The effect of CEO option compensation on the capital structure : a natural experiment

Firms simultaneously choose both their capital and their executive compensation structure. Using the Internal Revenue Code 162(m) tax law as an exogenous shock to compensation structure in a natural experiment setting, I identify firm leverage changes as a result of chief executive officer (CEO) option compensation changes. The evidence provides strong support for debt agency theory. Firms appear to decrease leverage when CEOs are paid with more options and when CEO options become a higher percentage of future cash flows. The findings are robust to controlling for corporate governance and convertible debt

Capturing Single Cell Genomes of Active Polysaccharide Degraders: An Unexpected Contribution of Verrucomicrobia

Microbial hydrolysis of polysaccharides is critical to ecosystem functioning and is of great interest in diverse biotechnological applications, such as biofuel production and bioremediation. Here we demonstrate the use of a new, efficient approach to recover genomes of active polysaccharide degraders from natural, complex microbial assemblages, using a combination of fluorescently labeled substrates, fluorescence-activated cell sorting, and single cell genomics. We employed this approach to analyze freshwater and coastal bacterioplankton for degraders of laminarin and xylan, two of the most abundant storage and structural polysaccharides in nature. Our results suggest that a few phylotypes of Verrucomicrobia make a considerable contribution to polysaccharide degradation, although they constituted only a minor fraction of the total microbial community. Genomic sequencing of five cells, representing the most predominant, polysaccharide-active Verrucomicrobia phylotype, revealed significant enrichment in genes encoding a wide spectrum of glycoside hydrolases, sulfatases, peptidases, carbohydrate lyases and esterases, confirming that these organisms were well equipped for the hydrolysis of diverse polysaccharides. Remarkably, this enrichment was on average higher than in the sequenced representatives of Bacteroidetes, which are frequently regarded as highly efficient biopolymer degraders. These findings shed light on the ecological roles of uncultured Verrucomicrobia and suggest specific taxa as promising bioprospecting targets. The employed method offers a powerful tool to rapidly identify and recover discrete genomes of active players in polysaccharide degradation, without the need for cultivation

A comparative analysis of the role of the violin in the sonatas of Wolfgang Amadeus Mozart, with special attention to the early sonata K. 304 and the late sonata K. 526

This study examined the nature of the role of the violin in the sonatas of Wolfgang Amadeus Mozart. Special emphasis was placed on the evolving role of the violin as the researcher looked at a movement from an early sonata and a corresponding movement from a late sonata. In the early sonata, K. 304, the dynamic between the piano and the violin is not in sync. The violin part retains no independence, no separate identity from its piano counterpart. Removing the violin would still result in a complete thematic movement. The dynamic between the violin and piano changes as Mozart matures. In the sonata K. 526 the violin and piano are more equal partners. There is independence in the violin and the two instruments truly work together to create chamber music.School of MusicThesis (M.M.

Characteristics of institutional investors and discretionary accruals

Purpose – The purpose of this paper is to examine the differential effects of institutional non-blockholders (NONB) and active institutional blockholders (ACTB) on earnings management behavior, as measured by discretionary accruals. Design/methodology/approach – This paper also proposes that the hypothesized influence of NONB and ACTB on earnings management behavior is affected by earnings pressure (EP) (i.e. the gap between target earnings and pre-managed earnings). In particular, it believes that the stimulating effect of NONB on earnings management may not manifest when the stimulating effect of EPs is already strong and the mitigating effect of ACTB may manifest only when the stimulating effect of EP is there. The sample into three EP conditions: pressure to increase earnings, neutral pressure and pressure to decrease earnings is grouped. Consistent with the expectations, the paper finds that NONB stimulates earnings management, but only when EP is not strong and that ACTB mitigates earnings management, but only when there is pressure to increase earnings. Findings – This paper also predicts that ACTB will need to exercise their monitoring power only when EP is strong. The results confirm this prediction, but only when there is strong pressure to increase earnings. When there is strong pressure to decrease earnings, inconclusive evidence regarding the effect of ACTB is found. This may imply that ACTB are conservative since they appear to be more likely to limit income-increasing accruals than they are to limit income-decreasing accruals. Originality/value – This paper's contributions to the literature are twofold: the paper shows that the characteristics of institutional investors (INSTs) should be considered when examining the relationship between INSTs and earnings management; the paper shows that the direction and level of EP should be considered when evaluating the relationship between INSTs and earnings management.Corporate governance, Earnings, Investors

Social responsibility and corporate reputation: The case of the Arthur Andersen Enron audit failure

We examine the influence of social responsibility ratings on market returns to Arthur Andersen (AA) clients following the Enron audit failure. Chaney and Philipich (2002) found that AA's loss of reputation resulted in negative market returns to AA clients following the Enron audit failure. Proponents of social responsibility argue that social responsibility can improve the reputation of the firm, while detractors argue that social responsibility expenditures are a poor use of shareholder money. If social responsibility sends a signal to investors regarding the reputation/ethics of management, social responsibility could mitigate the negative returns to AA clients following the Enron audit failure. Using a matched sample of AA and non-AA firms, we do not find evidence that social responsibility mitigated the negative returns to AA clients following the Enron audit failure. Our results are inconsistent with claims that social responsibility can burnish a firm's reputation in a time of crisis and with prior research indicating a positive relationship between social responsibility and market value.Social responsibility Corporate reputation Audit failure

Dual signals of future performance: how will the compensation committee respond?

Pay-for-performance is an important contracting tool available to mitigate agency costs. Matsunaga and Park (2001) suggest CEOs of firms that meet or beat (miss) the analysts' forecast receive a bonus compensation premium (discount) in affirmation of a pay-for-performance relation based on extant literature that suggests meet or beat firms outperform miss firms. However, Bhojraj, Hribar, Picconi, and McInnis (2009) more recently suggest miss firms with a positive signal of future performance outperform beat firms with a negative signal of future performance. I extend Matsunaga and Park (2001) by examining the incremental contribution of a positive/negative future performance signal in the determination of CEO bonus compensation to determine if the pay-for-performance relation holds, particularly for the subset of firms with conflicting analysts' forecast/future performance signals. Generally, my hypotheses predicting the future performance signal will incrementally contribute to the determination of bonus compensation are unsupported. This result is consistent with a breakdown in the pay-for-performance relationship attributable to either a myopic focus on an earnings threshold signal or an inability to interpret the future performance signal. Alternately, this result could also suggest the firm considers the cost of missing the forecast to be greater than the cost associated with a decline in future performance. (Published By University of Alabama Libraries