Executive Compensation in America: Optimal Contracting or Extraction of Rents?

This paper develops an account of the role and significance of rent extraction in executive compensation. Under the optimal contracting view of executive compensation, which has dominated academic research on the subject, pay arrangements are set by a board of directors that aims to maximize shareholder value by designing an optimal principal-agent contract. Under the alternative rent extraction view that we examine, the board does not operate at arm's length; rather, executives have power to influence their own compensation, and they use their power to extract rents. As a result, executives are paid more than is optimal for shareholders and, to camouflage the extraction of rents, executive compensation might be structured sub-optimally. The presence of rent extraction, we argue, is consistent both with the processes that produce compensation schemes and with the market forces and constraints that companies face. Examining the large body of empirical work on executive compensation, we show that the picture emerging from it is largely compatible with the rent extraction view. Indeed, rent extraction, and the desire to camouflage it, can better explain many puzzling features of compensation patterns and practices. We conclude that extraction of rents might well play a significant role in U.S. executive compensation; and that the significant presence of rent extraction should be taken into account in any examination of the practice and regulation of corporate governance.

Cross-Cutting Literature Review on the Drivers of Local Council Accountability and Performance

There is now a considerable body of literature on decentralization in diverse national contexts. Ascertaining factors that drive local accountability and performance have been the key concerns of these studies. Diverse ethodological instruments and approaches have been used—from large-n statistical analyses to in-depth case study techniques. And yet, the findings regarding the drivers of local performance and accountability remain inconclusive or even contradictory even when different scholars employ similar data.Local Performance; Democracy; Rule of Law; Elections; Socio-Economic development; Political Culture; Corruption; Ethnic Diversity; Party System; Fiscal Decentralization; Local Government; Outsourcing; Leadership Skills

Governance of communicable disease control services : a case study and lessons from India

The authors study the impact of governance and administrative factors on communicable disease prevention in the Indian state of Karnataka using survey data from administrators, frontline workers, and elected local representatives. They identify a number of key constraints to the effective management of disease control in India, in misaligned incentives, and the institutional arrangements for service delivery. The authors discuss these under five headings: administrative issues; human resource management; horizontal coordination; decentralization, community involvement, and public accountability; and implementation of public health laws and regulations. They find that India's public health system is configured to be highly effective at top-down reactive work, such as bringing disease outbreaks under control, but not for the more routine collaborations required for proactive disease prevention. The authors conclude with policy recommendations that take into account the complexity of India's system of public administration and the need for simple reforms that can be easily implemented.Health Monitoring&Evaluation,Health Systems Development&Reform,Agricultural Knowledge&Information Systems,Public Health Promotion,Disease Control&Prevention,Health Systems Development&Reform,Health Monitoring&Evaluation,National Governance,Agricultural Knowledge&Information Systems,Health Economics&Finance

The Social Construction of Sarbanes-Oxley

The closer one looks at SOX and its origins in the financial scandals of the early 2000s, the blurrier the picture, which lets commentators see what they want to see and draw inferences accordingly. That is why social construction is so crucial. My aim in this paper is to illuminate the social nature of SOX\u27s diffusion into practice. I will leave to the reader the judgment about whether this has been or will be good or bad, and for whom. If I seem to challenge SOX\u27s critics more than its supporters, it is because the critics have been more venomous than is fair. Venom aside, the bite still deserves attention

Non-profit Sector in Pakistan: Government Policy and Future Issues

The non-profit sector remains relatively small and underdeveloped in Pakistan. During the decade of the 1990s, it has demonstrated some nascent growth resulting from a number of favourable factors like the return to democracy, the growing push towards deregulation and privatisation, the process of globalisation and the emergence of international coalitions of civil society and the deterioration in the financial position of governments which has limited the public provision of social services. The objective of this paper is to examine the role played by government policy in fostering this process of growth of the non-profit sector of Pakistan and to review the key issues faced by the sector at this time. Of particular concern are, first, the overall posture of the government towards the non-profit sector, the types of policies in place, and the underlying philosophy or principles that guide policy-making. Second, the forms of support to the non-profit sector by different levels of government. Third, the posture of international organisations and supranational governments towards local non-profit organisations and, forth, the major issues facing the non-profit sector at the present time. The objective of this paper is to analyse government policy towards the nonprofit sector in Pakistan over the last two decades and review some major issues facing the sector at the present time. It is important to note that analysis presented here does not cover the period of current government.

