Essays on Stock Option Compensation and the Role of Incentives and Risk (summary section only)

Managerial pay-for-performance sensitivity has increased rapidly around the world. Early empirical research showed that pay-for-performance sensitivity resulting from stock ownership and stock options appeared to be quite low during the 1970s and early 1980s in the U.S. However, recent empirical research from the U.S. shows an enormous increase in pay-for-performance sensitivity. The global trend has also reached Finland, where stock options have become a major ingredient of executive compensation. The fact that stock options seem to be an appealing form of remuneration from a theoretical point of view combined with the observation that the use of this compensation form has increased significantly during the recent years, implies that research on the dynamics of stock option compensation is highly relevant for the academic community, as well as for practitioners and regulators. The research questions of the thesis are analyzed in four separate essays. The first essay examines whether stock option compensation practices of Finnish firms are consistent with predictions from principal-agent theory. The second essay explores one of the major puzzles in the compensation literature by studying determinants of stock option contract design. In theory, optimal contract design should vary according to firm characteristics. However, in the U.S., variation in contract design seems to be surprisingly low, a phenomenon generally attributed to tax and accounting considerations. In Finland, however, firms are not subject to stringent contracting restrictions, and the variation in contract design tends, in fact, to be quite substantial. The third essay studies the impact of price- and risk incentives arising from stock option compensation on firm investment. In addition, the essay explores one of the most debated questions in the literature, in particular, the relation between incentives and firm performance. Finally, several strands of literature in both economics and corporate finance hypothesize that economic uncertainty is related to corporate decision-making. Previous research has shown that risk tends to slow down firm investment. In the fourth essay, it is hypothesized that firm risk slows down growth from a more universal perspective. Consistent with this view, it is shown that risk not only tends to slow down firm investment, but also employment growth. Moreover, the essay explores whether the nature of firms’ compensation policies, in particular, whether firms make use of stock option compensation, affects the relation between risk and firm growth. In summary, the four essays contribute to the current understanding of stock options as a form of equity incentives, and how incentives and risk affect corporate decision-making. By this, the thesis promotes the knowledge related to the modern theory of the firm.

The impact of stock option incentives on investment and firm value

This paper analyzes the relations among firm-level stock option portfolio incentives, investment, and firm value based on a sample of Finnish firms during the time period 1987 – 2000. Utilizing exact and complete information regarding stock option portfolio characteristics, we find some evidence that firm investment is increasing in the incentives to increase stock price (delta) and risk (vega). Furthermore, we find strong evidence of a positive relation between both incentive effects and firm value (Tobin’s Q). In contrast, when we allow for stock option incentives, investment, and firm value to be simultaneously determined, we find no evidence that investment is increasing in incentives. However, even after controlling for endogeneity, we find that both incentive effects arising from stock option compensation display a positive and significant effect on firm value. Finally, in contradiction to earlier findings, we observe that neither Tobin’s Q nor investment drives incentives.

Does Uncertainty Affect Investment and Labor Demand?

This paper analyzes the effect of uncertainty on investment and labor demand for Finnish firms during the time period 1987 – 2000. Utilizing a stock return based measure of uncertainty decomposed into systematic and idiosyncratic components, the results reveal that idiosyncratic uncertainty significantly reduces both investment and labor demand. Idiosyncratic uncertainty seems to influence investment in the current period, whereas the depressing effect on labor demand appears with a one-year lag. The results provide support that the depressing effect of idiosyncratic uncertainty on investment is stronger for small firms in comparison to large firms. Some evidence is reported regarding differential effects of uncertainty on labor demand conditional on firm characteristics. Most importantly, the depressing effect of lagged idiosyncratic uncertainty on labor demand tends to be stronger for diversified firms compared with focused firms.

'South-South' Remittance - Poverty reduction nexus. The Case of 'Hadiya' immigrants in South Africa, as Agents of 'Constituence development' in Ethiopia, and the policy implications of their 'remittance instrument'

