The effect of price targets on the composition of CEO pay

This article analyzes the impact of price targets from the IBES Detail Price History Target database on CEO compensation retained from Execucomp. The two databases are merged at fiscal year frequency and an OLS regression with fixed effect is used to analyze the impact of price target on CEO compensation. The analysis reveals that analysts’ price targets affect top executives’ compensation: when analysts predict a growth in the share price for a company, the compensation package tilts towards stock options, when analysts forecast a drop in the share price, the compensation package tilts towards cash-based compensation and restricted stocks. I argue that the result is more aligned with the managerial power model of compensation (which assumes the board of directors maximizes managers’ compensation) than with the arm’s length bargaining model (that states that managers’ compensation is set to maximize shareholders’ profit).     

Giants, pygmies, and the social costs of fundamental research or price revisited

Social resource and opportunity costs of fundamental science are explored utilizing a model which integrates a) the determinants of the talent distribution of the cadre of fundamental scientists, b) the relationship of individual scientific productivity to scientific talent, c) the scientific value of aggregate scientific product, and d) the value of scientific personnel in nonscientific pursuits. On this basis, total, average, and marginal resource and opportunity costs of varying degrees of realization of “scientific potential” are derived. This comparative- static analysis is then applied to the United States over the period 1940 to 1975–1985, suggesting a four- to fivefold increase in the marginal resource cost and a five- to tenfold increase in the marginal opportunity cost of fundamental science over this period. In light of these findings and of the “free-good” aspect of the products of fundamental science, it is concluded that the level and mode of support for fundamental science must, ultimately, be determined with reference to the non- or quasiscientific contributions of fundamental scientists.     

Heterogeneous beliefs, price dispersion, and welfare-improving price controls

Summary. We consider a search market model where agents have heterogeneous beliefs about the distribution of prices. A suggestive example shows that Jevon's Law of One Price and standard welfare results are not robust to small heterogeneous errors in beliefs. In particular we show that a price ceiling above marginal cost can reduce price dispersion and improve welfare (by lowering aggregate search costs) without decreasing quantity supplied. These results are broadly consistent with the empirical evidence. Received: July 27, 1999; revised version: May 24, 2000     

Does right or left matter? Cabinets, credibility and fiscal adjustments

This paper tests the widely held assumption that left-wing cabinets favor higher public spending and examines whether cabinet ideology affects the persistence of major fiscal adjustments. In a panel of large fiscal adjustments in OECD countries during the last 40 years, we find evidence that left-wing and right-wing cabinets are partisan: the left tends to reduce the deficit by raising tax revenues while the right relies mostly on spending cuts. Our testable hypothesis is that cabinets can signal commitment by undertaking fiscal adjustments in ways that are not favored by their constituencies. In other words, the left gains credibility when it cuts spending while the right becomes more credible when it increases tax revenues. Probit estimates of the determinants of persistence in fiscal adjustments confirm that spending cuts by the left and tax increases by the right are associated with persistent adjustments. The effect is significant for cuts in public spending, public consumption (wage or nonwage), increases in total revenues, direct taxes on businesses and other taxes. We test for the role of several other determinants of persistence, confirming that coalition and majority cabinets are associated with less persistence while periods of high or rising levels of indebtedness favor persistence. The estimates of the impact of ideology and other variables on GDP and its components show that it is the size of the spending cut rather than cabinet ideology that is most important.     

建设工程价款优先受偿权与相关权利的冲突处理

《最高人民法院关于建设工程价款优先受偿权问题的批复》（以下简称《批复》）规定：建筑工程承包人的优先受偿权优于抵押权和其他债权;消费者交付购买商品房的全部或者大部分款项后,承包人就该商品房享有的工程价款优先受偿权不得对抗买受人。《物权法》规定,预告登记具有排斥任何第三人未经债权人同意而取得指定的不动产物权的效力。笔者曾就建设工程价款优先受偿权的保全登记进行探析,并提出＂以预告登记保全我国建设工程价款优先受偿权＂的设想。在这一设想基础上,就建设工程价款优先受偿权与相关权利的冲突处理作进一步探析。     

Government deficits, consumption, and the price level

This paper investigates the dynamics of the price level in a continuous time monetary version of the Yaari-Blanchard overlapping generations model with capital accumulation. It is shown that there is an interaction between fiscal discipline and price stability when the government budget is intertemporally balanced. Relevant implications are that high debt and slow adjustment adversely affect both prices and capital accumulation. Received: April 2005, Accepted: November 2005 We are very grateful to Paulo Brito, the editor, and to an anonymous referee for helpful comments. We also thank seminar participants at the University of Rome for useful discussions. Financial support from MIUR is gratefully acknowledged. The usual disclaimer applies.     

