nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2018‒05‒28
ten papers chosen by
Patrick Kampkötter
Eberhard Karls Universität Tübingen

  1. Accounting-Based Compensation and Debt Contracts By Li, Zhi; Wang, Lingling; Wruck, Karen H.
  2. Organizational Leadership Designed at Ensuring Employee Commitment By Cristian Liviu Vele
  3. Effects of State-Sponsored Human Capital Investment on the Selection of Training Type By KODAMA Naomi; YOKOYAMA Izumi; HIGUCHI Yoshio
  4. Does Ignorance of Economic Returns and Costs Explain the Educational Aspiration Gap? Evidence from Representative Survey Experiments By Lergetporer, Philipp; Werner, Katharina; Woessmann, Ludger
  5. Gender Digital Divide and Youth Business Group Leadership By Holden , Stein T.; Tilahun , Mesfin
  6. Management of organization and managing people ? examples of best practice in the Czech Republic. By Jana Marie ?afránková; Martin ?iký?
  7. Do CEOs Make Their Own Luck? Relative Versus Absolute Performance Evaluation and Firm Risk By Wruck, Karen H.; Wu, YiLin
  8. Collective Incentives and Cooperation in Teams with Imperfect Monitoring By Mengel, Friederike; Mohlin , Erik; Weidenholzer, Simon
  9. Tastes for Discrimination in Monopsonistic Labour Markets By Bernardo Fanfani
  10. CEO Overconfidence in Real Estate Markets: A Curse or A Blessing? By Helen Bao; Haotong Li

