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Article
Publication date: 1 June 2001

Jo Carby Hall

Examines the situation in the UK in some detail with regard to three aspects of the Charter of Fundamental Human Rights of the European Union. Looks at the aims, together…

Abstract

Examines the situation in the UK in some detail with regard to three aspects of the Charter of Fundamental Human Rights of the European Union. Looks at the aims, together with an analysis and appraisal. Considers, first, information and consultation rights with regards to the transfer of undertakings and redundancies, followd by the right to collective action and, lastly, protection in the event of unjustifiable dismissal. Presents case law throughout as examples. Concludes that the UK has attempted to prevent social and economic rights for workers from being included in the final charter despite fierce opposition. Compares this view together with the UK suspicion of Europe against the views of the other member states.

Details

Managerial Law, vol. 43 no. 3/4
Type: Research Article
ISSN: 0309-0558

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Article
Publication date: 6 February 2017

Matthias Kiefer, Edward A.E. Jones and Andrew T. Adams

Shareholders and managers can work in a hierarchy in which principals attempt to control the actions of agents to achieve the wealth objective. Alternatively, shareholders…

Abstract

Purpose

Shareholders and managers can work in a hierarchy in which principals attempt to control the actions of agents to achieve the wealth objective. Alternatively, shareholders and managers can work together as a cooperative team in which shareholders provide financial capital and managers provide human capital. The authors aim to examine the different implications for value creation provided by the two approaches.

Design/methodology/approach

By comparing the literature on the value implications of the incomplete contracting framework and control arrangements in principal-agent hierarchies, the authors identify deviations from optimal outcomes and suggest solutions.

Findings

The review indicates that a cooperative framework has some advantages over the hierarchical model. The stability of human capital and the relationship between managers and shareholders can be enhanced when shareholders provide capital in increments which vest over time and latitude for renegotiation of agreements is built into contracts.

Practical implications

By surrendering control using stock options programmes, managers are free to invest in relationship-specific assets. Shareholders can control the provision of capital by withdrawing investment if insufficient returns are realized, i.e. if stock options do not meet vesting requirements. The market can then be left to do its work.

Originality/value

This paper provides an original review of literature on cooperation and hierarchies in the shareholder–manager relationship and proposes solutions to identified deviations from optimal outcomes.

Details

Qualitative Research in Financial Markets, vol. 9 no. 1
Type: Research Article
ISSN: 1755-4179

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Book part
Publication date: 13 August 2007

Todd Fister and Anju Seth

This paper complements previous research on investment in firm-specific human capital by applying real options analysis. Our framework suggests that the parties receive…

Abstract

This paper complements previous research on investment in firm-specific human capital by applying real options analysis. Our framework suggests that the parties receive valuable options to exit the contract when information becomes revealed in the future, but these options may be more valuable for one party than the other. Companies and workers attempt to reduce the value of the options through contractual mechanisms that either shift wealth to the party granting the option or prevent the option from being exercised. In both cases, the mechanisms cause the parties to invest in firm-specific capital, resulting in higher output and higher wages.

Details

Real Options Theory
Type: Book
ISBN: 978-0-7623-1427-0

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Article
Publication date: 1 May 1977

NOW here is Mr. Leslie Huckfield speaking at the annual conference of the British Council of Productivity Associations. He (but of course!) is Parliamentary…

Abstract

NOW here is Mr. Leslie Huckfield speaking at the annual conference of the British Council of Productivity Associations. He (but of course!) is Parliamentary Under‐Secretary of State at the Department of Industry. He said “The Budget recognises the need to increase incentives at all levels in industry and particularly to improve the position of skilled workers and middle managers.”

Details

Work Study, vol. 26 no. 5
Type: Research Article
ISSN: 0043-8022

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Article
Publication date: 13 November 2009

Elke J. Jahn

Employment protection legislation defines social criteria according to which firms can dismiss workers. If firms evade the law, then negotiation about compensation begins…

Abstract

Purpose

Employment protection legislation defines social criteria according to which firms can dismiss workers. If firms evade the law, then negotiation about compensation begins. To reduce the legal and financial uncertainty often associated with ex post bargaining, the German government stipulate severance payments in the case of mutual agreements in law in 2004. This paper aims to examine whether social criteria affect the dismissal probability of workers.

Design/methodology/approach

The probability of receiving compensation and the factors determining the amount of severance payment are estimated when it comes to private negotiations about the termination of an employment contract. In addition, the effect of the reform of the employment protection legislation on the probability of receiving compensation and the amount of redundancy pay is analysed. A stepwise estimation strategy is developed to account for sample selection bias when examining which workers receive severance payments and the determinants of severance pay variation. Empirical evidence is provided using German panel data for the period 2000‐2006.

Findings

The paper shows that workers protected by law have the lowest probability of being dismissed. The expected severance payment and firm size increase the probability of receiving compensation while the amount of severance payment depends significantly on the way the employment relationship is dissolved. Contrary to the intention of the legislator, the reform increases the level of compensation.

Originality/value

The paper fills a gap in the literature by taking into account selectivity bias when estimating the probability of receiving redundancy pay and the size of compensation. The evidence also provides insights which may be useful for the ongoing discussion to reform employment protection legislation in Germany.

Details

International Journal of Manpower, vol. 30 no. 7
Type: Research Article
ISSN: 0143-7720

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Article
Publication date: 2 September 2014

Dennis Wesselbaum

The purpose of this paper is to compare two elements of lay-off costs in a dynamic model of the labor market and analyze the differences for business cycle dynamics and…

Abstract

Purpose

The purpose of this paper is to compare two elements of lay-off costs in a dynamic model of the labor market and analyze the differences for business cycle dynamics and welfare.

