Predictive view of the value relevance of earnings in India

Purpose This study aims to examine the value relevance of earnings in terms of predicting the value variables such as cash flow, capital investment (CI), dividend and stock return under the Indian institutional settings. Design/methodology/approach The study used panel Granger causality tests to examine causality relationships among variables and panel data regression models to check the statistical associations between earnings and value variables. Findings Based on a data set of 7,280 Bombay Stock Exchange-listed firm-years spanning over ten years from March 2009 to March 2018, the results show higher sensitivity of earnings toward cash flows, CI, divided and stock return and vice-versa. Further, the findings deduced from the empirical results demonstrate that earnings are positively related to value variables. Overall, the results established that earnings are value-relevant and have predictive ability to forecast the value variables that facilitate investors in portfolio valuation. The results are consistent with the predictive view of the value relevance of earnings. Several robustness checks confirm these results. Originality/value This study brings new empirical evidence from a distinct capital market, India, and provides a new facet to the value relevance debate in terms of its prediction view. The study is among earlier attempts that jointly measure the ability of earnings in forecasting different value variables by taking a uniform sample of firms at the same period. Hence, the study provides a comprehensive view of the predictive ability of reported earnings.

A portable and high-integrated 3D microfluidic chip for bacterial quantification and antibiotic susceptibility testing

On-site single-cell antibiotic susceptibility testing (sc-AST) provides unprecedented technical potential to improve the treatment of bacterial infections and study heterogeneous resistance to antibiotics. Herein, we developed a portable and high-integrated 3D polydimethylsiloxane (PDMS) chip to perform fast and on-site bacteria quantification and sc-AST. The 3D arrangement of the chambers significantly improved the integration of reaction units (~10000/cm2) and widened the dynamic range to 5 orders of magnitude. A capillary valve-based flow distributor was adopted for flow equidistribution in 64 parallel channels and uniform sample loading in as short as 2 s. The degassed PDMS enabled this device to independently dispense the sample into 3D chamber array with almost 100% efficiency. The quantification of Escherichia coli (E. coli) strains with various activity was accomplished in 0.5-2 h, shortened by 20 h in comparison to the traditional plate counting. The functionality of our platform was demonstrated with several effective antibiotics by determining minimum inhibitory concentrations at single-cell level. Furthermore, we utilized the lyophilization of test reagents and needle-mediated reagents rehydration to realize one-step on-site sc-AST. The results indicate that the proposed sc-AST platform is portable, highly sensitive, fast, accurate and user-friendly, thus it has the potential to facilitate precise therapy in time and monitor the treatment. Meanwhile, it could serve as an approach for investigating the mechanisms of heteroresistance at single-cell resolution.

Gross profit manipulation in emerging economies: evidence from India

Purpose This study aims to explore peer performance as the motivation behind gross profit manipulation through two different channels, namely, cost of goods sold (COGS) misclassification and revenue misclassification. Design/methodology/approach Gross profit expectation model (Poonawala and Nagar, 2019) and operating revenue expectation model (Malikov et al., 2018) are used to measure COGS and revenue misclassification, respectively. The panel data regression models are used to analyze the data for this study. Findings The study results show that firms engage in gross profit manipulation to meet the industry’s average gross margin, implying that peer performance is an important benchmark that firms strive to achieve through misclassification strategies. Further results exhibit that firms prefer COGS misclassification over revenue misclassification for manipulating gross profit, implying that firms choose the shifting strategy based on the relative advantage of each shifting tool. Practical implications The findings suggest that firms that just meet or slightly beat industry-average profitability levels are highly likely to engage in classification shifting (CS). Thus, investors and analysts should be careful when evaluating such firms by comparing them with other firms in the same industry. Originality/value First, this study is among earlier attempts to investigate CS motivated by peer performance. Second, this study investigates both tools of gross profit manipulation by taking a uniform sample of firms over the same period and provides compelling evidence that firms prefer one shifting tool over another depending on the relative advantage of each shifting tool.

