Empire-Builders and Shirkers: Investment, Firm Performance, and Managerial Incentives

Do firms systematically over- or underinvest as a result of agency problems? We develop a contracting model between shareholders and managers in which managers have private benefits or private costs of investment. Managers overinvest when they have private benefits and underinvest when they have private costs. Optimal incentive contracts mitigate the over- or underinvestment problem. We derive comparative static predictions for the equilibrium relationships between incentives from compensation, investment, and firm performance for both cases. The relationship between firm performance and managerial incentives, in isolation, is insufficient to identify whether managers have private benefits or private costs of investment. In order to identify whether managers have private benefits or costs, we estimate the joint relationships between incentives and firm performance and between incentives and investment. Our empirical results show that both firm performance and investment are increasing in managerial incentives. These results are consistent with managers having private costs of investment. We find no support for overinvestment based on private benefits.

Performance Incentives Within Firms: The Effect of Managerial Responsibility

Empirical research on executive compensation has focused almost exclusively on the incentives provided to chief executive officers. However, firms are run by teams of managers, and a theory of the firm should also explain the distribution of incentives and responsibilities for other members of the top management team. An extension of the standard principal-agent model to allow for multiple signals of effort predicts that executives who have other, more precise signals of their effort than firm performance will have compensation that is less sensitive to the overall performance of the firm. We test this prediction in a comprehensive panel dataset of executives at large corporations by comparing executives with explicit divisional responsibilities to those with broad oversight authority over the firm and to CEOs. Controlling for executive fixed effects and the level of compensation, we find that CEOs have pay-performance incentives that are $5.85 per thousand dollar increase in shareholder wealth higher than the pay-performance incentives of executives with divisional responsibility. Executives with oversight authority have pay-performance incentives that are$1.26 per thousand higher than those of executives with divisional responsibility. The aggregate pay-performance sensitivity of the top management team is quite substantial, at $30.24 per thousand dollar increase in shareholder wealth for the median firm in our sample. Our work sheds light on the alignment of responsibility and incentives within firms and suggests that the principal-agent model provides an appropriate characterization of the internal organization of the firm.

Corporate Political Donations: Investment or Agency?

This is the published version, also available from http://dx.doi.org/10.1515/1469-3569.1391 .We examine corporate donations to political candidates for federal offices in the United States from 1991 to 2004. Firms that donate have operating characteristics consistent with the existence of a free cash flow problem, and donations are negatively correlated with returns. A $10,000 increase in donations is associated with a reduction in annual excess returns of 7.4 basis points. Worse corporate governance is associated with larger donations. Even after controlling for corporate governance, donations are associated with lower returns. Donating firms engage in more acquisitions and their acquisitions have significantly lower cumulative abnormal announcement returns than non-donating firms. We find virtually no support for the hypothesis that donations represent an investment in political capital. Instead, political donations are symptomatic of agency problems within firms. Our results are particularly useful in light of the Citizens United ruling, which is likely to greatly increase the use of corporate funds for political donations

Predicting Energy Requirement for Cooling the Building Using Artificial Neural Network

This paper explores total cooling load during summers and total carbon emissions of a six storey building by using artificial neural network (ANN). Parameters used for the calculation were conduction losses, ventilation losses, solar heat gain and internal gain. The standard back-propagation learning algorithm has been used in the network. The energy performance in buildings is influenced by many factors, such as ambient weather conditions, building structure and characteristics, the operation of sub-level components like lighting and HVAC systems, occupancy and their behavior. This complex situation makes it very difficult to accurately implement the prediction of building energy consumption. The calculated cooling load was 0.87 million kW per year. ANN application showed that data was best fit for the regression coefficient of 0.9955 with best validation performance of 0.41231 in case of conduction losses. To meet out this energy demand various fuel options are presented along with their cost and carbon emission

Evaluation of relationship between bone mineral density and fragility fracture in perimenopausal women between 40-58 years of age: a hospital based prospective observational study

