Search results

Mark Klinedinst cuts straight to the chase with a chapter which examines the performance of commercial banks in the United States relative to credit unions which are financial cooperatives with democratic structures. Using panel data for the 1990s and early 2000s Mark shows that credit unions are more efficient than banks that are comparable in size, the metric being the assets per dollar of salary managed by the organization. Given that credit unions in the United States have not required a massive taxpayer bailout, the chapter offers food for thought as to what shape financial institutions should take in the United States going forward.

This volume of Advances in the Economic Analysis of Participatory and Labor Managed Firms is the tenth in the series. The series began in 1985 and until 1998 six volumes appeared. Then the series was published by JAI and Jan Svejnar and I were co-editors. The series was re-launched in 2003 when volume 7 (edited by Takao Kato and Jeffrey Pliskin) appeared as the first volume to be published by Elsevier. Subsequent volumes, both published by Elsevier, were edited by Virginie Perotin and Andrew Robinson (volume 8, 2004) and by Panu Kalmi and Mark Klinedinst (volume 9, 2006.)

By using new panel data for a sample of Bulgarian firms that comprises both state-owned and privatized firms (including new private firms), evidence is presented on the potential impact of ownership and age of the firm on diverse issues concerning corporate governance and executive compensation during 1997–2001. Privatization status and whether firms are de novo or not is found to be associated with differences in many areas including: the size and composition of company boards; the size of CEO pay; internal wage differences; the incidence of performance-based compensation (PBC); firm objectives; and patterns of decision-making influence.To investigate the determinants of executive compensation we first estimate standard CEO specifications. These baseline regressions reveal that CEO pay is: (i) positively related to size (ii) positively related to performance; (iii) significantly affected by ownership; and (iv) influenced by whether a firm is de novo or not. These findings and the fact that both size and performance elasticities are much larger than those estimated before the start of mass privatization provide more general support than previously for the view that privatization has imposed strong discipline on the level of CEO compensation. In a series of additional regressions we proceed beyond standard specifications and examine the impact on CEO pay on other aspects of corporate governance. We find CEO pay is associated with: decision-making influence; whether the contract provides for PBC; whether the firm belongs to an employer's federation; the extent of employee and managerial ownership. However some dimensions of corporate governance are not systematically associated with CEO pay. Chief amongst these is board structure. Many of these findings provide support for the view that managerial influence (rather than agency relationships) plays a key role in corporate governance in Bulgarian firms.

By using panel data for a sample of Bulgarian manufacturing firms we investigate the impact of the privatization process. All sample firms started under state control and many were privatized during the study period. Our rich data enable us to use and estimate a number of specifications to rigorously analyze the impact of privatization, and in particular insider privatization. Contrary to mainstream theory (e.g., Boycko, 1996) and the findings of an influential empirical survey (Djankov & Murrell, 2002), our results show no difference on firm performance for insider versus other methods of privatization. As such our findings more nearly support those of other studies for Bulgaria (e.g., Miller & Lazorov, 2011; Jones, Rock, & Klinedinst, 1998) and selected studies for other transition countries (e.g., Jones & Mygind, 1999 for Estonia).

This volume of Advances in the Economic Analysis of Participatory and Labor-Managed Firms marks the third volume in this series to be produced by Elsevier. The two previous volumes, Employee Participation, Firm Performance and Survival, edited by Virginie Perotin and Andrew Robinson, published in 2004, and The Determinants of the Incidence and the Effects of Participatory Organizations, edited by Takao Kato and Jeffrey Pliskin and published in 2003, marked the re-launching of the series. (The series began in 1985. Six volumes appeared during 1985–1995 when the series was published by JAI and was co-edited by Jan Svejnar and Derek C. Jones.)

This volume of Advances in the Economic Analysis of Participatory and Labor-Managed Firms consists of 12 original and innovative articles. The first four papers relate to the growing literature on employee participation and firm performance. The second group of papers looks at the impact of ownership structures into managerial compensation and control. The third set of papers analyzes the role of co-operatives in the changing economic environment. The three papers in the final section range from the historical perspective on participation to the role different forms of participation may play in the future.

The global financial meltdown brought to light a number of weaknesses in the U.S. financial system. Not all financial institution types will be taking large sums of taxpayer money to address their crippling decisions. Credit unions in the United States represent a type of financial cooperative that will probably not take any taxpayer money directly due to their structure and prudential oversight. Commercial banks, especially the megabanks, are likely to see even more bailouts in the future unless structural weaknesses are addressed in the clarifications as part of the enforcement of the Dodd-Frank Act. Using a unique panel data set on U.S. commercial banks, thrifts and credit unions from 1994 through 2010 performance metrics on a number of dimensions (over 300,000 observations) point to strengths and weaknesses of the various financial institutional forms. Credit unions also have had far fewer adjustable rate mortgages and mortgage-backed securities as a percentage of their portfolio. Robust estimators to correct for potential endogeneity are used to analyze the return on assets differentials between different institutional forms and portfolios. When controlling for size, region and portfolios credit unions are often estimated to have a better return on assets. Institutions with assets under 50 million dollars, about 50 percent of the total sample, show credit unions having higher efficiency in that they control more assets per dollar spent on salaries than commercial and savings banks.

Looking at data for over a hundred years on democratic economic institutions in the U.S., there seems to be a clear pattern of initiatives growing strongly, peaking and then falling off. The broad range of data used in this paper allows an investigation of these long-range patterns. These institutions show a life-cycle pattern and appear to be filling in more niches in the economy. The connections between different democratic economic institutions across sectors have historically been weak, but there is evidence of umbrella organizations playing a more active role as a supporting structure to encourage growth.