Do financial reforms improve the performance of financial holding companies? The case of Taiwan

We examine the performance of financial holding companies (FHCs) in Taiwan after the financial reform that removes the separation of banking, securities, insurance, and other financial services. Using data envelopment analysis, we find that FHCs fail to improve technical efficiencies in the post-reform era. They also do not outperform independent commercial banks after the financial reform. Lower technical efficiency caused by excess operating expenses appears to be the primary source of inefficiency. While scale efficiency may improve as FHCs grow larger, the benefits are marginal and insufficient to offset the potential costs of organizational diseconomies. Our findings suggest that increasing the size and scope of financial activities alone do not necessarily improve the performance of financial firms.

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.

A systematic review of organizational workplace wellness programs and their financial and nonfinancial incentives

Workplace wellness programs have revealed immense beneficial results for both the employer and employee. Examples of results include decrease in absenteeism, turnover rate, medical claims and increases in employee satisfaction, productivity, and return on investment. However, the approach taken when implementing requires greater attention since such programs and the financial and/or non-financial incentives chosen have shown to significantly impact employee participation thus the amount of savings the organization experiences. A systematic review was conducted to evaluate the overall effectiveness of workplace wellness programs on employee health status and lifestyle change, recognize the majority types of returns observed by such programs, and identify whether financial or non-financial incentives created a greater effect on the employee. Overall employee health status improvement occurred when participating in wellness programs. The dominant indirect benefit for the organization was employee weight loss leading to a decrease in absenteeism and direct benefits included decreases in medical claims and increases in return on investment. In general, factors such as rate of participation and health status changes were most influenced when a financial incentives was provided in the wellness program. The basis of providing a program with effective incentives resides from efforts made by the employer and their efforts to play a role on every level of the organization regarding planning, implementing, and strategizing the most optimal approach for creating changes for the employees' wellbeing and productivity, thus the organizations overall returns.^

Building International CSR on Solid Foundations: Location and Network Aspects of Nonmarket Environments in Europe and Non-Europe Markets. ACES Working Papers, 2011

Multinational companies' (MNCs) corporate social responsibility (CSR) programs frequently comprise a portfolio of disconnected country-level programs or, alternatively, consist of blanket corporate policies that apply in the same way across the geographies where the company operates. Yet, the international nonmarket environment in which CSR programs operate is neither a completely fragmented nor a perfectly homogeneous one. Building on the concept of stakeholder-issue-networks, we develop a model that explicitly takes into consideration the role of geography in the characterization of a firm's nonmarket environment. This allows us to develop a taxonomy of nonmarket environments on the basis of their geographic spread and their degree of cross-border connectedness. We then explore the strategic and organizational implications that different ideal types of (cross-border) nonmarket environments have for the development of international CSR policies.

Organizational aspects of e-referrals

Three different, well established systems for e-referral were examined. They ranged from a system in a single country handling a large number of cases (60,000 per year) to a global system covering many countries which handled fewer cases (150 per year). Nonetheless, there appeared to be a number of common features. Whether the purpose is e-transfer or e-consultation, the underlying model of the e-referral process is: the referrer initiates an e-request; the organization managing the process receives it, the organization allocates it for reply; the responder replies to the initiator. Various things can go wrong and the organization managing the e-referral process needs to be able to track requests through the system; this requires various performance metrics. E-referral can be conducted using email, or as messages passed either directly between computer systems or via a Web-link to a server. The experience of the three systems studied shows that significant changes in work practice are needed to launch an e-referral service successfully. The use of e-referral between primary and secondary care improves access to services and can be shown to be cost-effective.

Effects of hydrogen-air non-equilibrium chemistry on the performance of a model scramjet thrust nozzle

Two aspects of hydrogen-air non-equilibrium chemistry related to scramjets are nozzle freezing and a process called 'kinetic afterburning' which involves continuation of combustion after expansion in the nozzle. These effects were investigated numerically and experimentally with a model scramjet combustion chamber and thrust nozzle combination. The overall model length was 0.5m, while precombustion Mach numbers of 3.1 +/- 0.3 and precombustion temperatures ranging from 740K to 1,400K were involved. Nozzle freezing was investigated at precombustion pressures of 190kPa and higher, and it was found that the nozzle thrusts were within 6% of values obtained from finite rate numerical calculations, which were within 7% of equilibrium calculations. When precombustion pressures of 70kPa or less were used, kinetic afterburning was found to be partly responsible for thrust production, in both the numerical calculations and the experiments. Kinetic afterburning offers a means of extending the operating Mach number range of a fixed geometry scramjet.