Background: At present the risk assessment for osteoporosis using low bone mineral density (BMD) is based on data obtained from elderly females, largely ≥ 65 years of age. The risk factors for low peak bone mass or accelerated bone loss that occurs during perimenopausal phase is ignored in this risk assessment. Osteoporosis is found to occur at a relatively younger age in the Indian population. Although lower BMD values have an established identity as a major risk factor for fractures in postmenopausal women, we endeavour to evaluate relationship between bone mineral density and fragility fracture in perimenopausal women.Methods: 65 Patients were recruited for the study. After X-ray of involved part, patients were divided into cases (with fracture, n=33) and control (no bony injury, n=32). All patients underwent dual energy X-ray absorptiometry (DEXA) scan. Results of DEXA scans were evaluated in both the groups. BMD was expressed in g/cm2.Results: 33 patients (50.77%) were diagnosed as fracture, 32(49.23%) had no bony injury. Threshold bone mineral density (BMD) for fragility fracture found out asfor L1, cut off ≤0.767. For L2, cut off ≤0.829. For L3, cut off ≤0.811. L4, cut off ≤0.798. For L1-L4, cut off ≤0.845. For left femur total hip, cut off ≤0.918. For left forearm-total, cut off ≤0.411. For right femur total hip-cut off ≤0.795. For right forearm-total, cut-off≤0.382.Conclusions: Perimenopausal women having BMD below threshold for involved site are at risk of fragility fracture and should be given prophylactic treatment to improve bone mineral density

Evaluation of the Acute Phase Reactants CRP in Unstable Angina Cases

Unstable angina, a syndrome of symptoms caused by ischemia of the heart muscles, is both frightening and disabling and may herald acute myocardial infarction. The immediate precipitating events of the atherosclerotic plaque responsible for that critical degree of ischemia resulting in the syndrome of unstable angina are progression of atherosclerosis platelet aggregation, thrombosis and vasospasm. Acute phase reactants are proteins in the plasma whose levels increase during acute inflammatory states or secondary to certain types of tissue damage. A cross-sectional descriptive study was done in Safdarjung Hospital on 40 subjects and controls to establish the acute phase reactants CRP in unstable angina cases and their relationships. In our study, we found that CRP levels are increased in cases as compared to controls, thus showing a direct correlation

ECMO: a lifesaving modality in ARDS during puerperium

Acute respiratory distress syndrome (ARDS) is an uncommon condition encountered in pregnancy. The incidence of ARDS in pregnancy has been reported to be 1 in 6229 deliveries with mortality rates to range from 24% to 39% in pregnant patients. An essential component in management of ARDS involves good communication between the obstetrics team and critical care specialist and a fundamental understanding of mechanical ventilatory support. In critically ill patients where both cardiorespiratory support is required, Extracorporeal Membrane Oxygenation (ECMO) can be used to help maintain the vital functions. ECMO is a temporary cardio respiratory or respiratory support in critically ill patients who are unresponsive to conventional management.  In present case a young female with post-partum ARDS was successfully managed with extra corporeal membrane oxygenation (ECMO)

Coronary artery height differences and their effect on fractional flow reserve

Background: Fractional flow reserve (FFR) uses pressure-based measurements to assess the severityof a coronary stenosis. Distal pressure (Pd) is often at a different vertical height to that of the proximalaortic pressure (Pa). The difference in pressure between Pd and Pa due to hydrostatic pressure, mayimpact FFR calculation.Methods: One hundred computed tomography coronary angiographies were used to measure heightdifferences between the coronary ostia and points in the coronary tree. Mean heights were used to calculate the hydrostatic pressure effect in each artery, using a correction factor of 0.8 mmHg/cm. Thiswas tested in a simulation of intermediate coronary stenosis to give the “corrected FFR” (cFFR) andpercentage of values, which crossed a threshold of 0.8.Results: The mean height from coronary ostium to distal left anterior descending (LAD) was +5.26 cm,distal circumflex (Cx) –3.35 cm, distal right coronary artery-posterior left ventricular artery (RCA-PLV)–5.74 cm and distal RCA-posterior descending artery (PDA) +1.83 cm. For LAD, correction resulted in a mean change in FFR of +0.042, –0.027 in the Cx, –0.046 in the PLV and +0.015 in the PDA. Using 200 random FFR values between 0.75 and 0.85, the resulting cFFR crossed the clinical treatmentthreshold of 0.8 in 43% of LAD, 27% of Cx, 47% of PLV and 15% of PDA cases.Conclusions: There are significant vertical height differences between the distal artery (Pd) and its point of normalization (Pa). This is likely to have a modest effect on FFR, and correcting for this results in a proportion of values crossing treatment thresholds. Operators should be mindful of this phenomenon when interpreting FFR values

