The struggle against creative accounting: Is "true and fair view" part of the problem or part of the solution?

Creative accounting is a growing issue of interest in Spain. In this article we argue that the concept true and fair view can limit or promote the use of creative accounting depending upon its interpretation. We review the range of meanings that true and fair view can take at an international level and compare the experience of the United Kingdom with the Australian one by analysing the use of true and fair view to limit creative accounting. Finally, we suggest lines of action to be considered by the Spanish accounting standards-setting institutions.

Adaptive model selection using empirical complexities

Given $n$ independent replicates of a jointly distributed pair $(X,Y)\in {\cal R}^d \times {\cal R}$, we wish to select from a fixed sequence of model classes ${\cal F}_1, {\cal F}_2, \ldots$ a deterministic prediction rule $f: {\cal R}^d \to {\cal R}$ whose risk is small. We investigate the possibility of empirically assessingthe {\em complexity} of each model class, that is, the actual difficulty of the estimation problem within each class. The estimated complexities are in turn used to define an adaptive model selection procedure, which is based on complexity penalized empirical risk.The available data are divided into two parts. The first is used to form an empirical cover of each model class, and the second is used to select a candidate rule from each cover based on empirical risk. The covering radii are determined empirically to optimize a tight upper bound on the estimation error. An estimate is chosen from the list of candidates in order to minimize the sum of class complexity and empirical risk. A distinguishing feature of the approach is that the complexity of each model class is assessed empirically, based on the size of its empirical cover.Finite sample performance bounds are established for the estimates, and these bounds are applied to several non-parametric estimation problems. The estimates are shown to achieve a favorable tradeoff between approximation and estimation error, and to perform as well as if the distribution-dependent complexities of the model classes were known beforehand. In addition, it is shown that the estimate can be consistent,and even possess near optimal rates of convergence, when each model class has an infinite VC or pseudo dimension.For regression estimation with squared loss we modify our estimate to achieve a faster rate of convergence.

Minimum price variations, time priority and quotes dynamics

We analyze the impact of a minimum price variation (tick) and timepriority on the dynamics of quotes and the trading costs when competitionfor the order flow is dynamic. We find that convergence to competitiveoutcomes can take time and that the speed of convergence is influencedby the tick size, the priority rule and the characteristics of the orderarrival process. We show also that a zero minimum price variation is neveroptimal when competition for the order flow is dynamic. We compare thetrading outcomes with and without time priority. Time priority is shownto guarantee that uncompetitive spreads cannot be sustained over time.However it can sometimes result in higher trading costs. Empiricalimplications are proposed. In particular, we relate the size of thetrading costs to the frequency of new offers and the dynamics of theinside spread to the state of the book.

Inventory-routing model, for a multi-period problem with stochastic and deterministic demand

The need for integration in the supply chain management leads us to considerthe coordination of two logistic planning functions: transportation andinventory. The coordination of these activities can be an extremely importantsource of competitive advantage in the supply chain management. The battle forcost reduction can pass through the equilibrium of transportation versusinventory managing costs. In this work, we study the specific case of aninventory-routing problem for a week planning period with different types ofdemand. A heuristic methodology, based on the Iterated Local Search, isproposed to solve the Multi-Period Inventory Routing Problem with stochasticand deterministic demand.

The donor problem

Donors often rely on local intermediaries to deliver benefits to target beneficiaries. Each selected recipient observes if the intermediary under-delivers to them, so they serve as natural monitors. However, they may withhold complaints when feeling unentitled or grateful to the intermediary for selecting them. Furthermore, the intermediary may distort selection (e.g. by picking richer recipients who feel less entitled) to reduce complaints. We design an experimental game representing the donor s problem. In one treatment, the intermediary selects recipients. In the other, selection is random - as by an uninformed donor. In our data, random selection dominates delegation of the selection task to the intermediary. Selection distortions are similar, but intermediaries embezzle more when they have selection power and (correctly) expect fewer complaints.

When in peril, retrench: Testing the portfolio channel of contagion

One plausible mechanism through which financial market shocks may propagate across countriesis through the impact that past gains and losses may have on investors risk aversion and behavior. This paper presents a stylized model illustrating how heterogeneous changes in investors risk aversion affect portfolio allocation decisions and stock prices. Our empirical findings suggest that when funds returns are below average, they adjust their holdings toward the average (or benchmark) portfolio. In so doing, funds tend to sell the assets of countries in which they were overweight , increasing their exposure to countries in which they were underweight. Based on this insight, the paper constructs an index of financial interdependence which reflects the extent to which countries share overexposed funds. The index helps in explain the pattern of stock market comovement across countries. Moreover, a comparison of this interdependence measure to indices of trade or commercial bank linkages indicates that our index can improve predictions about which countries are more likely to be affected by contagion from crisis centers.

