We analyze audit fees and audit risk to extract auditors׳ assessment of family-firm׳s financial reporting quality. Relative to non-family firms, we find that auditors charge family firms significantly less, and the fee difference shrinks in magnitude when family firms have high audit risk. Using constructs for audit risk and audit effort, we show that family firms have lower audit risk, and that their auditors work less to provide assurance. Our findings suggest that superior reporting quality lowers audit risk and the need for greater audit investments, which is why auditors charge family firms less.

SYNOPSIS Although auditor litigation risk is considered as a leading explanation for auditor resignations, audit risk and business risk might also trigger resignations. Auditor litigation risk is defined as the risk of the auditor being involved in a lawsuit, audit risk is defined as the risk that the auditor expresses an inappropriate audit opinion when the financial statements are materially misstated and, finally, business risk is defined as the risk associated with the client's survival and profitability. Because the three risk factors are not mutually exclusive, we examine their relevance and incremental importance using measures from the pre- and post-resignation periods. Using summary indices from the pre-resignation period, we find that all of the three ex ante risk indices are incrementally important for resignations, especially when the predecessor auditor is a Big 4 firm. Because the ex ante risk factors are prone to measurement errors and are less likely to capture the auditor's proprietary information about the client, we analyze data from the post-resignation period when the auditor's proprietary information is likely to become publicly known. We find that within a three-year period following an auditor's resignation, clients are more likely to (1) be involved in class-action lawsuits (ex post litigation risk), (2) have internal control problems (ex post audit risk), and (3) to be delisted from a national stock exchange (ex post business risk). Our research demonstrates that auditors consider all three risk factors, and not just litigation risk, in resignation decisions.

Taking advantage of the cluster effect observed in multivalent peptides, this work describes antifungal activity and possible mechanism of action of tetravalent peptide (B4010) which carries 4 copies of the sequence RGRKVVRR through a branched lysine core. B4010 displayed better antifungal properties than natamycin and amphotericin B. The peptide retained significant activity in the presence of monovalent/divalent cations, trypsin and serum and tear fluid. Moreover, B4010 is non-haemolytic and non-toxic to mice by intraperitoneal (200 mg/kg) or intravenous (100 mg/kg) routes. S. cerevisiae mutant strains with altered membrane sterol structures and composition showed hyper senstivity to B4010. The peptide had no affinity for cell wall polysaccharides and caused rapid dissipation of membrane potential and release of vital ions and ATP when treated with C. albicans. We demonstrate that additives which alter the membrane potential or membrane rigidity protect C. albicans from B4010-induced lethality. Calcein release assay and molecular dynamics simulations showed that the peptide preferentially binds to mixed bilayer containing ergosterol over phophotidylcholine-cholesterol bilayers. The studies further suggested that the first arginine is important for mediating peptide-bilayer interactions. Replacing the first arginine led to a 2-4 fold decrease in antifungal activities and reduced membrane disruption properties. The combined in silico and in vitro approach should facilitate rational design of new tetravalent antifungal peptides.

This work describes how to tune the amphiphilic conformation of α-mangostin, a natural compound that contains a hydrophobic xanthone scaffold, to improve its antimicrobial activity and selectivity for Gram-positive bacteria. A series of xanthone derivatives was obtained by cationic modification of the free C3 and C6 hydroxyl groups of α-mangostin with amine groups of different pKa values. Modified structures using moieties with high pKa values, such as AM-0016 (3b), exhibited potent antimicrobial properties against Gram-positive bacteria. Compound 3b also killed bacteria rapidly without inducing drug resistance and was nontoxic when applied topically. Biophysical studies and molecular dynamics simulations revealed that 3b targets the bacterial inner membrane, forming an amphiphilic conformation at the hydrophobic-water interface. In contrast, moieties with low pKa values reduced the antimicrobial activity of the parent compound when conjugated to the xanthone scaffold. This strategy provides a new way to improve "hits" for the development of membrane-active antibiotics that target drug-resistant pathogens.

