global labor and worksite standards a strategic ethical analysis of shareholder employee relations resolutions the purpose of this paper is to analyze from a strategic ethical perspective four selected shareholder resolutions reported by the social issues service of the investor responsibility research center regarding international labor and workplace standards particular attention will be paid to specific employee relations issues at the operating and tactical level of individual multinational firms the paper concludes with policy recommendations for proxy statements

women as policy makers evidence from a randomized policy experiment in india this paper uses political reservations for women in india to study the impact of women s leadership on policy decisions since the mid 1990 s one third of village council head positions in india have been randomly reserved for a woman in these councils only women could be elected to the position of head village councils are responsible for the provision of many local public goods in rural areas using a dataset we collected on 265 village councils in west bengal and rajasthan we compare the type of public goods provided in reserved and unreserved village councils we show that the reservation of a council seat affects the types of public goods provided specifically leaders invest more in infrastructure that is directly relevant to the needs of their own genders

corruption investments and contributions to public goods experimental evidence from rural liberia we analyze how corruption affects incentives to invest or contribute to public goods we obtain a proxy for corruption among liberian community leaders by keeping track of a flow of inputs associated with a development intervention measuring these inputs before and after giving them in custody to the chief we then use the gap between these measurements missing inputs to explain variation in investment behavior of villagers investment behavior is gauged with two simple artefactual field experiments our main results are that corruption i undermines incentives for voluntary contributions to local public goods and ii may reduce private investments of individuals subject to rent seeking by the chief in real life we also provide weaker evidence that the impact of corruption on investments and contributions to public goods is heterogeneous this impact may be gender specific and appears to vary with accessibility of communities

do people care about democracy an experiment exploring the value of voting rights in almost all democratic national elections an individual vote cannot change the election outcome the fact that many individuals nevertheless participate voluntarily in such elections suggests that people do care about democracy as such this experiment investigates the value of democratic voting rights by providing participants the chance to sell them more specifically an incentive compatible mechanism is used to elicit the willingness to accept value of the voting right in the election of the german bundestag on 16 october 1994 a postexperimental questionnaire makes it possible to assess the relative importance of answers to the frequently raised question why do people vote

does aid affect governance why is there little robust evidence that foreign aid significantly enhances the economic growth of poor countries the search for an explanation is becoming immensely important as industrial countries are being exhorted to increase their aid budgets in order to help developing countries achieve the millennium development goals perhaps one should not expect an impact on growth from the mere infusion of additional capital into a country but perhaps any beneficial effects are offset by adverse spillover effects and academic focus should shift to determining what these are and how to mitigate them in this regard figure is suggestive we plot the log of the manufacturing to gross domestic product gdp ratio in a country against the log of the ratio of aid received to gdp for that country for two separate time periods the late 990s and the early 980s conditional on a number of variables as the figure suggests the more aid a country has received the smaller its share of manufacturing the coefficient estimate suggests that a percentage point increase in the ratio of aid to gdp is associated with a reduced share of manufacturing in total gdp of about 0 2 to 0 3 percentage points

spillover effects of nudges abstract we consider a theoretical model where an individual pays limited attention to decision relevant factors nudges increase attention to a factor but can have at the same time attentional spillover effects to other factors as a consequence nudges can have detrimental effects on desired behavior and consumption utility further measuring behavioral changes in the nudged domain sometimes does not yield the right conclusions about the effects of the nudge on utility even with an additive separable utility function

can vouchers reduce elite capture of local development projects experimental evidence from the solomon islands abstract external financing of local public goods can potentially create political resource curses by reducing citizen oversight exacerbating elite capture and producing policy outcomes that are sub optimal for the general population this paper experimentally tests a novel mechanism that seeks to mitigate elite capture of local development projects control communities are provided with block grants to fund local public goods while households in treatment communities are provided with vouchers that they may either contribute to a public good or redeem at a discount for a private capital good we find that the use of vouchers as a mechanism for aid delivery increases community participation in local public decision making changes the nature of allocation outcomes and improves community satisfaction with allocation outcomes