This thesis explores the link between South-South remittance and development. It attempts to establish improved understanding about the role of immigrants as agents of constituency growth and development. By doing so, it illuminates the dark corners of the policy implications that the unconventional development agency of immigrants might have for countries in the Organization ft Economic Cooperation and Development (OECD). The thesis problematises the existence of state-centric international cooperation as providing the recipe for failed Aid in the face of global poverty menace. In the last half a century, the relative shi' of focus to non-state actors brought about the proliferation of NGOs. That, intrun, helped improve international access to crisis situations; however, their long-term remedial impacts on poverty and development have been contested. Major misgivings for non-governmental organizations (NGOs) are, on one hand, low level goal-bound expenditures and lack of independence from influence of the state, on the other. Therefore, the thesis enterprises to empirically verify its fundamental question whether remitting immigrants constitute an alternative development agency to the traditional players: the State and NGOs. Its main arguments are: due to state's failures in bringing sustainable development in many countries of the South, the future of poverty reduction and development also rests in immigrants' remittances. Nonetheless, in the last decade, remittance security-nexus dominated its discourse. Because of that remittance was viewed as something requiring global regime and restrictions. These temptations to tightly regulate remittance flows carry the danger of overlooking its trans-boundary nature and its strong link with livelihood of the poor. Therefore, to avoid unintended consequences of interventions, there need to be clear policy that bases itself on a discursive knowledge on the issues of North-South and South-South remittances The study involved both literature based and empirical research. It employed Discourse Analysis (C as main method for the former and snow-balling as its approach for the latter. For the first part the thesis constructed three conceptual models, these are: metrological model, police model and ecological model on remittance development-nexus. Through this modeling, the thesis achieved better deconstruction on the concepts remittance, immigrants and development agency. The protagonists of each model, the values and interests they represent, and their main arguments along various lines of dichotomies have been discussed. For instance, the main treats of meteorological model include: it sees remittance as transitional economic variable which require constant speculations and global management; it acts as meteorological station for following up or predicting the level, direction, flow and movement of global remittance. It focuses on official lines and considers the state as legitimate recipient of advic and positive consequence of remittance. On the other hand, police model views remittance as beir at best, development neutral or as an illicit activity requiring global regulations and tight control. Both immigrants and remittance viewed as subversive to establishments. It gives primacy to state stable agent of development and a partner for international cooperation. The anti-thesis to the police model is supplied by ecological model, which this thesis is a part. Ecological model on remittance and immigrants argues that, tight global regulations alone cannot be a panacea for possible abuse of informal remittance system. Ecological model, not only links remittance to poverty reduction, the main trust of development, but also considers the development agency of immigrants as critical factor for 21st century north-south development intervention. It sees immigrants as development conscious and their remittance instrument as most stable flow of finance to the developing countries. Besides, it sees remittance as effective poverty solutions than Foreign Direct Investment and international AID. This thesis focuses on the significance of South-South remittance and investigates the South Africa - Ethiopia remittance corridor, as case study; and empirically verifies the role of Ethiopian (Kembata and Hadiya) immigrants in South Africa as agents of local development back home. The study involved techniques of interview, group discussions, observations and investigative study. It also looked into the determinants of their migration to South Africa, and their remittance to Ethiopia. The theoretical models in the first part of the thesis have been operationalised throughout the empirical part to verify if the Kembata and Hadiya immigrants played the crucial role in their household poverty and local development in comparison with the Ethiopian state and the NGOs involved in the system. As evidenced by the research the thesis has made three distinct contributions to the discourse of remittance development-nexus. Fist, it systematized the debate about linkages between remittance, immigrants, development agency and policy of international cooperation by creating three conceptual models (school of thoughts); second, it singled out remitting immigrants as new agents of development in the South; third, it deconstructed concept of remittance and established South¬South remittance as additional sphere of academic investigation. In addition to the above contributions, the thesis finds that Kembata and Hadiya immigrants have engaged in various developmental activities in their locality than usually anticipated. Hence, it concludes that Ethiopian immigrants constitute an alternative development agency to the state and other non-state actors in their country, and the lesson can be applied to poverty reduction strategies in most developing countries.

Retroalimentação do controle interno para os órgãos centrais do sistema de planejamento e orçamento federal em questões estruturantes

Analisa o fluxo do processo de retroalimentação da CGU para órgãos centrais do Sistema de Planejamento e Orçamento Federal, bem como as possibilidades de retroalimentação da CGU a esses órgãos. Propõe a previsão na legislação de um Comitê Operacional e de um Comitê Estratégico do Ciclo de Gestão.

Annual report 2000 - North Pacific Marine Science Organization (PICES). Ninth meeting, Hakodate, Hokkaido, Japan, October 20-28, 2000

Report of Opening Session (pdf 42 KB) Report of Governing Council Meetings (pdf 70 KB) Reports of Science Board and Committees: Science Board (pdf 57 KB) Biological Oceanography Committee (pdf 43 KB) Working Group 14: Effective Sampling of Micronekton Advisory Panel on Marine birds and mammals Fishery Science Committee (pdf 31 KB) Working Group 16 on Implications of Climate change to Fisheries Management Marine Environmental Quality Committee (pdf 47 KB) Working Group 8: Practical Assessment Methodology Working Group 15 on Ecology of Harmful Algal Blooms (HABs) in the North Pacific Physical Oceanography and Climate Committee (pdf 41 KB) Working Group 13: CO2 in the North Pacific Implementation Panel on the CCCC Program (pdf 120 KB) BASS Task Team Advisory Panel on Iron Fertilization Experiment MODEL Task Team MONITOR Task Team Advisory Panel on Continuous Plankton Recorder Survey in the North Pacific REX Task Team Technical Committee on Data Exchange (pdf 24 KB) Finance and Administration: Report of the Finance and Administration Committee (pdf 49 KB) Assets on 31st of December, 1999 Income and Expenditures for 1999 Budget for 2001 Report of the Fund-Raising Committee (pdf 20 KB) Composition of the Organization (pdf 27 KB) List of Participants (pdf 94 KB) List of Acronyms (pdf 13 KB)

