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.

Multicriterion differential games with applications to combat problems

In this paper a theory for two-person zero sum multicriterion differential games is presented. Various solution concepts based upon the notions of Pareto optimality (efficiency), security and equilibrium are defined. These are shown to have interesting applications in the formulation and analysis of two target or combat differential games. The methods for obtaining outcome regions in the state space, feedback strategies for the players and the mode of play has been discussed in the framework of bicriterion zero sum differential games. The treatment is conceptual rather than rigorous.

Specification-driven approach for protocol design of distributed computing systems

An important issue in the design of a distributed computing system (DCS) is the development of a suitable protocol. This paper presents an effort to systematize the protocol design procedure for a DCS. Protocol design and development can be divided into six phases: specification of the DCS, specification of protocol requirements, protocol design, specification and validation of the designed protocol, performance evaluation, and hardware/software implementation. This paper describes techniques for the second and third phases, while the first phase has been considered by the authors in their earlier work. Matrix and set theoretic based approaches are used for specification of a DCS and for specification of the protocol requirements. These two formal specification techniques form the basis of the development of a simple and straightforward procedure for the design of the protocol. The applicability of the above design procedure has been illustrated by considering an example of a computing system encountered on board a spacecraft. A Petri-net based approach has been adopted to model the protocol. The methodology developed in this paper can be used in other DCS applications.

Merkel cell carcinoma : Epidemiological study with special reference to polyomavirus and vascular factors in pathogenesis

Merkel cell carcinoma (MCC) is a rare cutaneous malignancy that occurs predominantly on sun exposed skin areas. A new polyomavirus (MCPyV) was identified in MCC tumor tissues in 2008 suggesting that a viral infection might be an etiological factor. A typical MCC is a rapidly growing painless purple nodule. In its early stage it can be misjudged by its appearance as a cyst or abscess. Recurrences are common and approximately half of the patients will develop lymph node metastases and third of the patents will have distant metastases. It affects mostly elderly persons at an average age of 70 at the time of diagnosis. MCC was first described in 1972 and the first MCC patient in Finland was identified in 1983. MCC has been poorly recognized, but increased awareness and better diagnostic accuracy has increased the incidence since the early years. In this study, all cases with a notation of MCC during 1979 2008 were obtained from the Finnish Cancer Registry. Based on this data, the incidence is 0.11 for men and 0.12 for women. It is similar than that of other Nordic countries, but lower than in the USA. For clinical series, the files of patients diagnosed with MCC during 1983 2004 were reviewed, and the tissue samples were re-evaluated, if available (n=181). Third of the patients were men, and the most common site of the primary tumor was the head and neck (53%). The majority of the patients (86%) presented with a clinically node-negative (Stage I or II) disease, but the disease recurred in 38% of them. The treatment schemes were heterogeneous. No additional benefit from a wide margin (≥2 cm) was found compared to a margin of 0.1-1.9 cm, but intralesional excision was more often associated with local recurrence. None of the patients with Stage I-II disease who had received postoperative radiotherapy had local recurrence during the follow-up period. The 5-year relative survival ratio for Stage I disease was 68%, for Stage II 67%, for Stage III 16%, and for Stage IV 0%. The relative excess risk of death was significantly lower among women than among men. Some of these tissue samples were further analyzed for vascular invasion (n=126) by immunohistochemistry using vascular endothelial markers CD-31 and D2-40. Vascular invasion was seen in 93% of the samples and it was observed already in very small, <5mm tumors. The tissue samples were also analyzed for the presence of MCPyV by using a polymerase chain reaction (PCR) and quantitative PCR. MCPyV DNA was present in 80% of 114 samples studied. The patients with virus-positive tumors had better overall survival than patients with virus-negative tumors. Immunohistochemical analyses were performed for the expression of VEGFR-2 (n=21) and endostatin (n=19), but they had no prognostic value. Our results support the concept of treating MCC with margin-negative excision and radiotherapy to the tumor bed to reduce local recurrence. The finding of a high frequency of lymphovascular invasion reduces its value as a prognostic factor, but emphasizes the role of sentinel node biopsy even in very small primary MCC.

