The impact of firm strategy on performance measures used in executive compensation

We investigate the relationship between firm strategy and the use of performance measures in executive compensation. Our analysis shows that there is an increased emphasis on sales in the determination of executive compensation for firms pursuing a cost leadership strategy, which seek to achieve their competitive advantage through low price and high volume. In contrast, there is a decreased emphasis on accounting measures in firms pursuing a differentiation strategy, which require investments in brand recognition and innovative products, investments that are subject to unfavorable accounting treatment. These results indicate that compensation committees link executive rewards to firm strategy.     

Socially responsible investing and stock performance: New empirical evidence for the US and European stock markets

This paper empirically examines the theoretically ambivalent relationship between socially responsible investing (SRI) and stock performance. It contributes to the existing literature by considering both the US and the entire European stock markets and by using consistent world-wide corporate sustainability performance data. Our portfolio analysis from 1998 to 2009 is based on the common four-factor model according to Carhart (1997), which comprises market return, size, value, and momentum factors. We show for the US and the European stock markets that SRI is associated with large-sized firms. The insignificant abnormal stock returns for SRI in both regions are the main result of our paper. Therefore, our study supports the view that SRI stocks are correctly priced by market participants, although we cannot rule out that a corresponding mispricing has existed before the beginning of our observation period in 1998.     

Empirical Analysis of Consumer Purchase Behavior: Interaction Between State Dependence and Sensitivity to Marketing-Mix Variables1

People are intent to make similar choices especially in consumer goods markets. To address both explanations of this persistence, i.e. state dependence and heterogeneity in preferences, we use random coefficient logit model based on scanner panel data on juice purchases. The product differentiation of the chosen category allows us to model three dimensions of state dependence on brand, size and flavor characteristics. We provide evidence that the persistence in brand choices is positively correlated with persistence in size and flavor choices, thus the consumer pattern is prone to be inertial or variety seeking in every product characteristics. Simultaneously we show that the more sensitive to price and promotional activities consumers are, the less inertial is their behavior.     

Taxes and Financial Constraints: Evidence from Linguistic Cues

Using a new measure of financial constraints based on firms’ qualitative disclosures, we find that financially constrained firms—firms that use more negative words in their annual reports—pursue more aggressive tax planning strategies as evidenced by: (1) higher current and future unrecognized tax benefits, (2) lower short‐ and long‐run current and future effective tax rates, (3) increase in tax haven usage for their material operations, and (4) higher proposed audit adjustments from the Internal Revenue Service. We exploit the unexpected closures of local banks as exogenous liquidity shocks to show that firms’ external financial constraints affect their tax avoidance strategies. Overall, the linguistic cues in firms’ qualitative disclosures provide incremental information beyond traditional accounting variables or commonly used effective tax rates to reveal and predict tax aggressiveness, both contemporaneously and in the future.     

DOMESTIC COMPETITION POLICY AND TARIFF POLICY COMPARED*

M. Yano and F. Dei have demonstrated that, by controlling the degree of competition in a non‐tradables market (competition policy), a country can influence the terms of trade so as to increase its welfare, relative to free trade. Using their model, this study compares the extent of this effect with that of a tariff policy. It demonstrates that a competition policy can achieve a higher utility than a tariff policy if tariff rates are at levels currently tolerated in the real world. This demonstrates that domestic competition policy may play an important role as a substitute for tariff policy.     

Decentralizing antipoverty program delivery in developing countries

We study the effects on accountability in government service delivery of decentralizing administration of an antipoverty program. While governments at both central and local levels are vulnerable to antipoor policy biases owing to political capture, centralized delivery systems are additionally prone to bureaucratic corruption, owing to problems in monitoring bureaucratic performance. Decentralizing the delivery system promotes cost-effectiveness and improves intraregional targeting at low program scales. But interregional targeting may deteriorate, as central grants to high-poverty regions shrink, owing to high capture of local governments by local elites in such regions.     

Currency competition: A partial vindication of Hayek

This paper establishes the existence of equilibria for environments in which outside money is issued competitively. Such equilibria are typically believed not to exist because of a classic overissue problem: if money is valued in equilibrium, an issuer produces money until its value is driven to zero. By backward induction, money cannot have value in the first place. This paper shows that overissuance is not a problem if agents believe that if an issuer produces more than some threshold number of notes, then only those notes issued up to the threshold will be valued; additional notes will be worthless. This result is very general, applying to any monetary economy in which equilibria with and without valued money exist if the money supply is finite. The paper also compares the allocation achieved by a monopolist to that achieved with competitive issuance in both a search and an overlapping-generations environment. The results depend on the environment considered, but two general conclusions arise. First, it is ambiguous whether competitive issuers can achieve a more desirable allocation than a monopolist. Second, with competitive issuance, a licensing agency can always improve on pure laissez-faire and achieve the efficient allocation in the long run.     

新商业模式成型过程与动态测评

商业模式创新难以获得成功的重要原因在于缺乏对商业模式成型路径的理解。一个新商业构想向新商业模式演化,在理论上存在无穷种结果。作为中介调节变量,商业模式能够调节输入变量（如技术、风险投资）,影响输出变量（如企业利润、市值、用户数等）。对商业模式成型过程进行分析和动态测评,将促进商业模式实际演化结果与期望方向一致。商业模式成型被划分为4个阶段：酝酿、试验学习、培育与复制。与之对应的关键动态测评项目为：顾客价值主张、核心可重复的标准活动系统、盈利模式和组件间的匹配。     

National levels of corruption and foreign direct investment

We model the relationship between bilateral foreign direct investment (FDI) and the level of corruption in multinational firms’ (MCNs’) home and host countries. We construct and test a model of bilateral FDI between countries that differ in their levels of corruption. FDI is affected negatively both by the level of corruption in the host country and by differences in home- and host-country corruption. Our model emphasizes that MNCs develop skills for dealing with home-country corruption, and these skills become a competitive advantage in similarly corrupt host countries. We test the model using data on bilateral FDI stocks among a large number of home and host countries, using a variety of specifications and estimation strategies to provide robustness. Our results show that the effects of host-country corruption and of differences in corruption levels between home and host countries are statistically and economically significant.     

中小投资者利益保护内部控制有效性研究——来自深圳证券交易所中小企业板的经验数据

本文从中小投资者的角度,研究深圳证券交易所中小企业板的上市公司与中小投资者利益保护相关的内部控制。根据112个企业的数据分析表明,董事长与总经理分离有利于中小投资者利益保护内部控制建设,其他公司治理措施与中小投资者利益保护内部控制建设无关,这些内部控制与公司价值也无关。这个发现启示我们,深圳证券交易所对中小投资者利益保护相关的内部控制可能需要进一步深化,使它们真正与中小投资者利益保护相关。