Search

Purpose The purpose of this study is to investigate whether within the same firm, earnings risk is exacerbated in the fiscal year end (FYE) quarters relative to that of other quarters, more importantly, if this type of earnings risk is unique. Further, the authors discuss solutions to mitigate this type of information risk. Design/methodology/approach This study provides evidence that the information risk associated with FYE quarter earnings cannot be explained by other identified risk factors. Solutions to mitigate this risk include strong corporate governance and a more streamlined financial reporting structure. Findings The paper shows that there is significantly lower earnings response coefficient for FYE quarters than for non-FYE quarters (1984–2015). Furthermore, strong corporate governance and a more streamlined financial reporting structure, either by firms willingly reducing the usage of extraordinary item reporting or by FASB codification changes such as FASB 145, can help mitigate this type of information uncertainty. Research limitations/implications This study explains that the causes of the exacerbated information risk associated with FYE quarter earnings identified in prior literature, namely, the “integral explanation” and “manipulation explanation,” are not mutually exclusive. Therefore, the authors deem it futile to disentangle the two. Instead, the authors offer two possible solutions.

Holding earnings surprises constant, investors react negatively to delayed earnings announcements. One standard deviation of delay (5 days) corresponds to about 21 bps negative abnormal returns over a two-day announcement window. We show that the results are robust after further controlling for various firm characteristics, earnings characteristics, and the industry effect. We examine alternative explanations, including the earnings manipulation hypothesis proposed in the literature, which suggests that delayed earnings announcements are susceptible to manipulation and are thus discounted by investors. We find no evidence supporting the earnings manipulation hypothesis. Instead, our results are consistent with the effect of concurrent information disclosure. We show that there is a cluster of bad news for late announcements. As investors react to not only a firm’s own announcements but also concurrent earnings announcements, the negative information of concurrent announcements contributes significantly to lower stock returns. In addition, information update by the management and analysts also has a significant effect on market reactions to delayed announcements. In particular, information update by analysts may help the market to incorporate future earnings information more efficiently into stock prices. We show direct evidence that negative market reactions to delayed earnings announcements contain information of future earnings.

Background Alopecia areata (AA) is an autoimmune form of hair loss with limited treatments. Objective To evaluate the efficacy and safety of the Janus kinase inhibitors ritlecitinib and brepocitinib in patients who have AA with ≥ 50% scalp hair loss. Methods Patients were randomized to once-daily ritlecitinib, brepocitinib, or placebo. The primary efficacy endpoint was a 24-week change from baseline in the Severity of Alopecia Tool (SALT) score. The key secondary efficacy endpoint was the proportion of patients achieving 30% improvement in SALT score (SALT30). Results The ritlecitinib, brepocitinib, and placebo groups included 48, 47, and 47 patients, respectively. At week 24, least-squares mean difference from placebo in SALT score change from baseline was 31.1 (95% confidence interval [CI], 18.8-43.5) for ritlecitinib and 49.2 (95% CI, 36.6-61.7) for brepocitinib (P Limitations Only a single-dosage regimen of each study drug was included. Conclusion Treatment with ritlecitinib or brepocitinib for 24 weeks was efficacious and generally well tolerated.

The idiosyncratic volatility (IVOL) anomaly, documented in Ang, et al. (2006), has garnered a great deal of attention in the literature. Yet questions remain regarding the robustness and pervasiveness of the IVOL anomaly, with a particular concern that the IVOL anomaly might simply be the manifestation of market microstructure effect. In this paper, we show that the IVOL anomaly is strong and pervasive after we exclude stocks most susceptible to market microstructure noise — such as microcap stocks, penny stocks, and stocks with strong short-term return reversal. These results are robust to equal-weighting or value-weighting stocks in the IVOL portfolios. Our findings suggest that rather than being the cause of the anomaly, market microstructure noise actually weakens the IVOL anomaly.

Purpose Alopecia areata (AA) is an autoimmune disease characterized by the development of non-scarring alopecia. The prevalence is not well known, and estimates vary considerably with no recent estimates in the United States (US). The objective of this study was to define the current AA point prevalence estimate among the general population in the US overall and by severity. Patients and methods We administered an online, cross-sectional survey to a representative sample of the US population. Participants self-screening as positive for AA using the Alopecia Assessment Tool (ALTO) also completed the Severity of Alopecia Tool (SALT) to measure the severity of disease as a percent of scalp hair loss. Self-reported AA participants were invited to upload photographs for adjudication of AA by 3 clinicians. Results The average age of participants was 43 years. Approximately half of the participants (49.2%) were male, and the majority were white (77.1%) and not of Hispanic origin (93.2%). Among the 511 self-reported AA participants, 104 (20.4%) uploaded photographs for clinician evaluation. Clinician-adjudicated point prevalence of AA was 0.21% (95% CI: 0.17%, 0.25%) overall, 0.12% (95% CI: 0.09%, 0.15%) for "mild" disease (≤50% SALT score), and 0.09% (95% CI: 0.06%, 0.11%) for "moderate to severe" disease (>50% SALT score) with 0.04% (95% CI: 0.02%, 0.06%) for the alopecia totalis/alopecia universalis (100% SALT score) "moderate to severe" subgroup. The average SALT score was 44.4% overall, 8.8% for "mild", and 93.4% for "moderate to severe". Conclusion This study suggests that the current AA prevalence in the US is similar to the upper estimates from the 1970s at approximately 0.21% (700,000 persons) with the current prevalence of "moderate to severe" disease at approximately 0.09% (300,000 persons). Given this prevalence and the substantial impact of AA on quality of life, the burden of AA within the US is considerable.

