Newsroom

Dr. Jim Woodward has been named interim chancellor of North Carolina State University, bringing years of administrative experience and leadership to the university.

“I have a special affinity for NC State that has grown since my time as a professor here,” Woodward said. “This institution is critical to the state of North Carolina and to the nation in preparing future leaders and conducting groundbreaking research. We must all continue to work together to move this university forward and continue its rich tradition of service and excellence.”

Woodward, who started work at NC State June 9, previously served as the chancellor of the University of North Carolina at Charlotte from 1989 to 2005. During his tenure at UNC Charlotte, Woodward oversaw the significant expansion of the school to over 19,000 students; the awarding of the school’s first doctoral degrees; and the largest fundraising campaign in the school’s history.

While serving at UNC Charlotte, Woodward also chaired the UNC System’s Information Technology Strategy Network Infrastructure Assessment Task Force. Woodward also served as a member on the UNC Tomorrow Commission and the North Carolina Education Lottery Commission.

Prior to serving at UNC Charlotte, Woodward, an aerospace engineer, had been dean of engineering and senior vice president of academic affairs at the University of Alabama at Birmingham (UAB). He worked at UAB from 1969-1989.

Woodward taught as an assistant professor in the engineering mechanics department of NC State’s College of Engineering in the 1968-69 academic year. Woodward received his Ph.D. in engineering mechanics from the Georgia Institute of Technology in 1967, and his MBA from UAB in 1973.

-  shipman -

North Carolina State University conferred 4,294 degrees when the university held its 2009 Spring Commencement on Saturday, May 9, at the RBC Center in Raleigh. Continue Reading »

Outstanding public school teachers in 11 North Carolina counties will partner with leading researchers at North Carolina State University to develop new curricula for schools across the state through teacher fellowships established by a $1.5 million National Science Foundation (NSF)  grant to the Kenan Fellows Program. Continue Reading »

The North Carolina State University Board of Trustees voted unanimously today to terminate Mary Easley’s contract. The formal motion read:

This board terminates Mary Easley’s contract on the grounds that (first) the duties for which we hired her no longer exist and (secondly) it is in the best interests of NC State University to eliminate her contract.

Burley Mitchell made the motion; it was seconded by Norris Tolson.

- 30 -

The largest 500 companies regulated by the U.S. Securities and Exchange Commission (SEC) are poised to submit quarterly financial reports that, for the first time, will be tagged using XBRL code – which will allow computers to “read” their content and make it easier for people to find and analyze financial data contained in the reports. However, a new study by researchers at North Carolina State University finds that XBRL filings submitted voluntarily as part of an SEC pilot for the program contained significant flaws. If the accuracy of the upcoming filings is not significantly improved, the researchers say, these errors will undermine confidence in the XBRL program from the very beginning.

The goal of XBRL is to make quarterly and annual reports computer-readable, allowing investors, companies, finance professionals and academics to sort and access data more efficiently. “Rather than going through a report page by page to find the information they’re looking for, users can plug their requests into the computer and have it pull up all relevant data,” explains Dr. Eileen Taylor, an assistant professor of accounting at NC State and co-author of the recent study on the accuracy of the voluntary XBRL filings.

Another benefit of XBRL is that it requires companies to use standardized tags for financial statement items, making it easier for users to compare data from different companies. This is significant because companies often use different terms to refer to the same thing. “For example,” Taylor says, “one company may refer to its ‘operating revenue,’ while another company may use the term ‘sales of goods net,’ and both mean the same thing. By using standardized tags, users can compare apples to apples, which really levels the playing field for individual investors,” who may not have the time or expertise to find and accurately compare data from these reports on their own.

But, while the XBRL concept is promising, the study from NC State found that reports from companies that participated in the voluntary pilot program contained multiple errors. “They were poorly tagged,” Taylor says, “and there were fundamental errors of accounting. One report, for example, contained too many zeros – turning millions into billions.” In their abstract, the researchers note that “These errors are serious because since XBRL data is computer-readable, users will not visually recognize the errors, especially when using XBRL analysis software.” In other words, users won’t be able to spot that something is wrong.

Now the SEC is requiring that companies file their reports in XBRL, as well as through traditional methods. The mandate is being phased in, with the 500 largest companies required to submit XBRL filings for the quarter ending June 15. The researchers are concerned that, if the upcoming XBRL filings do not represent a significant improvement from the voluntary reports, stakeholders in the financial community will not have any faith in the XBRL program – and it will be rendered relatively ineffective.

The study, “A Comparison of XBRL Filings to Corporate 10-Ks – Evidence from the Voluntary Filing Program,” examined XBRL filings by 22 companies that participated in the SEC’s voluntary pilot program in 2006. The study was co-authored by Taylor, Drs. Al Y. S. Chen and Jon Bartley, who are both professors of accounting at NC State. The study will be presented at the American Accounting Association Annual Meeting being held in New York City, Aug. 2-5.

