Audit committee director turnover

Actions by both private sector organizations and legislators in recent years have highlighted the importance of the audit committee of the board of directors of corporations in the financial reporting process. For example, the Sarbanes Oxley Act of 2002 has multiple sections that deal with the composition and functioning of audit committees. My dissertation examines multiple issues related to the composition of audit committees. In the first two parts of my dissertation, I examine the stock market reactions to disclosures of audit committee appointments and departures in the 8-Ks filed with the SEC during 2008 and 2009. I find that there is a positive stock market reaction to the appointment of audit committee directors who are financial experts. The second essay investigates the cumulative abnormal return to departure of audit committee directors. I find that when an accounting expert leaves the audit committee, the market reaction is significantly negative. These results are consistent with regulators’ concerns related to having directors with audit, accounting and other financial expertise on corporate audit committees. The third essay of my dissertation examines the changes in audit committee composition in the last decade. I find that while the increase in audit committee size is relatively modest, there has been a significant increase in the number of audit committee experts and the frequency of audit committee meetings over the past decade; interestingly, such increase in the number of meetings has persisted even after the media focus on the auditing profession, in the immediate aftermath of the Enron and Andersen failures, have waned. My results show that audit committee composition and its role continues to evolve with regulatory and other corporate governance related changes.

Three Essays in Empirical Asset Pricing

The financial crisis of 2007-2008 led to extraordinary government intervention in firms and markets. The scope and depth of government action rivaled that of the Great Depression. Many traded markets experienced dramatic declines in liquidity leading to the existence of conditions normally assumed to be promptly removed via the actions of profit seeking arbitrageurs. These extreme events motivate the three essays in this work. The first essay seeks and fails to find evidence of investor behavior consistent with the broad 'Too Big To Fail' policies enacted during the crisis by government agents. Only in limited circumstances, where government guarantees such as deposit insurance or U.S. Treasury lending lines already existed, did investors impart a premium to the debt security prices of firms under stress. The second essay introduces the Inflation Indexed Swap Basis (IIS Basis) in examining the large differences between cash and derivative markets based upon future U.S. inflation as measured by the Consumer Price Index (CPI). It reports the consistent positive value of this measure as well as the very large positive values it reached in the fourth quarter of 2008 after Lehman Brothers went bankrupt. It concludes that the IIS Basis continues to exist due to limitations in market liquidity and hedging alternatives. The third essay explores the methodology of performing debt based event studies utilizing credit default swaps (CDS). It provides practical implementation advice to researchers to address limited source data and/or small target firm sample size.

Reputational risk of banks : a study on the effects of regulatory sanctions for major european banks

Mestrado em Finanças

The wealth effects of commercial bank securities issuances announcement

Banks are often excluded in corporate finance research mainly because of the regulatory concerns. Compares to non-bank firms, banks are heavily regulated due to its special economic role of money and the uncertainty. Heavy regulation on banks could reduce the information asymmetry between the managers and investor by limiting the behaviour of banks at the time of the Seasoned Equity Offering (SEO), and by increasing the incentive for banks to avoid excessive risk-taking. Therefore, the market may be less likely to assume that bank issued securities signal information that the bank is overvalued compared to their non-bank counterparts. The objective of this thesis is therefore to examine commercial banks issued securities announcement effect. Three interrelated research questions are addressed in this thesis: 1) What is the difference in convertible bond announcement effect between banks and non-banks firm? 2) What is the difference in SEO announcement effect between banks and non-banks? 3) How do the stringency levels of bank regulation impact on the announcement effects of bank issued SEO? By using the U.S. convertible bond and SEO data from 1982 to 2012, I find that the bank issued a convertible bond and SEO announcement experience higher cumulative abnormal return than non-bank. This is consistent with the view that bank regulation reveals positive information about banks. Since banks are heavily regulated, the market is less likely to assume that the issuance of the convertible bond and SEO by banks signals information that is overvalued. These results are robust after controlling for a number of firm-, issue-, and market-specific characteristics. These results are robust by considering the different categories of non-bank industries by undertaking tests in relation to the differences in the CARS upon convertible bond/ SEO across industries, as well as the unbalanced sample between banks and non-banks by using the matched sample analysis. However, the relation between the stringency level of bank regulation and bank issued securities announcement effect may be nonlinear. As hypothesised, I find that bank regulation has an inverted U-shaped relation with the announcement effect of bank SEO by using the SEO data across 21 countries from 2001 to 2012. Under a less bank regulation environment, the market reacts more positively to the bank SEO announcement for an increase in the level of bank regulation. However, the bank SEO announcement effects become more negative if the bank regulation becomes too stringent. This inverted U-shaped relationship is robust after I use the exogenous cross-country, cross-year variation in the timing of the Basel II adoption as the instrument to assess the causal impact of bank regulation on SEO announcement effects. However, the stringency of regulation does not have a significant impact on the announcement effects of involuntary bank equity issuance.