Psoriatic arthritis (PsA) is a chronic, inflammatory disease. The effects of PsA real-world treatment patterns on patient-reported outcomes in the US and 5 European countries (EU5; France, Germany, Italy, Spain, UK) were evaluated. Respondents from the 2016 National Health and Wellness Survey received advanced therapies (e.g., biologic disease-modifying antirheumatic drugs [DMARDs]), other therapies, (e.g., conventional synthetic DMARDs), or no treatment. Assessments included demographics, disease severity (patient-reported), comorbidities (Charlson Comorbidity Index), health status (Short Form-36 Health Survey), depression (Patient Health Questionnaire-9), work productivity (Work Productivity and Activity Index), and treatment adherence (Morisky Medication Adherence Scale-8). Overall, 1037 respondents from the US and 947 respondents from the EU5 were included. Of these, 21.7% US and 7.3% EU5 respondents received advanced therapies; 16.6% and 28.5%, other therapies; and 61.7% and 64.2%, no treatment, respectively. During treatment with advanced or other therapies, 40.8–54.7% US and 57.7–58.9% EU5 respondents self-reported moderate or severe PsA. Respondents receiving advanced therapies had the highest Charlson Comorbidity Index score (US, 1.25; EU5, 1.42); the lowest scores were with no treatment (0.52 and 0.49, respectively). Employment was lowest with other therapies (US, 47.7%; EU5, 41.1%). Overall work impairment was reported by 57.9% US and 62.6% EU5 respondents receiving advanced therapies. Medication adherence was generally low in the US and medium in the EU5 (Morisky Medication Adherence Scale-8: low, US 40.1–46.7%, EU5, 29.0–35.2%; medium, US 29.3–36.1%, EU5 37.8–49.3%; high, US 23.8–24.0%; EU5, 21.7–27.0%). Advanced and other therapies reduced PsA severity; however, > 40% of respondents reported moderate or severe PsA during treatment. Better management and adherence may reduce unmet need and disease burden. Further work is required to improve PsA diagnosis and time to treatment initiation. Electronic supplementary material The online version of this article (10.1007/s00296-018-4195-x) contains supplementary material, which is available to authorized users.

Using monthly holdings data, we show that in contrast to findings in existing literature, mutual fund trades in aggregate do not have predictive power for future earnings information. We identify active trades by mutual funds, that is, trades not passively driven by fund flows, and show that only large active trades by mutual funds contain information on future earnings. Moreover, we show evidence that large active trades by mutual funds help incorporate future earnings information into stock prices and significantly improve stock price efficiency. Finally, we show that large active trades by mutual funds prior to earnings announcements deliver superior abnormal returns. Mutual fund managers that actively trade on future earnings information are skilled; the top quintile skilled funds on average outperform those in the bottom quintile by 127 bps in four-factor alpha over subsequent four quarters.

We show evidence that consistent with category-learning behavior, investors allocate more attention to macroeconomic news than to firm-specific news, such as earnings announcements. Despite the distracting effect of macroeconomic news on investor attention, we find that earnings announcements with concurrent macroeconomic news announcements actually have significantly stronger immediate market response and weaker post-earnings announcement drift. We hypothesize that the combined total attention to macroeconomic news and earnings announcements helps investors understand both the systematic and firm-specific components of earnings surprises. Consistent with the hypothesis, our results show that the macroeconomic news effect is mainly driven by firms with high exposure to macroeconomic news. Moreover, we show that the effect is stronger when macroeconomic news contains more information and for firms with greater information uncertainty. Finally, we provide evidence that macroeconomic news helps reduce stock return uncertainty and enhance stock price efficiency.

Earnings announcements present a clear risk to investors and, under rational asset pricing theory, such risk should be consistently priced in stocks. However, we find that stocks with high earnings announcement risk earn significantly higher returns only during months when firms have earnings or M&A announcements. Moreover, the higher returns are realized mostly around the date of announcements. The findings seem to suggest that the risk premium is accrued concurrently when investors adjust stock valuation in response to significant information events. We provide additional evidence to substantiate the conjecture based on the effects of information updates and investor information consumption.

Introduction Most patient-reported outcome (PRO) instruments that measure atopic dermatitis (AD) symptoms do not have sufficient documented evidence of content validity to satisfy regulatory agency guidance for inclusion in product-labelling claims in the USA or Europe. The objective of this study was to develop a PRO instrument in accordance with regulatory agency guidance to assess daily AD symptoms during the course of therapy and to establish its content validity and psychometric properties. Methods The Pruritus and Symptoms Assessment for Atopic Dermatitis (PSAAD) daily diary was developed based on qualitative interviews with US adolescents and adults with mild-to-severe AD. Content validity, test–retest reliability, internal consistency reliability, clinically important difference, clinically important responder, convergent validity, and known-group validity were evaluated using correlational and regression methods from phase 2b data from US adults with moderate-to-severe AD who were treated with abrocitinib. Results Patient interviews conducted with US adolescents and adults with mild-to-severe AD identified 11 relevant symptoms (itch, dryness, redness, flaking, discolouration, pain, bleeding, cracking, bumps, swelling, and weeping/oozing) for inclusion in the PSAAD instrument. All PSAAD psychometric parameters were acceptable based on phase 2b data from US adults with moderate-to-severe AD. Convergent validity and known-group validity were confirmed by significant correlations between PSAAD and six other PRO measures (r = 0.24–0.91, all p ≤ 0.01) and Dermatology Life Quality Index category (p ≤ 0.0001), respectively. Conclusions Evidence supports the PSAAD instrument validity, reliability, responsiveness and definitions of clinically important changes/differences for adults with moderate-to-severe AD. Supplementary Information The online version contains supplementary material available at 10.1007/s13555-020-00474-9.

Holding earnings surprise constant, investors react negatively to late earnings announcements. One standard deviation of announcement delay (about 5 days) corresponds to 23 bps lower abnormal returns over a two-day announcement window. We show that the results are robust to further controlling for various firm and earnings characteristics as well as the industry effect. We reject the hypothesis that the lower announcement returns are due to higher market risk or idiosyncratic risk for stocks with late earnings announcements. We find no evidence supporting the hypothesis that earnings announced late are more susceptible to management manipulation. Despite the lack of evidence on earnings manipulation, our results support the perceived disclosure credibility hypothesis. That is, investors view earnings with delayed announcements and the management as less credible. Consistent with the perceived disclosure credibility hypothesis, we find that investors discount positive earnings news more than negative earnings news when the announcements are delayed. In addition, analysts downgrade earnings forecasts following late announcements, evidence that delayed reporting has a negative effect on the credibility of the management. Moreover, investors discount late earnings announcements more when firms have weaker external governance, proxied by lower institutional ownership and analyst coverage. Finally, we show evidence that investors pay more attention to earnings announced late than to earnings announced on time. The negative reactions to late earnings announcements reflect investors’ better understanding of the implication of current earnings on future earnings as future earnings information is efficiently impounded into current stock prices.

