Agency theory and ownership structure - Estimating the effect of ownership structure on firm performance

This thesis tries to answer the question whether ownership structure matters for firm performance. The starting point for the analysis is the agency theory by Jensen and Meckling (1976), which predicts that higher levels of managerial ownership structure increase firm performance due to an incentive effect. Other authors have in turn suggested that large outside owners might have a role to play as monitors of the management and might thus enhance performance (Shlefer and Vishny 1986 and Zeckhauser and Pound 1990). On the other hand, the private benefits literature (Barclay and Holderness 1989 and Bebchuk 1999) suggests that high ownership concentration may lead to the extraction of the firm’s resources by the dominant owners at the expense of other shareholders. The empirical part of the thesis tests these two hypotheses, which can be combined if we allow the effect of ownership to be nonlinear. A large amount of empirical research has been published on the subject. Demsetz and Lehn (1985) were the first to estimate the effect of ownership concentration on firm performance and they found no relationship. Important research has also been published by Himmelberg et al. (1999), who estimate a fixed effects model on firm performance and insider ownership and also fail to find a relationship. Studies using non-U.S. data have, however, found a positive relationship even when controlling for endogeneity. Controlling for the endogeneity of ownership is important both in the light of the empirical results and the theoretical discussion. The thesis uses a panel dataset of Finnish listed companies over the years 2007-2009 to estimate a fixed effects model similar to Himmelberg et al (1999). In addition to control variables the model includes variables for insider ownership, ownership concentration and managerial compensation. The results from OLS regressions are largely in line with agency theory predictions, but statistical significance dissappears when controlling the endogeneity of ownership by two-stage least squares estimation. Upon closer inspection this turns out to be caused by the weakness of the used instruments. We then face the dilemma of choosing between OLS estimates biased due to endogeneity and 2SLS estimates biased due to weak instruments

Fine-root biomass production and its contribution to organic matter accumulation in sedge fens under changing climate

Climate change may affect the carbon sink function of peatlands through warming and drying. Fine-root biomass pro-duction (FRBP) of sedge fens, a widespread peatland habitat, is important in this context, since most of the biomass is below ground in these ecosystems.We examined the response of fine-root biomass production, depth distribution (10 cm intervals down to 60 cm), chem-ical characteristics, and decomposition along with other main litter types (sedge leaves, Sphagnum moss shoots) to an average May-to-October warming of 1.7 degrees C above ambient daily mean temperature and drying of 2-8 cm below ambi-ent soil water-table level (WL) in two sedge fens situated in Northern and Southern Boreal zones. Warming was in-duced with open top chambers and drying with shallow ditching. Finally, we simulated short-term organic matter (OM) accumulation using net primary production and mass loss data. Total FRBP, and FRBP in deeper layers, was clearly higher in southern than northern fen. Drying significantly in-creased, and warming marginally increased,total FRBP, while warming significantly increased, and drying marginally increased, the proportional share of FRBP in deeper layers. Drying, especially, modified root chemistry as the relative proportions of fats, wax, lipids, lignin and other aromatics increased while the proportion of polysaccharides decreased. Warming did not affect the decomposition of any litter types, while drying reduced the decomposition of sedge leaf litter. Although drying increased OM accumulation from root litter at both fens, total OM accumulation decreased at the southern fen, while the northern fen with overall lower values showed no such pattern.Our results suggest that in warmer and/or modestly drier conditions, sedge fen FRBP will increase and/or be allocated to deeper soil layers. These changes along with the altered litter inputs may sustain the soil carbon sink function through OM accumulation, unless the WL falls below a tipping point.Peer reviewe

Vegetation controls of water and energy balance of a drained peatland forest: Responses to alternative harvesting practices

We quantified the response of peatland water table level (WTL) and energy fluxes to harvesting of a drained peatland forest. Two alternative harvests (clear-cut and partial harvest) were carried out in a mixed-species ditch-drained peatland forest in southern Finland, where water and energy balance components were monitored for six pre-treatment and three post-treatment growing seasons. To explore the responses caused by harvestings, we applied a mechanistic multi-layer soil-plant-atmosphere transfer model. At the clear-cut site, the mean growing season WTL rose by 0.18 +/- 0.02 m (error estimate based on measurement uncertainty), while net radiation, and sensible and latent heat fluxes decreased after harvest. On the contrary, we observed only minor changes in energy fluxes and mean WTL (0.05 +/- 0.03 m increase) at the partial harvest site, although as much as 70% of the stand basal area was removed and leaf-area index was reduced to half. The small changes were mainly explained by increased water use of spruce undergrowth and field layer vegetation, as well as increased forest floor evaporation. The rapid establishment of field layer vegetation had a significant role in energy balance recovery at the clear-cut site. At partial harvest, chlorophyll fluorescence measurements and model-data comparison suggested the shade-adapted spruce undergrowth was suffering from light stress during the first post-harvest growing season. We conclude that in addition to stand basal area, species composition and stand structure need to be considered when controlling WTL in peatland forests with partial harvesting. Our results have important implications on the operational use of continuous cover forestry on drained peatlands. A continuously maintained tree cover with significant evapotranspiration capacity could enable optimizing WTL from both tree growth and environmental perspectives.Peer reviewe

