Annual shareholder meetings provide an opportunity for shareholders to express their concerns with corporate performance, pressuring managers to demonstrate good performance. We show that managers ...respond to the shareholder pressure by reporting positive corporate news before the annual shareholder meetings. Specifically, we find significantly positive average cumulative abnormal returns (CARs) during the 40 days before the annual meeting date. The premeeting returns are significantly higher when shareholder discontent with managerial performance is likely to be stronger. The decile of companies with the worst past stock price performance exhibits average CARs of 3.4% and buy-and-hold returns of 7.0% during the 40-day premeeting period. Companies with poor past performance exhibit even higher premeeting returns when shareholder pressure on management is greater, such as when institutional ownership is high, when CEO compensation is high, and when shareholders submit proxy proposals on corporate governance. We complement the evidence based on CARs by showing how managers of poorly performing firms manage the timing and content of earnings announcements and management forecast announcements before the annual shareholder meetings. Overall, the results suggest that managers attempt to influence shareholders before annual shareholder meetings through positive news.
We empirically examine the impact of relationships between contractors and subcontractors on firm pricing and entry decisions in the California highway procurement market using data from auctions ...conducted by the California Department of Transportation. Relationships in this market are valuable if they mitigate potential hold-up problems and incentives for ex post renegotiation arising from contractual incompleteness. An important characteristic of informal contracts is that they must be self-enforcing, so the value of relationships between firms and suppliers depend on the extent of possibilities for future interaction. We construct measures of the stock of contractors' prior interactions with relevant subcontractors and, most importantly, an exogenous instrument to measure the future value of ongoing relationships that is orthogonal to contractor—subcontractor match-specific productivity. We find that a larger stock of relationships leads to a greater likelihood of entry and to lower bids. Importantly, this relationship does not hold in periods of time and areas with little future contract volume, suggesting that the value of the future is crucial in providing value for informal contracts.
We present theory and evidence to suggest that, in the context of analyzing global poverty, the EKS approach to estimating purchasing power parities yields more appropriate international comparison ...of real incomes than the Geary-Khamis approach. Our analysis of the 1996 and 2005 International Comparison Project data confirms that the Geary-Khamis approach substantially overstates the relative incomes of the world's poorest nations, and this leads to misleading comparisons of poverty across regions and over time. The EKS index of real income is much closer to being a true index of economic welfare and is therefore preferred for assessment of global poverty.
This study uses a structural econometric model to evaluate the impacts of support from a European Union agri-environmental program designed to reduce nutrient pollution from agricultural land. ...Drawing on a representative sample of individual grain farms, we first quantify the effects of agrienvironmental payments on farms' decisions on land allocation and on fertilizer use. We then combine the predicted land allocation and fertilizer use with environmental production functions to quantify the impact on nutrient loading. Finally, we assess the monetary value of reduced nutrient pollution, drawing on a recent valuation study.
This paper analyzes the importance of teacher quality at the college level. Instructors are matched to objective and subjective characteristics of teacher quality to estimate the impact of rank, ...salary, and perceived effectiveness on student performance and subject interest. Student and course fixed effects, time of day and week controls, and students' lack of knowledge about first-year instructors help minimize selection biases. Subjective teacher evaluations perform well in measuring instructor influences on students, while objective characteristics such as rank and salary do not. Overall, the importance of college instructor differences is small, but important outliers exist.
This article presents new econometric evidence on the comparative behavior of worker cooperatives and capitalist firms, highlighting the differences in wages and employment responses. We use a ...comprehensive panel data set that covers the entire population of cooperatives and their capitalist counterparts registered in the social security records in Uruguay from April 1996 to December 2005. We analyze the data to study the employment and wage decisions in both types of enterprises, the results of which suggests that their adjustment mechanisms to idiosyncratic price changes and macroeconomic shocks may differ greatly. The data set also allows us to estimate wage and employment variations for members and non-members of cooperatives separately, and provides an empirical test for the so-called degeneration hypothesis. Our findings are broadly consistent with previous studies for Italian cooperatives and plywood cooperatives in the United States. As studies of this kind are so few, our research provides a significant contribution to the empirical literature on labor managed firms. Moreover, comparing worker cooperatives and capitalist firms offers an exceptional opportunity to determine how control by workers may lead to different organizational behavior.
Organizations undertake capital investments in technology to generate revenues or decrease costs, and thereby enhance profitability. However, Red Queen-type responses by competing organizations in ...the form of rapid imitation and escalating of technology investments erode the ability of the investing organizations to sustain gains in profitability. Productivity gains from these investments may persist, but they may not translate into sustained profitability gains owing to declining prices brought about by a hypercompetitive environment. The emergence and erosion of benefits attributable to capital investments is examined by decomposing profitability into productivity, price recovery, product mix, and capacity utilization, and by regressing each performance measure on past technology investments. A polynomial distributed lag model is estimated with quarterly data for 30 firms in the mobile telecommunications services sector from 1996 to 2005. The results indicate that capital investments are positively associated with productivity of current and future periods, and their association with profitability is only positive in the future (after six quarters). These results highlight a unique outcome of the Red Queen hypothesis: simply by imitating, learning, and investing in technology due to competition is beneficial to all firms in the industry. PUBLICATION ABSTRACT
I empirically consider the effect of horizontal subcontracting on firm bidding strategies in California highway construction auctions. Subcontractors are hired by prime contractors prior to the ...auction, and the subcontractor may also be a competitor in the primary auction. While horizontal subcontracting may improve productive efficiency, it softens the horizontal subcontractor's bid strategy, since winning the auction may entail losing subcontracting business. I find that while each additional competitor supplied by the firm is estimated to increase its bid by 1.4 per cent, the winning bid is uncorrelated with horizontal subcontracting. This points toward an efficiency motive for cross-supply.
Status versus growth Ladd, Helen F.; Lauen, Douglas L.
Journal of policy analysis and management,
06/2010, Letnik:
29, Številka:
3
Journal Article
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Although the federal No Child Left Behind program judges the effectiveness of schools based on their students' achievement status, many policy analysts argue that schools should be measured, instead, ...by their students' achievement growth. Using a 10-year student-level panel data set from North Carolina, we examine how school-specific pressure associated with status and growth approaches to school accountability affect student achievement at different points in the prior-year achievement distribution. Achievement gains for students below the proficiency cut point emerge in schools failing either type of accountability standard, with the effects clearer for math than for reading. In contrast to prior research highlighting the possibility of educational triage, we find little or no evidence that failing schools in North Carolina ignore the students far below proficiency under either approach. Importantly, we find that the status, but not the growth, approach reduces the reading achievement of higher performing students. Our analysis suggests that the distributional effects of accountability pressure depend not only on the type of pressure for which schools are held accountable (status or growth), but also the tested subject.
We investigate how corporate venture capitalists (CVCs) can rapidly attain central positions in venture capital syndication networks. Using data of CVC investments by U.S. corporations between 1996 ...and 2005, we complement prior research, which suggests that centrally positioned VCs predominantly invest together with other centrally positioned VCs. While we find clear support for the social network theory arguments that prior central positions in syndication networks significantly explain future network positions of CVCs, we also find a negative interaction effect between past centrality and corporate resources. This finding implies that resources of CVCs can substitute for their lack of prior centrality and allow them to gain rapidly central positions in rigid VC syndication networks.
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