381 research outputs found

    Firm Diversification and CEO Compensation: Managerial Ability or Executive Entrenchment?

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    Data for a sample of 558 CEOs over 1985-1990 suggest substantial compensation premia for managers of diversified firms. The CEO of a firm with two distinct lines of business averages 10 to 12 percent more in salary and bonus and 13 to 17 percent more in total compensation than the CEO of a similar-sized but undiversified firm, all else equal. This corresponds to average 1990 salary gains of 115,000to115,000 to 145,000 per year for our sample. Diversification may raise pay because the CEO's job requires higher ability or because it is associated with CEO entrenchment. If ability explains the correlation, we would expect the diversification premium to be invariant to tenure. Entrenchment models suggest higher premia for more experienced (more entrenched) CEOs, and an increase in compensation when the CEO diversifies the firm. The data support an ability model over an entrenchment explanation. The diversification premium is unaffected by tenure, and increasing diversification reduces compensation for incumbent CEOs, all else equal.

    Pricing behavior and verticle contracts in retail markets

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    Supported by the Center for Energy Policy Research, M.I.T

    Sticky Prices, Inventories, and Market Power in Wholesale Gasoline Markets

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    We present and test an explanation for lags in the adjustment of wholesale gasoline prices to changes in crude oil prices. Our simple model with costly adjustment of production and inventories implies that output prices will respond with a lag to cost shocks even in the absence of menu costs, imperfect information, and long-term buyer/seller relationships. The model predicts that futures prices for gasoline will adjust incompletely to crude oil price shocks occurring close to the expiration date of the futures contract. We test and confirm this implication. The model also predicts that firms with market power will choose a different price adjustment path than would perfectly competitive firms. We examine the responses of prices in 188 local wholesale gasoline markets and find evidence that greater market power leads to slower output price adjustment.

    Dynamic Pricing in Retail Gasoline Markets

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    This paper tests for price patterns in retail gasoline markets consistent with those predicted by models of implicit collusion among firms. Recent supergame models show that the highest supportable collusive price is a function of today's profit relative to expected future profit: collusive prices are higher when predictable changes in demand or cost lead firms to expect that collusive profits are increasing rather than declining. Ceteris paribus, collusive profits will be expected to increase when demand is expected to increase and/or costs are expected to decline. Using panel data on sales volume, and retail and wholesale prices in 59 cities over 72 months, we find results consistent with these predictions. Controlling for current demand and input price, the elasticity of current retail margins with respect to expected next-month demand is about 0.37. The elasticity of current margins with respect to next-month wholesale price is about -0.37. The results are inconsistent with inventory effects.

    Contractual form, retail price and asset characteristics

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    Predictions derived from a principal-agent analysis of the manufacturer-retailer relationship are derived and tested using microdata on contractual form, outlet characteristics and retail prices for gasoline stations in Eastern Massachusetts. The empirical results are consistent with upstream firms choosing contracts that have strong incentive characteristics but less direct control when asset characteristics make unobservable effort by downstream agents important. Manufacturers trade off incentive power for more direct control when observable effort is relatively more important. Retail prices are affected by the identity of the decisionmaker and are slightly lower when the upstream firm is allowed to directly control the retail price.Supported by a grant from the Center for Energy Policy Research at MIT

    Regulatory constraints on executive compensation

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    This paper explores the influence of economic regulation on the level and structure of executive compensation. We find substantial and persistent differences in CEO compensation between firms subject to economic regulation and those in unregulated industries. CEOs of regulated firms are paid substantially less, on average, than their counterparts in the unregulated sector. In particular, in the electric utility industry, the sector which is most tightly regulated and for which we have the most data, CEOs average only 30% to 50% of the compensation earned by the CEO of a comparable firm in the unregulated sector. Compensation in the regulated sector tends to be more heavily weighted toward salary and cash and away from incentive-based forms of pay (such as stock options), and tends to be less responsive to variations in firm financial performance. The pattern of compensation discounts across industries, over time, and between firms in the electric utility industry is broadly consistent with the presence of binding political constraints on executive pay, as medicated through the regulatory process.Supported by the MIT Center for Energy and Environmental Policy Research, the Olin Foundation, the National Science Foundation, and a Sloan Foundation Fellowship

    Adoption of Technologies With Network Effects: An Empirical Examination of the Adoption of Automated Teller Machines

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    The literature on networks suggests that the value of a network is positively affected by the number of geographically dispersed locations it serves (the "network effect") and the number of its users (the "production scale effect"). We show that as a result a firm's expected time until adoption of technologies with network effects declines in both users and locations. We provide empirical evidence on the adoption of automated teller machines by banks that is consistent with this prediction. Using standard duration models, we find that a bank's date of adoption is decreasing in the number of its branches (a proxy for the number of locations and hence for the network effect) and the value of its deposits (a proxy for number of users and hence for production scale economies). The network effect is the larger of the two effects.

