A Stakeholding Society — What Does It Mean for Business?

The paper describes the differences between stakeholding and shareholding views of the objects of business. In the former, the object of business is to develop good businesses. This is defined by the criteria normally associated with good businesses and valued by good businessmen themselves—satisfying customers, developing the skills and motivation of employees, earning good returns for investors. In the latter, profit is the defining purpose of business; and other objectives, although often pursued, are purely instrumental to that end. By emphasising the difference between a characteristic of an organisation— behaviour that is developed and valued for its own sake—and the policy of an organisation—behaviour that is adoped for the time being because of its hoped for consequences—I explain the greater capacity of the stakeholding company to make commitments in implicit contracts with all stakeholders. For this reason, it may perform better for all stakeholders, including shareholders.     

Estimating Systematic Risk with Daily Security Returns: A Note on the Relative Efficiency of Selected Estimators

This paper utilizes asymptotic analysis and daily security returns to examine the estimation efficiency of two unbiased robust estimators compared with ordinary least squares. Our results demonstrate a relative efficiency gain for a nonparametric rank estimator and a relative efficiency loss for the minimum absolute deviation estimator when estimating the systematic risk of securities using daily security returns.     

On distribution-free goodness-of-fit testing of exponentiality

There is a need to test the hypothesis of exponentiality against a wide variety of alternative hypotheses, across many areas of economics and finance. Local or contiguous alternatives are the closest alternatives against which it is still possible to have some power. Hence goodness-of-fit tests should have some power against all, or a huge majority, of local alternatives. Such tests are often based on nonlinear statistics, with a complicated asymptotic null distribution. Thus a second desirable property of a goodness-of-fit test is that its statistic will be asymptotically distribution free. We suggest a whole class of goodness-of-fit tests with both of these properties, by constructing a new version of empirical process that weakly converges to a standard Brownian motion under the hypothesis of exponentiality. All statistics based on this process will asymptotically behave as statistics from a standard Brownian motion and so will be asymptotically distribution free. We show the form of transformation is especially simple in the case of exponentiality. Surprisingly there are only two asymptotically distribution free versions of empirical process for this problem, and only this one has a convenient limit distribution. Many tests of exponentiality have been suggested based on asymptotically linear functionals from the empirical process. We illustrate none of these can be used as goodness-of-fit tests, contrary to some previous recommendations. Of considerable interest is that a selection of well-known statistics all lead to the same test asymptotically, with negligible asymptotic power against a great majority of local alternatives. Finally, we present an extension of our approach that solves the problem of multiple testing, both for exponentiality and for other, more general hypotheses.     

An interview with Eric M. Pillmore: Hitting the CSR bull's‐eye in a shifting corporate environment

Eric M. Pillmore served as the senior vice president of corporate governance for Tyco International Ltd. from 2002 to 2007. Working with the board of directors and the Tyco leadership team, Pillmore helped transform Tyco from an image of poor governance to a role as a leader in corporate governance. These efforts resulted in Tyco being named by GMI as the most improved U.S. company in the governance area from 2002 to 2005. Prior to Tyco, he served as senior vice president and CFO for Multilink Technology. Pillmore worked for General Instrument Corp (GI) from 1996 to 2000 and served as senior vice president and CFO from December 1997 to January 2000, leading up to the sale of GI to Motorola. In addition, he served for 17 years in a variety of senior finance roles for General Electric from 1979 to 1996, including roles as CFO for GE Plastics Americas and GE Medical Systems Asia. He also served as a US Navy officer from 1975 to 1979, aboard the USS Robison in the western Pacific, and as an auditor with the Naval Audit Service in Washington, D.C. Pillmore has a master's in business administration from the Villanova School of Business and a bachelor's degree in business administration from the Anderson School of Business at the University of New Mexico. He currently serves on the boards of the CEO Forum, Focus on the Family, the Ken Blanchard School of Business, the Anderson Schools of Management, and the Pillmore Family Foundation. © 2008 Wiley Periodicals, Inc.     

THE COST OF THE U.S. SUGAR PROGRAM REVISITED

The article analyzes the welfare cost of the U.S. sugar program using a multimarket model of U.S. sweetener markets. The latter includes raw crops, sugar extraction and refining, and sweetener users (food-processing industries and final consumers). The authors address the industrial organization of food industries using sweeteners and treat the United States as a large importer. With the removal of the program, this article estimates (all figures in 1999 dollars) that in 1998 cane growers, sugar beet growers, and processors would have lost $307, $650, and $89 million, respectively; sweetener users would have gained $1.9 billion. World prices would have increased by 13.2%. The deadweight loss of the program is estimated at $532 million.