French Abstract: Ce Rapport prend la suite du Rapport « Structure et Diversité des modèles actuels de gouvernement d’entreprise » de Christophe Clerc. Puisqu’il y a trois sources de pouvoir internes à l’entreprise, celui-ci distingue trois modèles « purs » de gouvernement d’entreprise (managérial, actionnarial et salarial) ; et un modèle mixte ou pluraliste : la codétermination. La thèse commune aux deux Rapports est que le modèle pluraliste surclasse les trois autres.
L’histoire révèle que les modèles « purs » débouchent sur des crises systémiques : crises pétrolières de 1973/78 pour le modèle à dominante managériale ; crise financière mondiale de 2007/8 pour le modèle actionnarial. Une croissance purement quantitative vient chaque fois buter sur l’une ou l’autre des trois « marchandises fictives » que sont la Monnaie, la Nature, et le Travail. Le Rapport démontre que le modèle pluraliste de la codétermination est bien le mode le plus rationnel de gouvernement d’entreprise : le seul qui offre une solution pragmatique à l’écart entre « la société », entité juridique (dont les seuls membres sont les actionnaires), et « l’entreprise », organisation économique (dont l’efficacité suppose la coopération de multiples parties prenantes). Cette solution consiste à intégrer les salariés aux conseils d’administration ou de surveillance (sur un pied d’égalité avec les actionnaires), et à donner aux comités d’entreprise un droit de regard sur l’organisation du travail.
L’absence de ce cadre éclaire rétrospectivement les crises des modèles précédents. Inversement, si le modèle pluraliste se généralise, la prospective fait émerger les trois principales potentialités des économies avec codétermination : instaurer une flexisécurité non régressive ; faciliter la transition écologique ; et offrir une issue à l’actuelle crise mondiale de gouvernementalité.
English Abstract: This Report follows on from Christophe Clerc's “Structure and Diversity of Current Models of Corporate Governance” Report. Since there are three sources of power internal to the company, he distinguishes three "pure" models of corporate governance (managerial, finance-led and labour-managed); and a mixed or pluralist model: codetermination. The common thesis of the two Reports is that the pluralist model outperforms the other three.
History reveals that "pure" models lead to systemic crises: oil crises of 1973/78 for the predominantly managerial model; 2007/8 global financial crisis for the shareholder model. A purely quantitative growth stumbles each time against one or the other of the three Polanyi’s "fictitious goods" i.e. Money, Nature, and Labour.
The Report shows that the pluralist model of co-determination is indeed the most rational mode of corporate governance: the only one that offers a pragmatic solution to the gap between "company" or “corporation”, a legal entity (of which the only members are the shareholders), and “business fi
英文摘要:本报告延续了Christophe Clerc的《公司治理模式的结构和多样性》报告。由于公司内部有三种权力来源，它区分了三种“纯”公司治理模式(管理层、股东和工资);以及一种混合或多元化的模式:共同决定。这两份报告的共同论点是，多元模式优于其他三份。历史表明，“纯”模型会导致系统性危机:1973/78年的石油危机，以管理为主的模型;2007/8年全球金融危机为股东模式。纯粹的数量增长总是会遇到货币、自然和劳动力这三种“虚拟商品”中的一种或另一种。报告表明,该模型进行多元化的员工是最合理的公司治理模式:唯一一个务实的办法向«»社会之间的差距,法律实体(包括会员只有在股东和公司«»),(经济组织,其效率意味着多重利益相关者合作)。这一解决方案包括将员工纳入董事会或监事会(与股东平等)，并赋予工人委员会监督工作组织的权利。回顾过去，这种框架的缺失揭示了早期模型的危机。相反，当多元模式变得普遍时，预测显示了共同决定经济体的三个主要潜力:建立非倒退的灵活性;促进生态转型;并为当前的全球治理危机提供一条出路。英文摘要:本报告遵循Christophe clerc的“当前公司治理模式的结构和多样性”报告。由于公司内部有三种权力来源，他区分了三种“纯”公司治理模式(管理型、财务型和劳工型);= =地理= =根据美国人口普查局的数据，该县总面积为，其中土地和(1.)水。这两份报告的共同主题是，多元主义模式的表现超过了其他三份报告。历史表明，“纯”模式导致系统性危机:1973/78年主要管理模式的石油危机;2007/8股东模式的全球金融危机。在波兰尼的三种“虚构商品”(即金钱、自然和劳动力)中，一种纯粹的数量增长每次都与一种或另一种商品相冲突。The Report shows that The pluralist model of The most; is indeed rational mode of corporate governance): The only one that常务实解决了to The gap between company”“公司”,于黄金一法律实体(of which are The only晤谈,and The bpr)“business晟”,an economic organization(当然不要效率需要多重利益相关者的合作》)。这一解决办法包括将雇员纳入董事会或监事会(与股东平等)，并让工务委员会在工作组织中有发言权。这一框架的缺失使人们回想起以前的模型的危机。总之，多元主义模型的推广将揭示共同决定经济的三大潜力:建立非回归灵活性;促进生态转型;他的父亲是一名律师，母亲是一名律师。