Earnings distribution,corporate governance and CEO pay

We investigate the relationship between earnings differentials and the pay of CEOs of 190 British companies between 1970 and 1990. We find that (i) changes in the differential between the 90th and 50th weekly earnings percentiles for non‐manual adult male workers [90:50] explain changes in the level of real CEO salary and bonus in our sample of companies; (ii) changes in this differential also account for changes in the elasticity of CEO pay to firm size; (iii) a broader measure of earnings inequality does far worse than 90:50 at explaining changes in both the level and the firm size elasticity of CEO pay; (iv) fitting the model on data for 1970–1983 and predicting pay levels for the period starting with the widespread adoption of executive share option schemes in 1984, we find a structural break in the relationship between lower management pay differentials and the pay of the CEO. We conclude first that top executive pay prior to 1984 was a stable function of both firm size and earnings differentials lower on the administrative ladder, consistent with a hypothesis advanced by Herbert Simon in 1957; and second that the use of share options from 1984 onward represents not simply a change in the mode of top executive compensation, but a de‐linking of the pay of top executives and that of their subordinates.     

Technology choice,relative performance pay,and worker heterogeneity

We identify a new problem that may arise when heterogeneous workers are motivated by relative performance pay: if workers’ abilities and the production technology are complements, the firm may prefer not to adopt a more advanced technology even though this technology would costlessly increase each worker’s productivity. Due to the complementarity between ability and technology, under technology adoption the productivity of a more able worker increases more strongly than the productivity of a less able colleague. As a consequence, both workers’ motivation to exert effort is reduced. We show that this adverse incentive effect is dominant and, consequently, keeps the firm from introducing a better production technology if talent uncertainty is sufficiently high and/or monitoring of workers is sufficiently precise.     

Currency denominations, currency substitutions, and the price level

In a 1976 Journal of Political Economy paper, Chen has shown that gross substitutability is a necessary and sufficient condition for the deletion of a desirable currency denomination to be inflationary. The present note corrects and extends the theory by showing that such deletion is inflationary even if monies are complements.     

Time- or state-dependent price setting rules? Evidence from micro data

We use two rich micro-datasets on Portuguese firms to analyse the ability of time- and state-dependent price setting rules to explain durations of price spells, or the probability of price changes. Using a duration model with time-varying regressors, we find some evidence of state-dependent price setting behaviour, which suggests that time-dependent models are unable to fully describe the features of the data. Specifically, we find statistically significant impacts on the probability of a price change of inflation, the level of economic activity and the magnitude of the last price change. Besides being statistically significant, in some cases these effects are also economically important. Finally, it is found that negative and positive values of the covariates have different impacts on the expected duration of prices.     

Seasonality,price discrimination,and welfare

We discuss a potential limitation to a widely accepted result, namely that an output increase is a necessary condition for welfare to increase with price discrimination. We use a theoretical model to show that the existence of seasonal demand fluctuations may allow for a simultaneous reduction in average output and increase in average welfare. We also discuss a number of extensions of our basic model.     

Bonus pay for teachers,spatial sorting,and student achievement

Bonus pay policy for teachers in the U.S. is analyzed in this paper. We quantitatively argue that, because of the decentralized education finance system in the U.S., this policy may lead to higher teacher and household sorting across school districts. This then may lead to higher variance of achievement and lower mean achievement. Formally, we use an equilibrium political economy model of education at which households, heterogeneous in exogenously set income, and teachers, heterogeneous in exogenously set quality, are endogenously allocated across two school districts. Public education expenditures, which includes teachers’ wage payment and non-teacher related education spending, are financed through local income taxation. Income tax rate in each district is determined via majority voting. Achievement depends on the efforts chosen by teachers and non-teacher related education spending. Teacher efficiency wage per unit of quality is determined at the national teacher labor market. We first calibrate our benchmark model by matching certain statistics from the U.S. data. Then in a computational experiment, we introduce bonus pay for teachers which rises with average achievement. We find that for the recently observed level of average bonus pay (6.59% of average base salary), variance of achievement is 2.46% higher and mean achievement is 1.79% lower than the benchmark. Variance of achievement reaches its peak when average bonus pay is 14.06% and then it starts falling. Also, mean achievement always falls as average bonus pay rises.     

A sticky floors model of promotion, pay, and gender

According to raw data from the British Household Panel Survey, full-time women are more likely than men to be promoted. Controlling for observed and unobserved individual heterogeneity, we find that women are promoted at roughly the same rate as men, but may receive smaller wage increases consequent upon promotion. To help explain these phenomena, we construct a new “sticky floors” model of pay and promotion. In our model, women are just as likely as men to be promoted but find themselves stuck at the bottom of the wage scale for the new grade.     

理顺价格机制彻底解决电荒

近年来,随着我国经济高速发展,能源需求日益增加,“电荒”现象愈演愈烈。主要原因是由于价格机制不顺,包括电网与电源企业利益分配失衡,火电与新能源价格、电煤与煤电价格、高油价与电价、电价与CPI等机制的不协调。只有理顺价格机制,才能彻底解决电荒危机。