Using a clean sample of private equity placements over the period of 1999 to 2012, we examine the determinants of the discounts on private placements. Classifying various determinants into three categories, namely risk, illiquidity, and marketability, we show that risk and marketability are significant determinants of the discount on private placements over the entire sample period. However, we identify a structural break in the relation between the discount on private placements with illiquidity and, to a lesser degree, marketability. Specifically, we find that liquidity is a more important determinant during the pre-2003 period, but marketability becomes a more important determinant during the post-2003 period. We attribute the structural break to substantial changes in market microstructure during our sample period. Lower transaction costs make illiquidity less of a concern for investors, whereas more active trading by investors calls for a higher discount for the lack of marketability.

Many efforts to improve science teaching in higher education focus on a few faculty members at an institution at a time, with limited published evidence on attempts to engage faculty across entire departments. We created a long-term, department-wide collaborative professional development program, Biology Faculty Explorations in Scientific Teaching (Biology FEST). Across 3 years of Biology FEST, 89% of the department’s faculty completed a weeklong scientific teaching institute, and 83% of eligible instructors participated in additional semester-long follow-up programs. A semester after institute completion, the majority of Biology FEST alumni reported adding active learning to their courses. These instructor self-reports were corroborated by audio analysis of classroom noise and surveys of students in biology courses on the frequency of active-learning techniques used in classes taught by Biology FEST alumni and nonalumni. Three years after Biology FEST launched, faculty participants overwhelmingly reported that their teaching was positively affected. Unexpectedly, most respondents also believed that they had improved relationships with departmental colleagues and felt a greater sense of belonging to the department. Overall, our results indicate that biology department–wide collaborative efforts to develop scientific teaching skills can indeed attract large numbers of faculty, spark widespread change in teaching practices, and improve departmental relations.

Objectives This non-interventional, cross-sectional, descriptive, exploratory analysis aimed to characterise patients (pts) with psoriatic arthritis (PsA) in the 2016 National Health and Wellness Survey (NHWS) and determine the impact of treatment, or no treatment, on pt-reported outcomes. Methods The NHWS was a self-administered, web-based, voluntary, confidential questionnaire. Stratified randomised sampling provided a representative sample of EU adults in France, Germany, Italy, Spain and UK. Respondents completing the arthritis module and reporting PsA diagnosis were stratified by: advanced therapies (tumour necrosis factor inhibitors, interleukin antagonists, phosphodiesterase-4 inhibitors) ± other drugs; other therapies (eg conventional synthetic disease-modifying antirheumatic drugs, glucocorticoids, topical medications); or no current treatment. Short Form-36 health survey (SF-36), Work Productivity and Activity Impairment questionnaire and Patient Health Questionnaire-9 (PHQ-9) responses were summarised descriptively. Results NHWS was completed by 80,600 adults; 947 completed the arthritis module and self-reported PsA diagnosis. Of these, 65 (7%) reported receiving advanced therapies, 274 (29%) other therapies and 608 (64%) no current treatment. Age and gender were generally balanced between the groups (mean 51–56 years; 51–64% female). More patients on advanced therapies had a body mass index ≥30 (41%) vs other therapies (34%) and no current treatment (26%). Pts on advanced therapies reported more comorbidities (mean 2.2) vs pts on other therapies (mean 1.8) and pts with no current treatment (mean 1.7). More pts on advanced therapies were current smokers (49%) vs pts on other therapies (30%) and pts with no current treatment (32%). Prior to treatment with advanced or other therapies, 94% and 82% self-reported moderate or severe PsA, falling to 58% and 59%, respectively, after treatment, compared with 36% of pts with no current treatment. SF-36 scores and PHQ-9 scores did not widely vary across groups (Table 1). Regardless of treatment groups, pts reported >20% work loss, >45% overall work impairment and >45% activity impairment (Table 1). Conclusions More than 60% of pts reporting PsA diagnosis reported no current treatment. Regardless of treatment group, pts reported >20% work loss and >45% work impairment. Among treated pts, >50% reported moderate or severe PsA, suggesting a need for overall better management of PsA to reduce the disease impact and improve quality of life. Our results are limited by self-reported PsA diagnosis, which may differ from physician-reported PsA diagnosis, and the survey being conducted in the EU only, which may differ from other parts of the world. Further statistical analyses are needed to determine differences between groups and correlation to other health indicators. Acknowledgements This study was sponsored by Pfizer Inc. Editorial support was provided by A Pedder of CMC and was funded by Pfizer Inc. Disclosure of Interest A. Gottlieb Grant/research support from: Abbott (AbbVie), Amgen, Baxalta, Celgene, Centocor (Janssen), Coronado, Dermira, Eli Lilly, Levia, Merck, Novartis, Pfizer Inc, Xenoport, Consultant for: Abbott (AbbVie), Actelion, Akros, Amgen, Astellas, Baxalta, Beiersdorf, Bristol-Myers Squibb, Canfite, Catabasis, Celgene, Centocor (Janssen), Coronado, CSL Behring Biotherapies for Life, Dermipsor, Eli Lilly, Genentech, GlaxoSmithKline, Incyte, Karyopharm, Meiji Seika Pharma, Mitsubishi Tanabe, Novo Nordisk, Novartis, Pfizer Inc, Takeda, TEVA, UCB, Vertex, Xenoport, J. Gratacos: None declared, A. Dikranian Consultant for: AbbVie, Mallinckrodt, Pfizer Inc, Speakers bureau: AbbVie, Amgen, Celgene, Mallinckrodt, Pfizer Inc, L. Fallon Shareholder of: Pfizer Inc, Employee of: Pfizer Inc, B. Emir Shareholder of: Pfizer Inc, Employee of: Pfizer Inc, T. Smith Shareholder of: Pfizer Inc, Employee of: Pfizer Inc, L. Aikman Shareholder of: Pfizer Inc, Employee of: Pfizer Inc, L. Chen Shareholder of: Pfizer Inc, Employee of: Pfizer Inc