{"title":"Rapport sur les modèles de gouvernance de l'entreprise - volume 2 - évaluation et prospective des modèles actuels (Report for Ilo on Models of Corporate Governance: Vol 2 Evaluation and Prospective of Present Models)","authors":"O. Favereau","doi":"10.2139/ssrn.3516580","DOIUrl":"https://doi.org/10.2139/ssrn.3516580","url":null,"abstract":"<b>French Abstract:</b> Ce Rapport prend la suite du Rapport « Structure et Diversité des modèles actuels de gouvernement d’entreprise » de Christophe Clerc. Puisqu’il y a trois sources de pouvoir internes à l’entreprise, celui-ci distingue trois modèles « purs » de gouvernement d’entreprise (managérial, actionnarial et salarial) ; et un modèle mixte ou pluraliste : la codétermination. La thèse commune aux deux Rapports est que le modèle pluraliste surclasse les trois autres.<br><br>L’histoire révèle que les modèles « purs » débouchent sur des crises systémiques : crises pétrolières de 1973/78 pour le modèle à dominante managériale ; crise financière mondiale de 2007/8 pour le modèle actionnarial. Une croissance purement quantitative vient chaque fois buter sur l’une ou l’autre des trois « marchandises fictives » que sont la Monnaie, la Nature, et le Travail. <br>Le Rapport démontre que le modèle pluraliste de la codétermination est bien le mode le plus rationnel de gouvernement d’entreprise : le seul qui offre une solution pragmatique à l’écart entre « la société », entité juridique (dont les seuls membres sont les actionnaires), et « l’entreprise », organisation économique (dont l’efficacité suppose la coopération de multiples parties prenantes). Cette solution consiste à intégrer les salariés aux conseils d’administration ou de surveillance (sur un pied d’égalité avec les actionnaires), et à donner aux comités d’entreprise un droit de regard sur l’organisation du travail.<br><br>L’absence de ce cadre éclaire rétrospectivement les crises des modèles précédents. Inversement, si le modèle pluraliste se généralise, la prospective fait émerger les trois principales potentialités des économies avec codétermination : instaurer une flexisécurité non régressive ; faciliter la transition écologique ; et offrir une issue à l’actuelle crise mondiale de gouvernementalité. <br><br><b>English Abstract:</b> This Report follows on from Christophe Clerc's “Structure and Diversity of Current Models of Corporate Governance” Report. Since there are three sources of power internal to the company, he distinguishes three \"pure\" models of corporate governance (managerial, finance-led and labour-managed); and a mixed or pluralist model: codetermination. The common thesis of the two Reports is that the pluralist model outperforms the other three.<br><br>History reveals that \"pure\" models lead to systemic crises: oil crises of 1973/78 for the predominantly managerial model; 2007/8 global financial crisis for the shareholder model. A purely quantitative growth stumbles each time against one or the other of the three Polanyi’s \"fictitious goods\" i.e. Money, Nature, and Labour.<br><br>The Report shows that the pluralist model of co-determination is indeed the most rational mode of corporate governance: the only one that offers a pragmatic solution to the gap between \"company\" or “corporation”, a legal entity (of which the only members are the shareholders), and “business fi","PeriodicalId":416291,"journal":{"name":"IO: Firm Structure","volume":"31 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-11-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125358965","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper discusses the influence of ownership