Impact of point-of-care pre-procedure creatinine and eGFR testing in patients with ST segment elevation myocardial infarction undergoing primary PCI: The pilot STATCREAT study

Background: Contrast-induced acute kidney injury (CI-AKI) is a recognised complication during primary PCI that affects short and long term prognosis. The aim of this study was to assess the impact of point-of-care (POC) pre-PPCI creatinine and eGFR testing in STEMI patients. Methods 160 STEMI patients (STATCREAT group) with pre-procedure POC testing of Cr and eGFR were compared with 294 consecutive retrospective STEMI patients (control group). Patients were further divided into subjects with or without pre-existing CKD. Results: The incidence of CI-AKI in the whole population was 14.5% and not different between the two overall groups. For patients with pre-procedure CKD, contrast dose was significantly reduced in the STATCREAT group (124.6 ml vs. 152.3 ml, p = 0.015). The incidence of CI-AKI was 5.9% (n = 2) in the STATCREAT group compared with 17.9% (n = 10) in the control group (p = 0.12). There was no difference in the number of lesions treated (1.118 vs. 1.196, p = 0.643) or stents used (1.176 vs. 1.250, p = 0.78). For non-CKD patients, there was no significant difference in contrast dose (172.4 ml vs. 158.4 ml, p = 0.067), CI-AKI incidence (16.7% vs. 13.4%, p = 0.4), treated lesions (1.167 vs. 1.164, p = 1.0) or stents used (1.214 vs. 1.168, p = 0.611) between the two groups. Conclusions: Pre-PPCI point-of-care renal function testing did not reduce the incidence of CI-AKI in the overall group of STEMI patients. In patients with CKD, contrast dose was significantly reduced, but a numerical reduction in CI-AKI was not found to be statistically significant. No significant differences were found in the non-CKD group

PF-05280014 (a trastuzumab biosimilar) plus paclitaxel compared with reference trastuzumab plus paclitaxel for HER2-positive metastatic breast cancer: a randomised, double-blind study

BACKGROUND: This randomised, double-blind study compared PF-05280014 (a trastuzumab biosimilar) with reference trastuzumab (Herceptin®) sourced from the European Union (trastuzumab-EU), when each was given with paclitaxel as first-line treatment for HER2-positive metastatic breast cancer. METHODS: Between 4 April 2014 and 22 January 2016, 707 participants were randomised 1:1 to receive intravenous PF-05280014 plus paclitaxel (PF-05280014 group; n = 352) or trastuzumab-EU plus paclitaxel (trastuzumab-EU group; n = 355). PF-05280014 or trastuzumab-EU was administered weekly (first dose 4 mg/kg, subsequent doses 2 mg/kg), with the option to change to a 3-weekly regimen (6 mg/kg) from Week 33. Treatment with PF-05280014 or trastuzumab-EU could continue until disease progression. Paclitaxel (starting dose 80 mg/m2 ) was administered on Days 1, 8 and 15 of 28-day cycles for at least six cycles or until maximal benefit of response. The primary endpoint was objective response rate (ORR), evaluating responses achieved by Week 25 and confirmed by Week 33, based on blinded central radiology review. RESULTS: The risk ratio for ORR was 0.940 (95% CI: 0.842–1.049). The 95% CI fell within the pre-specified equivalence margin of 0.80–1.25. ORR was 62.5% (95% CI: 57.2–67.6%) in the PF-05280014 group and 66.5% (95% CI: 61.3–71.4%) in the trastuzumab-EU group. As of data cut-off on 11 January 2017 (using data up to 378 days post-randomisation), there were no notable differences between groups in progression-free survival (median: 12.16 months in the PF-05280014 group vs. 12.06 months in the trastuzumab-EU group; 1-year rate: 54% vs. 51%) or overall survival (median: not reached in either group; 1-year rate: 89.31% vs. 87.36%). Safety outcomes and immunogenicity were similar between the treatment groups. CONCLUSION: When given as first-line treatment for HER2-positive metastatic breast cancer, PF-05280014 plus paclitaxel demonstrated equivalence to trastuzumab-EU plus paclitaxel in terms of ORR. CLINICAL TRIAL REGISTRATION: ClinicalTrials.gov, NCT0198967