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This article investigates the source of 10b5-1 plan insiders’ superior trade performance. Specifically, this article examines whether insiders trade on their private information about the firm’s future earnings performance through 10b5-1 sell trades and the features of 10b5-1 plan trades that are exploited to achieve superior trade performance. I find strong evidence that insiders use 10b5-1 plans to sell stock before disappointing earnings results. However, there is no evidence of earnings management around 10b5-1 sales, consistent with insiders’ good trade timing deriving from their foreknowledge about unfavorable earnings news rather than their ability to influence the timing and recognition of earnings performance. Restricting the sample to insiders who trade both before and after the implementation of Rule 10b5-1, I find that these insiders traded aggressively on earnings information even in the pre-10b5-1 era, but then shifted aggressive trading into 10b5-1 plans after the availability of planned trading, implying an unintended consequence of Rule 10b5-1. Finally, I document that strategic 10b5-1 trades tend to be infrequent, irregularly timed, close to the plan initiation date, and executed during traditional earnings blackout periods, revealing problematic features within 10b5-1 plans.

Anxiety is characterized by feelings of tension and worry even in the absence of threatening stimulus. Pathological condition of anxiety elicits defensive behavior and aversive reaction ultimately impacting individuals and society. The gut microbiota has been shown to contribute to the modulation of anxiety-like behavior in rodents through the gut-brain axis. Several studies observed that germ-free (GF) and the broad spectrum of antibiotic cocktail (ABX)-treated rodents display lowered anxiety-like behavior. We speculate that gut microbial short-chain fatty acids (SCFA) modulate the innate anxiety response. Herein, we administered SCFA in the drinking water in adult mice treated with ABX to deplete the microbiota and tested their anxiety-like behavior. To further augment the innate fear response, we enhanced the aversive stimulus of the anxiety-like behavior tests. Strikingly, we found that the anxiety-like behavior in ABX mice was not altered when enhanced aversive stimulus, while control and ABX mice supplemented with SCFA displayed increased anxiety-like behavior. Vagus nerve serves as a promising signaling pathway in the gut-brain axis. We determined the role of vagus nerve by subdiaphragmatic vagotomy (SDV) in ABX mice supplemented with SCFA. We found that the restored anxiety-like behavior in ABX mice by SCFA was unaffected by SDV. These findings suggest that gut microbiota can regulate anxiety-like behavior through their fermentation products SCFA.

We examine how the qualitative characteristics of a non-GAAP earnings disclosure reveal the quality of the non-GAAP performance metric itself. We measure the qualitative aspects of the non-GAAP disclosure using an index of 12 hand-coded characteristics and presentation choices that provide context to non-GAAP disclosures. We find that more transparent qualitative information in non-GAAP disclosures is associated with more transitory non-GAAP exclusions and a lower likelihood that managers will aggressively exclude expenses in calculating non-GAAP earnings to meet or beat analysts’ forecasts. We also find that the association between non-GAAP exclusions and earnings announcement period returns is less negative for firms with more transparent qualitative information accompanying their non-GAAP disclosures. Overall, these results suggest that qualitative characteristics of non-GAAP disclosures convey useful information about the quality of non-GAAP earnings metrics.

This paper documents that investors value unexpected changes in a firm’s relative earnings performance (REP) in addition to its absolute earnings surprise on the firm’s earnings announcement date. Consistent with REP filtering out industry-wide common shocks and conveying information about the firm’s competitive advantage over its industry peers, investors react more strongly to unexpected relative earnings for firms with a stronger peer-firm earnings correlation and for firms with fewer growth options in their operations relative to their industry peers. Moreover, current unexpected REP is positively associated future growths in sales, market share, and earnings performance, suggesting that firms with stronger REP are better able to capture future industry opportunities.

