Endogenous governance transparency and product market competition.

This paper endogenizes both the choice of governance transparency at the firrm level and the portfolio decisions of investors. ln the model, managers raise money in financial markets that are subject to imperfections arising from the non-observability of output for financiers. Investors, on the other hand, observe a signal correlated with returns. Formal contracting are needed to prevent expropriation of the investor`s wealth by the manager. The contract endogenously determines the nature and formation of the cost and benefits of voluntary disclosure. Managers optimally decide on the quality of the signal —used here as the measure of governance transparency- trading off the possibility of expropriating profits against the opportunity to raise more capital. We show that one important driving force behind governance transparency is product market competition: tougher competition translates into lower frictions on the capital market, since investors have better possibilities for portfolio diversification. Managers react to this loss of bargaining power by increasing transparency. Furthermore, firms characterized by low corporate profits or firms where investor protection is strong at the country level will be more likely to avoid voluntary disclosure regimes.Corporate governance; Voluntary disclosure; Portfolio choice; Incentives; Product market competition;

Executive equity compensation and incentives: a survey

Stock and option compensation and the level of managerial equity incentives are aspects of corporate governance that are especially controversial to shareholders, institutional activists, and government regulators. Similar to much of the corporate finance and corporate governance literature, research on stock-based compensation and incentives has not only generated useful insights, but also produced many contradictory findings. Not surprisingly, many fundamental questions remain unanswered. In this study, the authors synthesize the broad literature on equity-based compensation and executive incentives and highlight topics that seem especially appropriate for future research.Executives ; Stockholders ; Corporate governance

Innovation and the productivity challenge in the public sector

Evidence-based policymaking needs to be counter-balanced with intelligence-based policymaking, the Executive Director of the HC Coombs Policy Forum told an audience of senior public servants today. Dr Mark Matthews used an address to the inaugural Policy Reflections Forum at the Department of Communications to suggest that the public service consider the concept of intelligence-based policymaking as a means of crafting quicker policy responses when information is partial or incomplete. Intelligence-based policymaking involves tests of competing hypotheses and is used widely by the intelligence community to inform decision-making when a shortage of time means that the accumulation of robust evidence is a challenge. Matthews stressed that governments frequently had to make fast decisions on issues with considerable uncertainty over cause and effect, so in some circumstances the steady accumulation of information associated with evidence-based policymaking needs to be complemented with a faster approach. He added that there are a many public policy challenges that stand to benefit from the use of intelligence-based policymaking. “Intelligence-based policymaking has been explicitly designed to handle decision-making under conditions of substantive uncertainty, ambiguity and risk – situations in which there may be no option to wait before more evidence is available before deciding what to do about a possible threat. “I think there’s a compelling argument [to use intelligence-based policymaking] because it may be a faster, cheaper and a more ‘fit for purpose’ approach to formulating policy. “A transition to intelligence-based policymaking may be the step change in public sector productivity that we are searching for – simply because it involves much lower levels of wasted person-hours…and lower risks of wasted spending on intervention designs and the monitoring and evaluation of this spending that does not align with the reality that governments are the uncertainty and risk managers of last resort,” he said. He added that another advantage of intelligence-based policymaking is that it is better positioned to handle the possible unhelpful reactions of those groups a piece of policy is aimed at. “If I release an evidence-based assessment of a policy challenge – such as social policy or business regulation – it is likely that the behavior of the actors and entities whose behaviors constitute the policy challenge may change in response to their improved understanding of what government plans to do in the future. There are many examples of this.” Matthews leads the HC Coombs Policy Forum at Crawford School. The Forum is a collaboration between the Australian Government and The Australian National University with a mission to support innovative and experimental work at the interface between the public service and academia. His speech builds on an earlier keynote address calling for policymakers and academics to move beyond evidence-based policymaking: https://crawford.anu.edu.au/news/1637/building-better-partnerships Matthews’ speech to the Department of Communications, Innovation and the productivity challenge in the public sector is available for download on his website: http://marklmatthews.com/2014/03/05/talk-on-innovation-and-the-productiv..

Individual Consequences of Monitoring Under Gainsharing: Expanding Agency Theory Predictions

Agency theory suggests that gainsharing produces changes in monitoring within teams, however, the implications of monitoring on individual behavior have not yet been examined. This research expands agency theory by exploring the behavioral implications of peer monitoring under gainsharing. Performance data from both individual workers and managers show that peer monitoring has either zero or positive effects on five categories of individual behavior. However, focus group, interview, and company generated survey data indicate the existence of concealment and perhaps retaliatory behaviors in response to gainsharing

Market Structure and Energy Efficiency: The Case of New Commercial Buildings

This is a report on why commercial office buildings aren’t more energy efficient. Several decades of energy efficiency programs have resulted in some gains, but overall increases in the energy efficiency of buildings have fallen far short of the 30 to 50 percent improvement that many efficiency advocates believe is possible. The purpose of this study is to consider the “why” question by empirically examining the dynamics of new commercial building markets. To do so, the authors used multiple research techniques, including qualitative field observation and interview methods that allow for a more in-depth understanding of complicated market processes. Their research focused primarily on new office buildings and centered in four regional markets: Sacramento, San Francisco, Seattle, and Portland. The authors identify key dynamics of commercial office building markets, describe how change and innovation occurs in commercial development, discuss the implications for energy efficiency, and suggest next steps

