Essays On CEO Compensation: New Evidence On The Managerial-Power Vs. Optimal Contracting Debate

This dissertation analyzes the effect of market analysts’ expectations of share prices (price targets) on executive compensation. It examines how well the estimated effects of price targets on compensation fit with two competing views on determining executive compensation: the arm’s length bargaining model, which assumes that a board seeks to maximize shareholders’ interests, and the managerial power model, which assumes that a board seeks to maximize managers’ compensation (Bebchuk et al. 2005). The first chapter documents the pattern of CEO pay from fiscal year 1996 to 2010. The second chapter analyzes the Institutional Broker Estimate System Detail History Price Target data file, which that reports analysts’ price targets for firms. I show that the number of price target announcements is positively associated with company share price’s volatility, that price targets are predictive of changes in the value of stocks, and that when analysts announce positive (negative) expectations of future stock price, share prices change in the same direction in the short run. The third chapter analyzes the effect of price targets on executive compensation. I find that analysts' price targets alter the composition of executive pay between cash-based compensation and stock-based compensation. When analysts forecast a rise (fall) in the share price for a firm, the compensation package tilts toward stock-based (cash-based) compensation. The substitution effect is stronger in companies that have weaker corporate governance. The fourth chapter explores the effect of the introduction of the Sarbanes-Oxley Act (SOX) in 2002 and its reinforcement in 2006 on the options granting process. I show that the introduction of SOX and its reinforcement eliminated the practice of backdating options but increased “spring-loading” of option grants around price targets announcements. Overall, the dissertation shows that price targets provide insights into the determinants of executive pay in favor of the managerial power model.

Essays in Industrial Organization and Information Technology

Chapter 1 studies how consumers’ switching costs affect the pricing and profits of firms competing in two-sided markets such as Apple and Google in the smartphone market. When two-sided markets are dynamic – rather than merely static – I show that switching costs lower the first-period price if network externalities are strong, which is in contrast to what has been found in one-sided markets. By contrast, switching costs soften price competition in the initial period if network externalities are weak and consumers are more patient than the platforms. Moreover, an increase in switching costs on one side decreases the first-period price on the other side. Chapter 2 examines firms’ incentives to invest in local and flexible resources when demand is uncertain and correlated. I find that market power of the monopolist providing flexible resources distorts investment incentives, while competition mitigates them. The extent of improvement depends critically on demand correlation and the cost of capacity: under social optimum and monopoly, if the flexible resource is cheap, the relationship between investment and correlation is positive, and if it is costly, the relationship becomes negative; under duopoly, the relationship is positive. The analysis also sheds light on some policy discussions in markets such as cloud computing. Chapter 3 develops a theory of sequential investments in cybersecurity. The regulator can use safety standards and liability rules to increase security. I show that the joint use of an optimal standard and a full liability rule leads to underinvestment ex ante and overinvestment ex post. Instead, switching to a partial liability rule can correct the inefficiencies. This suggests that to improve security, the regulator should encourage not only firms, but also consumers to invest in security.

Recent developments for surgical aortic valve replacement: the concept of sutureless valve technology

