Nonprofit executive incentive pay

We utilize information only recently disclosed on Form 990 to examine the use, and consequences of, incentive pay at nonprofit organizations. Bonuses are common in nonprofits, as we observe that approximately 45% of the 44,000 organization-year observations in our sample reported paying CEO bonuses. We find that the bonuses are positively associated with profitability, competition from other nonprofits, firm size, available cash, and use of compensation consultants and committees, while negatively related to board oversight, donations, and grants. Our results also suggest that donors look unfavorably at the payment of bonuses; that is, bonuses are associated with lower future donations. Nonetheless, we find evidence consistent with the payment of bonuses incentivizing nonprofit executives, as despite reduced fundraising, future profitability and program services are positively associated with current bonus compensation.     

Financial analysts and price discovery

We show that whether or not a bank/brokerage firm has top‐rated financial analysts and high Wall Street Search rankings for their research is significantly related to that firm's contribution to price discovery, the process by which information is incorporated into stock prices. Our study relates cross‐sectional characteristics of the quality of brokerage research, the asymmetric information environment, and order flow volume to a microstructure measure of price discovery developed by Granger and Gonzalo. We measure analysts’ research quality with an industry‐specific ranking by institutional investors, with an opinion survey of trading desk personnel, and with the number of top 3 analysts across all industries employed by the bank/brokerage firm.     

Factors influencing foreign direct investment of South African financial services firms in Sub-Saharan Africa

This research investigates the key elements that South African financial services firms consider before making foreign direct investments in Sub-Saharan African (SSA) markets. The results show that South African financial services firms are most strongly influenced by the political and economic stability of the country in question as well as the profitability and long-term sustainability of its specific markets. The degree of available infrastructure in terms of Information and Communication Technology as well as the existence of credible financial systems was also viewed as highly important considerations before investing in SSA. Given the uncertainty and ambiguity of most SSA markets many South African financial services firms prefer to enter existing markets via a majority stakeholder joint venture with a local partner or via a new investment if the market does not currently exist. The nature of the financial services firm also seems to influence the entry method and once in a new country most firms seem to prefer a full service presence. Additionally, the key motives cited for expansion northward were to broaden revenue bases and improve profit margins as well as to stay close to local customers.     

Modeling Newspaper Advertising

Mathematical modeling is recognized as a powerful tool for planning business operations. The purpose of this paper is to present a mathematical model for simulating a newspaper financial system. The model was developed from actual newspaper industry data and includes the effects of advertising and circulation. The use of the model to predict advertising linage as a function of population, income and advertising rate is included in the discussion.     

News and notes

New Perspectives on Technology and Organization.

Innovative Banking: Competition and the Management of a New Networks Technology J. Howells &; J . Hines Eds) Ldon, Routledge, 1992, 252pp., £40.00 (hbk), ISB-V 0-415-05941-0. Technology and Organization: Power, Meaning and Design H. Scarborough &; J.M. Corbett London. Routledge. 1992, 178pp., ,£15.00, (pbk), ISBN 0-415-05941-0.

Beyond Partnership-Strategies for Innovation &; Lean Supply Richard Lamming Hemel Hempstead, Prentice-Hall International, 1993, ix + 299pp., £19.95 (hbk).

From Anticipation to Action: A handbook of Strategic Perspective Michel Godet.     

The effect of inflation on growth

The paper examines the effect of inflation on growth in transition countries. It presents panel data evidence for 13 transition countries over the 1990–2003 period; it uses a fixed effects panel approach to account for possible bias from correlations among the unobserved effects and the observed country heterogeneity. The results find a strong, robust, negative effect on growth of inflation or its standard deviation, and one that appears to decline in magnitude as the inflation rate increases, as seen for OECD countries. And the results include a role for a normalized money demand in affecting growth, as well as for a convergence variable, a trade variable and a government share variable. Robustness of the baseline single‐equation model is examined by expanding this into a three‐equation simultaneous system of output growth, inflation and money demand that allows for possible simultaneity bias in the baseline model.     

Opposition to unions in the non-union sector in Britain

Using data collected from over 1,000 individuals in 30 Finnish personnel funds, we study the links between pay knowledge, pay satisfaction and pay effectiveness. We find consistent evidence that higher levels of pay knowledge are associated with improved pay satisfaction and perceived pay effectiveness at the organizational level. We find that pay knowledge has an independent impact on organizational outcomes, rather than being mediated through pay satisfaction. Finally, comparing measures of actual pay knowledge and perceived pay knowledge, we find that the measures of actual knowledge were better connected to the outcomes. This last result suggests that to reliably estimate the relationship between pay knowledge and pay effectiveness researchers should prefer measures of actual knowledge.     

Decentralization, Integration and the Post-Bureaucratic Organization: The Case of R&d

We assess the relevance of theories of increased decentralization in post-bureaucratic organizations for understanding changes in the organization of the research and development (R&D) function. Analysis of a sample of companies shows that R&D is less decentralized than contemporary accounts suggest, and there are few signs of it becoming more decentralized. We present evidence on the organization of R&D in two sectors (mechanical engineering, and food and drink), which suggests: (1) most firms remain centralized in their approach to R&D, relative to other functions; (2) firms that adopt a more decentralized approach to R&D do so for more complex reasons than have been recognized; (3) inter-functional integration remains a critical issue, for centralized and decentralized organizations alike; (4) introducing market principles into R&D brings risks of market failure.     

Market Orientation and Performance: Objective and Subjective Empirical Evidence from UK Companies

The link between market orientation and performance has been claimed largely on the basis of the analysis of subjective measures of performance. Consequently, the aim of this study is to examine the links between market orientation and objectively measured financial performance. The paper begins with a brief examination of the definition and components of market orientation. Thereafter, extant research into the consequences of developing market orientation is reviewed critically, leading to the development of a number of research hypotheses. After detailing the research design and methodology adopted in this study, the findings of a survey of UK industry are presented. Briefly, the results indicate that when subjective measures of performance are adopted, market orientation is associated with company performance in certain environmental conditions. However, when objective measures of performance are adopted, we see a narrower range of environmental conditions where market orientation is positively associated with performance. The paper concludes with a series of implications for both theorists and practitioners.