scholarly journals Law, Economics, and Beyond: A Case for Retheorizing the Business Corporation

2011 ◽  
Vol 55 (4) ◽  
pp. 911-964
Author(s):  
P. M. Vasudev
Keyword(s):  
Public Policy ◽  
Economic Theory ◽  
Critical Analysis ◽  
Agency Costs ◽  
Executive Pay ◽  
Hostile Takeovers ◽  
Business Corporation ◽  
Share Prices ◽  
Managerial Power

This essay presents a critical analysis of the economic theory of corporations and its idioms, such as “nexus of contracts”, “agency costs”, and “shareholder value”. It calls for the development of a richer and more inclusive theory of business corporations that draws on the experience of the last three decades and better addresses the needs of the post-Enron, post-AIG world. The author identifies the following shortcomings of the economic theory of corporations. First, the contractarian interpretation overlooks the role of law and public policy in corporations. Second, using share prices as the yardstick of corporate performance and encouraging practices such as the buyback of shares have serious implications for the competitiveness and sustainability of corporations. Third, there is inadequate attention to the characteristic and normative distinctions between debt and equity. And fourth, hostile takeovers are treated as virtually the only solution to entrenched managements. The problem of managerial power must be reviewed in the light of evidence regarding managerial power and the efficacy of boards. Equally, there is a case for developing a more deliberated, fair, and equitable policy on executive pay.

scholarly journals Corporate governance issues surrounding executive compensation and executive severance

2021 ◽  
Author(s):  
Andrea W. Zanetti
Keyword(s):  
Executive Compensation ◽  
Board Independence ◽  
Substantial Influence ◽  
Publicly Traded ◽  
Business Corporation ◽  
Effective Governance ◽  
Corporation Law ◽  
Managerial Power ◽  
Legislative Framework

This paper seeks to explain why and how executive severances of publicly-traded Canadian and U.S. companies have reached the financial levels they have, generating public and shareholder outrage and causing governments on both sides of the border to introduce new legislation. The paper investigates the role of the CEO, boards and shareholders in the setting of executive compensation. As the origins ofthe three roles lie in business corporation law, the legislative framework of Canadian and U.S. companies is presented to permit the reader to understand the legal accountabilities and rights of each of the three parties. The paper identifies that executives may exercise substantial influence over boards, possibly impeding effective governance. The paper concludes that effective governance, including greater board independence and board competence in executive compensation matters will help to improve board functioning and minimize the effects of the agency problem, cronyism and managerial power.

scholarly journals Some Uses of Happiness Data in Economics

2006 ◽  
Vol 20 (1) ◽  
pp. 25-46 ◽  
Author(s):  
Rafael Di Tella ◽  
Robert MacCulloch
Keyword(s):  
Public Policy ◽  
Economic Theory ◽  
Political Economy ◽  
Empirical Research ◽  
Well Being ◽  
Empirical Measures ◽  
Happiness Research ◽  
Interpersonal Comparisons ◽  
Individual Welfare

Happiness research is based on the idea that it is fruitful to study empirical measures of individual welfare. The most common is the answer to a simple well-being question such as “Are you Happy?” Hundreds of thousands of individuals have been asked this question, in many countries and over many years. Researchers have begun to use these data to tackle a variety of important questions in economics. Some require strong assumptions concerning interpersonal comparisons of utility, but others make only mild assumptions in this regard. They range from microeconomic questions, such as the way income and utility are connected, to macroeconomic questions such as the tradeoff between inflation and unemployment, including large areas in political economy. Public policy is another area where progress using happiness data is taking place. Given the central role of utility notions in economic theory, we argue that the use of happiness data in empirical research should be given serious consideration.

scholarly journals Top executive pay in Spanish banking system

2014 ◽  
Vol 20 (3) ◽  
pp. 333-347 ◽  
Author(s):  
Idoya Ferrero-Ferrero ◽  
María Ángeles Fernández-Izquierdo ◽  
María Jesús Muñoz-Torres
Keyword(s):  
Corporate Performance ◽  
Banking System ◽  
Executive Pay ◽  
Short Term ◽  
Performance Incentives ◽  
Power Theory ◽  
Performance Sensitivity ◽  
Compensation Systems ◽  
Managerial Power