Aortic stenosis has become the most frequent type of valvular heart disease in Europe and North America and presents in the large majority of patients as calcified aortic stenosis in adults of advanced age. Surgical aortic valve replacement has been recognized to be the definitive therapy which improves considerably survival for severe aortic stenosis since more than 40 years. In the most recent period, operative mortality of isolated aortic valve replacement for aortic stenosis varies between 1–3% in low-risk patients younger than 70 years and between 4 and 8% in selected older adults. Long-term survival following aortic valve replacement is close to that observed in a control population of similar age. Numerous observational studies have consistently demonstrated that corrective surgery in symptomatic patients is invariably followed by a subjective improvement in quality of life and a substantial increase in survival rates. More recently, transcatheter aortic valve implantation (TAVI) has been demonstrated to be feasible in patients with high surgical risk using either a retrograde transfemoral or transsubclavian approach or an antegrade, transapical access. Reported 30-day mortality ranges between 5 and 15%) and is acceptable when compared to the risk predicted by the logistic EuroSCORE (varying between 20 and 35%) and the STS Score, although the EuroScore has been shown to markedly overestimate the effective operative risk. One major concern remains the high rate of paravalvular regurgitation which is observed in up to 85% of the patients and which requires further follow-up and critical evaluation. In addition, long-term durability of these valves with a focus on the effects of crimping remains to be addressed, although 3-5 year results are promising. Sutureless biological valves were designed to simplify and significantly accelerate the surgical replacement of a diseased valve and allow complete excision of the calcified native valve. Until now, there are 3 different sutureless prostheses that have been approved. The 3f Enable valve from ATS-Medtronic received CE market approval in 2010, the Perceval S from Sorin during Q1 of 2011 and the intuity sutureless prosthesis from Edwards in 2012. All these devices aim to facilitate valve surgery and therefore have the potential to decrease the invasivness and to shorten the conventional procedure without compromise in term of excision of the diseased valve. This review summarizes the history and the current knowledge of sutureless valve technology.

The NutriChip project--translating technology into nutritional knowledge

Advances in food transformation have dramatically increased the diversity of products on the market and, consequently, exposed consumers to a complex spectrum of bioactive nutrients whose potential risks and benefits have mostly not been confidently demonstrated. Therefore, tools are needed to efficiently screen products for selected physiological properties before they enter the market. NutriChip is an interdisciplinary modular project funded by the Swiss programme Nano-Tera, which groups scientists from several areas of research with the aim of developing analytical strategies that will enable functional screening of foods. The project focuses on postprandial inflammatory stress, which potentially contributes to the development of chronic inflammatory diseases. The first module of the NutriChip project is composed of three in vitro biochemical steps that mimic the digestion process, intestinal absorption, and subsequent modulation of immune cells by the bioavailable nutrients. The second module is a miniaturised form of the first module (gut-on-a-chip) that integrates a microfluidic-based cell co-culture system and super-resolution imaging technologies to provide a physiologically relevant fluid flow environment and allows sensitive real-time analysis of the products screened in vitro. The third module aims at validating the in vitro screening model by assessing the nutritional properties of selected food products in humans. Because of the immunomodulatory properties of milk as well as its amenability to technological transformation, dairy products have been selected as model foods. The NutriChip project reflects the opening of food and nutrition sciences to state-of-the-art technologies, a key step in the translation of transdisciplinary knowledge into nutritional advice.

Porous silicon technology for integrated microsystems

With the development of micro systems, there is an increasing demand for integrable porous materials. In addition to those conventional applications, such as filtration, wicking, and insulating, many new micro devices, including micro reactors, sensors, actuators, and optical components, can benefit from porous materials. Conventional porous materials, such as ceramics and polymers, however, cannot meet the challenges posed by micro systems, due to their incompatibility with standard micro-fabrication processes. In an effort to produce porous materials that can be used in micro systems, porous silicon (PS) generated by anodization of single crystalline silicon has been investigated. In this work, the PS formation process has been extensively studied and characterized as a function of substrate type, crystal orientation, doping concentration, current density and surfactant concentration and type. Anodization conditions have been optimized for producing very thick porous silicon layers with uniform pore size, and for obtaining ideal pore morphologies. Three different types of porous silicon materials: meso porous silicon, macro porous silicon with straight pores, and macro porous silicon with tortuous pores, have been successfully produced. Regular pore arrays with controllable pore size in the range of 2µm to 6µm have been demonstrated as well. Localized PS formation has been achieved by using oxide/nitride/polysilicon stack as masking materials, which can withstand anodization in hydrofluoric acid up to twenty hours. A special etching cell with electrolytic liquid backside contact along with two process flows has been developed to enable the fabrication of thick macro porous silicon membranes with though wafer pores. For device assembly, Si-Au and In-Au bonding technologies have been developed. Very low bonding temperature (~200 degrees C) and thick/soft bonding layers (~6µm) have been achieved by In-Au bondi ng technology, which is able to compensate the potentially rough surface on the porous silicon sample without introducing significant thermal stress. The application of the porous silicon material in micro systems has been demonstrated in a micro gas chromatograph system by two indispensable components: an integrated vapor source and an inlet filter, wherein porous silicon performs the basic functions of porous media: wicking and filtration. By utilizing a macro porous silicon wick, the calibration vapor source was able to produce a uniform and repeatable vapor generation for n-decane with less than a 0.1% variation in 9 hours, and less than a 0.5% variation in rate over 7 days. With engineered porous silicon membranes the inlet filter was able to show a depth filtration with nearly 100% collection efficiency for particles larger than 0.3µm in diameter, a low pressure-drop of 523Pa at 20sccm flow rate, and a filter capacity of 500µg/cm2.