Inter-annual variability in the timing of phytoplankton spring bloom and phytoplankton community structure in the central North Atlantic Ocean was quantified using ocean color data and continuous plankton recorder (CPR) data. This variability was related to the North Atlantic Oscillation using correlation analysis and multivariate auto-regression models. The initiation of the spring bloom derived from CPR phytoplankton color index data is similar to that derived from satellite chlorophyll, and exhibits a nominal correlation with the sea surface temperature (SST) and the North Atlantic Oscillation (NAO). The extrapolated spring bloom timing suggested later initiation of blooms in the mid-1980s and earlier initiation of blooms in the 1990s. The climatological phytoplankton community structure in the central North Atlantic is dominated by diatoms, except for a shift in community composition favoring dinoflagellates in August. The ratio of diatoms to total phytoplankton abundance and the ratio of dinoflagellates to total phytoplankton abundance are both closely correlated with the NAO and SST. The extended time series of phytoplankton community structure between 1985 and 2009, deduced from the time series of SST and NAO over the same interval, showed a decadal shift away from diatoms towards dinoflagellates. The linkages between the NAO, and changes in stratification and phytoplankton processes occur over a larger scale than previously observed.

The emergence of methicillin-resistant Staphylococcus aureus (MRSA) has created the need for better therapeutic options. In this study, five natural xanthones were extracted and purified from the fruit hull of Garcinia mangostana and their antimicrobial properties were investigated. α-Mangostin was identified as the most potent among them against Gram-positive pathogens (MIC=0.78–1.56μg/mL) which included two MRSA isolates. α‐Mangostin also exhibited rapid in vitro bactericidal activity (3-log reduction within 5min). In a multistep (20 passage) resistance selection study using a MRSA isolated from the eye, no resistance against α-mangostin in the strains tested was observed. Biophysical studies using fluorescence probes for membrane potential and permeability, calcein encapsulated large unilamellar vesicles and scanning electron microscopy showed that α‐mangostin rapidly disrupted the integrity of the cytoplasmic membrane leading to loss of intracellular components in a concentration-dependent manner. Molecular dynamic simulations revealed that isoprenyl groups were important to reduce the free energy for the burial of the hydrophobic phenyl ring of α-mangostin into the lipid bilayer of the membrane resulting in membrane breakdown and increased permeability. Thus, we suggest that direct interactions of α-mangostin with the bacterial membrane are responsible for the rapid concentration-dependent membrane disruption and bactericidal action.

Purpose - The National Commission on Fiscal Responsibility and Reform recently released a preliminary report with recommendations on cutting costs in the federal government, and one of its recommendations included the elimination of the Baldrige Performance Excellence Program, formerly known as the Malcolm Baldrige Nationality Quality Award Program. Established by an act of Congress in 1987, during the Reagan Administration, the goal of the Malcolm Baldrige Nationality Quality Award Program was to stimulate and reward product quality excellence. Since the inception of the award, however, there has been a long-standing controversy among industry leaders and academics on whether winning this award does enhance future financial performance and ultimately shareholders' wealth. This debate has again been recently fueled by the possible elimination of the program by the US government. This study, aims to shed further light on this subject by examining the academic research on the financial performance of the Baldrige Award winners.Design/methodology/approach - The paper examines academic and professional research on whether the Award adds value to firms and their investors.Findings - The conclusion, perhaps not surprisingly, is somewhat mixed; although there is parsimonious evidence to suggest that Award winners do witness an increase in market value. By and large, the authors feel that when all the benefits of the Baldrige Performance Excellence Program are considered and given the short-term focus of studies in this area, the elimination of the program would be a terrible mistake.Originality/value - The paper offers an original review and synthesis.

In recent years, interest has grown in the antimicrobial properties of certain natural and non-natural peptides. The strategy of inserting a covalent branch point in a peptide can improve its antimicrobial properties while retaining host biocompatibility. However, little is known regarding possible structural transitions as the peptide moves on the access path to the presumed target, the inner membrane. Establishing the nature of the interactions with the complex bacterial outer and inner membranes is important for effective peptide design. Structure-activity relationships of an amphiphilic, branched antimicrobial peptide (B2088) are examined using environment-sensitive fluorescent probes, electron microscopy, molecular dynamics simulations, and high resolution NMR in solution and in condensed states. The peptide is reconstituted in bacterial outer membrane lipopolysaccharide extract as well as in a variety of lipid media mimicking the inner membrane of Gram-negative pathogens. Progressive structure accretion is observed for the peptide in water, LPS, and lipid environments. Despite inducing rapid aggregation of bacteria-derived lipopolysaccharides, the peptide remains highly mobile in the aggregated lattice. At the inner membranes, the peptide undergoes further structural compaction mediated by interactions with negatively charged lipids, probably causing redistribution of membrane lipids, which in turn results in increased membrane permeability and bacterial lysis. These findings suggest that peptides possessing both enhanced mobility in the bacterial outer membrane and spatial structure facilitating its interactions with the membrane-water interface may provide excellent structural motifs to develop new antimicrobials that can overcome antibiotic-resistant Gram-negative pathogens.