AbstractThis study examines consistency between compensation systems and corporate performance. The main purpose is to analyse how the performance has affected the short-term executive pay in Spanish banking system during the period 2004–2008. The main results reveal that pay-performance sensitivity is asymmetrical regarding the sign of the variation of the performance, since the pay-performance sensitivity is greater when the variation of the results is positive than when the variation of the results is negative. This finding is consistent with the managerial power theory and calls into question the role of the pay-performance incentives to align interest of executives and shareholders.

scholarly journals Corporate governance issues surrounding executive compensation and executive severance

2021 ◽  
Author(s):  
Andrea W. Zanetti
Keyword(s):  
Executive Compensation ◽  
Board Independence ◽  
Substantial Influence ◽  
Publicly Traded ◽  
Business Corporation ◽  
Effective Governance ◽  
Corporation Law ◽  
Managerial Power ◽  
Legislative Framework

This paper seeks to explain why and how executive severances of publicly-traded Canadian and U.S. companies have reached the financial levels they have, generating public and shareholder outrage and causing governments on both sides of the border to introduce new legislation. The paper investigates the role of the CEO, boards and shareholders in the setting of executive compensation. As the origins ofthe three roles lie in business corporation law, the legislative framework of Canadian and U.S. companies is presented to permit the reader to understand the legal accountabilities and rights of each of the three parties. The paper identifies that executives may exercise substantial influence over boards, possibly impeding effective governance. The paper concludes that effective governance, including greater board independence and board competence in executive compensation matters will help to improve board functioning and minimize the effects of the agency problem, cronyism and managerial power.

Theory of Crises after Crisis: Technologies versus Institutions

2011 ◽  
pp. 17-33
Author(s):  
D. Frolov
Keyword(s):  
Economic Theory ◽  
Economic Development ◽  
Transaction Costs ◽  
Critical Analysis ◽  
Global Crisis ◽  
Evolutionary Economic

The article is devoted to the methodological contradictions of modern theories of crises and economic development. The critical analysis is carried out and the inconsistency of technological conceptions of global crisis is revealed. The key role of institutions in progress of technologies is proved. The necessity of synthesis of technological and institutional paradigms for the evolutionary economic theory is given reason. The author discusses positive features of the increase in transaction costs in a phase of post-crisis restoration of economy.

Whatever Happened to the Cambridge Capital Theory Controversies? (With comments by L. Pasinetti, F. Fisher, J. Felipe and J. McCombie, R. Greenfield and reply by the authors)

2009 ◽  
pp. 4-27
Author(s):  
A. Cohen ◽  
G. Harcourt
Keyword(s):  
Economic Theory ◽  
Economic Thought ◽  
Point Of View ◽  
Chronological Order ◽  
Capital Theory

The article written by the well-known theorists and historians of economic thought contains a detailed overview of the Cambridge capital controversy, which had raged from the mid-1950-s through the mid-1970-s. The authors track the origins of the controversy and cover arguments of both sides in chronological order. From their point of view, the discussion hasnt been resolved, and its main underlying aspects were ideological beliefs and fundamental methodological controversies on the nature of equilibrium and on the role of time in economic theory. The article is published with comments written by other leading theoreticians.

Hostile Takeovers and Anti-takeover Defenses in the Russian Corporate Market

2007 ◽  
pp. 70-84 ◽  
Author(s):  
E. Demidova
Keyword(s):  
Cost Benefit Analysis ◽  
Cost Benefit ◽  
Benefit Analysis ◽  
Costs And Benefits ◽  
Hostile Takeovers ◽  
Russian Market ◽  
Takeover Defenses ◽  
The Cost ◽  
European Markets

This article analyzes definitions and the role of hostile takeovers at the Russian and European markets for corporate control. It develops the methodology of assessing the efficiency of anti-takeover defenses adapted to the conditions of the Russian market. The paper uses the cost-benefit analysis, where the costs and benefits of the pre-bid and post-bid defenses are compared.

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