Growth through rigidity: An explanation for the rise in CEO pay

The dramatic rise in CEO compensation during the 1990s and early 2000s is a longstanding puzzle. In this paper, we show that much of the rise can be explained by a tendency of firms to grant the same number of options each year. Number-rigidity implies that the grant-date value of option awards will grow with firm equity returns, which were very high on average during the tech boom. Further, other forms of CEO compensation did not adjust to offset the dramatic growth in the value of option pay. Number-rigidity in options can also explain the increased dispersion in pay, the difference in growth between the US and other countries, and the increased correlation between pay and firm-specific equity returns. We present evidence that number-rigidity arose from a lack of sophistication about option valuation that is akin to money illusion. We show that regulatory changes requiring transparent expensing of the grant-date value of options led to a decline in number-rigidity and helps explain why executive pay increased less with equity returns during the housing boom in the mid-2000s.     

Reverse Mortgage Lending Disparities and the Economically Vulnerable

International Advances in Economic Research - A fair lending analysis seeks to determine whether a lender’s underwriting, pricing, and marketing decisions are free from a prohibited basis...     

‘Generation Rent’ and The Fallacy of Choice

The now widely used term ‘Generation Rent’ reflects the growing phenomenon in the UK of young people living in the private rental sector for longer periods of their lives. Given the importance of leaving home in youth transitions to adulthood, this is a significant change. It is further critical given the rapid expansion of the private rented sector in the UK over recent decades and the more limited rights that private tenants have. This article draws on qualitative evidence to highlight the impact this has on young people's lives, and broader patterns of social‐spatial inequality. Our research highlights that, whilst young people retain long‐term preferences for homeownership, they nonetheless deconstruct this normalized ideal as a ‘fallacy of choice', given its unachievability in reality. Influenced by the work of Foucault, Bourdieu and Bauman, we emphasize how these dominant norms of housing consumption are in tension with objective reality, since young people's ability to become ‘responsible homeowners' is tempered by their material resources and the local housing opportunities available to them. Nonetheless, this does not exempt them from the ‘moral distinctions' being made, wherein renting is problematized and constructed as ‘flawed consumption'. These conceptual arguments advance international scholarly debates about the governance of consumption, offering a novel theoretical lens through which to examine the difficulties facing ‘Generation Rent’.     

Physical activity advocacy in the UK: a multiple streams analysis of a hybrid policy issue

Physical activity is increasingly being defined as a major, complex, multi-sector issue. In order to understand more about how this expanded conception of physical activity is being factored into public policy, this article applies the multiple streams theory of policy change to examine the United Kingdom (UK) physical activity domain. Participant observation, policy analysis and media analysis are combined to examine the ways in which the political context, problem framing and policy solutions were brought together by a range of policy entrepreneurs. The study pays particular attention to how one lobby effort in the UK, the All Party Committee on Physical Activity (APCPA) attempted to elevate physical activity to a higher level of importance. The findings show how a hybrid form of organisation made up of traditional interest groups, corporations and government insiders, has successfully decreased ambiguity about physical activity and increased both official and public attention about the issue. The article suggests that while the multifarious benefits of physical activity and the diverse range of organisations involved have contributed to momentum towards policy change, these factors may also inhibit physical activity from remaining high on the policy agenda. Suggestions are offered for policy practices at a national level.     

Risk Management: Its Adoption in Australian Public Universities within an Environment of Change Management – A Management Perspective

This study draws on the multi‐theoretical approach to governance and a qualitative methodology to examine the extent to which key players in Australian public universities have developed and implemented risk management within an environment of change management. The findings demonstrate that wider influences – largely the result of conflicting management cultures – have had differing impacts on the values of key players and the consequent adoption of the process. Key players’ values range from congruent with a corporate culture (at the strategic level) to incongruent with a corporate culture (at the operational level), and result in different outcomes. These different outcomes suggest that the adoption of risk management by Australian public universities under the influence of new public management is problematic. The study provides opportunities for further research to confirm these findings with a broader sample of actors and the adoption of other governance control processes.     

Pleasantly Plump: Offsetting Negative Obesity Stereotypes for Frontline Service Employees

Obesity is described as the fastest growing public health challenge facing developed nations (Prentice, 2006). This research introduces the topic of obesity to the retailing literature by examining the interplay between obesity in frontline employees and customer evaluations of service transactions. Baseline effects are established that show customers evaluate employees and firms more negatively if the frontline worker is obese compared to average weight. Two follow-up studies identify means by which firms may offset the negative obesity effects. Specifically, signaling theory is drawn upon in Study 1 to justify the introduction of observable quality cues as a means to offset negative stereotypes. Results indicate that the presence of unambiguous quality cues attenuate unfavorable judgments of the obese employee and the affiliated retail store. In Study 2, a countervailing, jovial stereotype is primed as a means to offset the more prominent negative ones. Retail managers can use this research as a means to understand an important caveat to frontline service evaluations and as the basis for managing a prominent negative stereotype.     

Institutional pressures and marketing ethics initiatives: the focal role of organizational identity

Institutional theory implies that normative societal expectations create pressures for organizations to respond acceptably to important institutional constituents. Although the role of the institutional environment on marketing has been studied, the organizational mechanisms by which firms respond to societal pressures remain under-investigated. We suggest that an important determining factor involves organizational identity, which drives firm response to societal norms and facilitates its quest for legitimacy. Accordingly, this study contributes to organizational theory in marketing by casting identity as the focal mechanism in the firm’s response to the institutional environment. Marketing ethics and CSR issues frame this research given natural synergies with institutional and organizational identity theories and evidence that increasingly, firms must respond to societal expectations involving ethics in their marketing practices. Using game theoretical models and economic experiments, we find that the influence of the institutional environment emerges through firm identity, affecting resource allocation to ethical product augmentation.     

Differences between odd number and even number response formats: Evidence from mainland Chinese respondents

Scholars have speculated that the Chinese may be more reluctant to express their opinions strongly and that this may be reinforced if the odd number response format with a mid-point option of “no opinion” or “neither agree nor disagree” is provided. This may undermine the quality of survey data because less variances or even inaccurate information will be collected. This study provides empirical evidence from 532 mainland Chinese employees in Beijing to test this speculation. These employees were randomly assigned to complete either an odd number or even number response format questionnaire. In contrast to the speculation, in a wide variety of measures that are relevant to the area of organizational behavior (OB) and human resource management (HRM), it appears that the odd number response format does not show systematic differences when compared with the even number response format. This result holds even for some sensitive measures of personal beliefs, evaluation of and judgments about employing organizations, supervisors, and colleagues. Given the increasing number of studies surveying Chinese and other Asian respondents, we call for further research on this issue.     

The differential effects of job design on knowledge workers and manual workers: A quasi‐experimental field study in China

When Taylorism was discarded long ago, job enrichment emerged as a good alternative. Recent research, however, has pointed out the ineffectiveness of job enrichment. This study suggests that both approaches could be effective and looks at job nature as the moderator that can affect how the two approaches are applied. The authors' longitudinal quasi‐experimental field study in China found a significant interaction between worker type (knowledge workers [KWs] versus manual workers [MWs]) and job characteristics on employee outcomes. After enrichment, KWs experienced higher satisfaction and task performance, whereas for MWs, satisfaction and performance declined. This pattern of results suggests that both job enrichment and Taylorism are applicable depending on the job nature. In addition to contributing to job design theory, the present study also explored the unique attributes of KWs and provides practical suggestions as to how human resource managers can better motivate KWs. © 2011 Wiley Periodicals, Inc.