Common institutional investors and the quality of management earnings forecasts-Empirical and machine learning evidences

Based on the data of the Chinese A-share listed firms in China Shanghai and Shenzhen Stock Exchange from 2014 to 2021, this article explores the relationship between common institutional investors and the quality of management earnings forecasts. The study used the multiple linear regression model and empirically found that common institutional investors positively impact the precision of earnings forecasts. This article also uses graph neural networks to predict the precision of earnings forecasts. Our findings have shown that common institutional investors form external supervision over restricting management to release a wide width of earnings forecasts, which helps to improve the risk warning function of earnings forecasts and promote the sustainable development of information disclosure from management in the Chinese capital market. One of the marginal contributions of this paper is that it enriches the literature related to the economic consequences of common institutional shareholding. Then, the neural network method used to predict the quality of management forecasts enhances the research method of institutional investors and the behavior of management earnings forecasts. Thirdly, this paper calls for strengthening information sharing and circulation among institutional investors to reduce information asymmetry between investors and management.

Absence of ultimate controller and investment efficiency: Evidence from China

In modern enterprises with a separation of powers, the ultimate controller can effectively influence the implementation of corporate strategy and operational management efficiency, as well as improve corporate governance by monitoring and limiting the management entrenchment effect within enterprises. Based on the information pertaining to ultimate controllers disclosed by enterprises in their annual reports, this study empirically tested whether the absence of the ultimate controller impacts investment efficiency using the data of Chinese A-share listed companies from 2007 to 2020. It was found that the investment efficiency of enterprises without ultimate controllers is relatively lower than those with ultimate controllers. This is reflected in the insufficient investment of enterprises without an ultimate controller. Moreover, the effect is more significant when the financial environment, internal governance environment, and external governance environment of firms are worse. The mechanism analysis demonstrated that the absence of an ultimate controller causes a more severe insider agency problem and a significantly higher degree of financing constraints, which leads to underinvestment and reduces investment efficiency of firms. The economic consequence test also found that the inefficient investment caused by the absence of ultimate controllers would damage the future value of enterprises, but would increase managers' compensation. Overall, this study suggests that ultimate controllers are an important part of a firm's internal governance, especially for monitoring management behavior and resolving agency conflicts.

Sharing Knowledge to an Entrant for Production Investment Confronting COVID-19: Incentive Alignment and Lose-Lose Dilemma

Facing the urgent demand of medical devices for COVID-19 treatment, many automakers have recently begun manufacturing ventilators, even though they are inefficient in production and uninformed of demand variability. To help them, some incumbent ventilator manufacturers have chosen to share knowledge, such as production techniques and demand information. Clearly, the incumbent ventilator manufacturers are fulfilling social responsibility, but is their knowledge sharing rewarding, especially when the automakers are entrant rivals? If possible, are win-win situations in the sense of social responsibility and firms' profitability identifiable? In this work, we develop a game-theoretic model in which an incumbent and an entrant ventilator manufacturer engage in two-dimensional competition in production investment and sales volume. We examine the incumbent manufacturer's profitability with and without knowledge sharing by formulating the tradeoffs among supply expansion, intensified competition, and the entrant's production efficiency improvement and demand variance reduction. We identify both "win-win" and "lose-lose" situations for the two competing manufacturers. Specifically, we find that free knowledge could be harmful for the entrant manufacturer, but the incumbent manufacturer benefits from knowledge sharing when market competition is intense, or when market competition is mild but the production investment efficiency varies.

Can the dual-rating regulation improve the rating quality of Chinese corporate bonds?

We developed a dual-reputational rating shopping model to introduce public and institutional reputations. Investor's and regulator's penalty rates are described as public and institutional reputations, respectively. We achieved the available conditions of single-rating and dual-rating regulations to prevent rating inflation in this model. To examine the regulatory effects of different types of regulations on Chinese corporate bond ratings, we utilize panel ordered logit models. Theoretical analysis and empirical tests show that, when the reputation effect is low, the single-rating regulation is better at improving rating quality, and when the reputation effect is high, the dual-rating regulation induces rating agencies to provide more accurate ratings. Compared to the regulatory effects of the single-rating and the multi-rating regulations, the dual-rating regulation most effectively improves the rating quality of corporate bonds and prevents rating inflation.