Annual report 1999 - North Pacific Marine Science Organization (PICES). Eighth meeting, Vladivostok, Russia, October 8-17, 1999

Report of Opening Session (pdf 124 KB) Report of Governing Council Meetings (pdf 67 KB) Reports of Science Board and Committees: Science Board (pdf 56 KB) Biological Oceanography Committee (pdf 27 KB) Fishery Science Committee (pdf 53 KB) Working Group 12: Crabs and Shrimps Marine Environmental Quality Committee (pdf 92 KB) Working Group 8: Practical Assessment Methodology Physical Oceanography and Climate Committee (pdf 64 KB) Working Group 13: CO2 in the North Pacific Implementation Panel on the CCCC Program (pdf 51 KB) Technical Committee on Data Exchange (pdf 31 KB) Publication Committee (pdf 21) Finance and Administration: Report of the Finance and Administration Committee (pdf 40 KB) Assets on 31st of December, 1998 Income and Expenditures for 1998 Budget for 2000 Composition of the Organization (pdf 27 KB) List of Participants (pdf 94 KB) List of Acronyms (pdf 13 KB)

Annual report 1998 - North Pacific Marine Science Organization (PICES). Seventh meeting, Fairbanks, Alaska, U.S.A., October 14-25, 1998

Report of Opening Session (pdf 68 KB) Report of Governing Council Meetings (pdf 61 KB) Reports of Science Board and Committees: Science Board (pdf 56 KB) Biological Oceanography Committee (pdf 64 KB) Working Group 14: Effective sampling of micronekton to estimate ecosystem carrying capacity Working Group 11: Consumption of Marine Resources by Marine Birds and Mammals Fishery Science Committee (pdf 55 KB) Working Group 12: Crabs and Shrimps Marine Environmental Quality Committee (pdf 104 KB) Working Group 8: Practical Assessment Methodology Physical Oceanography and Climate Committee (pdf 44KB) Working Group 13: CO2 in the North Pacific Technical Committee on Data Exchange (pdf 37 KB) Implementation Panel on the CCCC Program (pdf 54 KB) Finance and Administration: Report of the Finance and Administration Committee (pdf 31 KB) Assets on 31st of December, 1997 Income and Expenditures for 1997 Budget for 1999 Composition of the Organization (pdf 27 KB) List of Participants (pdf 48 KB) List of Acronyms (pdf 13 KB)

Annual report 1997 - North Pacific Marine Science Organization (PICES). Sixth meeting, Pusan, Republic of Korea, October 14-26, 1997

Proceedings of the Sixth Annual Meeting Agenda Report of Opening Session Report of Governing Council Meetings Reports of Science Board and Committees Science Board Handbook of Guidelines Working Group 9: Subarctic Pacific Monitoring Report of the Study Group on Communications Biological Oceanography Committee Working Group 11: Consumption of Marine Resources by Marine Birds and Mammals Fishery Science Committee Working Group 12: Crabs and Shrimps Marine Environmental Quality Committee Working Group 8: Practical Assessment Methodology Physical Oceanography and Climate Committee Working Group 10: Circulation and Ventilation in the Japan Sea /East Sea and its Adjacent Areas Technological Committee on Data Exchange Implementation Panel on the CCCC Program Finance and Administration Report of Finance and Administration Committee Assets on 31st of December, 1996 Income and Expenditures for 1996 Budget for 1998 Composition of the Organization Officers, Delegates, Finance and Administration Committee, Science Board, Secretariat, Scientific and Technical Committees List of Participants List of Acronyms (Document has 142 pages.)

Annual report 1996 - North Pacific Marine Science Organization (PICES). Fifth meeting, Nanaimo, British Columbia, Canada, October 11-20, 1996

Proceedings of the Fifth Annual Meeting Agenda Report of Opening Session Report of Governing Council Meetings Reports of Science Board and Committees Science Board Working Group 5: Bering Sea (Final Report) Working Group 9: Subarctic Pacific Monitoring Report of the First Meeting Report of the Second Meeting Biological Oceanography Committee Working Group 11: Consumption of Marine Resources by Marine Birds and Mammals Fishery Science Committee Working Group 12: Crabs and Shrimps Marine Environmental Quality Committee Working Group 8: Practical Assessment Methodology Physical Oceanography and Climate Committee Working Group 10: Circulation and Ventilation in the Japan Sea /East Sea and its Adjacent Areas Technological Committee on Data Exchange Finance and Administration Report of Finance and Administration Committee Assets on 31st of December, 1995 Income and Expenditures for 1995 Budget for 1997 Composition of the Organization Officers, Delegates, Finance and Administration Committee, Science Board, Secretariat, Scientific and Technical Committees List of Participants List of Acronyms (Document has 163 pages.)

