Showing posts with label Economics. Show all posts
Showing posts with label Economics. Show all posts

Saturday, February 14, 2009

Executive Compensation and the Problems of Corporate Culture...

Executive Compensation Doesn't Always Reward The Best

Audio for this story will be available at approx. 12:00 p.m. ET

Weekend Edition Saturday, February 14, 2009 · Host Scott Simon speaks with Harvard Business School professor Rakesh Khurana about executive compensation and the culture of greed in corporate America. Khurana says the highest paid isn't always the best.


http://www.npr.org/templates/story/story.php?storyId=100714491


This was a really interesting piece on executive compensation and how execs have been able to morph themselves from "economic stewards" of their companies to self-perceived "Michael Jordans" of them. At least in my mind, this is a perfect reason for some serious regulation of how companies run and structure themselves. I understand the fears and protestations of free-marketeers and libertarians that hate any government intrusion in business, but come on. The absence of regulation have let POS execs establish virtual principalities that have led to a ruinous economic environment. If not regulation, something approaching the French Revolution may be on the horizon. Been a long time since the aristocracy faced the guillotine...


Friday, February 22, 2008

Freedom squelches terrorist violence

KSG associate professor researches freedom-terrorism link

By Alvin Powell
Harvard News Office

A John F. Kennedy School of Government researcher has cast doubt on the widely held belief that terrorism stems from poverty, finding instead that terrorist violence is related to a nation's level of political freedom.

Associate Professor of Public Policy Alberto Abadie examined data on terrorism and variables such as wealth, political freedom, geography, and ethnic fractionalization for nations that have been targets of terrorist attacks.

Abadie, whose work was published in the Kennedy School's Faculty Research Working Paper Series, included both acts of international and domestic terrorism in his analysis.

Though after the 9/11 attacks most of the work in this area has focused on international terrorism, Abadie said terrorism originating within the country where the attacks occur actually makes up the bulk of terrorist acts each year. According to statistics from the MIPT Terrorism Knowledge Base for 2003, which Abadie cites in his analysis, there were 1,536 reports of domestic terrorism worldwide, compared with just 240 incidents of international terrorism.

Before analyzing the data, Abadie believed it was a reasonable assumption that terrorism has its roots in poverty, especially since studies have linked civil war to economic factors. However, once the data was corrected for the influence of other factors studied, Abadie said he found no significant relationship between a nation's wealth and the level of terrorism it experiences.

"In the past, we heard people refer to the strong link between terrorism and poverty, but in fact when you look at the data, it's not there. This is true not only for events of international terrorism, as previous studies have shown, but perhaps more surprisingly also for the overall level of terrorism, both of domestic and of foreign origin," Abadie said.

Instead, Abadie detected a peculiar relationship between the levels of political freedom a nation affords and the severity of terrorism. Though terrorism declined among nations with high levels of political freedom, it was the intermediate nations that seemed most vulnerable.

Like those with much political freedom, nations at the other extreme - with tightly controlled autocratic governments - also experienced low levels of terrorism.

Though his study didn't explore the reasons behind the trends he researched, Abadie said it could be that autocratic nations' tight control and repressive practices keep terrorist activities in check, while nations making the transition to more open, democratic governments - such as currently taking place in Iraq and Russia - may be politically unstable, which makes them more vulnerable.

"When you go from an autocratic regime and make the transition to democracy, you may expect a temporary increase in terrorism," Abadie said.

Abadie's study also found a strong connection in the data between terrorism and geographic factors, such as elevation or tropical weather.

"Failure to eradicate terrorism in some areas of the world has often been attributed to geographic barriers, like mountainous terrain in Afghanistan or tropical jungle in Colombia. This study provides empirical evidence of the link between terrorism and geography," Abadie said.

In Abadie's opinion, the connection between geography and terrorism is hardly surprising.

"Areas of difficult access offer safe haven to terrorist groups, facilitate training, and provide funding through other illegal activities like the production and trafficking of cocaine and opiates," Abadie wrote in the paper.

A native of Spain's Basque region, Abadie said he has long been interested in terrorism and related issues. His past research has explored the effect of terrorism on economic activity, using the Basque country as a case study.

Abadie is turning his attention to the effect of terrorism on international capital flows. Some analysts have argued that terrorist attacks wouldn't have much of an impact on the economy, since unlike a war's widespread damage, the damage from terrorist attacks tends to be relatively small or confined to a small area.

In an era of open international capital markets, however, Abadie said terrorism may have a greater chilling effect than previously thought, since even a low risk of damage from a terrorist attack may be enough to send investors looking elsewhere.

http://www.hno.harvard.edu/gazette/2004/11.04/05-terror.html

Friday, November 9, 2007

Understanding ethical investment

I usually comment at the conclusion of an article but I thought I should just quickly say something at the beginning of this one. This is an editorial/opinion piece about investing in "ethical" funds and companies. I thought it was an important and neat take on strategies and practices in the new world of stocks and trading for the ethical investor. A little different from the normal topic, but I thought it was a good article.

Money Talk

By David Elms
Chief executive, Unbiased.co.uk
The number of people choosing to combine profits with principles is rising, with investment in "green" funds expected to exceed £7bn for the first time this year.