The influence of non-family members in top management teams on research and development investment: Evidence from Chinese family firms

The diversified management ability of the non-family members in the top management teams (TMTs) can significantly increase the research and development (R&D) investment of the family firms. However, existing studies focus on family characteristics. To bridge the gap, this study explored the R&D investment propensity for family firms from the perspective of non-family members’ participation in TMTs. Based on the upper echelons and the socioemotional wealth theory, this paper incorporated the non-economic goals that influence strategic decisions on family firms into the analytical framework. According to the questionnaire data of Chinese private enterprises, the Tobit regression model was used to analyze the influence of family members on R&D investment decisions under non-economic goal orientations. The results indicated that the preference for control and influence among family members weakens the positive effect of non-family managers on R&D investment, while the preferences for status perception and social responsibility strengthen the positive effect.

Does the principle of investment diversification apply to the starting pitching staffs of major league baseball teams?

Financial advisors often emphasize asset diversification as a means of limiting losses from investments that perform unexpectedly poorly over a particular time period. One might expect that this perceived wisdom could apply in another high stakes arena–professional baseball–where player salaries comprise a substantial portion of a team’s operational costs, year-to-year player performance is highly variable, and injuries can occur at any time. These attributes are particularly true in the case of the starting pitching staffs of professional baseball teams. Accordingly, this study analyzes starting pitcher performance and financial data from all Major League Baseball teams for the period 1985–2016 to determine whether the standard investment advice is applicable in this context, understanding that the time horizon for success for an investor and a baseball team may be distinct. A multiple logistic regression model of playoff qualification probability, based on realized pitcher performance, measures of luck, and starting pitcher staff salary diversification is used to address this question. A further stratification is conducted to determine whether there are differences in strategy for teams with allocated financial resources that are above or below league average. We find that teams with above average resources increase their post-season qualification probability by focusing their salary funds on a relative few starting pitchers rather than diversifying that investment across the staff. Second, we find that pitcher performance must align with that investment in order for the team to have a high qualification probability. Third, the influence of luck is not negligible, but those teams that allocate more overall funds to their pitching are more resilient to bad luck. Thus, poorly resourced teams, who are generally unable to bid for pitchers at the highest salary levels, must adopt alternative strategies to maintain their competitiveness.

A Scoping Review of Investment Cases for Vaccines and Immunization Programs

BACKGROUND

Many investment cases have recently been published intending to show the value of new health investments, but without consistent methodological approaches.

OBJECTIVES

To conduct a scoping review of existing investment cases (using vaccines and immunization programs as an example), identify common characteristics that define these investment cases, and examine their role within the broader context of the vaccine development and introduction.

METHODS

A systematic search was conducted from January 1980 to November 2017 to identify investment cases in the area of vaccines and immunization programs from gray literature and electronic bibliographic databases. Investment case outcomes, objectives, key variables, target audiences, and funding sources were extracted and analyzed according to their reporting frequency.

RESULTS

We found 24 investment cases, and most of them aim to provide information for decisions (12 cases) or advocate for a specific agenda (9 cases). Outcomes presented fell into 4 broad categories-burden of disease, cost of investment, impact of investment, and other considerations for implementation. Number of deaths averted (70%), incremental cost-effectiveness ratios (67%), and reduction in health and socioeconomic inequalities (54%) were the most frequently reported outcome measures for impact of investment. Health system capacity (79%) and vaccine financing landscape (75%) were the most common considerations for implementation. A sizable proportion (41.4%) of investment cases did not reveal their funding sources.

CONCLUSIONS

This review describes information that is critical to decision making about resource mobilization and allocation concerning vaccines. Global efforts to harmonize investment cases more broadly will increase transparency and comparability.

Towards deep inclusion for equity-oriented health research priority-setting: A working model

Growing consensus that health research funders should align their investments with national research priorities presupposes that such national priorities exist and are just. Arguably, justice requires national health research priority-setting to promote health equity. Such a position is consistent with recommendations made by the World Health Organization and at global ministerial summits that health research should serve to reduce health inequalities between and within countries. Thus far, no specific requirements for equity-oriented research priority-setting have been described to guide policymakers. As a step towards the explication and defence of such requirements, we propose that deep inclusion is a key procedural component of equity-oriented research priority-setting. We offer a model of deep inclusion that was developed by applying concepts from work on deliberative democracy and development ethics. This model consists of three dimensions--breadth, qualitative equality, and high-quality non-elite participation. Deep inclusion is captured not only by who is invited to join a decision-making process but also by how they are involved and by when non-elite stakeholders are involved. To clarify and illustrate the proposed dimensions, we use the sustained example of health systems research. We conclude by reviewing practical challenges to achieving deep inclusion. Despite the existence of barriers to implementation, our model can help policymakers and other stakeholders design more inclusive national health research priority-setting processes and assess these processes' depth of inclusion.