Background Tofacitinib is an oral Janus kinase inhibitor under investigation for treatment of psoriatic arthritis (PsA). The safety and efficacy of tofacitinib for the treatment of PsA has been investigated in two Phase 3 randomised controlled trials (RCTs: OPAL Broaden [12 months; NCT01877668]; OPAL Beyond [6 months; NCT01882439]). Objectives To evaluate patient-reported outcomes (PROs) in patients (pts) with active PsA enrolled in OPAL Broaden (N=422) and OPAL Beyond (N=394). OPAL Broaden pts had an inadequate response (IR) to ≥1 conventional synthetic disease-modifying antirheumatic drug and were naive to tumour necrosis factor inhibitors (TNFi) whilst OPAL Beyond pts had an IR to ≥1 TNFi. Methods Pts were randomised to tofacitinib 5 mg twice daily (BID), tofacitinib 10 mg BID, placebo (PBO)→ tofacitinib 5 mg BID, PBO→ tofacitinib 10 mg BID and, in OPAL Broaden, also to adalimumab 40 mg subcutaneously every two weeks (active comparator). Pts receiving PBO advanced to either tofacitinib 5 mg BID or 10 mg BID at month 3 (M3) in both RCTs. Least squares mean changes from baseline in: Patient9s Global Assessment of Arthritis (PtGA; Visual Analogue Scale [VAS]); Arthritis Pain (Pain; VAS); Short Form-36 Health Survey (SF-36); Functional Assessment of Chronic Illness Therapy–Fatigue (FACIT-F); Dermatology Life Quality Index (DLQI) and Ankylosing Spondylitis Quality of Life (ASQOL) questionnaires are reported. Nominal p values are reported without adjustments for multiple comparisons. Results Patients with active PsA in OPAL Broaden and OPAL Beyond RCTs receiving tofacitinib 5 mg and 10 mg BID reported improved PROs compared with PBO (Table 1). Greater improvements in PtGA and Arthritis Pain were observed as early as Week 2 through M3 with both tofacitinib doses compared with PBO in both studies (p≤0.05). Greater improvements were also reported in SF-36 Physical Component Summary, DLQI and ASQOL scores at M1 and M3 with both tofacitinib doses compared with PBO (p≤0.05). There were greater improvements in SF-36 physical functioning, bodily pain and vitality domains with both tofacitinib doses compared with PBO in both studies (p≤0.05) at M3. SF-36 social functioning domain showed greater improvement with tofacitinib 5 mg BID in OPAL Broaden and both tofacitinib doses in OPAL Beyond compared with PBO at M3 (p≤0.05). SF-36 role-physical domain showed greater improvement with tofacitinib 10 mg BID in OPAL Beyond at M3 compared with PBO (p≤0.05). FACIT-F showed a greater improvement in both studies at M3 with both tofacitinib doses compared with PBO (p≤0.05). In OPAL Broaden, improvements in PROs were similar between tofacitinib and adalimumab. Conclusions Pts with active PsA receiving tofacitinib reported greater improvements in PROs compared with PBO at M3 that were maintained throughout both RCTs. Acknowledgements To be presented at AAD 2017 and reproduced with permission. This study was sponsored by Pfizer Inc. Editorial support was provided by S. Morgan of CMC and was funded by Pfizer Inc. Disclosure of Interest V. Strand Consultant for: AbbVie, Amgen, Bristol-Myers Squibb, CORRONA, Eli Lilly, Janssen, Novartis, Pfizer Inc, UCB, K. de Vlam Consultant for: Celgene, Eli Lilly, Janssen, Novartis, Pfizer Inc, UCB, Speakers bureau: Celgene, Eli Lilly, Janssen, J. Covarrubias-Cobos Grant/research support from: Bristol-Myers Squibb, Eli Lilly, Janssen, Pfizer Inc, P. Mease Grant/research support from: AbbVie, Amgen, Bristol-Myers Squibb, Celgene, Eli Lilly, Janssen, Novartis, Pfizer Inc, Sun, UCB, Consultant for: AbbVie, Amgen, Bristol-Myers Squibb, Celgene, Crescendo, CORRONA, Dermira, Janssen, Eli Lilly, Merck, Novartis, Pfizer Inc, Sun, UCB, Zynerba, Speakers bureau: AbbVie, Amgen, Bristol-Myers Squibb, Celgene, Crescendo, Genentech, Janssen, Novartis, Pfizer Inc, UCB, D. D. Gladman Grant/research support from: Amgen, AbbVie, Bristol-Myers Squibb, Celgene, Janssen, Eli Lilly, Pfizer Inc, Novartis, UCB, Consultant for: Amgen, AbbVie, Bristol-Myers Squibb, Celgene, Janssen, Eli Lilly, Pfizer Inc, Novartis, UCB, Speakers bureau: Amgen; AbbVie; Bristol-Myers Squibb; Celgene; Janssen; Eli Lilly; Pfizer Inc; Novartis; UCB, T. Hendrikx Shareholder of: Pfizer Inc, Employee of: Pfizer Inc, E. Kudlacz Shareholder of: Pfizer Inc, Employee of: Pfizer Inc, D. Graham Shareholder of: Pfizer Inc, Employee of: Pfizer Inc, J. Wu Shareholder of: Pfizer Inc, Employee of: Pfizer Inc, L. Chen Shareholder of: Pfizer Inc, Employee of: Pfizer Inc

We study whether board gender diversity (BGD) affects corporate risk strategies. Specifically, we investigate the association between BGD and firms’ reputation risk and financial risk. Using S&P data from 1997 to 2013, we find that BGD is negatively associated with tax avoidance, suggesting firms with gender-diverse boards are more cautious about potential reputation risks associated with aggressive tax strategies. However, we find that BGD is positively associated with firms’ financial risk. The combined findings illustrate that BGD aligns a firm's risk exposure closer to risk-neutral shareholders’ preferences by reducing reputation risk exposure while enabling necessary financial risk exposure.

