Ausschuss für Unternehmenstheorie und -politik –

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Über den Ausschuss

Der Ausschuss für Unternehmenstheorie und -politik wurde 1971 gegründet. In diesem Gremium können Fachvertreter der Betriebswirtschaftslehre und volkswirtschaftliche Kollegen, die an den Problemen der Unternehmenstheorie und-politik interessiert sind, miteinander ins Gespräch kommen und sich in der Diskussion von Referaten gegenseitig anregen.

Satzung des Vereins für Socialpolitik, § 12:

"Für die Durchführung besonderer Arbeiten oder die dauernde Pflege besonderer wissenschaftlicher Gebiete kann der Erweiterte Vorstand Ausschüsse bilden. Diese wählen ihren Vorsitzenden jeweils für zwei Jahre. Eine einmalige anschließende Wiederwahl ist zulässig. ... Die Ausschüsse haben das Recht der Kooptation und können im Einvernehmen mit dem Engeren Vorstand auch Persönlichkeiten zur Mitarbeit als Gäste heranziehen, die nicht Mitglieder der Gesellschaft sind."

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Theorien auffrischen –
Die Veranstaltungen der vergangenen Jahre.

April 26 und 27. 2019 in Mannheim

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April 27 and 28. 2018 in Munich

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The following speakers were held and discussed in Bonn on April 22 and 23, 2016:

1.  Procyclicality of US Bank Leverage
Christian Laux, WU Wien

In light of the current debate about the link between accounting and financial stability, we investigate the determinants of procyclical leverage for US commercial and savings banks. We find that leverage is strongly procyclical. Our evidence is not consistent with the notion that fair value accounting contributes to procyclical leverage or that historical cost accounting reduces procyclicality. Overall, banks’ business model and the level of the regulatory capital and leverage ratio seem to be more important for procyclical leverage than accounting or regulatory risk weights.

2. Coordination Experience and Team Performance: Evidence from the Electronic Games Industry
Tobias Kretschmer, LMU München

In cross-functional teams, team performance depends on how skillfully function managers carry out the cross-function coordination of team members’ complementary expertise and activities. We argue (i) that function managers’ coordination skills develop in part through the coordination experience gained from interacting with managers from other functions, (ii) that coordination experience has general and firm-specific dimensions, and (iii) that coordination experience leads to better team performance. Using data on development teams in the electronic games industry, we show that coordination experience and its general and firm-specific components have a positive impact on the commercial success of electronic games, and that this effect is robust to tests for omitted variables and reverse causality. Our results have implications for the theory of learning and coordination in management teams and for the strategy and practice of team design in project-based organizations.


3. Incentives and the Delegation of Decision-Making Authority on Job Design - Complements or Substitutes?
Anna Rohlfing-Bastian, Universität Tübingen

We analyze the optimal interaction between decision-making authority and monetary incentives in a production process with two agents, each exerting non-observable effort on a specialized task. A further task needs to be performed, and one agent is privately informed about his costs for this task. The principal can either assign the task herself or delegate the decision-making authority to the informed agent. We find that, if the principal can employ a congruent performance measure to provide the agents with effort incentives, authority and incentives are complements. However, with an incongruent performance measure introducing the problem of effort misallocation across tasks, the relation between the two instruments is not univocal. We thus contribute to explaining the mixed empirical evidence on the relation between incentives and decision rights.

4. Hybrid Mechanisms in Procurement
Achim Wambach, University of Cologne

We give an overview over the research unit „Design and Behavior“ and present a recent paper in the subproject „Auctions, negotiations and hybrid mechanisms in procurement“, titled „Exploiting uncertainty about the number of competitors in procurement auctions“. In procurement practice first-price auctions are used if the number of potential suppliers is small and second-price auctions if it is large. This observation cannot easily be explained by standard economic theory as suppliers should anticipate little competition whenever they participate in a first-price auction. We test this setup experimentally and find that suppliers on average interpret the buyer's selection of a first-price auction as a signal of low competition. However, most suppliers overestimate the degree of competition in first-price auctions. As a consequence, they bid too aggressive in first-price auctions, which rationalizes buyer’s format choice.

