Staggered boards,corporate opacity and firm value

We explore the effect of corporate opacity on the relation between staggered boards and firm value. We find that through mitigating takeover pressure, staggered boards become increasingly beneficial to firm value as opacity increases. In addition, we document that staggered boards reduce value only in transparent firms. Additional tests indicate that, as opacity increases, staggered boards bear an increasingly positive relation to research and development and CEO pay-performance sensitivity. Taken together, these results suggest that corporate opacity affects the value impact of takeover protection.     

Performance choice,executive bonuses and corporate leverage

This study examines the causal link between a firm's leverage decisions and the characteristics of its CEO bonus plans. Results from a simultaneous equations model strongly suggest that highly levered firms are less likely to use return on equity (ROE) or ROE-based accounting performance measures to determine executive bonuses. Estimates also indicate that firms with fewer debt covenants, higher interest rates on debt, and a greater proportion of executive pay in the form of stock options are less likely to adopt ROE-based measures for use in CEO bonus plans. These findings lend strong support to the efficient contracting hypothesis. The conflicting interests of corporate stakeholders, especially between stockholders and creditors, encourage firms to tie executive pay to performance metrics like return on assets (ROA) that will strike the optimal balance between the agency costs of debt and the agency costs of equity.Data availability: all data are available from public sources.     

Investment policy in family controlled firms

We explore the relation between family ownership and corporate investment policy. Our analysis centers on two incentives, risk aversion and extended investment horizons, which potentially influence the level and type of investments that family firms undertake. We find that family firms devote less capital to long-term investments than firms with diffuse ownership structures. When dividing long-term investment into its two components of R&D and capital expenditures, we note that family firms, relative to nonfamily firms, prefer investing in physical assets relative to riskier R&D projects. Additional tests indicate that family firms receive fewer patent citations per dollar of R&D investment relative to nonfamily firms. Overall, all empirical results indicate that family preferences for lower firm risk, across all family sub-types, affects corporate R&D spending and capital expenditures.     

Chief technology officer roles and performance

This paper assesses the impact of Chief Technology Officers (CTO) on firm performance using upper-echelon theory, human capital theory and social capital theory. The upper-echelon theory is used to investigate how CTO roles are realised within a company regardless of the individual who carries them out, i.e. through a formal CTO position or not. Human and social capital theories are employed to assess how certain features of CTO influences his/her effect on company performance. Thus, this explorative study investigates two questions: (1) do CTO roles affect a firm's performance?, and (2) which features of the senior manager in charge of technology influence performance? To answer these questions the study first develops a conceptual model and subsequently tests the model based on a survey of 49 firms in electronics and machinery industries in Turkey. Two findings emerge: (1) the fulfilment of CTO roles increases a firm's profitability and (2) the existence of a distinct managerial technology position further improves profitability. Moreover, the study clearly shows the role of social capital theory in explaining how the company performance is likely to increase when the CTO/CTO-proxy manager is placed on a higher rung on the organisational ladder.     

The Shielding of CEO Compensation from the Effects of Strategic Expenditures*

This study investigates whether and why compensation committees shield CEO compensation from income‐decreasing effects of strategic expenditures. We document that firms do shield recurring strategic expenditures such as research and development and advertising expenditures. We also find that firms shield research and development expenditures more than advertising expenditures. Our results are consistent with prior findings that suggest that compensation committees shield CEOs from nonroutine transactions such as restructuring charges and extraordinary losses. Using a two‐task principal‐agent framework, we show that such shielding improves the efficiency of the contract by making the shielded income measure more congruent with the principal's objectives.     

A model of evidence production and optimal standard of proof and penalty in criminal trials

The defendant is either innocent or guilty, which she, not the court or prosecutor, knows. The court convicts the defendant whenever its posterior probability of her guilt – which depends on the evidence presented – is greater than the standard of proof. Evidence production by litigating parties is a costly stochastic process. Subsequently, the optimal choice of standard of proof and penalty is analysed. The optimal standard of proof is increasing in the cost of convicting an innocent defendant and decreasing in the cost of acquitting a guilty defendant. Higher penalties may increase probabilities of both false conviction and false acquittal. Un modèle de production de la preuve et la norme optimale de la preuve et de la punition dans les procès criminels. On développe un modèle de production de la preuve par les parties en litige dans un contexte criminel. L’accusé peut être de deux types – innocent ou coupable – et il sait de quel type il est. Mais ni le tribunal ni le procureur n’ont cette information. Le tribunal ne va condamner l’accusé que si la probabilité a posteriori de culpabilité de l’accusé est plus grande qu’une certaine valeur seuil – la norme de la preuve. Cette probabilité dépend des preuves présentées par les parties au tribunal. La production de la preuve est un processus stochastique coûteux. Ce modèle de production de la preuve est utilisé pour analyser le choix optimal de la preuve et de la punition. Comme on pouvait s’y attendre, on peut montrer que la norme optimale de la preuve s’accroît à proportion que s’accroît le coût de condamner un innocent et décroît à proportion que s’accroît le coût de l’acquittement d’un coupable. Ce qui est plus surprenant, on peut montrer que l’accroissement de la punition infligée à un accusé trouvé coupable peut accroître les probabilités à la fois de condamnation et d’acquittement non fondés.     

Peritoneal mesothelioma: Sonographic findings in nine cases

Ultrasonographic findings in nine cases of peritoneal mesothelioma are presented. The most common findings were sheetlike or nodular peritoneal thickening, soft tissue masses, fixation of the intestinal loops, mesenteric thickening, and minimal ascites which was disproportional to the degree of tumor dissemination. The authors found that abdominal sonography, using 3.75–7.5 MHz transducers, is a useful imaging method for diagnosis of peritoneal mesothelioma in high-risk groups.     

How did it all begin? Adam Smith on the early and rude state of society and the age of hunters

Abstract

Scholars tend to examine Smith's historical approach as a whole from the perspective of the four stages theory. This leads to a neglect of Smith's ability to use history in different ways as his different purposes require. This article distinguishes Smith's recourse to primitive society with respect to his purposes in Wealth of Nations and in Lectures on Jurisprudence. In the former, Smith analyses the capitalist economy, thereby laying emphasis on capital and the division of labour in his account of wealth. In the latter, he explains the evolution of institutions in order to challenge contractarian accounts of government.     

Multi-layer quality function deployment (QFD) approach for improving the compromised quality satisfaction under the agency problem: A 3D QFD design for the asset selection problem in the shipping industry

The aim of this paper is to improve the quality function deployment (QFD) method by utilizing requirements of both the major customer and the service provider. The QFD method was first applied to the shipbuilding industry and the main goal of the method is to improve the production processes by using customer requirements in connection with the related technical measures of the product. However, one of the critical criticisms of the QFD is based on the lack of proper budget assessment and the satisfaction of the producer (or service provider). The multi-layer QFD design is proposed to collect responses from both customer and the service provider so as to ensure satisfaction of all parties including financial feasibility of the intended improvements. Hence, the agency problem between parties will be eliminated.