Corporate Governance When Managers Set Their Own Pay

This paper presents a model of the firm in which the manager has discretion over his own compensation, constrained only by the threat of shareholder intervention. The model addresses two main questions. How does shareholder power affect managers' compensation and their incentives to maximise firm value? And what is the optimal level of shareholder power? Expectedly, the model shows that increasing shareholder power leads to lower managerial pay. Greater shareholder power, however, also weakens the manager's incentives to maximise value and may even lead to lower profits for shareholders. There might, thus, be too much, as well as too little, shareholder power. The model characterises the optimal level of shareholder power and yields predictions about the relation between shareholder power, managerial pay, performance and firm characteristics.     

Trick or Treat? Development Opportunities and Challenges in the WTO Negotiations on Industrial Tariffs

Negotiations on industrial tariffs in the current WTO work programme have turned out to be surprisingly difficult. On the one hand, developing countries, particularly in Africa, are concerned about the potential negative effect on their industrial development of developed country efforts to push them into deep cuts in applied tariffs: after the disillusion of the Uruguay Round, promises of welfare gains seem unconvincing. On the other hand, a number of the more complex formula proposals for tariff‐cutting make it difficult for participants to evaluate what they have to do compared with what they hope to receive. The developing countries may achieve greater exports and welfare gains from the more ambitious proposals, but computations show that these also imply greater imports, lower tariff revenues, some labour market adjustments and reduced output in some politically sensitive sectors. Some way of assisting the developing countries in coping with these adjustments is required to take advantage of the opportunities presented by the negotiations.     

Technology revenue management system for customer groups in hotels

This paper discusses revenue management; a technique that focuses on decision making that will maximize profit from the sale of perishable inventory units. New technologies management plays an important role in the development of revenue management techniques. Each new advancement in technology management leads to more sophisticated revenue business capabilities. Today decision support revenue management systems and technologies management are crucial factors for the success of businesses in service industries. This paper addresses the specific case of customer groups in hotels. This paper introduces a new decision support system that sets the revenue maximization criteria for a hotel. The aforementioned system includes a set of demand forecasting methods for customers and addresses a general case considering individual guests and customer groups. The system also incorporates deterministic and stochastic mathematical programming models that help to make the best decisions. The actual revenue depends upon which reservation system the hotel uses. A simulation engine makes a comparison between different heuristics of room inventory control: the results include performance indexes such as occupancy rate, efficiency rate, and yield; it compares results and chooses one of them. The system proves its suitability for actual cases by testing against actual data and thus becoming an innovative and efficient tool in the management of hotels' reservation systems.     

Improving the “Leader–Follower” Relationship: Top Manager or Supervisor? The Ethical Leadership Trickle-Down Effect on Follower Job Response

Since time immemorial, the phenomenon of leadership and its understanding has attracted the attention of the business world because of its important role in human groups. Nevertheless, for years efforts to understand this concept have only been centred on people in leadership roles, thus overlooking an important aspect in its understanding: the necessary moral dimension which is implicit in the relationship between leader and follower. As an illustrative example of the importance of considering good morality in leadership, an empirical study is conducted in which a good performance of the “leader–follower” relationship is reflected when individuals perceive ethical leadership in higher hierarchical managerial levels. To be precise, findings of this study demonstrate that follower job response is improved through an ethics trickle-down partial effect from the Top Manager to the immediate supervisor, and also reveal both key aspects and managerial level on which the practice of ethical leadership should rest upon to have a stronger effect on the follower positive job response. Practical implications of these findings and directions for future research are finally presented.     

Evaluación de la conversión a café orgánico usando la metodología de opciones reales

Since the deregulation of the coffee market in 1989, price crises are proof of the uncertainty and risk around coffee growers’ income, particularly for small producers who, in the case of Mexico, have taken action such as the conversion of their traditional crops into the organic production system which, besides the ecological priority, allows them to get a higher income than from conventional coffee. In this document we model as real investment options (RIO) the possibility of conversion from one system into the other one also including the feasibility of abandoning this strategic decision.     

Neural network volatility forecasts

We analyse whether the use of neural networks can improve ‘traditional’ volatility forecasts from time-series models, as well as implied volatilities obtained from options on futures on the Spanish stock market index, the IBEX-35. One of our main contributions is to explore the predictive ability of neural networks that incorporate both implied volatility information and historical time-series information. Our results show that the general regression neural network forecasts improve the information content of implied volatilities and enhance the predictive ability of the models. Our analysis is also consistent with the results from prior research studies showing that implied volatility is an unbiased forecast of future volatility and that time-series models have lower explanatory power than implied volatility. Copyright © 2008 John Wiley & Sons, Ltd.     

Sustainability reporting and stakeholder engagement in Spain: Different instruments,different quality

The purpose of this paper is to compare the quality of the sustainability information issued following the three most common reporting models: annual report (addressed to shareholders), sustainability report (addressed to stakeholders), and integrated report (addressed to shareholders). To this aim, we create a quality index based on previous literature, analyzing the content of the sustainability information disclosed by Spanish listed companies during the years 2013 to 2015. We find that companies issuing sustainability reports or integrated reports provide higher quality information than companies including their sustainability information within the annual report. We also find that sustainability reports are issued with higher quality than integrated reports. Both findings indicate that companies in Spain are engaged in a dialogue with all stakeholders, not only shareholders. Our results offer insights on the need to improve the framework of the integrated report in order to achieve the objectives of the International Integrated Reporting Council and to get a speed up in the adoption of this new reporting tool.     

On the contribution of eco-innovation features to a circular economy: A microlevel quantitative approach

The circular economy (CE) and eco-innovation (EI) are two concepts deemed instrumental in achieving a sustainable transition. They have been proposed in the academic literature and by practitioners and have acquired very high public policy relevance, being endorsed by policymakers and ultimately leading to regulations supporting them. It has been argued that both concepts are compatible and interrelated and that EI is instrumental in achieving the CE. However, little is known about how different EI features contribute to the CE at the microlevel. This article tries to cover this gap. Its aim is to assess and quantify the causal relationship between different EI features and the CE with the help of a unique dataset of small- and medium-sized firms in Spain and an econometric analysis. Our results show that only systemic EIs contribute to a global CE, whereas other EI types such as component additions or small changes in existing production processes could even be barriers to high levels of circularity. It is found out that technological novelty is not relevant for reaching the CE. The results support the understanding of how EIs enable a transition to the CE. Care should be taken not to promote incremental EIs that do not only achieve low (or no) circularity but that effectively lock-in the economic system in solutions that entail a barrier to the achievement of high-level circularity.     

Family firms’ identity communication and consumers’ product involvement impact on consumer response

The purpose of this study is to determine whether the image transfer theory and the elaboration likelihood model can provide a theoretical framework capable of assessing the influence of consumers’ product involvement and family firms’ identity communication through websites on consumer responses. This research conducted an experiment using an eye‐tracking technique measuring attention to family and nonfamily corporate websites. The procedure involved 120 participants. Consistent with the image transfer theory, family firms’ identity through websites positively impacts attitude toward the website and intention to buy. Additionally, the attitude toward the website affects the relationship between family firms’ identity through websites and the intention to buy. In line with the elaboration likelihood model, consumers’ product involvement negatively impacts the relationship between family firms’ identity through websites and intention to buy.