Essays in banking and corporate finance

Abstract This paper presents a model of executive compensation in which the executive is risk-averse and has specific knowledge -knowledge about the optimal actions to take that is costly to transfer to the principal. The model generates predictions that are consistent with the available evidence and provides a rationale for a number of unresolved puzzles in executive compensation. Notably, we find that relative performance evaluation is optimal only if the quality of specific knowledge is low. We also show (1) why some common risk components are not filtered out of executives' pay, (2) why performance is more likely to be evaluated relative to aggregate market movements than relative to industry movements, and (3) why executives with higher perceived abilities are given stronger incentives. Finally, we demonstrate that the relation between risk and incentives may be positive or negative, depending on the quality of the executive's specific knowledge.

Three essays in dynamic corporate finance

Summary Throughout my thesis, I elaborate on how real and financing frictions affect corporate decision making under uncertainty, and I explore how firms time their investment and financing decisions given such frictions. While the macroeconomics literature has focused on the impact of real frictions on investment decisions assuming all equity financed firms, the financial economics literature has mainly focused on the study of financing frictions. My thesis therefore assesses the join interaction of real and financing frictions in firms' dynamic investment and financing decisions. My work provides a rationale for the documented poor empirical performance of neoclassical investment models based on the joint effect of real and financing frictions on investment. A major observation relies in how the infrequency of corporate decisions may affect standard empirical tests. My thesis suggests that the book to market sorts commonly used in the empirical asset pricing literature have economic content, as they control for the lumpiness in firms' optimal investment policies. My work also elaborates on the effects of asymmetric information and strategic interaction on firms' investment and financing decisions. I study how firms time their decision to raise public equity when outside investors lack information about their future investment prospects. I derive areal-options model that predicts either cold or hot markets for new stock issues conditional on adverse selection, and I provide a rational approach to study jointly the market timing of corporate decisions and announcement effects in stock returns. My doctoral dissertation therefore contributes to our understanding of how under real and financing frictions may bias standard empirical tests, elaborates on how adverse selection may induce hot and cold markets in new issues' markets, and suggests how the underlying economic behaviour of firms may induce alternative patterns in stock prices.

Micro-insurance through corporate-NGO partnerships in West Bengal : opportunities and constraints

This Practical Note examines the nascent micro-insurance sector in West Bengal, paying particular attention to the corporate- NGO partnership model for micro-insurance distribution,which has been enabled by India's unique regulatory framework. We challenge the popularconstruction of this model as a 'win - win' for all parties by analysing conflicting understandings of micro-insurance schemes and their purposes by insurance companies, NGOs, and poorvillagers. The article also considers the role of the specific political context of West Bengal inconstricting corporate- NGO micro-insurance

Determinants of Corporate Disclosure : A Multicountry, Multilevel Model

Abstract The complexity of the current business world is making corporate disclosure more and more important for information users. These users, including investors, financial analysts, and government authorities rely on the disclosed information to make their investment decisions, analyze and recommend shares, and to draft regulation policies. Moreover, the globalization of capital markets has raised difficulties for information users in understanding the differences incorporate disclosure across countries and across firms. Using a sample of 797 firms from 34 countries, this thesis advances the literature on disclosure by illustrating comprehensively the disclosure determinants originating at firm systems and national systems based on the multilevel latent variable approach. Under this approach, the overall variation associated with the firm-specific variables is decomposed into two parts, the within-country and the between-country part. Accordingly, the model estimates the latent association between corporate disclosure and information demand at two levels, the within-country and the between-country level. The results indicate that the variables originating from corporate systems are hierarchically correlated with those from the country environment. The information demand factor indicated by the number of exchanges listed and the number of analyst recommendations can significantly explain the variation of corporate disclosure for both "within" and "between" countries. The exogenous influences of firm fundamentals-firm size and performance-are exerted indirectly through the information demand factor. Specifically, if the between-country variation in firm variables is taken into account, only the variables of legal systems and economic growth keep significance in explaining the disclosure differences across countries. These findings strongly support the hypothesis that disclosure is a response to both corporate systems and national systems, but the influence of the latter on disclosure reflected significantly through that of the former. In addition, the results based on ADR (American Depositary Receipt) firms suggest that the globalization of capital markets is harmonizing the disclosure behavior of cross-boundary listed firms, but it cannot entirely eliminate the national features in disclosure and other firm-specific characteristics.

Reduction of corneal edema in endotoxin-induced uveitis after application of L-NAME as nitric oxide synthase inhibitor in rats by iontophoresis.

