this study develops hypotheses that predict the monitoring effectiveness of the board and the audit committee. Using a combination of univariate and multivariate analyses, the association between corporate governance mechanisms and earnings management are tested from 2004 to 2008. Through analysing the empirical results, a number of findings are summarised as below. First, board independence is weakened by the introduction of government officials as independent directors on the boards. Government officials acting as independent directors, claim that they meet the definition of independent director set by the regulation. However, they have some connection with the State, which is the controlling shareholder in listed SOEs affiliated companies. Consequently, the effect of the independent director’s expertise in constraining earnings management is mitigated as demonstrated by an insignificant association between board expertise and earnings management. An alternative explanation for the inefficiency of board independence may point to the pre-selection of independent directors by the powerful CEO. It is argued that a CEO can manipulate the board composition and choose the "desirable" independent directors to monitor themselves. Second, a number of internal mechanisms, such as board size, board activities, and the separation of the roles of the CEO and chair are found to be significantly associated with discretionary accruals. This result suggests that there are advantages in having a large and active board in the Chinese setting. This can offset the disadvantages associated with large boards, such as increased bureaucracy, and hence, increase the constraining effects of a large and resourceful board. Third, factor analysis identifies two factors: CEO power and board power. CEO power is the factor which consists of CEO duality and turnover, and board power is composed of board size and board activity. The results of CEO power show that if a Chinese listed company has CEO duality and turnover at the same time, it is more likely to have a high level of earnings management. The significant and negative relationship between board power and accruals indicate that large boards with frequent meetings can be associated with low level of earnings management. Overall, the factor analysis suggests that certain governance mechanisms complement each other to become more efficient monitors of opportunistic earnings management. A combination of board characteristics can increase the negative association with earnings management. Fourth, the insignificant results between audit committees and earnings management in Chinese listed firms suggests that the Chinese regulator should strengthen the audit committee functions. This thesis calls for listed firms to disclose more information on audit committee composition and activities, which can facilitate future research on the Chinese audit committee’s monitoring role. Fifth, the interactive results between State ownership and board characteristics show that dominant State ownership has a moderating effect on board monitoring power as the State totally controls 42% of the issued shares. The high percentage of State ownership makes it difficult for the non-controlling institutional shareholders to challenge the State’s dominant status. As a result, the association between non-controlling institutional ownership and earnings management is insignificant in most situations. Lastly, firms audited by the international Big4 have lower abnormal accruals than firms audited by domestic Chinese audit firms. In addition, the inverse U-shape relationship between audit tenure and earnings quality demonstrates the changing effects of audit quality after a certain period of appointment. Furthermore, this thesis finds that listing in Hong Kong Stock Exchanges can be an alternative governance mechanism to discipline Chinese firms to follow strict Hong Kong listing requirements. Management of Hong Kong listed companies are exposed to the scrutiny of international investors and Hong Kong regulators. This in turn reduces their chances of conducting self-interested earnings manipulation. This study is designed to fill the gap in governance literature in China that is related to earnings management. Previous research on corporate governance mechanisms and earnings management in China is not conclusive. The current research builds on previous literature and provides some meaningful implications for practitioners, regulators, academic, and international investors who have investment interests in a transitional country. The findings of this study contribute to corporate governance and earnings management literature in the context of the transitional economy of China. The use of alternative measures for earnings management yields similar results compared with the accruals models and produces additional findings.

Relationship management as a strategy for supply chain engagement in the civil engineering construction industry

Many studies into construction procurement methods reveal evidence of a need to change the culture and attitude in the construction industry, transition from traditional adversarial relationships to cooperative and collaborative relationships. At the same time there is also increasing concern and discussion on alternative procurement methods, involving a movement away from traditional procurement systems. Relational contracting approaches, such as partnering and relationship management, are business strategies that align the objectives of clients, commercial participants and stakeholders. It provides a collaborative environment and a framework for all participants to adapt their behaviour to project objectives and allows for engagement of those subcontractors and suppliers down the supply chain. The efficacy of relationship management in the client and contractor groups is proven and well documented. However, the industry has a history of slow implementation of relational contracting down the supply chain. Furthermore, there exists little research on relationship management conducted in the supply chain context. This research aims to explore the association between relational contracting structures and processes and supply chain sustainability in the civil engineering construction industry. It endeavours to shed light on the practices and prerequisites for relationship management implementation success and for supply sustainability to develop. The research methodology is a triangulated approach based on Cheung.s (2006) earlier research where questionnaire survey, interviews and case studies were conducted. This new research includes a face-to-face questionnaire survey that was carried out with 100 professionals from 27 contracting organisations in Queensland from June 2008 to January 2009. A follow-up survey sub-questionnaire, further examining project participants. perspectives was sent to another group of professionals (as identified in the main questionnaire survey). Statistical analysis including multiple regression, correlation, principal component factor analysis and analysis of variance were used to identify the underlying dimensions and test the relationships among variables. Interviews and case studies were conducted to assist in providing a deeper understanding as well as explaining findings of the quantitative study. The qualitative approaches also gave the opportunity to critique and validate the research findings. This research presents the implementation of relationship management from the contractor.s perspective. Findings show that the adaption of relational contracting approach in the supply chain is found to be limited; contractors still prefer to keep the suppliers and subcontractors at arm.s length. This research shows that the degree of match and mismatch between organisational structuring and organisational process has an impact on staff.s commitment level and performance effectiveness. Key issues affecting performance effectiveness and relationship effectiveness include total influence between parties, access to information, personal acquaintance, communication process, risk identification, timely problem solving and commercial framework. Findings also indicate that alliance and Early Contractor Involvement (ECI) projects achieve higher performance effectiveness at both short-term and long-term levels compared to projects with either no or partial relationship management adopted.

Implementing a six sigma initiative in financial service companies

In a world of intense competition, Six Sigma is considered to be an important management philosophy, supporting organisations in their efforts to obtain satisfied customers. As financial service organisations have been slow to adopt Six Sigma, issues concerning its implementation are of major importance. For its implementation a large number of tools and techniques have been suggested by academics and practitioners. Intriguingly, despite the extensive effort that has been invested and benefits that can be obtained, the systematic implementation of Six Sigma in financial service organisations is limited. This paper presents a conceptual framework derived from literature and empirical results with a focus on financial services. Using this framework a financial service company should be able to cope with the relevant critical success factors. Thus, the framework allows identifying relevant aspects for a sustainable and successful implementation of a Six Sigma initiative.

Distribution feeder voltage support and power factor control by distributed multiple inverters

The potential of distributed reactive power control to improve the voltage profile of radial distribution feeders has been reported in literature by few authors. However, the multiple inverters injecting or absorbing reactive power across a distribution feeder may introduce control interactions and/or voltage instability. Such controller interactions can be alleviated if the inverters are allowed to operate on voltage droop. First, the paper demonstrates that a linear shallow droop line can maintain the steady state voltage profile close to reference, up to a certain level of loading. Then, impacts of the shallow droop line control on line losses and line power factors are examined. Finally, a piecewise linear droop line which can achieve reduced line losses and close to unity power factor at the feeder source is proposed.