segments and disciplining devices on the quality of Corporate Governance (CG) in the Indian context. The ultimate objective of the study is to identify the determinant ownership segment and their disciplining device that would explain the CG performance of the firm. The main goal is to prove the influence of majority shareholding segment in influencing the CG quality. Main attention was paid to usage of Herfindahl-Hirschman Index to find the combined ownership concentration of minority shareholder segments. Ordinary Least Squares (OLS) regression is the predominant technique that finds application to determine critical ownership segment and disciplining device. This topic was chosen because of the evergreen ambiguity on the role and intensity of shareholders on CG in India. The major findings of the paper are, there exists no statistical evidence to prove that CGPI is under the influence of any ownership segment. With coalition majority HHI dominates in most CG categories except category 5. HHI displays support for debt as controlling device in most CGPI categories. However, study also finds HHI supporting dividend in top two categories including CG category 1 and IP also favoring the same device for the same two categories. The above findings suggest that in totality HHI favors debt and IP supports dividend.
{"title":"The Dynamics of Corporate Ownership on Corporate Governance: Indian Evidence","authors":"Sajit Jacob","doi":"10.2139/ssrn.3491559","DOIUrl":"https://doi.org/10.2139/ssrn.3491559","url":null,"abstract":"This paper discusses the influence of ownership segments and disciplining devices on the quality of Corporate Governance (CG) in the Indian context. The ultimate objective of the study is to identify the determinant ownership segment and their disciplining device that would explain the CG performance of the firm. The main goal is to prove the influence of majority shareholding segment in influencing the CG quality. Main attention was paid to usage of Herfindahl-Hirschman Index to find the combined ownership concentration of minority shareholder segments. Ordinary Least Squares (OLS) regression is the predominant technique that finds application to determine critical ownership segment and disciplining device. This topic was chosen because of the evergreen ambiguity on the role and intensity of shareholders on CG in India. The major findings of the paper are, there exists no statistical evidence to prove that CGPI is under the influence of any ownership segment. With coalition majority HHI dominates in most CG categories except category 5. HHI displays support for debt as controlling device in most CGPI categories. However, study also finds HHI supporting dividend in top two categories including CG category 1 and IP also favoring the same device for the same two categories. The above findings suggest that in totality HHI favors debt and IP supports dividend.","PeriodicalId":416291,"journal":{"name":"IO: Firm Structure","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-11-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125203939","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Different types of blockholders govern differently. Committed (non-financial) blockholders are 6 times more likely to self-identify as active, and the language of their filings reflects governance through voice rather than exit. These differences in governance persist over a firm’s life cycle. We also find that governance by committed blocks may contaminate previous studies’ economic interpretation about governance by passive investors around index thresholds. Finally, the performance of firms with a committed block is similar to firms with a financial block, consistent with dynamic equilibrium models of optimal ownership. Firms with committed blockholders appear to have lower agency costs.