Set-up and instrumentation of the greenhouse gas measurements on experimental sites of continuous cover forestry

A set of experimental study sites was established to monitor greenhouse gas (GHG) emissions from drained peatland forests under different harvesting regimes in Finland. The purpose of these experimental sites is to study the effects of continuous cover forestry (CCF) and clear-cutting (CC) on ecosystem processes including GHG emissions and stand development on drained peatland forests. The sites represent fertile Norway spruce dominated peatland forests, where soil GHG emissions are high due to drainage that has exposed peat to decomposition in aerobic conditions. Two “flagship” sites for greenhouse gas (GHG) monitoring have been established and instrumented by the Natural Resources Institute Finland (Luke), University of Helsinki (UH) and the Finnish Meteorological Institute (FMI). The sites host continuous GHG monitoring with Eddy Covariance (EC) towers and with automatic chambers. In addition, greenhouse gas (CO2, CH4, and N2O) emissions are monitored with manually operated chambers at four sites, where effects of selection (CCF) harvests are studied with replicated treatments. These data will be used to calculate the ecosystem and soil GHG balances of the sites by using methodologies standardized earlier and compatible with the IPCC guidelines. On all experimental sites, ground water table (WT), tree growth and regeneration are monitored in different management trials. These data will form the basic data needed for designing and demonstrating optimal harvesting cycles and evaluating and generalizing the climate impacts. The results including the biological drainage capacity (evapotranspiration) of different-sized tree stands as well as the soil GHG balance of different tree stand – WT combinations will be incorporated into existing models that can be used to estimate the mitigation obtained with different management options and in different site and climatic conditions. The study sites are actively used for training and demonstration of alternative peatland management practices by host projects and by multiple stakeholders. The host projects and organizations also promote further extensions for the measurements and all complementary research activities are welcome to these study sites

Tekoälyn ja sensorifuusion kehityksen vaikutukset täysin automatisoitujen ajoneuvojen turvallisuuden parantamiseksi

Nykypäivänä autot ovat älykkäämpiä kuin koskaan ennen sisältäen monenlaisia kuljettajaa avustavia ja jollain tasolla ajoneuvoa itseohjaavia ominaisuuksia. Täysin itsenäiset, automatisoidut ajoneuvot tulevat muuttamaan koko ajamisen merkityksen parantaen merkittävästi liikenneturvallisuutta, tuoden uusia tapoja matkustaa ja mahdollistaen uusia liiketoimintamalleja. Tällä hetkellä täysin automatisoituihin ajoneuvoihin liittyy kuitenkin useita niiden käyttöönottoa rajoittavia tekijöitä, joiden perimmäinen syy on, etteivät automatisoidut ajoneuvot ole vielä tarpeeksi turvallisia, jotta ne voisivat toimia liikenteessä itsenäisesti ilman ihmiskuljettajaa. Tämä tutkielma on kirjallisuuskatsaus, jossa tarkastelen automatisoitujen ajoneuvojen turvallisuutta tekoälyn ja sensorien näkökulmasta. Tutkielman tavoitteena on selvittää, miten sensoreiden ja tekoälyn opetusmenetelmien kehitys auttaa tekemään automatisoiduista ajoneuvoista turvallisempia, jotta ne voitaisiin ottaa liikennekäyttöön. Aihetta tullaan ensin käsittelemään kertomalla yleisesti automatisoitujen ajoneuvojen kehityksen nykytilanteesta, luokittelusta, hyödyistä sekä ongelmista turvallisuuden kannalta, jonka jälkeen käsitellään sensoreiden ja niiltä saatavan datan käsittelymallien vaikutusta ajoneuvon ympäristöstä saatavaan informaatioon. Tämän käsitellään ajoneuvon päätöksistä vastaavaa tekoälyä ja pohditaan opetusmallien vaikutusta tekoälyn kykyyn tehdä tarkempia päätöksiä.Today, cars are smarter than ever before, incorporating a wide range of driver-assistive and, to some extent, self-steering features. Fully independent, automated vehicles will change the meaning of driving, significantly improving road safety, introducing new ways of traveling and enabling new business models. At present, however, fully automated vehicles are subject to several factors limiting their introduction. The root cause of the limitations is that automated vehicles are not yet safe enough to operate independently in traffic without a human driver. This thesis is a literature review in which I look at the safety of automated vehicles from the perspective of artificial intelligence and sensors. The aim of this thesis is to find out how advances on sensors and artificial intelligence learning methods help making autonomous vehicles safer so that they can be put into service. The subject will first be addressed by giving a general overview of the current state of development of automated vehicles, their classification, benefits, and safety problems. The effect of the sensors and the data processing models obtained from them on the information obtained from the vehicle environment is then discussed. This is followed by a discussion of the artificial intelligence responsible for vehicle decisions and the impact of teaching models on the ability of artificial intelligence to make more accurate decisions

