Essays on behavioral aspects of the design and disclosure of compensation contracts

This thesis consists of four essays on the design and disclosure of compensation contracts. Essays 1, 2 and 3 focus on behavioral aspects of mandatory compensation disclosure rules and of contract negotiations in agency relationships. The three experimental studies develop psychology- based theory and present results that deviate from standard economic predictions. Furthermore, the results of Essay 1 and 2 also have implications for firms’ discretion in how to communicate their top management’s incentives to the capital market. Essay 4 analyzes the role of fairness perceptions for the evaluation of executive compensation. For this purpose, two surveys targeting representative eligible voters as well as investment professionals were conducted. Essay 1 investigates the role of the detailed ‘Compensation Discussion and Analysis’, which is part of the Security and Exchange Commission’s 2006 regulation, on investors’ evaluations of executive performance. Compensation disclosure complying with this regulation clarifies the relationship between realized reported compensation and the underlying performance measures and their target achievement levels. The experimental findings suggest that the salient presentation of executives’ incentives inherent in the ‘Compensation Discussion and Analysis’ makes investors’ performance evaluations less outcome dependent. Therefore, investors’ judgment and investment decisions might be less affected by noisy environmental factors that drive financial performance. The results also suggest that fairness perceptions of compensation contracts are essential for investors’ performance evaluations in that more transparent disclosure increases the perceived fairness of compensation and the performance evaluation of managers who are not responsible for a bad financial performance. These results have important practical implications as firms might choose to communicate their top management’s incentive compensation more transparently in order to benefit from less volatile expectations about their future performance. Similar to the first experiment, the experiment described in Essay 2 addresses the question of more transparent compensation disclosure. However, other than the first experiment, the second experiment does not analyze the effect of a more salient presentation of contract information but the informational effect of contract information itself. For this purpose, the experiment tests two conditions in which the assessment of the compensation contracts’ incentive compatibility, which determines executive effort, is either possible or not. On the one hand, the results suggest that the quality of investors’ expectations about executive effort is improved, but on the other hand investors might over-adjust their prior expectations about executive effort if being confronted with an unexpected financial performance and under-adjust if the financial performance confirms their prior expectations. Therefore, in the experiment, more transparent compensation disclosure does not lead to more correct overall judgments of executive effort and to even lower processing quality of outcome information. These results add to the literature on disclosure which predominantly advocates more transparency. The findings of the experiment however, identify decreased information processing quality as a relevant disclosure cost category. Firms might therefore carefully evaluate the additional costs and benefits of more transparent compensation disclosure. Together with the results from the experiment in Essay 1, the two experiments on compensation disclosure imply that firms should rather focus on their discretion how to present their compensation disclosure to benefit from investors’ improved fairness perceptions and their spill-over on performance evaluation. Essay 3 studies the behavioral effects of contextual factors in recruitment processes that do not affect the employer’s or the applicant’s bargaining power from a standard economic perspective. In particular, the experiment studies two common characteristics of recruitment processes: Pre-contractual competition among job applicants and job applicants’ non-binding effort announcements as they might be made during job interviews. Despite the standard economic irrelevance of these factors, the experiment develops theory regarding the behavioral effects on employees’ subsequent effort provision and the employers’ contract design choices. The experimental findings largely support the predictions. More specifically, the results suggest that firms can benefit from increased effort and, therefore, may generate higher profits. Further, firms may seize a larger share of the employment relationship’s profit by highlighting the competitive aspects of the recruitment process and by requiring applicants to make announcements about their future effort. Finally, Essay 4 studies the role of fairness perceptions for the public evaluation of executive compensation. Although economic criteria for the design of incentive compensation generally do not make restrictive recommendations with regard to the amount of compensation, fairness perceptions might be relevant from the perspective of firms and standard setters. This is because behavioral theory has identified fairness as an important determinant of individuals’ judgment and decisions. However, although fairness concerns about executive compensation are often stated in the popular media and even in the literature, evidence on the meaning of fairness in the context of executive compensation is scarce and ambiguous. In order to inform practitioners and standard setters whether fairness concerns are exclusive to non-professionals or relevant for investment professionals as well, the two surveys presented in Essay 4 aim to find commonalities in the opinions of representative eligible voters and investments professionals. The results suggest that fairness is an important criterion for both groups. Especially, exposure to risk in the form of the variable compensation share is an important criterion shared by both groups. The higher the assumed variable share, the higher is the compensation amount to be perceived as fair. However, to a large extent, opinions on executive compensation depend on personality characteristics, and to some extent, investment professionals’ perceptions deviate systematically from those of non-professionals. The findings imply that firms might benefit from emphasizing the riskiness of their managers’ variable pay components and, therefore, the findings are also in line with those of Essay 1.

