Stacey Kole

Economics, Demography and Communication
Date Posted:Mon, 27 Nov 2000 13:23:35 -0600
This paper presents a model in which agents are distinguished by their characteristics, communication between firms and their customers plays an important role, and agents with similar characteristics communicate more effectively. The model is applied to annual data on the distribution of men and women across manufacturing and services in twelve OECD countries from 1965-93. These data display surprising regularities. The model provides an explanation for this in terms of technological change ...

Deregulation and the Adaptation of Governance Structures: The Case of the U.S. Airline Industry
Date Posted:Tue, 29 Aug 2000 03:52:16 -0500
Deregulation provides a natural experiment for examining how governance adapts to structural change in the business environment. We investigate the evolution of governance structure--ownership concentration, compensation policy, and board composition--in the U.S. airline industry during a 22- year period surrounding the Airline Deregulation Act of 1978. Consistent with theory, we find that after deregulation 1) equity ownership is more concentrated; 2) CEO pay increases; 3) stock option grants ...

Workforce Integration and the Disspiation of Value in Mergers: The Case of USAir's Acquisition of Pi...
Date Posted:Tue, 29 Aug 2000 01:44:19 -0500
In 1987, the USAir Group acquired Piedmont Aviation for $1.6 billion in a cash tender offer. Prior to the merger, comparably sized USAir and Piedmont were among the most profitable carriers in the industry. Almost immediately after the integration of the two airlines, USAir became the industry's least profitable carrier and came close to bankruptcy. This paper concludes that the major source of the value destruction in the merger was USAir's workforce integration strategy. The decision to buy ...

Workforce Integration and the Disspiation of Value in Mergers: The Case of Usair's Acquisition of Piedmont Aviation
Date Posted:Sat, 25 Sep 1999 20:20:50 -0500
In 1987, the USAir Group acquired Piedmont Aviation for $1.6 billion in a cash tender offer. Prior to the merger, comparably sized USAir and Piedmont were among the most profitable carriers in the industry. Almost immediately after the integration of the two airlines, USAir became the industry's least profitable carrier and came close to bankruptcy. This paper concludes that the major source of the value destruction in the merger was USAir's workforce integration strategy. The decision to buy labor peace by extending USAir's more generous pay scales and work rules to Piedmont employees accounts for roughly 80% of the $2.5 billion post-merger decline in the USAir's equity value. More generally, we conjecture that the integration of workforces is especially difficult in airline mergers and find evidence consistent with the conjecture. We interpret the USAir-Piedmont case as evidence consistent with Williamson's (1985) argument that the boundaries of the firm are limited in part by considerations of internal equity.

The Government as a Shareholder: A Case from the U.S.
Date Posted:Wed, 15 Sep 1999 22:28:36 -0500
We study a sample of U.S. corporations in which the federal government held between 35 percent and 100 percent of the outstanding common stock during and following World War II. We find that the firms experienced abnormally high turnover among corporate board members but that the tenure of senior management was relatively stable. We also find that the performance of the government-owned companies was not significantly different than private-sector firms in the same industry. We attribute this comparable performance of the government-controlled firms to monitoring mechanisms such as analyst valuation, tradeable shares and competitive product markets that are not normally associated with public ownership.

The Government as a Shareholder: A Case From The U.S.
Date Posted:Wed, 15 Sep 1999 13:28:36 -0500
We study a sample of U.S. corporations in which the federal government held between 35 percent and 100 percent of the outstanding common stock during and following World War II. We find that the firms experienced abnormally high turnover among corporate board members but that the tenure of senior management was relatively stable. We also find that the performance of the government-owned companies was not significantly different than private-sector firms in the same industry. We attribute this ...

Measuring Managerial Equity Ownership: A Comparison of Sources of Ownership Data
Date Posted:Thu, 18 Jun 1998 02:25:19 -0500
This paper demonstrates that differences in managerial stock ownership data cannot explain contradictory empirical evidence on the entrenchment of managers through equity. Three commonly used sources of managerial equity ownership data are described and contrasted. Value Line Investment Surveys are shown to be a relatively low-cost substitute for the beneficial ownership data for officers and directors found in corporate proxy statements.

