Nonlinear saturation of ion-acoustic instability

It is proposed that the wave mediated indirect wave-particle interaction may be responsible for nonlinear saturation of current driven low frequency ion-acoustic turbulence. This process decreases the growth rate and increases the damping rate of the wave. Comparison has been made with some experiments.

Global lopsided instability in a purely stellar galactic disc

It is shown that pure exponential discs in spiral galaxies are capable of supporting slowly varying discrete global lopsided modes, which can explain the observed features of lopsidedness in the stellar discs. Using linearized fluid dynamical equations with the softened self-gravity and pressure of the perturbation as the collective effect, we derive self-consistently a quadratic eigenvalue equation for the lopsided perturbation in the galactic disc. On solving this, we find that the ground-state mode shows the observed characteristics of the lopsidedness in a galactic disc, namely the fractional Fourier amplitude A(1), increases smoothly with the radius. These lopsided patterns precess in the disc with a very slow pattern speed with no preferred sense of precession. We show that the lopsided modes in the stellar disc are long-lived because of a substantial reduction (approximately a factor of 10 compared to the local free precession rate) in the differential precession. The numerical solution of the equations shows that the groundstate lopsided modes are either very slowly precessing stationary normal mode oscillations of the disc or growing modes with a slow growth rate depending on the relative importance of the collective effect of the self-gravity. N-body simulations are performed to test the spontaneous growth of lopsidedness in a pure stellar disc. Both approaches are then compared and interpreted in terms of long-lived global m = 1 instabilities, with almost zero pattern speed.

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.

Surface instability of confined elastic bilayers: Theory and simulations

The surface of a soft elastic film becomes unstable and forms a self-organized undulating pattern because of adhesive interactions when it comes in contact proximity with a rigid surface. For a single film, the pattern length scale lambda, which is governed by the minimization of the elastic stored energy, gives lambda similar to 3h, where h is the film thickness. Based on a linear stability analysis and simulations of adhesion and debonding, we consider the contact instability of an elastic bilayer, which provides greater flexibility in the morphological control of interfacial instability. Unlike the case of a single film, the morphology of the contact instability patterns, debonding distance, and debonding force in a bilayer can be controlled in a nonlinear way by varying the thicknesses and shear moduli of the films. Interestingly, the pattern wavelength in a bilayer can be greatly increased or decreased compared to a single film when the adhesive contact is formed by the stiffer or the softer of the two films, respectively. In particular, lambda as small as 0.5h can be obtained. This indicates a new strategy for pattern miniaturization in elastic contact lithography.

Instability of Coupled Longitudinal and Transverse Electromagnetic Modes of Wave‐Propagation in Bounded Streaming Plasmas

The instability of coupled longitudinal and transverse electromagnetic modes associated with long wavelengths is studied in bounded streaming plasmas. The main conclusions are as follows: (i) For long waves for which O (k 2)=0, in the absence of relative streaming motion of electrons and ions and aωp/c<0.66, the whole spectrum of harmonic waves is excited due to finite temperature and boundary effects consisting of two subseries. One of these subseries can be identified with Tonks-Dattner resonance oscillations for the electrons, and arises primarily due to the electrons with frequencies greater than the electrostatic plasma frequency corresponding to the electron density in the midplane in the undisturbed state. The other series arises primarily due to ion motion. When aωp/c>0.66, in addition to the above spectrum of harmonic waves, the system admits an infinite number of growing and decaying waves. The instability associated with these modes is found to arise due to the interaction of the waves inside the plasma with the external electromagnetic field. (ii) For modes with comparatively shorter wavelengths for which O (k3)=0, the coupling due to finite temperature sets in, and it is found that the two series of harmonic waves obtained in (i) deriving energy from the transverse modes also become unstable. Thus, for these wavelengths the system admits three sets of growing and decaying modes, first two for all values of aωp/c and the third for (aωp/c) > 0.66. (iii) The presence of streaming velocities introduces various other coupling mechanisms, and we find that even for the wavelengths for which O (k2)=0, we get three sets of growing and decaying waves. The numerical values for the growth rates show that the streaming velocities enhance the growth rates of instability significantly.