- shipman -

Note to editors: The presentation abstract follows.

“A Comparison of XBRL Filings to Corporate 10-Ks – Evidence from the Voluntary Filing Program”

Authors: Jon Bartley, Al Y. S. Chen and Eileen Z. Taylor, North Carolina State University

Presented: Aug. 2-5, 2009, American Accounting Association Annual Meeting being held in New York City

Abstract: The SEC has mandated a phase-in of XBRL filings beginning June 2009 for accelerated filers. Although companies have limited legal liability for initial filings, registrants may suffer reputational and other risks should the filings include errors. To assess the likelihood of material errors, we evaluate the accuracy of XBRL filings for 22 companies participating in the SEC’s voluntary filing program in 2006. Results of a comparison of XBRL filings to Forms 10-K reveal multiple errors in signage, amounts, labeling, and classification. These errors are serious because since XBRL data is computer-readable, users will not visually recognize the errors, especially when using XBRL analysis software. Although XBRL software and taxonomy have improved since 2006, the potential for some errors remains. The SEC, registrants, and accountants need to take note of the complexities of XBRL tagging and identify solutions (e.g., assurance, training) to ensure successful adoption.

Hands wring and teeth gnash over the loss of endangered species like the panda or the polar bear. But what happens to the parasites hosted by endangered species? And although most people would side with the panda over the parasite, which group should we worry about more?

In a new paper published in Proceedings of the Royal Society B, North Carolina State University biologist Rob Dunn and colleagues examine the concept of coextinction, or the domino effect of extinctions caused by species loss. For example, each fig species tends to be pollinated by a single fig wasp such that the loss of one should result in the loss of the other.

Mathematical models suggest that coextinctions due to the actions of humans are very common, the paper asserts. Yet, counterintuitively, there have been few reported cases of coextinction in the scientific literature.

“What we know about coextinctions presents a kind of paradox. The models suggest thousands of coextinctions have already occurred and that hundreds of thousands may be on the horizon. Yet we have observed few such events,” Dunn says. “So we’re not sure if all of these coextinctions are happening and not being tracked, or if parasites and mutualist species are better able to switch partners than we give them credit for, or something in between. Maybe some of the specialized relationships – like between the figs and fig wasps – aren’t so specialized.”

Moreover, Dunn says, the models, if crudely accurate, suggest that the number of parasite coextinctions greatly outweighs the number of host extinctions.

“Since the diversity of parasitic or affiliated species – which may include viruses, ticks, lice and bacteria, and butterflies, but also so-called mutualists such as the crops pollinated by honey bees or the bees themselves – is several orders of magnitude greater than that of their hosts, the numbers of coextinctions are also expected to be far greater than the number of extinctions of host species,” Dunn says.

This numbers game alone presents strong evidence to suggest that coextinctions are more important than the original host extinctions themselves. But the paper also examines other costs of coextinction – including the losses of biological diversity, unique species traits and what we can learn about evolutionary history.

But, regardless of whether we care at all about the loss of such species and their traits and roles, there is something even scarier about the consequences of coextinction.

“There is a distinct possibility that declines in host species could drive parasite species to switch onto alternative hosts, which in turn could escalate the rate of emerging pathogens and parasites both for humans and our domesticated animals and plants,” Dunn says. “Put simply, when a host becomes rare, its parasites and mutualists have two choices: jump ship to another host or go extinct. Either situation is a problem.”

Dunn noted that the regions where new human diseases, such as bird flu, are emerging coincide with the regions where the most mammal and bird species are endangered. “We have long talked about the negative consequences of the endangerment of the species we love,” he says, “but getting left with their parasites is a consequence no one bargained for.”

The paper concludes by calling for better study and understanding of coextinction, and for documenting cases of coextinction when they are discovered. It also calls for more study into the interactive effects of the different reasons for extinction – habitat loss, species invasion, overkill and coextinctions, not to mention climate change – to gauge how they affect each other.

- kulikowski -

Note: An abstract of the paper follows.

“The sixth mass coextinction: are most endangered species parasites and mutualists?”

Authors: Robert R. Dunn and Nyeema C. Harris, North Carolina State University; Robert K. Colwell, University of Connecticut; Lian Pin Koh, Institute of Terrestrial Ecosystems, ETH Zurich; Navjot S. Sodhi, University of Singapore and Harvard University

Published: May 27, 2009, in Proceedings of the Royal Society B

Abstract: The effects of species declines and extinction on biotic interactions remain poorly understood. The loss of a species is expected to result in the loss of other species that depend on it (coextinction), leading to cascading effects across trophic levels. Such effects are likely to be most severe in mutualistic and parasitic interactions. Indeed, models suggest that coextinction may be the most common form of biodiversity loss. Paradoxically, few historical or contemporary coextinction events have actually been recorded. We review the current knowledge of coextinction by: (i) considering plausible explanations for the discrepancy between predicted and observed coextinction rates; (ii) exploring the potential consequences of coextinctions; (iii) discussing the interactions and synergies between coextinction and other drivers of species loss, particularly climate change; and (iv) suggesting the way forward for understanding the phenomenon of coextinction, which may well be the most insidious threat to global biodiversity.

