{"title":"Political Property Rights and Entangled Political Economy","authors":"A. Salter","doi":"10.2139/ssrn.3263751","DOIUrl":"https://doi.org/10.2139/ssrn.3263751","url":null,"abstract":"I contribute to the theory of entangled political economy by showing how entanglement can be characterized in terms of political property rights. A political property right grants its holder a share of decision-making power in a specific context, as well as specifies to whom the costs and benefits from those decisions accrue. Because entangled political economy focuses on the complex relationships that exist between market and political enterprises, theorizing about these relationships as exchanges of political property rights can give us meaningful information about what entanglement is, when it exists, and how it can be expected to develop. I briefly survey the theory of political property rights, show how political property rights within a broader entanglement perspective helps understand constitutions, and discuss several applications of political property rights that can advance entangled political economy scholarship.","PeriodicalId":162203,"journal":{"name":"ERN: Decision Rights (Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-04-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129379235","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Communication and Behavior in Organizations: An Experiment","authors":"Piotr Evdokimov, Umberto Garfagnini","doi":"10.2139/ssrn.2536507","DOIUrl":"https://doi.org/10.2139/ssrn.2536507","url":null,"abstract":"We design a laboratory experiment to study behavior in a multidivisional organization facing a trade-off between coordinating its decisions across the divisions and meeting division-specific needs that are known only to the division managers. The managers communicate their private information through cheap talk. While the results show close to optimal communication, we also find systematic deviations from optimal behavior in how the communicated information is used. Specifically, subjects' decisions show worse than predicted adaptation to the needs of the divisions in decentralized organizations and worse than predicted coordination in centralized organizations. We show that the observed deviations disappear when uncertainty about the divisions' local needs is removed and discuss the possible underlying mechanisms.","PeriodicalId":162203,"journal":{"name":"ERN: Decision Rights (Topic)","volume":"6 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-03-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128074732","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Do We Need Employee Representation on the Board of Directors?","authors":"Laurent Germain, C. Lyon-Caen","doi":"10.2139/ssrn.2729708","DOIUrl":"https://doi.org/10.2139/ssrn.2729708","url":null,"abstract":"We develop a model of corporate board including employee representatives in addition to shareholders and top executives. In line with the empirical literature, our model shows that low levels of employee representation may increase the shareholder value, even in the presence of a conflict of interest between employee representatives and other directors because employees hold specific valuable private information. We also show that a minority employee representation may cause the board to switch from a short-term to a long-term strategy. Such a strategy switch is always in the employees’ interest and can be beneficial or detrimental to shareholders as well as top executives. Thus, employee representation can be beneficial to shareholders as well as other stakeholders. However, employee representation may be harmful for firms whose shareholder base has a short time horizon such as venture capitalists.","PeriodicalId":162203,"journal":{"name":"ERN: Decision Rights (Topic)","volume":"25 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-02-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127119080","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Rules vs. Discretion in Organizations","authors":"Susheng Wang","doi":"10.2139/ssrn.2593942","DOIUrl":"https://doi.org/10.2139/ssrn.2593942","url":null,"abstract":"Whether to set managerial rules or allow managerial discretion is a key issue in organizations. In this paper, we investigate the boundaries between rules and discretion in the firm. Using an incomplete contract approach, we differentiate between projects that are more efficiently managed under rules and those that are more efficiently managed under discretion. Our main finding is that for conservative projects with low expenditures and balanced expenditure/quality ratios, rules are more efficient than discretion; for other projects, discretion is efficient. We also find that (1) rules offer better incentives; (2) discretion works better for risky projects; (3) whenever discretion is efficient, rules are equally efficient; and (4) the profit share to the manager is independent of her decision-making rights (separation of income and control rights).","PeriodicalId":162203,"journal":{"name":"ERN: Decision Rights (Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2015-04-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129202318","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Jost H. Heckemeyer, Katharina Richter, Christoph Spengel
{"title":"Tax Planning of R&D Intensive Multinationals","authors":"Jost H. Heckemeyer, Katharina Richter, Christoph Spengel","doi":"10.2139/ssrn.2557353","DOIUrl":"https://doi.org/10.2139/ssrn.2557353","url":null,"abstract":"The allocation of management and control in the business decision process finds expression in the coordination intensity between agents in the firm. We develop and test a theory, based on the organizational design literature, for the intensity in which the tax department strives to coordinate with managers from other business units in order to intervene in investment decisions. Our theoretical considerations predict that R&D intensity is an important determinant of the tax department's role. Using data from a confidential survey taken in 2012 of top financial and tax managers of very large multinational companies, representing 8% of business R&D spending in the OECD, we indeed find supporting evidence that in R&D intensive multinational firms the tax department operates more as a controller than as a manager. In particular, tax departments of R&D intensive firms make less tax planning effort, are less ambitious to minimize the tax burden of the firm, are later involved in the decision-making process of a new investment project, but are more likely to have a veto right in the decision on a new investment project as compared to less R&D intensive firms. Conditional on R&D intensity, however, the level of intangible assets in the firm is associated with more tax planning efforts and ambitions. Our results are statistically significant and robust towards several sensitivity checks.","PeriodicalId":162203,"journal":{"name":"ERN: Decision Rights (Topic)","volume":"4 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2014-11-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126323830","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"The Intrinsic Value of Decision Rights","authors":"Björn Bartling, E. Fehr, Holger