Founding family firms, CEO incentive pay, and dual agency problems

This paper contributes to the literature on agency theory by examining relations between family involvement and CEO compensation. Using a panel of 362 small U.S. listed firms, we analyze how founding families influence firm performance through option portfolio price sensitivity. Consistent with the dual agency framework, we find that family firms have lower CEO incentive pay, which is further reduced by higher executive ownership. Interestingly, such incentive pay offsets the positive impact that families have on firm valuation. Collectively, our results show that, compared with nonfamily firms, lower incentive pay adopted by family firms due to lower agency costs mitigates the direct effect of family involvement on firm performance. Once accounting for CEO incentive pay, we do not observe performance differences between family and nonfamily firms

Managerial incentives and investment policy in family firms: evidence from a structural analysis

This paper provides evidence that CEO incentive pay mediates the effect of family preferences on corporate investment policy. Our study focuses on the option portfolio volatility sensitivity vega, which motivates the risk-taking behavior of undiversified managers. After controlling for factors that affect incentive pay and investment policy simultaneously, we find that one-third of underinvestment in riskier R&D projects in active family firms can be attributed to a significantly lower vega. Passive family firms allocate more capital to R&D as opposed to active family firms, and are more active in M&A deal making. In contrast to many prior studies, pay incentives and families are not associated with capital expenditures. Overall, our empirical results suggest that CEO pay incentives induce investment policy contingent on firm risk. Family CEO incentive pay manifests the family preference for lower risk, especially in firms with higher firm risk. Nonetheless, after replacing family CEOs with outside professionals, investments in both R&D and M&A increase, which is consistent with the family preference for extended investment horizons. Interestingly, such a preference seems not to be manifested in incentive pay

Dividend Policy and the COVID-19 Crisis

This paper examines dividend payment behavior of the S&P1500 firms during the COVID-19 crisis characterized by the stock market crash and a V-shaped stock price recovery propelled by technology stocks. We find that the great majority of firms either maintain or increase the level of dividend payment during the crisis period. Yet, the relationship between the dividend payout and bottom-line earnings available to common shareholders is significantly negative. This relationship holds even for dividend-increasing firms whose earnings streams should be relatively higher (or increasing) compared to other firms in the sample. We also find that forecast earnings of up to one year in the future are negatively associated with the current dividend level implying that the existing payout policies are unsustainable. Interestingly, we document similar patterns for stock repurchases

Fabry disease and sleep disorders: a systematic review

BackgroundFabry disease (FD) is an X-chromosome-linked disorder characterized by a reduced or complete absence of the enzyme α-galactosidase, resulting in the accumulation of lysosomal globotriaosylceramide. Despite the presence of these deposits in multiple organs, the problem of sleep disorders within this population has very rarely been documented.ObjectiveThis study aimed to investigate the types and prevalence of sleep disorders among patients with FD.MethodsScreening of the following medical databases using key terms was performed on 10 February 2023: PubMed, Scopus, and Embase. A total of 136 records were identified. The quality assessment of the studies was conducted by using tools from the National Institutes of Health (NIH) and critical appraisal tools from the Joanna Briggs Institute (JBI).ResultsThe study included nine studies on sleep disorders in patients with FD. The overall quality of the majority of these studies was assessed as either poor or fair. Among 330 patients, there was a slightly higher representation of female patients (56%). Sleep problems manifested 4–5 years after the onset of FD and sometimes even after 10–11 years. Genotypes of disease associated with sleep problems were rarely described. Within the FD population, the most commonly reported conditions were excessive daytime sleepiness (EDS) as well as obstructive and central sleep apnea (OSA, CSA). However, EDS occurred more frequently in FD patients, while the prevalence of OSA and CSA was within the ranges observed in the general population. The studies included indicated a lack of association between organ impairment by primary disease and EDS and OSA. The effectiveness of enzyme replacement therapy (ERT) in treating sleep disorders was not demonstrated.ConclusionThe findings of this report revealed the presence of many sleep-related disorders within the FD population. However, very few studies on this subject are available, and their limited results make it difficult to truly assess the real extent of the prevalence of sleep disturbances among these individuals. There is a need to conduct further studies on this topic, involving a larger group of patients. It is important to note that there are no guidelines available for the treatment of sleep disorders in patients with FD

Sleep Bruxism and Occurrence of Temporomandibular Disorders-Related Pain: A Polysomnographic Study

Introduction: The diagnosis of sleep bruxism is challenging due to the difficulties involved. Sleep bruxism can lead to clinical consequences, including pain in masticatory muscles, limitation of jaw mobility, headache, and the spectrum of symptoms associated with damage to the teeth and oral mucosa. Currently, only video-polysomnography can definitely diagnose sleep bruxism. Due to the risk of painful temporomandibular disorders (TMD) in sleep bruxers, early diagnosis of pain in the temporomandibular region using questionnaires is recommended. Therefore, this study aimed to assess the relationship between the intensity of sleep bruxism and the occurrence of pain related to TMD.Materials and Methods: This study was conducted on the patients of the Clinic of Prosthetic Dentistry operating at the Department of Prosthetic Dentistry at the Wroclaw Medical University. Based on a positive medical history, a thorough examination for the diagnosis of probable sleep bruxism was carried out in the enrolled patients. Eligible patients were then subjected to a video-polysomnographic study. Each patient was asked to complete the TMD Pain Screener questionnaire to assess the occurrence of pain in jaw and temple area.Results: The results of the study showed that increased bruxism episode index (BEI) was statistically significantly correlated with increase of all types of bruxism episodes—phasic, tonic, and mixed—in all the studied patients; a significant correlation was also found with respect to division of patients into studied and control groups. The study also showed that there was no statistically significant difference between BEI values and scores of TMD Pain Screener. In all the studied patients, a higher BEI was not found to be correlated with the occurrence of TMD-related pain assessed by TMD Pain Screener; similarly, no correlation was found with respect to division of patients into studied and control groups.Conclusions: The occurrence of TMD-related pain is not related to the intensity of sleep bruxism. TMD Pain Screener may be used as an auxiliary tool in the diagnosis or risk of occurrence of TMD-related pain, whereas in the case of sleep bruxism, it has only limited diagnostic value.Clinical Trial Registration:www.ClinicalTrials.gov, identifier NCT0308340

