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on Business Economics |
| By: | Ricardo Correa; Ugur Lel |
| Abstract: | This paper examines the effects of say on pay (SoP) laws on CEO compensation, the portion of top management pay captured by CEOs, and firm valuation. Using a large cross-country sample of about 103,000 firm-year observations from 39 countries, we document that compared to our control group of firms, SoP laws are associated with 1) a lower level of CEO compensation, which partly results from lower CEO compensation growth rates and is related to CEO power, 2) a higher pay for performance sensitivity suggesting that SoP laws have the greatest effects on firms with poor performance, 3) a lower portion of total top management pay awarded to CEOs indicating lower pay inequality among top managers and 4) a higher firm value, which is related to whether the CEO’s share of total top management pay was relatively high before the laws are passed. Further, while both mandatory and advisory SoP laws are associated with lower CEO pay levels, only advisory SoP laws tighten the sensitivity of executive pay to firm performance. Collectively, our results document significant changes in executive compensation policies and firm valuation following the passage of SoP laws around the world. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgif:1084&r=bec |
| By: | Fabling, Richard (Motu Economic and Public Policy Research Trust); Maré, David C. (Motu Economic and Public Policy Research Trust) |
| Abstract: | We examine the correlates of reported hiring difficulties at the firm level using linked employer-employee and panel survey data over 2005-2011, focussing on the relative influence of firm-level characteristics, persistence, the business cycle and local labour market liquidity. At both the aggregate and the firm-level, hiring difficulties eased after the onset of the Global Financial Crisis. Even in the presence of large cyclical changes in demand and labour market conditions, firm-level persistence is a dominant feature of the data, with one- and two-year lags of reported hiring difficulties both positively related to current difficulties. Firms paying higher wages are more likely to report difficulties when trying to hire skilled workers, while firms with more long tenure workers are less likely to report any difficulty hiring. Local labour market conditions appear unrelated to reported hiring difficulties. |
| Keywords: | hiring difficulties, hard-to-fill vacancies, local labour market, Global Financial Crisis |
| JEL: | E24 J23 J63 M51 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7534&r=bec |
| By: | Hiroshi Kitamura; Noriaki Matsushima; Misato Sato |
| Abstract: | This study constructs a model for examining anticompetitive exclusive supply contracts that prevent an upstream supplier from selling input to a new downstream firm. With regard to the technology to transform the input produced by the supplier, as an entrant becomes increasingly efficient, its input demand can decrease, and thus, the supplier earns smaller profits when socially efficient entry is allowed. Hence, the inefficient incumbent can deter socially efficient entry via exclusive supply contracts, even in the framework of the Chicago School argument where a single seller, a single buyer, and a single entrant exist. |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:dpr:wpaper:0878&r=bec |
| By: | George Kaufman |
| Abstract: | Interest in TBTF resolutions of insolvent large complex firms has intensified in recent years, particularly in banking. TBTF resolutions protect some in-the-money counterparties of the targeted insolvent firm from losses that would be suffered if the usual bankruptcy resolution regimes used in resolving other firms in the industry were applied. Although special TBTF resolution regimes may reduce the collateral spill-over costs of the failure, the combined direct and indirect costs from such “bailouts” may be large and financed in part or total by taxpayers. Thus, TBTF has become a major public policy issue that has not been resolved in part because of disagreements about definitions and thereby the estimates of the benefits and costs. This paper explores these differences and develops a framework for standardizing the definitions and evaluating the desirability of TBTF resolutions more accurately. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fmg:fmgsps:sp222&r=bec |
| By: | Rider, Christopher I. (Goizueta Business School); Thompson, Peter (Goizueta Business School); Kacperczyk, Aleksandra (Sloan School of Management); Tåg, Joacim (Research Institute of Industrial Economics (IFN)) |
| Abstract: | We document in two very different datasets an inverted U-shaped relationship between work experience and entrepreneurship among movers. The first dataset consists of 1,248, U.S. lawyers who were forced to seek alternative employment after the sudden dissolutions of their employers. The second consists of over 7.5 million observations on Swedish workers, where job separation is predominantly unrelated to job destruction. Our empirical results are consistent with a model of stochastic accumulation of employer-specific and transferable skills, where the mix between the two is not fully observable to outside parties. |
| Keywords: | Entrepreneurship; Employee mobility; Experience |
| JEL: | D20 J20 L26 M50 |
| Date: | 2013–08–06 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:0970&r=bec |
| By: | Georganas, Sotiris (Royal Holloway, University of London); Tonin, Mirco (University of Southampton); Vlassopoulos, Michael (University of Southampton) |
| Abstract: | Peer effects arise in situations where workers observe each other's work activity. In this paper we disentangle the effect of observing a peer from that of being observed by a peer, by setting up a real effort experiment in which we manipulate the observability of performance. In particular, we randomize subjects into three groups: in the first one subjects are observed by another subject, but do not observe anybody; in the second one subjects observe somebody else's performance, but are not observed by anybody; in the last group subjects work in isolation, neither observing, nor being observed. We consider both a piece rate compensation scheme, where pay depends solely on own performance, and a team compensation scheme, where pay also depends on the performance of other team members. Overall, we find some evidence that subjects who are observed increase productivity at least initially when compensation is team based, while we find that subjects observing react to what they see in a non-linear but monotonic way when compensation is based only on own performance. |
| Keywords: | peer effects, piece rate, team incentives, real-effort experiment |
| JEL: | D03 J24 M52 M59 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7523&r=bec |
| By: | Bartelsman, Eric (VU University Amsterdam); Dobbelaere, Sabien (VU University Amsterdam); Peters, Bettina (ZEW Mannheim) |
| Abstract: | This paper examines how productivity effects of human capital and innovation vary at different points of the conditional productivity distribution. Our analysis draws upon two large unbalanced panels of 6,634 enterprises in Germany and 14,586 enterprises in the Netherlands over the period 2000-2008, considering 5 manufacturing and services industries that differ in the level of technological intensity. Industries in the Netherlands are characterized by a larger average proportion of high-skilled employees and industries in Germany by a more unequal distribution of human capital intensity. Except for low-technology manufacturing, average innovation performance is higher in all industries in Germany and the innovation performance distributions are more dispersed in the Netherlands. In both countries, we observe non-linearities in the productivity effects of investing in product innovation in the majority of industries. Frontier firms enjoy the highest returns to product innovation whereas the most negative returns to process innovation are observed in the best-performing enterprises of most industries. In both countries, we find that the returns to human capital increase with proximity to the technological frontier in industries with a low level of technological intensity. Strikingly, a negative complementarity effect between human capital and proximity to the technological frontier is observed in knowledge-intensive services, which is most pronounced for the Netherlands. Suggestive evidence for the latter points to a winner-takes-all interpretation of this finding. |
| Keywords: | human capital, innovation, productivity, quantile regression |
| JEL: | C10 I20 O14 O30 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7540&r=bec |