Academic literature on the topic 'Supernormal returns'

In this paper, we aim to identify profitable investment styles on the Indian stock market by using various combinations of important stock pricing anomalies consisting of. size, value, volume, profitability, earnings surprises, short term and long term prior returns. Using NSE200 stocks, three different investment styles viz. univariate, independent bivariate and conditional bivariate are constructed for the period July 2005-June 2016.Results show that on an absolute return basis, bivariate strategies do not seem to outperform univariate strategies. The unifactor CAPM is able to absorb 42% of the returns owing to the explanatory power of beta. After adjusting for risk using the three factor Fama and French (1993) model, 42% of the alphas are explained. However, additional risk factors from the Carhart (1997) model and Fama and French (2015) model do not provide any incremental explanatory power over the three factor model, recommending the use of the latter as a baseline to evaluate investment strategies in India. The highest supernormal returns of 1.1% per month are obtained from combining attributes and employing the conditional bivariate investment strategy viz.E2L1 (earnings momentum-Liquidity), M2S1 (price momentum-size), E2M3 (earnings momentum-price momentum). The findings are pertinent to portfolio managers, financial regulators and other stakeholders.

Purpose – The purpose of this paper is to examine the hypothesis that a period of sustained supernormal firm performance (for up to five years before fraud commission) creates financial pressure on actors/agents so they have a propensity to behave fraudulently to keep the good times (apparently) rolling. Design/methodology/approach – Applying the Fama and French (1993) three-factor model using a range of calendar time portfolio methodologies, the authors measure abnormal drifts in stock performance in periods up to five years before alleged fraud commission dates. The authors examine a sample of 561 US firms subject to enforcement actions initiated by the Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) over 1968-2009. Findings – The authors find that sustained firm-specific positive stock price performance for up to five years followed by the almost inevitable adverse shock, which eventually brings the good times to an end, generally precedes corporate fraud. Fraud occurs when firm managers engage in misconduct in a misguided attempt to keep the good times (apparently) rolling despite the negative shock. Research limitations/implications – The sample is restricted to firms with trading histories on the stock market prior to the misconduct, and to firms contained in the Federal Securities Regulation database of US firms subject to enforcement actions initiated by the SEC and the DOJ over 1968-2009. Practical implications – The desire to keep the good times rolling appears to be a very important driver of fraudulent behavior, even after controlling for the executive compensation incentive effects and business cycle effects emphasized in prior studies. The robust findings of positive abnormal returns for up to five years preceding initial fraud commission suggest that regulators and investors would be well-advised to scrutinize the behavior of firms that exhibit surprisingly persistent superior performance over an extended period. If the financial results appear too good to be true, a closer examination might just reveal that they indeed are. Social implications – While most investors generally like to see the “good times keep rolling” this pressure can create ethical dilemmas for managers. Originality/value – Unlike most other papers in this area of the literature, which concentrate on the pre-fraud disclosure, the authors investigate the firm’s performance in the pre-fraud commission period. The authors find that the commission of the alleged fraud is preceded by a sustained period of surprisingly good performance of up to five years in length. The authors believe that the paper provides empirical evidence that supports the hypothesis that a period of sustained supernormal firm performance (for up to five years before fraud commission) creates financial pressure on actors/agents so they have a propensity to behave fraudulently to keep the good times (apparently) rolling.

This study explicitly rejects the prima facie proposition that the top-tier investment banks are capable of delivering supernormal value creation to the shareholders of a REIT acquirer in a corporate acquisition. Using the event study method, we find that REIT acquirers advised by market-leading investment banks suffer an average cumulative abnormal return of −4.41% following the M&A announcement, whereas REIT acquirers advised by non-top-tier investment banks only suffer an average cumulative abnormal return of −1.49%. The evidence shows that the contemporary practice of employing investment banks based on the prestige of the advisory firms could potentially result in value-destroying M&As for the REIT acquirers.

Purpose The purpose of this paper is to show that entrepreneurship can be fruitfully analyzed by positing that entrepreneurs are searching for rates of return exceeding the risk-adjusted market rate of return, i.e., they try to create or discover economic rents. Design/methodology/approach A conceptual paper trying to bridge the gap between neoclassical economics and the entrepreneurship field by seeing entrepreneurship as the search for and creation of (entrepreneurial) rents. Findings In the short to medium term the search for and creation of entrepreneurial rents give rise to supernormal profits if successful. In the longer term these rents are dissipated and accrue to society at large as cheaper and better products. Entrepreneurial rents are crucial for bringing about the innovation and continuous structural change required to generate economic growth. Practical implications The search for entrepreneurial rents is crucial for economic development. Without the possibility to earn entrepreneurial rents, no entrepreneur would be willing to exercise entrepreneurship and exploit entrepreneurial opportunities. Successful entrepreneurship attracts imitating firms that push back profits to normal levels and the benefits of the innovation will be diffused to consumers. Social implications Understanding the role of entrepreneurship and its compensation is crucial for analyses of potential policy measures. High ex post compensation for successful entrepreneurship cannot be taxed harshly without affecting entrepreneurs’ willingness to supply effort. Originality/value The entrepreneurial function and its compensation are often neglected in neoclassical economics. This is a major shortcoming, as the presence of and search for entrepreneurial rents are necessary for bringing about the innovation and structural change that result in economic growth.