We examine the role of institutional investors underlying post-earnings-announcement drift (PEAD). Our results show that while institutional investors generally herd on earnings news, such correlated trading among institutions does not eliminate or reduce market underreaction to earnings surprises. Instead, PEAD is significant only in the subsample of stocks where institutions herd in the same direction as earnings surprises. In fact, institutional herding is also positively related to next-quarter earnings announcement returns. We provide evidence that institutional herding on or against earnings news is largely driven by firm characteristics, particularly past firm performance and stock returns. In addition, we find that relative to non-transient institutions, transient institutions have a stronger tendency to herd on earnings information. Finally, based on long-run stock returns, we show that when institutions herd on earnings surprises, institutional trading represents a gradual process of incorporating information into stock prices. On the other hand, when institutions herd against earnings surprises, institutional trading slows down stock price discovery.

We show evidence that consistent with category-learning behavior, investors allocate more attention to macroeconomic news than to firm-specific news, such as earnings announcements. Despite the distracting effect of macroeconomic news on investor attention, we find that earnings announcements with concurrent macroeconomic news announcements actually have significantly stronger immediate market response and weaker post-earnings announcement drift. We hypothesize that the combined total attention to macroeconomic news and earnings announcements helps investors understand both the systematic and firm-specific components of earnings surprises. Consistent with the hypothesis, our results show that the macroeconomic news effect is mainly driven by firms with high exposure to macroeconomic news. Moreover, we show that the effect is stronger when macroeconomic news contains more information and for firms with greater information uncertainty. Finally, we provide evidence that macroeconomic news helps reduce stock return uncertainty and enhance stock price efficiency.

ObjectivesTofacitinib is an oral Janus kinase inhibitor for treatment of psoriatic arthritis (PsA). Patient-reported outcomes (PROs) were evaluated in patients with PsA with inadequate responses to tumour necrosis factor inhibitors (TNFi-IR) in a 6-month, phase III randomised controlled trial (OPAL Beyond [NCT01882439]).MethodsPatients (N=394) received tofacitinib 5 or 10 mg twice daily or placebo (advancing to tofacitinib 5 or 10 mg twice daily at month 3). Least squares mean changes from baseline and percentages of patients reporting improvements ≥minimum clinically important differences and scores ≥normative values were determined in Patient Global Assessment of disease activity (PtGA), Pain, Patient Global Joint and Skin Assessment (PGJS), Short Form-36 Health Survey version 2 (SF-36v2), Functional Assessment of Chronic Illness Therapy-Fatigue (FACIT-Fatigue), EuroQol 5-Dimensions-3-level (EQ-5D-3L), EQ-VAS and Ankylosing Spondylitis Quality of Life (ASQoL). Nominal p values are without multiple comparison adjustments.ResultsAt month 3, PtGA, Pain, PGJS, SF-36v2 Physical Component Summary (PCS), physical functioning (PF), bodily pain (BP), vitality and social functioning (SF) domains, FACIT-Fatigue Total score, EQ-5D-3L pain/discomfort, EQ-VAS and ASQoL scores exceeded placebo with both tofacitinib doses (role physical [RP] with 10 mg twice daily only; p≤0.05). Patients reporting improvements ≥MCID (%) in PtGA, PGJS, Pain, ASQoL and SF-36v2 PCS, PF, RP, BP, SF (both tofacitinib doses) exceeded placebo (p≤0.05).ConclusionTNFi-IR patients with PsA receiving tofacitinib reported statistically and clinically meaningful improvements in PROs versus placebo over 3 months, which were maintained to month 6. Despite lower baseline scores, these improvements were similar to the csDMARD-IR TNFi-naive OPAL Broaden trial.

In this paper, we show that conditions derived under the CAPM ensure only weak exogeneity in a linear regression setting. Since strong exogeneity is not guaranteed, the OLS estimator of CAPM beta is only consistent but not necessarily unbiased. We provide empirical evidence that individual daily stock returns exibit regime-switching patterns and may violate strong exogeneity conditions. As such, the OLS estimator of CAPM beta is likely biased. Based on the empirical patterns of daily stock returns, we use three regime-switching models to illustrate thatthe OLS estimator of CAPM beta can be consistent but at the same time biased. Simulation results based on these three regime-switching models show that biases of the OLS beta estimator can be substantial.

Bloomberg and Briefing.com provide competing forecasts for prescheduled macroeconomic announcements. This study examines the accuracy of these forecasts and market reactions to announcement surprises. Our results show that the Bloomberg survey is slightly more accurate than the Briefing.com survey. More importantly, although announcement surprises based on both surveys have a significant effect on the trading activities and returns of S&P 500 futures contracts, the Bloomberg survey subsumes the explanatory power of the Briefing.com survey. The findings suggest that on average Bloomberg forecasts are more consistent with the market consensus view. In addition, we provide evidence of asymmetric market reactions to positive versus negative announcement surprises. In particular, the market reacts strongly to inflation news in the Consumer Price Index (CPI) and Producer Price Index (PPI) announcements and negative shocks in housing price, personal spending, and retail sales.

The existing literature shows that cross-sectional stock returns exhibit both price momentum and earnings momentum. In this paper, we examine whether commonly used style and sector indexes also have momentum patterns. We show that style indexes exhibit strong price momentum, but give little evidence of earnings momentum. On the other hand, sector indexes exhibit both significant price momentum and earnings momentum. Moreover, we provide evidence that price momentum in style indexes can be explained by individual stock return momentum, whereas price momentum in sector indexes is driven by earnings momentum. Finally, we show that a dynamic momentum strategy can further enhance the performance of style investment even after adjusting for transaction costs.

This paper examines the effect of tax planning and earnings management on the informativeness of book income and taxable income. We conduct two sets of tests documenting (1) the incremental effect of tax planning and earnings management on the informativeness of book and taxable income, and (2) the relation between the consistency of the book-tax difference and the informativeness of book and taxable income. The consistency of the book-tax difference depends on firm decisions regarding incremental earnings management and tax planning. Consistency of the book-tax difference is measured as the standard deviation of the discretionary component of the difference between book income and taxable income. Our results show that consistency of the book-tax difference, as a measure of the joint effect of earnings management and tax planning, is related to persistence of both book and tax income and has an incremental effect on information content of both book income and taxable income. JEL Classifications: G12; G32; H24; H25.

