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.

An Empirical Study of the Mixture of Time and Movements in Prices

This paper investigates the persistent pattern in the Helsinki Exchanges. The persistent pattern is analyzed using a time and a price approach. It is hypothesized that arrival times are related to movements in prices. Thus, the arrival times are defined as durations and formulated as an Autoregressive Conditional Duration (ACD) model as in Engle and Russell (1998). The prices are defined as price changes and formulated as a GARCH process including duration measures. The research question follows from market microstructure predictions about price intensities defined as time between price changes. The microstructure theory states that long transaction durations might be associated with both no news and bad news. Accordingly, short durations would be related to high volatility and long durations to low volatility. As a result, the spread will tend to be larger under intensive moments. The main findings of this study are 1) arrival times are positively autocorrelated and 2) long durations are associated with low volatility in the market.

The Innocent Pleasure : A Study on Luther's theology of music

The aim of the study is to examine Luther s theology of music from the standpoint of pleasure. The theological assessment of musical pleasure is related to two further questions: the role of emotions in Christianity and the apprehension of beauty. The medieval discussion of these themes is portrayed in the background chapter. Significant traits were: the suspicion felt towards sensuous gratification in music, music as a mathematical discipline, the medieval theory of emotions informed by Stoic apatheia and Platonic-Aristotelian metriopatheia, the notion of beauty as an attribute of God, medieval aesthetics as the aesthetic of proportion and the aesthetic of light and the emergence of the Aristotelian view of science that is based on experience rather than speculation. The treatment of Luther s theology of music is initiated with the notion of gift. Luther says that music is the excellent (or even the best) gift of God. This has sometimes been understood as a mere music-lover s enthusiasm. Luther is, however, not likely to use the word gift loosely. His theology can be depicted as a theology of gift. The Triune God is categorically giving. The notion of gift also includes reciprocity. When we receive the gifts of God, it evokes praise in us. Praising God is predominantly a musical phenomenon. The particular benefit of music in Luther s thought is that it can move human emotions. This emphasis is connected to the overall affectivity of Luther s theology. In contrast to the medieval discussion, Luther ascribes to saints not just emotions but particularly warm and tender affections. The power of music is related to the auditory and vocal character of the Word. Faith comes through hearing the Word that is at once musical and affective perception. Faith is not a mere opinion but the affective trust of the heart. Music can touch the human heart and persuade with its sweetness, like the good news of the Gospel. Music allows us to perceive Luther s theology as a theology of joy and pleasure. Joy is for Luther a gift of the Holy Spirit that fills the heart and bursts out in voice and gestures. Pleasure appears to be a central aspect to Luther s theology. The problem of the Bondage of the Will is precisely the human inability to feel pleasure in God s will. To be pleased in the visible and tangible creation is not something a Christian should avoid. On the contrary, if one is not pleased with the world that God has created, it is a sign of unbelief and ingratitude. The pleasure of music is aesthetic perception. This in turn necessitates the investigation of Luther s aesthetics. Aesthetic evaluation is not just a part of Luther s thought. Eventually his theology as a whole could be portrayed in aesthetic terms. Luther s extremely positive appreciation of music illutrates his theology as an affective acknowledgement of the goodness of the Creation and faith as an aesthetic contentment.

