Essays on corporate governance, stakeholders, and restructuring

This dissertation consists of an introductory section and three theoretical essays analyzing the interaction of corporate governance and restructuring. The essays adopt an incomplete contracts approach and analyze the role of different institutional designs to facilitate the alignment of the objectives of shareholders and management (or employees) over the magnitude of corporate restructuring. The first essay analyzes how a firm's choice of production technology affects the employees' human capital investment. In the essay, the owners of the firm can choose between a specific and a general technology that both require a costly human capital investment by the employees. The specific technology is initially superior in using the human capital of employees but, in contrast to the general technology, it is not compatible with future innovations. As a result, anticipated changes in the specific technology diminish the ex ante incentives of the employees to invest in human capital unless the shareholders grant the employees specific governance mechanisms (a right of veto, severance pay) so as to protect their investments. The results of the first essay indicate that the level of protection that the shareholders are willing to offer falls short of the socially desirable one. Furthermore, when restructuring opportunities become more abundant, it becomes more attractive both socially and from the viewpoint of the shareholders to initially adopt the general technology. The second essay analyzes how the allocation of authority within the firm interacts with the owners' choice of business strategy when the ability of the owners to monitor the project proposals of the management is biased in favor of the status quo strategy. The essay shows that a bias in the monitoring ability will affect not only the allocation of authority within the firm but also the choice of business strategy. Especially, when delegation has positive managerial incentive effects, delegation turns out to be more attractive under the new business strategy because the improved managerial incentives are a way for the owners to compensate their own reduced information gathering ability. This effect, however, simultaneously makes the owners hesitant to switch the strategy since it would involve a more frequent loss of control over the project choice. Consequently, the owners' lack of knowledge of the new business strategy may lead to a suboptimal choice of strategy. The third essay analyzes the implications of CEO succession process for the ideal board structure. In this essay, the presence of the departing CEO on the board facilitates the ability of the board to find a matching successor and to counsel him. However, the ex-CEO's presence may simultaneously also weaken the ability of the board to restructure since the predecessor may use the opportunity to distort the successor's project choice. The results of the essay suggest that the extent of restructuring gains, the firm's ability to hire good outside directors and the importance of board's advisory role affect at which point and for how long the shareholders may want to nominate the predecessor to the board.

Aika hyvä rehtoriksi : Selviääkö koulun johtamisesta hengissä?

The aim of this study was to describe school leadership on a practical level. By observing the daily behaviour of a principal minute by minute, the study tried to answer the following questions: how did the principals use their time, did they have time to develop their school after participating in the daily life of the school, and how did the previously studied challenges of modern leadership show in their practical work? Five principals in different areas of Helsinki were observed – two women and three men. The principals were chosen at random from three educational conferences. The main hypothesis of this research was that the work of the principal consists of solving daily problems and routines concerning the pupils, teachers and other interest groups and writing all kinds of bureaucratic reports. This means that the school and its principal do not have enough resources to give to a visionary development of teaching and learning – in other words pedagogical leading – even though every principal has the best knowledge about his or her own school’s status quo and the needs for development revealed by this status quo. The research material was gathered by applying the Peer-Assisted Leadership method. The researcher shadowed each principal for four days for three hours at a time. After each shadowing period, any unclear situations were clarified with a short interview. After all the shadowing periods, the principals participated in a semi-structured interview that covered the themes emerging from the shadowing material. In addition to this, the principals evaluated their own leading with a self-assessment questionnaire. The results gathered from the shadowing material showed that the actions of the principals were focused on bureaucratic work. The principals spent most of their time in the office (more than 50%). In the office they were sitting mainly by the computer. They also spent a significant mount of time in the office meeting teachers and occasional visitors. The time spent building networks was relatively short, although the principals considered it as an important domain of leadership according to their interviews. After the classification of the shadowing material, the activities of the principals were divided according to certain factors affecting them. The underlying factors were quality management, daily life management, strategic thinking and emotional intelligence. Through these factors the research showed that coping with the daily life of the school took about 40% of the principals’ time. Activities connected with emotional intelligence could be observed over 30% and activities which required strategic thinking were observed over 20% of the time. The activities which according to the criteria of the research consisted of quality management took only 8% of the principals’ time. This result was congruent with previous studies showing that the work of school leaders is focused on something other than developing the quality of teaching and learning. Keywords: distributed leadership, building community, network building, interaction, emotional intelligence, strategy, quality management

