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This paper aims to develop a conceptual model that systematically interprets how key governance factors drive the alignment and the rent-extraction effects of executive stock options (SOs) as proxied by plan characteristics.

The authors draw on the review of 202 articles published in international academic journals. They collect data from library databases and by hand-searching and citation-tracking relevant papers on the topic. Moreover, the authors review and classify the studies as related with determinants or proxies of alignment and rent-extraction effects of SOs.

The conceptual model systematically interprets the results of the literature review and identifies the relationships between archetypes, driving factors and proxies of the rent/alignment effect of executive SOs. It highlights that, given ownership archetypes, effective (ineffective) governance practices drive the alignment (rent) aim of SOs as proxied by the optimal (non-optimal) plan design.

This paper supports compensation committees in selecting the SO characteristics that better attract investors and retain executives. Moreover, it guides future policy making interventions aiming at mitigating the rent-extraction effect of SOs.

The paper highlights that the governance determinants of SO aims can be effectively classified as archetypes or drivers of rent-extracting and aligning outcomes of these remuneration tools. Moreover, it offers a useful framework to guide future research efforts by providing a comprehensive interpretation of the relationships between ownership archetypes, driving factors and proxies of SO effects.

This study aims to examine the determinants of Foreign Corrupt Practices Act (FCPA) violations and consequences of FCPA enforcements.

This paper uses publicly available data from Compustat, I/B/E/S and Thomson Reuters databases, combined with Securities and Exchange Commission (SEC) and Department of Justice (DOJ) cases, to extract insights on FCPA violations and enforcements using econometric approaches.

The main determinants of FCPA violations appear to be firm size, multinational structure, country corruption and Sarbanes-Oxley Act control weaknesses. Traditional misreporting risks (F-score and M-score) do not predict FCPA violations. This study discovers significant differences between FCPA violations by motivation, as in, sale generation, rent extraction or cost evasion. Bribes motivated by sale generation or rent extraction are partially driven by the extent of the firm’s global operations, whereas bribes motivated by cost evasion relate to internal influences. This study also finds that enforcement is more salient for criminal violations (DOJ enforcement), compared to civil violations (SEC enforcement).

This research provides new insights into the determinants of FCPA violations while underscoring the need for effective measures to combat bribery and promote ethical business practices. This research contributes to the ongoing efforts to curtail bribery, offering valuable insights into the characteristics of firms more likely to engage in bribery and contexts in which these activities occur. It provides critical implications for regulatory bodies, highlighting the differential responses of firms to varying types of enforcement, namely, criminal versus civil, as the authors observe greater decreases in internal control weaknesses following DOJ enforcement compared to SEC enforcement.

For enforcement agencies, the findings underscore the importance of rigorous criminal enforcement against FCPA violations, highlighting the improved control environments prompted by DOJ actions. Managers will find this research relevant, as it demonstrates that a firm’s entry into international markets substantially elevates the risk of its representatives engaging in bribery with foreign officials. In addition, the results are of interest to regulators, revealing that the underlying motivations driving a firm’s activities can significantly alter the factors to consider that might lead to an FCPA violation.

This paper is the original work of the authors and explores the determinants and consequences of FCPA violations and enforcement actions since 2002. To the best of the authors’ knowledge, it is the first to explore bribe determinants by their motive and documents industry-wide benefits arising from criminal enforcement.

In this introductory chapter, we briefly outline the history of the political economy of raw materials, focusing particularly on the relationship between raw materials and economic development. We then introduce the chapters of this volume, and we conclude by discussing future directions for research in this area.

This paper looks at state-owned enterprises (SOEs) from the angle of the market for corporate control and analyzes in detail the reported rationales of a sample of 355 mergers and acquisition (M&A) deals performed by SOEs as acquirers over the period 2002-2012. The purpose of this paper, after having created a taxonomy of deal motivations, is to empirically test two alternative hypotheses: deviation vs convergence of M&A deal rationales between state-owned and private enterprises.

