Democracy, the Market, and the Firm

2021 ◽  
Author(s):  
Hervé Crès ◽  
Mich Tvede
Keyword(s):  
Political Stability ◽  
Majority Voting ◽  
Invisible Hand ◽  
Market Failures ◽  
Publicly Traded ◽  
Social Scientists ◽  
Publicly Traded Companies ◽  
Trading Mechanisms ◽  
The One ◽  
Market Equilibria

This book is an attempt to resolve an enigma that has puzzled social scientists since Condorcet in the eighteenth century: Why are collective choices so stable and easy to make in practice, when in theory it should be totally otherwise? A striking illustration of this enigma is the almost unanimous support of shareholders in publicly traded companies for the motions tabled by directors. The first part of the book explores the interplay between the voting and trading mechanisms. Two main arguments are proposed: on the one hand, the better the market works, the easier it is for majority voting to achieve political stability; on the other hand, among all market equilibria, those that are politically stable are more likely to be economically efficient. The second part of the book explores the feedback from collective choices to individual preferences. It investigates the behavioral assumptions leading to an alignment of shareholders, even in a context of severe market failures, and provides an analysis of the philosophical and axiomatic underpinnings of these assumptions. In sum, and figuratively, the book argues that the invisible hand of the market and the active hand of democracy can work hand in hand to give rise to a better world. The analysis relies on formal models which are kept as simple as possible and make use only of elementary convex and vector analysis.

Democracy in the Firm

2021 ◽  
pp. 38-59
Author(s):  
Hervé Crès ◽  
Mich Tvede
Keyword(s):  
Decision Making ◽  
Political Stability ◽  
Collective Decision ◽  
Majority Voting ◽  
Optimal Rate ◽  
Collective Decision Making ◽  
Market Failures ◽  
Democratic Principle ◽  
The Social ◽  
Decision Making Problem

The problem of collective decision-making arising from market failures is addressed using the democratic principle applied within the assembly of shareholders. A basic requirement is imposed (the Pareto principle): collective choices should not be at odds with the interests of all shareholders, as expressed by their preferences. This requirement puts bounds on what the collective can choose: it should remain within the set of averages of what the shareholders want. Further refining these bounds, a notion of political stability is proposed; it is defined with respect to (super) majority voting. One searches for the smallest rate of super majority for which a stable collective choice exists. This optimal rate is reviewed under classical assumptions from the social choice literature. It is shown how the dimensionality of the collective decision-making problem and the polarization of the electorate critically impact political stability, and hence the optimal rate of super majority.

Boards of directors in Russian publicly traded companies: the gender aspect

2018 ◽  
pp. 142-155 ◽  
Author(s):  
T. A. Garanina ◽  
A. A. Muravyev
Keyword(s):  
Boards Of Directors ◽  
Company Performance ◽  
Corporate Boards ◽  
Publicly Traded ◽  
Publicly Traded Companies ◽  
Representation Of Women ◽  
Female Directors ◽  
Female Director ◽  
Gender Aspect ◽  
Longitudinal Dataset

This article studies the gender composition of corporate boards of Russian companies, including its relation to company performance. The analysis is based on a unique longitudinal dataset of virtually all Russian companies whose shares were traded on the stock market in 1998-2014. It shows a relatively small representation of women, just 12% of all the seats, while about 40% of the companies did not have any female director. At the same time, both the share of companies that appoint female directors and the share of female directors on boards show a clear upward trend. The econometric analysis suggests a positive link between the presence of female directors on boards and company performance, especially when firms appoint several, rather than one, female directors.