{"title":"Ownership and Governance Style: New Evidence from Nonfinancial Blockholders","authors":"Ryan D. Israelsen, Miriam Schwartz-Ziv, J. Weston","doi":"10.2139/ssrn.3491708","DOIUrl":"https://doi.org/10.2139/ssrn.3491708","url":null,"abstract":"Different types of blockholders govern differently. Committed (non-financial) blockholders are 6 times more likely to self-identify as active, and the language of their filings reflects governance through voice rather than exit. These differences in governance persist over a firm’s life cycle. We also find that governance by committed blocks may contaminate previous studies’ economic interpretation about governance by passive investors around index thresholds. Finally, the performance of firms with a committed block is similar to firms with a financial block, consistent with dynamic equilibrium models of optimal ownership. Firms with committed blockholders appear to have lower agency costs.","PeriodicalId":416291,"journal":{"name":"IO: Firm Structure","volume":"50 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-11-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121092747","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This research looked at “Corporate governance as a strategy for business viability in Parastatal organizations in Harare�?, the literature on good governance, cooperate governance and culture as well as factors that influence and affect proper governance implementation. The descriptive research survey was used to target employees and management. A sample size of 20 respondents comprising of 10 employees and 10 from management was used. The researcher used simple random sampling method in selecting the respondents. Questionnaires were used as key research instrument. The study found out that issues of good governance are not properly followed within the organization. Whilst there is a board to oversee the operations of the organization, it was not being fully utilized as they are not sometimes involved in decision making and policy making. The issue of Parastatal organization governance remains an issue of concern considering their contribution to national development. There is therefore need to document, analyze and promote good practice in relation to Parastatal organizations’ governance and accountability as this remains a grey area due to difficulties that the sector has in utilizing and implementing conventional corporate governance principles.
{"title":"Corporate Governance as a Strategy for Business Viability in Parastatal Organizations in Harare","authors":"Anthony Tapiwa Mazikana","doi":"10.2139/ssrn.3476540","DOIUrl":"https://doi.org/10.2139/ssrn.3476540","url":null,"abstract":"This research looked at “Corporate governance as a strategy for business viability in Parastatal organizations in Harare�?, the literature on good governance, cooperate governance and culture as well as factors that influence and affect proper governance implementation. The descriptive research survey was used to target employees and management. A sample size of 20 respondents comprising of 10 employees and 10 from management was used. The researcher used simple random sampling method in selecting the respondents. Questionnaires were used as key research instrument. The study found out that issues of good governance are not properly followed within the organization. Whilst there is a board to oversee the operations of the organization, it was not being fully utilized as they are not sometimes involved in decision making and policy making. The issue of Parastatal organization governance remains an issue of concern considering their contribution to national development. There is therefore need to document, analyze and promote good practice in relation to Parastatal organizations’ governance and accountability as this remains a grey area due to difficulties that the sector has in utilizing and implementing conventional corporate governance principles.","PeriodicalId":416291,"journal":{"name":"IO: Firm Structure","volume":"66 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-10-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122817336","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper explores the incentives of competing firms to outsource to a common supplier and shows that firms outsource even when the supplier does not have a cost advantage in input production. The suppliers contract offers generate cost asymmetry, alter product market competition, and improve the competitive position of one of its customers. The use of nonlinear contracts is crucial for the emergence of outsourcing. The supplier purposefully avoids industry profit maximization to enlarge its profits share. Both consumers and welfare benefit from the presence of an otherwise redundant supplier in the market.
{"title":"Outsourcing without Cost Advantages","authors":"Chrysovalantou Milliou","doi":"10.2139/ssrn.3693726","DOIUrl":"https://doi.org/10.2139/ssrn.3693726","url":null,"abstract":"This paper explores the incentives of competing firms to outsource to a common supplier and shows that firms outsource even when the supplier does not have a cost advantage in input production. The suppliers contract offers generate cost asymmetry, alter product market competition, and improve the competitive position of one of its customers. The use of nonlinear contracts is crucial for the emergence of outsourcing. The supplier purposefully avoids industry profit maximization to enlarge its profits share. Both consumers and welfare benefit from the presence of an otherwise redundant supplier in the market.","PeriodicalId":416291,"journal":{"name":"IO: Firm Structure","volume":"303 2","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-10-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"113995995","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Purpose The aim of this study is to examine the determinants of capital expenditures in terms of ownership structure of firms (Foreign ownership and institutional ownership) and some-firm specific characteristics using Turkish listed companies and is to provide insightful evidence to the corporate governance literature about an emerging market. Design/Methodology/Approach Panel data estimation procedure was mainly conducted to test the hypotheses. To robust the main estimation results, quantile estimation procedure based on the asset size of each firm/year was employed. Besides, we tested the changing point for listing duration and size by using the squares of the related variables and re-run the model for the crisis years. Findings The findings revealed that institutional and foreign ownership do not affect the companies’ capital expenditure behavior in terms of net capital expenditures. Besides, the outcomes showed that companies’ size, cash flows from operating and tobin’s q (i.e. firm value) positively affects the capital expenditure behaviors, however net margin and listing duration decrease the net capital expenditures. On the other hand, when we divided our sample quintiles based on the asset size of each firm, the results show that the companies’ behavioral difference depend on the companies’ size. The results also indicated that the financial crisis affected the capital expenditure behavior of the companies traded in Borsa İstanbul. Originality/Value This paper makes a contribution to the corporate finance by providing an insight on determinants of capital expenditure from an emerging market. This paper is first research to investigate the determinants of capital expenditures of the Turkish listed companies. This paper provides a perspective on the institutional ownership’s impact on the companies’ capital expenditures. The results are also supported by the robustness tests.