The following presentations were held and discussed in Bendorf (Rhine) on May 8 and 9, 2015:


1.  Time Inconsistent Preferences and the Annuitization Decision
Martin Weber, Universität Mannheim

When entering retirement most people face the decision whether they would like their defined contribution account balance paid as a lump sum or to annuitize the amount. The fact that people tend to choose the lump sum even if economic reasons suggest not to is called the annuity puzzle. In a large online survey, we find that people behave time inconsistent: older people have a stronger tendency to choose the lump sum than younger people. This effect and therefore, the low real life annuitization can be explained by hyperbolic discounting. The age effect is considerably stronger for participants that answer simple time preference questions inconsistently. Our findings suggest to think
about precommitment devices for the annuitization decision.
 

2.  Black Sheep or Scapegoats? Implementable Monitoring Policies under Unobservable Levels of Misbehavior
Gerd Mühlheußer, Universität Hamburg

An authority delegates a monitoring task to an agent. Thereby, it can only observe the number of detected offenders, but neither the monitoring intensity chosen by the agent nor the resulting level of misbehavior. We provide a necessary and sufficient condition for the implementability of monitoring policies.  When several monitoring intensities lead to an observationally identical outcome, only the minimum of these is implementable, which can lead to under-enforcement. A comparative statics analysis reveals that increasing the punishment can undermine deterrence, since the maximal implementable monitoring intensity decreases. When the agent is strongly intrinsically motivated to curb crime, our results are mirrored and only high monitoring intensities are implementable. Then, higher monetary rewards for detections lead to a lower monitoring intensity and to a higher level of misbehavior.
 

3. Transfer Pricing System (TPS) Integration, Design Characteristics and perceived TPS Success
Dieter Pfaff, Universität Zürich

This paper shifts the focus of transfer pricing research from a traditional transaction-based approach to transfer pricing to the overall transfer pricing system (TPS). In particular, we investigate the relationship between the integration of the TPS into the management control system, an enabling use of the TPS and the perceived success of the TPS. Results from structural equation modeling using the partial least squares technique indicate that the level of TPS integration is positively and significantly related to the perceived success of the TPS. This relationship is mediated through an enabling use of the TPS as indicated by the design variables repair and internal transparency. Thus, the level of TPS integration is positively associated with internal transparency and the ability to adapt (repair), which in turn have positive links to the perceived success of the TPS.


4.  Expected Losses and Managerial Discretion as Drivers of Countercyclical Loan Loss Provisioning
Andreas Pfingsten, Universität Münster

Several studies have addressed, with conflicting results, the issue of procyclical effects of loan loss provisions in the past. More recently, the weak performance of incurred loss models in the financial crisis has given rise to a new debate on the sound design of credit risk provisioning schemes, which is reflected in the scheduled implementation of an expected loss model in IFRS 9. This study contributes to the extant literature by separately analyzing the cyclical effects of specific and general loan loss provisions under a legislative framework that allows provisions based on expected losses in the loan portfolio. Using three different measures of forward-looking provisioning, we find typical German banks, most of them unlisted and operating regionally, to use specific loan loss provisions countercyclically, in particular for earnings management and by anticipating non-performing loans at the closing date. The use of general loan loss provisions is predominantly motivated by tax considerations, pointing out the considerable importance of the impact of local tax law.

The following presentations were held and discussed in Bendorf (Rhine) on May 9 and 10, 2014:
 

1. Better development projects through impact measurement using experimental and quasi-experimental methods?

Eva Terberger, University of Mannheim
 

2. Sourcing Strategies of a Multi-Input-Multi-Product Firm

Michael Kopel, University of Graz (with Clemens Löffler, University of Vienna, and Thomas Pfeiffer, University of Vienna )

Recognizing that firms often manufacture multiple products using multiple complementary inputs, we investigate such a firm's optimal sourcing strategies. The multi-input-multi-product environment generates interactions among products that have profound implications on the firm's sourcing strategies. (i) In particular, we identify situations under which a multi-product firm optimally deviates from an isolated least-cost comparison, i.e. produces in-house even if in-house cost exceeds the input price (and vice versa). (ii) The multi-product firm can benefit from sourcing the same input separately for each product even though that provokes input price discrimination. (iii) Perfect competition on one input market can reduce the firm's profit. (iv) An outsourcing wave can arise in that outsourcing all inputs can be beneficial even though outsourcing just one of the inputs is detrimental. Overall, our results complement insights for a multi-input-single-product firm.
 