Many studies have shown that fish oil supplementation inhibits tumor necrosis factor-alpha (TNF-alpha) production in mice and human subjects; however, the mechanisms remain unclear. Nuclear factor-kappaB (NF-kappaB) is a transcription factor that plays an important role in controlling the expression of pro-inflammatory genes including TNF-alpha. Activation of NF-kappaB has been shown to mediate the maximal expression of TNF-alpha in human monocytes. NF-kappaB is kept in an inactive form in the cytoplasm by IkappaB, the inhibitory subunit of NF-kappaB complex. Phosphorylation and subsequent degradation of IkappaB lead to NF-kappaB activation.The effect of eicosapentaenoic acid (EPA), a major n-3 fatty acid in fish oil, on the lipopolysaccharide (LPS)-induced expression of TNF-alpha and activation of NF-kappaB were investigated. The mechanism underlying EPA modulation of NF-kappaB activation was also studied.Human monocytic THP-1 cells were pre-incubated with EPA and stimulated with LPS. The levels of secreted TNF-alpha were determined by ELISA. The DNA binding activity of NF-kappaB was analyzed by EMSA. The degradation and phosphorylation of IkappaB-alpha were examined by Western blot analysis.TNF-alpha production and expression induced by LPS were significantly decreased in cells pre-incubated with EPA. LPS-induced NF-kappaB activation, translocation of p65 subunit to the nucleus, phosphorylation and degradation of IkappaB-alpha were partially prevented by EPA.The results suggest that suppression of the TNF-alpha expression by EPA is partly attributed to its inhibitory effect on NF-kappaB activation. EPA appears to prevent NF-kappaB activation by preventing the phosphorylation of IkappaB-alpha.

Levels of antioxidants, activities of free radical scavenging enzymes and extent of lipid peroxidation were determined in the blood of 37 elderly diabetic men and 30 control elderly men, 16 without cardiovascular disease (CVD) and 14 with CVD. The mean +/-S.D. of the ages of the diabetic men was 66+/-5 and those of the control men was 69+/-5, while serum glucose levels of diabetic men were 213+/-81 mg/dl and that of control subjects were 95+/-14 mg/dl. Among the diabetic men, 13 men were obese with body mass index>30, 26 men had poor control of diabetes (glycohemoglobin>7%) and 25 men had retinopathy. The diets of the control and diabetic men were evaluated. Blood samples were collected and analyzed for major endogenous antioxidant defense parameters and lipid peroxidation. The results show that diabetic men had significantly lower blood reduced glutathione levels (p

Human cDNAs for methionine synthase (5-methyltetrahydrofolate:L-homocysteine S-transmethylase; EC 2.1.1. 13) have been isolated from fetal and adult liver and HepG2 libraries. The cDNAs span 7.2 kilobases (kb) and consist of a 394-base pair upstream untranslated region, a 3795-base pair open reading frame encoding a 1265-residue 140.3-kDa protein, and about 3 kb of 3' region. The deduced protein sequence shares 53 and 63% identity with the Escherichia coli and the presumptive Caenorhabditis elegans proteins, respectively, and contains all residues implicated in B12 binding to the E. coli protein. Several potential polymorphisms and a cryptic splice deletion were detected in the coding region of the cDNAs. A polymorphism that results in a D919G modification in the protein is fairly common in human DNA samples. Northern analyses of poly(A) mRNA indicated two major species of about 8 and 10 kb in human tissues and some minor, partially spliced species. mRNA levels were highest in the pancreas, skeletal muscle, and heart of the adult and in the kidney in the fetus and were low in adult liver. Genomic clones were isolated and the 5' region was analyzed. Exon 1 is preceded by a number of potential promoter sites, including an E box, CAAT boxes, and a GC box, but this region lacks a TATA element. The human methionine synthase gene was localized to chromosome region 1q42.3-43 by in situ hybridization.

Dietary restriction (DR) of 30% in caloric intake extends both median and maximum life span by about 30%. DR retards the aging process, but the mechanism of action is not clearly understood. The effects of DR on major endogenous antioxidant defenses were studied in 80 male Lobund-Wistar (L-W) rats at various ages throughout the life span. Two groups of rats were fed ad libitum (AL) or restricted diet (DR) from 6 weeks of age. Adult DR rats received 30% less diet with regard to calories per day when compared to adult AL rats. Eight rats in each diet group were killed at 6, 12, 18, 24 and 30 months of age. The livers were excised and prepared for the determinations of major endogenous antioxidant defense parameters. Hepatic reduced glutathione (GSH) levels were decreased at old age in the AL group, however, DR eliminated this decrease. Activities of glutathione reductase (GR) and Se-dependent glutathione peroxidase (GPx) were not affected by age nor by DR. Superoxide dismutase (SOD) activity decreased from 6 to 12 months of age and catalase activity decreased with aging in the AL group, while DR maintained the enzyme activities at similar levels for all ages. Quinone reductase (QR) activity increased with increasing age in the AL group, and DR further increased the enzyme activity at all ages. The results suggest that 30% DR may contribute to the delaying of the aging process by improving endogenous antioxidant defense capability which decreases by 20 to 30% during aging.

One of the contentious issues regarding the post-earnings announcement drift (PEAD) is whether the abnormal stock return is driven by investors’ delayed reaction to earnings information or by unexpected information shocks subsequent to earnings announcement. In this paper, we disentangle unexpected large changes in stock prices, known as jumps, from total stock returns. Although on average jump occurs only once per firm quarter, it accounts for up to 40% of the return differential between top and bottom SUE deciles. This is evidence that a significant part of PAED is driven by unexpected information shocks. Nevertheless, the drift component still explains at least 50% of the variation of anomalous PEAD returns. The findings suggest that PEAD cannot be entirely attributed to investors’ delayed reaction to earnings information, but neither can the hypothesis be ruled out. In particular, we find that delayed reaction is more pronounced following positive earnings surprises.