ethics on the web applying moral decision making to the new media this paper examines the advent of the web as a critical media tool in the promotion and sale of goods to consumers and the ethical questions it raises that are issues of public policy we examine four traditional ethical rationales that guide organizational decision making utilitarianism distributive justice moral rights of man and relativism further characterized as ends based equity based rules based and comparison based rationales and we apply them to four moral dilemmas attributed to the proliferation of dot com companies as they relate to consumer welfare we find that ethical rationale in the new media is largely non existent and where it exists it is primarily reactive and driven by utilitarian or relativistic reasoning we attribute this condition to the newness of the industry and to its economic context representing as it does many characteristics embodied in the concept of the perfect market we offer some remedies to improve ethical conduct by e business

institutional ownership of stock and dimensions of corporate social performance an empirical examination collectively institutions own an increasing proportion of outstanding corporate equities as an emergent force in shaping corporate america the linkages between institutional ownership and corporate social performance csp require empirical examination not only do corporate policy makers need to know those areas where social performance may lure or inhibit capital infusions lawmakers also need a better understanding of the social forces guiding corporate policy as anticipated this study found a positive relationship between the amount of institutional ownership of corporate stock and a company s social responsiveness as measured by the representation of women on its board of directors however no statistically significant relationship with social responsibility as measured by charitable giving was found the exemplar of social issues management compliance with the sullivan principles showed an unexpected negative relationship with the level of institutional ownership

who is at the wheel when communities drive development evidence from the philippines summary community driven development cdd approaches have become an important part of development operations using data from 1 200 households in 66 communities participating in a cdd project in the philippines we analyze how communities select their proposals and how resources are allocated across villages resources flow to the poorest and more politically active villages controlling for poverty more unequal villages are more likely to receive funding this surprising result is because in more unequal villages the elected village leader is more likely to override community preferences and to influence inter village competition such that project resources flow to their villages

the intrinsic value of decision rights philosophers psychologists and economists have long argued that certain decision rights carry not only instrumental value but may also be valuable for their own sake the ideas of autonomy freedom and liberty derive their intuitive appeal at least partly from an assumed positive intrinsic value of decision rights providing clean evidence for the existence of this intrinsic value and measuring its size however is intricate here we develop a method capable of achieving these goals the data reveal that the large majority of our subjects intrinsically value decision rights beyond their instrumental benefit the intrinsic valuation of decision rights has potentially important consequences for corporate governance human resource management and optimal job design it may explain why managers value power why employees appreciate jobs with task discretion why individuals sort into self employment and why the reallocation of decision rights is often very difficult and cumbersome our method and results may also prove useful in developing an empirical revealed preference foundation for concepts such as freedom of choice and individual autonomy

targeting the poor evidence from a field experiment in indonesia the brief summarizes the targeting the poor evidence from a field experiment in indonesia for the period december 2008 january 2009 this paper reports an experiment in 640 indonesian villages on three approaches to target the poor proxy means tests pmt where assets are used to predict consumption community targeting where villagers rank everyone from richest to poorest and a hybrid defining poverty based on ppp 2 per capita consumption community targeting and the hybrid perform somewhat worse in identifying the poor than pmt though not by enough to significantly affect poverty outcomes for a typical program elite capture does not explain these results instead communities appear to apply a different concept of poverty

for better or for worse empirical evidence of moral licensing in a behavioral energy conservation campaign isolated environmental campaigns focusing on defined target behaviors are rolled out to millions of households every year yet it is still unclear whether these programs trigger cross domain adoption of additional environment friendly behaviors positive spillover or reduced engagement elsewhere a thorough evaluation of the real net performance of these programs is lacking this paper investigates whether positive or perverse side effects dominate by exemplifying the impact of a water conservation campaign on electricity consumption the study draws on daily water 10 780 data points and weekly electricity 1386 data points consumption data of 154 apartments in a controlled field experiment at a multifamily residence the results show that residents who received weekly feedback on their water consumption lowered their water use 6 0 on average but at the same time increased their electricity consumption by 5 6 compared with control subjects income effects can be excluded while follow up research is needed on the precise mechanism of the psychological process at work the findings are consistent with the concept of moral licensing which can more than offset the benefits of focused energy efficiency campaigns at least in the short term we advocate the adoption of a more comprehensive view in environmental program design evaluation in order to quantify and mitigate these unintended effects