Conventional orthogonal frequency division multiple access (OFDMA) burst construction methods can only support limited numbers of connections due to the map overhead and corresponding limitations in the numbers of orthogonal resources blocks, which limits the capacity of current 4G and the following 5th generation (5G) networks. This study therefore provides a novel OFDMA burst construction algorithm and enhanced burst indexing aware algorithm (EHA), which try to maximize the throughput while considering the subchannel diversity and optimizing burst indexing issues. The EHA not only allocates the subchannels with the best channel quality for each burst, but also groups the bursts to alleviate the MAP overhead. Simulation results showed that the EHA yields two times the throughput that has been achieved using previous algorithms under a heavy load. Two contributions of the EHA are: (1) the overhead of burst indexing decreases because massive numbers of connections can be accommodated by one burst, and (2) the overall throughput increases due to that one connection with large data transferring requirements can be split and distributed into several bursts and placed on the subchannels with good channel quality to adopt better modulation coding scheme (MCS), if the saved bandwidth in this burst construction is more than the increased overhead of burst indexing.

This study examines how the elimination of the 20-F reconciliation requirement affects the quality of accounting data prepared by cross-listed firms that report under IFRS as promulgated by the IASB (hereafter CL IFRS firms). Using IFRS-adopting firms that are not cross-listed in the U.S. (hereafter NCL IFRS firms) as the control sample, we find that CL IFRS firms experience a decrease in the magnitude of accounting discretion, a change in the asymmetric timeliness of earnings, and an improvement in the value relevance of reported earnings between the pre- and the post-elimination periods. These results suggest that the SEC's previous reconciliation requirement may have an unintended negative effect on CL IFRS firms' incentives in the application of IFRS. Comparing accounting quality under IFRS and U.S. GAAP in the post-elimination period, our additional analysis shows that the quality of accounting data prepared using IFRS by CL IFRS firms is comparable to that prepared using U.S. GAAP by U.S. firms, except that IFRS-based numbers exhibit less earnings asymmetry than U.S. GAAP-based numbers.

We examine how corporate insiders profit from private information about future earnings performance through SEC Rule 10b5-1 trading plans. We first provide evidence consistent with insiders using 10b5-1 plans to sell stock in advance of disappointing earnings results. We then examine insiders who not only currently use 10b5-1 plans, but also actively traded their own company’s stock prior to the availability of such plans. We find that this group traded aggressively on earnings information prior to 10b5-1, but then shifted their aggressive trading into 10b5-1 plans after the availability of planned trading. We also document several questionable patterns associated with their trading behavior. Namely, their trades tend to be irregularly timed, close to the plan initiation date, infrequent in nature, and executed during traditional earnings blackout periods. In terms of firm characteristics, these insiders are more likely to be employed at firms with weaker firm governance and lower institutional ownership.

We analyzed a panel of cationic molecules secreted in the culture medium of human respiratory epithelial cells (REC) upon activation by IL-1β and different pathogen-associated molecular patterns. A 9 kDa fragment derived from β2-microglobulin (B2M) was identified and named shed 9 kDa B2M (sB2M-9). The primary structure of sB2M-9 was revealed to increase its pI value that potentially could play an important role in innate defense. sB2M-9 exhibits antibacterial activity against Gram positive Staphylococcus aureus (SA) but not against Gram negative Klebsiella pneumonia (KP). Upon its binding to SA, sB2M-9 induces clumps, a phenomenon not observed with B2M. Migration of THP-1 monocytes exposed to SA clumps was significantly greater than that to SA without clumps. sB2M-9 binds to SA, more likely as a chemokine, to facilitate THP-1 migration. As a whole, we demonstrated that REC release a novel chemokine with antibacterial activity that is shed from B2M to facilitate THP-1 migration.

We investigate the extent to which employee stock option (ESO) cutbacks around issuance of SFAS 123R are explained by eliminating the favorable accounting treatment available to firms prior to SFAS 123R and the economic consequences of such ESO cutbacks. We find a reduction in the grant day fair value of ESOs to all employees, which is an increasing function of the accounting benefits the firm derived from ESOs’ favorable accounting treatment prior to SFAS 123R. The removal of these accounting benefits explains 20% (45%) of ESO cutbacks around the issuance of SFAS 123R for our sample median (mean) firm. We do not find that firms cutting back more on the use of ESOs experienced a greater decrease in firm performance. Rather, a dollar increase in ESOs is associated with higher future productivity and higher future firm value in the post-SFAS 123R period. Collectively, our evidence suggests that ESOs’ favorable accounting treatment prior to SFAS 123R provided firms with incentives to make compensation decisions that minimized accounting expense but did not maximize firm value. We show that firms were more likely to replace ESOs with restricted stock and long-term incentive plans post-SFAS 123R but the substitution was far less than dollar for dollar.

