Non-uniform effects of CEO equity-based compensation on firm performance – An application of a panel threshold regression model

We use panel-data threshold models to examine the non-uniform relation between Chief Executive Officer (CEO) equity-based compensation and earnings-based performance. Prior studies examining this very issue have arbitrarily adopted various exogenous criteria to partition the sample, and thus the inferences could be misleading. To address this issue, we employ the threshold regression models that allow the data itself to endogenously generate several regimes identified by the thresholds. Our empirical results show that not only is the positive impact of CEO equity incentives on firm performance more pronounced for companies with lower and moderate levels of CEO stock-based incentive pay, but also for less-profitable firms. The results are consistent with the position that excessive equity-based awards are unable to benefit firm performance, and that share-based compensation is more effective for start-up firms with low profit.     

Nonlinearity in Deviations from Uncovered Interest Parity: An Explanation of the Forward Bias Puzzle

We provide empirical evidence that deviations from the uncovered interest rate parity (UIP) condition display significant nonlinearities, consistent with theories based on transactions costs or limits to speculation. This evidence suggests that the forward bias documented in the literature may be less indicative of major market inefficiencies than previously thought. Monte Carlo experiments allow us to reconcile these results with the large empirical literature on the forward bias puzzle since we show that, if the true process of UIP deviations were of the nonlinear form we consider, estimation of conventional spot-forward regressions would generate the anomalies documented in previous research.This paper was partly written while Lucio Sarno was a Visiting Scholar at the International Monetary Fund. Financial support from the Economic and Social Research Council (Grant No. RES-000-22-0404) is gratefully acknowledged. The authors are indebted for useful conversations or constructive comments to Josef Zechner (editor), three anonymous referees, Ulf Axelson, Magnus Dahlquist, Paul De Grauwe, Hans Dewachter, John Driffill, Bob Flood, Gordon Gemmill, Campbell Harvey, Peter Kenen, Rich Lyons, Angelo Melino, Chris Neely, Anthony Neuberger, Carol Osler, David Peel, Dagfinn Rime, Piet Sercu, Per Str?mberg, Shinji Takagi, Gabriel Talmain, Mark Taylor, Timo Ter?svirta, Dan Thornton, Shang-Jin Wei, Mike Wickens and Mark Wohar, as well as to participants at the 2005 European Finance Association Annual Conference, Moscow; 2004 Society of Nonlinear Dynamics and Econometrics Annual Conference, Federal Reserve Bank of Atlanta; the 2004 European Financial Management Association Conference, Basel; and seminars at the International Monetary Fund, Swedish Institute for Financial Research, Central Bank of Norway, University of Oxford, Catholic University of Leuven, University ofWarwick, Chinese University of Hong Kong, York University, University of Exeter, University of Kent, and University of Edinburgh. The authors alone are responsible for any errors that may remain and for the views expressed in the paper.     

The Paradox of Diversity Initiatives: When Organizational Needs Differ from Employee Preferences

Women are underrepresented in the upper echelons of management in most countries. Despite the effectiveness of identity conscious initiatives for increasing the proportion of women, many organizations have been reluctant to implement such initiatives because potential employees may perceive them negatively. Given the increasing competition for labor, attracting talent is relevant for the long-term success of organizations. In this study, we used an experimental design (N = 693) to examine the effects of identity blind and identity conscious gender diversity initiatives on people’s pursuit intentions toward organizations using them. We used counterfactual thinking, derived from fairness theory, as a guiding framework for our hypothesis development and investigated the moderating influence of a forthcoming government-mandated gender quota as well as individual characteristics (e.g., gender). Participants reviewed statements regarding workplace diversity initiatives and rated either the initiatives’ effectiveness or indicated their intentions to pursue employment with organizations using them. Of those rating pursuit intentions, half were informed that the country in which they were conducting their job search was about to implement gender quotas. Results indicated a diversity management paradox such that initiatives perceived as more effective made organizations using them less attractive as employers. However, these negative perceptions were mitigated by a government-mandated quota, and also lower among women. Implications for the study and practice of diversity are discussed.     

Industrial salespeople's views on motivation

Much has been written on the subject of motivation but, until now, no one has conducted a survey of industrial salespeople to ask them what motivates them. This article reports the results of such a survey and offers recommendations.