Evaluation of Relationship Between Sleep Bruxism and Headache Impact Test-6 (HIT-6) Scores: A Polysomnographic Study

Sleep bruxism (SB) is a masticatory muscle activity during sleep characterized by teeth clenching or grinding and/or bracing or thrusting of the mandible. Morning headache is considered as a common symptom of SB; however, the relationship between SB and headache and its impact on patient's life is not clear. Therefore, the present study aimed to assess the relationship between SB using polysomnography with video/audio recording and Headache Impact Test-6 (HIT-6) scores. SB was evaluated in respondents by single-night diagnostic polysomnography with video/audio recording. The study found that Bruxism Episode Index was similar in the group with significant impact of headache on patient's life (HIT-6 score ≥ 50) and in group with little or no impact (HIT-6 score < 50). A statistically significant positive correlation was observed between bruxism associated with arousal and HIT-6 score (r = 0.51, p < 0.05) and between mixed bruxism and HIT-6 score (r = 0.58, p < 0.05) in the subgroup with phasic bruxism. The results indicated the relationship between SB and impact of severity of headache on the patient's life measured by HIT-6 is only modest. It was also found that the impact of severity of headache measured by HIT-6 is altered only in those with phasic bruxism and is associated with arousal. Further research should elucidate the factors influencing the relationship between SB and headache.Trial Registration: Clinical Trials NCT03083405, WMU1/2017, https://clinicaltrials.gov/ct2/show/NCT0308340

Internal capital markets, non-cash divestitures and managerial incentives

Management incentive contracts are postulated to alleviate the principal-agent conflict in the widely-held firms. This paper studies the effect of changes in CEO pay-performance sensitivity (delta), stock option convexity (vega) and performance-contingent pay on changes in firm excess value for the US public companies that undergo non-cash divestitures (spin-offs) during the 1992-2006 period. First, I find that at the time of the breakup the management is awarded high-powered incentives, however, these improved incentives do not transmit into higher firm value. The evidence seems to support the supposition that the senior management may use the restructuring to derive private benefits of control in the form of additional remuneration. Second, CEO option vega in the multi business firms seem not to lead to the higher risk-taking. Third, I find that in the diversified firms the CEOs with more influence over their boards perform better as compared to the CEOs with less decision-making power. Contrary to the theoretical predictions, I also find that firms which decide to break up are not traded at a discount and that the crucial characteristics of their internal capital markets (e.g., diversity of business units) remain unchanged after the divestiture

Lost in translation: Deciphering competitive strategy from financial statements

The Case Centre, case study 117-0007-1, teaching note 117-0007-8In this case study, you will walk through different types of competitive strategies adopted by the world’s leading corporations, dominant players in their respective industries. In the first step, the identification of the generic competitive strategy is made solely based on the information contained in the income statement. Emphasis is placed on the link between the core competencies of the firm: product differentiation and product cost, versus the propensity of the firm to undertake innovation. In the second step, a selected set of examples highlight the ambiguity in the identification of the accurate competitive strategy, based only on the information disclosed in the statement of operating income. Additional information must be sought in order to determine how exactly firms achieve their sustainable competitive advantage. This case study leads through the sources of this additional information that complement the quantitative data included in the income statement. In the final step, we relate business strategy with firm profitability via an array of economic dimensions that jointly determine a firm’s relative position within an industry, and which can be regarded as its key success factors. Financial statements of global companies that are standardized under either GAAP or IFRS are used. This feature makes the students aware of the terminology and style differences adopted by GAAP and IFRS accounting principles, respectively. Equally important, the set of examples highlight terminology and style differences even across companies that use the same set of account rules, namely either GAAP or IFRS

Leading the Way in the DIY Market: The Case of Leroy Merlin

The Case Centre, case study 319-0137-1, teaching note 319-0137-

New Corporate Governance in Canada. Majority Voting, Individual Voting, and Gender

The Case Centre, case study 117-0002-1, teaching note 117-0002-8This case study evaluates a set of new proposals aimed to change the existing corporate governance regime in Canada. These amendments concern privately-held and publicly listed companies incorporated under the federal Canada Business Corporations Act (CBCA). The new regulation covers corporate governance practices related to shareholder voting, elections of directors, diversity among directors and senior managers, as well as other changes. The main objective of this case study is to explain the key differences between distinct shareholder voting regimes by indicating their relative advantages and disadvantages. More importantly, however, this study focuses on diversity policies introduced in the new bill with regard to gender diversity of the members of the board of directors and the top management team. It uses the proposed amendments as a pretext to discuss gender differences in the general population and the potential impact gender diversity may have on the quality of the decision-making process in the firm and subsequently on firm performance