The price of reputation: Executive compensation of sin companies

This study examines how and why managers receive pay premiums when vulnerable to social reputation loss. We define sin companies as those operating in the alcohol, gambling and tobacco industries. We show that company managers receive a higher asymmetric pay-for-performance sensitivity in their pay in addition to receiving higher total compensation. In other words, their pay increases with firm performance at a faster rate than that of their non-sin company peers. This finding is consistent with our prediction that sin companies provide greater rewards to their managers upon satisfactory performance, generating a pay premium. We propose two explanations for the reputation pay premium associated with sin-industry managers: the limited future career opportunities and the difficulty of reconciling managers’ self-identity with the employer's social identity. We find stronger support for the latter explanation. The sin-industry pay premium is larger when managers have pro-social and religious tendencies. However, we do not find a smaller pay premium when managers are close to their retirement. Since the career concern should be reduced for managers who are near retirement, this finding is inconsistent with the career opportunity explanation. Overall, our findings are consistent with the notion that managers associate their self-image with employers’ social identities.     

Profitability of Noisy Certification in the Presence of Loss Averse Buyers*

We study how the inaccuracy of a costly certification technology affects a monopolistic seller's profitability. We compare three scenarios: no certification, a 100% accurate certification, and a 50% accurate certification that produces accurate evaluations half the time. The noisy certification environment is never the most profitable and, depending on the buyers' loss aversion, can be the least profitable. However, a noisy certification can be more profitable than an accurate one, as it discourages the over-certification that occurs in an accurate certification environment. Experimentally, the noisy certification is shown to be the least profitable treatment, whereas the accurate certification is shown to be the most profitable.     

RESILIENCE AND ADAPTATION IN GENTRIFYING URBAN INDUSTRIAL DISTRICTS: The Experience of Cultural Manufacturers in San Francisco and Melbourne

Recent urban scholarship shows how zoning and real estate dynamics shape ongoing processes of gentrification and deindustrialization. While studies demonstrate the impact of planning and property market pressures on the arts, less research has examined their effect on urban manufacturers in gentrifying industrial districts. Given the differential impact of zoning and real estate pressures, our research focuses specifically on how ‘cultural manufacturers’ negotiate changing land use patterns in gentrifying urban industrial areas in San Francisco and Melbourne. Our findings show how cultural manufacturers develop flexible workspace arrangements, business models and professional networks to negotiate urban restructuring and avoid displacement. Though innovative, these survival strategies provide limited ability to navigate structural barriers. Here, the presence of intermediary organizations can help coordinate a strategic response to industrial gentrification and indifferent planning policy. In our research we highlight the everyday practices of adaptation and collective action in an under-researched cultural sector to provide a counterweight to macro-scale transitional narratives. While cities have deindustrialized owing to technological and competitive pressures, to focus exclusively on this misses a range of resilience practices that have sustained manufacturers in restructuring cities.