Is the Market Eroding Moral Norms? A Micro-Analytical Validation of Some Ideas of Anomie Theory

Anomie theorists have been reporting the suppression of shared welfare orientations by the overwhelming dominance of economic values within capitalist societies since before the outset of neoliberalism debate. Obligations concerning common welfare are more and more often subordinated to the overarching aim of realizing economic success goals. This should be especially valid with for social life in contemporary market societies. This empirical investigation examines the extent to which market imperatives and values of the societal community are anchored within the normative orientations of market actors. Special attention is paid to whether the shape of these normative orientations varies with respect to the degree of market inclusion. Empirical analyses, based on the data of a standardized written survey within the German working population carried out in 2002, show that different types of normative orientation can be distinguished among market actors. These types are quite similar to the well-known types of anomic adaptation developed by Robert K. Merton in “Social Structure and Anomie” and are externally valid with respect to the prediction of different forms of economic crime. Further analyses show that the type of normative orientation actors adopt within everyday life depends on the degree of market inclusion. Confirming anomie theory, it is shown that the individual willingness to subordinate matters of common welfare to the aim of economic success—radical market activism—gets stronger the more actors are included in the market sphere. Finally, the relevance of reported findings for the explanation of violent behavior, especially with view to varieties of corporate violence, is discussed.

One-year head to head comparison of the neointimal response between sirolimus eluting stent with reservoir technology and everolimus eluting stent: an optical coherence tomography study

OBJECTIVE to compare the vascular healing process between the sirolimus-eluting NEVO and the everolimus-eluting Xience stent by optical coherence tomography (OCT) at 1-year follow-up. BACKGROUND Presence of durable polymer on a drug-eluting metallic stent may be the basis of an inflammatory reaction with abnormal healing response. The NEVO stent, having a bioresorbable polymer eluted by reservoir technology, may overcome this problem. METHODS All consecutive patients, who received NEVO or Xience stent implantation between September 2010 and October 2010 in our institution, were included. Vascular healing was assessed at 1-year as percentage of uncovered struts, neointimal thickness (NIT), in-stent/stent area obstruction and pattern of neointima. RESULTS A total 47 patients (2:1 randomization, n = 32 NEVO, n = 15 Xience) were included. Eighteen patients underwent angiographic follow-up (eight patients with nine lesions for NEVO vs. 10 patients with 11 lesions for Xience). The angiographic late loss was numerically higher but not statistically different in NEVO compared with Xience treated lesions (0.38 ± 0.47 mm vs. 0.18 ± 0.27 mm; P = 0.171). OCT analysis of 4,912 struts demonstrated similar rates of uncovered struts (0.5 vs. 0.7%, P = 0.462), higher mean NIT (177.76 ± 87.76 µm vs. 132.22 ± 30.91 µm; P = 0.170) and in stent/stent area obstruction (23.02 ± 14.74% vs. 14.17 ± 5.94%, P = 0.120) in the NEVO as compared with Xience. CONCLUSION The NEVO stent with a reservoir technology seems to exhibit more neointimal proliferation as compared to Xience stent. The findings of our study, which currently represent the unique data existing on this reservoir technology, would need to be confirmed in a large population.

