Objectivity, Proximity and Adaptability in Corporate Governance

Countries appear to differ considerably in the basic orientations of their corporate governance structures. We postulate the trade-off between objectivity and proximity as fundamental to the corporate governance debate. We stress the value of objectivity that comes with distance (e.g. the market oriented U.S. system), and the value of better information that comes with proximity (e.g. the more intrusive Continental European model). Our key result is that the optimal distance between management and monitor (board or shareholders) has a bang-bang solution: either one should capitalize on the better information that comes with proximity or one should seek to benefit optimally from the objectivity that comes with distance. We argue that this result points at an important link between the optimal corporate governance arrangement and industry structure. In this context, we also discuss the ways in which investors have "contracted around" the flaws in their own corporate governance systems, pointing at the adaptability of different arrangements.http://deepblue.lib.umich.edu/bitstream/2027.42/39651/3/wp266.pd

Credit Ratings as Coordination Mechanisms

In this paper, we provide a novel rationale for credit ratings. The rationale that we propose is that credit ratings can serve as a coordinating mechanism in situations where multiple equilibria can obtain. We show that credit ratings provide a "focal point" for firms and their investors. We explore the vital, but previously overlooked implicit contractual relationship between a credit rating agency and a firm. Credit ratings can help fix the desired equilibrium and as such play an economically meaningful role. Our model provides several empirical predictions and insights regarding the expected price impact of ratings changes, the discreteness in funding cost changes, and the effect of the focus of organizations on the efficacy of credit ratings.http://deepblue.lib.umich.edu/bitstream/2027.42/39841/3/wp457.pd

Credit Ratings as Coordination Mechanisms

In this paper, we provide a novel rationale for credit ratings. The rationale that we propose is that credit ratings can serve as a coordinating mechanism in situations where multiple equilibria can obtain. We show that credit ratings provide a "focal point" for firms and their investors. We explore the vital, but previously overlooked implicit contractual relationship between a credit rating agency and a firm. Credit ratings can help fix the desired equilibrium and as such play an economically meaningful role. Our model provides several empirical predictions and insights regarding the expected price impact of ratings changes, the discreteness in funding cost changes, and the effect of the focus of organizations on the efficacy of credit ratings.coordination, credit ratings, multiple equilibria

Restructuring in the banking industry with implications for Europe

Set against the background of a rapidly consolidating financial sector, this paper explores the main forces that are driving this process. Acknowledging that the search for scale and scope economies is one of them, the paper emphasises that the empirical evidence in support of such economies is mixed, at best; while scale and scope economies exist, in principle, they are difficult to attain in practice. The paper considers strategic positioning in an uncertain and rapidly changing environment a more important factor: by expanding scope (and scale), financial institutions acquire options to venture into new activities. An implication of this strategic-option explanation is that consolidation, scope expansion in particular, will partially unravel as and when uncertainty declines and competition forces financial institutions to discover their true competitive advantages

'Trust is good, control is better': the 1974 Herstatt-Bank crisis and its implications for international regulatory reform

With its international supervisory and regulatory implications, the failure of Bankhaus Herstatt is one of the landmarks of post-war financial history. This article offers the first comprehensive historical account of the Herstatt crisis, and contributes to the wider discussions on international supervisory and regulatory reform since the mid-1970s, including regulatory capture, markets' self-regulation and resolution of failed banks. In doing so, it first argues that contrary to a widely held view, the German authorities received early and repeated warnings about Herstatt's dealings but this involved only limited and ineffective regulatory/supervisory responses, then it turns to the actual collapse of the bank in June 1974, and finally explores the wider regulatory issues raised by the Herstatt case

Collateral and Debt Maturity Choice. A Signaling Model

This paper derives optimal loan policies under asymmetric information where banks offer loan contracts of long and short duration, backed or unbacked with collateral. The main novelty of the paper is that it analyzes a setting in which high quality firms use collateral as a complementary device along with debt maturity to signal their superiority. The least-cost signaling equilibrium depends on the relative costs of the signaling devices, the difference in firm quality and the proportion of good firms in the market. Model simulations suggest a non-monotonic relationship between firm quality and debt maturity, in which high quality firms have both long-term secured debt and short-term secured or non-secured debt.

Superoxide dismutase downregulation in osteoarthritis progression and end-stage disease

Oxidative stress is proposed as an important factor in osteoarthritis (OA). To investigate the expression of the three superoxide dismutase (SOD) antioxidant enzymes in OA. SOD expression was determined by real-time PCR and immunohistochemistry using human femoral head cartilage. SOD2 expression in Dunkin–Hartley guinea pig knee articular cartilage was determined by immunohistochemistry. The DNA methylation status of the SOD2 promoter was determined using bisulphite sequencing. RNA interference was used to determine the consequence of SOD2 depletion on the levels of reactive oxygen species (ROS) using MitoSOX and collagenases, matrix metalloproteinase 1 (MMP-1) and MMP-13, gene expression. All three SOD were abundantly expressed in human cartilage but were markedly downregulated in end-stage OA cartilage, especially SOD2. In the Dunkin–Hartley guinea pig spontaneous OA model, SOD2 expression was decreased in the medial tibial condyle cartilage before, and after, the development of OA-like lesions. The SOD2 promoter had significant DNA methylation alterations in OA cartilage. Depletion of SOD2 in chondrocytes increased ROS but decreased collagenase expression. This is the first comprehensive expression profile of all SOD genes in cartilage and, importantly, using an animal model, it has been shown that a reduction in SOD2 is associated with the earliest stages of OA. A decrease in SOD2 was found to be associated with an increase in ROS but a reduction of collagenase gene expression, demonstrating the complexities of ROS function