Inventory Routing - A Strategic Management Accounting Perspective

This dissertation develops a strategic management accounting perspective of inventory routing. The thesis studies the drivers of cost efficiency gains by identifying the role of the underlying cost structure, demand, information sharing, forecasting accuracy, service levels, vehicle fleet, planning horizon and other strategic factors as well as the interaction effects among these factors with respect to performance outcomes. The task is to enhance the knowledge of the strategic situations that favor the implementation of inventory routing systems, understanding cause-and-effect relationships, linkages and gaining a holistic view of the value proposition of inventory routing. The thesis applies an exploratory case study design, which is based on normative quantitative empirical research using optimization, simulation and factor analysis. Data and results are drawn from a real world application to cash supply chains. The first research paper shows that performance gains require a common cost component and cannot be explained by simple linear or affine cost structures. Inventory management and distribution decisions become separable in the absence of a set-dependent cost structure, and neither economies of scope nor coordination problems are present in this case. The second research paper analyzes whether information sharing improves the overall forecasting accuracy. Analysis suggests that the potential for information sharing is limited to coordination of replenishments and that central information do not yield more accurate forecasts based on joint forecasting. The third research paper develops a novel formulation of the stochastic inventory routing model that accounts for minimal service levels and forecasting accuracy. The developed model allows studying the interaction of minimal service levels and forecasting accuracy with the underlying cost structure in inventory routing. Interestingly, results show that the factors minimal service level and forecasting accuracy are not statistically significant, and subsequently not relevant for the strategic decision problem to introduce inventory routing, or in other words, to effectively internalize inventory management and distribution decisions at the supplier. Consequently the main contribution of this thesis is the result that cost benefits of inventory routing are derived from the joint decision model that accounts for the underlying set-dependent cost structure rather than the level of information sharing. This result suggests that the value of information sharing of demand and inventory data is likely to be overstated in prior literature. In other words, cost benefits of inventory routing are primarily determined by the cost structure (i.e. level of fixed costs and transportation costs) rather than the level of information sharing, joint forecasting, forecasting accuracy or service levels.

Conformations of dehydrophenylalanine containing peptides. NMR studies on three tripeptides with a central dehydrophenylalanyl residue.

Three tripeptides containing a central Z-dehydrophenylalanine residue (Δz-Phe), Boc-L-Phe-Δz-Phe-X-OMe (X = L-Val 1, L-Leu 2 and X = L-Ala 3) have been synthesized and their solution conformations investigated by 270 MHz 1H NMR spectroscopy. In all three peptides, conformations involving the X residue NH in an intramolecular hydrogen bond were favoured in CDCl3 solutions. Studies of the nuclear Overhauser effect (NOE) provided support for a Type II β turn conformation in these peptides with Phe and Δz-Phe occupying the i + 1 and i + 2 positions, respectively. Significantly different conformations lacking any intramolecular hydrogen bonds were observed for peptide 1 in (CD3)2SO. NOE results were consistent with a significant population of molecules having semi-extended conformations (ø > 100°) at the Δz-Phe residue.

Modulus Spectroscopy and Dielectric Dispersion Studies in Alkali Metal Perchlorates

Alkali metal perchlorates (KClO4, RbClO4, and CsClO4) undergo a structural phase transition from the orthorhombic to the cubic phase at elevated temperatures. A detailed dielectric study of these crystals across the phase transition is carried out at different frequencies. The crystals are found to exhibit pronounced dielectric dispersion in the kHz frequency range. The results support the view that these transitions are of order–disorder type. The dielectric behaviour at temperatures above Tc is discussed in terms of modulus spectroscopy. An estimate of conductivity relaxation times above the phase transition temperatures made from modulus spectroscopy data gives values of 3.1, 12.2 and 17.7 μs for KClO4, RbClO4, and CsClO4, respectively.

Mutual diffusion coefficients of some binary liquid systems: benzene-n-alkyl alcohol

The mutual diffusion coefficients for binary liquid systems of benzene-n-alkyl alcohol at various compositions have been determined by the diaphragm cell method at 28-degrees-C. The alcohols used were the members of n-paraffinic alcohols ranging from C1 to C8. The maximum possible experimental error is 14%. The data were fitted with a generalized correlation, giving the deviation from the experimental data to within 2.75%, on average.