a sparsity based model of bounded rationality this article defines and analyzes a sparse max operator which is a less than fully attentive and rational version of the traditional max operator the agent builds as economists do a simplified model of the world which is sparse considering only the variables of first order importance his stylized model and his resulting choices both derive from constrained optimization still the sparse max remains tractable to compute moreover the induced outcomes reflect basic psychological forces governing limited attention the sparse max yields a behavioral version of basic chapters of the microeconomics textbook consumer demand and competitive equilibrium i obtain a behavioral version of marshallian and hicksian demand arrow debreu competitive equilibrium the slutsky matrix the edgeworth box roy s identity and so on the slutsky matrix is no longer symmetric nonsalient prices are associated with anomalously small demand elasticities because the consumer exhibits nominal illusion in the edgeworth box the offer curve is a two dimensional surface rather than a one dimensional curve as a result different aggregate price levels correspond to materially distinct competitive equilibria in a similar spirit to a phillips curve the arrow debreu welfare theorems typically do not hold this framework provides a way to assess which parts of basic microeconomics are robust and which are not to the assumption of perfect maximization jel codes d01 d03 d11 d51

exploring the curvature of the relationship between hrm csr and corporate financial performance this article contributes to the general literature on the relationship between corporate social performance and corporate financial performance as well as to the emerging hrm csr literature by exploring the curvature of the relationship between hrm csp and cfp we advance conceptual arguments in favor of an inverted u shaped relationship our results demonstrate a significant quadratic relationship between hrm csp and cfp we provide evidence that this relationship is not linear or s shaped but rather inverted u shaped

a study of the link between a corporation s financial performance and its commitment to ethics a number of studies have tested the relationship between a corporation s social and ethical performance and its financial performance in contrast this is the first study to demonstrate a link between overall financial performance and an emphasis on ethics as an aspect of corporate governance it identifies the 26 8 percent of the 500 largest u s public corporations that in their annual report to shareholders commit to ethical behavior toward their stakeholders or emphasize compliance with their code of conduct the financial performance of these corporations ranks higher than that of those who do not at a significance level of p 0 005 using the 1997 business week ranking which averages eight publicly reported measures of historical financial performance these findings should motivate more corporations to utilize the principles of social and ethical accounting auditing and reporting seaar

corporate social and financial performance an investigation in the u k supermarket industry the comparison of corporate social performance with corporate financial performance has been a popular field of study over the past 25 years the results while broadly conclusive of a positive relationship are not entirely consistent in addition most of the previous studies have concentrated on large scale cross industry studies and often with a single variable for corporate social performance in order to produce statistically significant results this weakens the richness of understanding that might be obtained from a single industry study with multiple social variables which would also allow investigation of inter relationships between individual and sub sets of social performance measures and between individual and sub sets of social performance and financial performance measures there have also been criticisms that the results lack a rigorous theoretical basis and the paper demonstrates clearly how stakeholder theory must form the basis for this area of research following a review of the literature this paper presents the initial findings from a study of the u k supermarket industry which suggest that contemporaneous social and financial performance are negatively related while prior period financial performance is positively related with subsequent social performance positive relationships between both age and size of the company with social performance are also found

