Copyright (c) 2009 All rights reserved. http://works.bepress.com/kevin_hallock Recent documents in Kevin F Hallock en-us Wed, 12 Aug 2009 08:30:34 PDT 3600 http://works.bepress.com/kevin_hallock/29 http://works.bepress.com/kevin_hallock/29 Wed, 12 Aug 2009 08:30:16 PDT [Excerpt] Studying compensation in the non-profit sector is difficult. In non-profit organizations, it is not always clear what the objectives of the organization are and, therefore, perhaps even more difficult to consider how to compensate managers. This paper investigates the determinants of executive compensation of leaders of American labor unions. We use panel data on more than 75,000 organization-years of unions from 2000 to 2007 to investigate these issues. We specifically concentrate on two issues of importance to unions - the level of membership and the wages of union members. Both measures are strongly related to compensation of the leaders of American labor unions, even after controlling for organization size and individual organization fixed-effects. Additionally, the elasticity of pay with respect to membership for unions is very similar to elasticity of pay with respect to employees in for-profit firms over the same period. Kevin F. Hallock http://works.bepress.com/kevin_hallock/28 http://works.bepress.com/kevin_hallock/28 Wed, 12 Aug 2009 08:30:14 PDT Who chooses what type of pay? The costs and benefits of "flexible" and "cafeteria-style" benefit plans have been discussed for some time. Additionally, many papers have considered the potential costs and benefits of certain types of pay plans (e.g. salaries versus piece rates). In this paper, we use detailed data from a specific firm that annually set the total compensation level for each of its employees but then did something extremely unusual. At the start of each pay year, the firm set an exchange rate for the dollar trade-off between cash pay and stock option pay. It then gave every employee nearly complete choice over the fraction of their pay that was contingent (stock options, bonus) versus guaranteed (salary). There are several empirical findings. There is substantial variation in the choice of contingent pay with some workers choosing almost all base pay and others choosing almost entirely stock options. Younger employees, more experienced employees, higher paid employees, and male employees are more likely to allocate a larger fraction of their total compensation to at-risk alternatives. The robustness of these results varies somewhat depending on the empirical specification and set of covariates used. Kevin F. Hallock http://works.bepress.com/kevin_hallock/30 http://works.bepress.com/kevin_hallock/30 Wed, 12 Aug 2009 08:30:12 PDT [Excerpt] Every once in a while someone comes out with an important book concerning corporate governance or executive compensation. Like Aldolf A. Berle and Gardiner C. Means's The Modern Corporation and Private Property (New York: Harcourt, Brace, and World, 1932) and Graef S. Crystal's In Search of Excess: The Overcompensation of American Executives (New York: W.W. Norton, 1991), Bebchuk and Fried's new book is thought-provoking and interesting. It is a very important book and should be read not just by those interested in executive pay or corporate governance but by anyone interested in how corporations work. Kevin F. Hallock http://works.bepress.com/kevin_hallock/27 http://works.bepress.com/kevin_hallock/27 Wed, 12 Aug 2009 08:30:10 PDT Unions compress the wage distribution among workers covered by union contracts. We ask whether unions also have an effect on the managers of unionized firms. To this end we collected and assembled data on unionization and managerial pay within firms and industries in the U.S. and across countries. Generally, we find a negative correlation between executive compensation and unionization in our cross-section data, but no relationship of changes in unionization on the growth of compensation of executives over time. Using NLRB elections data, we find that a loss of union members due to decertification elections is associated with higher CEO pay, although our estimates are imprecise. With CPS data we consistently find that where unions are stronger, fewer managers are employed. John DiNardo http://works.bepress.com/kevin_hallock/26 http://works.bepress.com/kevin_hallock/26 Wed, 12 Aug 2009 08:30:08 PDT This paper considers the share price reaction to dividend, earnings, and stock split announcements over a 30 year period. It first considers whether there is differential information content in similar corporate news announcements for different types of firms. Second, it investigates whether the value of news information about these firms has declined over time (has become "less newsworthy"). We categorize firms into groups by whether corporate news announcements regarding the firms will be more valuable to the public. For example, since the public may know more about larger firms, we expect the market to react less strongly (in absolute value) to new information from large firms. We find strong support for this idea. We find little evidence that is consistent with the idea that "news is less newsworthy" over the past few decades. Although, we do find that the share price reaction to "good" dividend news has become less positive and to "bad" dividend news has become less negative over time, no such related evidence exists for stock splits and earnings announcements. Additional investigation of entire distributions of returns