3. The Role of Communication of Performance Schemes: Evidence from a Field Experiment

Florian Englmaier, Ludwig Maximilians University Munich (with Andreas Roider, University of Regensburg, and Uwe Sunde, LMU)

In corporate practice, incentive schemes are often complicated even for simple tasks. Hence, the way they are communicated might matter. In a controlled field experiment, we study a minimally invasive change in the communication of a well-established incentive scheme – a reminder regarding the piece rate at the beginning of the shift. The experiment was conducted in a large firm where experienced managers work in a team production setting and where incentives for both quantity and quality of output are provided. While the treatment conveyed no additional material information and left the incentive system unchanged, it had significant positive effects on quantity and on managers' compensation. These effects are economically sizable and robust to alternative empirical specifications. We consider various potential mechanisms, where our preferred explanation - improved salience of incentives - is consistent with all of the findings.
 

4. Pay Inequity and Job Performance: An Insider-Econometrics Study   

Oliver Fabel, University of Vienna (with Christian Thomann, University of Hanover, and Yingchao Zhang, University of Graz)

Using personnel data on back-office employees of an insurance company, we calculate three measures of pay inequity, “inequality,” “envy,” and “altruism,” for total pay as well as, separately, for three pay components, salary, commissions, and year-end bonuses. Job performance is measured by the value of commissions for new contracts which accrue to the sales agents who are serviced by the back-office employee. Quantile panel regressions show that inequity effects on performance distinctly differ over the performance distribution and across the different pay components. Further, results depend on the time structure of pay and, possibly also, on pay secrecy rules.

The following presentations were held and discussed in Bendorf (Rhine) on April 26 and 27, 2013:

1. A theoretical analysis of the information content of segment reporting

Prof. Dr. Dirk Simons, University of Mannheim

In recent years, both the Financial Accounting Standards Board and the International Accounting Standards boards adopted a management approach to segment reporting. Firms now base their reporting segments on their internal operating segments, rather than on geography or industry. Our purpose in this article is to persuade you that the implicit discretion in the new approach informs capital markets about the riskiest firms in risky populations. This is accomplished with a fairly small number of segments. For all other firms, the benefits of segmentation are negligible, and segment reporting may even be harmful if it falls short of full disaggregation. These results explain the empirical findings that segment reports have become more informative without appreciably increasing in their number or granularity.

2. The ball is round, a game lasts 90 minutes, everything else is pure theory

Prof. Dr. Peter-J. Jost, WHU - Otto Beisheim School of Management

In a game-theoretical model we formulate a soccer match between two teams as a two-stage contest with two activities. Each team can choose its tactic in attacking and defending for each half of the match. Both activities are costly. Furthermore, we allow teams to be heterogeneous with respect to the abilities of its forwards and defenders. Teams' activities together with their abilities then determine the winner of the match. We completely analyze the optimal incentives of teams to exert effort as well as the optimal allocation of this effort level between offense and defense. In particular, we compare the strategic behavior of teams under the two- and three-point victory rule. Most of our results differ from those in the previous literature on soccer. For example, the common belief that a losing team at half-time will play offensive whereas the leading team defensive can be supported in our model. Instead we show that the leading may preempt its competitor in the sense that the other teams gives up with positive probability in the second half.

3. Robust dynamic lot size planning under uncertainty of yield and capacity restrictions

Prof. Dr. Stefan Helber, Florian Sahling u. Katja Schimmelpfeng, Leibniz University Hannover

A deterministic data constellation is often assumed in models and processes for planning production processes. In reality, however, random influences often play an important role. These can occur, for example, in the form of a random production yield. Then one way to deal with this uncertainty is to make robust plans that anticipate that uncertainty. The lecture shows how it can take place in the case of multi-product lot size planning over several periods in the case of a capacity-limited production facility.