Ten years ago just £1.5bn was put into environmental funds or those considered to be "socially responsible", according to Ethical Investment Research Services (Eiris).

But growing concerns about global warming and carbon footprints is prompting investors to become increasingly ethically minded and eco-conscious.

Ethical funds typically invest their cash in socially responsible businesses, staying away from the arms trade or tobacco companies.

They may choose, for example, renewable energy companies or organic food producers.

Friends Provident pioneered ethical investing in 1984, and its Stewardship fund, which is now managed by F&C Asset Management, was the UK's first ethical fund.

The ethical investment market has been booming in recent years, and there are now more than 90 "green" funds available to UK investors, with 10 new ones launched last year alone.

Making money with a clear conscience?

Contrary to popular belief, many ethical funds deliver impressive returns.


You need to know what your ethical priorities are and how green you want to go

Investors tend to believe they will not make as much profit by steering clear of certain unethical sectors, such as tobacco and arms.

Yet a recent survey by analyst Moneyfacts proves that you can make money by sticking to your principles.

It found that many ethical investment funds are producing better returns over one- and three-year periods than their traditional counterparts.

These include the popular £285m Jupiter Ecology fund, launched in the late 80s, which ranks consistently high in performance tables.

It invests in companies around the world which show a long-term commitment to the protection of the environment.

Please remember that past performance is no guarantee of future performance.

What different types of funds are there?

There are many funds to choose from, which use different methods to put themselves into the "green" category.

So, before deciding where to put your money, you need to know what your ethical priorities are and how green you want to go.

While some funds won't invest in armaments, or tobacco, others take a "lighter" green approach and may invest in controversial sectors such as the oil industry, if the company is making best efforts to be ecological and are trying to benefit society.

Different strategies

There are three methods used by investment companies to classify their ethical funds.


Negative practices may include bad employment conditions, poor health and safety records, and poor pollution records

While some combine a mixture of these tools, others only use one.

Some funds actively screen out companies that are involved in practices deemed to be unethical.

This is called "negative screening" and these funds are considered to be the greenest of all, being "dark green", such as the Jupiter Ecology fund.

Industries typically subject to negative screening include the oil industry, the arms industry, the logging and mining industries, and the pornography industry.

Negative practices may include bad employment conditions, poor health and safety records, and poor pollution records.

Another method is "positive screening", when funds search for companies that are working to help the environment, such as sustainable energy or recycling companies.

Funds which employ positive screening are referred to as "light green" funds because they might include companies with a less-than-perfect record.

Yet some may say they are more effective than the dark green funds because they give companies an incentive to review and change their practice.

The final method used is "engagement".

These funds use their manager's shareholder status to push for changes in the way a company deals with human rights, the environment and corporate governance issues to influence it to do good.

Dig deep

It is worth checking exactly where your money is going.


Eiris can provide more information about ethical investment, as can the World Trade Organisation

Some popular ethical funds may leave some investors surprised at the shares they hold.

For example, the £1bn F&C Stewardship Growth fund, the largest UK ethical fund, has holdings in Tesco - which has attracted protests over its treatment of labour in developing countries.

But if you dig deeper there are good reasons why such stocks are held in an ethical fund.

Ethical funds launched this year include Marks and Spencer Money's Ethical Fund and Standard Life's European Equity Ethical fund.

The former avoids investing in companies that have a poor environmental record or are primarily involved in armaments, gambling, the fur trade, tobacco and pornography.

The latter is investing in European businesses that meet Standard Life's ethical criteria, especially those that are making efforts to preserve the environment or improve the quality of human life.

How can you research ethical funds?

When researching which funds are suitable for your needs, check the investment company's website and consider consulting an independent financial adviser (IFA).

There are also various organisations which can help you make an informed choice.

Eiris can provide more information about ethical investment, as can the World Trade Organization.

The opinions expressed are those of the author and are not held by the BBC unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.

Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/7059547.stm

Friday, September 14, 2007

Dennis Kucinich on Poverty (part two)

This summary is not available. Please click here to view the post.

Wednesday, September 12, 2007

Dennis Kucinich Policies (part one)

This summary is not available. Please click here to view the post.

Tuesday, August 14, 2007

US retailers warn of tough times

Two US retailing giants, Wal-Mart and Home Depot, have warned about a poor year ahead after their latest results.

Wal-Mart's profits hit $3.1bn (£1.54bn) between May and July, from $2.08bn last year, but missed forecasts.

In contrast, Home Depot saw profits fall to $1.59bn from $1.86bn in the same period a year earlier, but beat expectations.

But both firms expect earnings to fall in the months ahead, amid fears that the US economy will continue to cool.

Rising costs

Following the results, Wal-Mart chief executive Lee Scott said earnings had been harmed by wider economic pressures.

"It is no secret that many customers are running out of money toward the end of the month," said Mr Scott.

In a bid to entice more customers, Wal-Mart has been reducing many items before the back-to-school period.

The combination of higher petrol prices and higher interest rates, that have pushed up mortgage payments, have both been factors squeezing customers, leaving them with less disposable income.

Higher costs have curbed people's appetite for home improvement, harming Home Depot and other such firms.

The company said sales from outlets open at least a year dropped by 5.2% for the quarter.

The results come as recent market turmoil has raised fears that a wider global contraction could be on the horizon.

Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/6946029.stm