We investigate whether the firm’s corporate governance affects the value of equity grants for its CEO. Consistent with the managerial power view, we find that more poorly-governed firms grant higher values of stock options and restricted stock to their CEOs after controlling for the economic determinants of these grants. We show that the negative relation between governance strength and equity grants is not likely to be attributable to omitted economic factors or substitution effects between governance strength and equity incentives. As further evidence consistent with the managerial power view, we show that firms with poorer governance in the pre-Enron era cut back more on using employee stock options (ESOs) for their CEOs in the post-Enron era, a period when the accounting and outrage costs of ESOs increased, consistent with poorly-governed firms taking more advantage of opaque ESO accounting rules than better-governed firms. We show that the association between governance strength and abnormal equity grants is less negative in the post-Enron period than it was in the pre-Enron period, consistent with firms making more efficient equity-granting decisions after the corporate governance changes mandated by the Sarbanes–Oxley Act of 2002 and the major US stock exchanges took effect.

A solution treated C-250 maraging steel tubing pre-form was cold forward flow-formed into a seamless tube to attain a 79% wall thickness reduction. Various heat treatments were then conducted on the tube to strengthen the material. This study found that although direct aging treatment could generate the tensile strength exceeded the specification's requirement in all the heat treatment attempts, the C-250 steel suffered loss of ductility in percentage elongation. Through “solution + aging” treatment, the steel's ductility was much improved and tensile properties can still meet the specification. The pre-treatment of high homogenization temperature could produce coarse lath martensitic microstructure and result in a decrease of the tensile strength of the C-250 steel. Furthermore, the C-250 steel also showed the presence of seemingly globular precipitates within the lath structure. Detailed discussion of mechanical properties obtained for each of the heat-treated steels in terms of microstructures and metallographic works was presented.

Statement of Financial Accounting Standards No. 130: Reporting Comprehensive Income encourages enterprises to report comprehensive income on a performance statement rather than on a statement of equity. We investigate the reporting decisions of 82 publicly traded property-liability insurers that are fairly evenly split in their choice. Our results demonstrate that insurers with a tendency to manage earnings through realized securities' gains and losses (that is, cherry pickers), as well as insurers with a reputation for poor disclosure quality, are more likely to report comprehensive income in a statement of equity. Apparently, these insurers face the highest cost of transparency. We do not find a relation between the reporting decision and the volatility of comprehensive income relative to the volatility of net income. Our findings that insurers' comprehensive income reporting choices are a reflection of their proclivity toward cherry picking as well as their level of disclosure quality should be of interest to standard-setters because of the controversy over standard-setters' preference for mandating all firms to report comprehensive income in a performance statement.

In substrate or PCB design, the escape routing problem is considered an essential part and has been widely studied in literature. There are industrial tools and some studies that work on simultaneous escape routing and escape routing of differential pairs on dense circuit boards. However, to route differential pairs simultaneously considering length-matching is still an important and on-going research problem. In this work, inspired by prior state-of-the-arts, we have implemented an integrated approach that achieves simultaneous escape routing considering length matching of differential pairs, our method avoids time-consuming ILP solutions in finding length-matching differential signal paths. Experimental results show that our approach can efficiently and effectively obtain length-matching of differential pairs on simultaneous escape routing to reduce differential-pair skews, compared with B-escape router we reimplemented.

We provide evidence that the market prices a firm’s industry-relative earnings performance. Specifically, we find that both positive price responses to earnings successes and negative responses to failures are increasing in the industry success rate. This pricing appears rational in the sense that a firm’s industry-relative performance is informative regarding its future earnings and cash flows. This pricing effect is more pronounced for firms that announce earnings later than do industry peers and for firms whose earnings are more highly correlated with those of industry peers. Our contribution is to provide specific evidence on the current pricing and future performance benefits of relative performance outcomes.