BackgroundDiagnosis of gastric ischaemia is difficult and angiography is an invasive procedure. Angiographic findings may not correlate with clinical importance.AimsTo investigate whether tonometric measurement of intragastric Pco2during exercise can be used to detect clinically important gastric ischaemia.MethodsFourteen patients with unexplained abdominal pain or weight loss were studied. Splanchnic angiography served as the gold standard. Three patients were studied again after a revascularisation procedure. Gastric Pco2 was measured from a nasogastric tonometer, with 10 minute dwell times, and after acid suppression. Gastric and capillary Pco2 were measured before, during, and after submaximal exercise of 10 minutes duration.ResultsSeven patients had normal angiograms; seven had more than 50% stenosis in the coeliac (n=7) or superior mesenteric artery (n=4). Normal subjects showed no changes in tonometry. In patients with stenoses, the median intragastric Pco2(Pico2) at rest was 5.2 kPa (range 4.8–11.2) and rose to 6.4 kPa (range 5.7–15.7) at peak exercise; the median intragastric blood Pco2 gradient increased from 0.0 kPa (range −0.8 to 5.9) to 1.7 kPa (range 0.9 to 10.3; p<0.01). Only two subjects had abnormal tonometry at rest; all had supernormal values at peak exercise. The Pco2 gradient correlated with clinical and gastroscopic severity; in patients reexamined after revascularisation (n=3), exercise tonometry returned to normal.ConclusionGastric tonometry during exercise is a promising non-invasive tool for diagnosing and grading gastrointestinal ischaemia and evaluating the results of revascularisation surgery for symptomatic gastric ischaemia.

The role of renal vasoregulatory hormones in the hyperfiltration of early insulin-dependent diabetes mellitus (IDDM) was studied by micropuncture methods in rats with streptozotocin-induced diabetes. Seven to ten days after streptozotocin injection, untreated diabetic rats had elevated glomerular filtration rate (GFR) and single-nephron glomerular filtration rate (SNGFR), compared with normal euvolemic rats. Infusion of indomethacin (5 mg/kg) markedly reduced urinary and proximal tubular fluid prostaglandin E2 (PGE2), but GFR and SNGFR did not change. In a second group, intrarenal infusion of aprotinin (1,000 kallikrein inhibitor units.min-1.kg-1) to inhibit kallikrein also had no effect on GFR or SNGFR. In a third group, intrarenal infusion of angiotensin II (ANG II, 0.1 microgram.min-1.kg-1) reduced GFR, renal plasma flow (RPF), SNGFR, and glomerular plasma flow rate (QA) to values close to those in normal euvolemic rats. Single-nephron filtration fraction rose significantly with ANG II, but glomerular pressure (PG) was unaltered. Tubular fluid PGE2 increased in response to ANG II. Saralasin infusion following ANG II returned GFR, RPF, SNGFR, and QA to supernormal levels, and PG fell. In chronically salt-loaded normal rats, the responses to intrarenal ANG II and saralasin were similar to those observed in the diabetic rats. We conclude that hyperfiltration in early IDDM is not dependent on intact renal PGE2 or bradykinin synthesis. The results with ANG II infusion indicate that pre- and postglomerular and glomerular contractile cells of the diabetic kidney are able to constrict in response to this hormone.

Purpose: The relationship between bank profitability and bank-specific and macroeconomic factors has important implications for a host of public policy questions. In the current study, balanced panel data on all scheduled banks over a period of 2006 to 2017 has been used to provide novel estimates of bank profit and its influential factors. Research Methodology: Further this study modeled the structure-conduct-performance hypothesis (SCP); it reflects the setting of prices that are less favorable to consumers (lower deposit rates, higher loan rates) in more concentrated markets as a result of competitive imperfections in these markets and lead supernormal profits The results of the current study have been obtained by using regression analysis and unit root analysis which deals with stationary and non-stationary of time series data. . Results: The results of the current study are significant and supported by the previous literature. In bank-specific characteristics, lagged bank profitability, capital ratio, and size found to have a positive relationship with bank profits while Loans have a negative and significant relationship with bank profits deposits have a positive and insignificant relationship with banks profitability. In macroeconomic factors such as inflation, corporate tax rate, negative and insignificant relation has been found. Originality/Value: This study implies that the profitability of banks can be enhanced by increasing the capitalization of banks. Endeavors should be made by banks in order to increase and maintain the retained earnings and reserves Keywords: Profitability, Return on Assets, Macroeconomic, Bank-specific, Corporate tax

