'Family' ownership, tunnelling and earnings management:a review of the literature

In this review paper, we bring together a number of aspects of family firms that are ubiquitous in a number of institutional contexts, often as part of larger business groups. We pay particular attention to the mechanisms by which families retain control over firms, and the incentives of the families in control to expropriate other stakeholders by way of tunnelling. We examine the role of earnings management in facilitating tunnelling, and evidence about the incidence of earnings management in family firms. Our review suggests that while the literature on these aspects of family control is rich, the contexts in which the empirical exercises are undertaken are relatively few, and hence there is considerable opportunity to expand it to other contexts, in particular in the form of cross-country comparisons of the relative impact of agency conflicts and institutions on these issues.

Stochastically driven instability in rotating shear flows

Origin of hydrodynamic turbulence in rotating shear flows is investigated. The particular emphasis is on flows whose angular velocities decrease but specific angular momenta increase with increasing radial coordinate. Such flows are Rayleigh stable, but must be turbulent in order to explain observed data. Such a mismatch between the linear theory and observations/experiments is more severe when any hydromagnetic/magnetohydrodynamic instability and the corresponding turbulence therein is ruled out. The present work explores the effect of stochastic noise on such hydrodynamic flows. We focus on a small section of such a flow which is essentially a plane shear flow supplemented by the Coriolis effect. This also mimics a small section of an astrophysical accretion disk. It is found that such stochastically driven flows exhibit large temporal and spatial correlations of perturbation velocities, and hence large energy dissipations, that presumably generate instability. A range of angular velocity profiles (for the steady flow), starting with the constant angular momentum to that of the constant circular velocity are explored. It is shown that the growth and roughness exponents calculated from the contour (envelope) of the perturbed flows are all identical, revealing a unique universality class for the stochastically forced hydrodynamics of rotating shear flows. This work, to the best of our knowledge, is the first attempt to understand origin of instability and turbulence in the three-dimensional Rayleigh stable rotating shear flows by introducing additive stochastic noise to the underlying linearized governing equations. This has important implications in resolving the turbulence problem in astrophysical hydrodynamic flows such as accretion disks.

Risk and structural instability in US house prices

This paper employs a Component GARCH in Mean model to show that house prices across a number of major US cities between 1987 and 2009 have displayed asset market properties in terms of both risk-return relationships and asymmetric adjustment to shocks. In addition, tests for structural breaks in the mean and variance indicate structural instability across the data range. Multiple breaks are identified across all cities, particularly for the early 1990s and during the post-2007 financial crisis as housing has become an increasingly risky asset. Estimating the models over the individual sub-samples suggests that over the last 20 years the financial sector has increasingly failed to account for the levels of risk associated with real estate markets. This result has possible implications for the way in which financial institutions should be regulated in the future.

Earnings differences between Chinese and Indian wage earners, 1987-2004

This paper is one of the first comprehensive attempts to compare earnings in urban China and India over the recent period. While both economies have grown considerably, we illustrate significant cross-country differences in wage growth since the late 1980s. For this purpose, we make use of comparable datasets, estimate Mincer equations and perform Oaxaca–Blinder decompositions at the mean and at different points of the wage distribution. The initial wage differential in favor of Indian workers, observed in the middle and upper part of the distribution, partly disappears over time. While the 1980s Indian premium is mainly due to higher returns to education and experience, a combination of price and endowment effects explains why Chinese wages have caught up, especially since the mid-1990s. The price effect is only partly explained by the observed convergence in returns to education; the endowment effect is driven by faster increase in education levels in China and significantly accentuates the reversal of the wage gap in favor of this country for the first half of the wage distribution.

Does move to market have an impact on earnings gap across gender? Some evidence from India

We use Indian National Sample Survey employment–unemployment data for the urban sector for the years 1987 and 1999. Our results indicate that the gender wage gap had narrowed considerably between these two years, for all earnings deciles and for all education cohorts. The narrowing of the earnings gap can be attributed largely to a sharp increase in the returns to the labour market experience of women.

Loan loss provisions, earnings management and capital management under IFRS:the case of EU commercial banks

Prior research has shown that loan loss provisions are primarily used as a tool for earnings management and capital management by listed banks. Effective 2005 all listed companies in the European Union (EU) are required to comply with International Financial Reporting Standards (IFRS). Adherence to IFRS, it is claimed, should enhance transparency of reporting practices relative to local General Accepted Accounting Principles (GAAP). The overall objective of this paper is to examine the impact of the implementation of IFRS on the use of loan loss provisions (LLPs) to manage earnings and capital. We use a sample of 91 EU listed commercial banks covering a period of 10 years (before and after implementation of IFRS). Since early adopters may have different incentives and motivations relative to those who adopt mandatorily, we dichotomize our sample into early and late adopters. Overall, we find that earnings management (using loan loss provisions) for both early and late adopters while significant over the estimation window is significantly reduced after implementation of IFRS. We also find that, for risky banks, earnings management behavior is more pronounced when compared to the less risky banks, but is significantly reduced in the post IFRS period. Capital management behavior by bank managers is not significant in both pre and post IFRS regimes. Overall, we conclude that the implementation of IFRS in the EU appears to have improved earnings quality by mitigating the tendency of bank managers of listed commercial banks to engage in earnings management using loan loss provisions.