4. Capital requirements for banks

Prof. Dr. hc Martin Hellwig, Max Planck Institute for Research on Collective Goods

We examine the pervasive view that "equity is expensive", which leads to claims that high capital requirements are costly and would affect credit markets adversely. We find that arguments made to support this view are either fallacious, irrelevant, or very weak. For example, the return on equity contains a risk premium that must go down if banks have more equity. It is thus incorrect to assume that the required return on equity remains fixed as capital requirements increase. It is also incorrect to translate higher taxes paid by banks to a social cost. Policies that subsidize debt and indirectly penalize equity through taxes and implicit guarantees are distortive. Any desirable public subsidies to banks' activities should be given directly and not in ways that encourage leverage. finally,

We conclude that bank equity is not socially expensive, and that high leverage is not necessary for banks to perform all their socially valuable functions, including lending, taking deposits and issuing money-like securities. To the contrary, better capitalized banks suffer fewer distortions in lending decisions and would perform better. The fact that banks choose high leverage does not imply that this is socially optimal, and, viewed from an ex ante perspective, high leverage may not even be privately optimal for banks.

Setting equity requirements significantly higher than the levels currently proposed would entail large social benefits and minimal, if any, social costs. Approaches based on equity dominate alternatives, including contingent capital. To achieve better capitalization quickly and efficiently and prevent disruption to lending, regulators must actively control equity payouts and issuance. If remaining challenges are addressed, capital regulation can be a powerful tool for enhancing the role of banks in the economy.

The following presentations were held and discussed in Bendorf (Rhine) on April 20 and 21, 2012:

1. Optimal Nonlinear Pricing in a Two-Sided Trade Show Market

Prof. Dr. Karen Gedenk, University of Hamburg

Media companies like newspaper publishers and trade show organizers face two key challenges in their pricing decisions. First, they operate in two-sided markets and must optimize prices on both sides of the market simultaneously. Second, their customers' usage quantity depends strongly on price, so that firms can benefit from nonlinear pricing. The authors develop the first decision support system for nonlinear pricing in a two-sided market. They do so in the context of a trade show company which sells booth space to exhibitors and tickets to visitors. In online surveys they measure the willingness to pay of the two customer groups. They estimate willingness-to-pay functions for segments of customers and determine optimal prices for different tariffs. Results indicate that moving from linear to nonlinear tariffs increases profit contribution substantively. Due to the demand interrelations between exhibitors and visitors, the trade show organizer should charge relatively high prices to exhibitors and generate most of its revenue on that side of the market. In addition, this study considers the case of a publically owned trade show organizer who is interested not only in the direct profit contribution from the show but also in indirect effects from attracting many customers to the show's site.

2. Entrepreneurial Spin-Offs, R&D, and Technology Choice

Prof. Dr. Thomas Gehrig, University of Vienna

The paper provides a framework to rationalize explain competitive spin-offs, a feature that spin-offs turn into (fierce) competitors of the mother company. The competitive spin-off typically results from conflicting views about the value of specific innovations in environments with asymmetric information about the potential quality of research ideas. While the parent company might generally prefer broader innovations, highly successful innovators of specific technologies might prefer to spin-off and market their innovation independently. As a side result our theory helps to characterize competitive spin-offs as a feature of research intensive industries. Whenever they occur they tend to be successful with resepct to the mother firm. Moreover, they tend to be more profitable than de-novo entry into the market.

3. Optimal Incentive Contracts under Moral Hazard When the Agent is Free to Leave

Prof. Dr. Andreas Roider, University of Regensburg

We characterize optimal incentive contracts in a moral hazard framework extended in two directions. First, after effort provision, the agent is free fo leave and pursue some ex-post outside option. Second, the value of this outside option is increasing in effort, and hence endogenous. Optimal contracts may entail properties such as inducing first-best effort and surplus, or non-responsiveness with respect to changes in verifiable parameters. Moreover, while always socially inefficient, separation might occur in equilibrium. Except for the latter, these findings are robust to renegotiation. When the outside option is exogenous instead, the standard results obtain.