Annual report 1995 - North Pacific Marine Science Organization (PICES). Fourth meeting, Qingdao, People's Republic of China, October 16-24, 1995

Report of Opening Session Report of Governing Council Meetings Reports of Science Board and Committees: Science Board Biological Oceanography Committee Fishery Science Committee Marine Environmental Quality Committee Physical Oceanography and Climate Committee Technological Committee on Data Exchange Finance and Administration: Report of the Finance and Administration Committee Assets on 31st of December, 1994 Income and Expenditures for 1994 Budget for 1996 Composition of the Organization List of Participants List of Acronyms (Document has 96 pages.)

Annual report 1994 - North Pacific Marine Science Organization (PICES). Third meeting, Nemuro, Hokkaido, Japan, October 15-24, 1994

Report of Opening Session Report of Governing Council Meetings Reports of Science Board and Committees: Science Board Biological Oceanography Committee Fishery Science Committee Marine Environmental Quality Committee Physical Oceanography and Climate Committee Reports of Workshops Report of PICES-GLOBEC Workshop (Summary) PICES-GLOBEC Science Plan Findings and Recommendations of the PICES-STA Workshop on Monitoring in the Subarctic North Pacific Finance and Administration: Report of the Finance and Administration Committee Assets on 31st of December, 1993 Income and Expenditures for 1993 Budget for 1995 Composition of the Organization List of Participants (Document has 95 pages.)

Annual report 1993 - North Pacific Marine Science Organization (PICES). Second meeting, Seattle, WA, U.S.A., October 25-30, 1993

Report of Opening Session Report of Governing Council Meetings Reports of Science Board and Committees: Science Board Biological Oceanography Committee Fishery Science Committee Marine Environmental Quality Committee Physical Oceanography and Climate Committee Finance and Administration: Report of the Finance and Administration Committee Assets on 31st of December, 1992 Income and Expenditures for 1992 Budget for 1994 Composition of the Organization List of Participants (Document has 78 pages.)

Demonstrativo das despesas obrigatórias de caráter continuado : análise e evolução histórica, avaliação e identificação das variáveis que o determinam para proposição de um novo modelo

Analisa os mecanismos referentes ao controle das despesas obrigatórias de caráter continuado: o mecanismo de compensação, que tem suas origens no denominado "pay-as-you-go" implantado com o "Budget Enforcement Act" norte-americano, e o demonstrativo de margem de expansão. A análise da evolução histórica dessa categoria de despesas para a União evidencia que os mecanismos de compensação utilizados não permitiram o controle efetivo do aumento dessas despesas, inviabilizando o direcionamento de recursos para ações que impliquem garantia de desenvolvimento sustentável. A discussão sobre os conceitos de despesas obrigatórias de caráter continuado, dos mecanismos de compensação e dos objetivos da apresentação de um demonstrativo de estimativa de margem de expansão indica a necessidade de uma reavaliação e aprofundamento, baseados nos objetivos originais da Lei de Responsabilidade Fiscal, a fim de se ampliar a eficácia de tais mecanismos. Por fim, o trabalho propõe um novo modelo para a apresentação do demonstrativo de estimativa de margem de expansão de despesas obrigatórias de caráter continuado, que possibilite a utilização de uma terminologia adequada, a identificação de fontes e valores dos parâmetros empregados na previsão de receitas e despesas e a avaliação comparativa entre os valores estimados e aqueles realmente executados nos dois exercícios anteriores.

An Economics Guide to Allocation of Fish Stocks between Commercial and Recreational Fisheries

The increasingly intense competition between commercial and recreational fishermen for access to fish stocks has focused attention on the economic implications of fishery allocations. Indeed, one can scarcely find a management plan or amendment that does not at least refer to the relative food and sport values of fish and to how expenditures by commercial and recreational fishermen on equipment and supplies stimulate the economy. However, many of the arguments raised by constituents to influence such allocations, while having an seemingly "economics" ring to them, are usually incomplete, distorted, and even incorrect. This report offers fishery managers and other interested parties a guide to correct notions of economic value and to the appropriate ways to characterize, estimate, and compare value. In particular, introductory material from benefitcost analysis and input-output analysis is described and illustrated. In the process, several familiar specious arguments are exposed.(PDF file contains 34 pages.)