the agency problems embedded in firm s equity investment we find that agency problems are embedded in firm s excess and abnormal equity investments that are mainly dictated by controlling shareholder s motives and ethical choices manifested in ownership and board structure the excess equity investment is gauged with respect to industry average the abnormal equity investment is specifically referred to the number of nominal investment companies that are fully controlled by the controlling owners while subject to little governance our empirical evidences of 345 taiwanese non financial listed firms show that firm s excess and abnormal equity investments are negatively correlated with controlling shareholder s cash flow rights while are positively correlated with the control cash flow deviation and board affiliation the results are supportive of the positive incentive hypothesis and the negative entrenchment hypothesis put forth by la porta et al 2002 journal of finance57 1147 1171 and claessen et al 2002 journal of finance57 2741 2742 the negative relation between equity investment and firm s value further supports the agency postulation that corporate excess and abnormal equity investments represent a leeway for controlling shareholder to exploit wealth of minority shareholders this study potentially contributes to the literature of business ethics by portraying an empirically testable linkage from controlling owner s ethical choices to his actions and therefore firm s value

the social impact of social funds in jamaica a participatory econometric analysis of targeting collective action and participation in community driven development qualitative data from a case study of the jamaica social investment fund reveal that the social fund process is elite driven and decision making tends to be dominated by a small group of motivated individuals however there is broad based satisfaction with the outcome quantitative data from 500 households mirror these findings by showing that ex ante the social fund does not address the expressed needs of the majority of individuals in the majority of communities by the completion of the project however 80 per cent of the community expresses satisfaction with the outcome an analysis of the determinants of participation reveals that better educated and better networked individuals dominate the process propensity score analysis demonstrates that jsif has had a causal impact on improvements in trust and the capacity for collective action but these gains are greater for elites

optimal taxation with behavioral agents this paper develops a theory of optimal taxation with behavioral agents we use a general framework that encompasses a wide range of biases such as misperceptions and internalities we revisit the three pillars of optimal taxation ramsey linear commodity taxation to raise revenues and redistribute pigou linear commodity taxation to correct externalities and mirrlees nonlinear income taxation we show how the canonical optimal tax formulas are modified and lead to novel economic insights we also show how to incorporate nudges in the optimal taxation framework and jointly characterize optimal taxes and nudges

corporate contributions altruistic or for profit existing literature has focused on three rationales for corporate philanthropy through the firm giving corporate statesmanship and profit motivated giving the profit motivation argument was exa

reshaping institutions evidence on aid impacts using a pre analysis plan this brief summarizes the results of a gender impact evaluation study entitled reshaping institutions evidence on aid impacts using a pre analysis plan conducted between 2005 and 2009 in sierra leone the study observed the impact of pre analysis plan pap on local institutions by imposing participation requirements for marginalized groups including women and test for learning by doing effects in sierra leone on the individual and village level requiring women and young adults to take on leadership positions participate in project meetings and sign off on project finances does not have any persistent effect on their participation in local decision making or attitudes regarding leadership ability the project successfully established village organizations and tools to manage the project the distributions of the project s benefits were equitable and leakage was minimal there was a significant positive impact on the stock and quality of local public infrastructure however there are no detectible changes in the ability to raise funds for local public goods decision making process or social norms and attitudes funding for the study derived from the gobifo project the institutional reform and capacity building project ircbp the world bank development impact evaluation dime the horace w goldsmith foundation the international growth center 3ie and the national bureau of economic research nber african successes project

moral and conceptual issues in investment and finance an overview as director of the second east carolina university conference in applied philosophy it is my pleasure to introduce this fine collection of papers on moral and conceptual issues in investment and finance the essays address a wide range of topics south african disinvestment the professional responsibil ities of accountants decision theoretic problems for fiduciaries and the rights of employees in corporate takeovers to cite just a few examples consequently any attempt to somehow summarize or tie together all this material would be either extremely super ficial or far exceed the available space instead in what follows i try to supplement the papers first by offering some general observations about our con ference topic and secondly by identifying what seem to me to be some of the fertile areas for further research the title of our conference was meant to em phasize two points first although a number of philosophers and business scholars now study a field commonly called business ethics a more natural and general description of their interests might be philosophical issues in business the study of the particularly abstract foundational or normative aspects of business thus while topics such as the rights of employees or the social obligations of corporations are of course part of the philosophical study of business so are non normative or less explicitly normative questions such as whether and in what sense corporations are persons the extent to