Two-stream instability in plasma

The problem of two-stream instability in plasma is studied by specifying the importance of initial magnetic field associated with the motion of the charged particles and the boundary effects. In Part I the accurate initial steady state is studied when the streams of electrons and ions move with different uniform speeds in plasmas with plane and cylindrical geometry. In Part II, in order to show the effects of finiteness and inhomogeneity of the system, small transverse plasma oscillations are studied in the case of plane plasmas. The role of plasma-sheath oscillations at the boundaries is found to be very important in driving the instabilities associated with the electromagnetic modes. The numerical estimates of the growth rates of the instability are given for the specific case of the physical data in discharge tubes.

MECHANISMS AND EFFECTS OF MITOCHONDRIAL DNA INSTABILITY AND COPY NUMBER MANIPULATION

Defects in mitochondrial DNA (mtDNA) maintenance cause a range of human diseases, including autosomal dominant progressive external ophthalmoplegia (adPEO). This study aimed to clarify the molecular background of adPEO. We discovered that deoxynucleoside triphosphate (dNTP) metabolism plays a crucial in mtDNA maintenance and were thus prompted to search for therapeutic strategies based on the modulation of cellular dNTP pools or mtDNA copy number. Human mtDNA is a 16.6 kb circular molecule present in hundreds to thousands of copies per cell. mtDNA is compacted into nucleoprotein clusters called nucleoids. mtDNA maintenance diseases result from defects in nuclear encoded proteins that maintain the mtDNA. These syndromes typically afflict highly differentiated, post-mitotic tissues such as muscle and nerve, but virtually any organ can be affected. adPEO is a disease where mtDNA molecules with large-scale deletions accumulate in patients tissues, particularly in skeletal muscle. Mutations in five nuclear genes, encoding the proteins ANT1, Twinkle, POLG, POLG2 and OPA1, have previously been shown to cause adPEO. Here, we studied a large North American pedigree with adPEO, and identified a novel heterozygous mutation in the gene RRM2B, which encodes the p53R2 subunit of the enzyme ribonucleotide reductase (RNR). RNR is the rate-limiting enzyme in dNTP biosynthesis, and is required both for nuclear and mitochondrial DNA replication. The mutation results in the expression of a truncated form of p53R2, which is likely to compete with the wild-type allele. A change in enzyme function leads to defective mtDNA replication due to altered dNTP pools. Therefore, RRM2B is a novel adPEO disease gene. The importance of adequate dNTP pools and RNR function for mtDNA maintenance has been established in many organisms. In yeast, induction of RNR has previously been shown to increase mtDNA copy number, and to rescue the phenotype caused by mutations in the yeast mtDNA polymerase. To further study the role of RNR in mammalian mtDNA maintenance, we used mice that broadly overexpress the RNR subunits Rrm1, Rrm2 or p53R2. Active RNR is a heterotetramer consisting of two large subunits (Rrm1) and two small subunits (either Rrm2 or p53R2). We also created bitransgenic mice that overexpress Rrm1 together with either Rrm2 or p53R2. In contrast to the previous findings in yeast, bitransgenic RNR overexpression led to mtDNA depletion in mouse skeletal muscle, without mtDNA deletions or point mutations. The mtDNA depletion was associated with imbalanced dNTP pools. Furthermore, the mRNA expression levels of Rrm1 and p53R2 were found to correlate with mtDNA copy number in two independent mouse models, suggesting nuclear-mitochondrial cross talk with regard to mtDNA copy number. We conclude that tight regulation of RNR is needed to prevent harmful alterations in the dNTP pool balance, which can lead to disordered mtDNA maintenance. Increasing the copy number of wild-type mtDNA has been suggested as a strategy for treating PEO and other mitochondrial diseases. Only two proteins are known to cause a robust increase in mtDNA copy number when overexpressed in mice; the mitochondrial transcription factor A (TFAM), and the mitochondrial replicative helicase Twinkle. We studied the mechanisms by which Twinkle and TFAM elevate mtDNA levels, and showed that Twinkle specifically implements mtDNA synthesis. Furthermore, both Twinkle and TFAM were found to increase mtDNA content per nucleoid. Increased mtDNA content in mouse tissues correlated with an age-related accumulation of mtDNA deletions, depletion of mitochondrial transcripts, and progressive respiratory dysfunction. Simultaneous overexpression of Twinkle and TFAM led to a further increase in the mtDNA content of nucleoids, and aggravated the respiratory deficiency. These results suggested that high mtDNA levels have detrimental long-term effects in mice. These data have to be considered when developing and evaluating treatment strategies for elevating mtDNA copy number.

