Balancing Conflicts of Interest when Employing Spouses

Employees can be put in situations where they are required to make decisions on behalf of the organization as part of their job duties. In these situations, organizations desire that employees make these decisions in the organization’s best interest. In an attempt to ensure that decisions are made in the best interest of the organization, some organizations implement anti-nepotism policies and no spouse rules. While the intent is to minimize conflicts of interest among employees, these policies exact costs to organizations. The present paper examines the costs and benefits of these types of policies, as well as the effects of family-friendly benefits, on organizations. The examination is further laid out in terms of four examples of how these policies and rules can be reframed into conflict of interest policies, allowing organizations to fully experience the benefits of increasing the size of the labor pool by being able to consider spouses and family members as potential applicants, while minimizing conflicts of interest. Finally, recommendations concerning the use of focused conflict of interest policies are made.

Appearance-based Sex Discrimination and Stereotyping in the Workplace: Whose Conduct Should We Regulate?

Court treatment of sex discrimination and harassment claims based on appearance and gender stereotyping has been inconsistent, particularly where the facts involve reference to sexual orientation. Ironically, court willingness to allow such claims may turn on the choice of verbal or physical conduct by, or the sex or sexual orientation of, the alleged offenders. Because plaintiffs in such situations may assert retaliation claims to increase their chances of prevailing, employers should focus less on regulating aspects of personal appearance unrelated to job performance and more on problematic reactions by co-workers. Workplace civility policies may hold promise for limiting both legal liability and practical consequences in the absence of a legislative response.

Stochastic productivity measurement

Stochastic productivity indicators are defined, and superlative measures of these indicators are derived. It is shown that, in the presence of complete markets or a common-expectations equilibrium, differences in the market values of firms are superlative indicators of cross-sectional productivity differences. Exactness results are used to decompose nonstochastic productivity indicators into a measure of true productivity change and a measure of ‘luck’. The decomposition is illustrated empirically.

Do liquidity induced changes in aggregate dividends signal aggregate future earnings growth?

Extant empirical literature does not provide abundant evidence for the information content hypothesis regarding firm-level dividend signaling. Although this is consistent with the argument against an optimal firm-level dividend policy, this does not imply an absence of an optimal aggregate dividend level. Aggregate dividends and earnings may exhibit stronger associations if aggregation filters out firm-specific earnings information and indicates macroeconomic trends. Using macroeconomic data, we show that aggregate payout ratios signal aggregate future earnings growth for horizons up to 4 years, and that excess aggregate liquidity plays an important role in this relationship.

Debreu’s coefficient of resource utilization, the Solow residual, and TFP: the connection by Leontief preferences

Debreu’s coefficient of resource utilization is freed from individual data requirements. The procedure is shown to be equivalent to the imposition of Leontief preferences. The rate of growth of the modified Debreu coefficient and the Solow residual are shown to add up to TFP growth. This decomposition is the neoclassical counterpart to the frontier analytic decomposition of productivity growth into technical change and efficiency change. The terms can now be broken down by sector as well as by factor input.

A Model for Predicting Outcomes of Sexual Harassment Complaints by Race and Gender

Organizational scholars have studied the impact of sex on sexual harassment outcomes but left unexplored the influences of race. Thus, we use social identity theory to explore the role of race stereotypes and their influences on sexual harassment outcomes. We posit that stereotypes of African-American women tend to be much more negative than those of white women and this serves to marginalize their position both as victims of sexual harassment as well as complainants.

How useful are signals? A micro-structure analysis

We analyze how the market processes a signaling event by studying a sample of self-tender offers, events often viewed as signals of firm value. By examining changes in the degree of informed trading, we find asymmetric information costs fall at announcement, remain low throughout the event, and increase at offer expiration. By 1 month following expiration, informed trading returns to a level not significantly different from that prior to the offer. Higher risk firms have significantly larger declines in information asymmetry during the offer. Increases in information asymmetry persist 1 month following expiration for firms with lower pre-offer informed trading.

Productivity and efficiency of state-owned enterprises in China

The purpose of this paper is to evaluate the variations in SOE efficiency and productivity from the perspectives of macroeconomic fluctuations and systematic reform in China during 1986–2003. We use Data Envelopment Analysis to measure SOE efficiency. Subsequently, we use the Malmquist Index of Productivity change to measure productivity growth. The empirical results show that SOE efficiency and productivity exhibited obvious improvements during periods of strong systematic reform and a prosperous economy. The systematic reform after 1998 had a clear-cut impact on SOE performance.

Application of a double bootstrap to investigation of determinants of technical efficiency of farms in Central Europe

The paper provides one of the first applications of the double bootstrap procedure (Simar and Wilson 2007) in a two-stage estimation of the effect of environmental variables on non-parametric estimates of technical efficiency. This procedure enables consistent inference within models explaining efficiency scores, while simultaneously producing standard errors and confidence intervals for these efficiency scores. The application is to 88 livestock and 256 crop farms in the Czech Republic, split into individual and corporate.

Accounting for growth in retail trade: an international productivity comparison

In this paper we argue that the standard approach for measuring output and productivity in the trade sector has become obsolete. The key problem is that changes in prices of goods purchased for resale are not accounted for. We outline a consistent accounting framework for measuring trade productivity and provide new estimates, taking into account purchase prices of goods sold in a double deflation procedure. We find strong productivity improvements in the UK and US compared to France, Germany and The Netherlands since the mid-1990s. This finding is robust for various productivity measurement models.