Design/methodology/approach

The paper builds a general equilibrium Real Business Cycle model and introduces firing costs and severance payments. Labor market frictions are assumed to follow the famous search and matching approach.

Findings

The paper finds that firing costs imply a higher volatility over the cycle and have stronger negative welfare effects. Severance payments have a lower volatility, reduce unemployment, and reduce welfare by a smaller amount.

Practical implications

Policy reforms should be aimed to use severance payments and reduce the ring cost component of lay-off costs.

Originality/value

Increasing welfare and a more stable business cycle could be supported by using severance payments instead of firing costs.

Details

Journal of Economic Studies, vol. 41 no. 5
Type: Research Article
ISSN: 0144-3585

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Article
Publication date: 31 July 2009

Shane van Dalsem

The purpose of this paper is to investigate the effect of executive severance contract maturity policies on the likelihood of forced turnover and the length of tenure for…

Abstract

Purpose

The purpose of this paper is to investigate the effect of executive severance contract maturity policies on the likelihood of forced turnover and the length of tenure for CEOs who are forced from their positions.

Design/methodology/approach

The paper utilizes logistic and accelerated failure time models to test the hypothesis that severance contracts decrease information asymmetries resulting in an increased likelihood of forced turnover and a shortened tenure for those CEOs who are forced out.

Findings

The results provide evidence that fixed‐term severance contracts increase the likelihood of forced tenure and decrease the length of tenure for CEOs who experience a forced turnover during the period, while time‐independent contracts do not.

Research limitations/implications

The limitation is the possibility that an omitted variable jointly determines the likelihood of the presence of a severance contract and the effect on forced turnover. Future research should investigate other possibilities beyond the CEO coming from outside of the firm.

Practical implications

The findings confirm that the maturity policies of severance contracts affect forced turnover. The results suggest that there may be a benefit in designing severance contracts to expire to encourage more efficient turnover of underperforming CEOs.

Originality/value

This paper contributes to the empirical corporate finance and accounting literature by differentiating between forced and unforced turnover when analyzing the effects of severance contracts and demonstrating that the time dimension of severance contracts may provide the desired result of encouraging the identification of CEO‐firm mismatches.

Details

Managerial Finance, vol. 35 no. 9
Type: Research Article
ISSN: 0307-4358

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Article
Publication date: 1 July 1974

J. Bridge

December 13, 1973 Master and Servant — Negligence — Manual lifting operation — Load caught on obstruction increasing effective weight — Two men sharing load near safe…

Abstract

December 13, 1973 Master and Servant — Negligence — Manual lifting operation — Load caught on obstruction increasing effective weight — Two men sharing load near safe limit — Whether foreseeable risk that one man would receive a disproportionate share of load — Meaning of maximum safe load.

Details

Managerial Law, vol. 16 no. 5
Type: Research Article
ISSN: 0309-0558

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Article
Publication date: 9 August 2011

Riccardo Calcagno, Roman Kraeussl and Chiara Monticone

The purpose of this paper is to study the impact of the 2007 Italian severance payment reform on the cost and the access to credit for small‐ and medium‐sized enterprises (SMEs).

Abstract

Purpose

The purpose of this paper is to study the impact of the 2007 Italian severance payment reform on the cost and the access to credit for small‐ and medium‐sized enterprises (SMEs).

Design/methodology/approach

The authors study the implications of the reform adapting the theoretical credit‐rationing model of Holmstrom and Tirole, then estimate the capital outflows due to the reform and, using the theoretical prediction, assess its impact using mathematical simulations.

Findings

The authors predict that the reform may cause severe credit constraints to SMEs which cannot pledge enough collateral in order to obtain credit. The most direct consequences are to reduce in the long run the amount of liquid assets available to Italian firms, and to reduce their aggregate investment in a more than proportional way, due to access to credit restrictions. However, it will not increase the cost of intermediated finance, ceteris paribus.

Practical implications

The fact that the reform restricts access to credit, but does not increase the cost of debt, has important policy consequences, as public interventions subsidizing credit through a constant cost of debt may be ineffective.

Originality/value

While the topic has been analyzed in several respects (e.g. workers' participation to the reform, cost of an access to credit subsidy, etc.), no other study proposed an integrated view of these effects with a rigorous micro‐economic approach.

Details

Journal of Financial Economic Policy, vol. 3 no. 3
Type: Research Article
ISSN: 1757-6385

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Book part
Publication date: 16 November 2016

Claudia Trentini

In the last decade, Argentina has experienced a considerable decline in informal employment and wage dispersion. This paper extends a search model with exogenous human…

Abstract

In the last decade, Argentina has experienced a considerable decline in informal employment and wage dispersion. This paper extends a search model with exogenous human capital accumulation to include the informal sector. The model is parametrized to match Argentinian data between 1996 and 1998 – before the onset of the declining trend – and it is used to investigate the contribution of labor market measures to the falling informality, unemployment, and wage dispersion. The findings indicate that institutional factors did not contribute to the positive labor market trends observed; on the contrary, results show that higher severance pay and minimum wages increase informality and that the introduction of unemployment assistance contributed to the spread of informal contracts across the work force. Further, I find that compliance with minimum wage regulation strongly affects the final impact of these policies. While non perfect compliance might reduce unemployment, it reinforces the incentives of workers to move to the informal sector.

Details

Inequality after the 20th Century: Papers from the Sixth ECINEQ Meeting
Type: Book
ISBN: 978-1-78560-993-0

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