Make or Buy New Technology – a CEO Compensation Contract’s Role in a Firm’s Route to Innovation

Firms obtain new technology either through internal R&D or through acquisitions. These two approaches are usually labeled as "make" and "buy" strategies. In this paper, I examine the relation between a firm's choice of "make" or "buy" and the performance measures used in the firm's CEO compensation contract. I focus on the two major differences between "make" and "buy" strategies: the risk levels and accounting treatments. I then examine the differential implications of accounting-based and stock-based performance measures on managers' incentive in choosing between the two strategies. Using data from US high tech industries, I find that, firms relying on "buy" approach to obtain technology tend to depend more on the accounting-based performance measures, while those firms who innovate through R&D activities skew toward stock-based pay especially stock option

Essays on the relation between managers' incentives and financial accounting information

Thesis (Ph. D.)--Massachusetts Institute of Technology, Sloan School of Management, 2004.Includes bibliographical references.(cont.) around thresholds do convey information about a firm's future performance, firms with a higher degree of information asymmetry between the management and investors are more likely to use this signaling mechanism, and the capital market recognizes the information content of the earnings management activities and rationally incorporates it in setting prices.My thesis consists of two separate essays. Each essay, from different angles, examines the relation between managers' incentives and financial accounting information. The first essay examines how a firm's choice between competing innovation strategies can be affected by the use of accounting information versus stock prices as performance measures in the firm's CEO compensation contract. Firms obtain new technology either through internal R&D or through acquisitions. These two approaches are usually labeled as "make" and "buy" strategies. In this paper, I focus on the two major differences between the "make" and "buy" strategies: risk levels and accounting treatment. I hypothesize that the high risk level and unfavorable accounting treatment associated with "make" strategy relative to "buy" strategy lead risk-averse managers to favor "buy" over "make," should they be compensated heavily using accounting-based performance measures. Stock-based compensation, especially stock options, on the other hand, should encourage managers to innovate more through "make" strategies instead of"buying" them from the outside. Using data from US high tech industries, I find evidence consistent with the above hypotheses. The second essay examines whether managers of information-strained firms signal the firm's future performance by managing earnings to exceed thresholds. Because managers' reporting discretion is bounded by the accounting regulations, managing earnings to exceed the current period's thresholds reduces future earnings, making future earnings thresholds more difficult to attain. As a result, only firms with sufficient future earnings growth can benefit from doing so. My empirical results suggest that the earnings management activitiesby Yanfeng Xue.Ph.D

Undernutrition-induced substance metabolism and energy production disorders affected the structure and function of the pituitary gland in a pregnant sheep model

IntroductionUndernutrition spontaneously occurs in ewes during late gestation and the pituitary is an important hinge in the neurohumoral regulatory system. However, little is known about the effect of undernutrition on pituitary metabolism.MethodsHere, 10 multiparous ewes were restricted to a 30% feeding level during late gestation to establish an undernutrition model while another 10 ewes were fed normally as controls. All the ewes were sacrificed, and pituitary samples were collected to perform transcriptome, metabolome, and quantitative real-time PCR analysis and investigate the metabolic changes.ResultsPCA and PLS-DA of total genes showed that undernutrition changed the total transcriptome profile of the pituitary gland, and 581 differentially expressed genes (DEGs) were identified between the two groups. Clusters of orthologous groups for eukaryotic complete genomes demonstrated that substance transport and metabolism, including lipids, carbohydrates, and amino acids, energy production and conversion, ribosomal structure and biogenesis, and the cytoskeleton were enriched by DEGs. Kyoto encyclopedia of genes and genomes pathway enrichment analysis displayed that the phagosome, intestinal immune network, and oxidative phosphorylation were enriched by DEGs. Further analysis found that undernutrition enhanced the lipid degradation and amino acid transport, repressing lipid synthesis and transport and amino acid degradation of the pituitary gland. Moreover, the general metabolic profiles and metabolic pathways were affected by undernutrition, repressing the 60S, 40S, 28S, and 39S subunits of the ribosomal structure for translation and myosin and actin synthesis for cytoskeleton. Undernutrition was found also to be implicated in the suppression of oxidative phosphorylation for energy production and conversion into a downregulation of genes related to T cell function and the immune response and an upregulation of genes involved in inflammatory reactions enriching phagosomes.DiscussionThis study comprehensively analyses the effect of undernutrition on the pituitary gland in a pregnant sheep model, which provides a foundation for further research into the mechanisms of undernutrition-caused hormone secretion and metabolic disorders

