Deoxynivalenol (DON) in wheat: an example of weighing the pros and cons of food stuffs

A Committee of the Health Council of the Netherlands advised on deoxynivalenol (DON), a mycotoxin occurring in cereals. TDIs of 1.0 and 0.5?µg.kg_{body weight} ^?1.day^?1 have been based on mice and pig studies in which DON reduced growth. In 1999, the 50^th and 95^th percentiles of DON intake by 1‐4‐year‐old children were, respectively, 1.3 and 2.4?µg.kg_{body weight} ^?1.day^?1. The Committee considered: (i) TDI contains safety factors, (ii) a slightly reduced weight gain is not necessarily harmful, (iii) when growth rate is highest, children consume little or no wheat, and (iv) in real life, exposure varies, causing the effect to be smaller. The Committee concluded that an exposure that only incidentally exceeds—up to about five times—0.5?µg.kg_{body weight} ^?1.day^?1 very unlikely inhibits weight gain. More severe effects on immunity, fertility and the foetus may occur at intakes higher than 2.5µg.kg_{body weight} ^?1.day^?1. Nonetheless, toxin exposure should be kept as low as possible. The Committee advised to agriculturally reduce DON content; second one may exclude wheat with high DON content for human consumption. Limits of 500 and 100?µg/kg_wheat prevent exposure exceeding 1.5 and 0.5?µg.kg_{body weight} ^?1.day^?1, respectively. As wheat products are good sources of nutrients, the Committee advised against discouraging their consumption.     

Social vulnerability indexes as planning tools: beyond the preparedness paradigm

This article draws from the experience of the ongoing drafting of the Regional Plan of the Centre Region of Portugal, and the empirical application of the Social Vulnerability Index proposed by Susan Cutter. It consists in the construction of an index of social vulnerability to natural and technological hazards and to social risks for all the municipalities of the region. Methodologically, it extends the vulnerability analysis to technological hazards and social risks, as a more encompassing view is necessary for the elaboration of prevention and civil protection policies. The results confirm the interactive nature of social vulnerability, and they also reflect the diffuse urbanisation and industrialisation patterns that characterise Portugal. The scattered nature of social facilities and security and health infrastructures pose specific challenges to planners concerning risk prevention and mitigation, and the elaboration of effective risk communication strategies adapted to specific hazards and risks in the studied municipalities. The article concludes with some reflections on the need to revise established paradigms of disaster analysis and emphasise the importance of pre‐event planning and the social cartography of vulnerable populations for effective prevention and security policies that take into account social inequalities and citizenship rights.     

Siting technological risks: cultural approaches and cross-cultural ethics

Are European national risk prevention regulations reflecting different cultural attitudes towards risk? This article replies positively to this question by elaborating the results of an investigation led between 2004 and 2008 by the Joint Research Centre of the European Commission. The investigation focused on the European national implementations of Article 12 of Directive Seveso II on Dangerous Substances (96/82/EC) and aimed at providing an overview of different methodological approaches to the matter of land use planning in areas subject to the risk of major accidents. Five countries were selected for in‐depth analysis and comparison. This article focuses on one aspect of their different approaches to land use planning in at‐risk areas that was not considered by the European investigation: the influence of national cultural backgrounds on the implementation of Article 12 within the respective national legislations and practices. To explain whether different cultural orientations may have affected them, the article refers to one cultural index in particular, namely the uncertainty‐avoidance index (UAI) proposed by the Dutch sociologist Geert Hofstede. This index provides a key of reading of the different methodological orientations adopted for regulating land uses in the vicinity of hazardous establishments in these countries; by applying it, the study demonstrates that different cultural attitudes towards uncertainty may be a determinant factor in the approaches to and the regulation of the matter of hazardous facility siting. In the conclusions, the regulatory as well as ethical implications of this finding are discussed.     

A genre-theoretic approach to financial reporting research

A genre is a category of texts marked out by the conventions employed in their production. A genre-theoretic approach draws out the complex, subtle and elusive nature of financial reporting as communication. It provides scope for examining the features of the reporting process that contribute to its complexities and subtleties in a systematic, comprehensive and integrated way, embracing both technical and social dimensions. This paper discusses aspects of genre theory, as employed in discourse analysis, and their application to financial reporting. Relevant features of the approach include financial statement composition as a challenging process; knowing users; an engaged discourse community; situated communication; intertextuality; and structural dynamism. A genre-based approach has a number of implications for financial reporting research, at both methodological and substantive levels, which are explored in the paper, and may ultimately offer the potential for integrating market-based and interdisciplinary work together with the best of the classical tradition.     

