A practical road map for assessing cyber risk

The increase in interconnectivity and developments in technology have caused cyber security to become a universal concern. This paper highlights the dangers of the evolution of cyber risk, the challenges of quantifying the impact of cyber-attacks and the feasibility of the traditional actuarial methodologies for quantifying cyber losses. In this paper, we present a practical roadmap for assessing cyber risk, a roadmap that emphasizes the importance of developing a company and culture-specific risk and resilience model. We develop a structure for a Bayesian network to model the financial loss as a function of the key drivers of risk and resilience. We use qualitative scorecard assessment to determine the level of cyber risk exposure and evaluate the effectiveness of resilience efforts in the organization. We highlight the importance of capitalizing on the knowledge of experts within the organization and discuss methods for aggregating multiple assessments. From an enterprise risk management perspective, impact on value should be the primary concern of managers. This paper uses a value-centric/reputational approach to risk management rather than a regulatory/capital-centric approach to risk.     

Firms cash management,adjustment cost and its impact on firms’ speed of adjustment: a cross country analysis

Review of Quantitative Finance and Accounting - We investigate the firms’ specific attributes that determine the difference in speed of adjustment (SOA) towards the cash holdings target in...     

‘Gay Enclaves Face Prospect of Being PassÉ': How Assimilation Affects the Spatial Expressions of Sexuality in the United States

Journalists, activists and academics alike predict that gay neighborhoods in the United States will disappear, yet many of their claims are unsubstantiated or overly determined by economic factors. This article examines 40 years of media accounts to identify the mechanisms that explain why these urban areas are changing. I begin with the observation that the rate of assimilation of sexual minorities into mainstream society has accelerated in today's so‐called ‘post‐gay' era. Assimilation expands the residential imagination of gays and lesbians beyond the boundaries of a specific neighborhood to the entire city itself. Furthermore, as sexual orientation recedes in centrality in everyday life, residents opine that few care if a person self‐identifies as gay or straight. These two respective mechanisms of expansion and cultural sameness bring existing economic wisdom into dialogue with a cultural and political perspective about how our shifting understandings of sexuality also affect the decisions we make about where to live and socialize.     

Bayesian and Bühlmann credibility for phase-type distributions with a univariate risk parameter

Credibility theory is a statistical tool to calculate the premium for the next period based on past claims experience and the manual rate. Each contract is characterized by a risk parameter. A phase-type (or PH) random variable, which is defined as the time until absorption in a continuous-time Markov chain, is fully characterized by two sets of parameters from that Markov chain: the initial probability vector and transition intensity matrix. In this article, we identify an interpretable univariate risk parameter from amongst the many candidate parameters, by means of uniformization. The resulting density form is then expressed as an infinite mixture of Erlang distributions. These results are used to obtain a tractable likelihood function by a recursive formula. Then the best estimator for the next premium, i.e. the Bayesian premium, as well as its approximation by the Bühlmann credibility premium are calculated. Finally, actuarial calculations for the Bühlmann and Bayesian premiums are investigated in the context of a gamma prior, and illustrated by simulated data in a series of examples.     

Measuring Production and Irrigation Efficiencies of Rice Farms: Evidence from the Punjab Province,Pakistan

We employ a non‐parametric approach, data envelopment analysis, to estimate the technical and irrigation efficiency of rice farms in the Punjab Province of Pakistan. We use a cross‐sectional dataset of 80 rice growers, including 45 tube‐well owners and 35 water buyers. Mean technical efficiency scores show that tube‐well owners and water buyers are operating at fairly high efficiency levels, indicating that access to technology is not a major constraint. However, irrigation inefficiency is pronounced, with water buyers being more inefficient than tube‐well owners. A bootstrap truncated regression is used to investigate the determinants of technical and irrigation efficiency. We suggest that groundwater management policies should be designed to address efficiency enhancing factors such as knowledge of crop water consumption requirement, better credit opportunities, outreach extension services and training programs.     

A near Pareto optimal auction with budget constraints

In a setup where a divisible good is to be allocated to a set of bidders with budget constraints, we introduce a mechanism in the spirit of the Vickrey auction. In the mechanism we propose, understating budgets or values is weakly dominated. Since the revenue is increasing in budgets and values, all kinds of equilibrium deviations from true valuations turn out to be beneficial to the auctioneer. We also show that ex-post Nash equilibrium of our mechanism is near Pareto optimal in the sense that all full winners? values are above all full losers? values.     

Externalities in the agricultural export sector and economic growth: a developing country perspective

For years economists have ignored the diversity in agriculture and its potential to increase long run growth rates by enhancing a country's knowledge base. Non-traditional agriculture requires significant investments in the infrastructure and knowledge; and therefore, has the potential to increase long run growth rates. Policy makers in developing countries have tended to enact macroeconomic policies designed to enhance the manufacturing sector at the expense of the agricultural sector. A theoretical model is developed to explain the dynamics between two non-traditional export sectors and the long run economic growth of the country. The model illustrates that growth in highly perishable agricultural exports, not domestic production of manufactured goods, can potentially lead to higher long run growth rates. The model is applied to the fruit and flower industries in Colombia to bring forth an example with real world relevance.     