the ethical context of entrepreneurship proposing and testing a developmental framework the aim of this study is to increase our understanding of the ethical climate of entrepreneurial firms as they grow and develop a developmental framework is introduced to describe the formal and informal ethical structures that emerge in entrepreneurial firms over time factors influencing where firms are within the developmental framework are posited including the entrepreneur s psychological profile lifecycle stage of the business and descriptive characteristics of the venture it is also proposed that the implementation of ethical structures will impact perceptions of the clarity and adequacy of the ethical standards of the firm and the firm s preparedness to deal with ethical challenges as they arise results are reported of a cross sectional survey of small firms at different stages of development the findings indicate the existence of four distinct clusters of firms based on their formal and informal ethical structures superlatives core proponents pain and gain and deficients evidence is also provided of statistically significant relationships between the proposed antecedent and outcome variables implications are drawn from the results and priorities are established for future research

the corporation and profits in this paper i argue that a theory of the firm that takes profit maximizing to be the essential activity and purpose of the firm is seriously inadequate i argue that firms in the actual economy neither are nor should be maximizers of profit i argue instead that firms are and must be satisficers that they must make enough profit to satisfy the various demands which they encounter in their operation yet it should be clear that the notion of satisficing while it escapes the major problems encountered by maximization itself lacks much of any very clear content in the end i claim that the notion of satisficing can best be understood if we abandon the traditional characterization of profits and replace it with a notion of extended profits which i define as that part of corporate revenue which is available for distribution among stockholders management and labor and for reinvestment in the corporation s business operation

the hidden costs of nudging experimental evidence from reminders in fundraising abstract we document the hidden costs of a popular nudge and show how these costs distort policy making when neglected in a field experiment with a charity we find reminders increasing intended behavior donations but also increasing avoidance behavior unsubscriptions from the mailing list we develop a dynamic model of donation and unsubscription behavior with limited attention we test the model in a second field experiment which also provides evidence that the hidden costs are anticipated the model is estimated structurally to perform a welfare analysis not accounting for hidden costs overstates the welfare effects for donors by factor ten and hides potential negative welfare effects of the charity

political foundations of the resource curse in this paper we argue that the political incentives that resource endowments generate are the key to understanding whether or not they are a curse we show 1 politicians tend to over extract natural resources relative to the efficient extraction path because they discount the future too much and 2 resource booms improve the efficiency of the extraction path however 3 resource booms by raising the value of being in power and by providing politicians with more resources which they can use to influence the outcome of elections increase resource misallocation in the rest of the economy 4 the overall impact of resource booms on the economy depends critically on institutions since these determine the extent to which political incentives map into policy outcomes countries with institutions that promote accountability and state competence will tend to benefit from resource booms since these institutions ameliorate the perverse political incentives that such booms create countries without such institutions however may suffer from a resource curse

leadership and the voluntary provision of public goods field evidence from bolivia abstract we conduct a controlled field experiment in 52 communities in rural bolivia to investigate the effect that local authorities have on voluntary public good provision in our study community members pool resources to provide environmental education material for local schools we find that voluntary contributions increase when democratically elected local authorities lead by example the results are driven by two factors 1 authorities like other individuals give more when they are called upon to lead than when they give in private and 2 high leader contributions increase the likelihood that others follow both effects are stronger when authorities as compared to randomly selected community members lead by example we explore two underlying sources of leadership influence first we provide evidence that the effect of a leader s contribution is not limited to signaling the value of the public good second we examine how leader characteristics affect the likelihood that others follow specifically our study shows that authority influence is driven by a combination of formal leadership status observable characteristics and the amount that authorities contribute when they give publicly before others

