Equities of scope as merger incentives under capital regulation: narrow versus synergy banking valuation

The call options theory of corporate security valuation is applied to narrow-banking contingent claims of one bank, while the cap options theory is applied to synergy-banking contingent claims of another bank. This article investigates efficiency gains specified as equities of scope associated with the likelihood of the two banks involved in merger under capital regulation. We find that merger incentives are encouraged when the narrowing banking is conducted by the consolidated bank, whereas discouraged when the synergy banking is conducted. Raising bank capital requirement leads to an increased interest margin of the consolidated bank with the narrow banking valuation; however, to a decreased margin of the consolidated bank with the synergy banking valuation. An increase in the capital regulation reduces the merger incentives in the narrow banking valuation whereas increases the merger disincentive in the synergy banking valuation. These findings are consistent with the organizational theory that predicts a comparative advantage of narrow banking proposals in bank mergers.     

Executive remuneration and financial performance in Brazilian companies

The objective of this study is to investigate the existence of a relationship between executive remuneration and financial performance in 28 Brazilian companies from the industrial sector. These companies have been selected among those companies elected as ＂The Best Companies to Work for in Brazil＂. In order to operationalize the remuneration variable, the authors use the monthly salary, the variable salary and three indexes--of benefits, career and professional development--which have been created especially for this survey. To measure financial performance, the authors use three accounting measures： sales growth, return on equity （ROE） and return on sales （ROS）. The results point the existence of a relationship between executive remuneration and financial performance.     

促进中国金融控股公司发展的对策

近年来,随着西方国家金融控股公司的不断发展以及我国市场经济体制的不断深化,国内各类金融控股公司相继出现。金融控股公司的发展虽然使我国金融行业的规模经济效应得到一定的提高,但与国际金融控股公司相比还处于初级阶段,还存在许多问题与不足。因此,讨论了我国金融控股公司的现状与发展局限,并提出了发展金融控股公司的对策建议。     

When financial work incentives pay for themselves: evidence from a randomized social experiment for welfare recipients

This paper summarizes early findings from a social experiment that provided financial incentives for new welfare recipients to leave welfare and work full time. The financial incentive was essentially a negative income tax with a requirement that people work at least 30 h/week. Early results show that the financial incentive increased full-time employment, earnings, and income, and reduced poverty. Furthermore, at the end of the period discussed in this paper, the program was paying for itself through increased tax revenues.     

Executive compensation among Australian mining and non-mining firms: Risk taking,long and short-term incentives

How firms determine the pay of their executive employees is a vital research area. In the Australian context, mining firms form a large portion of listed companies. These miners tend to have more volatile earnings, operate with less certainty and higher risk in relation to capital investment. We look at a sample of ASX listed miners and non-miners from 2005 to 2013. We note that miners pay their CEOs less (AUD 1 m vs AUD 1.5 m for non-miners) overall. However, we also note that miners tend to use enhanced contingent long-term remuneration arrangements to significantly boost the pay-performance relationship compared to non-miners particularly during the pre-GFC period. Curiously, non-miners tend to have more generous short-term contingent arrangements linking executive pay and performance. The GFC, as an event, has adversely impacted these arrangements, lessening the generosity of pay-performance among miners, while enhancing these arrangements among non-miners. Overall, the results of the study provide support for optimal contracting theory and do not generally support the managerial power approach for both mining and non-mining firms.     

SME performance in transition economies: The financial regulation and firm-level corruption nexus

Using a general equilibrium endogenous growth model we explain underperformance in the small and medium enterprise sector as an effect of corruption and non-competitive banking. Limited competition in the banking sector causes a high loan-deposit spread, worsens the initial effect of corruption, and depresses growth. Fostering bank competition, for instance, by allowing foreign bank entry, would be a simple solution to this problem, but frequently, authorities choose to hamper bank competition. Therefore, we explain the persistence of non-competitive banking as a result of governments’ regulatory choice. If the government has a stake in the banking sector there exists a trade-off between current benefits from bank profits and future growth. Firm-level corruption affects intertemporal optimization and distorts the government’s choice towards more restrictive regulation, i.e., less bank competition, even if the deciding institution itself is not corrupt. These results show that the two prominent problems for small and medium enterprises, corruption and finance, are mutually reinforcing.     

Competition under revenue-cap regulation with efficiency benchmarking: tariff related incentives for gas transmission system operators in merged markets

Journal of Regulatory Economics - In Europe, gas market mergers aim at reducing restrictions on gas wholesale markets. Market mergers also allow network users to book transport capacity at...     