Äidin raskausajan D-vitamiinitilanteen yhteys lapsen luustoon yhden vuoden iässä

Johdanto: Raskaudenaikaisen D-vitamiinin puutoksen on havaittu vaikuttavan negatiivisesti syntyvän lapsen luuston kasvuun. Myös lapsen riittävä D-vitamiinin saanti on merkittävä tekijä lapsen luuston hyvinvoinnissa. Suomalaisten odottavien äitien D-vitamiinin saanti on usein puutteellista, eikä D-vitamiinia muodostu iholla talvikuukausina Suomen pohjoisen sijainnin vuoksi. Suomalaisten raskaana olevien naisten heikko D-vitamiinitilanne saattaa vaikuttaa lasten luuston terveyteen. Tavoitteet: Työn tavoitteena oli tutkia ovatko raskauden aikainen D-vitamiinitilanne, lapsen D-vitamiinitilanne ja D-vitamiinin saanti vuoden iässä yhteydessä luuntiheyden ja -mineraalipitoisuuden muutoksiin lapsen ensimmäisen elinvuoden aikana. Aineisto ja menetelmät: Raskausaikana rekrytoiduista 126 äiti-lapsi-parista vuoden iässä seurantakäynnille saapui 89 (69 %). Lapsilta otettiin verinäyte ja siitä määritettiin D-vitamiinitilannetta kuvaava seerumin 25-hydroksi-D-vitamiinipitoisuus (25(OH)D) immunoentsymometrisellä menetelmällä. Lasten sääriluu tutkittiin pQCT-menetelmällä. Vastaavat tutkimukset oli suoritettu sekä lapsille että äideille synnytyksen jälkeen. Äitien seerumin 25(OH)D-pitoisuus alkuraskauden aikana määritettiin THL:n keräämistä verinäytteistä. Lapsilta kerättiin kolmen vuorokauden ruokapäiväkirja sekä kyselylomake, joiden avulla selvitettiin D-vitamiinin saanti ruokavaliosta, D-vitamiinilisän käyttö ja taustatekijöitä. Äideille suoritettiin lyhyt haastattelu koskien lapsen terveyttä ja kehitystä. Tilastollinen tarkastelu suoritettiin SPSS (versio 16.0) –ohjelmalla. Korrelaatioanalyysilla selvitettiin minkä tekijöiden kanssa 1-vuotiaan luuston laatua kuvaavat muuttujat ja niissä tapahtuneet muutokset korreloivat. Regressioanalyysilla tutkittiin selittääkö raskausajan D-vitamiinitilanne, lapsen D-vitamiinitilanteen muutos tai lapsen D-vitamiinin saanti yhden vuoden iässä luustomuuttujien muutoksia. Monimuuttujamallin avulla tarkasteltiin, onko raskaudenaikainen D-vitamiinitilanne lineaarisesti yhteydessä luumuuttujien arvoihin. Tulokset: Lasten D-vitamiinin saanti ylitti keskimäärin suositukset (KA 12,3 ?g/vrk), mutta 20 %:lla seerumin 25(OH)D-pitoisuus oli riittämätön (< 50 nmol/l). Seurantakäynnin aikaan yhä imetetyillä lapsilla Dvitamiinitilanne oli heikompi kuin ei-imetetyillä (p=0,044). Luun mineraalimäärä (BMC, engl. bone mineral content) oli kasvanut eniten niillä lapsilla, joiden äitien D-vitamiinitilanne oli ollut heikoin raskauden aikana ja vähiten niillä, joilla D-vitamiinitilanne raskausaikana oli ollut riittävä. Tulos ei kuitenkaan yltänyt merkitsevälle tasolle (p=0.069). Muissa luumuuttujissa viitteitä yhteyksistä ei löytynyt. Taustatietoja tarkastellessa havaittiin merkitsevä negatiivinen yhteys raskausajan D-vitamiinitilanteen ja lapsen sairastamien nuhakuumeiden lukumäärän välillä (p=0.044). Johtopäätökset: Lasten D-vitamiinin saanti oli suositusten mukaista, mutta siitä huolimatta osalla lapsista Dvitamiinitilanne ei ollut optimaalinen. Erot BMC:n muutoksessa ryhmien välillä viittaavat saavutuskasvuun eli heikomman D-vitamiinitilanteen vaikutus luustoon kompensoituu BMC:n osalta ensimmäisen elinvuoden aikana. Pitkäkestoisia lisätutkimuksia raskausajan D-vitamiinitilanteen ja lapsen luuston yhteyksistä suuremmilla tutkimusotoksilla tarvitaan.