Herz","doi":"10.2139/ssrn.2255992","DOIUrl":"https://doi.org/10.2139/ssrn.2255992","url":null,"abstract":"Philosophers, psychologists, and economists have long argued that certain decision rights carry not only instrumental value but may also be valuable for their own sake. The ideas of autonomy, freedom, and liberty derive their intuitive appeal – at least partly – from an assumed positive intrinsic value of decision rights. Proving the existence of this value and measuring its size, however, is intricate. Here, we develop an experimental method capable of achieving these goals. The data reveal that – across different parameterizations – the large majority of our subjects intrinsically value decision rights beyond their instrumental benefit. The existence of an intrinsic value of decision rights helps understand the allocation of decision rights in practice, and it has implications for their optimal allocation in organizations, economic institutions, and society at large.","PeriodicalId":162203,"journal":{"name":"ERN: Decision Rights (Topic)","volume":"22 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2013-05-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134540496","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Allocation of Decision Rights and the Investment Strategy of Mutual Funds","authors":"N. Dass, Vikram Nanda, Qinghai Wang","doi":"10.2139/ssrn.2024370","DOIUrl":"https://doi.org/10.2139/ssrn.2024370","url":null,"abstract":"The literature suggests that while decentralized decision making can allow for greater specialization in an organization, it heightens the cost of coordinating decisions. The mutual fund industry—in particular, sole- and team-managed balanced funds—provides an ideal setting to test the specialization versus coordination trade-off, as information on decision structures and fund actions is easily obtained. We show that sole-managed balanced funds, with centralized decision rights, exhibit significant market timing that requires reallocation across asset classes. However, consistent with coordination difficulties between managers specializing in particular asset classes, no market timing is evident in team-managed balanced funds. Team-managed funds exhibit greater returns from specialization, in the form of better security selection performance than sole-managed funds. These results hold cross-sectionally and for funds that switch management structures. The overall returns across different management structures are similar, indicating a market equilibrium. Investor flows reward market-timing performance for sole- but not team-managed funds.","PeriodicalId":162203,"journal":{"name":"ERN: Decision Rights (Topic)","volume":"1999 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2012-03-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128257754","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Las Problemáticas Modificaciones Adicionales a la Transformación de Sociedades Mercantiles (The Problematic Charter Amendments Additional to the Transformation of Corporations)","authors":"A. Sanchez-Graells","doi":"10.2139/SSRN.1787923","DOIUrl":"https://doi.org/10.2139/SSRN.1787923","url":null,"abstract":"Spanish Companies regulation (in particular, Act 3/2009 on the structural modifications of corporations) allows for a simplified procedure of charter amendment in the case of transformation of corporations. In some cases, the simplification might imply a reduction in shareholders' and creditors' rights. This article critically appraises the Spanish rules and proposes a functional interpretation that preserves shareholders' and creditors' legitimate rights when corporations decide to transform.","PeriodicalId":162203,"journal":{"name":"ERN: Decision Rights (Topic)","volume":"214 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2010-12-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122619804","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Financial Intermediation and the Rights Offer Paradox","authors":"Laure Koenig-Matsoukis","doi":"10.2139/ssrn.1576307","DOIUrl":"https://doi.org/10.2139/ssrn.1576307","url":null,"abstract":"In this study, we investigate the trading dynamics around rights issues. We employ signed and unsigned trading activity measures in order to provide evidence of costly financial intermediation. We, first, document short selling activity by underwriters and shareholders during rights issues leading to significant negative abnormal returns during the offer. Further, we provide evidence that rights tend to be sold below their fair value. Our results, therefore, suggest that the lack of use of rights offering, referred to as the rights offer paradox can be explained by indirect costs related to the nature of constraints confronting underwriters and shareholders but also to trading mistakes on the rights market.","PeriodicalId":162203,"journal":{"name":"ERN: Decision Rights (Topic)","volume":"76 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2010-07-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123189025","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"One Share, One Vote: A Perception of Legitimacy","authors":"Manning G. Warren","doi":"10.2139/ssrn.1621775","DOIUrl":"https://doi.org/10.2139/ssrn.1621775","url":null,"abstract":"Vital in preserving managerial accountability, the firmly established one share, one vote rule provides shareholders with limited rights to elect directors who appoint managers and to approve certain extraordinary transactions. Without the deterrents of risk of capital loss and fear of removal, management may exercise power without responsibility. The New York Stock Exchange (NYSE) embraced the one share, one vote model, and its leadership continues to emphasize the rule as good for investors and their public markets. Managers who fear the acquisition of voting control, and their subsequent removal, by new owners, favor moving their companies to markets where disproportionate voting rights are permitted, thus allowing their control of voting power. As a result, the NYSE proposed the elimination of the rule, out of fear of losing these companies from their listings, and the Securities and Exchange Commission (SEC) has indicated its willingness to permit access to the trading markets of common stock with disproportionate or no voting rights. Accordingly, the continued vitality of the one share, one vote rule is dependent upon the will of Congress. This article, after reviewing the rule’s controversial background, addresses disenfranchisement techniques, the value represented by voting rights, the effects on present public policies, and most importantly, the long-term impact on public confidence in the fairness and integrity of our securities markets. The transcendent question, and the focus of any analysis dealing with the protection of investors and the securities markets, is whether the ultimate resolution of the controversy will weaken or support a perception of legitimacy.","PeriodicalId":162203,"journal":{"name":"ERN: Decision Rights (Topic)","volume":"5 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1988-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114336649","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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