Aggressive oil extraction and precautionary saving: Coping with volatility

The effects of stochastic oil demand on optimal oil extraction paths and tax, spending and government debt policies are analyzed when the oil demand schedule is linear and preferences quadratic. Without prudence, optimal oil extraction is governed by the Hotelling rule and optimal budgetary policies by the tax and consumption smoothing principle. Volatile oil demand brings forward oil extraction and induces a bigger government surplus. With prudence, the government depletes oil reserves even more aggressively and engages in additional precautionary saving financed by postponing spending and bringing taxes forward, especially if it has substantial monopoly power on the oil market, gives high priority to the public spending target, is very prudent, and future oil demand has high variance. Uncertain economic prospects induce even higher precautionary saving and, if non-oil revenue shocks and oil revenue shocks are positively correlated, even more aggressive oil extraction. In contrast, prudent governments deliberately underestimate oil reserves which induce less aggressive oil depletion and less government saving, but less so if uncertainty about reserves and oil demand are positively correlated.     

Lone wolves reciprocate less deviance: a moral identity model of abusive supervision*

Abstract

Although previous studies provide diverse perspectives on the influences of abusive supervision, the moral perspective receives little attention in the literature. We rely on social cognitive theory to present a moral identity model of abusive supervision that accounts for the influences of perceiving abusive supervision on organizational and interpersonal deviance. In particular, we propose that employee moral identity mediates the positive relations between abusive supervision, as perceived by followers, and their subsequent organizational and interpersonal deviance. We also test the extent to which lone wolf tendencies alleviate the main negative impact of abusive supervision on moral identity and the indirect effect of abusive supervision on organizational and interpersonal deviance through moral identity. More specifically, when the level of lone wolf tendencies is high, the relationship between abusive supervision and moral identity, and the magnitude of the moral identity mediating mechanism will be weaker. Using multi-wave, multiple-source data collected in China, our findings support most of our hypotheses and offer insightful theoretical directions for mistreatment, morality, and disposition research. Our moderated mediation model serves as a springboard for future research to understand the social cognitive processes that link abusive supervision and deviant behavior from the moral perspective.     

Delaware Public Benefit Corporations: Widening the Fiduciary Aperture to Broaden the Corporate Mission

As a past practitioner of corporate law in Delaware for 26 years who remains convinced that the for‐profit corporation remains the best vehicle for raising and allocating private capital, the author nevertheless also believes that the stockholder primacy model that currently animates corporate fiduciary principles is too narrow. In the excerpts from his new book that make up this article, the author describes the “benefit corporation,” which introduces a corporate governance model based on stakeholder principles. This model encompasses a more complete recognition of the complex interdependencies between all aspects of a global society, and of the responsibility of corporations to reflect those interdependencies in their decision‐making. Although initially a skeptic, the author now believes that benefit corporation law offers an important opportunity for companies to align the interests of their investors with those of their stakeholders in a potentially value‐increasing way that is discouraged by traditional corporate law. State legislatures began authorizing benefit corporations in 2010, and they are now available in 32 U.S. jurisdictions. Over 3,000 benefit corporations have been formed. What's more, they are raising capital from traditional funders, including venture capitalists, and at least one benefit corporation has already gone public. As the author says in closing, “the stakeholder governance model facilitated by benefit corporations provides a clear path to a future of shared value creation, and some investors and corporations have started down that path.”