{"title":"Determinants of Capital Expenditures: Evidence from Borsa Istanbul","authors":"Gökberk Can, Samet Gunay, Murat Ocak","doi":"10.2139/ssrn.3472712","DOIUrl":"https://doi.org/10.2139/ssrn.3472712","url":null,"abstract":"Purpose The aim of this study is to examine the determinants of capital expenditures in terms of ownership structure of firms (Foreign ownership and institutional ownership) and some-firm specific characteristics using Turkish listed companies and is to provide insightful evidence to the corporate governance literature about an emerging market. Design/Methodology/Approach Panel data estimation procedure was mainly conducted to test the hypotheses. To robust the main estimation results, quantile estimation procedure based on the asset size of each firm/year was employed. Besides, we tested the changing point for listing duration and size by using the squares of the related variables and re-run the model for the crisis years. Findings The findings revealed that institutional and foreign ownership do not affect the companies’ capital expenditure behavior in terms of net capital expenditures. Besides, the outcomes showed that companies’ size, cash flows from operating and tobin’s q (i.e. firm value) positively affects the capital expenditure behaviors, however net margin and listing duration decrease the net capital expenditures. On the other hand, when we divided our sample quintiles based on the asset size of each firm, the results show that the companies’ behavioral difference depend on the companies’ size. The results also indicated that the financial crisis affected the capital expenditure behavior of the companies traded in Borsa İstanbul. Originality/Value This paper makes a contribution to the corporate finance by providing an insight on determinants of capital expenditure from an emerging market. This paper is first research to investigate the determinants of capital expenditures of the Turkish listed companies. This paper provides a perspective on the institutional ownership’s impact on the companies’ capital expenditures. The results are also supported by the robustness tests.","PeriodicalId":416291,"journal":{"name":"IO: Firm Structure","volume":"61 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-10-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132803156","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
There are several measures of equity compensation that may provide shareholders with distinct and useful information for evaluating CEO pay. We examine whether shareholders consider additional disclosures of equity compensation measures beyond the grant date fair value when participating in corporate governance. We find that CEO equity compensation expense, a distinct measure of equity compensation, is a determinant of shareholder voting for management sponsored equity plans and voting for directors that serve on the compensation committee. After controlling for ISS recommendations, we find that voting outcomes remain significantly related to abnormal equity compensation expense. Consistent with shareholders considering the equity compensation expense, we document that firms shorten equity compensation vesting periods when they are no longer required to disclose the equity compensation expense. Our findings suggest that shareholders rely on multiple, distinct measures of equity compensation when participating in corporate governance. JEL Classifications: M12; M52; G34. Data Availability: Data are available from the public sources cited in the text.