integrating the ethical dimension into the analytical framework for the reform of state owned enterprises in china s socialist market economy a proposal the discussions about the reform of state owned enterprises are so far dominated by economic and legal considerations while the ethical dimension of this highly complex problem is being barely addressed explicitly much less developed systematically and integrated into a broader analytical framework for companies in china this paper is a proposal to introduce this kind of ethical considerations first the main features of the reform of state owned enterprises are briefly summarized and a number of critical issues are identified second the balanced concept of the firm is presented and compared with other approaches to corporate ethics in chiefly western literature discussions on corporate social responsibility the stakeholder approach and social contract theories finally the relevance of this balanced concept of the firm for the reform of state owned enterprises is briefly discussed

the political resource curse this paper studies the effect of additional government revenues on political corruption and on the quality of politicians both with theory and data the theory is based on a political agency model with career concerns and endogenous entry of candidates the data refer to brazil where federal transfers to municipal governments change exogenously at given population thresholds allowing us to implement a regression discontinuity design the empirical evidence shows that larger transfers increase observed corruption and reduce the average education of candidates for mayor these and other more specific empirical results are in line with the predictions of the theory jel d72 d73 h77 o17 o18

corporate social responsibility and corporate performance evidence from a panel of us listed companies we investigate whether inclusion and permanence in the domini social index dsi affects corporate performance on a sample of around 1000 firms in a 13 year interval by controlling for size industry business cycle and time invariant firm idiosyncratic characteristics our results find partial support to the hypothesis that corporate social responsibility is a move from the shareholders wealth to a multi stakeholders welfare target on the one side permanence into the domini index di is shown to increase reduce significantly total sales per employee returns on equity but not when large and r d investing firms are excluded from the sample on the other side lower returns on equity for domini firms seem nonetheless to be accompanied by relatively lower conditional volatility and lower reaction to extreme shocks with respect to the control sample an explanation for these findings suggested by the inspection of domini criteria is that social responsibility implies on the one side decisions leadi

ethical commitment financial performance and valuation an empirical investigation of korean companies a variety of stakeholders including investors corporate managers customers suppliers employees researchers and government policy makers have long been interested in the relationship between the financial performance of a corporation and its commitment to business ethics as a subject of research the relations between business ethics and corporate valuation has yet to be thoroughly quantified and investigated this article is an effort to amend this inadequacy by demonstrating a statistically significant association between ethical commitment and corporate valuation measures consistent with anecdotal evidence we have found a significant association between the ethical commitment of korean companies and their valuation on the korean stock market however the result reveals that the association between ethical commitment and financial performance is not significantly supported

the relationship of ethical decision making to business ethics and performance in taiwan this paper examines the relationship of ethical decision making by individuals to corporate business ethics and organizational performance of three groups i smes small and medium enterprises ii outstanding smes the key stone award winners and iii large enterprises in order to provide a reference for taiwanese entrepreneurs to practice better business ethics the survey method involved random sampling of 132 enterprises within three groups some 524 out of 1320 questionnaires were valid the survey results demonstrated that ethical decision making by individuals corporate business ethics and organizational performance are highly related in summary then high levels of organizational performance were directly attributable to high levels of applied corporate and individual ethics furthermore there is a demonstrable tendency for outstanding smes to reject ethically unsound practices such as padded expense accounts tax evasion and misleading advertising the measurement criteria used to assess organizational performance however did not include an objective evaluation of financial performance

the corporate social performance financial performance link strategic managers are consistently faced with the decision of how to allocate scarce corporate resources in an environment that is placing more and more pressures on them recent scholarship in strategic management suggests that many of these pressures come directly from sources associated with social issues in management rather than traditional arenas of strategic management using a greatly improved source of data on corporate social performance this paper reports the results of a rigorous study of the empirical linkages between financial and social performance corporate social performance csp is found to be positively associated with prior financial performance supporting the theory that slack resource availability and csp are positively related csp is also found to be positively associated with future financial performance supporting the theory that good management and csp are positively related 1997 by john wiley sons ltd