Effects of a 30 percent (%) dietary restriction on liver DT-diaphorase activity toward various substrates were studied in male Lobund-Wistar (L-W) rats throughout the life span. DT-diaphorase catalyzes the reduction of quinones to hydroquinones, thus playing a major role in protecting cells against oxidative stress manifested by quinines. Eighty rats were divided into 2 groups and fed ad libitum or a 30% calorie-restricted diet. Eight rats in each group were killed at 6, 12, 18, 24 and 30 months of age. DT-diaphorase activity in liver cytosol was determined. The specific activity (per mg protein) of the enzyme in the ad libitum group toward 1,4-naphthoquinone (NQ) increased with age from 6 to 30 months, while those toward 2,6-dichlorophenol-indophenol (DCPIP), 2-methyl-1,4-naphthoquinone (MNQ) and ubiquinone0 (UQ0) increased with age from 18 to 30 months. The specific activity of the enzyme toward all four substrates in the restricted group did not change between 6 and 18 months, then increased with age from 18 to 30 months. When the enzyme activity was calculated on a per gram body weight basis or a per gram liver basis, the age-associated patterns of the ad libitum and restricted groups were similar to those on per mg protein basis. Dietary restriction increased the activity of DT-diaphorase on per mg protein basis, per gram body weight basis, or per gram liver basis, at almost all age points. The results suggest that dietary restriction contributes to the delaying of the aging process by decreasing oxidative stress exerted by quinones through increased DT-diaphorase activity.

This study investigates whether corporate climate risk is priced by the capital markets. Using carbon dioxide emission rates of publicly traded U.S. electric companies, we find that climate risk is positively associated with cost of capital measures, more specifically the implied cost of equity and the cost of debt. Additionally, we find that equity and debt investors evaluate corporate climate risk differently. The results show that the cost of debt decreases with the level of capital intensity, suggesting that debt investors value the increase in efficiency resulting from current capital investments. The results also show that the cost of equity decreases and the cost of debt increases with the newness of assets in places. Newer equipment is likely to be operationally and environmentally more efficient. While the results concerning the cost of debt are puzzling, we consider that debt investors may account for other performance indicators. We conclude that equity and debt investors evaluate climate risk differently according to their different payoff functions.

The purpose of this study was to determine if hepatic cellular antioxidants and indices of oxidative damage are altered by administration of the peroxisome proliferators ciprofibrate and perfluorodecanoic acid (PFDA). Rats were fed 0.01% ciprofibrate in the diet or were injected with PFDA (0.5 or 5.0 mg/kg, i.p.) every 4 weeks for 6, 14, 30, 54, and 78 weeks. Peroxisomal fatty acyl-CoA oxidase and catalase activities were increased by both ciprofibrate and PFDA throughout the study. Neither ciprofibrate nor PFDA increased the levels of malonaldehyde or conjugated dienes, but ciprofibrate decreased these indices at early time points. Ciprofibrate decreased the following cellular antioxidants or antioxidant enzymes: vitamin C, vitamin D, DT-diaphorase, glutathione peroxidase, glutathione-S-transferase, and glutathione reductase; superoxide dismutase and glutathione were not affected. PFDA decreased DT-diaphorase and increased superoxide dismutase, but did not affect other cellular antioxidants. This study shows that administration of the peroxisome proliferators ciprofibrate and PFDA did not increase indices of lipid peroxidation, but that cellular antioxidant defenses were inhibited for a prolonged period of time by the peroxisome proliferator ciprofibrate.

A survey of 139 elderly volunteers between 60 and 90 years of age was conducted to determine their vitamin C status and to investigate possible relationships between the plasma vitamin C level, the participant's age, sex, and institutionalization status. When the participants' vitamin C levels were compared by age groups (60–70, 71–80, 81–90) and sex, no significant differences were found. Higher (P

Motivated by the theoretical results of Yee (2006), we extend the empirical analysis of Francis, LaFond, Olsson, and Schipper (2005) to test the prediction that the effect of accruals quality on cost of capital increases with fundamental risk. In asset pricing tests, we find that there is essentially no relation between accruals quality and cost of capital as measured by future return realizations for firms with the lowest fundamental risk. In contrast, for firms with the highest fundamental risk, there is a strong relation between accruals quality and future return realizations. Using earnings-price ratios and average implied cost of capital as alternative measures of cost of capital, we find that, as fundamental risk increases, accruals quality has an increasing effect on cost of capital and that the effect of accruals quality on cost of capital is reduced for firms with low fundamental risk. Overall, the results in this paper show that that relation depends critically on the level of fundamental risk, consistent with the model of Yee (2006). The results also serve to qualify the findings of Francis et al. (2005), who document a relation between accruals quality and cost of capital.

This paper examines the effect of tax planning and earnings management on the relative informativeness of book income and taxable income. We conduct two sets of tests documenting (1) the incremental effect of tax planning and earnings management on the relative informativeness of book and taxable income and (2) the relation between voluntary conformity and the relative informativeness of book and taxable income. Based on these two sets of tests, we conclude that tax planning and earnings quality jointly affect the relative informativeness of book and taxable income.

Activator protein-1 (AP-1) is a transcription factor that plays an important role in regulating the expression of proinflammatory cytokines including tumor necrosis factor-alpha (TNF-alpha). Many studies have shown that fish oil supplementation inhibits TNF-alpha production in mice and humans; however, the mechanisms remain unclear. In this study, the effects of eicosapentaenoic acid (EPA), a major n-3 fatty acid in fish oil, on lipopolysaccharide (LPS)-stimulated activation of AP-1 were investigated in human monocytic THP-1 cells. The results demonstrated that AP-1 DNA binding activity stimulated by LPS was suppressed by preincubating cells with EPA. Lipopolysaccharide-stimulated increase of c-Jun and c-Fos protein levels was also attenuated by EPA pretreatment. In addition, EPA pretreatment decreased LPS-induced c-Jun phosphorylation and c-Jun N-terminal kinase (JNK) activation. The results suggest that suppression of TNF-alpha expression by EPA may be partly mediated by its inhibitory effect on AP-1 activation.