Based on the ratio of market share of 11 commercial banks discovered the phenomenon gap of the period 2007-2011 where 11 commercial banks dominate the banking market predominantly in Indonesia, including four state-owned banks. This phenomenon has resulted in the banking market structure tends to form an oligopoly, it is obviously affecting the behavior of banks that have a dominant position to maintain supernormal profit, which is reluctant to extend credit with low interest tribes and not a reflection of efficient behavior that ultimately lead to the real sector can not run role in the economy because of factors hampered financing. And with the market conditions are 11 commercial banks were so dominant, which is feared if one bank's collapse could affect the performance of banks in a systemic and even disrupt the Indonesian economy in general. The objectives of this research to determine the form of the banking market structure and analize the influence of concentration market structure and Capital Adequacy Ratio (CAR), Non Performing Loan (NPL), Net Interest Margin (NIM), and Loan to Deposit Ratio (LDR) to Return on Asset (ROA) wich is as a proxy of Financial Performance Banking in 2007 until 2011 periods. The data in this study was collected from Indonesian Banking Directory of 2007-2011. The collected sample was 11 biggest commercial banks over the period from 2007-2011. The analysis model was used to determine the shape of banking market structure by using CR4 concentration ratio (Four Concentration Ratio) on a share of the assets, the share of third-party funding (DPK) and the share of loans, that produce banking that shaped the oligopoly market structure moderate low or concentration oligopoly level IV, where four largest banks a dominate about 42% - 50% market share. The estimation of the Fixed Effect Model unknown that concentration market, market share, Capital Adequacy Ratio (CAR), Net Interest Margin (NIM) and the Loan to Deposit Ratio (LDR) has a positive effect on profitability (Return on Assets ) as a proxy for the performance of the banking industry. And for the Non Performing Loan (NPL) has a negatively effect on profitability (Return on Assets) as a proxy for the performance of the banking industry.

A problem South-Africa is facing is that the wealth created by mines (also called economic rent) may not yet get distributed satisfactorily evenly between the nation and investors. In an attempt to find a solution to the abovementioned dilemma, government initiated a feasibility study for the nationalisation of mines. This proposal was however waived for two reasons: firstly that it would be unaffordable for government to buy out private companies and secondly, that it would create discontent amongst foreign investors, which would result in them withdrawing access to financing. Consequently, the ANC, during 2012 in the SIMS report proposed a possible implementation of a resource rent tax (RRT), akin to Australia’s, to ensure that the State receives a greater/more equitable share of the wealth. Developments in the mining industry since 2012, have drawn attention to two serious issues: labour related concerns and continued strikes as well as a reduction in foreign direct investment as a result of negative investor sentiment towards South Africa. These issues are directly related to the perception that the community (including mine workers) do not benefit fairly from the wealth created by mines, which results in ongoing labour unrests and subsequently in investment withdrawal. It would seem that even though no further consideration has been given to the implementation of a RRT since 2012, it may be regarded as a possible and sensible solution. This study focuses on the possible impact on the taxation payable by the South African mining industry, if a RRT were to be introduced. Research has been conducted in order to obtain an understanding of the working of a RRT, to analyse South Africa’s current tax regime, to develop a simple hypothetical case study to evaluate both the quantitative and qualitative impact of the introduction of a RRT system on South African mining tax (for both the investor and the state). The study concludes that the introduction of a RRT can potentially result in a more fair distribution of resource rents between the investor and the state (community - rightful owners of the natural resources). Research however proved that this is likely to influence the investor’s investment decisions which in turn may result in a general downturn in mining operations and profits. Based on the qualitative results of a case study, a RRT was proven to be inefficient due to the fact that it will only tax mining companies with a higher rate of return and in effect higher risk companies. As investors are prepared to take on high risk projects for the purpose of generating higher returns, the introduction of an RRT reducing this return might influence an investor’s decision. The potential impact on investors’ decisions may be counteracted through further research with regard to variables used in the RRT model namely the percentage of tax charged and the required rate of return. A RRT is therefore proven to have some benefits, even though some aspects will require further evaluation.
MCom (South African and International Tax), North-West University, Potchefstroom Campus, 2015

Replacement of arteries with synthetic grafts causes activation of both plasma coagulation and platelets. In order to measure platelet activation the in vivo production of thromboxane A2 (TxA2) and prostacyclin (PGI2) were measured in patients following graft replacement of the abdominal aorta for aneurysmal disease.Specific methods based on gas chromatography-mass spectrometry using tetra-deuterated internal standards/carriers were used to measure the urinary excretion of 2,3-dinor-TxB2 and 2,3-dinor-6-keto PGF1α, the two major urinary metabolites of TxA2 and PGI2. The excretion of the metabolites increased ten-fold and fortyfold respectively on the first postoperative day and remained elevated up till 10 days postoperatively. In patients undergoing cholecystectomy only minor changes of shorter duration were seen. A marked decrease in platelet count occurred concomitanly with the increase in the urinary metabolites. Platelet counts returned to normal or supernormal values after 10 days when the excretion of 2,3-dinor TxB2had returned to normal values.It is concluded that synthetic grafts cause prolonged increase in the in vivo formation of TxA2 and PGI2 concomitantly with a decrease in platelet count. The reason for the increased TxA2 formation may be platelet interaction with the foreign surface but the increase of PGI2 is unexplained. The latter increase could be part of a vascular defense against the induced thrombotic activity.