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In this study, we examine the effect of worldwide board reforms on the cost of debt financing. We document an increase of loan spread after a country initiates the reform. The increase is larger among firms that are more exposed to shareholder–debtholder conflicts. The results suggest that board reforms empower shareholders at the cost of debtholders. However, we also find that, while the reform component related to board independence leads to the increase in the cost of debt, the component related to audit committee independence helps decrease the cost.
Firms modify their payout policy in anticipation of future litigation costs. We examine a comprehensive sample of U.S. corporate lawsuits and find that firms facing significant litigation risk pay lower dividends, and in some cases omit dividends while distributing more cash through share repurchases. Litigation risk changes the distribution of payouts but not the total payout yield as the increase in share repurchases offsets the decrease in dividends. Cash-poor firms cut share repurchases when settlement costs are incurred. The results suggest that firms at a higher risk of litigation increase their payout flexibility.
We zero in on the expected returns of long-short portfolios based on 204 stock market anomalies by accounting for i) effective bid–ask spreads, ii) post-publication effects, and iii) the modern era of trading technology that began in the early 2000s. Net of these effects, the average anomaly’s expected return is a measly 4 bps per month. The strongest anomalies net, at best, 10 bps after controlling for data mining. Several methods for combining anomalies net around 20 bps. Expected returns are negligible despite cost mitigations that produce impressive net returns in-sample and the omission of additional trading costs, like price impact.
We study the importance of peer effects among sell-side analysts who work at the same brokerage house, but cover different firms. By mapping the information network within each brokerage, we identify analysts who occupy central positions in the network. Central analysts incorporate more information from their coworkers and produce better research. Using shocks to network structures around brokerage mergers, we identify the influence of peer effects and the importance of industry expertise on analysts’ performance. A portfolio strategy that exploits the forecast revisions of central analysts earns up to 24% per annum.
Socially responsible (SR) institutions tend to focus more on the environmental, social, and governance (ESG) performance and less on quantitative signals of value. Consistent with this difference in focus, we find that SR institutions react less to quantitative mispricing signals. Our evidence suggests that the increased focus on ESG may have influenced stock return patterns. Specifically, abnormal returns associated with these mispricing signals are greater for stocks held more by SR institutions. The link between SR ownership and the efficacy of mispricing signals only emerges in recent years with the rise of ESG investing, and is significant only when there are arbitrage-related funding constraints.
Do limitations on commissions paid to financial advisers reduce prices of financial products and stimulate investment? I examine these questions by estimating the causal effects of regulating commissions for mutual fund distribution. I exploit the unique institutional setting in Israel and the 2013 policy change when the government reduced commissions differently for different fund types. The reform led to a major decline in fund expense ratios and a consequent increase in fund flows. Funds with price-sensitive investors experienced 35% larger inflows. I interpret these results as investor responses to price competition fostered by a reduction in distribution costs.
Investigations illustrate that the Internet of Things (IoT) can save costs, increase efficiency, improve quality, and provide data-driven preventative maintenance services. Intelligent sensors, dependable connectivity, and complete integration are essential for gathering real-time information. IoT develops home appliances for improved customer satisfaction, personalization, and enhanced big data analytics as a crucial Industry 4.0 enabler. Because the product design process is an important part of controlling manufacturing, there are constant attempts to improve and minimize product design time. Utilizing a hybrid algorithm, this research provides a novel method to schedule design products in production management systems to optimize energy usage and design time (combined particle optimization algorithm and shuffled frog leaping algorithm). The issue with particle optimization algorithms is that they might become stuck in local optimization and take a long time to converge to global optimization. The strength of the combined frog leaping algorithm local searching has been exploited to solve these difficulties. The MATLAB programming tool is used to simulate the suggested technique. The simulation findings were examined from three perspectives: energy usage, manufacturing time, and product design time. According to the findings, the recommended strategy performed better in minimizing energy use and product design time. These findings also suggest that the proposed strategy has a higher degree of convergence when discovering optimal solutions.
Upon the revelation of corporate misconduct by firms in their portfolios, institutional investors experience a significant discount in the market value of their portfolios, excluding misconduct firms, creating a short-term spillover that averages $92.7 billion losses per year. We examine an expansive set of channels under which this spillover to nontarget firms can occur, and find that it reflects the loss of the embedded value of monitoring by a common institutional owner, enforcement wave activity, and industry peer and business relationships. Institutional investors also experience a significant abnormal outflow of funds in the year following the misconduct event.
One of the earliest studies that focused on functioning in the Caribbean people was recorded in Edith Clarke’s book first published in 1957. This study used direct and participant observations in multiple Jamaican communities. Although this and earlier studies did not use standard psychological testing, they were among some of the first efforts to use systematic methods to observe functioning in Caribbean people. Since the mid-twentieth century, multiple studies conducted in the region have used tests and measures designed by researchers of European heritage for people of similar backgrounds who reside primarily from North America and Europe. Equally important is that such assessment tools are used in clinical as well as industrial and organizational contexts. While these tools have provided important information on Caribbean people’s functioning, their lack of attention to reliability and validity concerns for the Caribbean populations have made their findings somewhat questionable. This chapter addresses the historical use of psychological assessment in practice and research throughout the Caribbean region. Although to a lesser extent, it also focuses on contemporary use of psychological assessment tools in the Caribbean context.