    Does the taste matter? Taste and medicinal perceptions associated with five selected herbal drugs among three ethnic groups in West Yorkshire, Northern England

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    In recent years, diverse scholars have addressed the issue of the chemosensory perceptions associated with traditional medicines, nevertheless there is still a distinct lack of studies grounded in the social sciences and conducted from a cross-cultural, comparative perspective. In this urban ethnobotanical field study, 254 informants belonging to the Gujarati, Kashmiri and English ethnic groups and living in Western Yorkshire in Northern England were interviewed about the relationship between taste and medicinal perceptions of five herbal drugs, which were selected during a preliminary study. The herbal drugs included cinnamon (the dried bark of Cinnamomum verum, Lauraceae), mint (the leaves of Mentha spp., Lamiaceae), garlic (the bulbs of Allium sativum, Alliaceae), ginger (the rhizome of Zingiber officinale, Zingiberaceae), and cloves (the dried flower buds of Syzygium aromaticum, Myrtaceae). The main cross-cultural differences in taste perceptions regarded the perception the perception of the spicy taste of ginger, garlic, and cinnamon, of the bitter taste of ginger, the sweet taste of mint, and of the sour taste of garlic. The part of the study of how the five selected herbal drugs are perceived medicinally showed that TK (Traditional Knowledge) is widespread among Kashmiris, but not so prevalent among the Gujarati and especially the English samples. Among Kashmiris, ginger was frequently considered to be helpful for healing infections and muscular-skeletal and digestive disorders, mint was chosen for healing digestive and respiratory troubles, garlic for blood system disorders, and cinnamon was perceived to be efficacious for infectious diseases. Among the Gujarati and Kashmiri groups there was evidence of a strong link between the bitter and spicy tastes of ginger, garlic, cloves, and cinnamon and their perceived medicinal properties, whereas there was a far less obvious link between the sweet taste of mint and cinnamon and their perceived medicinal properties, although the link did exist among some members of the Gujarati group. Data presented in this study show how that links between taste perceptions and medicinal uses of herbal drugs may be understood as bio-cultural phenomena rooted in human physiology, but also constructed through individual experiences and culture, and that these links can therefore be quite different across diverse cultures

    Učinkovitost u zadacima fine motorike i prostornih odnosa tijekom menstrualnog ciklusa

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    Various studies have shown fl uctuations in task performance during the menstrual cycle. The aim of this study was to see the effects of the menstrual cycle on performing fi ne motor and spatial tasks of different level of complexity in twenty students aged 18 to 21 years, with regular menstrual cycle (28 to 30 days). The students performed Oā€™Connor Finger Dexterity Test and mental rotation test during the menstrual, late follicular, and midluteal phase. Before the tests were performed, we administered Spielbergerā€™s State-Trait Anxiety Inventory for each phase. After the tasks were completed, the subjects ranked their diffi culty on Borgā€™s scale. The results showed the best performance in both tests in the midluteal phase (with sex hormones at their peak). The anxiety level and task diffi culty ranking were the highest in the menstrual phase, when the hormone levels were the lowest.Različita su istraživanja pokazala promjene učinkovitosti tijekom menstrualnog ciklusa. U zadacima u kojima su uspjeÅ”nije žene, najveća učinkovitost događa se tijekom kasne folikularne ili srednje lutealne faze. U zadacima u kojima su pak uspjeÅ”niji muÅ”karci najveća je učinkovitost nađena u menstrualnoj fazi. Na osnovi uporabe zadataka fi ne motorike i prostornih zadataka različitih razina kompleksnosti, cilj ovog istraživanja bio je ispitati utjecaj menstrualnog ciklusa na kognitivne funkcije. U istraživanju je sudjelovalo dvadeset ispitanica, dobi od 18 do 21 godinu, s redovitim menstrualnim ciklusima (28 do 30 dana). Ispitanice su izvodile Oā€™Connorov deksterimetar i zadatke mentalne rotacije tijekom menstrualne, kasne folikularne i srednje lutealne faze. Prije izvođenja zadataka, u svakoj fazi ciklusa primijenjen je Spielbergerov upitnik stanja anksioznosti. Nakon izvođenja zadataka, ispitanice su procjenjivale njihovu težinu na Borgovoj skali. Rezultati su pokazali najbolju učinkovitost u oba zadatka u fazi visokih razina spolnih hormona (srednja lutealna faza). Stanje anksioznosti i procijenjene težine zadataka bili su najviÅ”i u menstrualnoj fazi, kada su razine spolnih hormona najniže
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