How to Open the Door to the Roth 401(k) Savings Opportunity

For many employees, Roth 401(k) contributions are a smart move toward strengthening retirement readiness, yet they remain markedly underused. Employers should consider providing the option, educating employees on its value and providing a good modeling tool to help plan participants make the Roth decision. Doing so could both increase overall 401(k) participation and lead employees to save more for retirement--which would help the enterprise meet organizational goals by maintaining high employee engagement and productivity levels and reducing talent-related risk.

Helping DC Plan Participants Hedge Longevity Risk

To help retirees turn savings into a steady, permanent income stream they won't outlive, the U.S. Treasury Department has made it easier for defined contribution plans to offer qualifying longevity annuity contracts (QLACs). This article explains the features of QLACs and why both employees and employers are finding this type of insurance an attractive option, as it protects people against their greatest risk in retirement--longevity. The author provides five steps a plan sponsor needs to take to add a QLAC.

Evaluating the Investment Potential of HSAs in Benefit Programs

Despite its complexities, the health savings account (HSA) is a powerful and growing element of the U.S. financial landscape. In the future, employers will likely be expected to provide tax-advantaged savings programs for employees' current and future medical expenses. This article discusses investment lineup issues that must be addressed in order to optimize HSAs to help participants achieve successful outcomes. Plan sponsors at the forefront of addressing these issues (and perhaps others) will be in a better position to help their employees maximize both the health benefits and the wealth benefits provided for a secure retirement.

Empowering Physicians with Financial Literacy

Most doctors complete their medical training without sufficient knowledge of business and finance. This leads to inefficient financial decisions, avoidable losses, and unnecessary anxiety. A big part of the problem is that the existing options for gaining financial knowledge are flawed. The ideal solution is to provide a simple framework of financial literacy to all students: one that can be adapted to their specific circumstances. That framework must be delivered by an objective expert to young physicians before they complete medical training.

Cheap and nasty? The potential perils of using management costs to identify global conservation priorities

The financial cost of biodiversity conservation varies widely around the world and such costs should be considered when identifying countries to best focus conservation investments. Previous global prioritizations have been based on global models for protected area management costs, but this metric may be related to other factors that negatively influence the effectiveness and social impacts of conservation. Here we investigate such relationships and first show that countries with low predicted costs are less politically stable. Local support and capacity can mitigate the impacts of such instability, but we also found that these countries have less civil society involvement in conservation. Therefore, externally funded projects in these countries must rely on government agencies for implementation. This can be problematic, as our analyses show that governments in countries with low predicted costs score poorly on indices of corruption, bureaucratic quality and human rights. Taken together, our results demonstrate that using national-level estimates for protected area management costs to set global conservation priorities is simplistic, as projects in apparently low-cost countries are less likely to succeed and more likely to have negative impacts on people. We identify the need for an improved approach to develop global conservation cost metrics that better capture the true costs of avoiding or overcoming such problems. Critically, conservation scientists must engage with practitioners to better understand and implement context-specific solutions. This approach assumes that measures of conservation costs, like measures of conservation value, are organization specific, and would bring a much-needed focus on reducing the negative impacts of conservation to develop projects that benefit people and biodiversity.

The economics of eHealth and mHealth

While mHealth has the potential to overcome traditional obstacles to the delivery of health services to the poor in lower and middle-income countries--issues related to access, quality, time, and resources--there is little evidence as to whether the expected benefits and savings can be actualized on a large scale. As a first step to developing the investment case for mHealth, this article outlines some of the key economic and financial questions that need to be answered in developing in-country eHealth investments. The proposed questions focus on the costs of eHealth infrastructure; regulatory structures that provide incentives at different levels of the health delivery system to encourage investment in, and use of, eHealth; and measuring the outcomes of successful eHealth utilization, including anticipated return on investment.