The Nature and Change of Bonds in Industrial Business Relationships

A focus on cooperative industrial business relationships has become increasingly important in studies of industrial relationships. If the relationships between companies are strong it is usually a sign that companies will cooperate for a longer time and that may affect companies’ competitive and financial strength positively. As a result the bonds between companies become more important. This is due to the fact that bonds are building blocks of relationships and thus affect the stability in the cooperation between companies. Bond strength affect relationship strength. A framework regarding how bonds develop and change in an industrial business relationship has been developed in the study. Episodes affect the bonds in the relationship strengthening or weakening the bonds in the relationship or preserving status quo. Routine or critical episodes may lead to the strengthening or weakening of bonds as well as the preservation of status quo. The method used for analyzing bond strength trying to grasp the nature and change of bonds was invented by systematically following the elements of the definitions of bonds. A system with tables was drawn up in order to find out if the bond was weak, of medium strength or strong. Bonds are important regulators of industrial business relationships. By influencing the bonds one may have possibilities to strengthen or weaken the business relationship. Strengthen the business relationship in order to increase business and revenue and weaken the relationship in order to terminate business where the revenue is low or where there may be other problems in the relationship. By measuring the strength of different bonds it can be possible to strengthen weak bonds in order to strengthen the relationship. By using bond management it is possible to strategically strengthen or weaken the bonds between the cooperating companies in order to strengthen the cooperation and tie the customer or supplier to the company or weaken the cooperation in order to terminate the relationship. The instrument for the management of bonds is to use the created bond audit in order to know which bonds resources should be focused on in order to increase or decrease their strength.

Nationalism Circumscribed : Transnational Governance of Minority Rights in Post-Cold War Europe

For the past two centuries, nationalism has been among the most influential legitimizing principles of political organization. According to its simple definition, nationalism is a principle or a way of thinking and acting which holds that the world is divided into nations, and that national and political units should be congruent. Nationalism can thus be divided into two aspects: internal and external. Internally, the political units, i.e., states, should be made up of only one nation. Externally each nation-state should be sovereign. Transnational national governance of rights of national minorities violates both these principles. This study explores the formation, operation, and effectiveness of the European post-Cold War minorities system. The study identifies two basic approaches to minority rights: security and justice. These approaches have been used to legitimize international minority politics and they also inform the practice of transnational governance. The security approach is based on the recognition that the norm of national self-determination cannot be fulfilled in all relevant cases, and so minority rights are offered as a compensation to the dissatisfied national groups, reducing their aspiration to challenge the status quo. From the justice perspective, minority rights are justified as a compensatory strategy against discrimination caused by majority nation-building. The research concludes that the post-Cold War minorities system was justified on the basis of a particular version of the security approach, according to which only Eastern European minority situations are threatening because of the ethnic variant of nationalism that exists in that region. This security frame was essential in internationalising minority issues and justifying the swift development of norms and institutions to deal with these issues. However, from the justice perspective this approach is problematic, since it justified double standards in European minority politics. Even though majority nation-building is often detrimental to minorities also in Western Europe, Western countries can treat their minorities more or less however they choose. One of the main contributions of this thesis is the detailed investigation of the operation of the post-Cold War minorities system. For the first decade since its creation in the early 1990s, the system operated mainly through its security track, which is based on the field activities of the OSCE that are supported by the EU. The study shows how the effectiveness of this track was based on inter-organizational cooperation in which various transnational actors compensate for each other s weaknesses. After the enlargement of the EU and dissolution of the membership conditionality this track, which was limited to Eastern Europe from the start, has become increasingly ineffective. Since the EU enlargement, the focus minorities system has shifted more and more towards its legal track, which is based on the Framework Convention for the Protection of National Minorities (Council of Europe). The study presents in detail how a network of like-minded representatives of governments, international organizations, and independent experts was able strengthen the framework convention s (originally weak) monitoring system considerably. The development of the legal track allows for a more universal and consistent, justice-based approach to minority rights in contemporary Europe, but the nationalist principle of organization still severely hinders the materialization of this possibility.