Researching (with) Major Food Retailers

2015 ◽  
Vol 15 (3) ◽  
pp. 33-39 ◽  
Author(s):  
David Evans
Keyword(s):  
Food Systems ◽  
Academic Research ◽  
Social Scientists ◽  
Major Food ◽  
Food Retailers ◽  
Food Retailer ◽  
The One ◽  
The Uk ◽  
The Relationship ◽  
Opening Up

This paper considers the relationship between social science and the food industry, and it suggests that collaboration can be intellectually productive and morally rewarding. It explores the middle ground that exists between paid consultancy models of collaboration on the one hand and a principled stance of nonengagement on the other. Drawing on recent experiences of researching with a major food retailer in the UK, I discuss the ways in which collaborating with retailers can open up opportunities for accessing data that might not otherwise be available to social scientists. Additionally, I put forward the argument that researchers with an interest in the sustainability—ecological or otherwise—of food systems, especially those of a critical persuasion, ought to be empirically engaging with food businesses. I suggest that this is important in terms of generating better understandings of the objectionable arrangements that they seek to critique, and in terms of opening up conduits through which to affect positive changes. Cutting across these points is the claim that while resistance to commercial engagement might be misguided, it is nevertheless important to acknowledge the power-geometries of collaboration and to find ways of leveling and/or leveraging them. To conclude, I suggest that universities have an important institutional role to play in defining the terms of engagement as well as maintaining the boundaries between scholarship and consultancy—a line that can otherwise become quite fuzzy when the worlds of commerce and academic research collide.

The Market Value and Reputational Effects from Lost Confidential Information

2015 ◽  
Vol 5 (4) ◽  
Author(s):  
Joseph K. Tanimura ◽  
Eric W. Wehrly
Keyword(s):  
Information Security ◽  
Market Value ◽  
Direct Costs ◽  
Publicly Traded ◽  
Confidential Information ◽  
Publicly Traded Companies ◽  
Security Breaches ◽  
Customer Information ◽  
Employee Information

According to many business publications, firms that experience information security breaches suffer substantial reputational penalties. This paper examines incidents in which confidential information, for a firms customers or employees, is stolen from or lost by publicly traded companies. Firms that experience such breaches suffer statistically significant losses in the market value of their equity. On the whole, the data indicate that these losses are of similar magnitudes to the direct costs. Thus, direct costs, and not reputational penalties, are the primary deterrents to information security breaches. Contrary to many published assertions, on average, firms that lose customer information do not suffer reputational penalties. However, when firms lose employee information, we find significant reputational penalties.

Big Decisions: Opting, Converting, Drifting

2006 ◽  
Vol 58 ◽  
pp. 157-172 ◽  
Author(s):  
Edna Ullmann-Margalit
Keyword(s):  
Decision Theory ◽  
Rational Choice ◽  
Practical Reasoning ◽  
Outer Space ◽  
Atomic Level ◽  
Social Scientists ◽  
Newtonian Physics ◽  
The Social ◽  
Separate Treatment ◽  
The One

I want to focus on some of the limits of decision theory that are of interest to the philosophical concern with practical reasoning and rational choice. These limits should also be of interest to the social-scientists' concern with Rational Choice.Let me start with an analogy. Classical Newtonian physics holds good and valid for middle-sized objects, but not for the phenomena of the very little, micro, sub-atomic level or the very large, macro, outer-space level: different theories, concepts and laws apply there. Similarly, I suggest that we might think of the theory of decisionmaking as relating to middle-sized, ordinary decisions, and to them only. There remain the two extremes, the very ‘small’ decisions on the one hand and the very ‘big’ decisions on the other. These may pose a challenge to the ordinary decision theory and may consequently require a separate treatment.

Genes, cognition, and social behavior: Next steps for foundations and researchers

2011 ◽  
Vol 30 (2) ◽  
pp. 65-87 ◽  
Author(s):  
Arthur Lupia
Keyword(s):  
Social Behavior ◽  
Political Science ◽  
National Science Foundation ◽  
Scientific Practices ◽  
Social Scientists ◽  
Research Areas ◽  
Unpublished Report ◽  
Summary Statement ◽  
The One ◽  
Scientific Value

Editor's note This well circulated but heretofore unpublished report is the summary statement of an interdisciplinary meeting of scholars convened by the National Science Foundation in Arlington, Virginia on June 28, 2010. The workshop, which was funded by the NSF's Political Science Program (Social, Behavioral & Economic Sciences Grant #1037831), was convened to answer two compelling questions: Are studies of social behavior that build from discoveries about genes and/or cognition of greater social and scientific value than studies of the same topics that ignore such factors? And, how can fundable research on genes, cognition, and politics generate transformative scientific practices, infrastructure, and findings of high social value? Assembled for the workshop were a group of scholars representing diverse yet increasingly connected research areas, including genetics, cognitive science and neuroscience, decision making and risk analysis, economics, political science, and sociology. The resulting report outlines the substantial challenges facing interdisciplinary research but also describes the considerable contributions to knowledge that could result from sustained collaborations between biologists, geneticists, and brain scientists on the one hand and social scientists on the other. Following this main report are three white papers by Jeremy Freese. Elizabeth Hammock, and Rose McDermott, which address importmant considerations related to the discussion. For a download of the full report, see http://www.isr.umich.edu.cps/workshop.Welcome.html.

