We discuss conditions for the Aubin property of solutions to perturbed cone constrained programs, by using and refining results given in Klatte-Kummer "Nonsmooth Equations in Optimization", Kluwer, 2002. In particular, we show that constraint nondegeneracy and hence uniqueness of the multiplier is necessary for the Aubin property of the critical point map. Moreover, we give conditions under which the critical point map has the Aubin property if and only if it is locally single-valued and Lipschitz.
Drawing on Pierre Bourdieu’s theory of social practice, this article develops a novel approach to the study of corporate social responsibility (CSR). According to this approach, pro-social activities are conceptualized as social practices that individual managers employ in their efforts to attain social power. Whether such practices are enacted or not depends on (1) the particular features of the social field; (2) the individual managers’ socially shaped dispositions and (3) their stock of different forms of capital. By combining these theoretical concepts, the Bourdieusian approach we develop highlights the interplay between the economic and non-economic motivations that underlie CSR, acknowledging influences both on the micro- and the macro-level, as well as deterministic and voluntaristic aspects of human behaviour.
Innovation research increasingly focuses on understanding why and how firms implement new management practices, processes or structures. Emerging in the shadow of research on technological innovation, growing evidence points towards the inter-firm relation as an important locus of innovation. Yet although organizational theory suggests discrete alternative inter-firm coordination mechanisms, the literature on management innovation has thus far treated the inter-firm relation as one broad mode of organizing. This study takes a configurational perspective to identify archetypes of inter-firm relations leading to the implementation of management innovation. Using fuzzy set Qualitative Comparative Analysis (fsQCA) to analyse 56 firm partnerships in China’s biopharmaceutical industry, the empirical evidence identifies four such discrete inter-firm archetypes: organic coalitions, bureaucratic foundations, coalitions of intense interdependency and reciprocal foundations. The results suggest that the type of interdependency, rather than the coordination mechanisms governing inter-firm relations, leads to the implementation of management innovation.
We document a curious feature of the German mutual fund industry. Unlike U.S. mutual funds, funds domiciled in Germany do not necessarily compute their net asset values (NAV) as of market close. Using a sample of German equity funds, we infer each fund's NAV closing time from the best-fit market model using both maximum likelihood and Bayesian estimation. The results of both approaches coincide perfectly and show that all but one of the funds domiciled in Germany report intraday NAVs. We show that using market returns computed at the end of the day instead of the best-fit time, usually leads to misleading inferences about mutual fund performance.
The failure of uncovered interest rate parity to explain short-term interest rate movements is well documented. We show that short-term changes in long-term interest rates do help to explain short-term exchange rate movements. The relationship gets stronger over our sample period, as the liquidity of the exchange rate market increases. We also show that controlling for time-varying exchange rate risk also helps to improve the fit of the relationship.
Die Debatte über Managerlöhne und mögliche Regulierungen hält an. Der Autor schlägt im Folgenden vor, die Entlöhnung relativ zu Gewinn oder Marktwert des Unternehmens zu messen.
I study the impact of ''say on pay'' (SoP) on the compensation decisions and the structure of the board of directors (BoD) in a setting where the CEO has the real authority over the composition of the BoD. The CEO's authority arises endogenously from an informational advantage about individual board members' contribution to firm value and allows her to establish a dependent BoD. Shareholders approve the CEO's director slate because they can only control the level of board dependence but not the board's contribution to firm value. In this setting, SoP has two effects. On the one hand, it prompts a BoD with a given dependence level to reduce the CEO's bonus. On the other hand, it allows the CEO to extract the rent generated by the improved compensation policy and to establish a more dependent BoD. In equilibrium the board becomes more dependent from the CEO and pays her a higher bonus for the same performance. This outcome can only be avoided if the CEO is restricted in her ability to adjust the board composition. Motivated by existing differences in SoP design, I also analyze the consequences of a binding and a pre-contractual vote. I find that a binding vote creates a moral hazard problem on the part of the firm's shareholders if the vote takes place after the agent has supplied her effort. Its consequences critically depend on the legal protection standard of the CEO. Whenever the shareholders can enforce a retroactive bonus cut, the allowable amount of the bonus reduction determines whether or not SoP improves the efficiency of the pay process or diminishes firm value. I show that the moral hazard problem can be avoided by a pre-contractual vote. If the vote is binding, SoP can improve the efficiency of the compensation arrangement and effectively reduce the equilibrium level of board dependence without impairing the CEO's effort incentives.
We conduct an experiment to study different shareholder voting right regimes in a setting where shareholders provide incentives to a CEO for a risky project choice through a discretionary bonus scheme. We compare three different types of shareholder voting rights (advisory, unconditionally binding, and conditionally binding voting rights) to the baseline case where shareholders have no say on CEO pay. We make the following observations: (1) Advisory and conditionally binding voting rights do not distort CEO investment incentives. Unconditionally binding voting rights adversely affect the CEO’s investment incentives. (2) Unconditionally binding voting rights are an effective instrument to curb executive compensation. Advisory shareholder voting rights have the opposite effect and can even increase executive compensation. (3) Most shareholders reject CEO bonus proposals whenever they have the right to do so. This effect is independent of the type of voting right in place and becomes more pronounced in case of poor project performance. (4) Advisory and conditionally binding voting rights have only limited impact on firm profit and executive compensation. In contrast, unconditionally binding voting rights reduce both, firm profit and executive compensation significantly. Overall, our results suggest that regulators should carefully evaluate dysfunctional economic consequences of shareholder voting rights before they are introduced or before existing rules are tightened.
