Corporate Governance

In 1995 The Boundaryless Organization showed companies how to sweep away the artificial obstacles — such as hierarchy, turf, and geography — that get in the way of outstanding business performance. Now, in this completely revised edition of their groundbreaking work, management experts Ron Ashkenas, Dave Ulrich, Todd Jick, and Steve Kerr offer an up-to-date version of their comprehensive guide to help any organization go "boundaryless" — and become a company with the ability to quickly, proactively, and creatively adjust to changes in the environment.

We estimate the relation between stock option (ESO) grants to the top five executives and future earnings to examine whether incentive alignment or rent extraction by top managers explains option granting behavior. The future operating income associated with a dollar of Black-Scholes value of an ESO grant is $3.71. To understand the source of these positive payoffs, we parse out ESO grant values into components predicted by economic determinants of option grants, governance quality, and a residual grant value.

The push for increased transparency in financial reporting and corporate governance serves shareholders only up to a point. The problem of assessing the value of transparency to shareholders is subtle because both the level and pattern of earnings can convey information. Even when earnings management conceals information, it can be beneficial to shareholders. Distinguishing between ex ante and ex post efficiency underscores the advantages of achieving a balance between transparency and privacy in corporations.

In this paper, we develop an approach for filtering state variables in the setting of continuous-time jump-diffusion models. Our method computes the filtering distribution of latent state variables conditional only on discretely observed observations in a manner consistent with the underlying continuous-time process. The algorithm is a combination of particle filtering methods and the "filling-in-the-missing-data" estimators which have recently become popular. We provide simulation evidence to verify that our method provides accurate inference.

I focus on the valuation of the shares of a firm that has intangible assets. As most firms have some form of intangible asset that is not on the balance sheet, my talk deals with the general principles of vaulation when balance sheets are imperfect.

This paper studies the economic benefits of return predictability by analyzing the impact of market and volatility timing on the performance of optimal portfolio rules. Using a model with time-varying expected returns and volatility, we form optimal portfolios sequentially and generate out-of-sample portfolio returns. We are careful to account for estimation risk and parameter learning.

This paper investigates the relationship between economic and social development. Contrary to the view of those who believe in the existence of a tradeoff between democracy and growth, the paper contends that consensus-building, open dialog and the promotion of an active civil society are key ingredients to long-term sustainable development. Development is a participatory process. "Best practices" or reforms that are imposed on a country through conditionality may very well fail to produce lasting change.

Supply chain management is a complex process that requires a high-level dedicated governing body or steering committee to meet the various needs of the supply chain's multiple customers. Because a supply chain system is complex and nonlinear, there may be multiple reasons for poor performance. Supply chains can fall victim to feedback loops that reinforce negative actions and behaviors. Improving a supply chain requires understanding functional deficiencies and, also, how such deficiencies interact with one another to degrade overall performance.

Economists seeking explanations for the global financial crisis of 1997-99 are reaching consensus that a major factor was weak financial institutions, which resulted in part from inadequate government regulations. At the same time many developing countries are struggling with an overregulated financial system - one that stifles innovation and the flow of credit to new entrepreneurs and that can stunt the growth of well-established firms. In particular, too many countries are relying excessively on capital adequacy standards, which are inefficient and sometimes counterproductive.