Effort and Selection Effects of Incentive Contracts

We show that the improved effort of employees associated with incentive contracts depends on the properties of the performance measures used in the contract.We also find that the power of incentives in the contract is only indirectly related to any improved employee effort.High powered incentive increase the selection effect of the incentive contract and attract better employees to the firm.The selection effect of the incentive contract depends, in turn, on the (perceived) properties of the performance measures specified in the contract.These results hold after controlling for an array of incentive contract design characteristics and for differences in organizational context.Data is from a third party survey on compensation practices among Chief Executive Officers.Our estimation procedures address several known problems with using secondary datasets.incentives;contracts;performance measurement;employees

The Endogeneity Bias in the Relation Between Cost-of-Debt Capital and Corporate Disclosure Policy

The purpose of this paper is twofold.First, we provide a discussion of the problems associated with endogeneity in empirical accounting research.We emphasize problems arising when endogeneity is caused by (1) unobservable firm specific factors and (2) omitted variables and discuss the merits and drawbacks of using panel data techniques to address these causes.Second, we investigate the magnitude of endogeneity bias in Ordinary Least Squares regressions of cost-of-debt capital on firm disclosure policy.We document how including a set of variables which theory suggests to be related with both cost-of-debt capital and disclosure and using fixed effects estimation in a panel dataset reduces the endogeneity bias and produces consistent results.This analysis reveals that the effect of disclosure policy on cost-of-debt capital is 200% higher than what is found in Ordinary Least Squares estimation.Finally, we provide direct evidence that disclosure is impacted by unobservable firm-specific factors that are also correlated with cost-of-capital.Disclosure policy;cost-of-debt capital;endogeneity

Baculovirus Per Os Infectivity Factors Form a Complex on the Surface of Occlusion-Derived Virus

Five highly conserved per os infectivity factors, PIF1, PIF2, PIF3, PIF4, and P74, have been reported to be essential for oral infectivity of baculovirus occlusion-derived virus (ODV) in insect larvae. Three of these proteins, P74, PIF1, and PIF2, were thought to function in virus binding to insect midgut cells. In this paper evidence is provided that PIF1, PIF2, and PIF3 form a stable complex on the surface of ODV particles of the baculovirus Autographa californica multinucleocapsid nucleopolyhedrovirus (AcMNPV). The complex could withstand 2% SDS-5% ß-mercaptoethanol with heating at 50°C for 5 min. The complex was not formed when any of the genes for PIF1, PIF2, or PIF3 was deleted, while reinsertion of these genes into AcMNPV restored the complex. Coimmunoprecipitation analysis independently confirmed the interactions of the three PIF proteins and revealed in addition that P74 is also associated with this complex. However, deletion of the p74 gene did not affect formation of the PIF1-PIF2-PIF3 complex. Electron microscopy analysis showed that PIF1 and PIF2 are localized on the surface of the ODV with a scattered distribution. This distribution did not change for PIF1 or PIF2 when the gene for PIF2 or PIF1 protein was deleted. We propose that PIF1, PIF2, PIF3, and P74 form an evolutionarily conserved complex on the ODV surface, which has an essential function in the initial stages of baculovirus oral infectio