We investigate whether corporate governance affects the use of employee stock options (ESOs) in CEOs' compensation packages. Consistent with the managerial power view, we find that firms with poorer corporate governance grant their CEOs higher values of ESOs after controlling for the economic determinants of ESO use. We show that the relation between governance strength and ESO grant values cannot be attributed to two other plausible explanations: omitted economic factors or substitution effects between corporate governance and incentive compensation. Also consistent with the managerial power view, we show that firms with poorer governance in the pre-SFAS 123R period cut back more on ESO grant values for their CEOs after the issuance of SFAS 123R which mandated ESO expensing. Our last finding is consistent with poorly governed firms taking relatively more advantage of the favorable accounting treatment for ESOs in the pre-SFAS 123R period by granting their CEOs excess ESOs, suggesting that agency problems associated with poor corporate governance contribute to excessive ESO use

We investigate the causes and consequences of changes in option-based compensation for the top five executives around the issuance of SFAS 123R, which requires firms to expense the fair value of their employee stock options (ESOs) on their income statements. We hypothesize that firms with greater tendencies to substitute ESOs for other forms of compensation to report higher earnings pre SFAS 123R cut back more on ESOs. Consistent with our hypotheses, we find that reduction in the proportion of total compensation paid in ESOs increased in the firm's propensity to take advantage of ESOs' favorable accounting as proxied by debt contracting concerns, tendency to achieve earnings benchmarks using ESOs' favorable accounting treatment, corporate governance weakness, and if the firm accelerated vesting of outstanding ESOs in response to SFAS 123R. We show that firms replaced ESOs with restricted stock post SFAS 123R, but the substitution was less than dollar for dollar. We also find that ESO cutbacks around the issuance of SFAS 123R reduced abnormal compensation without harming firms' operating performance.

We investigate the determinants and consequences of the changes in option-based compensation for the top five executives around the issuance of SFAS 123R. We find that the reduction in the proportion of total compensation paid in employee stock options (ESOs) increases in (1) the firm's tendency to take advantage of ESO's favorable accounting treatment to report higher earnings in the pre-expensing period (as proxied by debt contracting concerns, pressure to meet or beat earnings benchmarks and corporate governance strength); and (2) the amount of ESO expense to be recognized upon adopting SFAS 123R (as proxied by the values of annual ESO grants and unvested outstanding ESOs pre SFAS 123R). Our findings are consistent with ESOs' favorable accounting treatment prior to SFAS 123R having a significant effect on boards' executive compensation decisions. We show that firms were more likely to replace ESOs with restricted stock but not with other forms of compensation post SFAS 123R. The substitution between restricted stock and ESOs, however, was far less than dollar for dollar, and that ESO cutbacks around the issuance of SFAS 123R resulted in reduced abnormal compensation.

This paper empirically examines whether and how credit rating agencies incorporate the information contained in outstanding employee stock options (ESOs) when assessing the credit risk of the issuing company. I hypothesize that outstanding ESOs play two informational roles in credit risk assessments - signaling equity infusion and predicting future repurchases - that help credit rating agencies evaluate the cash flow implications at the settlement of ESO contracts. My empirical analyses show that the fair value of outstanding ESOs has a negative impact on the issuer's credit rating after controlling for information risk, operating risk, incentive effects, and other known factors that affect perceived credit risk. This adverse impact is more pronounced for companies that repurchase shares in response to ESO exercise and is robust to the control of the endogenous choices of option issuance and ESO-related repurchases. Moreover, I find that the fair value change in outstanding ESOs subsequent to the grant date is incrementally informative about credit ratings beyond the grant date fair value. Collectively, these findings are consistent with the hypothesis that credit rating agencies incorporate in their credit risk assessments the information conveyed by outstanding ESOs about potential cash outflows associated with ESO-related repurchases. I do not find, however, that the present value of the expected proceeds from option exercise is associated with credit ratings. This latter finding suggests that credit rating agencies do not attach additional valuation on ESOs' promise to create future equity beyond the information that has been reflected in the fair value of outstanding ESOs.