This paper examines the effect of income smoothing on information uncertainty, stock returns, and cost of equity. I show that income smoothing through both total accruals and discretionary accruals tends to reduce firms' information uncertainty, as measured by stock return volatility, analyst earnings forecast dispersion, and analyst earnings forecast error. Further, I provide evidence that stocks of income smoothing firms are priced with a premium. Controlling for earnings shocks and other firm characteristics, income smoothing firms have significantly higher abnormal returns around earnings announcement. In addition, I show that income smoothing reduces firms' implied cost of equity or expected returns. The result is more robust over short horizons up to two years.

The effects of fish oil, which is rich in n–3 fatty acids, on cytokine levels in a murine model of acquired immune deficiency syndrome (AIDS) were studied. Thirty-two C57BL/6 female mice were divided into two dietary groups and fed either a corn oil diet or a fish oil diet. After 4 weeks, each diet group was further divided into two subgroups, and mice in one subgroup were injected i.p. with LP-BM5 murine retrovirus (MAIDS) stock. After 4 weeks, all mice were killed, blood samples were collected, and the spleens and the livers were excised. Splenocytes were isolated immediately and cultured in RPMI-1640 medium and stimulated by either lipopolysaccharide (LPS) or Concanavalin A (ConA) for 24 h. The supernatant was collected for cytokine assays. The results showed that MAIDS infection increased the levels of tumor necrosis factor-α (TNF-α) and interleukin-1-beta (IL-1β), while fish oil partially prevented this elevation. MAIDS infection depressed interleukin-2 (IL-2) and interferon-gamma (IFNγ), while fish oil partially prevented the depression of IL-2. In addition, MAIDS infection depressed LPS- and ConA-stimulated cell proliferation, while fish oil partially prevented the depression. The results suggest that fish oil may slow down the progression of murine AIDS by modulating levels of cytokines including TNF-α, IL-1β, and IL-2.—Xi, S., D. Cohen, and L. H. Chen. Effects of fish oil on cytokines and immune functions of mice with murine AIDS.

Human cytosolic folylpolyglutamate synthetase (FPGS) was expressed in Escherichia coli and purified to homogeneity. Tetrahydrofolate and dihydrofolate were the most effective substrates, while 5-substituted folates were poor substrates. Most pteroyldiglutamates were better substrates than monoglutamates. The human FPGS gene spans 12 kilobases and contains 15 exons and 14 introns. A single FPGS gene was located to chromosome region 9q34.1. Four exon 1 variants were identified, each of which was spliced to exon 2. The exon 1 variant corresponding to the isolated cDNA contains two ATG codons and multiple transcription start sites in this region generates mitochondrial and cytosolic FPGS (Freemantle, S. J., Taylor, S. M., Krystal, G., and Moran, R. G. (1995) J. Biol. Chem. 270, 9579-9584). Exons 1B and 1C, generated by alternate splicing in intron 1, and exon 1A, which is 5′ to exon 1 and may encode an additional mitochondrial isoform, are preceded by a number of potential promoter sites. Chinese hamster ovary cell transfectants expressing FPGS activity in the mitochondria contained normal mitochondrial and low cytosolic folylpolyglutamate pools. Mitochondrial FPGS activity is required for mitochondrial folate accumulation, while cytosolic FPGS activity is needed for establishment of normal cytosolic folate pools. The reconstructed FPGS gene restored normal cytosolic and mitochondrial folate metabolism in hamster cells.

The effects of murine AIDS infection on endogenous antioxidant defenses in mice fed the AIN-76A liquid diet were investigated. C57BL/6 female mice were divided into 2 groups: one group was injected interperitoneally with LP-BM5 murine retrovirus (MAIDS) stock, and the other group served as the non-infected control. Two weeks after the infection, the mice were killed and livers were excised for biochemical analysis of the antioxidant defenses. Liver reduced glutathione (GSH) levels and activities of both cytosolic Superoxide dismutase (SOD) and mitochondrial SOD were significantly depressed by MAIDS infection. Activities of glutathione reductase (GR), selenium (Se)-dependent glutathione peroxidase (GPx), catalase and glutathione-S-transferase (GST) toward 1-chloro-2,4-dinitrobenzene (CDNB) were not affected by MAIDS infection. A previous study by this laboratory using the Lieber-DeCarli (L-D) all purpose liquid diet caused a decline in total SOD activity and GPx activity, but not GSH levels. The results suggest that MAIDS infection depresses liver antioxidant defenses; however, MAIDS infection of mice fed the AIN-76A liquid diet depresses different liver antioxidant defense parameters when compared to those of the mice fed the L-D all purpose liquid diet.

Glutathione-S-transferases (GST) are a group of enzymes which detoxify electrophilic xenobiotics (including drugs, carcinogens and their metabolites), and thus may be involved in the age-related pathologic process. Effects of a 30% dietary restriction on liver GST activities toward seven substrates were studied in male Lobund-Wistar (L-W) rats at 6, 12, 18, 24 and 30 months of age. The enzyme activities in the ad libitum (AL) group toward 1-chloro-2,4-dinitrobenzene (CDNB), bromosulfophthalein (BSP), 4-nitropyridine-N-oxide (NPNO), p-nitrobenzyl chloride (NBC), trans-4-phenyl-3-buten-2-one (PBO) and styrene oxide (STOX) did not change with age, while those toward 1,2-dicholoro-4-nitrobenzene (DCNB) decreased after middle age. The enzyme activities in the dietary restricted (DR) group toward CDNB and STOX did not change with age, while those toward DCNB, BSP, NPNO, NBC and PBO decreased after middle age. The DR group had significantly higher GST activities than the AL group, especially at 18 months, when BSP, NPNO, NBC and PBO were used as the substrates. Dietary restriction did not affect GST activities toward all seven substrates at old age. These results are substrate-specific, indicating that isozyme-specific changes in GST activities occur with dietary restriction and aging. The results suggest that dietary restriction enhances liver detoxification capability associated with GSH conjugation in middle age, which may contribute to the delaying of the age-related pathologic process until a later point in life in this animal model.