Issues in socially desirable responding and personality research

The four studies presented in this dissertation were designed to examine the influence of socially desirable responding (SDR) on personality research outcomes. The assessment of personality relies heavily on the use of self-report questionnaires. Their validity could be threatened by people being dishonest in their self-descriptions and ascribing more desirable traits to themselves than would be warranted by their behaviour. Scales designed to detect SDR have been around for half a century, but their status continues to be debated. Paulhus (1991) Balanced Inventory of Desirable Responding (BIDR) is perhaps the most prominent of the scales developed to distinguish between those individuals who have distorted their responses and those who have not. The first two studies included in this dissertation mostly deal with the properties of the BIDR. The other two studies are less focused on SDR scales and investigate, more generally, the potential effects of SDR on two phenomena that are of central interest to the general personality discourse personality stability over time and volunteering as participants in psychological research. The data of Studies I and II showed that Paulhus BIDR scales, designed to be indicators of SDR, are not pure measures both the communion management and self-deceptive enhancement scales are, at once, measures of response bias and measures of more substantive individual differences in behaviour. The data further suggested that the communion management and self-deceptive enhancement scales of the BIDR are somewhat accurate measures of communal and agentic bias, respectively. No evidence for a suppressor model of SDR, and only weak evidence for a moderator model, was found in those studies. Concerning research on personality stability, some data in Study I suggested that SDR may add reliable and common variance to a personality questionnaire administered at two different points in time, thus artificially inflating the test-retest correlation of that questionnaire. Furthermore, Study III demonstrated that the maturity-stability hypothesis may be in part, but not entirely, a product of SDR. Study IV suggested that some of the observed personality differences between research volunteers and nonvolunteers may be due to heightened SDR of volunteers. However, those personality differences were by no means exclusively attributable to differences in SDR. In sum, the work presented in this thesis reveals some ambiguity regarding the effects of SDR on personality research, as is true of much of the previous research on SDR. Clear-cut conclusions are difficult to reach, as the data were neither fully consistent with the view that SDR can be ignored, nor with the view that SDR needs to be controlled in some way. The struggle to understand the influence of SDR on personality research continues.

Socioeconomic Status, Occupational Factors and Lifestyle as Predictors of Hospitalisation for Back Disorders

The aim of this dissertation was to examine the determinants of severe back disorders leading to hospital admission in Finland. First, back-related hospitalisations were considered from the perspective of socioeconomic status, occupation, and industry. Secondly, the significance of psychosocial factors at work, sleep disturbances, and such lifestyle factors as smoking and overweight was studied as predictors of hospitalisation due to back disorders. Two sets of data were used: 1) the population-based data comprised all occupationally active Finns aged 25-64, and included hospitalisations due to back disorders in 1996 and 2) a cohort of employees followed up from 1973 to 2000 having been hospitalised due to back disorders. The results of the population-based study showed that people in physically strenuous industries and occupations, such as agriculture and manufacturing, were at an increased risk of being hospitalised for back disorders. The lowest hospitalisation rates were found in sedentary occupations. Occupational class and the level of formal education were independently associated with hospitalisation for back disorders. This stratification was fairly consistent across age-groups and genders. Men had a slightly higher risk of becoming hospitalised compared with women, and the risk increased with age among both genders. The results of the prospective cohort study showed that psychosocial factors at work such as low job control and low supervisor support predicted subsequent hospitalisation for back disorders even when adjustments were made for occupational class and physical workload history. However, psychosocial factors did not predict hospital admissions due to intervertebral disc disorders; only admissions due to other back disorders. Smoking and overweight predicted, instead, only hospitalisation for intervertebral disc disorders. These results suggest that the etiological factors of disc disorders and other back disorders differ from each other. The study concerning the association of sleep disturbances and other distress symptoms with hospitalisation for back disorders revealed that sleep disturbances predicted subsequent hospitalisation for all back disorders after adjustment for chronic back disorders and recurrent back symptoms at baseline, as well as for work-related load and lifestyle factors. Other distress symptoms were not predictive of hospitalisation.