North Carolina State University Board of Trustees Chair Bob Jordan has asked Chancellor James Oblinger for a review of former provost Larry Nielsen’s salary package to determine its compliance with university rules.

“This type of transition package is widely used in academia,” Jordan said, “but these are extraordinary budgetary times. I am asking the chancellor to review the contract to ensure compliance with university policies, rules and regulations.”

Nielsen resigned as provost effective May 22 to return to the faculty. He is being paid his provost salary during a six-month period in which he is preparing himself to resume his faculty responsibilities. Before serving as provost for over four years, Nielsen served as dean of the College of Natural Resources for four years.

-30-

A new study from North Carolina State University indicates that regulators need to do more to ensure that banks are adequately computing their Value-at-Risk (VaR) to reflect fluctuations in financial markets. The study finds that the tests used by regulators do not detect when VaRs inaccurately account for significant swings in the market, which is significant because VaRs are key risk-assessment tools financial institutions use to determine the amount of capital they need to keep on hand to cover potential losses.

“Failing to modify the VaR to reflect market fluctuations is important,” study co-author Dr. Denis Pelletier says, “because it could lead to a bank exhausting its on-hand cash reserves.” Pelletier, an assistant professor of economics at NC State, says “Problems can come up if banks miscalculate their VaR and have insufficient funds on hand to cover their losses.”

VaRs are a way to measure the risk exposure of a company’s portfolio. Economists can determine the range of potential future losses and provide a statistical probability for those losses. For example, there may be a 10 percent chance that a company could lose $1 million. The VaR is generally defined as the point at which a portfolio stands only a one percent chance of taking additional losses.

In other words, the VaR is not quite the worst-case scenario – but it is close. The smaller a company’s VaR, the less risk a portfolio is exposed to. If a company’s portfolio is valued at $1 billion, for example, a VaR of $15 million is significantly less risky than a VaR of $25 million.

The NC State study indicates that regulators could use additional tests to detect when the models used by banks are failing to accurately assess the statistical probability of losses in financial markets. The good news, Pelletier says, is that the models banks use tend to be overly conservative – meaning they rarely lose more than their VaR. But the bad news is that bank models do not adjust the VaR quickly when the market is in turmoil – meaning that when the banks are wrong and “violate” or lose more than their VaR – they tend to be wrong multiple times in a short period of time.

This could have serious consequences, Pelletier explains. “For example, if a bank has a VaR of $100 million it would keep at least $300 million in reserve, because banks are typically required to keep three to five times the VaR on hand in cash as a capital reserve. So it could afford a bad day – say, $150 million in losses. However, it couldn’t afford several really bad days in a row without having to sell illiquid assets, putting the bank further in distress.”

Banks are required to calculate their VaR on a daily basis by various regulatory authorities, such as the Federal Deposit Insurance Corporation. Pelletier says the new study indicates that regulatory authorities need to do more to ensure that banks are using dynamic models – and don’t face multiple VaR violations in a row.

The study, “Evaluating Value-at-Risk Models with Desk-Level Data,” was co-authored by Pelletier, Jeremy Berkowitz of the University of Houston and Peter Christoffersen of McGill University. The study will be published in a forthcoming special issue of Management Science on interfaces of operations and finance.

- shipman -

Note to editors: The study abstract follows.

“Evaluating Value-at-Risk Models with Desk-Level Data”

Authors: Denis Pelletier, North Carolina State University; Jeremy Berkowitz, University of Houston; Peter Christoffersen, McGill University.

Published: Forthcoming, Management Science special issue on interfaces of operations and finance

Abstract: We present new evidence on disaggregated profit and loss (P/L) and value-at-risk (VaR) forecasts obtained from a large international commercial bank. Our data set includes the actual daily P/L generated by four separate business lines within the bank. All four business lines are involved in securities trading and each is observed daily for a period of at least two years. Given this unique data set, we provide an integrated, unifying framework for assessing the accuracy of VaR forecasts. We use a comprehensive Monte Carlo study to assess which of these many tests have the best finite-sample size and power properties. Our desk-level data set provides importance guidance for choosing realistic P/L-generating processes in the Monte Carlo comparison of the various tests. The conditional autoregressive value-at-risk test of Engle and Manganelli (2004) performs best overall, but duration-based tests also perform well in many cases.

Distinguished University Professor And William Neal Reynolds Distinguished Professor Of Food Science, Microbiology, and Genetics. 

Read more about this expert.