Gender,Organizational Justice Perceptions,and Union Organizing

The authors examine the relationship between gender and organizational justice perceptions and the implications of this relationship for organizing women. They employ a survey study design to confirm expectations associated with the anecdotal literature on this topic, namely that women place greater value on interactional justice than on distributive or procedural justice. Results indicate that gender leads to valuing interactional justice more highly only in interaction with race. Specifically, in contrast to white women and both white and black men, black women give greater weight to being treated with dignity and respect than to the other two organizational justice dimensions.

A generalized procedure to recover the first derivatives of a production function when the firm is a profit maximizer

Partial derivatives of production functions are necessary in many instances to characterize the technology of firms. We present here a general method to recover the first derivatives of the production function of a profit maximizing firm. The method is systematic and applies even when the optimization problem of the firm is subject to additional constraints. It allows researcher to recover returns to scale and technological progress in complex situations.

Market reactions to announcements to expense options

The joint hypotheses of informationally efficient markets, transparent financial statements, and adequate accounting disclosure suggest that announcements of changes in the accounting treatment of employee stock options from footnote disclosure to expense recognition should not trigger stock price reactions because free-cash-flows will not change. Event study results from a sample of 241 firms that announce such changes reveal statistically significant negative price changes followed by positive price changes about equal in magnitude. We propose the learning, sophisticated investor, neglected firm, and firm size hypotheses to explain the observed announcement-period stock price reaction.

An examination of the performance and prospects for the future of internet-primary banks

We study Internet-primary banks for differences in performance versus newly chartered traditional banks from 1996 through 2003. Internet-primary banks are larger, with lower net interest margins and loan losses, and higher wage and physical capital rates than newly chartered traditional banks. Univariate ROE is lower, but profit efficiency is significantly higher on average for Internet-primary banks compared to all newly chartered banks as well as those that survive through the sample period. In multivariate models, Internet-primary banks continue to have significantly higher average profit efficiency, and particularly so when of sufficient size.

How different are the regional factors of high-tech and low-tech start-ups? Evidence from Japanese manufacturing industries

This paper analyzes regional determinants of the start-up ratio in the Japanese manufacturing sector. A major contribution of this study is the comparison between high-tech and low-tech industries. The empirical results using a sample of 253 industrial districts suggest that business density, weight of the manufacturing sector, and the average business size significantly influence the start-up ratio in both high-tech and low-tech industries. Distinct differences between these industries were found with regard to the effects of human capital, research institutes, and the weight of high-tech industries.

The productivity performance of Irish dairy farms 1984–2000: a multiple output distance function approach

This study measures productivity growth on Irish dairy farms over the period 1984–2000. A total factor productivity index is constructed for the dairy system and is decomposed into technical change, efficiency change, and changes in scale efficiency. This is achieved by estimating a stochastic output distance function model of the production technology in use on Irish dairy farms. Overall, productivity on Irish dairy farms grew by 1.2% per annum over the sample period.

How to value a life

The tradeoff between money and small risks of death is the value of statistical life (VSL), which has become the standard for assessing the benefits of risk and environmental regulations. Labor market estimates of the VSL average about $7 million. This valuation amount rises with age and then declines, closely tracking the pattern of consumption over the life cycle. The VSL for those at age 60 is higher than for people in their 20s. Application of this methodology to assess the mortality costs to smokers indicates a personal mortality cost on the order of $200 per pack for men and $100 for women using a 3% discount rate, but based on smokers’ rates of time preference the costs are reduced by about an order of magnitude.

Convertibles and milestones in staged financing

This paper investigates a popular financing strategy whereby the manager of a firm uses convertibles in staged financing. Staged financing is particularly popular in corporate finance, even although it has potential incentive and risk problems. This paper identifies many interesting properties of convertibles in staged financing, including the fact that staged financing using convertibles can almost achieve the first best. We also find that risks can reduce agency costs by putting pressure on the manager to perform. These results may explain why convertibles are a popular instrument in staged financing in reality.

Applying intervention analysis to financial performance data: The case of US airlines and September 11th

Using intervention analysis I assess the effect of the September 11 terrorist attack on the performance of the US airline industry. The estimated initial effect supports the US federal government decision to provide a $5 billion cash compensation to the airlines. However, the long-run effect is found to be much smaller than the losses reported by the industry in 2001 and 2002. Also, the analysis suggests that not all of the airlines were equally affected by the terrorist act and that investors were fairly rational pricing major airline stocks, but were less accurate with the stocks of smaller regional carriers.

Relief and Redress for Targets of Workplace Bullying

Workplace bullying is a particularly insidious form of counterproductive workplace behavior that results in significant costs to both targets and organizations. We explore existing and potential avenues of relief and redress available to targets. Relief refers to activities focused on eliminating the bullying as well as the mechanisms used to treat those who have been bullied. Redress refers to third-party remedies that involve the financial and/or non-financial compensation of targets. The optimal strategy for dealing with workplace bullying involves both effective organizational interventions to help prevent and address bullying incidents and strong legislative mechanisms to allow for restitution and compensation. This two-pronged strategy provides targets of bullying with multiple sources of relief and redress.