Stock Option Compensation in Finland: An Analysis of Economic Determinants, Contracting Frequency, and Design

This paper addresses several questions in the compensation literature by examining stock option compensation practices of Finnish firms. First, the results indicate that principal-agent theory succeeds quite well in predicting the use of stock options. Proxies for monitoring costs, growth opportunities, ownership structure, and risk are found to determine the use of incentives consistent with theory. Furthermore, the paper examines whether determinants of stock options targeted to top management differ from determinants of broad-based stock option plans. Some evidence is found that factors driving these two types of incentives differ. Second, the results reveal that systematic risk significantly increases the likelihood that firms adopt stock option plans, whereas total firm risk and unsystematic risk do not seem to affect this decision. Third, the results show that growth opportunities are related to time-dimensional contracting frequency, consistent with the argument that incentive levels deviate more rapidly from optimum in firms with high growth opportunities. Finally, the results suggest that vesting schedules are decreasing in financial leverage, and that contract maturity is decreasing in firm focus. In addition, both vesting schedules and contract maturity tend to be longer in firms involving state ownership.

From Habits to Social Structures : Pragmatism and Contemporary Social Theory

Pragmatism has sometimes been taken as a catchphrase for epistemological stances in which anything goes. However, other authors argue that the real novelty and contribution of this tradition has to do with its view of action as the context in which all things human take place. Thus, it is action rather than, for example, discourses that should be our starting point in social theory. The introductory section of the book situates pragmatism (especially the ideas of G. H. Mead and John Dewey) within the field and tradition of social theory. This introductory also contextualizes the main core of the book which consists of four chapters. Two of these chapters have been published as articles in scientific journals and one in an edited book. All of them discuss the core problem of social theory: how is action related to social structures (and vice versa)? The argument is that habitual action is the explanation for the emergence of social structures from our action. Action produces structures and social reproduction takes place when action is habitualized; that is, when we develop social dispositions to act in a certain manner in familiar environments. This also means that even though the physical environment is the same for all of us, our habits structure it into different kinds of action possibilities. Each chapter highlights these general insights from different angles. Practice theory has gained momentum in recent years and it has many commonalities with pragmatism because both highlight the situated and corporeal character of human activity. One famous proponent of practice theory is Margaret Archer who has argued that the pragmatism of G. H. Mead leads to an oversocialized conception of selfhood. Mead does indeed present a socialized view of selfhood but this is a meta-sociological argument rather than a substantial sociological claim. Accordingly, one can argue that in this general sense intersubjectivity precedes subjectivity and not the other way around. Such a view does not indicate that our social relation would necessarily "colonize" individual action because there is a place for internal conversations (in Archer s terminology); it is especially in those phases of action where it meets obstacles due to the changes of the environment. The second issue discussed has the background assumption that social structures can fruitfully be conceptualized as institutions. A general classification of different institution theories is presented and it is argued that there is a need for a habitual theory of institutions due to the problems associated with these other theories. So-called habitual institutionalism accounts for institutions in terms of established and prevalent social dispositions that structure our social interactions. The germs of this institution theory can be found in the work of Thorstein Veblen. Since Veblen s times, these ideas have been discussed for example, by the economist Geoffrey M. Hodgson. His ideas on the evolution of institutions are presented but a critical stance is taken towards his tendency of defining institutions with the help of rules because rules are not always present in institutions. Accordingly, habitual action is the most basic but by no means the only aspect of institutional reproduction. The third chapter deals with theme of action and structures in the context of Pierre Bourdieu s thought. Bourdieu s term habitus refers to a system of dispositions which structure social fields. It is argued that habits come close to the concept of habitus in the sense that the latter consists of particular kinds of habits; those that are related to the reproduction of socioeconomic positions. Habits are thus constituents of a general theory of societal reproduction whereas habitus is a systematic combination of socioeconomic habits. The fourth theme relates to issues of social change and development. The capabilities approach has been associated with the name of Amartya Sen, for example, and it underscores problems inhering in economistic ways of evaluating social development. However, Sen s argument has some theoretical problems. For example, his theory cannot adequately confront the problem of relativism. In addition, Sen s discussion lacks also a theory of the role of the public. With the help of arguments derived from pragmatism, one gets an action-based, socially constituted view of freedom in which the role of the public is essential. In general, it is argued that a socially constituted view of agency does not necessarily to lead to pessimistic conclusions about the freedom of action.