Valuation of Stock Options of Non‐Publicly Traded Companies

2007 ◽  
Vol 22 (1) ◽  
pp. 11-20 ◽  
Author(s):  
William R. Cron ◽  
Randall B. Hayes
Keyword(s):  
Stock Options ◽  
Publicly Traded ◽  
Publicly Traded Companies

scholarly journals The Catch 22 syndrome of social scientists in the semiperiphery: Exploratory sociological observations

Sociologija ◽  
2010 ◽  
Vol 52 (4) ◽  
pp. 337-358 ◽  
Author(s):  
Marina Blagojevic ◽  
Gad Yair
Keyword(s):  
Political Organization ◽  
Academic Excellence ◽  
Free Access ◽  
Social Scientists ◽  
Scholarly Publications ◽  
The Social ◽  
Catch 22 ◽  
The One ◽  
Definition Of ◽  
Problem Setting

This paper describes the parochial predicament of the social sciences by looking at world sociology in its Janus-like face: on the one hand we focus on the intellectual, political, and sometimes even ethical compromises that social scientists in European semiperipheral countries forgo in order to gain acceptance and recognition in world sociology. On the other hand we show how these compromises paradoxically impoverish intellectual potentialities in the major centers of academic excellence too. In the analyses we focus on different interrelated facets of scholarly work where these paradoxes take shape: problem setting and conceptualization, the hierarchy of scholarly publications, the definition of excellence through citation patterns, scientific conferences, and lastly, funding schemes for research. We argue that the social and the political organization of the World System of Science jeopardizes free access to multiple and plural perspectives of the social. A potential source of ideas, theories, and paradigms is hampered by the hierarchical division of labor between scientists in the centers of science and their peers in semiperipheral countries, whose knowledge remains unutilized and sidelined.

scholarly journals Relationship Between Free Cash Flows and Corporate Governance Levels in the Light of Agency Theory

2021 ◽  
Vol 20 ◽  
pp. e3206
Author(s):  
Glaysson Aguilar de Araújo ◽  
Lara Alves Corrêa ◽  
Valéria Gama Fully Bressan ◽  
João Estevão Barbosa Neto ◽  
Bruna Camargos Avelino
Keyword(s):  
Corporate Governance ◽  
Stock Market ◽  
Cash Flows ◽  
Least Square ◽  
Publicly Traded ◽  
Potential Conflict ◽  
Return On Equity ◽  
Publicly Traded Companies ◽  
Corporate Governance Mechanisms ◽  
Free Cash Flows

This research analyzes the relationship between free cash flows (FCFs) and the different levels of Corporate Governance present in the Brazilian stock market. To this end, the sample was composed of 212 Brazilian publicly traded companies listed on Brasil, Bolsa, Balcão [B]³, in the period from 2010 to 2018. The methodology consisted of estimating a regression for panel data, using the random effects model, estimating by generalized least square (GLS) and assuming adjustments for autocorrelation and robust standard errors for heteroscedasticity. The results found, for the sample studied, suggest that Corporate Governance levels are positively related to the FCFs. In synergy, when compared to the Traditional level of [B]³, companies listed on the Novo Mercado and Level 2 levels tend to present higher FCF values. In addition, the larger the size of the companies and the higher their return on equity, the higher their FCFs tend to be, just as companies in stages of maturity tend to present lower FCF values. The relevance of this research is based on analyzing, in a stock market subject to imperfections, factors that may affect decisions about the level of cash maintenance of companies, more specifically by evaluating how Corporate Governance mechanisms relate to the theory of FCFs, in a context of potential conflict of interest.

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