Rapamycin Inhibits Expression of Elongation of Very-long-chain Fatty Acids 1 and Synthesis of Docosahexaenoic Acid in Bovine Mammary Epithelial Cells

Mammalian target of rapamycin complex 1 (mTORC1) is a central regulator of cell growth and metabolism and is sufficient to induce specific metabolic processes, including de novo lipid biosynthesis. Elongation of very-long-chain fatty acids 1 (ELOVL1) is a ubiquitously expressed gene and the product of which was thought to be associated with elongation of carbon (C) chain in fatty acids. In the present study, we examined the effects of rapamycin, a specific inhibitor of mTORC1, on ELOVL1 expression and docosahexaenoic acid (DHA, C22:6 n-3) synthesis in bovine mammary epithelial cells (BMECs). We found that rapamycin decreased the relative abundance of ELOVL1 mRNA, ELOVL1 expression and the level of DHA in a time-dependent manner. These data indicate that ELOVL1 expression and DHA synthesis are regulated by mTORC1 in BMECs

The anti-obesity effects of a water-soluble glucan from Grifola frondosa via the modulation of chronic inflammation

Polysaccharides from Grifola frondosa (G. frondosa) have anti-obesity and anti-inflammatory activities. In this study, the major type, molecular weight, homogeneity and structure of a polysaccharide purified from G. frondosa (denoted GFPA) were determined. In high-fat diet (HFD)-treated mice, 8 weeks of GFPA administration efficiently decreased body weight and blood glucose concentration and counteracted hyperlipidemia. GFPA efficiently decreased adipocyte size and ameliorated inflammatory infiltration in the three types of white adipose tissue and alleviated steatosis, fat accumulation and inflammatory infiltration in the livers of HFD-fed mice. GFPA also decreased the concentrations of aspartate aminotransferase, alanine aminotransferase and pro-inflammatory factors in the sera and livers of HFD-treated mice. Furthermore, GFPA was found to regulate lipid metabolism via the inhibition of ceramide levels in HFD-treated mice. GFPA exhibited strong anti-obesity effects via the modulation of chronic inflammation through Toll-like receptor 4/nuclear factor kappa-B signaling, which supports the use of GFPA for the treatment of obesity

Make or Buy New Technology Â€Ó a CEO Compensation Contract€ٳ Role in a Firm€ٳ Route to Innovation

Firms obtain new technology either through internal R&D or through acquisitions. These two approaches are usually labeled as "make" and "buy" strategies. In this paper, I examine the relation between a firm's choice of "make" or "buy" and the performance measures used in the firm's CEO compensation contract. I focus on the two major differences between "make" and "buy" strategies: the risk levels and accounting treatments. I then examine the differential implications of accounting-based and stock-based performance measures on managers' incentive in choosing between the two strategies. Using data from US high tech industries, I find that, firms relying on "buy" approach to obtain technology tend to depend more on the accounting-based performance measures, while those firms who innovate through R&D activities skew toward stock-based pay especially stock optionsR&D, Acquisition, Compensation, Technology,

A new genus and two new species of Azeliinae from China (Diptera: Muscidae)

Yang, Kuiwen, Xue, Wanqi, Tong, Yanfeng (2022): A new genus and two new species of Azeliinae from China (Diptera: Muscidae). Zootaxa 5154 (3): 393-400, DOI: https://doi.org/10.11646/zootaxa.5154.3.1