Executive Remuneration And Firm Performance: Evidence From A Panel Of Mutual Organisations

The empirical relationship between the remuneration of: the highest paid director (HPD), mean Board remuneration (Director), and the Chairperson of the Board (Chair) and firm- level performance is examined on a panel of mutual building societies over the 1991 to 1996 period. Two measures of performance are employed: profitability and the change in total factor productivity (TFP). A strong positive relationship between profitability and pay is found for the HPD but not for the Director or Chair. The relationship between pay and TFP change is generally weak for all three measures of executive remuneration. A strong relationship between size and the executive remuneration measures is found, particularly for the Director. Although there is evidence of pay being used as a governance device, the pay-size relationship is consistent with managerial theories of the firm. Surprisingly, our results are similar to those reported for joint stock firms.Mutuals; executive remuneration; performance

Who Decides? A Study of the Effects on Decision Unit Dynamics in Crisis and Crisis Transition

Foreign policy decision-making is often an obscured process, particularly when it involves threats to national security or national interests. Despite the lack of transparency, though sometimes necessary, foreign policy decisions can have far-reaching consequences. Policymakers establish and affect relationships with other governments, and can commit state resources for cooperation or for conflict. The purpose of this study is to determine what types of decision units make foreign policy decisions and what factors influence the dynamics of the unit. I employ the decision units (DU) framework developed by Margaret Hermann to decisions made by the United States and Israel during the 1973Yom Kippur War until the signing of the Sinai II Agreement. I identify and classify the units, which constitute both a crisis and crisis transition period. In addition, this study tests the effects of shocks or feedback on decision unit dynamics. The results of the study reveal that more decisions were made more often by one individual during the crisis than during the crisis transition period. External shocks did not appear to have a significant effect on the type of decision unit, except for the initial shock of the war. Internal political shocks occurred in both the United States and Israel during the transition period, affecting regime change and thus a change in key actors involved in the decision-making process. Pertaining to the effects of feedback, negative feedback influenced decision unit dynamics in the U.S. during the crisis. For Israel, negative feedback as a result of a crisis decision affected the nature of the decision unit, but in the transition period. In other words, there was no change in decision unit dynamics until after the conclusion of hostilities. Positive feedback did not appear to influence the nature of the decision unit. Overall, the study demonstrates that as the crisis subsided and transitioned to a less stressful, non-crisis situation, single group decision-making became more prevalent. The study also shows that decision unit dynamics helped determine policy outcomes

Efficiency in UK building society branch networks: a comparative analysis using parametric and non-parametric distance functions

While there have been many academic studies of the efficiency of financial institutions at the industry level (see Berger et al 1997a), there have been relatively few studies made of efficiency at the branch level. This is probably due to the difficulty in obtaining adequate branch level data, which is typically not publicly available. As Berger et al (1997b) point out, however, “… ..information on branch efficiency may help improve our understanding of the underpinnings of efficiency at the bank level”

Trends and cycles in Euro area real GDP

This paper examines the time series properties of real GDP in the Euro area (EU 11), both prior to and after the adoption of the Euro in January 1999. We employ the relatively recent "optimal approximation" band pass filter developed by Christiano and Fitzgerald (2003) in order to identify a Euro-zone business cycle. We also utilise two alternative assumptions regarding the behaviour of the trend component of Euro area real GDP. The empirical results suggest that the single currency experiment appears to have reduced trend growth in the Euro zone, both ex-ante during the Maastricht nominal convergence phase, and also ex-post, during the period 2001Q1 to 2005Q4. With respect to cyclical behaviour, we identify a very robust measure of the Euro zone business cycle in the post 1994 period which does not appear to be sensitive to the particular assumption made regarding the trend rate of growth of real GDP. This type of result should facilitate a more accurate assessment of the extent to which individual countries and groups of countries are converged with respect to the Euro area business cycle

Economies of scale in UK building societies: a re-appraisal using an entry/exit model

