too many performance measures and too much complexity;
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arbitrary targets that are subject to intense lobbying by executives;
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caps and floors that narrow the payout range and stifle incentives;
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performance measured at a level too high to be meaningful for most managers, or too low to encourage teamwork; and
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a failure to integrate the incentive plan into the overall compensation philosophy.
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After examining these problems, the author offers 12 suggestions for implementing plans that support management's aspirations to create value for shareholders.
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A closer look at BBW's regression analysis suggests that investors, while apparently ignoring the cost of equity, put great weight on the cost of debt —a puzzling result in need of an explanation.
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The attempt by BBW to "level the playing field" effectively makes the NOPAT model into a NOPAT and capital model. Thus, it is really an EVA model in disguise and offers no insight into the explanatory power of NOPAT or earnings by itself.
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BBW's model of expectations is too simple. The ability of EVA to explain shareholder returns depends upon the accuracy of the model of expected EVA performance, and BBW make no attempt to derive a model of expected EVA improvement from the EVA valuation equation.
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Trust toward others is positively correlated with both religious observance and Catholic affiliation (and practice ).
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There is a positive correlation between trust in the government, in the police, in the armed forces, in the judiciary and in the banking system and religious practice in general. Identical positive findings are obtained for Catholic affiliation and practice , although they may be affected by a majority effect.
Moreover, there is no evidence to support the hypotheses of a negative effect of religion on social capital. 相似文献
This article discusses the four cornerstones of the reform program:
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Encouraging the development of sound, well-structured banking sectors subject to well-designed systems of bank regulation and supervision.
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Ensuring that private institutions have the incentives, governance structures, and internal controls in place to avoid inappropriate risks.
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Strengthening disclosure requirements to ensure that global lenders and investors have the quantity and quality of information they need to make informed judgments about risks and returns.
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Ensuring that monetary, fiscal, and exchange rate policies are appropriate and resilient enough to permit emerging market governments to withstand a crisis.
As recommended in the article on Indonesia, the author encourages the private sector to make greater use of innovative financing arrangements to manage their risk exposures—for example, through standby lines of credit or pre-negotiated options that would allow a debtor to automatically restructure its obligations under certain conditions. 相似文献
Nevertheless, reliance on VAR can result in serious problems when improperly used, and would-be users of VAR are advised to consider the following three pieces of advice:
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First, VAR is a tool for firms engaged in total value risk management. Companies concerned not with the value of a stock of assets and liabilities over a specific time horizon, but rather with the volatility of a flow of funds, are often better off eschewing VAR altogether in favor of a measure of cash flow volatility.
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Second, VAR should be applied very carefully to companies that practice "selective" risk management those firms that choose to take certain risks as a part of their primary business. When VAR is reported in such situations without estimates of corresponding expected profits, the information conveyed by the VAR estimate can be extremely misleading.
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Third, as a number of recent derivatives disasters are used to illustrate, no form of risk measurement including VAR–is a substitute for good management. Risk management as a process encompasses much more than just risk measurement. Indeed, risk measurement (whether using VAR or some of the alternatives proposed in this article) is pointless without a well-developed organizational infrastructure and IT system capable of supporting the complex and dynamic process of risk taking and risk control.
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corporate IR activities and the number of stock analysts who follow the firm;
In this article, the authors use the term organizational architecture to refer to three key elements of a company's design:
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the assignment of decision-making authority–who gets to make what decisions;
The article begins by dividing the compensation debate into four key issues:
First, while public outrage has focused on the size of the pay packages at failed financial institutions, it is perhaps more important to focus on the structure of compensation and the process of setting compensation to prevent future crises. An effective pay package is not necessarily the one most laden with equity incentives. Too much equity exposure can cause excessive risk-taking, manipulation, and shift executive attention away from true value creation.
Second, incentive structures should incorporate indexing and clawbacks to guard against the possibility that performance benchmarks are rewarding luck more than sustainable, long-run performance.
Third, the compensation-setting process should be placed in the hands of shareholders, boards, and advisors who are not only independent but also possess ample expertise in the financial instruments used to incentivize pay.
Fourth and finally, any proposals for changes in compensation design or the taxation of compensation should anticipate how executives will alter their behavior in response to the changes, and evaluate the effect of the changes net of such offsetting responses.
Further analysis of the chosen companies suggests that they are distinguished by a number of common capabilities:
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an alert perception of customer values, allowing for quick detection of major shifts in demand or environmental conditions;
The author argues that improvements in governance should focus on achieving the following:
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Organization structures that leverage external alliances while improving internal collaboration. This involves gaining acceptance of and support for a common aspiration across the company—the goal of deploying financial and human resources, complemented by technology, to build shareholder wealth.
In the case of unvested options, the expected option value at vesting should be estimated quarterly starting at the time of grant and the corresponding estimated expense should be revised and allocated as a pro rata accrual each quarter over the vesting period. The cumulative expense over the entire vesting period will equal the fair market value of the option at its vesting date.
Besides reflecting the economics of the exchange of value for labor involved in stock option grants, this approach has a number of practical advantages:
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The 90-day maturity permits the use of publicly traded options to determine fair market value and makes Black-Scholes and other (lattice) pricing models more reliable.
This article presents an alternative framework to estimate the discount for private companies that computes four separate valuation multiples for a set of private transactions and a comparable set of public transactions. After comparing these four sets of multiples for both domestic and foreign firms, the authors reach the following conclusions:
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Domestic private companies are acquired at an average 20–30% discount relative to similar public companies when using earnings (more precisely, EBIT and EBITDA) multiples as the basis for valuing the transactions. The average discount measured using price- to-book value multiples are somewhat lower, and there are no significant differences between the revenue multiples of acquired private and public companies.
The authors' analysis suggests that the pay-setting process in U.S. public companies has strayed far from the economist's model of "arm's-length contracting" between executives and boards in a competitive labor market. In place of this conventional model, which is standard in corporate law as well as economics, the authors argue that managerial power and influence play a major role in shaping executive pay, and in ways that end up imposing significant costs on investors and the economy.
The main concern is not the levels of executive pay, but rather the distortion of incentives caused by compensation practices that fail to tie pay to performance and to limit executives' ability to sell their shares. Also troubling are "the correlation between power and pay, the systematic use of compensation practices that obscure the amount and performance insensitivity of pay, and the showering of gratuitous benefits on departing executives."
To address these problems, the authors propose three kinds of changes:
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increases in transparency , accomplished in part by new SEC rules requiring annual corporate disclosure that provides "the dollar value of all forms of compensation" (including "stealth compensation" in the form of pensions and other post-retirement benefits) and an analysis of the relationship between the past year's pay and performance, as well as more timely and informative disclosure of insider stock purchases and sales;