Fuel poverty in residential housing: providing financial support versus combatting substandard housing

Between 50 and 125 million Europeans are unable to afford the energy needed for adequate heating, cooking, light and use of appliances in the home. Tackling fuel poverty has thus become a public policy challenge. In this article, we assess the effectiveness of social energy subsidies and social housing to reduce fuel poverty. The literature reports that rising fuel prices, low incomes and energy-inefficient housing are the main causes of fuel poverty. Existing public policies focus mainly on price- and income-based measures to reduce fuel poverty, such as social energy subsidies. This type of policy is palliative as it does not permit to sustainably eradicate fuel poverty. Other policies aim to encourage renovation in order to improve energy efficiency. Those policies are curative as they sustainably reduce one cause of fuel poverty: energy inefficiency. In this article, we focus on another public policy to tackle fuel poverty: social housing. We believe that this policy could be preventive, as the literature reports the better energy efficiency of social housing. We use matching methods and find that living in social housing decreases fuel poverty by 5.4% to 9.1%. On the contrary, social energy subsidies have no effect on fuel poverty.     

Knowledge spillovers in biotechnology: sources and incentives

This paper sheds light on the questions, Why does knowledge spill over? and How does knowledge spill over? The answer to these questions we suggest lies in the incentives confronting scientists to appropriate the expected value of their knowledge considered in the context of their path-dependent career trajectories. In particular, we focus on the ability of scientists to appropriate the value of knowledge embedded in their human capital along with the incentive structure influencing if and how scientists choose to commercialize their knowledge. We conclude that the spillover of knowledge from the source creating it, such as a university, research institute, or industrial corporation, to a new-firm startup facilitates the appropriation of knowledge for the individual scientist(s) but not necessarily for the organization creating that new knowledge in the first place.     

Effective regulation versus tacit collusion in the long-distance market: an empirical analysis

Regulatory decisions often must be made in an atmosphere of uncertainty, and arguments presented by the affected parties frequently add to, rather than resolve, that uncertainty. Here, we examine several of the deregulatory decisions affecting the long-distance market that were rendered by the FCC over the two-decade period following the divestiture of AT&T. Our purpose is to provide empirical evidence relevant to some of the arguments regarding market conditions that were presented during that period. Findings suggest that some of the more prominent allegations are not supported by the data.      

Negotiation versus consultation in the development of a regulation

Under negotiated regulation, stakeholders are invited to reach an agreement on a regulatory innovation. This approach might be harmful, because potential improvements might be blocked. However, negotiation can also be beneficial—eliciting information about how to improve regulations. Three reasons are identified. First, a participant might hesitate to provide information, unless she can prevent that information being used against her interests. Second, negotiation provides stronger incentives than consultation does, to suggest innovations that primarily benefit parties other than oneself. Third, if uninformed stakeholders can reduce the no-information payoff of informed parties, those parties lose the incentive to strategically withhold information.      

Biotechnology: the emerging battlefield for US and Japanese pharmaceutical companies

The Japanese pharmaceutical industry has lagged behind the US in developing and marhting innovative new compounh. A gap anabsis rebing on international publication and patenting stahtics as well as market survgs shows that the US is the clear leader in biophannaceuticals. Recent Japanese public and private efforts to close the gap have posed no immediate threat to US pharmaceutical companies. The conflict over industrial policy among the ministries involved will take some time to be resolved. However, information networking activities and cross-border technology linkages of Japanese companies should not be underestimated. Biotechnology is current4 transforming theJapanese pharmaceutical induse, and the US will have to deal with a gowing Japanese challenge in the long run. Preventive US counter-measures should include investments in in-house biotechnology research, acquisitions of smaller biotechnology start-up ventures, global commercialization o f biophannaceuticals, and proactive management o f technology linkages with Japanese companies.     

Professional versus consumer interests in regulation: the case of the US child care industry

Professional licensure benefits producers by creating entry barriers into the profession, but consumers might also gain if licensure induces producers to supply high levels of quality. Whether consumers or producers gain most form licensure can be determined by examining the effect of licensure requirements on aggregate consumption. This paper uses a cross-sectional model to estimate the relationship between variations in state licensure rules and consumption of child care services. The results suggest that professional interests, and not those of consumers, are dominant in the setting of regulatory standards for the US child care industry.     

Internal monitoring, regulation, and compensation of top executives in banks

This paper examines the relation between incentive pay, monitoring, and regulatory requirements in banks. Using a one-period model with asymmetrical information between the bank owner and the top management team, as well as within the team itself, we show that (1) incentive pay increases the mutual-monitoring activity among top executives; (2) senior executives, especially the CEO, collect more incentive pay than their subordinates; and (3) bank regulations, such as capital adequacy (CAD) requirements, reduce the absolute amount of incentive pay granted to executives.     

