Ownership Incentives Research Articles

Assessing the effectiveness of financial incentives on electric vehicle adoption in Europe: Multi-period difference-in-difference approach

Electric vehicles (EVs) are considered a promising alternative to achieve a cleaner transportation sector. In the last decade, European countries have implemented financial incentive policies to boost EV adoption. This paper estimates the impacts of these policies on EV adoption in Europe using data from 30 countries from 2012 to 2021 and a multi-period difference-in-differences approach. Our results reveal that purchase incentive policies are associated with increased registrations of battery electric vehicles and plug-in hybrid vehicles, and that the effect holds over time. However, the magnitude and duration of these effects are more significant for battery electric vehicles. Ownership incentive policies do not contribute to EV registrations for either type. Further, the results suggest that policy impacts vary between countries with different levels of gross domestic product per capita and renewable energy consumption. These results contribute to the literature on evaluating financial incentive policies for EV adoption, enabling improved decision making by policymakers.

Analysis of BYD Zero Cost Shareholding Incentive Plan

As a matter of fact, with the continuous entry of new energy into the market, the competition among new energy enterprises has gradually increased. In this case, each new energy enterprise continues to maintain its own original interests and open up a wider market through the reform of the company and financial structure and the implementation of various incentive plans. BYD, as a rapidly rising domestic new energy vehicle, has also made corresponding plan adjustments in recent years. With this in mind, we combined different reference materials and data, through the comparison of BYD company in different periods, to BYD 2022 new proposed "zero cost" employee stock ownership incentive plan to make an analysis. According to the analysis of its implementation motivation, the relationship between decision-makers and shareholders, the effect of implementation and other aspects of the corresponding conclusions and revelation. Overall, these results shed light on guiding further exploration of shareholding incentive plan.

The dynamic risk profiles and management strategies in supply chain coopetition under altruistic preference

This paper focuses on bilateral coopetition within a two-echelon supply chain consisting of manufacturer and retailer. The objective is to establish a comprehensive stochastic dynamical framework for investigating the dynamic mechanisms of supply chain coopetition (SCC) and to develop a novel method for optimal decision-making of ownership incentive and capital structure under the measurement of dynamic risks in uncertain environment. The study introduces the altruistic preference to characterize the bilateral utility, and establish a stochastic system model within the framework of Langevin dynamics. Considering the inherent uncertainty in SCC, we define and classify the dynamic risks into bilateral cooperation risk and system response risk, based on which we propose a novel indicator to assess the performance in terms of risks. In the simulations, we consider the different scenarios to discuss the influences of various factors, i.e., ownership ratio, capital leverage, altruistic preference, and uncertain environment, on dynamic risk profiles and the performance in SCC, and explore the feasibility of constructing strategies from these dimensions. The results provide valuable insights for risk management and decision-making within the supply chain context.

Do founding families downgrade corporate governance? The roles of intra-family enforcement

We examine whether adding more founding family members as firm owners and/or managers matters to corporate governance outcomes. Based on a sample of 1242 founder-controlled publicly traded Chinese private-sector firms, we find that more such family involvement is associated with lower volumes of related party transactions suspicious of expropriating shareholder wealth. The curtailing relation is stronger when family members own firm shares and/or serve as managers, and are more arm's-length relatives instead of immediate kin of the founders. The intra-family governance effects are stronger when firms are subject to weaker capital market disciplines or have more free cash under insider discretion. The overall evidence is consistent with founding family members' information advantages and ownership incentives making them more robust monitors of managerial decisions than other formal mechanisms, which help enforce shareholder rights in emerging markets.

