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Prior research on the structure‐performance relationship has not investigated all of the relevant relationships among market structure, profits, prices, and explicitly calculated measures of firm efficiency. This paper replicates the four approaches in the literature, adds several innovations, and applies the analysis to banking data. We find more support for the structure‐conduct‐performance hypothesis than for the relative‐market‐power and efficient‐structure hypotheses, although the data are not fully consistent with any of these theories. We also find support for Hick's quiet‐life hypothesis, which implies that firms with market power adhere less rigorously to efficiency maximization. J.E.L. Classification Numbers G21, G28, L41, L89 The opinions expressed do not necessarily reflect those of the Board of Governors or its staff. The authors thank Dean Amel, Jim Berkovec, Myron Kwast, Nellie Liang, LenNakamura, Steve Rhoades, and participants in the meeting of the Federal Reserve System Committee on Financial Structure and Regulation for helpful comments, and Ken Cavalluzzo, Jalal Akhavein, John Leusner, and Seth Bonime for outstanding research assistance.

Core‐deposit franchises usually fetch substantial premiums when placed on the market. Those premiums are consistent with the “core‐deposit hypothesis:” because of limitations on competition (rationing of charters), deposits provide below‐market funds to financial intermediaries (Spellman, 1982, Chapter 3). However, two other hypotheses can explain core‐deposit premiums. The first holds that generally accepted accounting principles (GAAP) misallocate the costs of developing a core‐deposit base, by charging such costs against current income rather than capitalizing them as an asset; core‐deposit premiums merely represent a normal return to the costs of developing a core‐deposit base. The second holds that core‐deposit premiums arise from banks' good reputation (“goodwill”). A test which can discriminate between the three hypotheses is needed.

We examine whether Douglas and Santerre's (1990) substitutes hypothesis obtains for bank holding companies (BHCs); i.e. whether degree of ownership concentration and salary incentives are alternative methods of aligning BHC CEO incentives with those of shareholders. Also examined is the relation between CEO salary and bonus and CEO tenure. Using a sample of 95 BHC drawn from the 1990 Forbes magazine compensation survey, we regress CEO salary and bonus against ROE, stock return, two measures of ownership concentration, and a CEO tenure variable. Our results 1) support the substitutes hypothesis as applied to BHCs, and, 2) find a negative relation between CEO salary and bonus and CEO tenure.

The importance of the market for corporate control as a disciplining device has received considerable research interest in recent years. Since the advent of event study methodology pioneered by Fama, Fisher, Jensen and Roll (1969), and the availability of machine readable returns data from the Center of Research on Security Prices, the effects of various control related corporate events have been well documented. Jensen and Ruback (1983) in their review of the empirical literature on the market for corporate control report that the findings in general support the hypothesis that outside takeover mechanisms do act efficiently to limit managerial departures from the objective of maximising the economic well‐being of its shareholders. They further point out that studies using the event study methodology cannot distinguish between the different sources of gains in the takeover process, namely those due to synergies, or those due to lack of efficient management in the acquired firm.

This paper uses a laboratory experiment to examine the effect of accountability pressure as a monitoring control tool to mitigate subordinates' propensity to create budgetary slack. The results suggest that budgetary slack is (lowest) highest when accountability pressure is (present) absent under a private information situation. The results further reveal that accountability pressure is positively associated with subordinates' perceived levels of honesty, which in turn is negatively associated with budgetary slack creation. The findings of this paper have important theoretical and practical implications for budgetary control systems design.