Some aspects of performance at a psychokinetic task

Psychokinetic phenomena are currently anomalous with respect to physics. They are not generally accepted as genuine nor are their possible physical mechanisms understood. It is argued here that a certain class of psychokinetic phenomena, termed "directly detectable" psychokinetic effects, are likely to yield possibly important insights into the physical mechanisms mediating psychokinetic phenomena generally. The current use within parapsychological research of randomly behaving psychokinetic target systems is criticised on several grounds. They are of limited scope for use in delineation of physical mechanisms involved in psychokinesis, and their intrinsic characteristics prevent subjects from utilising their possible capacity to learn to produce larger magnitude effects. It is argued that instrumented directly detectable psychokinetic tasks have characteristics which may allow subjects to treat their psychokinetic ability as akin to a normal skill which can be improved with continued practice, using an experimental paradigm similar to that used in the biofeedback training of physiological functions. The task used in this work was a microscopic form of psychokinetic metal-bending, whereby subjects produce pulse-like electrical outputs in a ceramic piezoelectric element used as psychokinetic target. Subjects were not allowed to touch the target and many effects were obtained under witnessed conditions with subjects situated several metres from it. One pilot and three principal longitudinal training studies were performed with a total of seventeen subjects. Six of the seventeen subjects showed significant improvement in their psychokinetic performance in the training studies, one showed a non-significant increase. The other ten failed to show any convincing signs of psychokinetic output. Three of the successful subjects did not show convincing signs of voluntary control over their effects, three did. Large individual differences were found including different rates of learning and levels of initial and final ability. This research was performed by Julian David Isaacs in preparation for the degree of Doctor of Philosophy and was submitted in 1984.

Impact of the Financial Crisis on the Performance of European Acquisitions

This study looks at the impact of the recent financial crisis on the short-term performance of European acquisitions. We use institutional theory and transaction cost economic theory to study whether bidders derive lower or higher returns from acquisitions announced after 2008. We investigate shareholders’ stock price reaction to 2245 deals which occurred during 2004–12 across 22 European Union countries. Our results from both univariate and multivariate analysis show that the deals announced in the post-crisis period, corresponding to the period of economic recession, generate higher returns to shareholders as compared to acquisitions announced in the pre-crisis period. We also test the relevance of the Economic and Monetary Union (EMU), that is, the Eurozone, to this value accrual during the recessionary period. We observe that non-EMU transactions obtain significantly higher gains vis-à-vis EMU transactions in the post-crisis years. Overall, announcement returns of European acquisitions have been affected by the financial crisis and the global recession; and companies that target countries with different currency regimes are likely to generate better returns from their acquisitions.