401(k) plan asset allocation, account balances, and loan activity in 2010

THE BULK OF 401(K) ASSETS CONTINUED TO BE INVESTED IN STOCKS: On average, at year-end 2010, 62 percent of 401(k) participants' assets were invested in equity securities through equity funds, the equity portion of balanced funds, and company stock. Thirty-three percent were in fixed-income securities such as stable value investments and bond and money funds. SEVENTY PERCENT OF 401(K) PLANS INCLUDED TARGET-DATE FUNDS IN THEIR INVESTMENT LINEUP AT YEAR-END 2010: At year-end 2010, 11 percent of the assets in the EBRI/ICI 401(k) database were invested in target-date funds and 36 percent of 401(k) participants held target-date funds. Also known as lifecycle funds, they are designed to offer a diversified portfolio that automatically rebalances to be more focused on income over time. MORE NEW OR RECENT HIRES INVESTED THEIR 401(K) ASSETS IN BALANCED FUNDS, INCLUDING TARGET-DATE FUNDS: For example, at year-end 2010, 44 percent of the account balances of recently hired participants in their 20s were invested in balanced funds, compared with 42 percent in 2009, and about 7 percent in 1998. A significant subset of that balanced fund category is target-date funds. At year-end 2010, 35 percent of the account balances of recently hired participants in their 20s were invested in target-date funds, compared with 31 percent at year-end 2009. 401(K) PARTICIPANTS CONTINUED TO SEEK DIVERSIFICATION OF THEIR INVESTMENTS: The share of 401(k) accounts invested in company stock continued to shrink, falling by more than a percentage point (to 8 percent) in 2010, continuing a steady decline that started in 1999. Recently hired 401(k) participants contributed to this trend: They tended to be less likely to hold employer stock. PARTICIPANTS' 401(K) LOAN BALANCES DECLINED SLIGHTLY IN 2010: In 2010, 21 percent of all 401(k) participants who were eligible for loans had loans outstanding against their 401(k) accounts, unchanged from year-end 2009, and up from 18 percent at year-end 2008. Loans outstanding amounted to 14 percent of the remaining account balance, on average, at year-end 2010, compared with 15 percent at year-end 2009. Loan amounts outstanding declined slightly from those in the past few years. THE YEAR-END 2010 AVERAGE ACCOUNT BALANCE IN THE DATABASE WAS 3.4 PERCENT HIGHER THAN THE YEAR BEFORE, BUT MAY NOT ACCURATELY REFLECT THE EXPERIENCE OF TYPICAL 401(K) PARTICIPANTS IN 2010: To understand changes in 401(k) participants' average account balances, it is important to analyze a sample of consistent participants. As with previous EBRI/ICI updates, analysis of a sample of consistent 401(k) participants (those that have been in the same plan since 2003) is expected to be published in 2012.

The US stock market leads the federal funds rate and treasury bond yields

Using a recently introduced method to quantify the time-varying lead-lag dependencies between pairs of economic time series (the thermal optimal path method), we test two fundamental tenets of the theory of fixed income: (i) the stock market variations and the yield changes should be anti-correlated; (ii) the change in central bank rates, as a proxy of the monetary policy of the central bank, should be a predictor of the future stock market direction. Using both monthly and weekly data, we found very similar lead-lag dependence between the S&P 500 stock market index and the yields of bonds inside two groups: bond yields of short-term maturities (Federal funds rate (FFR), 3M, 6M, 1Y, 2Y, and 3Y) and bond yields of long-term maturities (5Y, 7Y, 10Y, and 20Y). In all cases, we observe the opposite of (i) and (ii). First, the stock market and yields move in the same direction. Second, the stock market leads the yields, including especially the FFR. Moreover, we find that the short-term yields in the first group lead the long-term yields in the second group before the financial crisis that started in mid-2007 and the inverse relationship holds afterwards. These results suggest that the Federal Reserve is increasingly mindful of the stock market behavior, seen as key to the recovery and health of the economy. Long-term investors seem also to have been more reactive and mindful of the signals provided by the financial stock markets than the Federal Reserve itself after the start of the financial crisis. The lead of the S&P 500 stock market index over the bond yields of all maturities is confirmed by the traditional lagged cross-correlation analysis.

An examination of contemporary financing practices and the global financial crisis on nonprofit multi-hospital health systems

This study examines the impact of the 2008 global financial crisis on large US nonprofit health systems. We proceed from an analysis of the contemporary capital financing practices of 25 of the nation's largest nonprofit hospitals and health systems. We find that these institutions relied on operating cash flows, public issues of insured variable rate debt, and accumulated investment to meet their capital financing needs. The combined use of these three financial instruments provided these organizations with $22.4 billion of long-term capital at favorable terms and the lowest interest rates. Our analysis further indicates that the extensive utilization of bond insurance, auction rate debt, and interest rate derivatives created significant risk exposures for these health systems. These risks were realized by the broader global financial crisis of 2008. Findings indicate these health systems incurred large losses from the early retirement of their variable rate debt. In addition, many organizations were forced to post nearly $1 billion of liquid collateral due to the falling values of their interest rate derivatives. Finally, the investment portfolios of these large nonprofit health systems suffered millions of dollars of unrealized capital losses, which may minimize their ability to finance future capital investment requirements.