  1. By: Li, Zhi (Chapman University); Wang, Lingling (University of Connecticut); Wruck, Karen H. (Ohio State University)
    Abstract: Adding accounting-based performance plans to management compensation packages influences borrowing costs and structure of corporate debt contracts. After granting long-term accounting-based incentive plans (LTAPs) to CEOs, firms pay lower spreads and have fewer restrictive covenants in new loans. Lenders impose fewer earnings-based covenants after firms adopt earnings-based LTAPs. Results are stronger for firms with high leverage or bankruptcy risk, and that are difficult for lenders to monitor. Results are robust to alternative borrowing cost measures, including new public bond spreads, credit ratings, and CDS spreads. Overall, evidence suggests that adding LTAPs to compensation packages helps align debtholder and shareholder interests.
    JEL: G30 J33 M41 M52
    Date: 2018–02
  2. By: Cristian Liviu Vele (Technical University of Cluj Napoca, North University Center in Baia Mare)
    Abstract: Every organization wants and need employees that perform at their best in each and every aspect of their work. This, in terms, leads to an increase in organizational efficiency and to the development of competitive advantages in relationship with other competitors. But how can organizations develop a working environment in which employees give their full commitment to organizational strategic goals? What are the cultural elements that drive people to develop the necessary beliefs and behaviors in order to fully commit to an organization? In what manner does the leadership of an organization contribute to the increase of individual commitment? The main objective of this article is to identify and analyze possible correlations between certain elements of transformational leadership and employee commitment. One of the main challenges that companies face in present times is the constant shift in the business environment that requires a high level of flexibility and adaptation. Given the fact that employees are the company’s front line by coming in contact with customers, it is paramount that their behavior and commitment is focused on providing the highest value for the market. For this reason, managers need to fully understand how to motivate individuals in order to become completely involved in their work and in offering their contribution to organizational success. The findings presented in the paper can help managers and leaders in their efforts to retain employees and to increase their involvement in the long term sustainable development of the organization in which they work.
    Keywords: Leadership, organizational change, creativity, strategy, competitive advantage
    Date: 2018–03
  3. By: KODAMA Naomi; YOKOYAMA Izumi; HIGUCHI Yoshio
    Abstract: Since the 1990s, firms in Japan have reduced their human capital investment in the workplace to minimize costs. Moreover, in response to the increase in the number of non-regular employees and turnover rates, workers need to have greater incentive to make the self-motivated investment in themselves for their self-protection. In this study, we first estimate the effects of workers' self-motivated investment in themselves on wage rates. Next, we explore who is likely to participate in which training type and accordingly estimate the effects of the self-motivated investment on wage rates by training type. Our estimates controlling for individual-level fixed-effects indicate that the return is significantly positive and particularly high for practical training related to workers' current jobs, and regular workers tend to self-select these higher-returns programs, while non-regular workers are more likely to enroll in lower-returns programs, such as schooling. This trend in investment in oneself could potentially increase the wage inequality between regular and non-regular workers through the self-selection of training types. Our estimates reveal that receiving the training and education benefit raises the likelihood for workers to participate in a high-return training program regardless of whether they are non-regular or regular workers. This suggests that government benefits on self-investment change workers' self-selection of training type and serve to promote practical trainings that lead to high returns.
    Date: 2018–05
  4. By: Lergetporer, Philipp (Ifo Institute for Economic Research); Werner, Katharina (Ifo Institute for Economic Research); Woessmann, Ludger (Ifo Institute for Economic Research)
    Abstract: The gap in university enrollment by parental education is large and persistent in many countries. In our representative survey, 74 percent of German university graduates, but only 36 percent of those without a university degree favor a university education for their children. The latter are more likely to underestimate returns and overestimate costs of university. Experimental provision of return and cost information significantly increases educational aspirations. However, it does not close the aspiration gap as university graduates respond even more strongly to the information treatment. Persistent effects in a follow-up survey indicate that participants indeed process and remember the information. Differences in economic preference parameters also cannot account for the educational aspiration gap. Our results cast doubt that ignorance of economic returns and costs explains educational inequality in Germany.
    Keywords: inequality, higher education, university, aspiration, information, returns to education, survey experiment
    JEL: D83 I24 J24 H75
    Date: 2018–04
  5. By: Holden , Stein T. (Centre for Land Tenure Studies, Norwegian University of Life Sciences); Tilahun , Mesfin (Centre for Land Tenure Studies, Norwegian University of Life Sciences)
    Abstract: We assess the gender difference in mobile phone ownership among youth business group members, and how it affects election into leadership and group board positions in recently established rural youth business groups in northern Ethiopia. Based on data on 1125 youths from 119 youth business groups where 32% of the members were female, 37% of the females and 70% of the males owned mobile phones. Male members were twice as likely to become board members and five times as likely to become group leaders. While there was a strong gender effect, having a mobile phone had an even stronger effect enhancing the likelihood of members becoming board members by 17.4 percentage points. Male gender and mobile phone ownership had equally strong effects on members becoming group leaders. Male group members were on average older than female group members, and with there being a significant age effect, this also contributed to the male dominance in group boards and leadership positions. Education also increased the likelihood of members becoming leaders and board members but this did not increase the gender gap in selection into such positions, as females were equally well educated as males.
    Keywords: Mobile phone ownership; gender gap; education; group leadership; youth business groups; Ethiopia.
    JEL: D23 D83 J16 P13
    Date: 2018–05–16
  6. By: Jana Marie ?afránková (The College of Regional Development and Banking Institute ? AMBIS a.s.); Martin ?iký? (The College of Regional Development and Banking Institute ? AMBIS a.s.)
    Abstract: Based on the authors? scientific cooperation and research results the goal of the paper is to analyse approaches of organizational management and compare some examples of best practice in managing people in the Czech Republic. Modern approaches to managing people and developing organizations defines the concept of management, characterizes the role, functions, competencies and motivation of managers and presents the current generation of managers and are based on management competency, motivation and flexible adaptability. Paper summarizes the results of the authors' research on management and organization in terms of managing and leading people in organizations and managing and developing of organizations. The paper provides results of authors´ surveys on the problematic of management organization and managing people in SME Czech organizations in profit and non-profit sector. The paper aims to answer the following question: What are the similarities and differences in managing people processes in profit and non-profit organization? The results show some interesting tendencies mainly in approaches to the management, competence, development and training and evaluation processes.
    Keywords: management, organization, competence, people management, Czech Republic
    JEL: D23 M10 M12
    Date: 2018–04
  7. By: Wruck, Karen H. (Ohio State University); Wu, YiLin (National Taiwan University)
    Abstract: Influenced by their compensation plans, CEOs make their own luck through decisions that affect future firm risk. After adopting a relative performance evaluation (RPE) plan, total and idiosyncratic risk are higher, and the correlation between firm and industry performance is lower. The opposite is true for firms that adopt absolute performance evaluation (APE) plans. Plans including accounting-based performance metrics and/or cash payouts have weaker risk-related incentives. The higher idiosyncratic risk associated with RPE increases a firm's exposure to downside stock return risk and lowers credit quality. Our findings are economically consistent with observed differences in firms' financial and investment policies.
    JEL: D22 G12 G32 G34 J33 J41 O31
    Date: 2017–10
  8. By: Mengel, Friederike (Department of Economics, University of Essex); Mohlin , Erik (Department of Economics, Lund University); Weidenholzer, Simon (Department of Economics, University of Essex)
    Abstract: We experimentally explore the role of collective incentives in sustaining cooperation in finitely repeated public goods games with imperfect monitoring. In our experiment players only observe noisy signals about individual contributions, while total output is perfectly observed. We consider sanctioning mechanisms that allow agents to commit to collective punishment in case total output fall short of a target. We find that cooperation is higher in the case of collective punishment compared to both the case of no punishment and the case of standard peer-to-peer punishment which conditions on the noisy signals. Further experiments indicate that both the commitment possibility and the collective nature of punishment matter for the positive effect of collective incentives on cooperation.
    Keywords: Public goods game; Team production; Punishment; Collective sanctions; Imperfect monitoring
    JEL: C72 D02 D23 D90
    Date: 2018–05–19
  9. By: Bernardo Fanfani (Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino, Italy)
    Abstract: We study a model where wage differences between men and women arise from taste-based discrimination and monopsonistic mechanisms. We show how preferences against women affect heterogeneity in firms' pay policies in the context of an imperfect labour market, deriving a rigorous test for the presence of taste-based discrimination and of other firm-level mechanisms driving the gender wage gap, in particular compensating wage differentials. These results inform an analysis of sex pay differences in the Italian manufacturing sector showing that taste-based discrimination and preferences for workplaces providing more flexible schedules are two significant determinants of the gender wage gap.
    Keywords: Gender Wage Gap; Taste-Based Discrimination; Monopsonistic Discrimination; Compensating Wage Differentials; Firm Wage Policy; Matched Employer-Employee Data.
    JEL: J00 J16 J31 J71
    Date: 2018–05
  10. By: Helen Bao; Haotong Li
    Abstract: This paper studies the influence of CEO overconfidence on firms’ financial performance and corporate social responsibility (CSR) in the US real estate investment trust (REIT) market. CEO overconfidence has been shown to have both negative and positive influences on firms. This paper is the first to combine the two sides in a single framework. We find that firms with overconfident CEOs tend to have better CSR performance. In addition, better CSR performance can increase firms’ financial performance, but this positive relationship is undermined by the existence of overconfident CEOs. Our results not only shed light on the two sides of CEO overconfidence in the real estate sector, but also provide a new prospective for research on the CSR–financial performance relationship.
    Keywords: CEO overconfidence; Corporate Social Responsibility; Financial Performance; REIT
    JEL: R3
    Date: 2017–07–01

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