Agency problems in tracking stock and minority carve-out decisions: Explaining the discrepancy in short- and long-term performances

Several studies have evaluated short- and long-term performances of parent firms who resort to restructuring via tracking stock or minority carve-out. Results show that short-term positive performance of restructuring parents turns negative in the long haul. Although researchers have attempted to resolve this inconsistency, a satisfactory explanation is yet to emerge. In this paper, we offer the self-serving behavior of restructuring parents’ managers as a potential explanation for the observed discrepancy in the short- and long-term performances. We argue that managers of parent firms create new units to receive additional compensation packages. We present evidence that the long-term negative performance can be attributed, at least partially, to self-awarded raise. Since managers of tracking stock parents enjoy a greater degree of managerial discretion and controls, we hypothesize that they would pay themselves a bigger compensation package than their carve-out counterparts and their long-term performance would be inferior to that of the latter group. Our results largely support these hypotheses.

Structural changes,market growth and productivity gains of the US real estate investment trusts in the 1990s

The 1990s were tumultuous times for the US Real Estate Investment Trusts (REITs) industry. Significant structural changes occurred during the decade, especially after the 1993 Revenue Reconciliation Act, which tremendously boosted the flow of funds into the system by allowing the participation of institutional investors in REITs. As a result, the industry experienced remarkable asset growth during the decade, with a large number of initial public offerings and substantial increases in market capitalization. Employing the Data Envelopment Analysis-type Malmquist index approach, this paper explores the impact of such environmental changes on productivity growth, efficiency change, and technological progress of REITs. Our results indicate that while efficiency of the REITs significantly increased, their average productivity declined and technology regressed during this decade. It appears that the typical REIT has failed to improve technically, but exerted substantial effort to catch up with the best practice ones relying mainly on aggressive growth strategies. However, our empirical results indicate that they might have overextended themselves as most began to suffer from diseconomies of scale.

Market reactions to announcements to expense options

The joint hypotheses of informationally efficient markets, transparent financial statements, and adequate accounting disclosure suggest that announcements of changes in the accounting treatment of employee stock options from footnote disclosure to expense recognition should not trigger stock price reactions because free-cash-flows will not change. Event study results from a sample of 241 firms that announce such changes reveal statistically significant negative price changes followed by positive price changes about equal in magnitude. We propose the learning, sophisticated investor, neglected firm, and firm size hypotheses to explain the observed announcement-period stock price reaction.

Politische Ökonomie der Rechnungslegung – Bisherige Forschungsergebnisse und künftige Forschungsperspektiven unter besonderer Berücksichtigung des Lobbyingkonzepts

Particularly in the field of German research tradition concerning financial accounting thoughts about interpretation and development of standards are focal points. Along with the appearance of the information economics it became apparent that financial accounting is not only a technical vehicle but a social institution. By making accounting information publicly available it may have an effect on the distribution of economic income. Insofar the presumption is feasible that those players influence standard-setting whose welfare is directly affected by it. The above mentioned view that is rarely noted in the German-speaking countries is followed by the research approach so called ‘‘Political Economy of Accounting’’. Aim of this research approach is to explain the complex standard-setting process by considering the different parties within a society. The article at hand contributes to sum up state-of-the-art advancements in the field of scientific discourse concerned and provides an outlook on perspectives in this research area.     

Joint estimation of technology choice and technical efficiency: an application to organic and conventional dairy farming

This paper proposes an econometric framework for joint estimation of technology and technology choice/adoption decision. The procedure takes into account the endogeneity of technology choice, which is likely to depend on inefficiency. Similarly, output from each technology depends on inefficiency. The effect of the dual role of inefficiency is estimated using a single-step maximum likelihood method. The proposed model is applied to a sample of conventional and organic dairy farms in Finland. The main findings are: the conventional technology is more productive, ceteris paribus; organic farms are, on average, less efficient technically than conventional farms; both efficiency and subsidy are found to be driving forces behind adoption of organic technology.     

Exact decomposition of the Fisher ideal total factor productivity index

Decompositions of total factor productivity (TFP) shed light on the driving factors behind productivity change. We develop the first exact decomposition of the Fisher ideal TFP index which contains no debatable mixed-period components or residuals. We systematically isolate five effects of (1) technical change, (2) technical efficiency, (3) scale efficiency, (4) allocative efficiency, and (5) price effect. The three efficiency components (2–4) represent the efficiency of achieving a given target point. Components (1) and (5) capture the changes of the target point. While the technical change component is well-established, changes in the relative input–output prices can have real effects on the scale and scope of the target. Such changes are captured by the new price effect component (5). The new decomposition is compared with existing decompositions both in theory and by means of an empirical application to a panel data of 459 Finnish farms in years 1992–2000.

MULTIVARIATE METHODS FOR MONITORING STRUCTURAL CHANGE

Detection of structural change is a critical empirical activity, but continuous ‘monitoring’ for changes in real time raises well‐known econometric issues that have been explored in a single series context. If multiple series co‐break then it is possible that simultaneous examination of a set of series helps identify changes with higher probability or more rapidly than when series are examined on a case‐by‐case basis. Some asymptotic theory is developed for maximum and average CUSUM detection tests. Monte Carlo experiments suggest that these both provide an improvement in detection relative to a univariate detector over a wide range of experimental parameters, given a sufficiently large number of co‐breaking series. This is robust to a cross‐sectional correlation in the errors (a factor structure) and heterogeneity in the break dates. We apply the test to a panel of UK price indices. Copyright © 2011 John Wiley & Sons, Ltd.     

Advances in Joint Modelling: A Review of Recent Developments with Application to the Survival of End Stage Renal Disease Patients

The use of joint modelling approaches is becoming increasingly popular when an association exists between survival and longitudinal processes. Widely recognized for their gain in efficiency, joint models also offer a reduction in bias compared with naïve methods. With the increasing popularity comes a constantly expanding literature on joint modelling approaches. The aim of this paper is to give an overview of recent literature relating to joint models, in particular those that focus on the time‐to‐event survival process. A discussion is provided on the range of survival submodels that have been implemented in a joint modelling framework. A particular focus is given to the recent advancements in software used to build these models. Illustrated through the use of two different real‐life data examples that focus on the survival of end‐stage renal disease patients, the use of the JM and joineR packages within R are demonstrated. The possible future direction for this field of research is also discussed.     

Creative Collaboration and the Self‐Concept: A Study of Toy Designers

In this paper, we explored how collaborative behaviours were related to the self‐concepts of creative workers. Our findings, derived from a qualitative study of corporate toy designers, showed that the personal (vs. social) identities of toy designers were most strongly related to collaborative behaviours. Further, collaborative behaviours defined as idea giving were most congruent with all toy designers' personal identities, while collaborative behaviours defined as idea taking were most incongruent with those identities. Finally, specific collaborative behaviours related to specific types of personal identities (e.g. the collaborative behaviour of ‘incorporating the ideas of others’ was especially incongruent with ‘artistic’ personal identities). Together, these results suggest that promoting collaboration among creative workers may require attention to not only idea‐giving behaviours and social identities (as suggested by most extant theories), but also to idea‐taking behaviours and personal identities. We discuss the implications of these findings for theories of creative collaboration and identity in organizations.