This study contributes to the participative budgeting and budget misrepresentation literature by exploring: (1) whether managers’ judgments of fair behaviors are malleable and context-dependent and (2) if these judgments of fair behavior impact cost reporting misrepresentations. Two experiments investigate these questions. Experiment 1 (n = 42) tests whether the behavior that managers judge to be “fair” differs based on the decision context (i.e., initial economic position [IEP]). Experiment 2 (n = 130) investigates: (1) how managers’ deployment of fairness beliefs influences their reporting misrepresentations and (2) how decision aids that reduce task complexity impact managers’ deployment of fairness beliefs in their misreporting decisions. The study found that managers deploy fairness beliefs (i.e., honesty or equality) consistent with maximizing their context-relevant income. Hence, fairness beliefs constrain misrepresentations in predictable ways. In addition, we find more accounting information is not always beneficial. The presence of decision aids actually increases misrepresentations when managers are initially advantaged (i.e., start with more resources than others). The implications from these findings are relevant to the honesty and budgeting literature and provide novel findings of how managers’ preferences for fairness constrain managers from maximizing their income. The chapter demonstrates that contextual factors can influence the deployment of managers’ fairness beliefs which, in turn, differentially impact their reporting misrepresentation. Another contribution is that providing decision aids, which reduce task complexity, may not always benefit companies, since such aids may increase misrepresentation under certain conditions.

Institutions operate at the core of all social structures, and it is vital to social science that we understand how they are established, maintained, and transformed. Considerable progress has been achieved in pursuit of this agenda, particularly in the last three decades, which have witnessed a resurgence of scholarly attention and productive inquiry. Institutions operate at multiple levels within a social structure. Recent students have concentrated efforts on their microfoundations, focusing on the agents who construct and reconstruct them and the mechanisms at work in producing, reproducing, and changing them. And of late, new efforts have been addressed to macro-structures and forces at work in sustaining and changing societal and global institutional systems.

This paper applies the variable forgetting factor and the fixed forgetting factor to financial time-series analysis, and establishes the linkage for the first time between the variable forgetting factor approach and kernel smoothing. We then demonstrate the use of the proposed variable forgetting factor approach to undertake forecasting of the Euro's exchange rates and the CRSP monthly net asset values (NAV). For both applications, the findings show that the kernel bandwidth so determined can improve the forecasting performance.

This study explores how balanced scorecard format and reputation from environmental performances interact to influence performance evaluations.

Two general options exist for inserting environmental measures into a scorecard: embedded among the four traditional perspectives or grouped in a fifth perspective. Prior balanced scorecard research also assumes negative past environmental performances. In such settings, and when low management communication levels exist on the importance of environmental strategic objectives (a common practitioner scenario), environmental measures receive less decision weight when they are grouped in a fifth scorecard perspective. However, a positive environmental reputation would generate loss aversion concerns with reputation, leading to more decision weight given to environmental measures. Participants (N=138) evaluated performances with scorecards in an experimental design that manipulates scorecard format (four, five-perspectives) and past environmental performance operationalizing reputation (positive, negative).

The environmental reputation valence’s impact is more (less) pronounced when environmental measures are grouped (embedded) in a fifth perspective (among the four traditional perspectives), when the environmental feature of the measures is more (less) salient.

Findings provide the literature with original empirical results that support the popular, but often anecdotal, position of advocating a fifth perspective for environmental measures to help emphasize and promote environmental stewardship within an entity when common low management communication levels exist. Specifically, when positive past environmental performances exist, entities may choose to group environmental performance measures together in a fifth scorecard perspective without risking those measures receiving the discounted decision weight indicated in prior studies.

The aim of this paper is to construct a theoretical model of the characteristics and determinants of employee management configurations, simple management, personnel management and human resource management (HRM).

This paper builds upon work in HRM by integrating critical management, population ecology and industrial relations to develop a conceptual framework of the character of employee management and its determinants.

This framework represents an important step forward in thinking about the determinants and character of employee management systems.

A typology of six employee management configurations is established in both union and non‐unionised contexts. The paper critiques the universalistic approach to HRM. This paper offers an insight into the rationale of employee management techniques and its determinants.

Within the normative HRM literature there has been little discussion of the role of context in influencing the character of HRM or employee management generally. The paper seeks to explore, using population ecology theory, how context influences the characteristics of employee management.