IE University

About: IE University is a education organization based out in Segovia, Castilla y León, Spain. It is known for research contribution in the topics: Corporate governance & Supply chain. The organization has 527 authors who have published 1709 publications receiving 64682 citations.

The effect of relative wealth concerns on the cross-section of stock returns

Abstract: There are several economic reasons why investors might want to hedge local risk resulting from relative wealth concerns; namely, keeping up with the Joneses preferences and competition for local assets in short supply. In equilibrium, hedging for these purposes results in a negative risk Premium for the local risk factors. We study the empirical implications of this equilibrium at the level of the nine US census divisions. As a proxy for the local risk factor we use regional labor income growth. In explaining the cross-section of stock returns, the model performs substantially better than the CAPM, and as well as the Fama-French three factor model.

Right on the money? The contingent effects of strategic orientation and pay system design on firm performance

Abstract: Research Summary: This article extends prior research on the performance implications of the fit between a firm's strategic orientation and its pay system design. Whereas prior research has shown that matching the pay system design to the strategic orientation of the firm generally contributes to higher performance, most studies have examined the pay systems of the upper echelons and employees separately. Based on an analysis that accounts for both horizontal and vertical pay dispersion, we find that, whereas growth‐oriented firms (prospectors) tend to benefit from high horizontal pay dispersion, efficiency‐oriented firms (defenders) perform better with high vertical pay dispersion and low relative base pay. Overall, our findings contribute to an improved understanding of how to optimize the pay systems of firms with different strategic orientations. Managerial Summary: We study how the optimal configuration of the overall pay system differs between firms that pursue growth‐oriented and efficiency‐oriented strategies. Our results show that growth‐oriented firms (prospectors) benefit from pay structures with relatively large pay differentials horizontally between employees based on ability, effort, and results. Efficiency‐oriented firms (defenders), on the other hand, benefit from pay structures with relatively larger differences in pay across organizational levels vertically. Our findings suggest that while defenders should pay special attention to average pay levels to avoid over compensating their employees relative to competitors, prospectors should pay attention to the CEO‐employee pay differentials to avoid overcompensating executives relative to employees. Overall, our findings provide further evidence on the importance of matching the pay system design to a firm's strategy.

The Regional Entrepreneurship and Development Index (REDI): The Case of Spain

Abstract: This paper constructs a Regional Entrepreneurship and Development Index (REDI) that captures the contextual features of entrepreneurship across regions. Using both institutional data and survey data weaknesses in the incentive structure that affects regional development can be identified. The entrepreneurial disparities among regions are analysed at the country and regional level using a penalty for bottleneck methodology. The methodology allows us to coordinate public policy action at national and regional levels.

Firms’ Rationales for CEO Duality: Evidence from a Mandatory Disclosure Regulation

Abstract: Exploiting the 2009 amendments to Regulation Ssingle bondK, we provide unique evidence on the first-time disclosure of the reasons firms state for combining or separating the roles of CEO and chairman. The stated reasons support both agency theory and organization theory. They are more numerous, comprise more words, and have a more positive tone for firms with duality. Examining the announcement returns to firms' disclosures, we find that investors evaluate the most frequently cited reasons for CEO duality by considering firm's characteristics. Our evidence enhances the understanding of firms' endogenous decision to opt for CEO duality and its value consequences.