Theorizing the Nature of Reflection

For the past decades reflection has been the buzzword of adult and higher education. Reflection is facilitated in many practices and there is abundant research on the issue. Despite the popularity of the concept, the reasons why bringing about reflection in educational practices is difficult remain unclear. The prevailing theories inform of the process in its ideal form. However, to a great extent, they fail to offer conceptual tools for understanding and working with the actualities of reflection. The aim of the doctoral thesis was to explore the challenges and prerequisites of reflection in order to theorize the nature of reflection. By the term reflection it is here referred to becoming aware of and questioning the assumptions that orient our thinking, feelings and actions. The doctoral thesis consists of five studies that approach these questions from different viewpoints and within different contexts. The methods involve both a philosophical and an empirical approach. This multifaceted approach embodies the aim of both gaining a more thorough grasp of the phenomenon and to develop the methodology of researching reflection. The theory building is based on conceptual analysis and rational reconstruction (see Davia 1998; Habermas 1979; Rorty1984) of Mezirow s (1981; 1991; 2000; 2009) theory of transformative learning. In order to explore the aspects which, based on the analysis, appeared insufficiently considered within Mezirow s theory, Damasio s (1994; 1999; 2003; 2010) theory on emotions and consciousness as well as Clausewitz s (1985) view on friction are used as complementary theories. Empirical analyses are used in dialogue with the theoretical, in order to challenge and refine the emerging theorization. Reflection is examined in three different contexts; regarding university teachers pedagogical growth, involuntarily childless women recovering from a life-event crisis, and soldiers preparing to act in chaotic situations of the battlefield as well as recovering from it. The choice of these contexts is based on Mezirow s notion of disorienting dilemma as a trigger for reflection. This notion indicates that reflection may more naturally emerge in association to life-event crises or other cumulative sets of instances, which bring our worldview and beliefs under question. Nevertheless, reflection is often being promoted in educational contexts in which the trigger conditions may not readily prevail. These contextual issues as well as the differences between the facilitated and non-facilitated contexts have not, however, been considered in detail within the research on reflection (or transformative learning). The doctoral thesis offers a new perspective into reflection which, as a further development on Mezirow s transformative learning theory, theorizes the nature of reflection. The developed theory explicates the prerequisites and challenges to reflection. The theory suggests that the challenges of reflection are fundamentally connected to the way the biological life-support system affects our thinking through emotions. While depicting the mechanisms that function as a counterforce to reflection, the developed theory also opens a perspective for considering possibilities for carrying out reflection, and suggests ways to locate and deal with the assumptions to be reflected on. The basic dynamic of the challenges to reflection was explicated by conceptually bridging the gap between Mezirow s and Damasio s theories, through exploring the connections between the meaning perspective and the biological functions of emotions. The concepts of comfort zone and edge-emotions were formed so as to depict the emotional orientation of our thinking, as part of the explanation of the nature of reflection.

Corporate Brand Repositioning with CSR as the Differentiating Factor: A Study on Consumer Perceptions

Purpose – This research paper studies how the strategy of repositioning enables marketers to communicate CSR as their brand’s differentiating factor. It aims at understanding how consumer perceptions can be managed to generate brand value through corporate brand repositioning when CSR is the differentiating factor. The purpose of this paper is to answer the following research question: How can consumer perceptions be managed to generate brand value through corporate brand repositioning when CSR is the differentiating factor? The two research objectives were: 1. to build a model, which describes the different components of consumer perceptions involved in generation of brand value through repositioning when CSR is the differentiating factor, 2. to identify the most critical components in the context of the case company, IKEA for generation of brand value during the process of corporate brand repositioning Design/methodology/approach – This paper is based on the literature review covering the logic of brand value generation, repositioning strategy and consumer perceptions connected to CSR activities. A key concept of the positioning theory, the brand’s differentiating factor, was explored. Previous studies have concluded that desirability of the differentiating factor largely determines the level of brand value-creation for the target customers. The criterion of desirability is based on three dimensions: relevance, distinctiveness and believability. A model was built in terms of these desirability dimensions. This paper takes a case study approach where the predefined theoretical framework is tested using IKEA as the case company. When developing insights on the multifaceted nature of brand perceptions, personal interviews and individual probing are vital. They enable the interviewees to reflect on their feelings and perceptions with their own words. This is why the data collection was based on means-end type of questioning. Qualitative interviews were conducted with 12 consumers. Findings – The paper highlights five critical components that may determine whether IKEA will fail in its repositioning efforts. The majority of the critical components involved believability perceptions. Hence, according to the findings, establishing credibility and trustworthiness for the brand in the context of CSR seems primary. The most critical components identified of the believability aspect were: providing proof of responsible codes of conduct via conducting specific and concrete CSR actions, connecting the company’s products and the social cause, and building a linkage between the initial and new positioning while also weakening the old positioning. Originality/value – Marketers’ obligation is to prepare the company for future demands. Companies all over the globe have recognized the durable trend of responsibility and sustainability. Consumer´s worry about the environmental and social impact of modern lifestyles is growing. This is why Corporate Social Responsibility (CSR) provides brands an important source of differentiation and strength in the future. The strategy of repositioning enables marketers to communicate CSR as their brand’s differentiating factor. This study aimed at understanding how consumer perceptions can be managed to generate brand value through corporate brand repositioning when CSR is the differentiating factor.

On higher order shear deformation theory of laminated composite panels

In this paper we examine the suitability of higher order shear deformation theory based on cubic inplane displacements and parabolic normal displacements, for stress analysis of laminated composite plates including the interlaminar stresses. An exact solution of a symmetrical four layered infinite strip under static loading has been worked out and the results obtained by the present theory are compared with the exact solution. The present theory provides very good estimates of the deflections, and the inplane stresses and strains. Nevertheless, direct estimates of strains and stresses do not display the required interlaminar stress continuity and strain discontinuity across the interlaminar surface. On the other hand, ‘statically equivalent stresses and strains’ do display the required interlaminar stress continuity and strain discontinuity and agree very closely with the exact solution.

