Leadership Structure and Corporate Governance in Switzerland

The question of whether the CEO should also serve as chairman of the board is one of the most hotly debated issues in the recent corporate governance discussion. While agencytheoretic arguments advocate a separation of decision and control functions, the empirical evidence focusing on U.S. companies is not conclusive. In this context evidence from a country with a different practice of CEO succession may provide important new insights with respect to the question of whether one leadership structure should generally be preferred to the other one. This article fills this gap by investigating the valuation effects of leadership structure in Switzerland where – in contrast to the U.S. – a separation of the CEO and chairman functions is common. Consistent with the majority of prior research focusing on the U.S., the authors found no evidence of a systematic and significant difference in valuation between firms with combined and firms with separated functions. They also investigated whether leadership structure is related to firm-level corporate governance characteristics and found a similar curvilinear relationship between leadership structure and managerial shareholdings as is observed between firm value and managerial shareholdings. An implication is that possible agency costs associated with a combined function are mitigated by a higher incentive alignment of the CEO/chairman through an adequate level of managerial shareholdings. Over the last few years corporate governance became an important investment criterion, which is for example reflected in the emergence of various corporate governance ratings. The authors of this article additionally investigated whether firm value is significantly related to firm level corporate governance as measured by a broad survey-based index for a representative sample of Swiss firms. They documented a positive and significant relationship between the corporate governance index and firm valuation. This finding is robust to controlling for a series of additional governance mechanisms related to ownership structure, board characteristics, and leverage as well as a potential endogeneity of these mechanisms.Leadership structure; Firm valuation; Corporate governance; Managerial shareholdings

Estimating the Cost of Executive Stock Options: Evidence from Switzerland

It is often argued that Black-Scholes (1973) values overstate the subjective value of stock options granted to risk-averse and under-diversified executives. We construct a “representative” Swiss executive and extend the certainty- equivalence approach presented by Hall and Murphy (2002) to assess the value-cost wedge of executive stock options. Even with low coefficients of relative risk aversion, the discount can be above 50% compared to the Black-Scholes values. Regression analysis reveals that the equilibrium level of executive compensation is explained by economic determinant variables such as firm size and growth opportunities, whereas the managers’ pay-forperformance sensitivity remains largely unexplained. Firms with larger boards of directors pay higher wages, indicating potentially unresolved agency conflicts. We reject the hypothesis that cross-sectional differences in the amount of executive pay vanish when risk-adjusted values are used as the dependent variable.Managerial compensation, incentives, executive stock options, option valuation, risk aversion

Disorder-Induced Static Antiferromagnetism in Cuprate Superconductors

Using model calculations of a disordered d-wave superconductor with on-site Hubbard repulsion, we show how dopant disorder can stabilize novel states with antiferromagnetic order. We find that the critical strength of correlations or impurity potential necessary to create an ordered magnetic state in the presence of finite disorder is reduced compared to that required to create a single isolated magnetic droplet. This may explain why in cuprates like LSCO low-energy probes have identified a static magnetic component which persists well into the superconducting state, whereas in cleaner systems like YBCO it is absent or minimal. Finally we address the case of nominally clean LSCO samples at optimal doping, where such ordered magnetic moments are absent, but where they can be induced by small concentrations of strong scatterers.Comment: 4 pages, 5 figure

Do Financial Conglomerates Create or Destroy Economic Value?