Dual-pump Raman amplification with increased flatness using modulation instability

he application of modulation instability-initiated nonlinear broadening of two CW pumps at different wavelengths, in order to achieve superior gain ripple performance in broadband Raman amplifiers, is demonstrated for the first time experimentally. A particular example using Truewave and LEAF fibers is offered, in which the 0.1 dB gain ripple band is extended from 5 nm to 19 nm. Experimental results are in a good agreement with numerical modeling. Guidelines for optimal broadening are discussed.

Dual-pump Raman amplification with increased flatness using modulation instability

The application of modulation instability-initiated nonlinear broadening of two CW pumps at different wavelengths, in order to achieve superior gain ripple performance in broadband Raman amplifiers, is demonstrated for the first time experimentally. A particular example using Truewave and LEAF fibers is offered, in which the 0.1 dB gain ripple band is extended from 5 nm to 19 nm. Experimental results are in a good agreement with numerical modeling. Guidelines for optimal broadening are discussed. © 2005 Optical Society of America.

Stochastically driven instability in rotating shear flows

Origin of hydrodynamic turbulence in rotating shear flows is investigated. The particular emphasis is on flows whose angular velocities decrease but specific angular momenta increase with increasing radial coordinate. Such flows are Rayleigh stable, but must be turbulent in order to explain observed data. Such a mismatch between the linear theory and observations/experiments is more severe when any hydromagnetic/magnetohydrodynamic instability and the corresponding turbulence therein is ruled out. The present work explores the effect of stochastic noise on such hydrodynamic flows. We focus on a small section of such a flow which is essentially a plane shear flow supplemented by the Coriolis effect. This also mimics a small section of an astrophysical accretion disk. It is found that such stochastically driven flows exhibit large temporal and spatial correlations of perturbation velocities, and hence large energy dissipations, that presumably generate instability. A range of angular velocity profiles (for the steady flow), starting with the constant angular momentum to that of the constant circular velocity are explored. It is shown that the growth and roughness exponents calculated from the contour (envelope) of the perturbed flows are all identical, revealing a unique universality class for the stochastically forced hydrodynamics of rotating shear flows. This work, to the best of our knowledge, is the first attempt to understand origin of instability and turbulence in the three-dimensional Rayleigh stable rotating shear flows by introducing additive stochastic noise to the underlying linearized governing equations. This has important implications in resolving the turbulence problem in astrophysical hydrodynamic flows such as accretion disks.

Power-controlled phase-matching and instability of CW propagation in multicore optical fibers with a central core

We present modulation instability analysis including azimuthal perturbations of steady-state continuous wave (CW) propagation in multicore-fiber configurations with a central core. In systems with a central core, a steady CW evolution regime requires power-controlled phase matching, which offers interesting spatial-division applications. Our results have general applicability and are relevant to a range of physical and engineering systems, including high-power fiber lasers, optical transmission in multicore fiber, and systems of coupled nonlinear waveguides. © 2013 Optical Society of America.

Design of a fiber scheme for nonlinear Raman pump broadening through modulation instability

In this work we explore numerically an experimentally the dependence of the broadened spectra on the choice of fibers and we analyze a series of basic rules to be taken into account when using nonlinear broadening to reduce the gain ripple of broadband Raman amplifiers

Dual-pump Raman amplification with enhanced flatness using modulation instability

In this work, we utilize modulation instability to the broadening of the two CW-pumps of a wideband Raman amplifier. Applying nonlinear fiber process, we demonstrate a feasibility of a certain control over the broadening process, leading to clear improvements in the flatness of the amplifier gain over its operational bandwidth.

The role of pinning and instability in a class of non-equilibrium growth models

We study the dynamics of a growing crystalline facet where the growth mechanism is controlled by the geometry of the local curvature. A continuum model, in (2+1) dimensions, is developed in analogy with the Kardar-Parisi-Zhang (KPZ) model is considered for the purpose. Following standard coarse graining procedures, it is shown that in the large time, long distance limit, the continuum model predicts a curvature independent KPZ phase, thereby suppressing all explicit effects of curvature and local pinning in the system, in the "perturbative" limit. A direct numerical integration of this growth equation, in 1+1 dimensions, supports this observation below a critical parametric range, above which generic instabilities, in the form of isolated pillared structures lead to deviations from standard scaling behaviour. Possibilities of controlling this instability by introducing statistically "irrelevant" (in the sense of renormalisation groups) higher ordered nonlinearities have also been discussed.