Reading on LCD vs e-Ink displays: effects on fatigue and visual strain

Purpose:  Most recently light and mobile reading devices with high display resolutions have become popular and they may open new possibilities for reading applications in education, business and the private sector. The ability to adapt font size may also open new reading opportunities for people with impaired or low vision. Based on their display technology two major groups of reading devices can be distinguished. One type, predominantly found in dedicated e-book readers, uses electronic paper also known as e-Ink. Other devices, mostly multifunction tablet-PCs, are equipped with backlit LCD displays. While it has long been accepted that reading on electronic displays is slow and associated with visual fatigue, this new generation is explicitly promoted for reading. Since research has shown that, compared to reading on electronic displays, reading on paper is faster and requires fewer fixations per line, one would expect differential effects when comparing reading behaviour on e-Ink and LCD. In the present study we therefore compared experimentally how these two display types are suited for reading over an extended period of time. Methods:  Participants read for several hours on either e-Ink or LCD, and different measures of reading behaviour and visual strain were regularly recorded. These dependent measures included subjective (visual) fatigue, a letter search task, reading speed, oculomotor behaviour and the pupillary light reflex. Results:  Results suggested that reading on the two display types is very similar in terms of both subjective and objective measures. Conclusions:  It is not the technology itself, but rather the image quality that seems crucial for reading. Compared to the visual display units used in the previous few decades, these more recent electronic displays allow for good and comfortable reading, even for extended periods of time.

Perceived malleability of self versus the world and its impact on youths’ control orientation and well-being in the US, Germany, and India

Primary control is defined as changing the world to fit the self, while secondary control is defined as changing the self to fit the world. To understand why different individuals prefer different kinds of control processes, we proposed a research project looking at US, German and Indian young adults. We hypothesize that theories of self and the world (fixed vs. malleable; Dweck, 1999) affect the prevailing mode of control used. Furthermore, adolescents’ cultural background is assumed to affect their self-world theories as well as the adaptiveness of specific modes of control. For example, in the US, where the self is tended to be seen as fixed and the world as malleable, primary control prevails and is more adaptive than secondary control while the reverse is expected for India. We present the theoretical outline and methodology of the study as well as first results.

The Integration of Electricity from Renewable Energy Sources in the European Union Electricity Market – The case for “Smart Grids”

The power sector is to play a central role in a low carbon economy. In all the decarbonisation scenarios of the European Union renewable energy sources (RES) will be a crucial part of the solution. Current grids constitute however major bottlenecks for the future expansion of RES. Recognising the need for a modernisation of its grids, the European Union has called for the creation of a "smart supergrid" interconnecting European grids at the continental level and making them "intelligent" through the addition of information and communication technology (ICT). To implement its agenda the EU has taken a leading role in coordinating research efforts and creating a common legislative framework for the necessary modernisation of Europe’s grids. This paper intends to give both an overview and a critical appraisal of the measures taken so far by the European Union to "transform" the grids into the backbone of a decarbonised electricity system. It suggests that if competition is to play a significant role in the deployment of smart grids, the current regulatory paradigm will have to be fundamentally reassessed

Managing the risks of medical technology: Do hazard surveillance systems provide an early warning of medical device problems?