Non-invasive assessment of tear film surface quality

The tear film plays an important role preserving the health of the ocular surface and maintaining the optimal refractive power of the cornea. Moreover dry eye syndrome is one of the most commonly reported eye health problems. This syndrome is caused by abnormalities in the properties of the tear film. Current clinical tools to assess the tear film properties have shown certain limitations. The traditional invasive methods for the assessment of tear film quality, which are used by most clinicians, have been criticized for the lack of reliability and/or repeatability. A range of non-invasive methods of tear assessment have been investigated, but also present limitations. Hence no “gold standard” test is currently available to assess the tear film integrity. Therefore, improving techniques for the assessment of the tear film quality is of clinical significance and the main motivation for the work described in this thesis. In this study the tear film surface quality (TFSQ) changes were investigated by means of high-speed videokeratoscopy (HSV). In this technique, a set of concentric rings formed in an illuminated cone or a bowl is projected on the anterior cornea and their reflection from the ocular surface imaged on a charge-coupled device (CCD). The reflection of the light is produced in the outer most layer of the cornea, the tear film. Hence, when the tear film is smooth the reflected image presents a well structure pattern. In contrast, when the tear film surface presents irregularities, the pattern also becomes irregular due to the light scatter and deviation of the reflected light. The videokeratoscope provides an estimate of the corneal topography associated with each Placido disk image. Topographical estimates, which have been used in the past to quantify tear film changes, may not always be suitable for the evaluation of all the dynamic phases of the tear film. However the Placido disk image itself, which contains the reflected pattern, may be more appropriate to assess the tear film dynamics. A set of novel routines have been purposely developed to quantify the changes of the reflected pattern and to extract a time series estimate of the TFSQ from the video recording. The routine extracts from each frame of the video recording a maximized area of analysis. In this area a metric of the TFSQ is calculated. Initially two metrics based on the Gabor filter and Gaussian gradient-based techniques, were used to quantify the consistency of the pattern’s local orientation as a metric of TFSQ. These metrics have helped to demonstrate the applicability of HSV to assess the tear film, and the influence of contact lens wear on TFSQ. The results suggest that the dynamic-area analysis method of HSV was able to distinguish and quantify the subtle, but systematic degradation of tear film surface quality in the inter-blink interval in contact lens wear. It was also able to clearly show a difference between bare eye and contact lens wearing conditions. Thus, the HSV method appears to be a useful technique for quantitatively investigating the effects of contact lens wear on the TFSQ. Subsequently a larger clinical study was conducted to perform a comparison between HSV and two other non-invasive techniques, lateral shearing interferometry (LSI) and dynamic wavefront sensing (DWS). Of these non-invasive techniques, the HSV appeared to be the most precise method for measuring TFSQ, by virtue of its lower coefficient of variation. While the LSI appears to be the most sensitive method for analyzing the tear build-up time (TBUT). The capability of each of the non-invasive methods to discriminate dry eye from normal subjects was also investigated. The receiver operating characteristic (ROC) curves were calculated to assess the ability of each method to predict dry eye syndrome. The LSI technique gave the best results under both natural blinking conditions and in suppressed blinking conditions, which was closely followed by HSV. The DWS did not perform as well as LSI or HSV. The main limitation of the HSV technique, which was identified during the former clinical study, was the lack of the sensitivity to quantify the build-up/formation phase of the tear film cycle. For that reason an extra metric based on image transformation and block processing was proposed. In this metric, the area of analysis was transformed from Cartesian to Polar coordinates, converting the concentric circles pattern into a quasi-straight lines image in which a block statistics value was extracted. This metric has shown better sensitivity under low pattern disturbance as well as has improved the performance of the ROC curves. Additionally a theoretical study, based on ray-tracing techniques and topographical models of the tear film, was proposed to fully comprehend the HSV measurement and the instrument’s potential limitations. Of special interested was the assessment of the instrument’s sensitivity under subtle topographic changes. The theoretical simulations have helped to provide some understanding on the tear film dynamics, for instance the model extracted for the build-up phase has helped to provide some insight into the dynamics during this initial phase. Finally some aspects of the mathematical modeling of TFSQ time series have been reported in this thesis. Over the years, different functions have been used to model the time series as well as to extract the key clinical parameters (i.e., timing). Unfortunately those techniques to model the tear film time series do not simultaneously consider the underlying physiological mechanism and the parameter extraction methods. A set of guidelines are proposed to meet both criteria. Special attention was given to a commonly used fit, the polynomial function, and considerations to select the appropriate model order to ensure the true derivative of the signal is accurately represented. The work described in this thesis has shown the potential of using high-speed videokeratoscopy to assess tear film surface quality. A set of novel image and signal processing techniques have been proposed to quantify different aspects of the tear film assessment, analysis and modeling. The dynamic-area HSV has shown good performance in a broad range of conditions (i.e., contact lens, normal and dry eye subjects). As a result, this technique could be a useful clinical tool to assess tear film surface quality in the future.

An index of best practice performance reporting for Malaysian local authorities

Abstract Purpose – The purpose of this paper is to identify stakeholders’ expectations of information to be conveyed in local authorities’ annual reports and to develop an index of best practice performance reporting. Design/methodology/approach – The paper describes the development of a disclosure index emphasizing the public interest aspect of reporting and the need to provide relevant and meaningful information to stakeholders. The index was crafted from a public accountability perspective and based on the expectations of stakeholders as reconciled and validated by a Delphi panel of experts. Findings – The wide scope of information that was dentified as being important for disclosure by local authorities is consistent with the public accountability paradigm which requires the reporting of comprehensive information (both financial and non financial), about the condition, performance, activities and progress of the entity. Originality/value – The research posits a model of best practice performance reporting for Malaysian, and other, local authorities to meet the need for greater accountability by these entities.

Process engineering aspects of plasmid-based biopharmaceuticals production : tackling the threatening vaccine shortages to prevent global pandemics

Infectious diseases such as SARS, influenza and bird flu have the potential to cause global pandemics; a key intervention will be vaccination. Hence, it is imperative to have in place the capacity to create vaccines against new diseases in the shortest time possible. In 2004, The Institute of Medicine asserted that the world is tottering on the verge of a colossal influenza outbreak. The institute stated that, inadequate production system for influenza vaccines is a major obstruction in the preparation towards influenza outbreaks. Because of production issues, the vaccine industry is facing financial and technological bottlenecks: In October 2004, the FDA was caught off guard by the shortage of flu vaccine, caused by a contamination in a US-based plant (Chiron Corporation), one of the only two suppliers of US flu vaccine. Due to difficulties in production and long processing times, the bulk of the world's vaccine production comes from very small number of companies compared to the number of companies producing drugs. Conventional vaccines are made of attenuated or modified forms of viruses. Relatively high and continuous doses are administered when a non-viable vaccine is used and the overall protective immunity obtained is ephemeral. The safety concerns of viral vaccines have propelled interest in creating a viable replacement that would be more effective and safer to use.