Instability of the self-similar flow into a cavity

In this paper we have investigated the instability of the self-similar flow behind the boundary of a collapsing cavity. The similarity solutions for the flow into a cavity in a fluid obeying a gas law p = Kργ, K = constant and 7 ≥ γ > 1 has been solved by Hunter, who finds that for the same value of γ there are two self-similar flows, one with accelerating cavity boundary and other with constant velocity cavity boundary. We find here that the first of these two flows is unstable. We arrive at this result only by studying the propagation of disturbances in the neighbourhood of the singular point.

The effect of viscosity and surface tension on the Taylor instability of the surface of a cavitation bubble*

This paper is devoted to a consideration of the following problem: A spherical mass of fluid of density varrho1, viscosity μ1 and external radius R is surrounded by a fluid of density varrho2 and viscosity μ2.The fluids are immiscible and incompressible. The interface is accelerated radially by g1: to study the effect of viscosity and surface tension on the stability of the interface. By analyzing the problem in spherical harmonics the mathematical problem is reduced to one of solution of the characteristic determinant equation. The particular case of a cavity bubble, where the viscosity μ1 of the fluid inside the bubble is negligible in comparison with the viscosity μ2 of the fluid outside the bubble, is considered in some detail. It is shown that viscosity has a stabilizing role on the interface; and when g1 > T(n − 1) (n + 2)/R2(varrho2 − varrho1) the stabilizing role of both viscosity and surface tension is more pronounced than would result when either of them is taken individually.

Localised instability in unsteady separation bubbles

We propose in experimental method to study the instability of thin unsteady separation bubbles, i.e. of unsteady boundary layers with reverse flow. The unsteady boundary layer is created by controlled temporal and spatial variations of the velocity external to the boundary layer. We present results of the evolution of instability in different temporally varying flows in a shallow angle diffuser. Depending on the extent of reverse flow in the boundary we observe that instability can be spatially localised.

Detecting Earnings Management Using Neural Networks

Detecting Earnings Management Using Neural Networks. Trying to balance between relevant and reliable accounting data, generally accepted accounting principles (GAAP) allow, to some extent, the company management to use their judgment and to make subjective assessments when preparing financial statements. The opportunistic use of the discretion in financial reporting is called earnings management. There have been a considerable number of suggestions of methods for detecting accrual based earnings management. A majority of these methods are based on linear regression. The problem with using linear regression is that a linear relationship between the dependent variable and the independent variables must be assumed. However, previous research has shown that the relationship between accruals and some of the explanatory variables, such as company performance, is non-linear. An alternative to linear regression, which can handle non-linear relationships, is neural networks. The type of neural network used in this study is the feed-forward back-propagation neural network. Three neural network-based models are compared with four commonly used linear regression-based earnings management detection models. All seven models are based on the earnings management detection model presented by Jones (1991). The performance of the models is assessed in three steps. First, a random data set of companies is used. Second, the discretionary accruals from the random data set are ranked according to six different variables. The discretionary accruals in the highest and lowest quartiles for these six variables are then compared. Third, a data set containing simulated earnings management is used. Both expense and revenue manipulation ranging between -5% and 5% of lagged total assets is simulated. Furthermore, two neural network-based models and two linear regression-based models are used with a data set containing financial statement data from 110 failed companies. Overall, the results show that the linear regression-based models, except for the model using a piecewise linear approach, produce biased estimates of discretionary accruals. The neural network-based model with the original Jones model variables and the neural network-based model augmented with ROA as an independent variable, however, perform well in all three steps. Especially in the second step, where the highest and lowest quartiles of ranked discretionary accruals are examined, the neural network-based model augmented with ROA as an independent variable outperforms the other models.

Essays on Earnings Management (summary section only)

There is much literature developing theories when and where earnings management occurs. Among the several possible motives driving earnings management behaviour in firms, this thesis focuses on motives that aim to influence the valuation of the firm. Earnings management that makes the firm look better than it really is may result in disappointment for the single investor and potentially leads to a welfare loss in society when the resource allocation is distorted. A more specific knowledge of the occurrence of earnings management supposedly increases the awareness of the investor and thus leads to better investments and increased welfare. This thesis contributes to the literature by increasing the knowledge as to where and when earnings management is likely to occur. More specifically, essay 1 adds to existing research connecting earnings management to IPOs and increases the knowledge in arguing that the tendency to manage earnings differs between the IPOs. Evidence is found that entrepreneur owned IPOs are more likely to be earnings managers than the institutionally owned ones. Essay 2 considers the reliability of quarterly earnings reports that precedes insider selling binges. The essay contributes by suggesting that earnings management is likely to occur before high insider selling. Essay 3 examines the widely studied phenomenon of income smoothing and investigates if income smoothing can be explained with proxies for information asymmetry. The essay argues that smoothing is more pervasive in private and smaller firms.