Evaluation of medical costs associated with use of new oral anticoagulants compared with standard therapy among venous thromboembolism patients

Objective:

This study evaluated differences in medical costs associated with clinical end-points from randomized clinical trials that compared the new oral anticoagulants (NOACs), dabigatran, rivaroxaban, apixaban, and edoxaban, to standard therapy for treatment of patients with venous thromboembolism (VTE).

Research design and methods:

Event rates of efficacy and safety end-points from the clinical trials (RE-COVER, RE-COVER II, EINSTEIN-Pooled, AMPLIFY, Hokusai-VTE trial) were obtained from published literature. Incremental annual medical costs among patients with clinical events from a US payer perspective were obtained from the literature or healthcare claims databases and inflation adjusted to 2013 costs. Differences in total medical costs associated with clinical end-points for the NOACs vs standard therapy were then estimated. One-way and Monte Carlo sensitivity analyses were carried out.

Results:

A lower rate of major bleedings was associated with use of any of the NOACs vs standard therapy. Except for dabigatran, use of NOACs was also associated with a lower rate of recurrent VTE/death. As a result of the reduction in clinical event rates, the overall medical cost differences were ?$146, ?$482, ?$918, and ?$344 for VTE patients treated with dabigatran, rivaroxaban, apixaban, and edoxaban, respectively, vs patients treated with standard therapy.

Conclusions:

When any of the four NOACs are used instead of standard therapy for acute VTE, treatment medical costs are reduced. Apixaban is associated with the greatest reduction in medical costs, which is driven by medical cost reductions associated with both efficacy and safety end-points. Further evaluation may be needed to validate these results in the real-world setting.     

Africa and The Global System Disaster

Abstract: The study proposes a critical review of the national modernization project on which every African country embarked as from 1960. Beyond the number of variants of this project based on the social content of the national liberation movement and the development strategy options implemented, the author reviews what he considers to be their common denominator, applicable to the entire third world for the whole post-war (1945-90) period which he calls the Bandoung period. He describes it as a bourgeois project, although there is no real national bourgeoisie: an attempt to build “capitalism without capitalists”. He then proposes a list of its achievements, on the basis of his own criteria, that of national construction and those of the populism of some experiences. He also proposes a classification based on the supreme criterion of the logic of capitalist globalization, that of the capacity of new industries to be competitive on world markets and explains Africa's failure from this standpoint by the delay caused by colonization in solving the agricultural problem. In the light of these considerations, he reviews the nature of the challenges raised today by globalization and outlines the main features of the transformations required in the design of national and regional policies and in the organization of the world system which could sustain a new departure for Africa. Résumé: L‘étude propose une lecture critique du projet national de modernisation dans lequel l'ensemble des pays africains se sont engagés à partir de 1960. L'auteur examine, par delà la variété des variantes de ce projet tenant au contenu social du mouvement de libération national et aux options de stratégie de développement mises en oeuvre, ce qui lui apparaît constituer leur dénominateur commun, caractéristique de toute la période de l'après guerre (1945-90) pour l'ensemble du tiers monde. II qualifie cette période de Bandoung. II catalogue ce projet de bourgeois, en dépit de l'absence d'une véritable bourgeoisie nationale, et l'analyse comme une tentative de construction “d'un capitalisme sans capitaliste”. II propose ensuite un bilan de ses réalisations, sur la base de ses propres critères, celui de la construction nationale et ceux du populisme de certaines expériences. II propose également un classement fondé sur le crière suprême de la logique de la mondialisation capitaliste, celui de la capacité des industries nouvelles de faire face à la compétition sur le marché mondial et explique l’échec africain de ce point de vue par le retard que la colonisation a apportée à la révolution agricole. A à lumière de ces considérations il examine la nature des défis que la mondialisation constitute aujourd'hui et brosse les grands traits des transformations que s'imposent dans la conception des politiques nationales et régionales et dans l'organisation du système mondial, susceptibles de soutenir un nouveau départ de l'Afrique.     

Cancellation of Executive Stock Options: Tax and Accounting Income Considerations*

Canadian firms face a trade‐off between reporting higher accounting income and paying lower taxes that arises from their ability to cancel in‐the‐money executive stock options and making a substitute cash payment to the executive instead of issuing shares. Firms' trade‐off hypotheses are operationalized in a multilateral framework and empirically tested using insider‐trading data. The multilateral approach is designed to control for the incentive effects of alternative compensation schemes and to determine the cancellation payment that keeps the executive indifferent between receiving cash or shares. The results show that firms consider both taxes and financial reporting costs in determining their option cancellation behavior.