Electoral and Financial Bookkeeping: A Comparison of Pre-Electoral Pledges on Public Spending and the Outcome of Post-Electoral Budget Debates

In the wake of the financial crisis, budgetary discipline has taken centre stage in politics. More than ever a country's budget mirrors the true policy preferences of the legislative majority beyond all political discourse and cheap talk. The paper sheds light on mandate fulfilment in the field of public spending and fiscal policy in general. Based on previous work on pledge fulfilment in Switzerland the paper compares publicised pre-electoral statements of MPs on public spending and the development of the public finances with their post-electoral legislative behaviour during budget debates and votes. The findings of the paper confirm the results of the aforementioned earlier studies and point to the potential of budgetary statements for future mandate fulfilment research.

Factors influencing the accuracy of fetal weight estimation with a focus on preterm birth at the limit of viability: a systematic literature review

BACKGROUND Fetal weight estimation (FWE) is an important factor for clinical management decisions, especially in imminent preterm birth at the limit of viability between 23(0/7) and 26(0/7) weeks of gestation. It is crucial to detect and eliminate factors that have a negative impact on the accuracy of FWE. DATA SOURCES In this systematic literature review, we investigated 14 factors that may influence the accuracy of FWE, in particular in preterm neonates born at the limit of viability. RESULTS We found that gestational age, maternal body mass index, amniotic fluid index and ruptured membranes, presentation of the fetus, location of the placenta and the presence of multiple fetuses do not seem to have an impact on FWE accuracy. The influence of the examiner's grade of experience and that of fetal gender were discussed controversially. Fetal weight, time interval between estimation and delivery and the use of different formulas seem to have an evident effect on FWE accuracy. No results were obtained on the impact of active labor. DISCUSSION This review reveals that only few studies investigated factors possibly influencing the accuracy of FWE in preterm neonates at the limit of viability. Further research in this specific age group on potential confounding factors is needed.

The impacts of volcanic aerosol on stratospheric ozone and the Northern Hemisphere polar vortex: separating radiative-dynamical changes from direct effects due to enhanced aerosol heterogeneous chemistry

After major volcanic eruptions the enhanced aerosol causes ozone changes due to greater heterogeneous chemistry on the particle surfaces (HET-AER) and from dynamical effects related to the radiative heating of the lower stratosphere (RAD-DYN). We carry out a series of experiments with an atmosphere–ocean–chemistry–climate model to assess how these two processes change stratospheric ozone and Northern Hemispheric (NH) polar vortex dynamics. Ensemble simulations are performed under present day and preindustrial conditions, and with aerosol forcings representative of different eruption strength, to investigate changes in the response behaviour. We show that the halogen component of the HET-AER effect dominates under present-day conditions with a global reduction of ozone (−21 DU for the strongest eruption) particularly at high latitudes, whereas the HET-AER effect increases stratospheric ozone due to N2O5 hydrolysis in a preindustrial atmosphere (maximum anomalies +4 DU). The halogen-induced ozone changes in the present-day atmosphere offset part of the strengthening of the NH polar vortex during mid-winter (reduction of up to −16 m s-1 in January) and slightly amplify the dynamical changes in the polar stratosphere in late winter (+11 m s-1 in March). The RAD-DYN mechanism leads to positive column ozone anomalies which are reduced in a present-day atmosphere by amplified polar ozone depletion (maximum anomalies +12 and +18 DU for present day and preindustrial, respectively). For preindustrial conditions, the ozone response is consequently dominated by RAD-DYN processes, while under present-day conditions, HET-AER effects dominate. The dynamical response of the stratosphere is dominated by the RAD-DYN mechanism showing an intensification of the NH polar vortex in winter (up to +10 m s-1 in January). Ozone changes due to the RAD-DYN mechanism slightly reduce the response of the polar vortex after the eruption under present-day conditions.

On loop corrections to the dilepton rate

Next-to-leading order analyses of the dilepton production rate from a hot QCD plasma are reviewed. In general, the photon invariant mass is taken to be in the range K2∼(πT)2, permitting thereby for an interpolation between an OPE computation in a hard regime K2≫(πT)2 and an LPM resummed computation in a soft regime 0the computations are extended into the spacelike domain K2<0 in the future, they can also be systematically compared with lattice results at non-zero momentum.