The Food and Drug Administration (FDA) is responsible for risk assessment and risk management in the post-market surveillance of the U.S. medical device industry. One of the FDA regulatory mechanisms, the Medical Device Reporting System (MDR) is an adverse event reporting system intended to provide the FDA with advance warning of device problems. It includes voluntary reporting for individuals, and mandatory reporting for device manufacturers. ^ In a study of alleged breast implant safety problems, this research examines the organizational processes by which the FDA gathers data on adverse events and uses adverse event reporting systems to assess and manage risk. The research reviews the literature on problem recognition, risk perception, and organizational learning to understand the influence highly publicized events may have on adverse event reporting. Understanding the influence of an environmental factor, such as publicity, on adverse event reporting can provide insight into the question of whether the FDA's adverse event reporting system operates as an early warning system for medical device problems. ^ The research focuses on two main questions. The first question addresses the relationship between publicity and the voluntary and mandatory reporting of adverse events. The second question examines whether government agencies make use of these adverse event reports. ^ Using quantitative and qualitative methods, a longitudinal study was conducted of the number and content of adverse event reports regarding breast implants filed with the FDA's medical device reporting system during 1985–1991. To assess variation in publicity over time, the print media were analyzed to identify articles related to breast implant failures. ^ The exploratory findings suggest that an increase in media activity is related to an increase in voluntary reporting, especially following periods of intense media coverage of the FDA. However, a similar relationship was not found between media activity and manufacturers' mandatory adverse event reporting. A review of government committee and agency reports on the FDA published during 1976–1996 produced little evidence to suggest that publicity or MDR information contributed to problem recognition, agenda setting, or the formulation of policy recommendations. ^ The research findings suggest that the reporting of breast implant problems to FDA may reflect the perceptions and concerns of the reporting groups, a barometer of the volume and content of media attention. ^

A longitudinal cross-country study of entrepreneurial orientation

As recent research documents, there has been an impressive effort of studying the entrepreneurial orientation construct and its nomological role. However, most research has been very context specific and based on the analyses of cross-sectional information. We study causal performance effects from entrepreneurial orientation and its key dimensions in two economic contexts–developed and emerging markets. Gathering data on a sample of 94 firms in developed market context and 108 in emerging market context at two time-points we explore our hypotheses. The results suggest that in a developed economy entrepreneurial orientation has a positive impact on firm performance, whereas in the emerging market context this effect is negative. Furthermore, we assess the contribution of each dimension to the aggregate construct and reveal the importance of risk-taking in both contexts. Finally, we highlight the role of environmental dynamism and explain its varying effect

Investigation of robotics-assisted tilt table technology for cardiopulmonary exercise testing in stroke patients

Due to the lack of exercise testing devices that can be employed in stroke patients with severe disability, the aim of this PhD research was to investigate the clinical feasibility of using a robotics-assisted tilt table (RATT) as a method for cardiopulmonary exercise testing (CPET) and exercise training in stroke patients. For this purpose, the RATT was augmented with force sensors, a visual feedback system and a work rate calculation algorithm. As the RATT had not been used previously for CPET, the first phase of this project focused on a feasibility study in 11 healthy able-bodied subjects. The results demonstrated substantial cardiopulmonary responses, no complications were found, and the method was deemed feasible. The second phase was to analyse validity and test-retest reliability of the primary CPET parameters obtained from the RATT in 18 healthy able-bodied subjects and to compare the outcomes to those obtained from standard exercise testing devices (a cycle ergometer and a treadmill). The results demonstrated that peak oxygen uptake (V'O2peak) and oxygen uptake at the submaximal exercise thresholds on the RATT were ̴20% lower than for the cycle ergometer and ̴30% lower than on the treadmill. A very high correlation was found between the RATT vs the cycle ergometer V'O2peak and the RATT vs the treadmill V'O2peak. Test-retest reliability of CPET parameters obtained from the RATT were similarly high to those for standard exercise testing devices. These findings suggested that the RATT is a valid and reliable device for CPET and that it has potential to be used in severely impaired patients. Thus, the third phase was to investigate using the RATT for CPET and exercise training in 8 severely disabled stroke patients. The method was technically implementable, well tolerated by the patients, and substantial cardiopulmonary responses were observed. Additionally, all patients could exercise at the recommended training intensity for 10 min bouts. Finally, an investigation of test-retest reliability and four-week changes in cardiopulmonary fitness was carried out in 17 stroke patients with various degrees of disability. Good to excellent test-retest reliability and repeatability were found for the main CPET variables. There was no significant difference in most CPET parameters over four weeks. In conclusion, based on the demonstrated validity, reliability and repeatability, the RATT was found to be a feasible and appropriate alternative exercise testing and training device for patients who have limitations for use of standard devices.

