Determining Depreciations as a Two-Stage Problem
Rüdiger Eichin/Christoph Schneeweiss
Within the framework of a hierarchical model, the paper determines depreciation rates for exhaustable facilities. It hierarchically integrates an investment model with a production model combining the tactical investment calculus with the operational cost accounting level. Using the anticipation procedure of hierarchical planning, depreciation rates, as part of the contribution margin of the operational production model, influence the anticipated cash flow of the net present value (NPV) criterion of the investment level. Hence, using a two-stage procedure depreciation rates are determined as NPV-optimal cost parameters. The paper fully accounts for a stochastic environment and compares numerically the two-stage cost evaluation with linear depreciations.
JEL-classification: D29, D82, M40.
p. 66
Fairness Within Firms: The Case of One Principal and Multiple Agents
W. Güth/M. Königstein/J. Kovács/E. Zala-Mezo
Many experimental studies report evidence of fairness in bargaining games. More recently fairness and its consequences for productive efficiency have been explored in principal-agent games, in which a single principal meets a single agent. However, in most organizations, there are usually many agents in one layer of a firm's hierarchy. Consequently, fairness considerations may be based on a comparison between layers (vertical fairness) as well as within a layer (horizontal fairness). In this paper we report an experiment in which a principal faces two agents with deterministic but unequal productivity. The experimental treatment variable is the information that one agent has about the other agent's contract offer. When work contracts are observable, the principal offers less asymmetric contracts (pay compression) than when contracts are not observable, i.e., horizontal fairness matters.
JEL-Classification: C70, D20, J31.
p. 82
Strategic Change, Multi-Task Managers and Executive Compensation
Joachim Schwalbach
There is consensus that executive compensation is strongly tied to firm size and much less so to financial performance. Observed strategic change in corporations can affect these results. Based on multi-task theoretical considerations, the evidence for German industrial firms shows that elasticities in pay decrease only for large firms as they change from growth to downsizing strategies. Furthermore, pay-for-performance elasticities are contrary to predictions of agency theory. Both results support the belief that compensation contracts in public corporations are imperfectly aligned with firm performance and managers' tasks.
JEL-Classification: L1, M2.
p. 102
Strategy and Structure: Extending the Theory and Integrating the Research on National and International Firms
Joachim Wolf/William G. Egelhoff
In this paper, we seek to extend and integrate national and international strategy-structure theory. We use an information-processing approach to model the relationship between both national and international elements of strategy and macro structure. We test our hypotheses with data from 156 German firms. The inclusion of new elements of strategy (type of competitive strategy, degree of internationalization, and type of international strategy) produces a model that is superior to existing models in explaining the newer and more complex forms of strategy and structure.
JEL-Classification: L1, L2, M1.
p. 117
