Optimal mechanism for land acquisition

Review of Economic Design - Sellers with one unit of land each are located at the nodes of a graph. Two sellers are contiguous if they are connected by an edge in the graph. The buyer realizes a...     

Managerial compensation and the underinvestment problem

This paper studies the effect of managerial compensation terms on the well-known “underinvestment” incentive. We extend the Mauer and Ott (2000) real-option model of corporate expansion, and show that, when the manager maximizes the value of his compensation package (rather than equity value), the underinvestment problem can be substantially mitigated. Further, by designing an appropriate compensation contract, it is possible to eliminate the underinvestment incentive altogether. This managerial contract, consisting of fixed salary and equity ownership, is explicitly derived in the model. The equity ownership level is found to be an increasing function of the manager's fixed salary and the company's earnings growth rate, and a decreasing function of leverage ratio, earnings volatility, tax rate, bankruptcy costs, and the manager's severance pay at bankruptcy.     

Do the English Legal Origin Countries have More Dispersed Share Ownership and More Developed Financial Systems?

The essence of the legal origin hypothesis is that a country with an English legal origin provides better investor and creditor protection and experiences greater financial development; financial institutions and stock markets flourish, the general public participate more in financing investment projects of companies and so shareholding is less concentrated. The present paper examines this hypothesis on the basis of a cross‐country study of 85 countries. We find no evidence of more dispersed share ownership in the English law countries than in other countries with different legal origins irrespective of whether we adjust for the existence of transitional economies and less developed countries in the sample. Using three indicators of development of banking and other credit institutions and four indicators of stock market developments, we also find no evidence of more developed financial systems in the English law countries. As expected, there is some evidence of lower financial development in the less developed countries and transitional countries. It is not the English law heritage but the security of persons and goods that appears to explain the cross‐country variations in financial development.     

Technological Diffusion: Alternative Theories and Historical Evidence

This paper presents an interpretive survey of the neoclassical and evolutionary approaches to modeling the process of technological diffusion, with an orientation that is distinct in two important respects from existing surveys. First, the present survey is designed to provide a comparative overview of the alternative approaches within a unified framework of analysis. The objective is to bring out the areas of convergence as well as divergence between the approaches, and address the issue of whether the approaches could be considered as complementary rather than as alternatives. Second, the survey attempts to link the theoretical methodologies to the variety of empirical and historical evidence, and evaluate how the theories best fit the evidence on the dynamics of the technological diffusion process.     

Determinants of employees’ attitudes toward union membership in India

Drawing on data from a survey of 252 unionized full-time employees from large Indian organizations, this study examined whether individual level job related variables and individual cultural value dimensions of individualism–collectivism (I–C) were predictive of employees’ attitudes toward union membership. Using regression analysis, the author found that over and above the effects of demographic and job-related variables, work situation dissatisfaction and perceived work stress were able to predict union attitudes significantly and positively for the sample. The relationship of union attitude was highly significant and negative with a consultative managerial style. Collectivism was able to predict the union attitudes positively, whereas individualism was negatively related to the union attitudes. The interaction between employees’ perceived work stress and work situation dissatisfaction are found to have a positive influence on their union attitudes. The results and implications of findings are discussed in the paper with reference to the literature on role of cultural dimensions (I–C) and job related factors in relation to organizational outcomes like union membership.