The data set is obtained by combining firm-level information from two sources, Zephyr and Orbis (Bureau Van Dijk). A recursive algorithm is developed to infer the ownership nature of the enterprises at the time the deal took place and then the authors double-checked the identity of the global ultimate owner by visual inspection of all the available information. Motivations are analyzed through a case-by-case analysis and classified into several categories, thereby providing a taxonomy of rationales behind SOE M&As and discussing their differences and similarities relative to private firms.

More than 60 percent of the deals performed by SOEs as acquirers are driven by “shareholder value maximization” motives, similarly to private enterprise acquirers. The other 40 percent of deals are almost equally spread among three rationales that specifically relate to the role of modern state capitalism in the economy. “Financial distress” motivation, which is the only one clearly deviating from the objectives of profit maximization typical of private ownership, is far less important than the others.

The paper does not analyze the case studies in detail. Neither does it correlate the evidence with the quality of corporate governance or the quality of institutions in the country. This would be interesting in order to discover whether the alignment of objectives between public and private enterprises is enhanced by certain features of public sector management, as suggested by the OECD (2015) Guidelines.

The paper suggests some policy implications in terms of reforms of the corporate governance of the SOEs and accountability of their management against clearly stated public missions. It also calls for the need for citizens to be informed in a transparent way about the rationales of major M&A deals when a SOE is on the acquirer side, and the consistency of such rationales with the mission assigned by governments to the enterprises they own. Finally, it underlines that regulatory concerns raised in many countries by the rise of cross-border SOE M&As are in most of the cases unfounded.

Existing literature has mainly focused on private corporate M&A deals or has just disregarded the ownership status of the acquiring firm. This paper focuses on the motivations for SOE deals in order to elaborate a taxonomy of SOE deal rationales and to identify the differences and similarities between private corporate firms.

This study aims to examine the impact of CEO equity-based compensation (EBC) on employee wages. It also examines the impact of EBC on average employee wages in different industries and business cycles.

The authors use pay-performance sensitivity (PPS) to measure for CEO EBC and run OLS models with year and industry dummies. As many firms do not report labor expenses, the authors conduct the two-step analysis as in Heckman (1979) to overcome the potential selection bias.

The authors find that CEOs with higher EBC tend to pay their employees lower wages. They also find that such an impact is more evident in non-technology firms than in technology firms. Finally, they find that CEOs with higher PPS are more likely to depress employee wages when the business cycle shows a downturn.

No study examines the impact of EBC on employee wages directly to date. The authors add to the existing stream of literature regarding employee wages and managerial compensation. Hence, they purport that the findings support existing literature suggesting EBC contributes to, rather than alleviates, the classic agency conflict. Finally, the evidence suggests an unexplored manifestation of that agency conflict and an additional source of CEO rent extraction.

Researchers of legislative behavior have attempted to explain the decisions of legislators for some time. Public choice scholars have argued that legislators will “sell” political favors in exchange for some from of interest group payment that is thought to benefit the legislator's electoral ambitions. Yet, legislators do not appear to receive the full value of their political favor in these exchanges. That is, the value of the policies offered appears to exceed the price paid by interest groups in the form of campaign contributions, speaking honoraria and other material payments. This imbalance has led some scholars to discount theories that explain legislative behavior motivated by material gain. However, to the extent that legislators value post‐elective employment opportunities, interest groups have an incentive to use the offer of future employment as a payment for present legislative influence. In this sense, perhaps a large portion of the difference in payments can be accounted for in the post‐elective employment careers of elected politicians. In this paper, I explore and explain this theory using a political market model and attempt to identify several attributes that I believe will be common among “prospect‐legislators” whose behavior is principally motivated by concerns with post‐elective life.

The purpose of this paper is to clarify the influence of chief executive officer (CEO) reputation on top management team (TMT) compensation, proposing corporate governance characteristics as a moderator of the relationships between the power of top managers to extract rents and the importance of external signals. The study aims to expand the domain of executive compensation literature by including the role of CEO reputation in the context of non-Anglo-Saxon corporate governance systems.