The eastern Canadian seas including Baffin Bay, the Labrador Sea and shelf, the N.E. Newfoundland Shelf, the Scotian Shelf and the Gulf of St. Lawrence form an integrated hydro-dynamical system. The circulation is investigated using current meter data and a high resolution three dimensional coupled ice-ocean circulation model, CECOM (Canadian East Coast Ocean Model) covering the entire area. The model is forced with realistic atmosphere fluxes and the results are compared to the current meter data collected in four selected periods between 1987 and 2008. Many features of the model current fields are similar to those from the previous regional circulation models for the shelves. New findings from CECOM include seasonal differences of the circulation around Davis Strait, the detailed structure of the Labrador Current re-circulation, two cross-shelf currents on the Scotian Shelf, and strong currents in Halibut Channel which connects the waters of the western Grand Banks and Scotian Shelf. The annual variation of the circulation is investigated. Both the model and data show the Labrador Current is strong in fall and weak in spring. The outflow from the Gulf of St. Lawrence through Cabot Strait and the currents on the inner Scotian Shelf are strong in winter and fall and weak in spring, and are in phase with the Labrador Current. The model currents are compared to observations using a qualitative method of visual comparison, and a quantitative method based on statistical analysis. The comparisons indicate that the main features of the current fields from the observations are successfully reproduced by the model. The quantitative analysis indicates that the model currents are in reasonable agreement with the observations. Specifically, a good agreement is found in the Labrador shelf, Newfoundland Shelf and Flemish Pass, a fair agreement is found in Davis Strait, the inner Scotian Shelf and Sable Bank. However, the agreement for Cabot Strait and the Scotian Shelf break is less satisfactory. An analysis of the spatial variability of the current field suggests that the degree of agreement is closely related to the spatial variability of the current field. The regions with low spatial variability generally have good agreements. The volume and freshwater transports through several sections from the model are in good agreement with available estimates based on data.

An ice-ocean forecasting system for eastern Canadian waters has been developed to provide short-term forecasts of ice concentration, ice thickness, sea surface temperature and other oceanographic variables. In this paper, we describe the forecast model, forcing data, methods of data assimilation and operational procedure. The method by which to compute the forecast skills is outlined. As an example, April 2008 ice forecasts are evaluated by comparing the mean square errors of the forecast and the persistence.

The impact of physical forcing on seasonal and interannual phytoplankton dynamics was examined using SeaWiFS chlorophyll, AVHRR sea surface temperature (SST), nitrate, and other hydrographic measurements for the Scotian Shelf and Scotian Slope. The spring bloom was characterized by a shifted Gaussian function fitted to seasonal chlorophyll time-series. The background chlorophyll (a constant term in the Gaussian function) is a joint property of the stratification and bio-optics of the mixed layer. Rapid shoaling of the mixed-layer depth in spring promoted the early spring bloom on the middle Scotian Shelf and Slope, triggered when averaged light in the mixed layer reached 15 W m(-2). The duration of the spring bloom was prolonged in slope water, resulting in a discontinuity in duration between the shelf and slope water masses. The position of the latitudinal discontinuity in duration was correlated with that of the shelf-slope front in SST. The amplitude of the spring bloom was correlated with the nitrate inventory in the surface layer at the end of winter. The rate of decrease (increase) in chlorophyll after the spring bloom was related to the depletion (resupply) of nitrate in summer. The position of the shelf-slope front influenced the interannual variability of bloom characteristics.

