Comment on ‘Matching Organizational Structure with Firm Attributes: A study of Master Limited Partnerships’ Claudio Loderer Claudio Loderer Search for other works by this author on: Oxford Academic Google Scholar Review of Finance, Volume 1, Issue 2, 1997, Pages 193–196, https://doi.org/10.1023/A:1009792007996 Published: 01 August 1997

This paper tests whether the higher oil prices of the last decade could have been the result of producer collusion. We find little evidence that OPEC influenced oil prices during the years of skyrocketing prices (1974–1980), but there is evidence that it did so during the recent years of softening prices (1981–1983).

ABSTRACT This paper tests whether the higher oil prices of the last decade could have been the result of producer collusion. We find little evidence that OPEC influenced oil prices during the years of skyrocketing prices (1974–1980), but there is evidence that it did so during the recent years of softening prices (1981–1983).

We examine the relation between managers' financial interests and firm performance. Since the relation could go in either direction, we cast the analysis in a simultaneous equations framework. For firms involved in acquisitions, we find that acquisition performance and Tobin's Q ratios affect the size of managers' stockholdings. We find no evidence, however, that larger stockholdings lead to better performance. Perhaps management is effectively disciplined by competition in product and labor markets. Alternatively, it may not be necessary for top executives to own stock to be residual claimants. And finally, higher ownership might multiply the opportunities to appropriate corporate wealth.

The question of whether the design of the corporate executive pay package reflects an attempt to reduce agency costs between shareholders and managers is addressed. The components of senior executive pay are found to vary systematically across firms in a manner that cannot easily be explained by tax effects, and which would indicate that individual elements of pay are aimed at controlling for limited horizon and risk exposure problems. Managerial decisions and the structure of managerial pay therefore appear to be interrelated.

Failure to correct for pension risk leads to upward-biased discount rate estimates in firms with pension risk exposure. The result is a negative and economically significant relation between pension risk and corporate investment. The effect is confined to investment decisions that require discount rate estimates. Moreover, it is stronger if project value is more sensitive to such estimates. Because of this bias, firms miss valuable investment opportunities. The results survive robustness tests that address endogeneity concerns and alternative interpretations of the evidence. The general implication is that non-operating risks can distort, if ignored, corporate investment decisions.

ABSTRACT We investigate whether insiders of bankrupt firms hold less stock or reduce their stockholdings compared to what we observed for insiders of similar firms that do not go bankrupt. We find little evidence of such time‐series and cross‐sectional differences in spite of the fact that the stock value of bankrupt firms falls by more than ninety percent in the five years preceding bankruptcy. One implication of our results is that the amount of stock owned and the magnitude of the trades undertaken by corporate insiders of both bankrupt and nonbankrupt firms appear to provide no information about firm value.