How Do Ex Ante Severance Pay Contracts Fit into Optimal Executive Incentive Schemes?

2013 ◽  
Vol 51 (3) ◽  
pp. 631-671 ◽  
Author(s):  
P. RAGHAVENDRA RAU ◽  
JIN XU
Keyword(s):  
Severance Pay ◽  
Incentive Schemes ◽  
Ex Ante

scholarly journals Monitoring experts: insights from the introduction of video assistant referee (VAR) in elite football

2021 ◽  
Author(s):  
Ulrike Holder ◽  
Thomas Ehrmann ◽  
Arne König
Keyword(s):  
Decision Making ◽  
Natural Experiment ◽  
Home Bias ◽  
Selection System ◽  
Preferential Treatment ◽  
Monitoring Technology ◽  
Incentive Schemes ◽  
Home Team ◽  
Experience Levels ◽  
Ex Ante

AbstractAlong with incentive schemes, another well-established way to align the interests of principals and agents and, consequently, to reduce and eliminate biases and errors is the practice of monitoring. Considering the monitoring of experts, we evaluate the introduction of the most recent monitoring technology in football, the virtual assistant referee (VAR). Focusing on the German Bundesliga and the Italian Serie A, we analyse whether VAR has changed referees’ decision-making behaviour and, in particular, whether this led to changes in referees’ well-documented preferential treatment of home teams. By doing so, we use the introduction of VAR as a natural experiment to examine whether VAR can help overcome inefficiencies in referees’ decision-making and whether it exposes any inefficiencies in the referee selection system. Ex ante (in-)efficiency would imply that few (many) changes in referee decisions are seen after the VAR introduction. Our results suggest, generally, that VAR impacts referees’ decision-making. We confirm current research and conclude that prior to the introduction of the VAR, the home team tends to be favoured with respect to awarded penalty kicks, red cards and the amount of added time in games containing either penalty kicks or red cards. However, because the home bias only partially decreased with the introduction of VAR, it seems that the bias emerges more as a result of the advantages of playing in one’s local surroundings than of the referees’ decisions. We further show that VAR interventions do not correlate with referees’ experience levels. Overall, these modest findings and even non-existent differences indicate that home bias occurs for reasons other than referees, suggesting that the process for training, promoting, and selecting referees at the highest league works well. Finally, our findings suggest that the VAR implementation is aimed at purposes other than classic agent monitoring.

Does Ex Ante Severance Pay Affect the Timeliness of Bad News Disclosure? The Role of Managerial Exit Costs

2020 ◽  
pp. 0148558X2092098
Author(s):  
Herita Akamah ◽  
Bryan Brockbank ◽  
Sydney Qing Shu
Keyword(s):  
Positive Association ◽  
Bad News ◽  
Severance Pay ◽  
Extant Literature ◽  
Employment Termination ◽  
Exit Costs ◽  
Ex Ante ◽  
Severance Agreements

Extant literature documents a positive association between ex ante severance pay and timeliness of bad news disclosure, suggesting that the provision of severance pay is consistent with efficient contracting. Relying on an empirically unexplored theory, we investigate whether and how managerial exit costs (i.e., financial and nonfinancial losses triggered by employment termination) affect the effectiveness of severance pay in curbing bad news withholding. We find that managerial exit costs attenuate the positive association between severance pay and timely disclosure of bad news. Moreover, we document that severance pay does not prompt managers to reveal bad news when their exit costs are sufficiently high (i.e., in the top quartile). This result suggests that exit costs erode the efficacy of ex ante severance pay in curtailing bad news withholding. Overall, our findings support the notion that a “one-size-fits-all” approach to structuring severance agreements undermines the potential of severance pay to benefit investors.

Do Career Concerns Affect the Delay of Bad News Disclosure?