This study advances an entry/exit model to analyse the scale efficiency of UK building societies. We find that there are considerable divergences across building societies in levels of scale efficiency and also in technological change during the sample period 1992-1997. The paper also finds that scale economies and technological change estimates are dependent on whether the econometrician balances a panel data set or utilises the entry/exit model based on Dionne et al’s (1998) specification. In general, scale economies in UK building societies are found to be more significant and more pervasive than in previous studies

An Economic evaluation of inputs and outputs in policing: problems in efficiency and measurement

The new Labour government has recently instigated an initiative to establish whether English and Welsh police forces should be ranked into groups based on an efficiency measure. The estimation techniques proposed in the Public Service Productivity Panel (2000) report in order to rank the efficiency of forces are Data Envelopment Analysis (DEA) and Stochastic Frontier Analysis (SFA). These procedures allow for multiple input/output configurations in a cost or production model in order to obtain efficiency scores. In order to produce comparative efficiency measures, however, it is essential that the services provided by police forces (the outputs or outcomes) be related to the resources (inputs) utilised by the forces in delivering these outputs (outcomes). A particular problem, however, is that policing includes many inputs and outputs (outcomes) that could potentially be utilised in an efficiency model using DEA and SFA. Hence, this paper considers the problems associated with measuring relative police force efficiency given that a vast number of potential indicators must be reduced to a handful to allow feasible estimation. In addition, it discusses the input and output variables utilised in the first 'official' analysis of English and Welsh police force efficiency (Demonstration Project (Home Office (2001))

Is M3 an appropriate aggregate for guiding ECB monetary policy?

This paper utilises an approach to long run modelling proposed by Pesaran, Shin and Smith (2001) to develop empirically weighted broad monetary aggregates for the Euro area. Two alternative aggregates are derived based upon the long run relationship between the M3 component assets and nominal income or prices respectively. The empirical results do not support the use of M3 as the key monetary indicator, as both aggregates accord a very low, or zero weight, to the broadest of the M3 component assets. The implied optimal weights are very different from those that would be implied by either simple sum or Divisia aggregation. Furthermore, recursive estimation reveals that the optimal weights do evolve over time in response to financial innovation and changes in wealth holder preferences. This implies that an aggregate such as M3, with fixed and equal weights of unity on all component assets, may not be a reliable leading indicator for inflation. Out of sample forecasts confirmed that the optimally weighted monetary aggregates have superior predictive content for inflation at longer forecast horizons such as 12 quarters

English and Welsh Police Force Efficiency: Demonstration Project Peer Review Results

The recent report by the Public Service Productivity Panel (PSPP) (2000), proposed that non-parametric (DEA) and parametric (SFA) modelling techniques be utilised as an aid to allow efficiency bandings of police forces. To determine whether these techniques could be utilised, a data set approved by the Home Office Steering Committee was compiled, and a report commissioned to present the results of the Demonstration Project (DP). This paper presents abridged results from a Peer Review report on the DP showing that the given data set could indeed produce efficiency bandings and hence facilitate future discussions concerning differential payments of funds to English and Welsh police forces. Due to the sensitivity of the results, the police force names have been changed

The use of 'performance radars' as a predictor of police force efficiency: an analysis of UK home office policy

Over the last 20 years, governments around the world have implemented strategies and targets to ensure that public services are efficient in the management of resources. In the UK this common agenda has led to the recent ‘Police Reform Act 2002’ in which consideration was given on how police forces can show ‘Value for Money’ based on government strategic policy targets. This paper discusses the ‘Performance Radar’ technique proposed by the Home Office in the United Kingdom as a new public policy objective in order to assess police force performance. We show, utilising an innovative nonparametric modelling strategy, that environmental factors and revenues can have significant effects on whether a police force is deemed to be efficient. Further, the results presents evidence that survey data should not be utilised as a basis to assess police performance