Institutional incentives for managing the landscape: Inducing cooperation for the production of ecosystem services

Agricultural landscapes hold tremendous potential for producing a diverse stream of ecosystem services. Yet, because the spatial configuration of particular ecosystems is critical to the supply of many services, realizing this potential requires that farms be managed in a coordinated way across landscapes rather than as independent units. Under existing incentive programs, this level of coordination is typically neither required nor encouraged.Here we explore how to achieve such coordination from an institutional perspective using voluntary incentives rather than regulation. We focus on three services operating at contrasting scales, from local to global: pollination, hydrologic services, and carbon sequestration. First, we briefly illustrate how agricultural practices can diminish or enhance their provision. Next, we show how all three services require coordinated, landscape-scale management because provision depends upon particular spatial configurations, of which we provide several stylized examples. Finally, based on these stylized configurations, we evaluate the relative merits of three incentive designs-the “cooperation bonus,” the “entrepreneur,” and the “ecosystem service district”-to promote cross-farm cooperation to enhance service provision.All three incentive systems rely on rational self-interest, have cooperative configurations to promote ecosystem services across different scales, use tiered reward systems, and have a major voluntary element. They are distinct in certain key features. The cooperation bonus system rewards conservation even without cooperation but adds a bonus for cooperation. In the entrepreneur incentive, all tiers of reward are contingent upon cooperation. The ecosystem service district scheme is only partially voluntary and forces cooperation of all landowners once the district is formed. Our analysis of these heuristic alternatives integrates biophysical, economic, and institutional factors with the aim of addressing the suite of institutional barriers for landscape-scale management.     

Environmental self-auditing: setting the proper incentives for discovery and correction of environmental harm

Many firms conduct 'environmental audits' to test compliancewith a complex array of environmental regulations. Commentatorssuggest, however, that self-auditing is not as common as itshould be, because firms fear that what they find will be usedagainst them. This article analyzes self-auditing as a two-tieredincentive problem involving incentives both to test for andto effect compliance. After demonstrating the inadequacy ofconventional remedies, we show that incentives can be properlyaligned by conditioning fines on firms' investigative effort.In practice, however, the regulator may not be able to observesuch effort. Accordingly, we propose and evaluate the use ofthree observable proxies for self-investigation: the mannerin which the regulator detected the violation; the firm's owndisclosure of violations; and the firm's observed correctiveactions. Each method has its own efficiency benefits and informationalrequirements, and each is distinct from EPA's current auditpolicy.     

Local financial benefits of rain forests: comparative evidence from Amerindian societies in Bolivia and Honduras

Researchers generally express the local value of tropical rain forests in dollars/ha/year. The approach is problematic because it produces low values to local users, underestimating the importance of the forest expressed as a share of household consumption or earnings. Here we contribute to valuation studies of rain forests by estimating the financial importance of the forest measured in three ways: (1) the contribution of forests to annual household consumption and (2) earnings; and (3) the value of a hectare of rain forest to villagers measured through the biological goods consumed and sold. We collected panel data on consumption and earnings from 81 households in four villages of two Amerindian societies in two nations (Tsimane’, Bolivia; Tawahka, Honduras). Analyses suggest: (1) forests account for a large share of household consumption (median 38.5%; range 14.65–53.11%); (2) forests contribute more to household consumption than to household earnings (median 22.69%; range 16.56–44.81%); (3) the relative contribution of forests to household consumption and earnings falls among villages closer to towns; and (4) the range of values/year of rain forest/ha is US$7.10–9.70 using 1999 dollars or US$18.46–46.56 using purchasing power parity indexes, below previous estimates. Results show much variation in forest values; valuation methods and stakeholder perspectives affect the variation. Given the variation, a useful strategy to promote forest conservation would transfer income to villagers to compensate them for non-local forest values.     

The financial accelerator and the real economy: A small macroeconometric model for Norway with financial frictions

This paper studies the salient features of a core macro econometric model that allows for self-reinforcing co-movements between credit, asset prices and real economic activity. In contrast to the economic literature that cultivates highly stylized model representations aimed at illustrating the workings and the implications of such a feature, the model of this paper integrates two mutually reinforcing financial accelerator mechanisms within the framework of a fully-fledged core macroeconomic model. The impulse responses of such a model is in line with the ones typical of SVAR/DSGE models, though the amplitude of shocks is in most cases stronger than the ones pertaining to these kinds of models. This is due to the workings of the financial accelerators that contribute to magnify the effects of shocks to the economy. A forecast comparison undertaken between our model and an alternative macro econometric model without a financial block, suggests that financial feedback mechanisms may be forecast improving.     

中国生态补偿:理论与研究述评

目前发展阶段,生态补偿的核心问题是要解决好“谁补偿谁”和“补多少”的问题。基于此,论文通过大量文献分析归纳,从生态补偿概念和理论基础出发,研究生态补偿主客体,重点探讨了目前较为认可的基于成本、意愿调查、生态系统服务价值评估三种生态补偿标准核算方法,分析补偿存在的不足之处并展望未来的研究方向:(1)扩大补偿研究尺度,推动科研成果转化。(2)建立多元化补偿方式,构建完备的生态补偿机制。(3)引导公众参与生态补偿,扩大补偿资金来源渠道。(4)完善补偿标准体系,确定动态化、差异化补偿标准。以期促进我国生态补偿机制建设。