Firm Performance and Wages: Evidence from Across the Corporate Hierarchy

Does it matter whether you work for a successful company? And if so, does it matter who you are? To answer these questions we construct a unique panel dataset covering the pay of all CEOs, senior managers and a fully representative sample of workers for a large group of publicly-listed companies covering just under 90% of the market capitalization of the UK stock market. We show that senior management appear to have pay that is strongly associated with various measures of firm performance (such as shareholder returns and quasi-rents), while workers' pay is only weakly associated with such measures. A 10% increase in firm value is associated with an increase of 3% in CEO pay but only 0.2% in average workers' pay. Falls in firm performance are also followed by CEO pay cuts and significantly more CEO firings. This is essentially a result of the responsiveness of flexible pay to performance and only senior executives have a large enough share of pay in bonuses to generate a sizeable overall effect on pay. External control matters for pay - firms with lower levels of institutional ownership have smaller pay-performance elasticities for CEOs and do not cut their pay when performance is poor.

CEO Clarity

A key task for CEOs is to communicate with analysts and investors about their companies' past performance and prospects in quarterly earnings conference calls. Some CEOs speak fuzzily, frequently using words such as "approximately", "probably", and "maybe." Others rarely use such tentative words. That is, they speak clearly. We show that CEO clarity is a matter of personal style; it is not driven by fundamental uncertainty in the companies' business activity. Analysts and the stock market respond more strongly to earnings news conveyed by clear CEOs. Past performance does not explain the style of a newly appointed CEO. However, when a firm does appoint a more clear-talking CEO, Tobin's Q increases and analyst recommendations become more favorable. Overall, investors and analysts appear to value clear talk

The Indulgence of Reasonable Presumptions: Federal Court Contractual Civil Jury Trial Waivers

Large institutions such as banks, franchisers, international companies, and lessors distrust juries\u27 ability to properly resolve disputes and award reasonable damages. As a result, these and other actors have attempted to limit juries\u27 potential influence on the contracts to which they are parties. They have done so through contractual jury trial waiver clauses in these agreements. The Seventh Amendment to the Constitution guarantees the jury trial right. Whether the right is determined to exist in an individual instance is a matter of federal common law, which merely preserves the jury trial right as it existed when the Amendment was adopted in 1791. Although the Seventh Amendment guarantees the right to a jury trial, it does not mandate one. As with other constitutional rights, this right may be waived

Limiting the Business Method Patent: A Comparison and Proposed Alignment of European, Japanese and United States Patent Law

That ideas should freely spread from one to another over the globe, for the moral and mutual instruction of man, and improvement of his condition…

Quieting the Sharholders\u27 Voice: Empirical Evidence of Pervasive Bundling in Proxy Solicitations

The integrity of shareholder voting is critical to the legitimacy of corporate law. One threat to this process is proxy “bundling,” or the joinder of more than one separate item into a single proxy proposal. Bundling deprives shareholders of the right to convey their views on each separate matter being put to a vote and forces them to either reject the entire proposal or approve items they might not otherwise want implemented. In this Paper, we provide the first comprehensive evaluation of the anti-bundling rules adopted by the Securities and Exchange Commission (“SEC”) in 1992. While we find that the courts have carefully developed a framework for the proper scope and application of the rules, the SEC and proxy advisory firms have been less vigilant in defending this instrumental shareholder right. In particular, we note that the most recent SEC interpretive guidance has undercut the effectiveness of the existing rules, and that, surprisingly, proxy advisory firms do not have well-defined heuristics to discourage bundling. Building on the theoretical framework, this Article provides the first large-scale empirical study of bundling of management proposals. We develop four possible definitions of impermissible bundling and, utilizing a data set of over 1,300 management proposals, show that the frequency of bundling in our sample ranges from 6.2 percent to 28.8 percent (depending on which of the four bundling definitions is used). It is apparent that bundling occurs far more frequently than indicated by prior studies. We further examine our data to report the items that are most frequently bundled and to analyze the proxy advisors’ recommendations and the voting patterns associated with bundled proposals. This Article concludes with important implications for the SEC, proxy advisors, and institutional investors as to how each party can more effectively deter impermissible bundling and thus better protect the shareholder franchise

Government-industry relations in China : a review of the art of the state

For those who have studied the political economy of China since the onset of urban-industrial reform in the 1980s, the state looks considerably less powerful today than it once was. Market mechanisms and state regulation have been brought in to replace direct control and planning, whilst the importance of state ownership has diminished through the effective privatisation of many State Owned Enterprises (SOEs) and the emergence of new private economic sectors and actors. Nevertheless, this does not mean that the state has withdrawn from economic activity. On the contrary, the state is alive and well and exercising considerable control over the nature of economic activity, albeit in different less direct ways than before

DNA as Patentable Subject Matter and a Narrow Framework for Addressing the Perceived Problems Caused by Gene Patents

Concerns about the alleged harmful effects of gene patents— including hindered research and innovation and impeded patient access to high-quality genetic diagnostic tests—have resulted in overreactions from the public and throughout the legal profession. These overreactions are exemplified by Association for Molecular Pathology v. U.S. Patent and Trademark Office, a 2010 case in the Southern District of New York that held that isolated DNA is unpatentable subject matter under 35 U.S.C. § 101. The problem with these responses is that they fail to adequately consider the role that gene patents and patents on similar biomolecules play in facilitating investment in the costly and risky developmental processes required to transform the underlying inventions into marketable products. Accordingly, a more precisely refined solution is advisable. This Note proposes a narrowly tailored set of solutions to address the concerns about gene patents without destroying the incentives for companies to create and commercialize inventions derived from these and similar patents

An Uncertain Destination: On the Development of Conflict Management Systems in U.S. Corporations

[Excerpt] Our survey and field research have led us to some tentative conclusions that do not conform to the conventional wisdom of our field. From its inception, ADR has been controversial. On the one hand, ADR has been embraced by a coterie of champions who have always believed that its advantages over litigation were so obvious and compelling it would only be a matter of time before ADR was adopted universally. These champions have also been missionaries, proselytizing their faith in all quarters and making numerous converts. Like all true believers, ADR champions cannot understand why others have not yet gotten the faith. On the other hand, there has always been a group of ADR opponents who believe ADR undercuts our system of justice and must be resisted. ADR champions believe in the inevitability of ADR, while ADR opponents believe the movement to ADR can be stopped and even reversed. On balance, we believe in ADR\u27s merits and share many of its champions\u27 convictions. Our research — which is based on the analytical model we present in this paper — suggests, however, that there is nothing inevitable about the ultimate triumph of ADR