CEO Pay-for-Performance Heterogeneity Using Quantile Regression (CRI 2009-002)

We provide some examples of how quantile regression can be used to investigate heterogeneity in pay–firm size and pay-performance relationships for U.S. CEOs. For example, do conditionally (predicted) high-wage managers have a stronger relationship between pay and performance than conditionally low-wage managers? Our results using data over a decade show, for some standard specifications, there is considerable heterogeneity in the returns to firm performance across the conditional distribution of wages. Quantile regression adds substantially to our understanding of the pay-performance relationship. This heterogeneity is masked when using more standard empirical techniques

The Myth of the Unbiased Director

This Article seeks to use social science research to better understand why these and other corporate governance problems persist. One reason may be that boards are biased as to how they respond to these issues. Social science research on risk perception informs us that individuals’ “preferences among different types of risk taking (or avoiding), correspond to cultural biases—that is, to worldviews or ideologies entailing deeply held values and beliefs defending different patterns of social relations.” Cultural theorists have identified four competing worldviews: communitarian, individualistic, hierarchical, and egalitarian. The communitarian and individualistic worldviews are at opposite ends of a spectrum measuring the degree to which an individual’s self-identity and preferred social relations derive from membership in a group...Moreover, this Article argues that directors’ decision-making may involve risk-taking with respect to matters that may carry a social charge...Further, the article presents two strategies to neutralize the impact of CIP risk assessment on corporate decision-making. One possible strategy may be that courts give greater scrutiny to directors’ decisions that particularly may be prone to risk assessment bias...Further, the Article suggests that although CIP cognition affects all directors, non-management directors may be better situated (after education) than management directors to provide a voice on the board to counteract the effects of CIP cognition...This Article does not recommend that non-management directors are the solution to the problem of CIP risk assessment on corporate boards. Also, it does not attempt to take a position about the proper role for non-management directors. This Article suggests that, indeed, under our current corporate governance system, CIP risk assessment bias may be a difficult problem to solve. There may be very few directors who are capable of exercising unbiased judgment in any directorial role

The effects of supplemental educational services on student achievement

Supplemental educational services (SES) are a core component of the No Child Left Behind Act of 2001 (NCLB) that provide free academic assistance in reading, language arts and mathematics for eligible students. Supplemental educational services include tutoring and other educational interventions that align with the state\u27s academic content standards provided outside of the regular school day. Despite four years of supplemental services educational and millions of dollars spent, little is known about the effects of SES on student achievement. This study hypothesized that after the sixth month of SES tutoring, students in the experimental group would achieve higher scores on the language arts and mathematics posttests in comparison to the students in the control group, those students who did not receive SES. The participants for this research were fourth and fifth grade students drawn from an after-school program located in a small urban district in southern New Jersey. The sample size included 42 students. Results indicated that the experimental group raised their posttest scores from initial pretest scores. The experimental group displayed a twenty point mean score increase compared to the control group in both the language arts and mathematics posttests