Early growth and adult health: focus on blood pressure, glucose tolerance status and body composition

Theory of developmental origins of adult health and disease proposes that experiences during critical periods of early development may have consequences on health throughout a lifespan. Thesis studies aimed to characterize associations between early growth and some components of the metabolic syndrome cluster. Participants belong to two epidemiological cohorts with data on birth measurements and, for the younger cohort, on serial recordings of weight and height during childhood. They were born as singletons between 1924-33 and 1934-44 in the Helsinki University Central Hospital, and 500 and 2003 of them, respectively, attended clinical studies at the age of 65-75 and 56-70 years, respectively. In the 65-75 year old men and women, the well-known inverse relationship between birth weight and systolic blood pressure (SBP) was confined to people who had established hypertension. Among them a 1-kg increase in birth weight was associated with a 6.4-mmHg (95% CI: 1.0 to 11.9) decrease in SBP. This relationship was further confined to people with the prevailing Pro12Pro polymorphism of the peroxisome proliferator-activated receptor-γ2 (PPARγ2) gene. People with low birth weight were more likely to receive angiotensin-converting enzyme inhibitors/angiotensin-receptor blockers (ACEI/ARB, p=0.03), and, again, this relationship was confined to the carriers of the Pro12Pro (p=0.01 for interaction). These results suggest that the inverse association between birth weight and systolic BP becomes focused in hypertensive people because pathological features of BP regulation, associated with slow fetal growth, become self-perpetuating in adult life. Insulin resistance of the Pro12Pro carriers with low birth weight may interact with the renin-angiotensin system leading to raised BP levels. Habitual physical activity protected men and women who were small at birth, and thus at increased risk for the development of type 2 diabetes, against glucose intolerance more strongly. Among subjects with birth weight ≤3000 g, the odds ratio (OR) for glucose intolerance was 5.2 (95% CI: 2.1 to 13) in those who exercised less than 3 times per week compared to regular exercisers; in those who scored their exercise light compared with moderate exercisers (defined as comparable to brisk walking) the OR was 3.5 (1.5 to 8.2). In the 56-70 year old men a 1 kg increase in birth weight corresponded to a 4.1 kg (95% CI: 3.1 to 5.1) and in women to a 2.9 kg (2.1 to 3.6) increase in adult lean mass. Rapid gain in body mass index (BMI), i.e. crossing from an original BMI percentile to a higher one, before the age of 2 years increased adult lean mass index (LMI, lean mass/height squared) without excess fat accumulation whereas rapid gain in BMI during later childhood, despite the concurrent rise in LMI, resulted in a relatively higher increase in adult body fat mass. These findings illustrate how genes, the environment and their interactions, early growth patterns, and adult lifestyle modify adult health risks which originate from early life.