Spain and Portugal share the territory of the Iberian Peninsula at the southwestern end of the European continent. They are two countries with remarkable similarities but also with marked peculiarities of their own. They form two of the oldest states in Europe and both experienced a period of splendor and glory during the fifteenth to sixteenth centuries, as a result of the great maritime expeditions undertaken, and the vast territories first explored by European countries. Both Spain and Portugal suffered an extended period of decline from the eighteenth century onwards, from which they have only been able to recover in the second half of the twentieth century. This historical evolution has strongly conditioned, as it could not be otherwise, the development of economic and scientific activities in both countries, which logically also applies to the use of psychological assessment instruments. This chapter briefly describes the evolution of psychological assessment techniques in Spain and Portugal, following a chronological order, paying greater attention to the early days, which are generally less well known, and identifying the most outstanding milestones or those that have had the greatest impact in the scientific field and in professional practice.
This chapter sets out to provide a comparative perspective on seemingly incompatible global agendas and efforts to include all children in the general school system, thus reducing exclusion. With an examination of the international testing culture and the politics of inclusion currently permeating national school reforms, this chapter intends to raise a critical and constructive discussion of these movements, which appear to support one another, yet simultaneously offer profound contradictions. The chapter will include a brief history of psychological testing in Central Africa and identify types of psychological tests in use in Central Africa as well as the issues and problems that arise when making use of such psychological tests at both national and local levels. It will shed light on new possibilities for educational improvements in global and local contexts.
Relatively speaking, the history of psychological testing in North America is brief but dense. Given the similarities in language and culture of Canada and the United States, it is not surprising that many events in the history of psychological testing were shared by the two countries. Progress in academic and professional realms readily crosses the border, helping to sustain a stable and mutually beneficial relationship. This chapter begins by describing milestone events in the shared history of these two countries that marked turning points in the development of instruments and testing practices. Activities by European scholars laid the foundation for further developments in North America. These activities are reviewed first, followed by discussions of events concerning the North American history of intellectual assessment, personality testing, and psychological testing used in employment contexts. Next, major impacts of the history of psychological testing in North American are described to demonstrate how they have helped to shape psychological testing in the larger international sphere.
The United Kingdom is more properly called the United Kingdom of Great Britain and Northern Ireland, where Great Britain includes the nations of Scotland, England, and Wales. In this chapter we will see that the development of psychological assessment as a science in the United Kingdom and more widely proceeded in parallel with and in interaction with the development of psychometrics as a set of measurement tools, which in turn was used to support a world view at that time which saw psychological differences as relatively fixed attributes that were only primarily changeable through genetic changes. We also track the development of assessment methods which were influenced strongly by the two World Wars. The greatest changes and developments in testing and assessment in the United Kingdom took place in occupational job selection and training settings before they had an impact on practice in clinical and educational assessment. As a consequence, this chapter focuses on the history of occupational assessment rather than on developments in the clinical and educational fields.
The history of psychology in general and of assessment in particular in the Nordic countries is not very well covered in the relevant international literature. The few articles and books one can find are mostly written in the respective native languages of these countries. The information in this chapter is taken mainly from K.H. Teigen (2015), with other information also coming from a number of articles and additional sources as cited. This chapter covers the history of assessment and its development in the Nordic countries with emphasis on Norway, Sweden, and Denmark, with some reference to Finland.
Psychological assessment is deemed one of the most crucial parts of the science of psychology, particularly its clinical branch, and has helped enhance its credibility to a great extent. Although a considerable number of psychological assessment movements have originated in North America and Europe, limiting the developmental aspects of ongoing research on assessment trends and techniques to the aforementioned regions, and disregarding the role of other regions in the further development of this branch seems unjust and irrational. Moreover, the growing tendencies in adopting a reductionist approach in natural science and overlooking the importance of cultural aspects over the past decades have damaged the true nature of psychological assessment. The role played by culture and other contextual variables in psychological research has been duly emphasized, to such a degree that any clinical or psychological decision making without taking these factors into consideration is faced with skepticism. In this chapter, we will examine the historical trends in psychological assessment in Central Asia (Iran, Pakistan, Afghanistan, Tajikistan, Uzbekistan, Kazakhstan, Turkmenistan, and Kyrgyzstan) while discussing the scientific and research potential of its countries in expanding the field of psychological assessment.
China, Japan, and South Korea, as three representative countries in East Asia, all have their own historical and cultural traditions, but they are closely related. In particular, Chinese culture has a great influence on Japan and Korea. The history of psychological testing in East Asia can be traced back to the ancient Chinese talent selection system. For example, an important content of the system of selecting officials in ancient China, the imperial examinations not only penetrated the middle and late stages of Chinese feudal society but also had a particularly profound impact on the entire East Asian civilization. However, despite some similarities in culture, these three countries have maintained their own ways of living. In this chapter we discuss the histories of psychological assessment of the three countries.
The western part of Europe has played a pivotal role in the early development of modern testing starting with the work of scholars like Alfred Binet, William Stern, and Hugo Münsterberg in the early 1900s. However, most of the experts were driven out of the country by the Nazis and the Wehrmacht psychologists who largely replaced them favored non-psychometric methods. In the more recent history after World War II, there were several successful psychometric testing programs. While the Netherlands have embraced psychometric testing since the 1950s and widely apply it in education, testing and especially psychometric methods have traditionally been less frequently used to make important decisions in Germany, France, and Belgium. A recent trend is the increasing use of testing and assessment for quality control in education especially in the Netherlands and Germany. Another more recent trend is a shift of higher education to a global level which creates a new need to assess foreign applicants for Western European institutions. This chapter focuses on the development of modern testing in the Dutch, German, and French-speaking parts of Europe (France, The Netherlands, Belgium, Luxembourg, Germany, most parts of Switzerland, Austria, and the South Tirol region of Italy).