Chain Affiliation and Human Resource Investments: Evidence from the Restaurant Industry

Drawing on organizational theory, agency theory, and research in strategic human resource management, this study explores how chain affiliation influences human resource (HR) investments using data from a nationally random survey of restaurant establishments. We propose that chain-affiliated units will make different investments in those areas of the HR system where chains establish superior organizational routines compared with nonaffiliated units. By contrast, we argue that in the absence of chain routines, ownership incentives will drive differences in human resource investments. Specifically, we find that franchisee-owned units focus more on cost reduction by underinvesting in human resource practices compared with company-owned units and independently owned units when organizational routines are not provided by the chain. We provide further support for our theoretical arguments using additional data on multiunit ownership and franchisor influence. Finally, we conduct supplemental analyses to explore the relationship between different human resource investments and two important organizational outcomes: employee turnover and customer satisfaction ratings from Yelp. Our results highlight the types of human resource practices that are important for service work and suggest that the provision of organizational routines can have important implications for the long-run success of chains and their units. Funding: Financial support from the Center for Advanced Human Resource Studies, Cornell University; and the Rockefeller Foundation is gratefully acknowledged. Supplemental Material: The online appendix is available at https://doi.org/10.1287/orsc.2021.1539 .

Lower Your Weapon: Common Ownership and Innovation (Dis)Incentives

Lower Your Weapon: Common Ownership and Innovation (Dis)Incentives

Ownership incentives and housing affordability: Evidence from France

Are ownership incentive policies inevitably accompanied by detrimental inflationary effects? To address this issue, we develop a theoretical model in which owners of new housing benefit from a homeownership subsidy or a rental investment incentive. We show that while both incentives increase the price of the new housing, they reduce old housing prices and have an ambiguous impact on the average housing price. These effects result from residential spillovers from the old housing market to the new housing market. We test these findings empirically by exploiting a 2014 French reform in the metropolitan area of Lyon which intensified both incentives. Difference-in-difference estimates confirm our theoretical predictions: two years after the reform, the price of new housing increased by 30% and the price of old housing decreased by 7%. Taking both markets together, the overall effect is non-significant. The share of new housing transactions increased by 25%.

Diversification, Common Ownership, and Strategic Incentives

We argue that within-industry investor diversification is directly related to common ownership incentives (profit loads on rival firms by the manager of a firm) in product markets. Because of their respective investment strategies, passive investors are naturally more diversified than active investors. If more money flows from active toward passive investors, then common ownership incentives increase. The opposite occurs if active investors receive more money flows. This pattern is shown in two example US industries for the period 2004-2012.

Shareholder involvement and firm innovation performance

PurposeWhether shareholders’ involvement in management benefits the organization’s performance remains inconclusive. The purpose of this study is to reconcile the conflicting results by exploring whether and under which contexts shareholder involvement may impact firm innovation performance.Design/methodology/approachThis study attempts to combine previous theoretical views (reactance and agency theories) to examine a curvilinear effect of shareholder involvement on firm innovation performance based on governance related to cost-benefit analysis. Drawing on data from 174 Chinese manufacturing firms, the hierarchical regressions were used to test the hypotheses.FindingsThe study finds that shareholder involvement has a U-shaped relationship with firm innovation performance. Moreover, ownership incentive strengthens the U-shaped relationship, while monitoring weakens it.Originality/valueExamination of the U-shaped main effect of shareholder involvement and these contingent factors further explains the mixed empirical results concerning the link between shareholder activism and firm-level performance.

Delegated Monitoring, Institutional Ownership, and Corporate Misconduct Spillovers

Upon the revelation of corporate misconduct by firms in their portfolios, institutional investors experience a significant discount in the market value of their portfolios, creating a negative externality that averages $92.7 billion of losses per year. This negative spillover increases with stronger ownership links to misconduct firms, when more long-term investors hold such firms’ shares, and when the institutional investor should provide higher common ownership incentives, all of which lend support to a failed monitor hypothesis. These institutional investors experience significant fund outflows in the year immediately following the fraud incidents, which increase with misconduct severity and monitoring incentives.

