Option grant backdating investigations and capital market discipline

Using a large sample of option granting firms, some of which were investigated for option grant backdating, we develop a predictive model for such investigations and examine how the capital market responded as the backdating scandal unfolded. Firms that were investigated experienced significant stock price declines from the beginning of the Wall Street Journal's Perfect Payday series through the end of 2006. Firms predicted to have backdating problems, but not the subject of publicly revealed investigations, experienced stock price performance during the same period that was remarkably similar to that of firms with publicly revealed investigations. In contrast, firms not predicted to have backdating problems experienced normal stock price performance. Our results suggest that capital markets disciplined companies with suspicious option grant histories, often prior to, and irrespective of, any public revelation of an investigation into the matter.     

The Effect of Sales Force Adoption on New Product Selling Performance

Although several studies have suggested that the sales force is a major contributing factor to new product success, few studies have focused on new product adoption by the sales force, particularly with respect to its relationship with selling performance. The present article presents empirical evidence on the impact of sales force adoption on selling performance. We defined sales force adoption as the combination of the degree to which salespeople accept and internalize the goals of the new product (i.e., commitment) and the extent to which they work hard to achieve those goals (i.e., effort). It was hypothesized that the impact of sales force adoption on selling performance will be contingent on supervisory factors (sales controls, internal marketing of the new product, training, trust, and supervisor's field attention), and market volatility. Therefore, this article also provides evidence of the conditions under which sales force adoption of a new product is more or less effective in engendering successful selling performance. The hypothesized relationships were tested with data provided by 97 high technology firms from The Netherlands. The results show that sales force adoption is positively related to selling performance. This finding suggests that salespeople who simultaneously exhibit commitment and effort will achieve higher levels of new product selling performance. Outcome based control, internal marketing and market volatility are also positively related to new product selling performance. The effect of sales force adoption on selling performance is stronger where outcome based control is used and where the firm provides information on the background of the new product to salespeople through internal marketing. Training and field attention weaken the adoption‐performance linkage. These findings may indicate that salespeople in The Netherlands interpret training as “micromanaging” and field attention as “looking over their shoulder.” We conclude with implications of our study for research and managerial practice.     

The bargaining family revisited

We suggest a family bargaining model where human capital investment decisions are made non-cooperatively in a first stage, while day-to-day allocation of time is determined later through Nash bargaining, but with non-cooperative behaviour as the fall-back. One finding is that overinvestment in education may be even more of a problem in such a semi-cooperative model than in a fully non-cooperative one. Even though both the semi-cooperative model and the fully non-cooperative model predict overinvestment in education, policy conclusions that follow from the two models are distinctly different. JEL Classification: D13, J24
Les auteurs suggèrent un modèle de famille qui marchande où les décisions d'investissement en capital humain sont prises de manière non-coopérative dans un premier temps, alors que l'allocation du temps au jour le jour est déterminée plus tard par un marchandage à la Nash, mais avec un comportement noncoopératif comme choix de second ordre. On découvre que le surinvestissement dans l'éducation peut être encore plus problématique dans un tel modèle de semi-coopération que dans un modèle de non coopération. Même si les deux modèles prévoient un surinves;chtissement dans l'éducation, les conclusions au plan de la politique publique qui découlent de ces deux modèles sont fort différentes.     

Determinants of CEO and Board Turnover

The purpose of this paper is twofold. First, to document changes in top management and board of directors in Danish firms during 1996–98. Second, to examine whether these changes are related to the performance of firms during the preceding years. Our study differs from earlier investigations in that we not only consider removal of CEOs but also turnover of board chairmen and board members. We find that turnovers of CEOs, board chairs and members have a number of common determinants like firm size and age of the firm. Risks of removals increase with lower rates of solvency but are unaffected by profitability changes. The hypothesis that competition increases the turnover risk is not supported by the estimations.     

Heroin Consumption,Prices and Addiction: Evidence from Self‐reported Panel Data*

Estimation models of drug demand should encompass the aspect of addiction. Here, we consider two static panel data regression models and two cross‐section models with lags or leads in drug consumption as additional regressors. Heroin injectors attending a needle exchange service in Oslo were interviewed twice, with a one‐year interval. Despite our relatively small sample, we obtain statistically significant price and income responses for nearly all of the models and specifications applied. The sample is split by dealing status, with dealers obtaining price elasticities in the range of [?0.15, ?1.51] and non‐dealers [?0.71, ?1.69]. Somewhat surprisingly, the estimates of the variance of the latent individual‐specific variable are rather low in the panel data models, although higher for non‐dealers than for dealers.     

Report on the Montreal Conference

This article does not have an abstract     

“Honey,Have You Seen Our Hamster?” Consumer Evaluations of Autonomous Domestic Products

Several autonomous products have been launched in the marketplace in the past few years. These autonomous products do not need any human intervention but operate on their own. An example of such an autonomous product is the self-initiating, independent vacuum cleaner that determines when a floor or room needs to be vacuumed, and does the job by itself, returning to the charging station when it needs to recharge its battery. It is unclear, however, to what extent consumers appreciate this autonomy. Autonomous products take over tasks from the user, which leaves the user the opportunity to take part in other activities. However, consumers may also consider these products complex and the use and purchase of such products risky. In addition, people often show a desire for control and may be reluctant to hand over some control to autonomous products. The advantages of autonomous products may thus be partly compensated by several disadvantages.
The present study aims to explain overall consumer appreciation for autonomous products by integrating the above-mentioned factors in a conceptual model. This conceptual framework was tested in an experiment (N=77). The results reveal that consumers perceive highly autonomous products as more risky and complex than less autonomous products. Perceived risk negatively influenced overall consumer appreciation whereas complexity did not affect consumers' appreciation. Relative advantage, however, compensates the negative effect of perceived risk on overall consumer appreciation. Also, contrary to our expectations, we found that people with a high desire for control perceive less risk. We conclude with managerial implications for developers and marketers of autonomous domestic products.     

US—Soviet grain embargoes: Regulating the MNCs

The US government has often attempted to regulate commercial interaction between US grain MNCs (multinational corporations) and the Soviet Union. The US government tried to prohibit the sale of grain to the Soviet Union prior to 1971, to swap US grain for Soviet oil in 1975, and to embargo all grain sales to the Soviets in 1980. Distinctive characteristics of grain MNCs and grain as a commodity, however, have made such efforts at national regulation by the US government a difficult administrative task. These characteristics include the secrecy surrounding grain trading, the fungibility of grain, the use of ‘optional origins’ contracts, and the possession of a considerable number of foreign subsidiaries by the grain MNCs.     

Perturbations of Matrices: A theorem on the perron vector and its applications to input-output models

This is a much revised version of my paper The Effects of Errors in Matrices on the Perron Vector: An Application to Input-Output Models, which was presented at the 1987 European Meeting of the Econometric Society, held in Copenhagen. I would like to thank Gerard Sierksma and Albert E. Steenge for valuable discussions and two anonymous referees for their helpful comments.