Inhibition of in Vitro Aminoacylation and Translation by RNA Reactive Antibodies

Antibodies were raised against guanosine-BSA, GMP-BSA and tRNA-mBSA conjugates separately in rabbits. Binding characteristics of these antibodies to various RNAs were studied using a sensitive avidin-biotin micro ELISA. These antibodies inhibited in vitro aminoacylation of tRNA in a dose dependent manner. This inhibition was reversed by the addition of the respective homologous haptens thereby showing the specificity of these antibodies. In vitro translation of endogenous mRNAs in rabbit reticulocyte lysate was also inhibited by these antibodies in a dose dependent manner.

Serotypic and genotypic characterization of human serotype 10 rotaviruses from asymptomatic neonates

Human rotaviruses were isolated from asymptomatic neonates at various hospitals and clinics in the city of Bangalore, India, and were found to be subgroup I specific and possess long RNA patterns (M. Sukumaran, K. Gowda, P. P. Maiya, T. P. Srinivas, M. S. Kumar, S. Aijaz, R. R. Reddy, L. Padilla, H. B. Greenberg, and C. D. Rao, Arch. Virol. 126:239-251, 1992). Three of these strains were adapted to tissue culture and found by serotype analysis and neutralization assays to be of serotype 10, a serotype commonly found in cattle but infrequently found in humans and not previously identified in neonates. By RNA-RNA hybridization, a high level of relatedness to a serotype 10 bovine rotavirus strain and a low-to-medium level of relatedness to a human rotavirus strain were observed. Since this human isolate shares a genogroup with bovine rotavirus, it is likely that it originated by interspecies transmission. A human rotavirus strain isolated from asymptomatic neonates and similar to bovine rotavirus might represent a good vaccine candidate.

Role of lattice defects and crystallite morphology in the UV and visible-light-induced photo-catalytic properties of combustion-prepared TiO2

The physico-chemical, photo-physical and micro-structural properties responsible for the strikingly different photocatalytic behavior of combustion-prepared TiO2 (c.TiO2) and Degussa P25 (d.TiO2) samples are elucidated in this study. Electron microscopy and selected area electron diffraction micrographs revealed that the two samples exhibited different morphologies. The grains of c.TiO2 were spherical and comprised of 5-6 nm size primary particle. On the other hand, d.TiO2 consisted of large (0.5-3.0 mu m) size and irregular shape aggregates having primary particles of 15-40 nm cross-sectional diameter. The ESR study revealed that the presence of certain defect states in c.TiO2 helped in stabilization of O-. and Ti3+-OH type species during room-temperature UV-irradiation. No such paramagnetic species were however formed over d.TiO2 under similar conditions. C1s and Ti 2p XPS spectra provide evidence for the presence of some lattice vacancies in c.TiO2 and also for the bulk Ti4+ -> Ti3+ conversion during its UV-irradiation. Compared to d.TiO2, c.TiO2 displayed considerably higher activity for discoloration of methyl orange but very poor activity for splitting of water, both under UV and visible light radiations. This is attributed to enhanced surface adsorption of dye molecules over c.TiO2, because of its textural features and also the presence of photo-active ion-radicals. On the other hand, the poor activity of c.TiO2 for water splitting is related to certain defect-induced inter-band charge trapping states in the close vicinity of valence and conduction bands of c.TiO2, as revealed by thermoluminescence spectroscopy. Further, the dispersion of nanosize gold particles gave rise to augmented activity of both the catalysts, particularly for water splitting. This is explained by the promotional role of Au-0 or Au-0/TiO2 interfacial sites in the adsorption and charge-adsorbate interaction processes. (C) 2011 Elsevier B.V. All rights reserved.

Optimization of cold and warm workability in 304 stainless steel using instability maps

The deformation characteristics of stainless steel type AISI 3O4 under compression in the temperature range 20 degrees C to 600 degrees C and strain-rate range 0.001 to 100 s(-1) have been studied with a view to characterizing the flow instabilities occurring in the microstructure. At strain rates less than 5 s(-1), 304 stainless steel exhibits flow localization, whereas dynamic strain aging occurs at intermediate temperatures and below 0.5 s(-1). At room temperatures and strain rates less than 10 s(-1), martensite formation is observed. To avoid the preceding microstructural instabilities, cold and warm working should be carried out at strain rates greater than 5 s(-1). The continuum criterion, developed on the basis of the principles of maximum rate of entropy production and separability of the dissipation function, predicts accurately all the preceding instability features.