Should there exist secondary markets for executive stock options?

This paper investigates the potential disadvantages of the secondary markets for executive stock options (ESOs). The benefits of such markets are evident, but they might also have negative effects for shareholders. Executives might, for example, use inside information to time their ESO selling. We investigate two personal motives of managers that can be assumed to affect their optimal selling decision, that is, managers' personal portfolio management issues and the use of inside information. We explore these motives by analyzing unique data from Finland, where there are secondary markets for ESOs. The results of the study support the traditional portfolio diversification hypothesis according to which managers tend to sell their ESOs when holding an ESO is equivalent to holding the underlying stock; that is, in such a case a manager's wealth is closely tied to the stock price of the firm. With respect to the use of inside information the results indicate that ESO selling activity is not related to future stock price behaviour, suggesting that managers do not use inside information to determine the selling time of their ESOs. These results imply that the existence of secondary markets for ESOs does not weaken the usefulness of ESOs as the management compensation, although the benefits of such markets are evident.     

Ideologie vor Eigennutz?

The case study regards the question whether economic self-interests of publishers have a significant influence on the reporting of their own newspapers with regard to crucial topics touching those interests. The conflict about the minimum wage in the mailing business is scrutinized. The newspapers engaged in the mailing business are compared with those of independent newspapers without these interests. Because the political inclination of a newspaper, even beyond the self-interests of its publisher, affects the reporting of a conflict, newspapers with different political views are chosen among economically involved and uninvolved media companies. The study is based on the “public task” of press and researches, using a quantifying analysis of contents, relevance and plurality of conflict reports. The results show that in this case the basic political orientation of a newspaper had a significant influence on the portrayal of the conflict. An additional influence with regard to the economic self-interests could not be proven significantly. Ideology seems to be more important than self-interest. However in this case political orientation and economic self-interests harmonized. Therefore it is still relevant to study the role of economic interests for the realization of the “public task”.     

Katastrophenanleihen als Risikotransfer-Instrument für Industrieunternehmen

All over the world an increase in natural catastrophes and resulting damages can be observed for entire economies as well as for individual industrial enterprises. This trend leads to extraordinary expensive traditional natural catastrophe insurance or even a lack of insurance capacities. Due to the increased threat resulting from natural catastrophes and the inefficiencies of traditional insurance solutions, it will be analyzed in the following whether catastrophe bonds (cat bonds), as an alternative risk transfer instrument, should play a role in the risk management portfolio of industrial companies. It will be discussed whether catastrophe bonds are possible risk transfer instruments for industrial companies and whether certain basic prerequisites for a confirmation of the suitability are recognizable. In a further step, the design possibilities for cat bonds will be presented and the most suitable design alternatives for industrial companies as issuers of cat bonds will be elaborated. In addition, a critical comparison between the usage of traditional insurance solutions and cat bonds by industrial companies in order to protect themselves against natural catastrophes will be conducted. The result is a first orientation and a general guideline for dealing with catastrophe bonds as part of the operational risk management for industrial companies.     

Utilization-focused performance reporting

How best to define performance measures is a much-debated issue. Mismatches between goals and indicators can lead to distortions that undermine impact-oriented steering. This article presents a model of goal and indicator development and explains its applicability, benefits and limitations.     

Does Say‐on‐Pay Matter? Evidence from Say‐on‐Pay Proposals in the United States

We investigate the effect of say‐on‐pay (SOP) proposals on changes in executive and director compensation. Relative to non‐SOP firms, SOP firms’ total compensation to CEOs does not significantly change after the proposal. However, the mix of compensation does change—companies move away from using cash compensation toward more incentive compensation, offsetting the reduction in bonus. Further, the mix of compensation of non‐CEO executives changes similarly to that of CEOs. Compensation to directors of SOP firms increases less than non‐SOP firms. Firms whose CEOs are well compensated, especially with cash‐based compensation, are most likely to receive a proposal.     

Adventures,auctions and aspirations: Illuminating shifts,tensions and contradictions in consumers' leisure shopping experiences

Drawing upon the work of Simmel ([1907–1911] 1971) and other socioculturally oriented theoreticians (e.g. Campbell 1987; Thompson et al. 1994), this paper illuminates the composite and dynamic character of leisure shopping. Using three overarching themes – the adventure, the auction and the aspiration – the paper illustrates that leisure shopping experiences comprise a synthesis of opposites, involving dynamic shifts between for example spontaneity and control, delight and disappointment, dreams and fantasies as well as rational calculations and purposive planning. Leisure shopping is thus described as a form of rational recreation (Lash and Urry 2002), where consumers seek pleasure in highly rationalized ways.     

Crafting customer insight: What we can learn from the revival of the vinyl record

The recent resurgence of the vinyl record and the proliferation of so-called craft and artisanal products offer unique opportunities to observe ongoing shifts in the contemporary consumer’s values and attitudes. In this article, we explore such thought-provoking market developments and their implications by contrasting them with the conventional understanding of markets and consumers. This understanding can lead to marketing myopia as it works from the utility-oriented assumption that what ultimately matters for both the company and the customer is cost efficiency and convenience. Against this backdrop, in this article, we discuss how market developments representing the contemporary consumer’s mindset prove valuable in creating customer insight that highlights aspects often obscured by an exaggerated focus on cost efficiency and convenience. We provide an alternative approach to evaluating markets and consumers that encourages companies to build their customer-centric market strategies around questions of context, authenticity, story, and resonance. This will help them narrow the gap between their market offerings and the actual wants and needs of their customer, and consequently allow them to revitalize their market.     

Interdependencies in the Dynamics of Firm Entry and Exit

This paper investigates the interdependence between firm entry and exit from an industrial dynamics perspective. The paper discusses how entry and exit rates in industrial sectors are affected by previous exit and entry rates. Economic theory presents two different approaches to how entry and exit of firms are interrelated, the multiplier effect and the competition effect. This paper intends to investigate which force is the predominant one, for entry and exit patterns, respectively. The empirical analysis is based on data for 25 Swedish manufacturing industries at the 2-digit SIC level, during the period 1991–2000. In the estimation work the study applies a dynamic panel data approach as suggested by Anderson and Hsiao [Journal of the American Statistical Association, 76:598–606, 1981] and Arellano and Bond [Review of Economic Studies, 58(2):277–297, 1991]. With respect to entry, the empirical results support the multiplier effect such that entry stimulates future entry, but also a competition effect such that past exit induces additional entry. With regard to exit, on the other hand, the competition effect rules, implying that previous entry causes subsequent exit and previous exit reduces subsequent exit.