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.

Improving the dependability of research in personality and social psychology: Recommendations for research and educational practice

In this article, the Society for Personality and Social Psychology (SPSP) Task Force on Publication and Research Practices offers a brief statistical primer and recommendations for improving the dependability of research. Recommendations for research practice include (a) describing and addressing the choice of N (sample size) and consequent issues of statistical power, (b) reporting effect sizes and 95% confidence intervals (CIs), (c) avoiding “questionable research practices” that can inflate the probability of Type I error, (d) making available research materials necessary to replicate reported results, (e) adhering to SPSP’s data sharing policy, (f) encouraging publication of high-quality replication studies, and (g) maintaining flexibility and openness to alternative standards and methods. Recommendations for educational practice include (a) encouraging a culture of “getting it right,” (b) teaching and encouraging transparency of data reporting, (c) improving methodological instruction, and (d) modeling sound science and supporting junior researchers who seek to “get it right.”

Computer Aided Surgery for Percutaneous Nephrolithotomy: Clinical Requirement Analysis and System Design

Percutaneous nephrolithotomy (PCNL) for the treatment of renal stones and other related renal diseases has proved its efficacy and has stood the test of time compared with open surgical methods and extracorporal shock wave lithotripsy. However, access to the collecting system of the kidney is not easy because the available intra-operative image modalities only provide a two dimensional view of the surgical scenario. With this lack of visual information, several punctures are often necessary which, increases the risk of renal bleeding, splanchnic, vascular or pulmonary injury, or damage to the collecting system which sometimes makes the continuation of the procedure impossible. In order to address this problem, this paper proposes a workflow for introduction of a stereotactic needle guidance system for PCNL procedures. An analysis of the imposed clinical requirements, and a instrument guidance approach to provide the physician with a more intuitive planning and visual guidance to access the collecting system of the kidney are presented.

Non-traumatic spinal cord ischaemia in childhood - Clinical manifestation, neuroimaging and outcome

Spinal cord ischaemia is rare in childhood and information on clinical presentation and outcome is scarce.

Multiple meningiomas: clinical, radiological, surgical, and pathological findings with outcome in four cats

The present report describes the clinical signs, magnetic resonance imaging (MRI) findings, surgical procedure, pathological findings and follow-up in four cats with multiple meningiomas; three castrated male and one spayed female domestic shorthair indoor cats, ranging in age from 11 to 14 years. In three of four cats, clinical signs at presentation were suggestive of a focal lesion. Three cats had two meningiomas and one had four meningiomas. Most of the tumours were supratentorial, one arose from the tentorium and one was infratentorial. The duration of presenting signs before surgery ranged from 10 days to 11 months. Postoperative MRI revealed complete gross tumour removal in three cases. In one cat with two cranial fossa meningiomas, subtotal excision with a small basal remnant (2 x 2 mm) of the ventral part of one meningioma lying on the floor of the skull, was observed. Based on histopathological architecture, six tumours revealed features of a transitional subtype meningioma, and four of a meningotheliomatous meningioma. In each cat, the multiple meningiomas were all assigned to the same histopathological group. The preoperative presenting signs had resolved by the follow-up examinations 4 weeks after surgery in two cats. Long-term follow-up evaluation revealed that surgically-induced or exacerbated neurological deficits in two cats had completely or almost completely resolved within 8 weeks of surgery. All patients are still alive 12 to 21 months after surgery and no clinical signs of recurrence could be detected at that time.

Comparisons of bacterial patterns present at implant and tooth sites in subjects on supportive periodontal therapy. I. Impact of clinical variables, gender and smoking