The presence of phytoplankton affects the attenuation of the visible range of solar radiation in the upper ocean. An optically-coupled circulation model is used to examine the impact of phytoplankton on sea-surface temperature, stratification, circulation and air–sea non-solar heat fluxes in the Gulf of St. Lawrence. The attenuation coefficients are calculated by a spectral model of irradiance in the visible range, using the SeaWiFS chlorophyll concentration as input. The circulation model is forced by climatological atmospheric fields and sea-ice distribution. The impact of phytoplankton is examined by comparing model results from two numerical experiments using a phytoplankton-dependent attenuation of solar radiation and a constant attenuation corresponding to clear seawater, respectively. The presence of phytoplankton increases the sea-surface temperature by up to 2°C, and thus enhances the heat loss from the ocean to the air by up to 40Wm−2. Phytoplankton cools the subsurface temperature by up to 2°C. The associated increase of the vertical gradient of temperature leads to higher density stratification by up to 0.4kgm−3. Phytoplankton also enhance the general cyclonic circulation, causing upwelling in the central Gulf of St. Lawrence. These oceanographic changes and their feedback to the atmosphere indicate that the optical effects of phytoplankton can be significant, and should be included in models of ocean dynamics, especially those developed in the context of climate change. The negative feedback on sea-surface temperature by non-solar air–sea heat fluxes is investigated using a 1-d analytical model. An analysis of the model results shows that the feedback mechanism limits the effect of bio-optical heating to a short period and thus significantly reduces the impact of heating by the absorption of the solar radiation by phytoplankton. The net temperature increase is determined by the total absorption of light in the mixed layer, accumulated over a period of a few weeks.

Remote sensing provides our only window into the phytoplankton community on synoptic scales, permitting the construction of spatially distributed time series of biomass indexed as chlorophyll concentration. Data from the SeaWiFS mission have accumulated to the point where they meet the criterion of a 10-year series. The seasonal phytoplankton cycle is the dominant mode of temporal variability. The time series can be used to construct a variety of ecological indicators of the pelagic system useful in ecosystem-based management. These are reviewed and examples of their implementation are presented. Phenology of phytoplankton blooms is given particular attention. Interannual variation in some of the indicators is strong, presumably a response to variation in large-scale forcing. Examination of the results in the context of a simple phytoplankton-nutrient model enhances the interpretation. Remote sensing imagery also lends itself to the retrieval of information on community structure, in addition to biomass. More information will be recovered from satellite imagery if the remote-sensing program is coupled closely to a ship program on which appropriate bio-optical observations are made. The data series can be distilled to yield concise descriptions of the unfolding of ecosystem characteristics through time.

Sea surface temperature (SST) from a near real-time data set produced from satellites data has been assimilated into a coupled ice–ocean forecasting model (Canadian East Coast Ocean Model) using an efficient data assimilation method. The method is based on an optimal interpolation scheme by which SST is melded into the model through the adjustment of surface heat flux. The magnitude and space–time variation of the adjustment depend on the depth of heat diffusion into the water column in response to changes in surface flux, the correlation time scale of the data, and model and data errors. The diffusion depth is scaled by the eddy diffusivity for temperature. The ratio of the model and data errors is treated as an adjustable parameter. To evaluate the quality of the assimilation, the results from the model with and without assimilation are compared to independent ship data from the Atlantic Zone Monitoring Program and the World Ocean Circulation Experiment. It is shown that the assimilation has a significant impact on the modeled SST, reducing the root mean square difference (RMSD) between the model SST and the ship SST by 0.63°C or 37%. The RMSD of the assimilated SST is smaller than that of the satellite SST by 0.23°C. This suggests that model simulations or predictions with data assimilation can provide the best estimate of the true SST. A sensitivity study is performed to examine the change of the model RMSD with the adjustable parameter in the assimilation equation. The results show that there is an optimal value of the parameter and the model SST is not very sensitive to the parameter.

The total daily phytoplankton loss from the mixed layer is estimated as the difference between the primary production and the realized change of phytoplankton carbon biomass. A Monte Carlo procedure is used to recover the total loss rates for ten geographic locations on the Northwest Atlantic continental shelf. The strong seasonal and geographic variations in mixed-layer loss rates of phytoplankton are tied closely to the primary production. The daily, mixed-layer, total loss ranges from 50 to 1000mgCm−2d−1, which is compared with the output of process models, the closure error being generally less than 10% of the total loss. The model results show that the annual respiration is generally greater than losses due to zooplankton grazing and sinking, except that zooplankton grazing dominates other loss terms on the west Greenland shelf.