Combining domestic and foreign investment to expand tuberculosis control in China

Jia and colleagues describe how a combination of increased domestic funding, supplemented by foreign loans and donations since 2002, have led to a dramatic increase in tuberculosis case finding in China.

401(k) plan asset allocation, account balances, and loan activity in 2009

CONSISTENT SAMPLE: Because 401(k) balances can fluctuate with market returns from year to year, meaningful analysis of 401(k) plans must examine how participants' accounts have performed over the long term. Looking at consistent participants in the EBRI/ICI 401(k) database over the six-year period from 2003 to 2009 (which included one of the worst bear markets for stocks since the Great Depression), the study found: After rising in 2003 and for the next four consecutive years, the average 401(k) retirement account fell 27.8 percent in 2008, before rising 31.9 percent in 2009. The average 401(k) account balance moved up and down with stock market performance, but over the entire six-year time period increased at an average annual growth rate of 10.5 percent, attaining $109,723 at year-end 2009. The median (or midpoint, half above and half below) 401(k) account balance increased at an average annual growth rate of 14.7 percent over the 2003-2009 period to $59,381 at year-end 2009. THE BULK OF 401(K) ASSETS CONTINUED TO BE INVESTED IN STOCKS: On average, at year-end 2009, 60 percent of 401(k) participants' assets were invested in equity securities through equity funds, the equity portion of balanced funds, and company stock. Thirty-six percent was in fixed-income securities such as stable-value investments and bond and money funds. MORE THAN THREE-QUARTERS OF 401(K) PLANS INCLUDED TARGET-DATE FUNDS IN THEIR INVESTMENT LINEUP AT YEAR-END 2009: At year-end 2009, nearly 10 percent of the assets in the EBRI/ICI 401(k) database was invested in target-date funds and 33 percent of 401(k) participants held target-date funds. Also known as lifecycle funds, they are designed to simplify investing and to automate account rebalancing. NEW EMPLOYEES CONTINUED TO USE BALANCED FUNDS, INCLUDING TARGET-DATE FUNDS: Across all but the oldest age group, more new or recent hires invested their 401(k) assets in balanced funds, including target-date funds. At year-end 2009, about 42 percent of the account balances of recently hired participants in their 20s were invested in balanced funds, compared with 36 percent in 2008, and about 7 percent in 1998. At year-end 2009, 31 percent of the account balances of recently hired participants in their 20s was invested in lifecycle funds, compared with almost 23 percent at year-end 2008. 401(K) PARTICIPANTS CONTINUED TO SEEK DIVERSIFICATION OF THEIR INVESTMENTS: The share of 401(k) accounts invested in company stock continued to shrink, falling by half of a percentage point (to 9.2 percent) in 2009. That continued a steady decline that started in 1999. Recently hired 401(k) participants contributed to this trend: They tended to be less likely to hold employer stock. PARTICIPANTS' 401(K) LOAN ACTIVITY ROSE IN 2009: In 2009, 21 percent of all 401(k) participants eligible for loans had a loan outstanding against their 401(k) account, compared with 18 percent at year-end 2008 and year-end 2007. Loans outstanding amounted to 15 percent of the remaining account balance, on average, at year-end 2009, compared with 16 percent at year-end 2008. Loan amounts remained in line with the past few years in terms of typical dollar amounts.

How to choose the right financial planner

An "economic Pearl Harbor." That is how the world's most famous investor, Warren Buffett, described what we have gone through and what we're still going through.' Even the most optimistic appraisals of our economic conditions suggest that we are likely to feel the effects of the Great Recession through the decade we recently entered. Healthcare reform, in whatever form, may also create change in your medical practice ranging from immaterial to revolutionary. To whom should you turn to ensure that your personal economy survives and thrives, especially in these times? A financial planner, possibly, but what is a financial planner, how do you choose one, and what sort of service should you expect?

Alternative strategies: a better alternative

Alternatives can be defined as being any financial asset other than traditional stocks and bonds. They include marketable alternatives, private capital, and equity real estate. There are two primary reasons for investing in alternatives: the potential for greater return and the opportunity to diversify a portfolio. Although alternatives were challenged in the highly volatile environment that existed in 2008 and early 2009, they generally lived up to expectations.