Minimum distance estimation of stationary and non-stationary ARFIMA processes

A new parametric minimum distance time-domain estimator for ARFIMA processes is introduced in this paper. The proposed estimator minimizes the sum of squared correlations of residuals obtained after filtering a series through ARFIMA parameters. The estimator iseasy to compute and is consistent and asymptotically normally distributed for fractionallyintegrated (FI) processes with an integration order d strictly greater than -0.75. Therefore, it can be applied to both stationary and non-stationary processes. Deterministic components are also allowed in the DGP. Furthermore, as a by-product, the estimation procedure provides an immediate check on the adequacy of the specified model. This is so because the criterion function, when evaluated at the estimated values, coincides with the Box-Pierce goodness of fit statistic. Empirical applications and Monte-Carlo simulations supporting the analytical results and showing the good performance of the estimator in finite samples are also provided.

Amiloride-sensitive epithelial Na+ channel is made of three homologous subunits.

The amiloride-sensitive epithelial sodium channel constitutes the rate-limiting step for sodium reabsorption in epithelial cells that line the distal part of the renal tubule, the distal colon, the duct of several exocrine glands, and the lung. The activity of this channel is upregulated by vasopressin and aldosterone, hormones involved in the maintenance of sodium balance, blood volume and blood pressure. We have identified the primary structure of the alpha-subunit of the rat epithelial sodium channel by expression cloning in Xenopus laevis oocytes. An identical subunit has recently been reported. Here we identify two other subunits (beta and gamma) by functional complementation of the alpha-subunit of the rat epithelial Na+ channel. The ion-selective permeability, the gating properties and the pharmacological profile of the channel formed by coexpressing the three subunits in oocytes are similar to that of the native channel.

A simple optimised search heuristic for the job-shop scheduling problem

This paper presents a simple Optimised Search Heuristic for the Job Shop Scheduling problem that combines a GRASP heuristic with a branch-and-bound algorithm. The proposed method is compared with similar approaches and leads to better results in terms of solution quality and computing times.

Metaheuristics for the bus-driver scheduling problem

We present new metaheuristics for solving real crew scheduling problemsin a public transportation bus company. Since the crews of thesecompanies are drivers, we will designate the problem by the bus-driverscheduling problem. Crew scheduling problems are well known and severalmathematical programming based techniques have been proposed to solvethem, in particular using the set-covering formulation. However, inpractice, there exists the need for improvement in terms of computationalefficiency and capacity of solving large-scale instances. Moreover, thereal bus-driver scheduling problems that we consider can present variantaspects of the set covering, as for example a different objectivefunction, implying that alternative solutions methods have to bedeveloped. We propose metaheuristics based on the following approaches:GRASP (greedy randomized adaptive search procedure), tabu search andgenetic algorithms. These metaheuristics also present some innovationfeatures based on and genetic algorithms. These metaheuristics alsopresent some innovation features based on the structure of the crewscheduling problem, that guide the search efficiently and able them tofind good solutions. Some of these new features can also be applied inthe development of heuristics to other combinatorial optimizationproblems. A summary of computational results with real-data problems ispresented.

Liddle's syndrome caused by a novel missense mutation (P617L) of the epithelial sodium channel beta subunit.

OBJECTIVE: The aim of the study was to search for mutations of SCNN1B and SCNN1G in an Italian family with apparently dominant autosomal transmission of a clinical phenotype consistent with Liddle's syndrome. METHODS: Genetic analysis was performed in the proband, his relatives, and 100 control subjects. To determine the functional role of the mutation identified in the proband, we expressed the mutant or wild-type epithelial sodium channel in Xenopus laevis oocytes. RESULTS: A novel point mutation, causing an expected substitution of a leucine residue for the second proline residue of the conserved PY motif (PPP x Y) of the beta subunit was identified in the proband. The functional expression of the mutant epithelial sodium channel in X. laevis oocytes showed a three-fold increase in the amiloride-sensitive current as compared with that of the wild-type channel. CONCLUSION: This newly identified mutation adds to other missense mutations of the PY motif of the beta subunit of the epithelial sodium channel, thus confirming its crucial role in the regulation of the epithelial sodium channel. To our knowledge, this is the first report of Liddle's syndrome in the Italian population, confirmed by genetic and functional analysis, with the identification of a gain-of-function mutation not previously reported.

Adaptive dynamics and the implementation problem with complete information

This paper studies the equilibrating process of several implementationmechanisms using naive adaptive dynamics. We show that the dynamics convergeand are stable, for the canonical mechanism of implementation in Nash equilibrium.In this way we cast some doubt on the criticism of ``complexity'' commonlyused against this mechanism. For mechanisms that use more refined equilibrium concepts,the dynamics converge but are not stable. Some papers in the literatureon implementation with refined equilibrium concepts have claimed that themechanisms they propose are ``simple'' and implement ``everything'' (incontrast with the canonical mechanism). The fact that some of these ``simple''mechanisms have unstable equilibria suggests that these statements shouldbe interpreted with some caution.

On the concept of optimality interval

The approximants to regular continued fractions constitute `best approximations' to the numbers they converge to in two ways known as of the first and the second kind.This property of continued fractions provides a solution to Gosper's problem of the batting average: if the batting average of a baseball player is 0.334, what is the minimum number of times he has been at bat? In this paper, we tackle somehow the inverse question: given a rational number P/Q, what is the set of all numbers for which P/Q is a `best approximation' of one or the other kind? We prove that inboth cases these `Optimality Sets' are intervals and we give aprecise description of their endpoints.