Defensins are small (3-5 kDa) cysteine-rich cationic proteins found in both vertebrates and invertebrates constituting the front line of host innate immunity. Despite intensive research, bactericidal and cytotoxic mechanisms of defensins are still largely unknown. Moreover, we recently demonstrated that small peptides derived from defensins are even more potent bactericidal agents with less toxicity toward host cells. In this paper, structures of three C-terminal (R36-K45) analogues of human beta-defensin-3 were studied by 1H NMR spectroscopy and extensive molecular dynamics simulations. Because of indications that these peptides might target the inner bacterial membrane, they were reconstituted in dodecylphosphocholine or dodecylphosphocholine/1-palmitoyl-2-oleoyl-sn-glycero-3-[phospho-rac-(1-glycerol)] mixed micelles, and lipid bicelles mimicking the phospholipid-constituted bilayer membrane of mammalian and bacterial cells. The results show that the binding affinity and partitioning into the lipid phase and the ability to dimerize and accrete well-defined structures upon interactions with lipid membranes contribute to compactization of positive charges within peptide oligomers. The peptide charge density, mediated by corresponding three-dimensional structures, was found to directly correlate with the antimicrobial activity. These novel observations may provide a new rationale for the design of improved antimicrobial agents.

We examine the relation between analysts' earnings forecasts and their stock recommendations. We hypothesize that if analysts base their recommendations on their earnings forecasts, recommendations will be more (less) favorable relative to consensus recommendations when analysts' earnings forecasts are more optimistic (pessimistic) relative to consensus earnings forecasts. The data support this hypothesis. We find the relation between recommendations and forecasts to be stronger when earnings are more value relevant. Factors such as lower earnings volatility, higher growth, lower market risk, healthier financial conditions, and larger analyst following make stock recommendations more responsive to earnings forecasts. Stock recommendations are also more responsive when the forecast horizon is longer.

This paper examines the valuation effects of earnings and two nonearnings-based measurements (book values and operating cash flow) on security prices of airline companies under two different market structures: regulated and deregulated. The literature lacks empirical evidence in examining the relative importance of earnings and nonearnings accounting-based measurements in regulated and deregulated markets, especially in the airlines industry. We compare coefficient estimates of regressing stock prices on earnings, book value, and cash flow from operations of airline companies during regulated and deregulated times. A control sample of manufacturing companies is also used for supporting inferences from the airline sample's findings. In a typical regulated market, using cost recovery plus an adequate rate of return on assets, security prices are highly aligned with nonearnings measurements such as the book value. In the airline industry, regulation took the form of guaranteed routes and subsidies to service rural areas, giving rise to a differential effect of both earnings and nonearnings measurements. Under deregulation, airline firms operate in highly competitive markets with large airline firms enjoying the benefits of economy of scale and service diversification. Thus, the asset capitalization (book value), cash flow, and operational efficiencies (earnings) would be major indicators in the market assessment of the firm's future profitability and security price. This paper finds that nonearnings measures have higher explanatory power of security prices in regulated times for the airline firms. In deregulated times, although earnings have a stronger relationship with prices, nonearnings measures continued to influence stock price levels, reflecting airline specific economics.

A method is presented for estimation of seasonally‐varying, total loss rate of phytoplankton from time series of satellite‐derived phytoplankton biomass data. The loss is calculated as the difference between the (modelled) rate of photosynthesis and the observed, realized rate of change of phytoplankton biomass. A Monte Carlo procedure is used to recover the loss rates. The (biomass‐normalized) total loss rate shows a seasonal cycle with values ranging from 0.5 to 3 mg C (mg Chl)−1 h−1 and shows an abrupt shift during the spring bloom. On the other hand, the absolute loss rate increases during blooms, a consequence of the increase in the biomass. The normalized total loss rate can be further expressed as a time‐varying fraction of the assimilation number. The fraction lies in the range from 0.2 to 0.8. During the increasing (decreasing) phase of phytoplankton blooming, the ratio of growth to total loss increases (decreases), such that this ratio may have value as an ecological indicator for blooms.