using kernel density estimators also rejects the "news is no longer newsworthy" idea. Kevin F. Hallock http://works.bepress.com/kevin_hallock/25 http://works.bepress.com/kevin_hallock/25 Wed, 12 Aug 2009 08:30:05 PDT This paper examines the gender wage gap among managers of nonprofit organizations using newly collected detailed data on compensation of managers and accounting characteristics of nonprofits in the U.S. There are several main findings. First, women lead roughly nineteen percent of all nonprofit organizations in the sample. Second, on average, women who lead nonprofits earn roughly twenty percent less than men who lead nonprofits. Third, the fraction of nonprofits lead by women varies dramatically based on characteristics of the organization such as size (measured, for example, by income, revenue, or assets) or the "industry" of the organization. I find a generally negative relationship between the size of the nonprofit and the likelihood that a woman runs it. Finally, once even simple characteristics of the nonprofits are controlled for, the male -female salary gap in this sample of nonprofits is not significantly different from zero. Kevin Hallock http://works.bepress.com/kevin_hallock/31 http://works.bepress.com/kevin_hallock/31 Wed, 12 Aug 2009 08:29:12 PDT Excerpt] This book is an attempt to consolidate what we know about Personnel Economics by focusing on Personnel Economics in Imperfect Labor Markets. Even on the first page of the book, the author is clear about this mission. In particular he notes that "The view of personnel economics analyzed in this book is based on two key properties of... labour markets: labour markets are imperfect and jobs are associated to [sic] rents; labour market institutions interact with personnel policies. Notably, wages are partly set outside the firm-worker pair (minimum wages and collective agreements are widespread)" and "job termination policies are affected by a sizeable and binding employment protection legislation." This is a worthy goal and the idea for writing a book that focuses on imperfect labor markets is a very good one. Kevin F. Hallock http://works.bepress.com/kevin_hallock/24 http://works.bepress.com/kevin_hallock/24 Mon, 15 Jun 2009 13:18:32 PDT Is executive compensation influenced by the composition of the board of directors? About 8% of chief executive officers (CEOs) are reciprocally interlocked with another CEO--the current CEO of firm A serves as a director of firm B and the current CEO of firm B serves as a director of firm A. Roughly 20% of firms have at least one current or retired employee sitting on the board of another firm and vice versa. I investigate how these and other features of board composition affect CEO pay by using a sample of 9,804 director positions in America's largest companies. CEOs who lead interlocked firms earn significantly higher compensation. Also, interlocked CEOs tend to head larger firms. After controlling for firm and CEO characteristics, the pay gap is reduced dramatically. However, when firms that are interlocked due to documented business relationships are considered not interlocked, the measured return to interlock is as high as 17%. There also is evidence that the return to interlock was higher in the 1970s than in the early 1990s. Kevin F. Hallock http://works.bepress.com/kevin_hallock/22 http://works.bepress.com/kevin_hallock/22 Mon, 15 Jun 2009 13:18:31 PDT [Excerpt] This paper studies reciprocal interlocks of boards of directors of large firms where an employee of firm A sits on firm B's board and at the same time an employee of firm B sits on firm A's board. The study of Boards of Directors by those in economics and finance is not new. In fact, Dooley (1969) writes of interlocking directorates, but his definition is different in that he presents evidence of interlock where "at least one director ... sat on the board of at least one other of the largest companies". Books by Mizruchi (1982) and Pennings (1980) as well as many articles, for example Bearden and Mintz (1985), Bunting and Barbour (1971) and Mintz and Schwartz (1981) discuss interlocking boards in much more detail from a sociological perspective. Mizruchi and Stearns (1988) study the longitudinal formation of interlocking directorates using a small sample of firms. This paper uses data from the early 1990s to explore reciprocal interlocks and the effects they have on firms. There are several goals, including documenting the frequency of interlocks and the characteristics of boards that interlock, exploring several different definitions of reciprocal interlock, examining whether interlocks are symptomatic of agency problems, and whether interlocks have an effect on managerial pay. Kevin F. Hallock http://works.bepress.com/kevin_hallock/23 http://works.bepress.com/kevin_hallock/23 Mon, 15 Jun 2009 13:17:43 PDT This paper uses data on over 4,600 layoff announcements in the U.S., covering each firm that ever existed in the Fortune 500 between 1970 and 2000, along with 40 interviews of senior managers in 2001 and 2002 to describe layoffs in large U.S. firms over this period. In order to motivate further work in the area, I investigate six main issues related to layoffs: timing of layoffs, reasons for layoffs, the actual execution of layoffs, international workers, labor unions, and the types of workers by occupation and compensation categories. The paper draws on literature from many fields to help further understand these issues. Kevin F. Hallock