Dynamic Factor Models and Forecasting Finnish Macroeconomic Variables

In recent years, thanks to developments in information technology, large-dimensional datasets have been increasingly available. Researchers now have access to thousands of economic series and the information contained in them can be used to create accurate forecasts and to test economic theories. To exploit this large amount of information, researchers and policymakers need an appropriate econometric model.Usual time series models, vector autoregression for example, cannot incorporate more than a few variables. There are two ways to solve this problem: use variable selection procedures or gather the information contained in the series to create an index model. This thesis focuses on one of the most widespread index model, the dynamic factor model (the theory behind this model, based on previous literature, is the core of the first part of this study), and its use in forecasting Finnish macroeconomic indicators (which is the focus of the second part of the thesis). In particular, I forecast economic activity indicators (e.g. GDP) and price indicators (e.g. consumer price index), from 3 large Finnish datasets. The first dataset contains a large series of aggregated data obtained from the Statistics Finland database. The second dataset is composed by economic indicators from Bank of Finland. The last dataset is formed by disaggregated data from Statistic Finland, which I call micro dataset. The forecasts are computed following a two steps procedure: in the first step I estimate a set of common factors from the original dataset. The second step consists in formulating forecasting equations including the factors extracted previously. The predictions are evaluated using relative mean squared forecast error, where the benchmark model is a univariate autoregressive model. The results are dataset-dependent. The forecasts based on factor models are very accurate for the first dataset (the Statistics Finland one), while they are considerably worse for the Bank of Finland dataset. The forecasts derived from the micro dataset are still good, but less accurate than the ones obtained in the first case. This work leads to multiple research developments. The results here obtained can be replicated for longer datasets. The non-aggregated data can be represented in an even more disaggregated form (firm level). Finally, the use of the micro data, one of the major contributions of this thesis, can be useful in the imputation of missing values and the creation of flash estimates of macroeconomic indicator (nowcasting).

On the fundamentals of coherence theory

In the thesis I study various quantum coherence phenomena and create some of the foundations for a systematic coherence theory. So far, the approach to quantum coherence in science has been purely phenomenological. In my thesis I try to answer the question what quantum coherence is and how it should be approached within the framework of physics, the metatheory of physics and the terminology related to them. It is worth noticing that quantum coherence is a conserved quantity that can be exactly defined. I propose a way to define quantum coherence mathematically from the density matrix of the system. Degenerate quantum gases, i.e., Bose condensates and ultracold Fermi systems, form a good laboratory to study coherence, since their entropy is small and coherence is large, and thus they possess strong coherence phenomena. Concerning coherence phenomena in degenerate quantum gases, I concentrate in my thesis mainly on collective association from atoms to molecules, Rabi oscillations and decoherence. It appears that collective association and oscillations do not depend on the spin-statistics of particles. Moreover, I study the logical features of decoherence in closed systems via a simple spin-model. I argue that decoherence is a valid concept also in systems with a possibility to experience recoherence, i.e., Poincaré recurrences. Metatheoretically this is a remarkable result, since it justifies quantum cosmology: to study the whole universe (i.e., physical reality) purely quantum physically is meaningful and valid science, in which decoherence explains why the quantum physical universe appears to cosmologists and other scientists very classical-like. The study of the logical structure of closed systems also reveals that complex enough closed (physical) systems obey a principle that is similar to Gödel's incompleteness theorem of logic. According to the theorem it is impossible to describe completely a closed system within the system, and the inside and outside descriptions of the system can be remarkably different. Via understanding this feature it may be possible to comprehend coarse-graining better and to define uniquely the mutual entanglement of quantum systems.

Noncommutative Quantum Field Theory : Problem of Time and Some Applications

In this thesis the current status and some open problems of noncommutative quantum field theory are reviewed. The introduction aims to put these theories in their proper context as a part of the larger program to model the properties of quantized space-time. Throughout the thesis, special focus is put on the role of noncommutative time and how its nonlocal nature presents us with problems. Applications in scalar field theories as well as in gauge field theories are presented. The infinite nonlocality of space-time introduced by the noncommutative coordinate operators leads to interesting structure and new physics. High energy and low energy scales are mixed, causality and unitarity are threatened and in gauge theory the tools for model building are drastically reduced. As a case study in noncommutative gauge theory, the Dirac quantization condition of magnetic monopoles is examined with the conclusion that, at least in perturbation theory, it cannot be fulfilled in noncommutative space.

Operationalizing Supply Chain vs. Supply Chain Competion

Competition is an immensely important area of study in economic theory, business and strategy. It is known to be vital in meeting consumers’ growing expectations, stimulating increase in the size of the market, pushing innovation, reducing cost and consequently generating better value for end users, among other things. Having said that, it is important to recognize that supply chains, as we know it, has changed the way companies deal with each other both in confrontational or conciliatory terms. As such, with the rise of global markets and outsourcing destinations, increased technological development in transportation, communication and telecommunications has meant that geographical barriers of distance with regards to competition are a thing of the past in an increasingly flat world. Even though the dominant articulation of competition within management and business literature rests mostly within economic competition theory, this thesis draws attention to the implicit shift in the recognition of other forms of competition in today’s business environment, especially those involving supply chain structures. Thus, there is popular agreement within a broad business arena that competition between companies is set to take place along their supply chains. Hence, management’s attention has been focused on how supply chains could become more aggressive making each firm in its supply chain more efficient. However, there is much disagreement on the mechanism through which such competition pitching supply chain against supply chain will take place. The purpose of this thesis therefore, is to develop and conceptualize the notion of supply chain vs. supply chain competition, within the discipline of supply chain management. The thesis proposes that competition between supply chains may be carried forward via the use of competition theories that emphasize interaction and dimensionality, hence, encountering friction from a number of sources in their search for critical resources and services. The thesis demonstrates how supply chain vs. supply chain competition may be carried out theoretically, using generated data for illustration, and practically using logistics centers as a way to provide a link between theory and corresponding practice of this evolving competition mode. The thesis concludes that supply chain vs. supply chain competition, no matter the conceptualization taken, is complex, novel and can be very easily distorted and abused. It therefore calls for the joint development of regulatory measures by practitioners and policymakers alike, to guide this developing mode of competition.