The paper opted for a panel methodology for the period 2004-2009, including 534 observations from Spanish listed companies. Data were obtained from several sources. Compensation and governance information was obtained from the Spanish Stock Exchange National Commission; data regarding CEO reputation were obtained from Spanish Corporate Reputation Monitor, and, finally, financial statement was obtained from the OSIRIS database.

The paper provides empirical insights on the CEO reputation diffusion on TMT compensation, showing different scenarios depending on effectiveness of corporate governance. CEO reputation diffusion on TMT pay is strengthened or weakened by the organizational governance effectiveness. General evidence supports the notion that in countries characterized by an incomplete corporate governance system, boards – and also indirectly the structure of ownership – act as a catalyst for external signs of legitimacy, rather than for the organization's and stakeholders’ interests.

Because of the difficulty in pooling information for a long period from three different sources of data, the number of observations is not very large. Therefore, researchers are encouraged to test the proposed propositions further using other context of corporate governance.

The paper includes implications for the development of effective governance mechanisms which promote an adequate link between the CEO reputation and the TMT compensation, avoiding rent extractions.

The paper contributes to new international evidences regarding relations between top managers’ reputations and compensation. Specifically, it allows reinforcement of the importance of institutional arguments in the understanding of the effectiveness of governance mechanisms in large listed companies.

The purpose of the present study is to test the hypothesis alluded to by Tullock, within the context of defensive rent‐seeking efforts developed by others (e.g. McChesney). Here, we test the idea that defensive rent seeking efforts (or rent‐defending) to maintain the status quo augment offensive rent‐seeking (all proxied by real campaign contributions to US House/Senate candidates, 1976‐1992) during federal budgetary climates of deficit‐cutting (budget‐balancing). When a panel estimator is properly used, our econometric evidence confirms our hypothesis. Evidence from a Parks regression technique suggests that total rent‐seeking is positively related to the amount of federal spending, as others have shown, but that rent‐seeking efforts increase when federal budget deficits are reduced, threatening existing spending patterns and rents. Perhaps an unintended consequence of deficit‐reduction efforts, holding government spending constant, is an increase in the size of the rent‐seeking industry.

This paper aims to examine the effects of marginal and general wage subsidies on employment and income distribution.

The paper constructs a theoretical, partial‐equilibrium model of an economy in which a large number of competitive firms produce a homogeneous output good. Involuntary unemployment arises from a too high and rigid wage. By conducting comparative static analyses, the paper evaluates the impact of general and marginal wage subsidies on employment and incomes.

The paper shows that a marginal wage subsidy is a fiscally more efficient instrument for employment creation than a general wage subsidy because it resembles a combination of a general wage subsidy with a profit tax. These favorable effects persist even if between‐firm displacement effects are taken into account.

In line with most of the literature on marginal employment subsidies, attention is restricted to a partial‐equilibrium analysis in which the wage is assumed to be fixed. This helps to sharpen the focus on between‐firm competition, but is perhaps implausible when analyzing a general‐equilibrium setting. The inclusion of endogenous wage setting is bound to provide an interesting area for future research.

If politicians want to implement a wage subsidy scheme that has to be self‐financing, marginal wage subsidies are an effective policy instrument for employment creation. Its downside is an inefficient allocation of labor among firms, because some firms become larger than is necessary.

The paper provides a novel approach to model the between‐firm displacement effects of marginal wage subsidies and derives policy conclusions.

This chapter provides an overview of the explanations and factors affecting dividend policy. This study employs a systematic literature review approach to review a large sample of studies related to the dividend puzzle. Although the analysis reveals mixed evidence involving the theories and determinants of dividend policy, some determinants appear in numerous studies. However, no consensus exists on an optimal dividend to resolve the dividend puzzle, and the authors propose a model to deal with the same. When examining dividend policy, researchers should consider the firm, market, behavior, and other determinants. When making significant dividend or stock decisions, managers and shareholders should also contemplate the factors, interactions, inadequacies, and consequences. Future researchers should strive to take a more comprehensive view when resolving the dividend puzzle. This study provides a current and complete picture of dividend policy's available theories and empirical determinants. Its significant contribution is identifying some of the more consistently essential determinants of dividend policy while proposing a holistic model to address the prevailing dividend dilemma.