Research on Combination of Inventive Mechanisms for Marketization-recruited CEOs in State-Owned Enterprises

The reform of state-owned enterprises has entered into a critical and deep-water area. Exploratory research on incentive methods for CEOs who are recruited into state-owned enterprises through market needs theoretical guidance and support from the related theories of incentive scheme and mechanism. The extant literature studied the combination of incentive mechanisms for CEOs; however, substitution relationship and complementary relationship between different incentive mechanisms are under-researched. This study develops theoretical models to study the effectiveness and restrictiveness interacted between different incentive mechanisms. According to our findings, the short-term performance share incentive and the effectiveness of long-term stock ownership incentive has a negative correlation with CEO risk aversion, environmental uncertainty and stock market uncertainty; the short-term performance share incentive, the long-term stock ownership incentive and CEO control incentive are complementary. Increase of CEO delegation should be considered when principal increases the CEO short-term performance share and long-term stock ownership incentive. Along with the development of enterprise, the effectiveness of CEO material incentive decreases, and the material incentive barely substitute the immaterial incentive. Principal needs to pay more focus on CEO immaterial incentive. This study enriches the extant literature by contributing implications to combination of incentive mechanisms for marketization-recruited CEOs in state-owned enterprises.

Family ownership and free cash flow

PurposeThe purpose of this paper is to investigate the effect of family ownership on investment-cash flow sensitivity and on firm performance.Design/methodology/approachThe author uses panel data to examine the relationship between investment and cash flow and between family ownership and the firm performance of Thai listed firms from 2001 to 2008. To account for the endogeneity of the lagged dependent variable, the investment equation is estimated by the generalized method of moments, following Arellano and Bond (1991).FindingsThe presence of family owners reduces the sensitivity of investment and cash flow. At low and high levels of family ownership, an increase in family shareholding leads to lower investment-cash flow sensitivity. In contrast, firms with medium family ownership levels have higher investment-cash flow sensitivity. Only at high levels of family ownership is firm performance positively related to family shareholding.Originality/valueThe ownership levels of family shareholders affect the investment-cash flow sensitivity in an S-shaped relation, supporting the interest alignment and entrenchment effects. When family shareholders have high ownership incentives, their interest alignment reduces the agency costs of free cash flow problems and leads to higher firm performance.

Ownership Structure, Incentives, and Asset Prices

We show how firms' ownership structures, managerial contracts, and asset prices interact in a dynamic equilibrium model. Our framework distinguishes a firm's small shareholders from its large shareholders, who play the role of mediators by determining managerial contracts, while also influencing asset prices through their dynamic trades. Agency conflicts between large shareholders and managers lead to more volatile and higher expected stock returns. Risk sharing through managerial incentive contracts, however, makes block ownership dynamics effectively insulated from fluctuations in firm-specific parameters. We derive a number of testable implications for the endogenous relations among ownership concentration, managerial incentives, and stock returns.

Free Zones, Foreign Ownership and Tax Incentives for Foreign Direct Investment in Qatar

Qatar offers specific Free Zones in order to encourage Foreign Direct Investment, as Free Zones Enterprises can be fully owned by non-Qataris, which is not the case of companies located in Non-Free Zones areas in Qatar. In fact, Free Zones offer huge tax incentives and do not provide any regulatory or legal restrictions to repatriate profits and investments. As Non-Free Zones are governed by a different law than the one applicable in Free Zones areas, taxation is slightly less favorable (corporate income taxes of 10% apply for ordinary companies) even if lots of activities are still tax exempted. The most significant difference lies in the ownership restrictions of Qataris companies. The present contribution is aiming at presenting the main tax and legal aspects of these two different options in Qatar, notably given the growing importance of Free Zones in this region.

CEO Ownership Concentration and CEO CSR Performance Compensation of S&P 500 Companies

This study investigates how CEO ownership concentration in S&P 500 companies is associated with compensation tied to social performance. My theory on how these two variables are connected is presented in the paper. I employ logistic regression on privately collected data on social performance compensation. Using firm-level and individual-level data for over 400 companies, I find that the relationship between CEO ownership and CEO CSR incentive is positively related. In my analysis, I control for leverage, profitability, and industry. I suggest that I recommend that more researches in this area should be conducted in order to properly understand if CEOs are using their ownership concentration to obtain more private benefits for themselves.