{"title":"Compensation Disclosures and Corporate Governance through Shareholder Voting","authors":"Brian D. Cadman, Richard Carrizosa, Xiaoxia Peng","doi":"10.2308/JMAR-18-046","DOIUrl":"https://doi.org/10.2308/JMAR-18-046","url":null,"abstract":"\u0000 There are several measures of equity compensation that may provide shareholders with distinct and useful information for evaluating CEO pay. We examine whether shareholders consider additional disclosures of equity compensation measures beyond the grant date fair value when participating in corporate governance. We find that CEO equity compensation expense, a distinct measure of equity compensation, is a determinant of shareholder voting for management sponsored equity plans and voting for directors that serve on the compensation committee. After controlling for ISS recommendations, we find that voting outcomes remain significantly related to abnormal equity compensation expense. Consistent with shareholders considering the equity compensation expense, we document that firms shorten equity compensation vesting periods when they are no longer required to disclose the equity compensation expense. Our findings suggest that shareholders rely on multiple, distinct measures of equity compensation when participating in corporate governance.\u0000 JEL Classifications: M12; M52; G34.\u0000 Data Availability: Data are available from the public sources cited in the text.","PeriodicalId":416291,"journal":{"name":"IO: Firm Structure","volume":"27 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-09-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121410982","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
CEO activism refers to corporate leaders taking a public stand on issues such as race relations, gender equality or climate change not directly related to their business. In this paper, we investigate under what conditions CEO activism can create firm value. We develop a model where consumers care about the type of firm they buy from. Taking a stand raises two issues. First, not all consumers share the same viewpoint, so while some may be more eager to buy from a firm with an activist CEO, others may be put off. Second, consumers may discount CEO communications if they perceive them to be profit motivated. We show that credibility requires CEO communications to be public and sufficiently controversial. CEO activism is more likely to create firm value when competition is strong, consumers care a lot about "symbolic" value and polarization is high. CEO activism is associated with niche product market strategies and high prices, while "strategic ambiguity" (not taking a stand) is associated with mass market strategies and low prices. The model sheds light on the costs and benefits of intrinsically motivated CEOs and the limits of corporate governance.
{"title":"CEO Activism As Communication to Multiple Audiences","authors":"G. Melloni, Andrea Patacconi, Nick Vikander","doi":"10.2139/ssrn.3455330","DOIUrl":"https://doi.org/10.2139/ssrn.3455330","url":null,"abstract":"CEO activism refers to corporate leaders taking a public stand on issues such as race relations, gender equality or climate change not directly related to their business. In this paper, we investigate under what conditions CEO activism can create firm value. We develop a model where consumers care about the type of firm they buy from. Taking a stand raises two issues. First, not all consumers share the same viewpoint, so while some may be more eager to buy from a firm with an activist CEO, others may be put off. Second, consumers may discount CEO communications if they perceive them to be profit motivated. We show that credibility requires CEO communications to be public and sufficiently controversial. CEO activism is more likely to create firm value when competition is strong, consumers care a lot about \"symbolic\" value and polarization is high. CEO activism is associated with niche product market strategies and high prices, while \"strategic ambiguity\" (not taking a stand) is associated with mass market strategies and low prices. The model sheds light on the costs and benefits of intrinsically motivated CEOs and the limits of corporate governance.","PeriodicalId":416291,"journal":{"name":"IO: Firm Structure","volume":"59 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-09-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128723053","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Problem definition : Project outsourcing has been a pronounced trend in many industries but is also recognized as a major cause for project delays. We study how companies can coordinate outsourced projects with uncertain completion times through bilateral contract negotiations. Academic/practical relevance : Misaligned subcontractor incentives may result in substantial losses to both project clients and subcontractors. Coordinating subcontractors’ efforts through proper contracts is imperative to the success of project outsourcing. Most previous studies on project contracting have not addressed subcontractors’ bargaining powers or the dynamic bargaining process in negotiations. We fill in this gap by studying bilateral bargaining between the client and subcontractors, which better reflects real-world negotiations. Methodology : We model project contract negotiations as a multiunit bilateral bargaining game. We derive the conditions such that bilateral negotiations can achieve system coordination and characterize the equilibrium negotiation outcomes. We then compare the conditions and equilibria under various model settings to study their impact on project contracting. Results : Our study uncovers how the coordination of project outsourcing is impacted by the contract form, bargaining power structure, precedence network topology, payment timing, external opportunities, and negotiation protocols. For single-task projects, the widely used fixed-price (cost-plus) contract can achieve system coordination only when the subcontractor (client) possesses full bargaining power. Cost-sharing and time-based incentive contracts, which perform well for single-task projects, may not be effective for projects with parallel tasks when any subcontractor’s bargaining power is sufficiently high. Projects with serial tasks can be coordinated only under certain extreme bargaining power structures. Delaying payments always exacerbates the incentive misalignment. Managerial implications : Our analysis provides insights and guidelines to companies regarding how to select proper contract forms and payment timing schemes, based on the characteristics of the projects and subcontractors, to ensure the effectiveness of project outsourcing. Our results also highlight the importance of bargaining modeling in project contracting.