Investment Activity and Ownership Structure of Czech Corporate Farms

This paper aims at assessing the relationship between ownership structure, performance and investment activity. In particular it studies how behavioural differences between farms related to ownership structure influence farms' investment activity and thus their further development potential resulting in farm structural changes. The paper analyses a sample of corporate farms over 7 years, 1997-2003, using structural model of three equations including investment accelerator model. This model considers the effect of ownership on (a) technical efficiency as proxy for the quality of operational management, (b) returns on capital as proxy for quality of financial management, (c) investment activity, and (d) investment sensitivity to internal funds as proxy for owners/managers opposition to credit financing. The empirical results provide evidence of a theoretically justifiable positive effect of ownership concentration on investment activity and farms economic performance, and a theoretically consistent effect of external/employee ownership on technical performance. However, the authors are not able to confirm empirically the theoretically based effect of external/employee ownership on farm investment activity.corporate ownership, employee ownership, external ownership, agency problem, investment behaviour, financial constraint, Agricultural Finance, Farm Management,

Venture capital as human resource management

Part of the way venture capitalists add value to portfolio firms is by obtaining and transferring information about senior managers across firms over time. Information transfer occurs on a significant scale and takes place both among a single venture capitalists portfolio firms and between different venture capitalists firms via a network of venture capitalists, which venture capitalists use to locate and relocate managers. We collect and analyze survey data on the operation of this human resource network. Theoretical and empirical analyses indicate that cross-sectional differences among portfolio firms are associated with differences in the intensity with which venture capitalists network. The observable factors relevant in explaining the intensity with which venture capitalists network include: 1) the value of the information transmitted though the network, 2) the riskiness of the activities of the portfolio firms, 3) the size of the venture capital fund, 4) the degree of difficulty in enticing executives to manage portfolio firms, and 5) the reputation of the venture capitalist for successfully recycling managers. We show that each of these factors reflects the costs and benefits to venture capitalists of participating in the network.

Venture Capital as Human Resource Management

Venture capitalists add value to portfolio firms by obtaining and transferring information about senior managers across firms over time. Information transfer occurs on a significant scale and takes place both among a single venture capitalist%u2019s portfolio firms and between different venture capitalists%u2019 firms via a network of venture capitalists, which venture capitalists use to locate and relocate managers. Cross-sectional differences are associated with differences in the intensity with which venture capitalists network. The observable factors relevant in explaining the intensity with which venture capitalists network include: 1) the value of the information transmitted through the network, 2) the riskiness of the activities of portfolio firms, 3) the size of the venture capital fund, 4) the degree of difficulty in enticing executives to manage portfolio firms, and 5) the reputation of the venture capitalist for successfully recycling managers. These factors reflect costs and benefits to venture capitalists of participating in the network.

Managing in conflict: How actors distribute conflict in an industrial network

IMP researchers have examined conflict as a threat to established business relationships and commercial exchanges, drawing on theories and concepts developed in organization studies. We examine cases of conflict in relationships from the oil and gas industry's service sector, focusing on conflicts of interest and resources, and conflict as experienced by actors. Through a comparative case study design, we propose an explanation of how actors manage conflict and manage in conflict given that they tend to value and maintain relationships beyond episodes of exchange. We consider conflicts in relationships from a network perspective, showing that actors experienced these while adapting to changes in their business setting, modifying their roles in that network. By identifying conflict with the organizing forms of relationship and network, we show how actors formulate conflict through pursuing and combining a number of strategies, distributing the conflict across an enlarged network

The Financial System, Bussiness Cycles and Growth

Los economistas han reconocido desde hace mucho tiempo la importancia del sistema financiero. Muchas de las discusiones tratan al sistema financiero aisladamente, o lo relacionan sólo superficialmente a la macroeconomía. Este artículo discute los intrincados lazos entre el sistema financiero y la macroeconomía. El principal resultado de los modelos microeconómicos de finanzas desarrollados en el pasado cuarto de siglo han mostrado cuan diferente es el sector financiero de otros sectores, incluyendo la persistencia de situaciones de no equilibrio en los mercados y equilibrios ineficientes. Aquí hay una aplicación de esas ideas a una discusión de los modelos macroeconómicos basados en finanzas, usándolos para arrojar luz sobre las causas de las fluctuaciones cíclicas de los negocios y algunos de los determinantes del crecimiento. Finalmente, en la última parte de la discusión hay algunas respuestas a desarrollos en flujos de capitales internacionales, incluyendo las cuestiones de convertibilidad de la cuenta de capital y la respuesta a crisis.Financial System; Bussiness Cycles; modelos microeconómicos