4. Multiple-option Spare Parts Procurement after End-of-Production

Prof. Dr. Karl Inderfurth, University of Magdeburg

Inventory management of spare parts plays a key role in providing adequate after-sales service. From an OEM's perspective, managing a spare parts supply chain is particularly challenging for two main reasons. Firstly, even on the OEM's aggregate level demands for spare parts are characterized by both time-dependencies and considerable uncertainty. Secondly, decreasing product life cycles along with long service periods steadily increase the number of products which are no longer produced, but for which spare parts must be provided. For this case, we present a model to coordinate three main procurement options for spare part acquisition, namely a final order placed at the end of regular production of the parent product, extra production, and remanufacturing. The modeling assumptions cover the problem background found in the automotive industry. Since coordinating all three options yields a complicated stochastic dynamic decision problem, we develop an advanced heuristic based upon a quite simple but effective order-up-to decision rule that can easily be applied to practical problems. A comparison with simple decision rules adapted from practice provides evidence that the heuristic helps to exploit major potentials for cost improvement.

The following presentations were held and discussed in Bendorf (Rhine) on April 15 and 16, 2011:

1. Lower Price Limits for Flat-Fee Service Contracts under Risk

Prof. Dr. Hermann Jahnke, Bielefeld University

Capital equipment requires various services at the different stages of its usefullife, e.g. maintenance, monitoring and repair. This paper addresses the determination of lower price limits for profitable flat-fee contracts from the perspective of a provider of such services. Management accounting traditionally focuses on costs as a major factor for lower price limits and neglects uncertainty. But under a flat-fee contract the service provider assumes part of the customer's risk. Our research analyses the impact of the contract's inherent risk on the service provider's lower price limit. The analysis is mainly based on the concept of almost stochastic dominance which makes it possible to consider decision making under both risk and restricted information on the decisionmaker's risk preferences. We extend the concept to model multi-person decision contexts such as the delegation of preparatory work, the delegation of pricing decisions and several decision makers. Besides opening a route to the calculation of price limits based on the risk assessments of the relevant decisionmakers, we discuss implementation issues concerning the assessment of preferences and a variable number of contracts. Our approach is not restricted to service contracts, but can be applied to a wide range of flat-fee contracts.

2. Holding On for Too Long? An Experimental Study on Inertia in Entrepreneurs' and Non-Entrepreneurs' Disinvestment Choices

Prof. Dr. Christian Schade, Humboldt University Berlin

Disinvestment, in the sense of project termination and liquidation of assets including the cession of a venture, is an important realm of entrepreneurial decision making. The problem is also relevant for other domains of economic life: financial decisions, R&D choices, marketing etc. This study presents the results of an experimental investigation modeling the choice to disinvest as a dynamic problem of optimal stopping in which the patterns of decisions are analyzed with entrepreneurs and non-entrepreneurs. Our experimental results reject the standard net present value approach as an account of observed behavior. Instead, most individuals seem to understand the value of waiting. Their choices are weakly related to the disinvestment triggers derived from a formal optimal stopping benchmark consistent with real-options reasoning. We also observe a pronounced "psychological inertia", i.e., most individuals hold on to a losing project for even longer than real-options reasoning would predict. The study provides evidence for entrepreneurs and non-entrepreneurs being quite similar in their behavior. Potential consequences of these findings depend on how the pronounced waiting tendencies are interpreted. We discuss the "virtue of perseverance", ecological rationality arguments, and advocate more research in this domain.

3. Leadership and Cooperation in Groups - Lessons from Ethiopia

Prof. Dr. Michael Kosfeld, Goethe University Frankfurt

Recent evidence suggests that prosocial behaviors like conditional cooperation and costly norm enforcement can stabilize large‐scale cooperation for commons management. However, field evidence on the extent to which variation in these behaviors among actual commons users accounts for natural commons outcomes is altogether missing. Here, we combine experimental measures of conditional cooperation and survey measures on costly monitoring among 49 forest user groups in Ethiopia with measures of natural forest commons outcomes to show that (i) groups vary in conditional cooperator share, (ii) groups with larger conditional cooperator share are more successful in forest commons management, and (iii) costly monitoring is a key instrument with which conditional cooperators enforce cooperation. Our findings are consistent with models of gene‐culture coevolution on human cooperation and provide external validity to laboratory experiments on social dilemmas.

