Broad-based Employee Stock Options in US 'New Economy' Firms

This paper compares the performance of 229 'New Economy' firms offering broad-based stock options to that of their non-stock option counterparts. A simple comparison of these firms reveals that the former have higher shareholder returns, Tobin's q and new knowledge generation. Multivariate analysis using panel data also suggests that the adoption of a stock option plan results in higher levels of value added per employee. However, we do not find evidence that these plans result in superior growth in Tobin's q or new knowledge generation.     

A regression approach to conceptualizing and analyzing marketing transactions

A conceptual approach is developed in this article using the logic and concepts of statistical regression to analyze marketing phenomena such as: attraction, power, conflict, stability, and competition. Marketing transaction is conceptualized as a perceptual phenomenon in the mind of the marketing agent determined by psychological contiguity between perceived benefits and costs. Theattraction felt by a marketing organization toward a target market is conceptualized as theslope of the regression line,power in theintercept of the regression line,stability in thecoefficient of determination, andconflict in thestandard error of the estimate. Competition is conceptualized in terms of theproportion of variance in benefits extracted by a target market accounted for by costs of one competitor marketing organization relative to the costs of other competitor firms. Marketing transactions can also be similarly analyzed from the perspective of the buying agent in dealing with one or more marketing organizations. Managerial implications, limitations, and future research are also discussed.     

The maize seed industry in Zimbabwe

The development of maize improvement and of the seed industry in Zimbabwe over the past 75 years is outlined. True breeding started in 1933, the first double hybrid was available in 1949, the first single hybrid in 1960 and the first top‐cross for marginal areas in 1963. Commercialisation of both breeding and the seed trade has been inhibited first by the Seed Maize Association's exclusive rights to government germ plasm and certified seed production, and then by government's socialist economic policies and controls. The future for maize breeding and the seed industry in Zimbabwe depends on a market‐orientated economy, the ending of the monopoly on government germ plasm, liberalisation of seed certification procedures, the updating of the Plant Breeders Rights Act and exploiting regional and not only national markets for maize seed.     

The political economy of Reconstruction Finance Corporation assistance during the Great Depression

This paper analyzes the role of political rent-seeking in New Deal expenditures focusing on the Reconstruction Finance Corporation (RFC). Unlike other New Deal agencies, the RFC was not financed by government appropriations, it devolved assistance decisions, and primarily offered loans rather than grants. Although the RFC was subject to pressures for political favor during the Great Depression, the geographic distribution of RFC funds across states is not associated with standard political measures used to examine rent-seeking behavior in other studies of the New Deal.     

Asymmetric-information and principal-agent problems as sources of value in FSLIC-Assisted acquisitions of insolvent thrifts

This study uses a two-factor market-model to estimate excess returns around 43 announcements of FSLIC-assisted thrift mergers and 66 announcements of unassisted thrift mergers. These estimated excess returns are then used to test hypotheses about asymetric-information and principal-agent problem in the thrift resolution process as sources of value in these mergers. The results show that acquirers in assisted transactions earned positive and statistically significant excess returns of approximately 2 percent, whereas acquirers in unassisted transactions earned excess returns that are not significantly different from zero; however, the excess returns in the assisted mergers are quantitatively small. For the 43 assisted mergers, estimated excess returns imply aggregate wealth transfers of only $13 million as compared with $2.3 billion in FSLIC assistance that were granted in these transactions. These findings suggest that the FSLIC-assisted transactions were reasonably well structured and that the assistance granted did not result in large wealth transfers to acquirers of insolvent institutions. Finally, the study provides evidence that informational asymmetries and principal-agent problems in the thrift resolution process were significant sources of excess returns for the acquirers receiving FSLIC assistance.The views reflected in this paper are those of the authors and do not necessarily represent policies of Board of Governors of the Federal Reserve System or the Federal Housing Finance Board. Helpful comments were recieved from participants in the Finance Workshop at the University of North Carolina at Chapel Hill, George Benston, Richard Brown, Jennifer Conrad, Sally Davies, Mark Flannery, Edward Kane, David Ravenscraft, and Lawrence J. White.     

The Interactive Effect of Product Differentiation and Cost Variability on Profit

It is generally believed that industries with greater product differentiation have higher rates of return. This paper shows that this effect breaks down in the presence of firm-specific cost shocks. Greater substitutability in products generates two opposing effects: (1) it allows a larger increase in demand when a firm has a favorable cost shock, which more than compensates for the reduction in demand when it has an unfavorable cost shock, and (2) it results in more intense price competition. These two countervailing forces result in industry profit being highest in markets with a moderate degree of product differentiation.