The Effects of Infrastructure Development and Taxation on Current and Future Earnings

This dissertation is a collection of three essays, each of which studies a policy in India that provides a unique circumstance affecting directly or indirectly earnings. The purpose of this work is to analyze how taxation and infrastructure development aspects the current and future earnings using these policies In the first essay, I use a national infrastructure development program initiated in India in 2001 to construct new all-season roads (roads that can be used in all-weather especially monsoons) in villages that previously had only had dry-season roads (roads that are difficult to use in monsoons). In the second, I use a new tax on fringe benefits initiated in India in 2005, seeking evidence for the hypothesis that the difference in higher marginal tax rates on wages, relative to lower rates on fringe benefits, induces a reallocation of the total compensation package toward fringe benefits. In the final essay, which uses the same policy as that of first I am interested behind the economic motives of manipulation by the local community to obtain public good road in their locality

Public Works and Employment Programmes: Towards a Long-Term Development Approach

Public works and employment programmes have long been considered a staple of social assistance. For the most part, though, they have been designed as short-term ?safety nets?. While, in some cases, the focus has also been on reducing poverty or addressing structural unemployment challenges, their implementation has seldom been on a scale that would make a dent in structural poverty. The fact that large scale programmes such as India?s National Rural Employment Guarantee Scheme (NREGS), which was initiated prior to the recent economic crisis, could also be effective in responding speedily to and mitigating the effects of the crisis has elicited interest in such policies as a component of inclusive growth paths. In making the case for a longer-term development approach, the paper points out that such an approach would not only allow these programmes to act as shock absorbers without being ?too little, too late? but would also enable the state to strengthen its capacities to provide support to livelihood strategies of the poor through addressing critical public goods and service deficits while creating jobs. In this context, the paper assesses the desirability and feasibility of adopting a universal or a partial Employment Guarantee (EG) to make such programmes a more stable complement to market-driven employment creation in situations where levels of poverty, in particular, working poverty, and underemployment are high. The paper also explores the complementarities and interactions with various social assistance and cash transfer programmes with a view to fostering a more comprehensive approach to social protection for the poor. The paper concludes with a section on implementation issues with a view to strengthening learning on how to plan, design and implement long-term and Employment Guarantee types of public employment programmes. (?)Public Works and Employment Programmes: Towards a Long-Term Development Approach

Microfinance as Business

We analyze microfinance institutions (MFIs) as businesses, asking how some succeed in covering costs, earning returns, attracting capital, and scaling up. We draw on existing literature and interviews with industry players and academics. Key microfinance business challenges include building volume, keeping loan repayment rates high, retaining customers, and minimizing scope for fraud. Since the 1970s, microfinance innovators have developed clever solutions to these problems. Some have built huge organizations that serve thousands or millions of clients and have demonstrated an impressive capacity for change—in countries, to boot, with weak infrastructure and human capital. The individual innovations have spread both through a Darwinian process of selection and through cultural diffu-sion. We examine three kinds of determinants of commercial success: product design, management, and environmental factors such as regulation. We conclude that much about how microfinance is de-livered can be understood as responses to business imperatives. Indeed, the discoveries of techniques for cost-effective microfinance delivery are the real genius of microfinance, rather than the "discovery" that the poor can repay that dominates its public image. But by Occam's razor (simpler explanations are more plausible), the power of commercial imperatives to explain so many product design choices weakens an alternative explanation for them, namely that they are made primarily to help clients. These doubts point up the need for more rigorous impact evaluations of microfinance.microfinance