Esseitä dynaamisista kannustimista

This thesis consists of three essays in theoretical microeconomics. Broadly speaking, the unifying theme in the essays are dynamic incentives — how the actions of economic agents today depend on future actions.  The first essay studies monopoly pricing in a model of social learning. A monopolist is selling a product of uncertain quality whose value to the consumers is revealed over time through buyers' experiences. How does the monopolist want to price the product? What are her incentives to produce information, i.e. learning about product quality, in such a market? The essay is part of a large literature addressing the Coase conjecture. We construct Markov perfect equilibria of the game and solve the commitment solution to the monopolist's problem. We show that unlike in the complete information models the latter can provide more welfare, because commitment power can enhance the monopolist's incentives to produce information. The second essay analyzes a firm, the principal, outsourcing a project to a subcontractor, the agent. The principal does not observe the agent's actions and the agent is protected by limited liability so there is moral hazard. What is the optimal contract for the principal in this setting? We show that the optimal contract takes the form of deadlines, in which the agent is punished for not delivering the project before the deadline. The essay then analyzes the role the agent's impatience plays for the optimal contract: effort moral hazard goes away as the agent becomes more impatient but quality moral hazard can become worse.  The third essay studies countries' information acquisition in a common pool game with uncertain damages from emissions. Our motivating example is climate change, which generates a lot of research but there is still considerable uncertainty about its effects. How efficient is information acquisition by individual countries? We show that both the inefficiency of the common pool stage and the correlation between countries' damages are key determinants for information acquisition — when correlation is low noncooperative countries tend to overinvest into information compared to the cooperative solution and when it is high they tend to underinvest.Tämä väitöskirja koostuu kolmesta esseestä, jotka kuuluvat soveltavan mikrotalousteorian tutkimusalueeseen. Yhdistävänä teemana esseissä on dynaamisten kannustimien analysointi — siis se miten taloudellisten toimijoiden tämänhetkiset teot riippuvat tulevaisuudesta. Ensimmäinen essee tutkii monopolistin hinnoittelua ja sosiaalista oppimista. Monopolisti myy tuotetta, jonka arvo on aluksi epävarma, mutta joka voidaan oppia kuluttajien kokemuksista. Millä tavalla monopolisti hinnoittelee tuotteen? Miten tehokasta informaation tuotanto on tällaisella markkinalla? Essee liittyy laajaan kirjallisuuteen Coasen konjektuurista, joka tiivistetysti sanoo monopolistin hinnoittelunvoiman katoavan, kun kerran ostettavaa tuotetta myydään yli ajan. Tarkastelemme esseessä Markov täydellisiä tasapainoja ja ratkaisemme monopolistin sitoutumisratkaisun. Päätulos on, että toisin kuin täydellisen informaation malleissa sitoutumisratkaisu voi olla tasapainoja tehokkaampi, koska sitoutumisvoima voi voimistaa monopolistin kannustimia tuottaa informaatiota.  Toinen essee analysoi yritysten välisiä sopimuksia tilanteessa, jossa yritys on ulkoistamassa projektia alihankkijalle. Ulkoistamista miettivä yritys ei havaitse alihankkijan toimia eikä pysty rankaisemaan tätä, joten yritys kärsii taloustieteessä moraalikatona tunnetusta ongelmasta. Essee liittyy siten laajaan päämies-agentti ongelmia koskevaan kirjallisuuteen. Mikä on paras tapa luoda kannustimia alihankkijalle? Essee osoittaa, että optimaalinen sopimus koostuu tässä tilanteessa agentille asetettavista takarajoista — yksinkertaistettuna projektin tekeminen myöhemmin tarkoittaa alhaisempaa palkkiota agentille. Esseen päätulos liityy siihen miten agentin aikapreferenssit muuttavat optimaalista sopimusta: moraalikato työmäärän suhteen poistuu, kun agentista tulee kärsimättömämpi, mutta moraalikato työn laadun suhteen voi voimistua.  Kolmas essee tutkii maiden informaationhankintaa yhteismaan ongelmana tunnetussa pelissä, kun maiden päästöjen vaikutukset ovat epävarmoja. Yksi esimerkki tällaisesta päästöongelmasta on ilmastonmuutos, jonka vaikutusten arviointi on osoittautunut vaikeaksi. Esseessä mietitään erityisesti sitä miten tehokasta yksittäisten maiden informaationhankinta on verrattuna siihen, että maat tekisivät yhteistyötä. Ovatko kannustimet hankkia informaatiota päästöjen vaikutuksesta liian heikot vai liian voimakkaat? Essee osoittaa, että keskeistä informaationhankinnalle on sekä päästöpelin tehottomuuden taso että korrelaatio eri maiden päästövahinkojen kesken. Riippuen näistä tekijöistä yksittäiset maat voivat investoida liikaa tai liian vähän informaatioon