Impacts of Technology Adoption: Comparing Returns to the Farming Sector in Maine under Alternative Technology Regimes

This thesis tests if certain technology choices are associated with a reduction in the proportion of farming activities in the agro-food system in Maine. Goodman, Sorj, and Wilkinson define appropriationism as the replacement of farming sector activities by industrial inputs. Based on the concept of appropriationism, industrial fanning systems using large amounts of synthetic inputs contribute less to fanning than more agrarian systems, like organic fanning. Thus, returns to the farming sector should be greater for organic compared with conventional potato fanning in Maine since organic farming uses fewer industrial inputs. Goodman et. al. define substitutionism as the displacement of farming sector commodities and activities by industrial processes in the marketing sector. Based on the concept of substitutionism, returns to the farming sector should be greater for Lay's Classic®™ potato chips made from natural potatoes compared with Baked Lay's®™ potato crisps manufactured from processed dehydrated potatoes. Returns to the farming sector are defined as returns to the farmer or farm family from farming activities, returns to farm labor, and returns to farmers and farm labor producing inputs used on the farm. Results show absolute returns to the farming sector are less for organic compared to conventional tablestock potato farms in Maine. However as a proportion of farm revenues, large organic farms that market at least 25% of their produce to retail stores or directly to consumers do as well as conventional farms. When comparing returns as a proportion of consumer expenditures, these organic farms do better than conventional farms. Returns to the farming sector are less for organic because of yield penalties, cost of marketing services, and diseconomies of size for organic tablestock potato farms. Expanding acreage and reintegrating livestock with cropping systems may increase returns to the fanning sector. Organic farming demonstrates difficulties in providing marketing services at the farm level. Providing marketing services limits the ability to expand production to capture economies of size. Maine organic potato farmers emphasize non-monetary values such as supporting sustainable agriculture, self-sufficiency, the intrinsic value of work, and close community and family connections. Returns to the farming sector as a proportion of consumer expenditures are about three times greater for Lay's Classic®™ potato chips than for Baked Lay's®™ potato crisps, since the value that farmers receive for potatoes used to produce dehydrated potato flakes in one pound of crisps is about half of the value that farmers receive for potatoes used to make one pound of chips. However, this assumes farmers assign a cost to producing low-grade potatoes for dehydration proportionate to their value. Premium potatoes are used to produce potato chips. Low-grade potatoes are used to produce the dehydrated potato flakes used to make potato crisps. Returns to the farming sector are slightly greater for potato crisps if no costs are allocated to producing low-grade potatoes for dehydration. A shift in consumer preferences from potato chips to crisps may result in a geographical shift of potato production from Maine to the Pacific Northwest assuming no food-grade dehydration facilities are built in Maine.

An Experimental Study of Complex-Offer Auctions: Payment Cost Minimization vs. Offer Cost Minimization

A Payment Cost Minimization (PCM) auction has been proposed as an alternative to the Offer Cost Minimization (OCM) auction to be used in wholesale electric power markets with the intention to lower the procurement cost of electricity. Efficiency concerns about this proposal have relied on the assumption of true production cost revelation. Using an experimental approach, I compare the two auctions, strictly controlling for the level of unilateral market power. A specific feature of these complex-offer auctions is that the sellers submit not only the quantities and the minimum prices at which they are willing to sell, but also the start-up fees that are designed to reimburse the fixed start-up costs of the generation plants. I find that both auctions result in start-up fees that are significantly higher than the start-up costs. Overall, the two auctions perform similarly in terms of procurement cost and efficiency. Surprisingly, I do not find a substantial difference between less market power and more market power designs. Both designs result in similar inefficiencies and equally higher procurement costs over the competitive prediction. The PCM auction tends to have lower price volatility than the OCM auction when the market power is minimal but this property vanishes in the designs with market power. These findings lead me to conclude that both the PCM and the OCM auctions do not belong to the class of truth revealing mechanisms and do not easily elicit competitive behavior.