FIRST FINDINGS ON COMETARY ACTIVITY FROM THE PTF COMET SAMPLE

We present preliminary results from the Palomar Transient Factory (PTF) uniform sample of short period comets (SPCs) and long period comets (LPCs), captured between September 2009 and March 2013. We study their dynamical and physical properties in relation to their activity for a better understanding of cometary evolution. This observing campaign was part of PTF in its intermediate phase (iPTF) at the California Institute of Technology (Caltech). The photometric sample comprises more than 180 comets, which makes it one of the largest samples studied to-date. We present a new approach to identifying active comets that compares subtracted aperture magnitudes of comets with the distribution of stars of similar brightness in each image. In this paper, we present initial findings on cometary activity in relationship to their perihelion distances. We show differences between the distributions of the SPCs and that of the LPCs. As others predicted, it seems that a larger fraction of LPCs are found to be active at larger perihelia than for the SPCs. We look at ratios of active comets in different perihelia brackets and compare those to previous works and results. We do not discuss the statistical significance of our findings as this is still work in progress.

Impact of upward and downward earnings management on stock returns

PurposeThe current study aims at examining the impact of upward and downward earnings management on the cross-sections of stock return. The study also examines the moderating role of cross-sectional effects on the association between earnings management and stock returns.Design/methodology/approachThe study employed univariate and bivariate-sorted portfolio-level analysis to investigate the issue. Fama–Macbeth cross-sectional regression is used to analyze the moderating role of different cross-sectional effects. The study used a sample of 3085 Bombay Stock Exchange (BSE) listed stocks spanning over 20 years from January 2000 to December 2019.FindingsThe findings suggest that investors have different perceptions toward different forms of earnings management. In other words, results exhibit that investors perceive downward earnings management as an element of risk; hence, they discount the returns at a higher rate. On the contrary, results show that upward earnings management is positively perceived by the investors; hence, they hold the stocks even at a lower rate of return. This relation is found to be consistent even after controlling the impact of marker effect, size effect, value effect and momentum effect.Originality/valueThis study is among pioneering studies that consider the direction of earnings management while examining its impact on the stock return. This study is also among the earlier attempts to examine the moderating role of four different cross-sectional effects by taking a uniform sample of stocks over the same period.

Transportation container for pre-processing cytogenetic assays in radiation accidents

We report a shipping container that enables a disruptive logistics for cytogenetic biodosimetry for radiation countermeasures through pre-processing cell culture during transportation. The container showed precise temperature control (< 0.01 °C) with uniform sample temperature (< 0.1 °C) to meet the biodosimetry assay requirements. Using an existing insulated shipping box and long shelf life alkaline batteries makes it ideal for national stockpile. Dose curve of cytogenetic biodosimetry assay using the shipping container showed clear dose response and high linear correlation with the control dose curve using a laboratory incubator (Pearson’s correlation coefficient: 0.992). The container’s ability of pre-processing biological samples during transportation could have a significant impact on radiation countermeasure, as well as potential impacts in other applications such as biobanking, novel molecular or cell-based assays or therapies.

Approximate Mining of Frequent -Subgraph Patterns in Evolving Graphs

“Perhaps he could dance first and think afterwards, if it isn’t too much to ask him.” S. Beckett, Waiting for Godot Given a labeled graph, the collection of -vertex induced connected subgraph patterns that appear in the graph more frequently than a user-specified minimum threshold provides a compact summary of the characteristics of the graph, and finds applications ranging from biology to network science. However, finding these patterns is challenging, even more so for dynamic graphs that evolve over time, due to the streaming nature of the input and the exponential time complexity of the problem. We study this task in both incremental and fully-dynamic streaming settings, where arbitrary edges can be added or removed from the graph. We present TipTap , a suite of algorithms to compute high-quality approximations of the frequent -vertex subgraphs w.r.t. a given threshold, at any time (i.e., point of the stream), with high probability. In contrast to existing state-of-the-art solutions that require iterating over the entire set of subgraphs in the vicinity of the updated edge, TipTap operates by efficiently maintaining a uniform sample of connected -vertex subgraphs, thanks to an optimized neighborhood-exploration procedure. We provide a theoretical analysis of the proposed algorithms in terms of their unbiasedness and of the sample size needed to obtain a desired approximation quality. Our analysis relies on sample-complexity bounds that use Vapnik–Chervonenkis dimension, a key concept from statistical learning theory, which allows us to derive a sufficient sample size that is independent from the size of the graph. The results of our empirical evaluation demonstrates that TipTap returns high-quality results more efficiently and accurately than existing baselines.