Fearful asymmetry: An analysis of pre-earnings abnormal returns

A Work Project, presented as part of the requirements for the Award of a Masters Degree in Finance from the NOVA – School of Business and Economics

The persistence of return on assets: differences between industries and differences between firms

This study offers a statistical analysis of the persistence of annual profits across a sample of firms from different European Union (EU) countries. To this end, a Bayesian dynamic model has been used which enables the annual behaviour of those profits to be broken down into a permanent structural component on the one hand and a transitory component on the other, while also distinguishing between general effects affecting the industry as a whole to which each firm belongs and specific effects affecting each firm in particular. This break down enables the relative importance of those fundamental components to be evaluated. The data analysed come from a sample of 23,293 firms in EU countries selected from the AMADEUS data-base. The period analysed ran from 1999 to 2007 and 21 sectors were analysed, chosen in such a way that there was a sufficiently large number of firms in each country*sector combination for the industry effects to be estimated accurately enough for meaningful comparisons to be made by sector and country. The analysis has been conducted by sector and by country from a Bayesian perspective, thus making the study more flexible and realistic since the estimates obtained do not depend on asymptotic results. In general terms, the study finds that, although the industry effects are significant, more important are the specific effects. That importance varies depending on the sector or the country in which the firm carries out its activity. The influence of firm effects accounts for more than 90% of total variation and display a significantly lower degree of persistence, with adjustment speeds oscillating around 51.1%. However, this pattern is not homogeneous but depends on the sector and country analysed. Industry effects have a more marginal importance, being significantly more persistent, with adjustment speeds oscillating around 10% with this degree of persistence being more homogeneous at both country and sector levels.

Detecting patterns of the spinoff decision of companies and accessing the determination of the abnormal returns

This paper examines value created through spinoffs over a period from 2002-2010. The net debt to average share price ratio and the debt to asset ratio of a company impacts the decision for this restructuring process statistically significant. The announcement of a spinoff yields abnormal returns (AR) for the stockholders of the parent. The relative size of the spin and the financial leverage correlated with the AR positively, whereas the net debt per share and the return on asset negatively. Therefore, no direct wealth transfer from the debt holders of a company to the equity holders can be derived from these results.

Abnormal collagen deposition in synovia after collagen type V immunization in rabbits

Sinovitis in Scleroderma (SSc) is rare, usually aggressive and fully resembles rheumatoid arthritis. Experimental models of SSc have been used in an attempt to understand its pathogenesis. Previous studies done in our laboratory had already revealed the presence of a synovial remodeling process in rabbits immunized with collagen V. To validate the importance of collagen type V and to explore the quantitative relationship between this factor and synovia remodeling as well as the relationship between collagen type V and other collagens, we studied the synovial tissue in immunized rabbits. Rabbits (N= 10) were immunized with collagen V plus Freund's adjuvant and compared with animals inoculated with adjuvant only (N= 10). Synovial tissues were submitted to histological analysis, immunolocalization to collagen I, III and V and biochemical analysis by eletrophoresis, immunoblot and densitometric method. The synovial tissue presented an intense remodeling process with deposits of collagen types I, III and V after 75 and 120 days of immunization, mainly distributed around the vessels and interstitium of synovial extracellular matrix. Densitometric analysis confirmed the increased synthesis of collagen I, III and V chains (407.69 +/- 80.31; 24.46 +/- 2.58; 70.51 +/- 7.66, respectively) in immunized rabbits when compared with animals from control group (164.91 +/- 15.67; 12.89 +/- 1.05; 32 +/- 3.57) (p<0.0001). We conclude that synovial remodeling observed in the experimental model can reflect the articular compromise present in patients with scleroderma. Certainly, this experimental model induced by collagen V immunization will bring new insights in to pathogenic mechanisms and allow the testing of new therapeutic strategies to ameliorate the prognosis for scleroderma patients.