The Impact of Monitoring by Short Sellers on Auditor's Risk Assessment: A Cross-Sectional Study

We investigate two competing perspectives as to how institutional ownership, analyst following, and equity incentives moderates the effect of short interest on the behavior of auditors. It is unclear how information signal embedded in short interest affects the audit process for companies of different characteristics. In this paper, Wwe investigate two competing perspectives as to how external monitoring and managerial incentives affect the association between short interest and audit risk. The supply side perspective (i.e. labeled signaling) argues that if there is strong external monitoring and managerial incentives, short interests will not lead to greater amount of audit effort because auditor’s of auditors’ self-interest in minimizing costs, self-interest largely drives audit effort, while the demand side perspective argues that the same factors (i.e. institutional ownership, analyst following, and equity incentives) will lead to a greater demand for audit effort. Using audit fees as a proxy for audit risk, we find that an increase in short interest is associated with an increase in audit fees for companies that have weak external monitoring (i.e. low institutional ownership, low analyst following) and weak managerial incentives (i.e. compensation is less sensitive to stock price movements). In contrast, an increase in short interest is not associated with an increase in audit fees for companies that have a high institutional ownership, large analyst following, or managerial incentives that are more sensitive to stock price movements. Our results provide support for the signaling perspective, but not for the demand perspective.

Executive compensation in government-linked companies: evidence from Malaysia

The aim of this study was to explore the characteristics of executive pay, equity ownership incentives and pay–performance relationship in government-controlled firms. Data were hand-collected from the annual reports of 179 companies listed on Bursa Malaysia. The results show that executive pay is lower in government-linked companies. Positive pay–performance relationship is also not evident for this category of firms, which indicates that their executives were largely guaranteed with certain level of pay irrespective of performance. The level of equity ownership incentives provides the executives in government-controlled firms with very little incentive to produce effort that can improve firm performance. Overall, our findings are consistent with the inefficient pay hypothesis developed in this study.

An Empirical Study on the Effects of Equity Incentive of the Listed Corporations in the SME Board of China<br/> —An Empirical Analysis Based on the View of Earnings Management

Currently, most researches are focusing on Shanghai & Shenzhen exchange, and few researches have been done on the SME board. Besides, while studying the effect of equity incentive, most of the researchers have ignored the earnings management triggered by stock ownership incentive. This paper takes the SME board companies which have implemented stock ownership incentive as the research object. We have used earnings management to modify the company performance and carried out an empirical research to study the effect of stock ownership incentive. Our result shows that without earnings management to modify the company performance, stock ownership incentive is positively related to company performance. Taking the earnings management into account, the positive correlation relationship between stock ownership incentive and company performance will be weakened, and stock ownership incentive will stimulate earnings management.

International Real Estate Review

This paper examines real property tax as a determinant of tenure choice. The analysis is conducted in two stages. First, parameter estimates for a reduced-form homeownership model are obtained through multivariate logistic regression on data drawn from the U.S. Survey of Income and Program Participation (SIPP). Second, data from the Chinese Household Income Project (CHIP) is used to obtain predicted homeownership for China by using the SIPP-based model. Actual and predicted values of homeownership in China are presented, and the marginal effect of property tax is computed. Overall, we find that tenure choice is significantly influenced by property tax, even after controlling for a wide range of supply and demand considerations. Furthermore, and in the case of China, we show that the negative impact of property tax on homeownership may be mitigated by corresponding ownership incentives (e.g., tax policy). To the best of our knowledge, this is the first paper to explicitly analyze property tax in this regard. Implications based on the empirical analysis are applicable to the evolution of property tax policy in China.

Managerial Ownership and Firm Performance: Evidence from the 2003 Dividend Tax Cut

Evidence on the causal effect of managerial ownership on firm performance is elusive due to lack of within-firm variations and credible empirical designs. We identify this causal effect by exploiting the 2003 Tax Cut as a natural experiment, which increased the net-of-tax effective managerial ownership. Consistent with predictions from agency theory, our difference-in-difference empirical design uncovers a significant and hump-shaped improvement in firm performance with respect to the level of managerial ownership. The increase in performance is more pronounced for firms subject to more severe agency problems as well as firms under weak alternative governance mechanisms, further demonstrating managerial ownership incentive as the underlying channel for our results.