4. Scarcity and risk premiums on commodity futures markets

Prof. Dr. Heinz Zimmermann, University of Basel

The pricing of commodity futures is challenged by the fact that many commodities share the features of consumption or production goods and investment assets. As the current backwardation cycle in silver futures demonstrates, these characteristics are not even constant over time. This dual nature of commodity derivatives was a key characteristic of the commodity pricing theory from the very beginnings in the 30s of the last century, which is best reflected in the Keynes-Hicks risk-premium/hedging-pressure approach compared to the Kaldor-Working convenience-yield-theory-of-storage approach. Unfortunately it is difficult to reconcile the two approaches if markets are incomplete, arbitrage strategies are invalidated due to scarcity or limited storability of goods. While the notion of "convenience yield" has from the beginning been widely used to characterize the distinctive features of commodity futures and remains popular today, its economic meaning is somehow obscure. We prefer an approach which strictly separates between a quasi asset price component which excludes intertemporal arbitrage, and an additional "scarcity" (or maturity-specific or incomplete markets) related price component, much in the spirit of Working (1948). This allows it to separate out asset related and commodity-specific risk factors and to test whether they impact the two price components separately. Commodity-specific risk components are related to scarcity and hedging pressure - both factors are related to inventory levels or changes, but with different sign. Our empirical results show, indeed, that both risk components co-exist and exhibit distinctive cyclical properties. We also find that asset market risk factors such as exchange rates or stock market shocks affect the term structure of futures prices in a much more homogeneous way than commodity-specific hedging pressure or scarcity shocks.

The following presentations were held and discussed in Bendorf (Rhein) on April 23 and 24, 2010:

1. Competitive Careers as a Way to Mediocracy

Prof. Dr. Matthias Kräkel, University of Bonn

We show that in competitive careers based on individual performance the least productive individuals may have the highest probabilities to be promoted to top positions. These individuals have the lowest fall-back positions and, hence, the highest incentives to succeed in career contests. This detrimental incentive effect exists irrespective of whether effort and talent are substitutes or complements in the underlying contest-success function. However, in case of complements the
incentive effect may be outweighed by a productivity effect that favors high effort choices by the more talented individuals. Switching from wages-attached-to-jobs to pay-for-performance will work against mediocracy if applied to top jobs, but may be detrimental at lower career levels. The mediocracy problem will be aggravated if high-ability individuals decide to sandbag on lower career levels in order to avoid strong opponents at higher levels.

2. Social preferences and incentive systems

Prof. Dr. Ulrike Stefani, University of Konstanz

There are cases of economically relevant examples in which agents have private information that the principal wants to obtain through a "report" from the agents. This includes, for example, the transmission of information about external accounting to the capital market or the reporting of decentralized corporate divisions to the head office as part of the budgeting. The agents face a moral dilemma in these situations, as truthful reporting may involve negative monetary consequences for them. The accounting literature uses monetary incentive systems to solve this dilemma, which - provided the standard assumptions are met - should induce a truthful report. However, results from laboratory experiments show that there are "selfish" participants who deliberately report incorrectly, but also those with preferences for honesty. The latter report truthfully even if there is no corresponding monetary incentive. At the same time, it can be observed that a false report is submitted, although a theoretically advantageous incentive system is implemented. The reason for this could be that the participants have social preferences in the sense of inequality aversion and reduce income inequality through a false report. The results of corresponding laboratory experiments and their integration into theory formation therefore appear to be necessary in order to develop incentive systems that work even when the agents are not of the "homo oeconomicus" type. In particular, the "