ABNORMAL EXPRESSION OF VOLTAGE-GATED SODIUM CHANNELS Nav1.7, Nav1.3 AND Nav1.8 IN TRIGEMINAL NEURALGIA

Voltage-gated sodium channels have been implicated in acute and chronic neuropathic pain. Among subtypes, Nav1.7 single mutations can cause congenital indifference to pain or chronic neuropathic pain syndromes, including paroxysmal ones. This channel is co-expressed with Nav1.8, which sustains the initial action potential; Nav1.3 is an embrionary channel which is expressed in neurons after injury, as in neuropathic conditions. Few studies are focused on the expression of these molecules in human tissues having chronic pain. Trigeminal neuralgia (TN) is an idiopathic paroxysmal pain treated with sodium channel blockers. The aim of this study was to investigate the expression of Nav1.3, Nav1.7 and Nav1.8 by RT-PCR in patients with TN, compared to controls. The gingival tissue was removed from the correspondent trigeminal area affected. We found that Nav1.7 was downregulated in TN (P=0.017) and Nav1.3 was upregulated in these patients (P=0.043). We propose a physiopathological mechanism for these findings. Besides vascular compression of TN, this disease might be also a channelopathy. (C) 2009 IBRO. Published by Elsevier Ltd. All rights reserved.

Abnormal Neurovascular Control in Anabolic Androgenic Steroids Users

NUNES ALVES, M. J. N., M. R. DOS SANTOS, R. G. DIAS, C. A. AKIHO, M. C. LATERZA, M. U. P. B. RONDON, R. L. DE MORAES MOREAU, and C. E. NEGRAO. Abnormal Neurovascular Control in Anabolic Androgenic Steroids Users. Med. Sci. Sports Exerc., Vol. 42, No. 5, pp. 865-871, 2010. Purpose: Previous studies showed that anabolic androgenic steroids (AAS) increase vascular resistance and blood pressure (BP) in humans. In this study, we tested the hypotheses 1) that AAS users would have increased muscle sympathetic nerve activity (MSNA) and reduced forearm blood flow (FBF) compared with AAS nonusers and 2) that there would be an association between MSNA and 24-h BP. Methods: Twelve AAS users aged 31 +/- 2 yr (means +/- SE) and nine age-matched AAS nonusers aged 29 T 2 yr participated in the study. All individuals were involved in strength training for at least 2 yr. AAS was determined by urine test (chromatography-mass spectrometry). MSNA was directly measured by microneurography technique. FBF was measured by venous occlusion plethysmography. BP monitoring consisted of measures of BP for 24 h. Results: MSNA was significantly higher in AAS users than that in AAS nonusers (29 +/- 3 vs 20 +/- 1 bursts per minute, P = 0.01). FBF (1.92 +/- 0.17 vs 2.77 +/- 0.24 mL.min(-1).100 mL(-1), P = 0.01) and forearm vascular conductance (2.01 +/- 0.17 vs 2.86 +/- 0.31 U, P = 0.02) were significantly lower in AAS users than that in AAS nonusers. Systolic (131 +/- 4 vs 120 +/- 3 mm Hg, P = 0.001), diastolic (74 +/- 4 vs 68 +/- 3 mm Hg, P = 0.02), and mean BP (93 +/- 4 vs 86 +/- 3 mm Hg, P = 0.005) and heart rate (74 +/- 3 vs 68 +/- 3 bpm, P = 0.02) were significantly higher in AAS users when compared with AAS nonusers. Further analysis showed that there was a significant correlation between MSNA and 24-h mean BP (r = 0.75, P = 0.002). Conclusions: AAS increases MSNA and reduces muscle blood flow in young individuals. In addition, the increase in BP levels in AAS users is associated with augmented sympathetic outflow. These findings suggest that AAS increases the susceptibility for cardiovascular disease in humans.