Influence of firm size and firm age on classification shifting: an empirical study on listed firms in India

Purpose Prior studies document that managers engaged in shifting of non-operating revenue to operating revenue (revenue shifting) and shifting of operating expenses to non-operating expenses (expense shifting (ES)) within income statement to report inflated operating profits of firms. This study aims to identify the factors affecting revenue shifting and ES. Design/methodology/approach The operating revenue model (Malikov et al., 2018) and the core earnings expectation model (McVay, 2006) are used for measuring revenue shifting and ES, respectively. The panel data regression models are used to analyze the data for this study. Findings The study results show that large and old firms are engaged in revenue shifting, whereas small and young firms prefer ES over revenue shifting for reporting inflated operating profits. These results imply that firms choose the shifting strategy based on relative advantage and ease in execution. The results are robust after controlling for accruals earnings management, real earnings management and endogeneity bias. Practical implications It suggests investors minutely investigate the operating performance metrics of initial public offering firms that are relatively small and young while buying their shares. Besides, findings suggest accounting standard setters make more mandatory disclosure requirements for recording expense and revenue items in the income statement to curb this corporate misfeasance of classification shifting. Originality/value This is among the earlier attempts to identify firm-specific factors that incentivize firms to prefer one form of shifting over another. Second, the study jointly examines both forms of shifting by taking a uniform sample of firms over the same period. Most of the prior studies have examined one form at a time.

Tracing the evolution of dust-obscured activity using sub-millimetre galaxy populations from STUDIES and AS2UDS

ABSTRACT We analyse the physical properties of 121 SNR ≥ 5 sub-millimetre galaxies (SMGs) from the STUDIES 450 μm survey. We model their UV-to-radio spectral energy distributions using magphys+photo-z and compare the results to similar modelling of 850 μm-selected SMG sample from AS2UDS, to understand the fundamental physical differences between the two populations at the observed depths. The redshift distribution of the 450-μm sample has a median of z = 1.85 ± 0.12 and can be described by strong evolution of the far-infrared luminosity function. The fainter 450-μm sample has ∼14 times higher space density than the brighter 850-μm sample at z ≲ 2, and a comparable space density at z = 2–3, before rapidly declining, suggesting LIRGs are the main obscured population at z ∼ 1–2, while ULIRGs dominate at higher redshifts. We construct rest-frame ∼180-μm-selected and dust-mass-matched samples at z = 1–2 and z = 3–4 from the 450 and 850-μm samples, respectively, to probe the evolution of a uniform sample of galaxies spanning the cosmic noon era. Using far-infrared luminosity, dust masses, and an optically thick dust model, we suggest that higher redshift sources have higher dust densities due to inferred dust continuum sizes which are roughly half of those for the lower redshift population at a given dust mass, leading to higher dust attenuation. We track the evolution in the cosmic dust mass density and suggest that the dust content of galaxies is governed by a combination of both the variation of gas content and dust destruction time-scale.

The Lx–Luv–Lradio relation and corona–disc–jet connection in optically selected radio-loud quasars

ABSTRACT Radio-loud quasars (RLQs) are more X-ray luminous than predicted by the X-ray–optical/UV relation (i.e. $L_\mathrm{x}\propto L_\mathrm{uv}^\gamma$) for radio-quiet quasars (RQQs). The excess X-ray emission depends on the radio-loudness parameter (R) and radio spectral slope (αr). We construct a uniform sample of 729 optically selected RLQs with high fractions of X-ray detections and αr measurements. We find that steep-spectrum radio quasars (SSRQs; αr ≤ −0.5) follow a quantitatively similar $L_\mathrm{x}\propto L_\mathrm{uv}^{\gamma }$ relation as that for RQQs, suggesting a common coronal origin for the X-ray emission of both SSRQs and RQQs. However, the corresponding intercept of SSRQs is larger than that for RQQs and increases with R, suggesting a connection between the radio jets and the configuration of the accretion flow. Flat-spectrum radio quasars (FSRQs; αr &gt; −0.5) are generally more X-ray luminous than SSRQs at given Luv and R, likely involving more physical processes. The emergent picture is different from that commonly assumed where the excess X-ray emission of RLQs is attributed to the jets. We thus perform model selection to compare critically these different interpretations, which prefers the coronal scenario with a corona–jet connection. A distinct jet component is likely important for only a small portion of FSRQs. The corona–jet, disc–corona, and disc–jet connections of RLQs are likely driven by independent physical processes. Furthermore, the corona–jet connection implies that small-scale processes in the vicinity of supermassive black holes, probably associated with the magnetic flux/topology instead of black hole spin, are controlling the radio-loudness of quasars.