3. Provider integration: elements of a new marketing approach and empirical evidence

Prof. Dr. Rolf Weiber, University of Trier

Currently, information technology is increasingly finding its way into the objects we encounter in everyday life through what are known as smart products, which is discussed in computer science primarily under the keywords "ambient intelligence" or "ubiquitous computing". The associated technologies will allow providers for the first time not only to receive direct feedback from people's everyday and consumption processes, but also to be able to support customers with real-time usage processes through smart services. This leads to a change from the still dominant product marketing to a usage marketing that will allow customers to provide services at the "point of use". This leads to an integration of the provider into the usage processes of the consumers, which has to be taken into account by means of a suitable marketing concept, which is referred to here as provider integration. Provider integration primarily requires analysis of the demand-side usage processes in order to identify possible points of intervention for the provision of suitable service offers. The marketing of services at the point of use presupposes, on the one hand, the "permission" of the customer, for accompanying the everyday processes by the provider; on the other hand, this also opens up new design options in the marketing instruments. B. Services within the framework of the distribution policy can be adapted to the process flow of the customer in real time. For the pricing policy, however, the challenge in the context of provider integration lies in the design of price models based on the intensity of use of the customer in terms of pay-per-use. Initial empirical studies on the acceptance of the concept of supplier integration have shown that the consumers are quite willing to disclose their private processes and accept support services from providers if this results in a sufficiently high added value for the customer in the use of products and services in the current situation Can generate insert.

4. The renewal power of securities liquidity

Prof. Dr. Alexander Kempf, University of Cologne

The lecture deals with the renewal power of liquidity, i.e. the question of how quickly liquidity returns to a market. To answer this question, a mean reversion model is proposed, which can be used to map the dynamics of liquidity. We use the bid-ask spread of a security and the quoted amount of the security as a measure of liquidity. The empirical study is based on a data set that contains all trading information from the first quarter of 2004 for the shares of the DAX30.
We find a high level of renewal power for all stocks, regardless of whether we measure the renewal power in terms of margin or volume. The recovery of liquidity is primarily due to the fact that new orders are placed close to the best bid-ask price. We continue to find that there is a high level of synchronization of the renewal power of various stocks. If one looks at the common dynamics of the margin renewal force and the quantity renewal force, a temporal advance of the margin renewal force can be seen. In addition, the power of renewal proves to be an independent dimension of liquidity. The correlation with the other liquidity dimensions is very low and not stable over time.
Finally, we investigate determinants of the power of renewal based on the theoretical model of Foucault, Kandan and Kandel (2005, RFS). Our results support their model hypotheses: The margin renewal power increases with the proportion of patient traders, decreases with the frequency of incoming orders and is particularly low at the end of a trading day. We identify the uncertainty in the market and the extent of the information asymmetry as further important influencing factors for the range renewal power.

On April 24 and 25, 2009, the following presentations were held and discussed in Bendorf (Rhine):

1. The future of securitization - analysis of false incentives

Prof. Dr. Dr. hc Günther Franke, University of Konstanz

Günter Franke gave a lecture on "The future of securitization - analysis of false incentives". First, he outlined various theses on the causes of the financial crisis. Since it is a combination of different causes, it is very difficult to give a clear answer here. The lecture then focused on false incentives in the financial system. The first loss piece in a securitization transaction serves to limit the originator's adverse selection and moral hazard. The prerequisite for this is that he retains a substantial portion of the first loss piece. This has often not been the case. Then the incentives of the originator's first profit position were explained. They give him a largely risk-free profit position, even if the quality of the underlying portfolio is rather poor. Then the diverse agency problems in the value chains, which play a major role in the securitization of mortgage loans, were addressed. Off agency problems cannot simply be controlled by contracts. The discussion about incentive systems for bank managers took up more space. If a bank manager's income is made up of fixed salary, bonus and shares / options, there is a risk that this creates a high incentive to take risks. Whether this is the case depends on various parameters. However, it can easily happen that the bank manager with higher leverage can increase his income in terms of First Order Stochastic Dominance. This then leads to excessive levels of debt, such as were observed with ABCP conduits and structured investment vehicles. Finally, possible wrong incentives in rating agencies were discussed, triggered by the enormous earning opportunities of the rating agencies in the securitization business.
Finally, various approaches to improve the institutional framework for securitization transactions were discussed.
This includes more transparency about the whereabouts of the first loss position, controls on the reward systems by the banking supervisory authority to mitigate the negative external effects of such systems, and in particular the development of a risk map that allows systemic risks to be identified earlier and in the risk management of banks consider. Even in the general discussion, proposals for further refinement of banking regulation met with skepticism.