The Dark Side of the Moon: Meta-analytical Impact of Recruitment Strategies on Risk Enrichment in the Clinical High Risk State for Psychosis

Background: The individual risk of developing psychosis after being tested for clinical high-risk (CHR) criteria (posttest risk of psychosis) depends on the underlying risk of the disease of the population from which the person is selected (pretest risk of psychosis), and thus on recruitment strategies. Yet, the impact of recruitment strategies on pretest risk of psychosis is unknown. Methods: Meta-analysis of the pretest risk of psychosis in help-seeking patients selected to undergo CHR assessment: total transitions to psychosis over the pool of patients assessed for potential risk and deemed at risk (CHR+) or not at risk (CHR−). Recruitment strategies (number of outreach activities per study, main target of outreach campaign, and proportion of self-referrals) were the moderators examined in meta-regressions. Results: 11 independent studies met the inclusion criteria, for a total of 2519 (CHR+: n = 1359; CHR−: n = 1160) help-seeking patients undergoing CHR assessment (mean follow-up: 38 months). The overall meta-analytical pretest risk for psychosis in help-seeking patients was 15%, with high heterogeneity (95% CI: 9%–24%, I 2 = 96, P < .001). Recruitment strategies were heterogeneous and opportunistic. Heterogeneity was largely explained by intensive (n = 11, β = −.166, Q = 9.441, P = .002) outreach campaigns primarily targeting the general public (n = 11, β = −1.15, Q = 21.35, P < .001) along with higher proportions of self-referrals (n = 10, β = −.029, Q = 4.262, P = .039), which diluted pretest risk for psychosis in patients undergoing CHR assessment. Conclusions: There is meta-analytical evidence for overall risk enrichment (pretest risk for psychosis at 38monhts = 15%) in help-seeking samples selected for CHR assessment as compared to the general population (pretest risk of psychosis at 38monhts=0.1%). Intensive outreach campaigns predominantly targeting the general population and a higher proportion of self-referrals diluted the pretest risk for psychosis.

Hyperthermia-related clinical trials on cancer treatment within the ClinicalTrials.gov registry

PURPOSE Hyperthermia has been shown to improve the effectiveness of chemotherapy and radiotherapy in the treatment of cancer. This paper summarises all recent clinical trials registered in the ClinicalTrials.gov registry. MATERIALS AND METHODS The records of 175,538 clinical trials registered at ClinicalTrials.gov were downloaded on 29 September 2014 and a database was established. We searched this database for hyperthermia or equivalent words. RESULTS A total of 109 trials were identified in which hyperthermia was part of the treatment regimen. Of these, 49 trials (45%) had hyperthermic intraperitoneal chemotherapy after cytoreductive surgery (HIPEC) as the primary intervention, and 14 other trials (13%) were also testing some form of intraperitoneal hyperthermic chemoperfusion. Seven trials (6%) were testing perfusion attempts to other locations (thoracic/pleural n = 4, limb n = 2, hepatic n = 1). Sixteen trials (15%) were testing regional hyperthermia, 13 trials (12%) whole body hyperthermia, seven trials (6%) superficial hyperthermia and two trials (2%) interstitial hyperthermia. One remaining trial tested laser hyperthermia. CONCLUSIONS In contrast to the general opinion, this analysis shows continuous interest and ongoing clinical research in the field of hyperthermia. Interestingly, the majority of trials focused on some form of intraperitoneal hyperthermic chemoperfusion. Despite the high number of active clinical studies, HIPEC is a topic with limited attention at the annual meetings of the European Society for Hyperthermic Oncology and the Society of Thermal Medicine. The registration of on-going clinical trials is of paramount importance for the achievement of a comprehensive overview of available clinical research activities involving hyperthermia.

Influence of noninjecting and injecting drug use on mortality, retention in the cohort, and antiretroviral therapy, in participants in the Swiss HIV Cohort Study.

OBJECTIVES We studied the influence of noninjecting and injecting drug use on mortality, dropout rate, and the course of antiretroviral therapy (ART), in the Swiss HIV Cohort Study (SHCS). METHODS Cohort participants, registered prior to April 2007 and with at least one drug use questionnaire completed until May 2013, were categorized according to their self-reported drug use behaviour. The probabilities of death and dropout were separately analysed using multivariable competing risks proportional hazards regression models with mutual correction for the other endpoint. Furthermore, we describe the influence of drug use on the course of ART. RESULTS A total of 6529 participants (including 31% women) were followed during 31 215 person-years; 5.1% participants died; 10.5% were lost to follow-up. Among persons with homosexual or heterosexual HIV transmission, noninjecting drug use was associated with higher all-cause mortality [subhazard rate (SHR) 1.73; 95% confidence interval (CI) 1.07-2.83], compared with no drug use. Also, mortality was increased among former injecting drug users (IDUs) who reported noninjecting drug use (SHR 2.34; 95% CI 1.49-3.69). Noninjecting drug use was associated with higher dropout rates. The mean proportion of time with suppressed viral replication was 82.2% in all participants, irrespective of ART status, and 91.2% in those on ART. Drug use lowered adherence, and increased rates of ART change and ART interruptions. Virological failure on ART was more frequent in participants who reported concomitant drug injections while on opiate substitution, and in current IDUs, but not among noninjecting drug users. CONCLUSIONS Noninjecting drug use and injecting drug use are modifiable risks for death, and they lower retention in a cohort and complicate ART.