OBJECTIVE: (I) To compare the oral microflora at implant and tooth sites in subjects participating in a periodontal recall program, (II) to test whether the microflora at implant and tooth sites differ as an effect of gingival bleeding (bleeding on probing (BOP)), or pocket probing depth (PPD), and (III) to test whether smoking and gender had an impact on the microflora. MATERIAL AND METHODS: Data were collected from 127 implants and all teeth in 56 subjects. Microbiological data were identified by the DNA-DNA checkerboard hybridization. RESULTS: PPD> or =4 mm were found in 16.9% of tooth, and at 26.6% of implant sites (P<0.01). Tooth sites with PPD> or =4 mm had a 3.1-fold higher bacterial load than implant sites (mean difference: 66%, 95% confidence interval (CI): 40.7-91.3, P<0.001). No differences were found for the red, orange, green, and yellow complexes. A higher total bacterial load was found at implant sites with PPD> or =4 mm (mean difference 35.7 x 10(5), 95% CI: 5.2 (10(5)) to 66.1 (10(5)), P<0.02 with equal variance not assumed). At implant sites, BOP had no impact on bacterial load but influenced the load at tooth sites (P<0.01). CONCLUSION: BOP, and smoking had no impact on bacteria at implant sites but influenced the bacterial load at tooth sites. Tooth sites harbored more bacteria than implant sites with comparable PPD. The 4 mm PPD cutoff level influenced the distribution and amounts of bacterial loads. The subject factor is explanatory to bacterial load at both tooth and implant sites.

Gemcitabine plus capecitabine compared with gemcitabine alone in advanced pancreatic cancer: a randomized, multicenter, phase III trial of the Swiss Group for Clinical Cancer Research and the Central European Cooperative Oncology Group

This phase III trial compared the efficacy and safety of gemcitabine (Gem) plus capecitabine (GemCap) versus single-agent Gem in advanced/metastatic pancreatic cancer.

Diagnostic workup of patients with acute transverse myelitis: spectrum of clinical presentation, neuroimaging and laboratory findings

STUDY DESIGN: Retrospective 9-year survey. OBJECTIVES: Clinical presentation of acute myelitis syndromes is variable, and neuroimaging and laboratory findings are not specific enough to establish the diagnosis with certainty. We evaluated the spectrum clinical features and paraclinical findings encountered during diagnostic workup and aiding the diagnosis. SETTING: Department of Neurology, Inselspital Bern, Switzerland. MATERIAL: Charts and magnetic resonance imaging (MRI) of 63 patients discharged with the diagnosis of acute transverse myelitis. RESULTS: The diagnosis was supported by abnormal MRI and cerebrospinal fluid (CSF) findings in 52 patients (82.5%) and suspected in the remaining either because of a spinal cord MRI lesion suggestive of myelitis (n=5), or abnormal CSF findings (n=4), or electrophysiological evidence of a spinal cord dysfunction (n=2). Clinical impairment was mild (ASIA D) in the majority. All patients had sensory disturbances, whereas motor deficit and autonomic dysfunction were less frequent. Neurological levels were mainly located in cervical or thoracic dermatomes. Spinal cord lesions were visualized by MRI in 90.4% of the patients and distributed either in the cervical or thoracic cord, or both. Multiple lesions were present in more than half of the patients, and lateral, centromedullary and posterior locations were most common. A high percentage of multiple sclerosis (MS)-typical brain lesions and CSF findings suggested a substantial number of MS-related myelitis in our cohort. CONCLUSION: The diagnostic workup of acute myelitis discloses a broad spectrum of CSF or MRI findings, and may be associated with diagnostic uncertainty due to lack of specific CSF or MRI features, or pathological findings.

Acute disseminated encephalomyelitis in adults: a reappraisal of clinical, CSF, EEG, and MRI findings

OBJECTIVES: To establish an adequate definition of acute disseminated encephalomyelitis (ADEM) in adults, based on our clinical observations of a case-series. METHODS: Over a period of three years 10 adult patients with a para- or postinfectious disseminated (diffuse or multifocal) syndrome of the CNS fulfilling predefined strict criteria for the diagnosis of ADEM were encountered and systematically followed. RESULTS: The age ranged from 21 to 62 years, two were men. MRI was normal in 5 patients and only mildly abnormal in the remaining patients. CSF was normal in 5 patients and mildly abnormal in the remainder, EEG was abnormal in 7/8 patients. All patients survived and were followed over a period of 30 months (range: 8 to 48 months). Nine patients were left with some residual defects, consisting most often of a mild cognitive impairment. CONCLUSIONS: The EEG as an investigation of brain function can be crucial in establishing the organic nature of disease. MRI is important to exclude other diffuse or multifocal encephalopathies. However, in contrast to previous reports in the literature abnormal MRI should not be considered mandatory in adult ADEM. Difficulties in the diagnosis of ADEM are discussed and the importance of clinical and paraclinical findings for establishing the diagnosis is outlined.