Measuring Managerial Equity Ownership: A Comparison of Sources of Ownership Data
Date Posted:Sat, 16 May 1998 14:58:01 -0500
This paper demonstrates that differences in managerial stock ownership data cannot explain contradictory empirical evidence on the entrenchment of managers through equity. Three commonly used sources of managerial equity ownership data are described and contrasted. Value Line Investment Surveys are shown to be a relatively low-cost substitute for the beneficial ownership data for officers and directors found in corporate proxy statements.

Managerial Ownership and Firm Performance: Incentives or Rewards?
Date Posted:Tue, 10 Feb 1998 02:44:08 -0600
Managerial ownership of equity both aligns shareholder and management interests and places voting power in the hands of corporate decision-makers. The cross-sectional relation between management ownership and firm performance has been interpreted as evidence of these conflicting influences. In this paper, new evidence draws attention to the cumulation of managerial stockholdings and argue for a reversal of causality in the ownership-performance relation: firm performance is a determinant of ...

Managerial Ownership and Firm Performance: Incentives or Rewards?
Date Posted:Tue, 10 Feb 1998 02:42:29 -0600
Managerial ownership of equity both aligns shareholder and management interests and places voting power in the hands of corporate decision-makers. The cross-sectional relation between management ownership and firm performance has been interpreted as evidence of these conflicting influences. In this paper, new evidence draws attention to the cumulation of managerial stockholdings and argues for a reversal of causality in the ownership-performance relation: firm performance is a determinant of ...

Economics, Demography and Communication
Date Posted:Wed, 15 Oct 1997 00:00:00 -0500
This paper presents a model in which agents are distinguished by their characteristics, communication between firms and their customers plays an important role, and agents with similar characteristics communicate more effectively. The model is applied to annual data on the distribution of men and women across manufacturing and services in twelve OECD countries from 1965-93. These data display surprising regularities. The model provides an explanation for this in terms of technological change in firms and households.

Deregulation and the Adaptation of Governance Structures: The Case of the U.S. Airline Industry
Date Posted:Wed, 03 Sep 1997 00:00:00 -0500
Deregulation provides a natural experiment for examining how governance adapts to structural change in the business environment. We investigate the evolution of governance structure--ownership concentration, compensation policy, and board composition--in the U.S. airline industry during a 22- year period surrounding the Airline Deregulation Act of 1978. Consistent with theory, we find that after deregulation 1) equity ownership is more concentrated; 2) CEO pay increases; 3) stock option grants to CEOs increase; and 4) board size decreases. Airlines governance structures gravitate toward the system of governance mechanisms used by unregulated firms. The adaptation process is gradual, however, suggesting that it is costly to alter organizational capital. We also present evidence on the relation between governance structure and firm survival.

Managerial Ownership and Firm Performance: Incentives or Rewards?
Date Posted:Mon, 02 Sep 1996 00:00:00 -0500
Managerial ownership of equity both aligns shareholder and management interests and places voting power in the hands of corporate decision-makers. The cross-sectional relation between management ownership and firm performance has been interpreted as evidence of these conflicting influences. In this paper, new evidence draws attention to the cumulation of managerial stockholdings and argue for a reversal of causality in the ownership-performance relation: firm performance is a determinant of management ownership. Subsample evidence that documents increased sensitivity of firm performance to managerial ownership in research- intensive firms is also presented. Both systematic bias due to the mismeasurement of performance and the endogeneity of managerial stockholdings can explain this result.

Managerial Ownership and Firm Performance: Incentives or Rewards?
Date Posted:Tue, 16 May 1995 00:00:00 -0500
Managerial ownership of equity both aligns shareholder and management interests and places voting power in the hands of corporate decision-makers. The cross-sectional relation between management ownership and firm performance has been interpreted as evidence of these conflicting influences. In this paper, new evidence draws attention to the cumulation of managerial stockholdings and argues for a reversal of causality in the ownership-performance relation: firm performance is a determinant of management ownership. Subsample evidence that documents increased sensitivity of firm performance to managerial ownership in research- intensive firms is also presented. Both systematic bias due to the mismeasurement of performance and the endogeneity of managerial stockholdings can explain this result.