Antioxidants are defined as “any substance which significantly delays or inhibits oxidation of a substrate when present at low concentrations compared to that of an oxidizable substrate” (Jun, Park, Jung, & Kim, 2004). Antioxidants are commonly used in the food industry to prevent lipid oxidation which can lead to product degradation and production of off-flavours, but they also have applications in other fields where oxidation will degrade the product quality (Gao, Miller, & Han, 2004).
Compounds such as polyphenols and carotenoids found in brightly coloured fruits and vegetables have been shown to possess beneficial health properties such as preventing cancer, diabetes, arthritis, atherosclerosis, and other age-related diseases (Kaur & Kapoor, 2001). The primary focus has been on the antioxidant properties of molecules such as flavonoids, polyphenols, and carotenoids derived from fruit and vegetable sources (Fukumoto & Mazza, 2000, Pulido, Bravo, & Saura-Calixto, 2000, Kaur et al., 2001, Sanchez-Moreno, 2002) but some groups are also investigating the antioxidant properties of proteins and peptides derived from both animal and non-animal sources (Chen, Muramoto, Yamauchi, Fujimoto, & Nokihara, 1998, Jao & Do, 2002, Saito et al., 2003). Wayner and co-workers recognized that 10-50% of the antioxidant properties found in human blood plasma could not be explained by known antioxidants such as vitamin E, urate, or ascorbate and theorized that a number of essential amino acids possessing labile hydrogen atoms could allow amino acids and peptides to behave as antioxidants (Wayner, Burton, Ingold, Barclay, & Locke, 1987). Research currently underway covers a wide range of potential antioxidant peptide sources such as rice, soybean, fish, skeletal muscle tissue, chicken eggs, and bovine milk.
Hayn (1995) and Burgstahler and Dichev (1997) find evidence that there is a ‘point of discontinuity’ in the cross-sectional distribution of earnings around zero with an unusually low concentration of firms just below zero and an unusually high concentration of firms just above zero earnings (earnings level threshold). Burgstahler and Dichev (1997) find similar breaks in the distribution for small positive and small negative earnings changes (earnings changes threshold). Degeorge, Patel, and Zeckhauser (1999) find similar results for the cross sectional distribution of analyst forecast errors (analyst forecast threshold). These studies interpret the breaks in the distributions as circumstantial evidence that earnings are managed to beat these thresholds.
Firms have incentives to beat earnings thresholds. Graham, Harvey, and Rajgopal (2005) survey 312 financial executives from public companies. They ask executives which earnings benchmarks are important to them and find that roughly two thirds or more (depending on the benchmark) of the respondents agree that all three benchmarks are important (Graham et al. 2005, Table 3). Over 80% of the executives surveyed agreed that meeting earnings benchmarks helped them to ‘build credibility with the capital market’ and ‘maintain or increase stock price’ (Graham et al. 2005, Table 4). There has developed a large literature that documents firms’ capital market incentives for beating one of the benchmarks (e.g. Barth, Elliot, and Finn 1999, Myers et al. 2007, Bartov et al. 2002, Kasznik and McNichols 2003, Brown and Caylor 2005). Matsunaga and Park (2001) suggest that CEO bonus payments give CEOs an economic incentive to beat the analyst forecast benchmark and the earnings changes benchmark. If firms have incentives to beat a threshold, then why do so many firms miss a threshold? What prevents firms just below a threshold from managing earnings to beat a threshold? I examine the characteristics of firms just above and firms just below thresholds. I focus on two specific characteristics—market sensitivity to earnings announcements and a firm’s flexibility to manage earnings.
Bob Murray, Ph.D. and Alicia Fortinberry M.S. have been healing depression for over 20 years with the widely successful and unconventional methods that form the basis of their “Uplift Program.” Sponsored by the University of South Florida,this program has an astounding 94% success rate and has proven far more effective than drugs, or psychotherapy – or both treatments combined.