PURPOSE: To investigate the involvement of the cornea during endotoxin-induced uveitis (EIU) in the rat and the effect of Ngamma-nitro-L-arginine methyl ester (L-NAME) as nitric oxide synthase (NOS) inhibitor, administered by iontophoresis. METHODS: EIU was induced in Lewis rats that were killed at 8 and 16 hours after lipopolysaccharide (LPS) injection. The severity of uveitis was evaluated clinically at 16 hours, and nitrite levels were evaluated in the aqueous humor at 8 hours. Corneal thickness was measured, 16 hours after LPS injection, on histologic sections using an image analyzer. Transmission electron microscopy (TEM) was used for fine analysis of the cornea. Transcorneoscleral iontophoresis of L-NAME (100 mM) was performed either at LPS injection or at 1 and 2 hours after LPS injection. RESULTS: At 16 hours after LPS injection, mean corneal thickness was 153.7+/-5.58 microm in the group of rats injected with LPS (n=8) compared with 126.89+/-11.11 microm in the saline-injected rats (n=8) (P < 0.01). TEM showed stromal edema and signs of damage in the endothelial and epithelial layers. In the group of rats treated by three successive iontophoreses of L-NAME (n=8), corneal thickness was 125.24+/-10.36 microm compared with 146.76+/-7.52 microm in the group of rats treated with iontophoresis of saline (n=8), (P=0.015). TEM observation showed a reduction of stromal edema and a normal endothelium. Nitrite levels in the aqueous humor were significantly reduced at 8 hours by L-NAME treatment (P=0.03). No effect on corneal edema was observed after a single iontophoresis of L-NAME at LPS injection (P=0.19). Iontophoresis of saline by itself induced no change in corneal thickness nor in TEM structure analysis compared with normal rats. CONCLUSIONS: Corneal edema is observed during EIU. This edema is significantly reduced by three successive iontophoreses of L-NAME, which partially inhibited the inflammation. A role of nitric oxide in the corneal endothelium functions may explain the antiedematous effect of L-NAME.

Precarious Work: Agenda and Implications for Corporate Social Responsibility

Precarious work, in contrast to regular, permanent wage work, is commonly associated to insecure and unstable, and often poor quality jobs. The concept of precarious work relates either to a socioeconomic group which allows one to refer it to a "class in itself," or as - pursued more recently - to the precarization process which results in a growing fragmentation of societal structures. Common to both conceptions is that they refer to the exposition of workers to employment instability, limited access to legal and union protection, socially irresponsible and discriminating employment practices, and social and economic vulnerability in general. The present contribution provides an overview of some key issues and future directions of research on precarious work relevant to CSR researchers, policy-makers, and social scientists.

Citizens' preferences for brand name drugs for treating acute and chronic conditions: a pilot study.

Background: Generic drugs have been advocated to decrease the proportion of healthcare costs devoted to drugs, but are still underused. Objective: To assess citizens' preferences for brand name drugs (BNDs) compared with generic drugs for treating acute and chronic conditions. Methods: A questionnaire with eight hypothetical scenarios describing four acute and four chronic conditions was developed, with willingness to pay (WTP) determined using a payment card system randomized to ascending (AO) or descending order (DO) of prices. The questionnaire was distributed with an explanation sheet, an informed consent form and a pre-stamped envelope over a period of 3 weeks in 19 community pharmacies in Lausanne, Switzerland. The questionnaire was distributed to every third customer who also had health insurance, understood French and was aged =16 years (up to a maximum of ten customers per day and 100 per pharmacy). The main outcome measure was preferences assessed by WTP for BNDs as compared with generics, and impact of participants' characteristics on WTP. Results: Of the 1800 questionnaires, 991 were distributed and 393 returned (pharmacy participation rate?=?55%, subject participation rate?=?40%, overall response rate?=?22%); 51.7% were AO and 48.3% DO. Participants were predominantly women (62.6%) and of median age 62 years (range 16-90). The majority (70%) declared no WTP for BNDs as compared with generics. WTP was higher in people with an acute disease than in those with a chronic disease, did not depend on the type of chronic disease, and was higher in people from countries other than Switzerland. Conclusions: Most citizens visiting pharmacies attribute no added value to BNDs as compared with generics, although some citizen characteristics affected WTP. These results could be of interest to several categories of decision makers within the healthcare system.

The correct name, species diagnosis, and distribution of the Sicilian shrew

New karyological and morphological data show that Sicily, the Egadi Islands, Malta and Gozo are (ore were) inhabited by a particular species of Crocidura, for which the name Crocidura sicula Miller, 1901 is available. The species is briefly diagnosed and described and a new key to the European species of Crocidura is presented