Downsizing decisions: The joint influence of equity incentives and behavioral biases

Although new investment can be viewed as a decision to pursue projects from a wide number of growth opportunities with easily discernible (and presumably preferable) risk profiles, downsizing (e.g., through layoffs, plant closings, asset divestitures, etc.) is a dichotomous choice to either abandon or continue an existing project where the relative risk between these options is not clear. Our evidence suggests that vega in the pre-downsizing period is associated with risky investment that necessitates future downsizing. We further find that contemporaneous vega is associated with a greater likelihood of downsizing. On the other hand, our evidence suggests that delta is a significant impediment to downsizing. We examine the influence of behavioral factors in the decision-making process and find downsizing decisions are discouraged by managerial overconfidence but encouraged by managers’ aversion to ambiguity. Finally, we investigate whether equity incentives and behavioral factors lead to better downsizing decisions. We find that downsizing firms with high ambiguity perform better after downsizing relative to their matched pair with lower ambiguity.     

Accounting fundamentals and CEO bonus compensation

Research indicates that there is a positive association between accounting earnings and chief executive officer (CEO) cash compensation; however, evidence also suggests that this positive association ceases to exist when earnings performance is poor or declining. This latter result has led some critics of corporate compensation policies to conclude that CEOs are not penalized for poor or declining firm performance. The purpose of this study is to further illuminate the pay-performance debate by expanding the traditional executive bonus compensation model to include a set of accounting fundamentals that prior research indicates are related to both current and future firm performance. Our results indicate that there is a highly significant relationship between accounting fundamentals and the level of and change in CEO bonus compensation. Moreover, we find a highly significant relationship between accounting fundamentals and both bonus omissions and bonus reductions. When earnings are negative or declining, we find that the above relationships remain intact. In contrast, when earnings are negative or declining, we find that the relationship between aggregate earnings and bonus compensation is weak or insignificant in most of our analyses. Taken together, our results suggest that the apparently weak relationship between accounting earnings and CEO bonus compensation (particularly when earnings are negative or declining) is partly due to the fact that the bonus compensation model excludes accounting fundamentals which are strongly associated with bonus compensation. Thus, we conclude that (i) bonus compensation is more closely tied to firm performance than critics sometimes claim and (ii) bonus compensation awarded to CEOs when earnings performance is poor is at least partially explained by the presence of favorable accounting fundamentals.     

Assessing the performance of the national park authorities: a case study of Northumberland National Park,England

Although the legislation for the designation of national parks in England dates back to the National Parks and Access to the Countryside Act of 1949, it was not until 1997 that free-standing and independent national park authorities were established to help manage these landscapes. In 2014–15, the 10 English national park authorities were allocated £44.6 million from the Department for Food, the Environment and Rural Affairs to deliver their conservation and recreation purposes and their socio-economic duty. This paper discusses how the performance of the national park authorities has been assessed, using the Northumberland National Park Authority as a case study.     

蒲公英原则:挖掘创新人才

正就如草坪中的蒲公英,明明具备很多有益作用却总被当作杂草除去一样,人群中的"异类"(无论是行为还是思维层面有别于普通人群)总是不适合标准化的工作。然而,如果能够根据这些"异类"的能力安排相应的工作环境,往往会产生意想不到的价值     

Assessing the impact of co-branding of island destination and tourism activities on tourists’ reactions

The aim of this study is to examine the status and images of certain islands based on specific tourism activities. A total of 385 valid samples were obtained from tourists at the islands' main transportation facilities. The results are as follows: (1) different island destinations are promoted differently, which significantly affects the perceptions of tourists. (2) Tourists' familiarity with various tourism activities and the rate of participation in these activities vary significantly between the islands; in addition, tourists display greater familiarity with beach/water activities and participate in these activities in higher proportions. (3) Greater consistency in the matching of island destinations with tourism activities helps produce a co-branding effect, which positively affects tourists' perception of these destinations. From a co-branding perspective, this study demonstrates that the empirical market positioning of island destinations must be consistent with the tourism activities that are possible to produce an optimal experience for the tourists. This comparison of different islands explains why the development of island tourism on such locations should involve the provision of information on rankings and tourism activities.     

Fixed investment,factor substitution and the elasticity of demand

The results of comparative stability analysis of demand- and supply-side input–output models using the UK data are presented, as well as the results of the comparison between the UK and US comparative stability analyses of the two models. The results of comparative stability analysis of the two models using the US data were reported elsewhere (Bon, 1986). The forecasts of sectoral and total output of the two models are generated with known final demand and value added figures from subsequent tables, and are compared with known output figures for benchmark years. The results of the UK and US studies are very similar. The demand-side model performs somewhat better in terms of total output forecasts, but the supply-side model performs some-what better for a larger number of sectors. In particular, the supply-side model offers better forecasts for the mature economic sectors such as agriculture, mining, and construction. Both models should be used to determine the extent to which an extent to which an economy or a sector are demand- or supply-driven.     

Politics vs Economics: Evidence from Municipal Annexation

This paper investigates economic and political factors in suburban annexation decision in large U.S. cities. This paper employs a median-voter model, which suggests a natural latent-variable estimation strategy. Bivariate logit and normal procedures incorporating information about state laws governing annexation are run on census tract level data. Estimated parameters are used to evaluate the effects of economic and political variables. Results show cities' desire to expropriate suburban tax base did not motivate annexation, although cities were sensitive to other economic factors. The desire to offset political and racial effects of urban migration had a consistent and positive effect on annexation.     

Income inequality,volatility, and mobility risk in China and the US

A unified index of income inequality, volatility, and mobility risk is presented, and measurements based on US and Chinese panel data calculated. China is found to have higher-income volatility than the US in recent data, so that long-run inequality is comparable in the two countries, and short-run inequality overstates long-run inequality more in China than in the US. In both countries volatility and income inequality are increasing over time.     

How efficiency shapes market impact

We develop a theory for the market impact of large trading orders, which we call metaorders because they are typically split into small pieces and executed incrementally. Market impact is empirically observed to be a concave function of metaorder size, i.e. the impact per share of large metaorders is smaller than that of small metaorders. We formulate a stylized model of an algorithmic execution service and derive a fair pricing condition, which says that the average transaction price of the metaorder is equal to the price after trading is completed. We show that at equilibrium the distribution of trading volume adjusts to reflect information, and dictates the shape of the impact function. The resulting theory makes empirically testable predictions for the functional form of both the temporary and permanent components of market impact. Based on the commonly observed asymptotic distribution for the volume of large trades, it says that market impact should increase asymptotically roughly as the square root of metaorder size, with average permanent impact relaxing to about two-thirds of peak impact.