Effects of living crown reduction on needle element status of Scots pine

A wide range of biotic and abiotic factors, operating over different time perspectives and intensities, cause defoliation and a rapid decrease in the crown size of trees. Scleroderris canker disease [Gremmeniella abietina (Lagerb.) Morelet] has caused widespread crown reduction and tree mortality in Scots pine (Pinus sylvestris L) in forests in Scandinavia during the last three decades. In the 1980's, attempts were made to show, on the basis of the higher foliar N and S concentrations of affected pines in the diseased area, that sulphur and nitrogen deposition predispose trees to G. abietina. Unfortunately, in many studies on defoliated trees, exceptionally high or low needle mineral nutrient concentrations are still often interpreted as one of the causes of tree injury and not, conversely, as the result. In this thesis, three different field experiments, with foliar analysis as the main study method, were conducted in order to asses the possible long-term effects of living crown reduction on the needle nutrient concentrations of Scots pine trees in southern Finland. The crown ratio and length of the living crown were used to estimate the amount of defoliation in the reduced canopies. The material for the partial studies was collected and a total of 968 foliar samples were analysed individually (15-17 elements/sample) on a total of 488 sample trees (140 diseased, 116 pruned and 232 control trees) during the years 1987-1996 in 13 Scots pine stands. All the three experiments of this thesis provided significant evidence that severe, disease-induced defoliation or artificial pruning of the living branches can induce long-lasting nutritional changes in the foliage of the recovering trees under the typical growing conditions for Scots pine. The foliar concentrations of all the 17 mineral nutrients/elements analysed were affected, to a varying degree, by artificial pruning during the following three years. Although Scots pine, as an evergreen conifer, is considered to have low induced chemical responses to defoliation, this study proved experimentally under natural forest conditions that severe artificial pruning or disease-induced defoliation of Scots pine trees may induce biologically significant changes in the concentrations of most of the important macro- and micronutrients, as well as of carbon, in refoliated needles. Concerning the studies in this thesis, I find the results significant in providing new information about the long-term effects of rapid living crown reduction on the foliar nutrient and element status of Scots pine trees. Key words: Foliar analysis, defoliation, needle loss, pruning, nutrients, Pinus sylvestris, Gremmeniella abietina

Bone health and vitamin D status in children with motor disability and adults with intellectual disability

Osteoporosis is not only a disease of the elderly, but is increasingly diagnosed in chronically ill children. Children with severe motor disabilities, such as cerebral palsy (CP), have many risk factors for osteoporosis. Adults with intellectual disability (ID) are also prone to low bone mineral density (BMD) and increased fractures. This study was carried out to identify risk factors for low BMD and osteoporosis in children with severe motor disability and in adults with ID. In this study 59 children with severe motor disability, ranging in age from 5 to 16 years were evaluated. Lumbar spine BMD was measured with dual-energy x-ray absorptiometry. BMD values were corrected for bone size by calculating bone mineral apparent density (BMAD), and for bone age. The values were transformed into Z-scores by comparison with normative data. Spinal radiographs were assessed for vertebral morphology. Blood samples were obtained for biochemical parameters. Parents were requested to keep a food diary for three days. The median daily energy and nutrient intakes were calculated. Fractures were common; 17% of the children had sustained peripheral fractures and 25% had compression fractures. BMD was low in children; the median spinal BMAD Z-score was -1.0 (range -5.0 – +2.0) and the BMAD Z-score <-2.0 in 20% of the children. Low BMAD Z-score and hypercalciuria were significant risk factors for fractures. In children with motor disability, calcium intakes were sufficient, while total energy and vitamin D intakes were not. In the vitamin D intervention studies, 44 children and adolescents with severe motor disability and 138 adults with ID were studied. After baseline blood samples, the children were divided into two groups; those in the treatment group received 1000 IU peroral vitamin D3 five days a week for 10 weeks, and subjects in the control group continued with their normal diet. Adults with ID were allocated to receive either 800 IU peroral vitamin D3 daily for six months or a single intramuscular injection of 150 000 IU D3. Blood samples were obtained at baseline and after treatment. Serum concentrations of 25-OH-vitamin D (S-25-OHD) were low in all subgroups before vitamin D intervention: in almost 60% of children and in 77% of adults the S-25-OHD concentration was below 50 nmol/L, indicating vitamin D insufficiency. After vitamin D intervention, 19% of children and 42% adults who received vitamin D perorally and 12% of adults who received vitamin D intramuscularly had optimal S-25-OHD (>80 nmol/L). This study demonstrated that low BMD and peripheral and spinal fractures are common in children with severe motor disabilities. Vitamin D status was suboptimal in the majority of children with motor disability and adults with ID. Vitamin D insufficiency can be corrected with vitamin D supplements; the peroral dose should be at least 800 IU per day.