Uniformly valid analytical solution to the problem of a decaying shock wave

An explicit representation of an analytical solution to the problem of decay of a plane shock wave of arbitrary strength is proposed. The solution satisfies the basic equations exactly. The approximation lies in the (approximate) satisfaction of two of the Rankine-Hugoniot conditions. The error incurred is shown to be very small even for strong shocks. This solution analyses the interaction of a shock of arbitrary strength with a centred simple wave overtaking it, and describes a complete history of decay with a remarkable accuracy even for strong shocks. For a weak shock, the limiting law of motion obtained from the solution is shown to be in complete agreement with the Friedrichs theory. The propagation law of the non-uniform shock wave is determined, and the equations for shock and particle paths in the (x, t)-plane are obtained. The analytic solution presented here is uniformly valid for the entire flow field behind the decaying shock wave.

Tibetan Written Images : A Study of Imagery in the Writings of Dhondup Gyal

Dhondup Gyal (Don grub rgyal, 1953 - 1985) was a Tibetan writer from Amdo (Qinghai, People's Republic of China). He wrote several prose works, poems, scholarly writings and other works which have been later on collected together into The Collected Works of Dhondup Gyal, in six volumes. He had a remarkable influence on the development of modern Tibetan literature in the 1980s. Examining his works, which are characterized by rich imagery, it is possible to notice a transition from traditional to modern ways of literary expression. Imagery is found in both the poems and prose works of Dhondup Gyal. Nature imagery is especially prominent and his writings contain images of flowers and plants, animals, water, wind and clouds, the heavenly bodies and other environmental elements. Also there are images of parts of the body and material and cultural images. To analyse the images, most of which are metaphors and similes, the use of the cognitive theory of metaphor provides a good framework for making comparisons with images in traditional Tibetan literature and also some images in Chinese, Indian and Western literary works. The analysis shows that the images have both traditional and innovative features. The source domains of images often appear similar to those found in traditional Tibetan literature and are slow to change. However, innovative shifts occur in the way they are mapped on their target domains, which may express new meanings and are usually secular in nature if compared to the religiosity which often characterizes traditional Tibetan literature. Dhondup Gyal's poems are written in a variety of styles, ranging from traditional types of verse compositions and poems in the ornate kāvya-style to modern free verse poetry. The powerful central images of his free verse poems and some other works can be viewed as structurally innovative and have been analysed with the help of the theory of conceptual blending. They are often ambiguous in their meaning, but can be interpreted to express ideas related to creativity, freedom and the need for change and development.

Molecular hydrodynamic theory of non‐Markovian collective orientational relaxation in dense dipolar liquids

A microscopic study of the non‐Markovian (or memory) effects on the collective orientational relaxation in a dense dipolar liquid is carried out by using an extended hydrodynamic approach which provides a reliable description of the dynamical processes occuring at the molecular length scales. Detailed calculations of the wave‐vector dependent orientational correlation functions are presented. The memory effects are found to play an important role; the non‐Markovian results differ considerably from that of the Markovian theory. In particular, a slow long‐time decay of the longitudinal orientational correlation function is observed for dense liquids which becomes weaker in the presence of a sizeable translational contribution to the collective orientational relaxation. This slow decay can be attributed to the intermolecular correlations at the molecular length scales. The longitudinal component of the orientational correlation function becomes oscillatory in the underdamped limit of momenta relaxations and the frequency dependence of the friction reduce the frictional resistance on the collective excitations (commonly known as dipolarons) to make them long lived. The theory predicts that these dipolarons can, therefore, be important in chemical relaxation processes, in contradiction to the claims of some earlier theoretical studies.

Molecular theory of dielectric relaxation in a dense binary dipolar liquid

A molecular theory of dielectric relaxation in a dense binary dipolar liquid is presented. The theory takes into account the effects of intra- and interspecies intermolecular interactions. It is shown that the relaxation is, in general, nonexponential. In certain limits, we recover the biexponential form traditionally used to analyze the experimental data of dielectric relaxation in a binary mixture. However, the relaxation times are widely different from the prediction of the noninteracting rotational diffusion model of Debye for a binary system. Detailed numerical evaluation of the frequency-dependent dielectric function epsilon-(omega) is carried out by using the known analytic solution of the mean spherical approximation (MSA) model for the two-particle direct correlation function for a polar mixture. A microscopic expression for both wave vector (k) and frequency (omega) dependent dielectric function, epsilon-(k,omega), of a binary mixture is also presented. The theoretical predictions on epsilon-(omega) (= epsilon-(k = 0, omega)) have been compared with the available experimental results. In particular, the present theory offers a molecular explanation of the phenomenon of fusing of the two relaxation channels of the neat liquids, observed by Schallamach many years ago.