This paper investigates whether functional diversification is value-enhancing or value-destroying in the financial services sector, broadly defined. Based on a U.S. dataset comprising approximately 4,060 observations covering the period 1985-2004, we report a substantial and persistent conglomerate discount among financial intermediaries. The study differs materially from earlier work on scope dimensions of financial institution structures. Our results suggest that it is diversification that causes the discount, and not that troubled firms diversify into other more promising areas. In addition, the discount applies to all financial services industries with the exception of investment banking and is stable over different combinations of financial activ-ity-areas with the exception of commercial banking units combined with insurance companies and/or investment banking activities. Finally, our results reveal that geographic diversification per se is not associated with a significant discount. Although geographic diversity is value de-stroying in all financial services activity-areas when there are more geographic segments and the activities are distributed relatively evenly over these segments

Disorder- and Field-Induced Antiferromagnetism in Cuprate Superconductors

The underdoped high-Tc materials are characterized by a competition between Cooper pairing and antiferromagnetic (AF) order. Important differences between the superconducting (SC) state of these materials and conventional superconductors include the d-wave pairing symmetry and a remarkable magnetic response to nonmagnetic perturbations, whereby droplets of spin-density wave (SDW) order can form around impurities and the cores of vortices. In a simple picture, whenever SC is suppressed locally, SDW order is nucleated. Within a mean-field theory of d-wave SC in an applied magnetic field including disorder and Hubbard correlations, we show in fact that the creation of SDW order is not simply due to suppression of the SC order parameter, but rather due to a correlation-induced splitting of the electronic bound state created by the perturbation. Since the bound state exists because of the sign change of the order parameter along quasiparticle trajectories, the induced SDW order is a direct consequence of the d-wave symmetry. Furthermore the formation of anti-phase domain walls is important for obtaining the correct temperature dependence of the induced magnetism as measured by neutron diffraction.Comment: 22 pages, 9 figure

Disorder Induced Stripes in d-Wave Superconductors

Stripe phases are observed experimentally in several copper-based high-Tc superconductors near 1/8 hole doping. However, the specific characteristics may vary depending on the degree of dopant disorder and the presence or absence of a low- temperature tetragonal phase. On the basis of a Hartree-Fock decoupling scheme for the t-J model we discuss the diverse behavior of stripe phases. In particular the effect of inhomogeneities is investigated in two distinctly different parameter regimes which are characterized by the strength of the interaction. We observe that small concen- trations of impurities or vortices pin the unidirectional density waves, and dopant disorder is capable to stabilize a stripe phase in parameter regimes where homogeneous phases are typically favored in clean systems. The momentum-space results exhibit universal features for all coexisting density-wave solutions, nearly unchanged even in strongly disordered systems. These coexisting solutions feature generically a full energy gap and a particle-hole asymmetry in the density of states.Comment: 28 pages, 8 figure

Corporate Governance und Unternehmungsbewertung in der Schweiz

Die Diskussion über die Qualität guter Corporate Governance und deren Auswirkung auf den Unternehmenswert beschäftigt Wissenschaft und Praxis seit mehreren Jahren. Allerdings existiert noch keine umfassende empirische Studie zum Einfluss der Corporate Governance auf den Unternehmenswert schweizerischer Firmen. Diese Lücke soll durch die vorliegende Arbeit geschlossen werden. Neben einem breiten Corporate Governance Index umfasst die Studie fünf weitere Governance Mechanismen, von welchen sowohl theoretische als auch empirische Arbeiten vermuten lassen, dass sie das Potential haben, die aus der Prinzipal-Agenten Beziehung resultierenden Kosten zwischen dem Management und den Aktionären zu reduzieren. Die Resultate multivariater OLS Regressionen zeigen, dass eine gute Corporate Governance vom Kapitalmarkt durch eine höhere Bewertung entschädigt wird

Corporate Governance, Unternehmensbewertung und Wettbewerb - eine Untersuchung für die Schweiz

Corporate governance; Ownership structure; Competition; Firm valuation; Endogeneity

Science with EPICS, the E-ELT planet finder

EPICS is the proposed planet finder for the European Extremely Large Telescope. EPICS is a high contrast imager based on a high performing extreme adaptive optics system, a diffraction suppression module, and two scientific instruments: an Integral Field Spectrograph (IFS) for the near infrared (0.95-1.65 μm), and a differential polarization imager (E-POL). Both these instruments should allow imaging and characterization of planets shining in reflected light, possibly down to Earth-size. A few high interesting science cases are presente