Essays on Corporate Governance and the Quality of Disclosed Earnings: Across Transitional Europe

A growing body of empirical research examines the structure and effectiveness of corporate governance systems around the world. An important insight from this literature is that corporate governance mechanisms address the excessive use of managerial discretionary powers to get private benefits by expropriating the value of shareholders. One possible way of expropriation is to reduce the quality of disclosed earnings by manipulating the financial statements. This lower quality of earnings should then be reflected by the stock price of firm according to value relevance theorem. Hence, instead of testing the direct effect of corporate governance on the firm’s market value, it is important to understand the causes of the lower quality of accounting earnings. This thesis contributes to the literature by increasing knowledge about the extent of the earnings management – measured as the extent of discretionary accruals in total disclosed earnings - and its determinants across the Transitional European countries. The thesis comprises of three essays of empirical analysis of which first two utilize the data of Russian listed firms whereas the third essay uses data from 10 European economies. More specifically, the first essay adds to existing research connecting earnings management to corporate governance. It testifies the impact of the Russian corporate governance reforms of 2002 on the quality of disclosed earnings in all publicly listed firms. This essay provides empirical evidence of the fact that the desired impact of reforms is not fully substantiated in Russia without proper enforcement. Instead, firm-level factors such as long-term capital investments and compliance with International financial reporting standards (IFRS) determine the quality of the earnings. The result presented in the essay support the notion proposed by Leuz et al. (2003) that the reforms aimed to bring transparency do not correspond to desired results in economies where investor protection is lower and legal enforcement is weak. The second essay focuses on the relationship between the internal-control mechanism such as the types and levels of ownership and the quality of disclosed earnings in Russia. The empirical analysis shows that the controlling shareholders in Russia use their powers to manipulate the reported performance in order to get private benefits of control. Comparatively, firms owned by the State have significantly better quality of disclosed earnings than other controllers such as oligarchs and foreign corporations. Interestingly, market performance of firms controlled by either State or oligarchs is better than widely held firms. The third essay provides useful evidence on the fact that both ownership structures and economic characteristics are important factors in determining the quality of disclosed earnings in three groups of countries in Europe. Evidence suggests that ownership structure is a more important determinant in developed and transparent countries, while economic determinants are important determinants in developing and transitional countries.

Monetary Policy, Stock Price Misalignments and Macroeconomic Instability

Perhaps the most fundamental prediction of financial theory is that the expected returns on financial assets are determined by the amount of risk contained in their payoffs. Assets with a riskier payoff pattern should provide higher expected returns than assets that are otherwise similar but provide payoffs that contain less risk. Financial theory also predicts that not all types of risks should be compensated with higher expected returns. It is well-known that the asset-specific risk can be diversified away, whereas the systematic component of risk that affects all assets remains even in large portfolios. Thus, the asset-specific risk that the investor can easily get rid of by diversification should not lead to higher expected returns, and only the shared movement of individual asset returns – the sensitivity of these assets to a set of systematic risk factors – should matter for asset pricing. It is within this framework that this thesis is situated. The first essay proposes a new systematic risk factor, hypothesized to be correlated with changes in investor risk aversion, which manages to explain a large fraction of the return variation in the cross-section of stock returns. The second and third essays investigate the pricing of asset-specific risk, uncorrelated with commonly used risk factors, in the cross-section of stock returns. The three essays mentioned above use stock market data from the U.S. The fourth essay presents a new total return stock market index for the Finnish stock market beginning from the opening of the Helsinki Stock Exchange in 1912 and ending in 1969 when other total return indices become available. Because a total return stock market index for the period prior to 1970 has not been available before, academics and stock market participants have not known the historical return that stock market investors in Finland could have achieved on their investments. The new stock market index presented in essay 4 makes it possible, for the first time, to calculate the historical average return on the Finnish stock market and to conduct further studies that require long time-series of data.