In this dissertation, I study the influence of monitoring by institutional investors on corporate behavior within the context of CEO compensation-based incentives. I find that institutional investors provide an executive with higher levels of compensation sensitivity with respect to a firm’s equity price (Delta). In contrast to prior literature, however, once I control the dynamic nature of the data, institutional investors do not affect compensation sensitivity with respect to a firm’s equity risk (Vega). Instead, I find that institutional investors appear to influence the risk profile of firm through the firm’s investment, financing and diversification policy choices even after I control for the CEO’s compensation structure. The results suggest that compensation-related incentives to increase risk (i.e. vega) and monitoring by institutional investors are substitutes of each other in that both can offset the managerial incentives to reduce risk that stem from greater levels of compensation delta. These results are robust to potential endogeneity problems that may arise due to the dynamic nature of panel data.

abstract: Environmental agencies often want to accomplish additional objectives beyond their central environmental protection objective. This is laudable; however it begets a need for understanding the additional challenges and trade-offs involved in doing so. The goal of this thesis is to examine the trade-offs involved in two such cases that have received considerable attention recently. The two cases I examine are (1) the protection of multiple environmental goods (e.g., bundles of ecosystem services); and (2) the use of payments for ecosystem services as a poverty reduction mechanism. In the first case (chapter 2), I build a model based on the fact that efforts to protect one environmental good often increase or decrease the levels of other environmental goods, what I refer to as "cobenefits" and "disbenefits" respectively. There is often a desire to increase the cobenefits of environmental protection efforts in order to synergize across conservation efforts; and there is also a desire to decrease disbenefits because they are seen as negative externalities of protection efforts. I show that as a result of reciprocal externalities between environmental protection efforts, environmental agencies likely have a disincentive to create cobenefits, but may actually have an incentive to decrease disbenefits. In the second case (chapter 3), I model an environmental agency that wants to increase environmental protection, but would also like to reduce poverty. The model indicates that in theory, the trade-offs between these two goals may depend on relevant parameters of the system, particularly the ratio of the price of monitoring to participant's compliance cost. I show that when the ratio of monitoring costs to compliance cost is higher, trade-offs between environmental protection and poverty reduction are likely to be smaller. And when the ratio of monitoring costs to compliance costs is lower, trade-offs are likely to be larger. This thesis contributes to a deeper understanding of the trade-offs faced by environmental agencies that want to pursue secondary objectives of protecting additional environmental goods or reducing poverty. / Dissertation/Thesis / M.S. Biology 2012

Worldwide income taxation in the country of residence is a legal dogma of international taxation. We question this dogma from the perspective of relations between developed and developing countries from a legal and economic perspective, and make a modern and fair proposal for tax treaties. We will show under which conditions a developing and a developed country will voluntarily sign a tax treaty where information is exchanged truthfully and whether they should share revenues. Moreover, we will demonstrate how the conclusion of a tax treaty can assist in the implementation of a tax audit system. / Series: WU International Taxation Research Paper Series

In this thesis, I apply the sophisticated tools made available by the econometrics of panel data and treatment models to a range of different issues. In the first Chapter, an ECM model is used to test on the existence of financing constraints in firms’ investment and R&D, taken a proxy for the efficiency of market institutions and governance rules in different countries. In the second chapter we test an agency model linking pay-performance contracts of CEOS to the financial situation of a firm by using a UK panel data. In the third chapter I use a sophisticated treatment model to evaluate the effectiveness of Italian public subsidies to R&D. Finally, in the fourth chapter I try to evaluate the efficiency of Italian regional systems of public healthcare by controlling for socio-economic factors and quality of healthcare in a composite model using panel data estimation and efficient frontier techniques.<p>The first Chapter analyzes the investment behavior of a sample of R&D intensive firms which are quoted on the stock market from USA, UK and Japan for the period 1990-1998. By using an error correction model we test the elasticity of investment and R&D to cash flow in these countries to see by which measure different market institutions and corporate governance rules affects the cost of external financing. Contrary to previous studies, we find significant differences in the sensitivity to cash flow of the two types of investment, with R&D expenditure being much less sensitive than ordinary investment. This is not surprising given the more long-term nature of R&D expenditures. For what concerns the comparison between the different systems/countries, the USA stock markets confirms as the most efficient market providing outside financing at a much lower cost compared to other markets, especially for young, smaller firms.<p>The second Chapter is a joint work with Biagio Speciale. It uses the data on a panel of quoted UK firms over the period 1995–2002 to study the effects of financial leverage on managerial compensation. The change in the investors’ expectations that caused the recent collapse of the stock market tech bubble is a perfect example of natural experiment that has been used as a source of plausibly exogenous variation in the firm’s debt. The estimates show that pay-for-performance sensitivity is increasing in financial leverage, with the exception of the 10% most levered firms, giving rise at the end to a non-linear (inverted U-shape) relationship between the two variables. The chapter includes also a theoretical model accounting for this relationship where an higher leverage increases both the expected returns and the expected variance of investment returns: the first effect (determining increased pay-performance sensitivity) prevails for low leverage values and the second effect (determining decreased pay-performance sensitivity) prevails for high leverage values.<p>The third Chapter undertakes an empirical estimation of the additionality of public funding on both the propensity to initiate R&D activity and the intensity of R&D spending of Italian enterprises for the period 1998-2000, using data from the Third Community Innovation Survey and from firms' financial accounts. The chosen methodology (Endogenous Switching Type II-Tobit) takes into account the possibility that decisions about both starting an R&D activity (sample selection effect) and applying for/obtaining public funding (essential heterogeneity) are influenced by private knowledge of enterprises' idiosyncratic propensities in R&D spending. The present analysis shows that both these effects are indeed important and that they contribute to explain most of the additionality found with less sophisticated models.<p>The fourth Chapter investigates the underlying causes of variability of public health expenditure per capita (SSPC henceforth) between Italian regions. A fixed-effect panel data estimate on the SSPC (for the period 1997-2006) is used in the first part of the paper to account for regional differences in terms of physical, demographic, socio-economic characteristics and in terms of other variables that affect demand and supply of health services. In the second part, we take the ‘adjusted’ SSPC and proceed to estimate an "efficient production function" of the quality of health services through Data Envelopment Analysis. This procedure allows us to separate the share of expenditure used for the improvement of the quality from the one that can be traced only to an inefficient use of financial resources. A comparison of regional SSPC after factoring out the socio-economic factors and the quality of healthcare shows that big differences still remain and are even exacerbated, signalling big pockets of inefficiency and correspondingly a huge potential for cost savings. Finally, a preliminary analysis shows a positive correlation between the efficiency of regional public spending in healthcare and the level of social capital. / Doctorat en Sciences économiques et de gestion / info:eu-repo/semantics/nonPublished