Relativistic ponderomotive force, uphill acceleration, and transition to chaos

Starting from a covariant cycle-averaged Lagrangian the relativistic oscillation center equation of motion of a point charge is deduced and analytical formulae for the ponderomotive force in a travelling wave of arbitrary strength are presented. It is further shown that the ponderomotive forces for transverse and longitudinal waves are different; in the latter, uphill acceleration can occur. In a standing wave there exists a threshold intensity above which, owing to transition to chaos, the secular motion can no longer be described by a regular ponderomotive force. PACS number(s): 52.20.Dq,05.45.+b,52.35.Mw,52.60.+hComment: 8 pages, RevTeX, 3 figures in PostScript, see also http://www.physik.th-darmstadt.de/tqe

Magnetic resonance imaging-guided phase 1 trial of putaminal AADC gene therapy for Parkinson's disease.

ObjectiveTo understand the safety, putaminal coverage, and enzyme expression of adeno-associated viral vector serotype-2 encoding the complementary DNA for the enzyme, aromatic L-amino acid decarboxylase (VY-AADC01), delivered using novel intraoperative monitoring to optimize delivery.MethodsFifteen subjects (three cohorts of 5) with moderately advanced Parkinson's disease and medically refractory motor fluctuations received VY-AADC01 bilaterally coadministered with gadoteridol to the putamen using intraoperative magnetic resonance imaging (MRI) guidance to visualize the anatomic spread of the infusate and calculate coverage. Cohort 1 received 8.3 × 1011 vg/ml and ≤450 μl per putamen (total dose, ≤7.5 × 1011 vg); cohort 2 received the same concentration (8.3 × 1011 vg/ml) and ≤900 μl per putamen (total dose, ≤1.5 × 1012 vg); and cohort 3 received 2.6 × 1012 vg/ml and ≤900 μl per putamen (total dose, ≤4.7 × 1012 vg). (18)F-fluoro-L-dihydroxyphenylalanine positron emission tomography (PET) at baseline and 6 months postprocedure assessed enzyme activity; standard assessments measured clinical outcomes.ResultsMRI-guided administration of ascending VY-AADC01 doses resulted in putaminal coverage of 21% (cohort 1), 34% (cohort 2), and 42% (cohort 3). Cohorts 1, 2, and 3 showed corresponding increases in enzyme activity assessed by PET of 13%, 56%, and 79%, and reductions in antiparkinsonian medication of -15%, -33%, and -42%, respectively, at 6 months. At 12 months, there were dose-related improvements in clinical outcomes, including increases in patient-reported ON-time without troublesome dyskinesia (1.6, 3.3, and 1.5 hours, respectively) and quality of life.InterpretationNovel intraoperative monitoring of administration facilitated targeted delivery of VY-AADC01 in this phase 1 study, which was well tolerated. Increases in enzyme expression and clinical improvements were dose dependent. ClinicalTrials.gov Identifier: NCT01973543 Ann Neurol 2019;85:704-714

Adrenal suppression in patients taking inhaled glucocorticoids is highly prevalent and management can be guided by morning cortisol

Context Up to 3% of US and UK populations are prescribed glucocorticoids (GC). Suppression of the hypothalamo–pituitary–adrenal axis with the potential risk of adrenal crisis is a recognized complication of therapy. The 250 μg short Synacthen stimulation test (SST) is the most commonly used dynamic assessment to diagnose adrenal insufficiency. There are challenges to the use of the SST in routine clinical practice, including both the staff and time constraints and a significant recent increase in Synacthen cost. Methods We performed a retrospective analysis to determine the prevalence of adrenal suppression due to prescribed GCs and the utility of a morning serum cortisol for rapid assessment of adrenal reserve in the routine clinical setting. Results In total, 2773 patients underwent 3603 SSTs in a large secondary/tertiary centre between 2008 and 2013 and 17.9% (n=496) failed the SST. Of 404 patients taking oral, topical, intranasal or inhaled GC therapy for non-endocrine conditions, 33.2% (n=134) had a subnormal SST response. In patients taking inhaled GCs without additional GC therapy, 20.5% (34/166) failed an SST and suppression of adrenal function increased in a dose-dependent fashion. Using receiver operating characteristic curve analysis in patients currently taking inhaled GCs, a basal cortisol ≥348 nmol/l provided 100% specificity for passing the SST; a cortisol value <34 nmol/l had 100% sensitivity for SST failure. Using these cut-offs, 50% (n=83) of SSTs performed on patients prescribed inhaled GCs were unnecessary. Conclusion Adrenal suppression due to GC treatment, particularly inhaled GCs, is common. A basal serum cortisol concentration has utility in helping determine which patients should undergo dynamic assessment of adrenal function