Influence of HIV-1 coinfection on effective management of abnormal vaginal discharge

Background: Reports on microbiologic cure rates following syndromic management (SM) of women with nonulcerative sexually transmitted infections (STIs) are limited. Goal. The goal of the study was to determine the effectiveness of the drugs used in SM of nonulcerative STIs and bacterial vaginosis in women and to compare the response among those with and without HIV-1 coinfection. Study Design: This was a cohort study of women with nonulcerative STIs who were treated according to local SM protocols. Results: Of 692 women recruited, 415 (80%) returned 8 to 10 days later, and 290 (70%) consented to a second examination, in which specimens were obtained. Clinical cure was reported by 67%, and microbiologic cure ranged from 80% to 89% for the three discharge-causing STIs and was independent of HIV-1 status. Only 38% of those with bacterial vaginosis were cured, and HIV-1-infected women were less likely to be cured (28% versus 52%; P < 0.001). Conclusions: Clinical and microbiologic response to SM of the nonulcerative STIs was not affected by HIV-1 coinfection, but cure rates for bacterial vaginosis were reduced.

Immunohistochemical detection of polyductin and co-localization with liver progenitor cell markers during normal and abnormal development of the intrahepatic biliary system and in adult hepatobiliary carcinomas

The longest open reading frame of PKHD1 (polycystic kidney and hepatic disease 1), the autosomal recessive polycystic kidney disease (ARPKD) gene, encodes a single-pass, integral membrane protein named polyductin or fibrocystin. A fusion protein comprising its intracellular C-terminus, FP2, was previously used to raise a polyclonal antiserum shown to detect polyductin in several human tissues, including liver. In the current study, we aimed to investigate by immunohistochemistry the detailed polyductin localization pattern in normal (ductal plate [DP], remodelling ductal plate [RDP], remodelled bile ducts) and abnormal development of the primitive intrahepatic biliary system, known as ductal plate malformation (DPM). This work also included the characterization of polyductin expression profile in various histological forms of neonatal and infantile cholestasis, and in cholangiocellular carcinoma (CCC) and hepatocellular carcinoma (HCC). We detected polyductin expression in the intrahepatic biliary system during the DP and the RDP stages as well as in DPM. No specific staining was found at the stage of remodelled bile ducts. Polyductin was also detected in liver biopsies with neonatal cholestasis, including mainly biliary atresia and neonatal hepatitis with ductular reaction as well as congenital hepatic fibrosis. In addition, polyductin was present in CCC, whereas it was absent in HCC. Polyductin was also co-localized in some DP cells together with oval stem cell markers. These results represent the first systematic study of polyductin expression in human pathologies associated with abnormal development of intrahepatic biliary tree, and support the following conclusions: (i) polyductin expression mirrors developmental properties of the primitive intrahepatic biliary system; (ii) polyductin is re-expressed in pathological conditions associated with DPM and (iii) polyductin might be a potential marker to distinguish CCC from HCC.

Abnormal chronotropic reserve and heart rate recovery in patients with SLE: a case-control study

Abnormal heart-rate (HR) response during or after a graded exercise test has been recognized as a strong and an independent predictor of all-cause mortality in healthy and diseased subjects. The purpose of the present study was to evaluate the HR response during exercise in women with systemic lupus erythematosus (SLE). In this case-control study, 22 women with SLE (age 29.5 perpendicular to 1.1 years) were compared with 20 gender-, BMI-, and age-matched healthy subjects (age 26.5 +/- 1.4 years). A treadmill cardiorespiratory test was performed and HR response during exercise was evaluated by the chronotropic reserve (CR). HR recovery (Delta HRR) was defined as the difference between HR at peak exercise and at both first (Delta HRR1) and second (Delta HRR2) minutes after exercising. SLE patients presented lower peak VO(2) when compared with healthy subjects (27.6 perpendicular to 0.9 vs. 36.7 perpendicular to 1.1 ml/kg/min, p = 0.001, respectively). Additionally, SLE patients demonstrated lower CR (71.8 +/- 2.4 vs. 98.2 +/- 2.6%, p = 0.001), Delta HRR1 (22.1 +/- 2.5 vs. 32.4 +/- 2.2%, p = 0.004) and Delta HRR2 (39.1 +/- 2.9 vs. 50.8 +/- 2.5%, p = 0.001) than their healthy peers. In conclusion, SLE patients presented abnormal HR response to exercise, characterized by chronotropic incompetence and delayed Delta HRR. Lupus (2011) 20, 717-720.