‘BIG DATA’, THE ‘INTERNET OF THINGS’ AND THE ‘INTERNET OF SIGNS’

This paper examines the relationship between so‐called ‘Big Data’, the ‘Internet of Things’ (the ‘Internet of People and Things,’ and the ‘Internet of Everything’), and the ‘Internet of Signs.’ In particular, we investigate how the ‘things’ in the ‘Internet of Things’ generate ‘Big Data’, and how both are used to generate semiotic ‘signs’. In addition, we analyse the importance of context in and the relationships between ‘Big Data’, the ‘Internet of Things’, and the ‘Internet of Signs’. Copyright © 2013 John Wiley & Sons, Ltd.     

Cross‐market spillovers with ‘volatility surprise’

This article adopts the asymmetric DCC with one exogenous variable (ADCCX) model developed by Vargas (2008), by updating the concept of ‘volatility surprise’ to capture cross-market relationships. Current methods for measuring spillovers do not focus on volatility interactions, and neglect cross-effects between the conditional variances. This paper aims to fill this gap. The dataset includes four aggregate indices representing equities, bonds, foreign exchange rates and commodities from 1983 to 2013. The results provide strong evidence of spillover effects coming from the ‘volatility surprise’ component across markets. Against the background of the recent financial crisis, the aim is to contribute to the literature on the interdependencies of financial markets, both in conditional means and (co)variances. In addition, asset management implications are derived.     

The ‘SKADE LITorSET’ Expert System for Corporate ‘Litigate or Settle’ Decisions

The ‘SKADE LITotSET’ system is a blackboard-based expert system that makes ‘litigate or settle’ decisions in the product liability area. It has three knowledge sources: Legal, Manager and Insurance Adjuster. The combined expertise from each of these is required to solve the ‘litigate or settle’ problem. The control component co-ordinates the interaction between the various knowledge sources on the blackboard. Based on the latest changes to the data on the blackboard, it selects and executes the next knowledge source. The model reproduces the decision makers' opportunistic reasoning processes by the interaction between the various knowledge sources through the blackboard. The results of analyses of a hypothetical case through a series of experiments with the ‘SKADE LITorSET’ system indicate that the blackboard is an appropriate model for development of expert systems in the ‘litigate or settle’ decision domain. The initial success with the blackboard approach suggests that further work needs to be done to see whether more complex models can be built to incorporate a broader range of determinants of settlement decisions.     

How do ‘busy’ and ‘overlap’ directors relate to CEO pay structure and incentives?

We examine how CEO compensation is affected by the presence of busy and overlap directors. We find that CEOs at firms with more busy directors receive greater total pay, fixed salary and equity‐linked pay and exhibit higher pay‐performance (delta) and pay‐risk (vega) sensitivities. Our results also suggest that CEOs at firms with more overlap directors take smaller total pay and equity‐linked pay and reveal lower delta and vega. We further show that the impact of busy and overlap directors on CEO pay is more visible for firms with less complexity and low information acquisition cost.     

‘Obedience’ in the classroom

The second general standard of the AICPA states “In all matters relating to the assignment, an independence in mental attitude is to be maintained by the auditor or auditors.” Despite assertions that the ultimate responsibility of independence rests with the individual auditor, emphasis is typically placed on the AICPA's code of ethics in the auditing classroom. But, does such an approach reflect and accentuate the ultimate moral responsibility of the individual? The purpose of this paper is to discuss the use of Milgram's film “Obedience,” which portrays a psychological experiment on response to authority, as a means of dramatizing the subtle nature of “mental independence” to auditing students.The paper describes the use of this film in auditing instruction and the corresponding response of students. Recommendations for effective administration of the film are offered.     

‘Hot’ Debt Markets and Capital Structure

This paper examines the motives of debt issuance during hot‐debt market periods and its impact on capital structure over the period 1970–2006. We find that perceived capital market conditions as favourable, an indication of market timing, and adverse selection costs of equity (i.e., information asymmetry) are important frictions that lead certain firms to issue more debt in hot‐ than cold‐debt market periods. Using alternative hot‐debt market issuance measures and controlling for other effects, such as structural shifts in the debt market, industry, book‐to‐market, price‐to‐earnings, size, tax rates, debt market conditions and adjustment costs based on debt credit ratings, we find that firms with high adverse selection costs issue substantially more (less) debt when market conditions are perceived as hot (cold). Moreover, the results indicate that there is a persistent hot‐debt market effect on the capital structure of debt issuers; hot‐debt market issuing firms do not actively rebalance their leverage to stay within an optimal capital structure range.