{"title":"Coordinating Project Outsourcing through Bilateral Contract Negotiations","authors":"Chengfan Hou, Mengshi Lu, Tianhu Deng, Z. Shen","doi":"10.2139/ssrn.3443865","DOIUrl":"https://doi.org/10.2139/ssrn.3443865","url":null,"abstract":"Problem definition : Project outsourcing has been a pronounced trend in many industries but is also recognized as a major cause for project delays. We study how companies can coordinate outsourced projects with uncertain completion times through bilateral contract negotiations. Academic/practical relevance : Misaligned subcontractor incentives may result in substantial losses to both project clients and subcontractors. Coordinating subcontractors’ efforts through proper contracts is imperative to the success of project outsourcing. Most previous studies on project contracting have not addressed subcontractors’ bargaining powers or the dynamic bargaining process in negotiations. We fill in this gap by studying bilateral bargaining between the client and subcontractors, which better reflects real-world negotiations. Methodology : We model project contract negotiations as a multiunit bilateral bargaining game. We derive the conditions such that bilateral negotiations can achieve system coordination and characterize the equilibrium negotiation outcomes. We then compare the conditions and equilibria under various model settings to study their impact on project contracting. Results : Our study uncovers how the coordination of project outsourcing is impacted by the contract form, bargaining power structure, precedence network topology, payment timing, external opportunities, and negotiation protocols. For single-task projects, the widely used fixed-price (cost-plus) contract can achieve system coordination only when the subcontractor (client) possesses full bargaining power. Cost-sharing and time-based incentive contracts, which perform well for single-task projects, may not be effective for projects with parallel tasks when any subcontractor’s bargaining power is sufficiently high. Projects with serial tasks can be coordinated only under certain extreme bargaining power structures. Delaying payments always exacerbates the incentive misalignment. Managerial implications : Our analysis provides insights and guidelines to companies regarding how to select proper contract forms and payment timing schemes, based on the characteristics of the projects and subcontractors, to ensure the effectiveness of project outsourcing. Our results also highlight the importance of bargaining modeling in project contracting.","PeriodicalId":416291,"journal":{"name":"IO: Firm Structure","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-08-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125483672","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The purpose of this study is to evaluate how different founder and firm characteristics affect new venture performance. This research uses survival proportional hazard functions and limited-information maximum likelihood instrumental regressions to quantify the marginal effects of capitalization choices on revenues and employment. Panel data analysis on 4,298 new firms shows that financing strategy matters, especially in combination with particular human and social capital attributes of the founders.
{"title":"Survival of the Funded? An Econometric Analysis of New-Firm Survival and Success","authors":"Dan, Daniel K. N. Johnson","doi":"10.2139/ssrn.3402779","DOIUrl":"https://doi.org/10.2139/ssrn.3402779","url":null,"abstract":"The purpose of this study is to evaluate how different founder and firm characteristics affect new venture performance. This research uses survival proportional hazard functions and limited-information maximum likelihood instrumental regressions to quantify the marginal effects of capitalization choices on revenues and employment. Panel data analysis on 4,298 new firms shows that financing strategy matters, especially in combination with particular human and social capital attributes of the founders.","PeriodicalId":416291,"journal":{"name":"IO: Firm Structure","volume":"137 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-06-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116900427","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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