2017 ◽  
Vol 93 (2) ◽  
pp. 61-95 ◽  
Author(s):  
Stephen P. Baginski ◽  
John L. Campbell ◽  
Lisa A. Hinson ◽  
David S. Koo
Keyword(s):  
Empirical Evidence ◽  
Career Concerns ◽  
Data Availability ◽  
Bad News ◽  
Severance Pay ◽  
The Public ◽  
Ex Ante ◽  
Theoretical Evidence ◽  
The Impact ◽  
Jel Classifications

ABSTRACT Theory argues that career concerns (i.e., concerns about the impact of current performance on contemporaneous and future compensation) encourage managers to withhold bad news disclosure. However, empirical evidence regarding the extent to which a manager's career concerns are associated with a delay in bad news disclosure is limited. Across multiple proxies for career concerns, we find that the extent to which managers delay bad news is positively associated with their level of career concerns. Then, we hand-collect data on a compensation contract that firms use to reduce CEOs' career concerns (i.e., ex ante severance pay agreements). We find that if managers receive a sufficiently large payment in the event of dismissal, they no longer delay the disclosure of bad news. Overall, our findings support prior theoretical evidence that managers delay bad news disclosure due to career concerns and suggest a mechanism through which firms can mitigate the delay. JEL Classifications: M12; M41. Data Availability: Data are available from the public sources cited in the text.

Are Ex Ante CEO Severance Pay Contracts Consistent with Efficient Contracting?

2016 ◽  
Vol 51 (3) ◽  
pp. 737-769 ◽  
Author(s):  
Brian D. Cadman ◽  
John L. Campbell ◽  
Sandy Klasa
Keyword(s):  
Risk Taking ◽  
Chief Executive Officers ◽  
Net Present Value ◽  
Chief Executive ◽  
Downside Risk ◽  
Present Value ◽  
Severance Pay ◽  
Ex Ante ◽  
Executive Officers ◽  
Risky Projects

AbstractEfficient contracting predicts that ex ante severance pay contracts are offered to chief executive officers (CEOs) as protection against downside risk and to encourage investment in risky projects with a positive net present value (NPV). Consistent with this prediction, we find that ex ante contracted severance pay is positively associated with proxies for a CEO’s risk of dismissal and costs the CEO would incur from dismissal. Additionally, we show that the contracted severance payment amount is positively associated with CEO risk taking and the extent to which a CEO invests in projects that have a positive NPV. Overall, our findings imply that ex ante severance pay contracts are consistent with efficient contracting.

scholarly journals Essays on the economics of energy and real estate management

2020 ◽  
Author(s):  
◽  
Ghislaine Lang
Keyword(s):  
Energy Efficiency ◽  
Alternative Energy ◽  
Energy Use ◽  
Energy Savings ◽  
New Technologies ◽  
Low Cost ◽  
Heating System ◽  
Carbon Price ◽  
Incentive Schemes ◽  
Ex Ante

Building energy retrofits are popular targets of public incentive schemes to curb emissions. For an efficient allocation of resources, policy-makers are required to compare benefit estimates of avoided carbon emissions with reliable estimates of each intervention's associated implicit carbon price (i.e., the net social cost of reducing CO$_2$ emissions by one tonne). In this thesis, I use data for a unique portfolio of 548 multi-unit buildings to provide novel evidence on heterogeneous effects of alternative energy efficiency interventions on energy use and the implicit carbon price. My results confirm that frequently subsidized measures such as wall insulation and windows replacement achieve significant energy savings, yet turn out to be a relatively expensive strategy to abate CO$_2$. By contrast, findings for smart thermostats suggest that new technologies can achieve significant savings at a relatively low cost. Despite public incentive schemes and the expected private and pro-social benefits, the level of realized investments remains low, and a burgeoning literature proposes ex-ante information to guide owners' investment decisions. In this context, this thesis also includes a discrete choice experiment on a sample of 511 homeowners to estimate their valuation of alternative replacement heating appliances. Results show that homeowners' willingness to invest in energy efficiency goes beyond financial savings, and that choices are unaffected by ex-ante information on heating costs. By contrast, this thesis also includes a stated choice multiple price list applied to 406 tenants in order to estimate acceptability of rent increases in exchange for improved energy efficiency of the heating system. Findings show that tenants' average willingness to pay for energy efficiency is statistically and economically significant, and can be stimulated further with ex-ante information on heating costs. Information on CO$_2$ tax payments has no incremental effect.

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