CEO's financial experience and earnings management

We study whether Chinese CEOs with financial experience engage in more earnings management or less earnings management than those without such experience. In doing so, we distinguish between accrual-based earnings management and real earnings management. Overall, we find that CEOs with financial experience tend to do less real earnings management, while we find no evidence that they do either more or less accrual-based earnings management. Our findings tend to confirm that CEOs with financial experience provide more precise earnings information and higher quality financial statements.     

Optimal stopping under model uncertainty and the regularity of lower Snell envelopes

The analysis of American options in incomplete markets has motivated the development of robust versions of the classical Snell envelopes: The cost of superhedging an American option is characterized by the upper Snell envelope, while the infimum of the arbitrage prices is given by the lower Snell envelope. Lower Snell envelopes also appear in the problem of optimal stopping under model uncertainty. In this paper we focus on the lower Snell envelope. We construct a regular version of this stochastic process. To this end, we apply results due to Dellacherie and Lenglart on the regularization of stochastic processes and 𝒯-Systems.     

Econophysics review: II. Agent-based models

This article is the second part of a review of recent empirical and theoretical developments usually grouped under the heading Econophysics. In the first part, we reviewed the statistical properties of financial time series, the statistics exhibited in order books and discussed some studies of correlations of asset prices and returns. This second part deals with models in Econophysics from the point of view of agent-based modeling. Of the large number of multi-agent-based models, we have identified three representative areas. First, using previous work originally presented in the fields of behavioral finance and market microstructure theory, econophysicists have developed agent-based models of order-driven markets that we discuss extensively here. Second, kinetic theory models designed to explain certain empirical facts concerning wealth distribution are reviewed. Third, we briefly summarize game theory models by reviewing the now classic minority game and related problems.     

Applying hedging strategies to estimate model risk and provision calculation

We present an empirical study of the intertwined behaviour of members in a financial market. Exploiting a database where the broker that initiates an order book event can be identified, we decompose the correlation and response functions into contributions coming from different market participants and study how their behaviour is interconnected. We find evidence for the following. (1) Brokers are very heterogeneous in liquidity provision—some appear to be primarily liquidity providers while others are primarily liquidity takers. (2) The behaviour of brokers is strongly conditioned on the actions of other brokers. In contrast, brokers are only weakly influenced by the impact of their own previous orders. (3) The total impact of market orders is the result of a subtle compensation between the same broker pushing the price in one direction and the liquidity provision of other brokers pushing it in the opposite direction. These results enforce the picture of market dynamics being the result of the competition between heterogeneous participants, interacting to form a complex market ecology.     

Complexity and financial stability in a large random economy

I study the limit of a large random economy, in the ideal case of perfect competition, where full information is available to all market participants, and where a set of consumers invests in financial instruments engineered by banks in order to optimize their future consumption. This provides a picture of how unregulated financial innovation pushes an economy towards the ideal limit of complete markets. Hedging new products with existing products allows financial institutions to reduce the associated risk and hence the risk premium. This has the expected consequence that markets, under such ideal conditions, converge to market completeness as the repertoire of financial instruments expands. As markets approach completeness, however, two ‘unintended consequences’ also arise: (i) equilibrium portfolios develop a marked susceptibility to idiosyncratic shocks and/or parameter uncertainty and (ii) hedging engenders divergent trading volumes in the interbank market. Combining these suggests an inverse relation between financial stability and the size of the financial sector, which can be quantified within the present framework. These results suggest that even under perfect competition and symmetric information, the pursuit of market efficiency—in terms of completeness—may erode financial stability. The proliferation of financial instruments exacerbates the effects of market imperfections and, in order to prevent an escalation of perverse effects, markets may require institutional structures that become more and more substantial as their complexity expands.     

Portfolio choice with indivisible and illiquid housing assets: the case of Spain

This paper studies the investment decisions of Spanish households using a unique data-set, the Spanish Survey of Household Finance (EFF). We propose a theoretical model in which households, given a fixed investment in housing, allocate their net wealth across bank time deposits, stocks and mortgage. Besides considering housing as an indivisible and illiquid asset that restricts the portfolio choice decision, we take into account the financial constraints that households face when they apply for external funding. For every representative household in the EFF, we solve this theoretical problem and obtain the theoretically optimal portfolio that is then compared with households’ actual choices. We find that households significantly under-invest in stocks and deposits while the optimal and actual mortgage investments agree. Considering the three types of financial assets at once, we find that the households headed by highly financially sophisticated, older, retired, richer, and unconstrained persons are the ones investing more efficiently.