The Role of Electronic Word of Mouth in Shaping Consumer Attitudes

The purpose of this research was to investigate the role of electronic word of mouth (eWOM) in shaping consumer attitudes towards various products and services with concentration on the consumer attitude change. eWOM has long been proven to play an important role in influencing consumer attitudes and has been researched from a variety of perspectives. This study attempts to look deeper into the process of consumer attitude change by applying as the central theory of the study the Elaboration Likelihood Model of Persuasion by Petty and Cacioppo. In the processes of examining the background academic and empirical research the Internet and Web 2.0 are closely depicted in order to understand how throughout the past centuries technology allowed the rise of various mediums where consumers can not only share their opinions online about products and services but also communicate with other consumers. Manuel Castel’s Internet Galaxy, Gildin’s, Carl and Noland’s, Hennig-Thurau, Gwinner, Walsh and Gremler’s researches on eWOM are the central works that helped to shape both the theoretical and empirical parts of this study. The mixed method approach was chosen as a research method for this study. An online survey was conducted via the Surveymonkey.com platform and eight qualitative in-depth interviews were conducted. The results of the study show that central route queues as text quality and text argumentativeness are more prominent among the research subjects and the peripheral route queues: source credibility and source expertise did not show considerable significance. Also more experience and participation consumers have with user-rating websites and applications more inclined they are to elaborate on the central route cues and are more likely to search for opinions that they consider rational and credible. Also these respondents are less inclined to search for ratings that confirm their existing beliefs about products or services. Less experience/participation they have about eWOM more likely they are to search for reviews confirmatory to their own.

A new theory of gravitation with parity-violating propagating torsion

A new theory of gravitation has been proposed in a more general space-time than Riemannian. It is a generalization of the ECSK and Brans-Dicke (BD) theory of gravitation. It is found that, in contrast to the standard the ECSK theory, a parity-violating propagating torsion is generated by the BD scalar field. The interesting consequence of the theory is that it can successfully predict solar system experimental results to desired accuracy.

An examination of the BEBO model with the results of ab initio calculations of a reaction series

The BEBO (bond energy-bond order) model of Johnston and Parr is examined with the results of ab initio MO calculations on a series of metathetic reactions which involve hydrogen transfer. Energies are calculated at the 6-31G**/PMP2 = full//6-31G** level while the bond orders are estimated using the 6-31G** basis set with the geometry optimisation at the single configuration unrestricted Hartree-Fock frame. Our analysis reveals that the bond-order exponent in the BEBO theory is greater than unity for the reaction series and the entropy term becomes implicitly present in the BEBO model.

Multifractal analysis, a method to investigate the morphology of materials

Using the multifractal formalism, we discuss the results obtained to characterized the morphology of polymer alloys and granular discontinuous metallic thin films. In the first case we have found a correlation between the multifractality and the mechanical properties of the alloys. In the second case, we have found that it is possible to measure the differences between the morphology of thin films induced by a growth process on a subtrate and that of percolation clusters of the classical theory of percolation.

Microscopic origin of the chirality driven morphologies of the amphiphilic monolayers and bilayers

It is widely known that the compressed monolayers and bilayers of chiral lipids or fatty acids form helical morphologies, while the corresponding racemic modification gives only flat platelets without twist. No molecular explanation of this phenomenon is yet available, although subtle interactions at the chiral centers have often been proposed as the driving force behind the morphology of the aggregate to form a particular shape. In the present study, the morphologies of the chiral amphiphilic assemblies have been predicted on the basis of an effective pair potential between the molecules, which depends on the relative sizes of the groups attached to the chiral centers, the orientation of the amphiphilic molecules and also on the distance between them. It is shown that fur a pair of same kind of enantiomers, the minimum energy conformation favours a twist angle between them. This twist between the neighbouring molecules gives rise to the helicity of the aggregate. The present theory also shows from the molecular considerations that for a pair of mirror-image isomers (i.e. the racemic modification) the minimum energy conformation corresponds to the zero angle between the molecules, thus giving rise to flat platelets as observed in experiments. Another fascinating aspect of such chirality driven helical structures is that the sense (or the handedness) of the helix is highly specific about the chirality of the monomer concerned. The molecular theory shows, for the first time, that the sense of the helical structures in many cases is determined by the sizes of the groups attached to the chiral centers and the effective potential between them. The predicted senses of the helical structures are in complete agreement with the experimental results.