UK Executive Bonuses and Transparency — A Research Note

High levels of executive pay in the USA and the UK have attracted journalistic and academic criticism to the effect that they constitute rent extraction by self‐interested executives rather than rewards for raising shareholder returns. The focus of most criticism has been on salary, severance payments and various long‐term incentives (particularly share options). However, executive bonuses have attracted little attention and have been only lightly regulated. This raises important questions. Has lighter regulation been associated with significant levels of rent extraction through bonuses, that is, a weak relation between bonus pay and shareholder returns? Have more transparent performance conditions attached to bonuses strengthened the relation, making rent extraction more difficult, or have they acted as camouflage for rent extraction, associated with higher bonus pay but lower pay‐performance responsiveness? Are measures of CEO power associated with larger bonuses? This empirical note provides the first, preliminary answers to these questions.     

Contracting Public Services: the Management of Compulsory Competitive Tendering In Two County Councils

Trevor Colling, Research Fellow in the Industrial Relations Research Unit at the University of Warwick, discusses the experience of two local authorities, one Labour- and the other Conservative-controlled, in managing compulsory competitive tendering. Both authorities were faced with the task of making radical changes in employment practices to compete against the private sector. Yet the pace and extent of change differed markedly reflecting not just the political complexion of the two authorities, but a range of factors. Employee as well as employer responses were crucially important in each case.     

CARE/CEASA Roundtable on Managing Uncertainty and Risk

Two distinguished Morgan Stanley “alumni” discuss how their management of risk and uncertainty has not only preserved but increased the profitability of their businesses. In both cases—one involving a commodities trading operation and the other a long‐short hedge fund—the key has been to find cost‐effective ways to “cut off the left tails” of the distribution by avoiding naked long or short positions and creating option‐like payoffs with limited downside. In the case of the hedge fund, the combination of longs and shorts with the use of other risk‐reducing strategies has enabled the fund's managers to produce twice the market's returns with only half the volatility (and only one losing year) during the 18‐year life of the fund. In the case of the commodities trading operation, the strategy is described as combining ownership of physical assets with the use of option pricing models to create what amount to “long gamma positions in the asset” that “produce payoffs regardless of whether the asset goes up or down in value.”     

Highly qualified and highly ambitious: implications for workforce retention of realising the career expectations of graduate nurses in England

Although increasing numbers of graduates now enter the UK labour market, there has been little evaluation of the benefits that this component of the workforce is reported to bring to employing organisations. This study focused on nursing; a profession in which graduate entry is increasing but potential benefits of moving to all‐graduate entry are strongly contested. Career behaviour and expectations of graduate nurses were compared with those of diploma‐qualified nurses. Career behaviours were similar but differences were found in fulfilment of expectations that reflected findings reported for graduates in other employment contexts. Graduates entered nursing with higher expectations than diplomates but these were often unfulfilled. Graduates reported lower levels of satisfaction than diplomates over time and became less likely to intend remaining in nursing. Implications for increasing graduate entry are discussed, together with strategies to facilitate better synchronisation between graduate expectations and opportunities within the NHS and beyond.     

A note on complex group structures,associated companies,and credit evaluation

This paper provides case analyses which illustrate the opportunistic use of corporate group structure and method of accounting for associated companies to exclude financial results and engage in off-balance sheet financing. It also discusses general implications for accounting policymakers, and provides a number of specific suggestions for financial analysis and credit evaluation.     

State promotion of high-definition television

Governments have used a number of mechanisms to support research and production in domestic industries that are considered strategic. In recent years the Japanese system of administrative guidance and support for pre-competitive research joint ventures has arguabh proved the most successul High-dgfnition teleuislon ( H D V provides an interesting new case study in government support for high-tech industries. Wzile the failure of the EC's venture in this jeld is perhaps unsurprising, the MUSE pryect in Japan has suffered a similar fate. Success in HDTV har been achieved by the US government's novel use ofpre-competitive contests in which domestic and overseas companies are free to form consortia and to arrange side-payments which share out the winning 'prize'. This innovation in the state's promotion of innovation may haue wider applications, though its repeated use could inhibit research by individual companies able tojee-ride on the contest winners.     

CORPORATE GOVERNANCE AND VOUCHER BUY-OUTS IN RUSSIA

This paper examines the issues which may create pressures and incentives to introduce efficiency-enhancing governance structures in enterprises which are privatized through voucher schemes in Russia. These pressures emphasize the need to view buy-outs created on privatization as transitory organizational forms with a three-stage process being suggested as the most feasible for developing governance mechanisms which produce efficiency gains, The paper uses illustrative case studies of the first major enterprises to experience post-privatization ownership changes.