2. Contracts as Rent Seeking Devices: Theory and Evidence from German Soccer

Prof. Dr. Eberhard Fees, Frankfurt School of Finance and Management

Recent theoretical research has identified mandy ways how contracts can be used as rent seeking devices vis-à-vis third parties, but there is no empirical evidence on this issue so far. To test some basic qualitative properties of this literature, we develop a theoretical and empirical framework in the context of European professional soccer where (incumbent) clubs and players sign binding contracts which are, however, frequently renegotiated when other clubs (entrants) want to hire the player. Because they weaken entrants in renegotiations, long term contracs are useful rent seeking devices for the contracting parties. From a social point of view, however, they lead to allocative distortions in the form of deterring efficient transfers.
Using data from the German "Bundesliga", our model predictions are broadly confirmed. In particular, our analysis supports the concerns expressed in the theoretical literature about detrimental effects of strategic contracting on allocative efficiency.

3. Tournament incentives and heterogeneity

Prof. Dr. Kerstin Pull, University of Tübingen

The theoretical literature on organizational reward systems repeatedly points to the importance of tournament models from an efficiency perspective, very few is known about the application and effectiveness of tournament compensation in organizations, especially when contestant heterogeneity is taken into account. While the distorting effects of contestant heterogeneity on tournament incentives have been theoretically analyzed for the two-contestant-case, tournament incentives in a typical organizational context with more than two contestants and with more than one prize, have not been studied so far. In our paper, we analyze these effects theoretically as well as empirically by studying incentive travel sales contests as a quantitatively important component of compensation,

4. Time-Varying Credit Risk and Liquidity Premia in Bond and CDS markets

Prof. Dr. Dr. hc Wolfgang Bühler, University of Mannheim

The current financial crisis underlines once again that there is a close relationship between credit and liquidity risks. The reassessment of credit risks by investors led to drying up of individual markets and a drop in prices. Which part of the price decline is due to higher credit risks and which is due to the reduced liquidity can only be answered against a model-theoretical background. A well-founded answer to this question is important for the internal risk management of credit institutions and for their supervision. It is also important for optimizing a company's borrowing costs by controlling the risk of default and the liquidity of the fixed-income securities issued.
The lecture examines theoretically and empirically the decomposition of yield spreads and CDS premiums. In the theoretical part, we develop an approach for mapping credit and liquidity risks of bonds and CDS contracts in a reduced-form model. For the first time, liquidity aspects of CDS markets and the effect that an illiquid bond is delivered to the CDS contract in the event of a default are recorded in this.
In the empirical part of our analysis, we break down CDS premiums and bond yield spreads into a pure credit risk - a pure liquidity and a correlation component. Here we achieve three main results. (1) The consideration of liquidity effects in CDS markets always leads to positive liquidity premiums in bond yields and thus to an explanation of a confusing result by Longstaff, Mithal and Neis (2005). (2) We show that an increasing credit risk leads to a decrease in bond liquidity. This empirical finding confirms the theoretical prediction of Ericsson and Renault (2006). (3) We document on both the factor and premium level that a decrease in liquidity in the bond market has an analogous consequence for the CDS market.

The following presentations were held and discussed in Bendorf (Rhine) on April 18 and 19, 2008:

1. Case-based decisions and similarity-weighted frequencies

Prof. Dr. Jürgen Eichberger, Heidelberg University

We consider a decision maker who wants to learn a probability distribution about the results of an action from previously observed cases. With each observed set of cases, the decision maker associates a set of probability distributions that express his ideas about the underlying probability distribution. We propose a version of the concatenation axiom by BILLOT, GILBOA, SAMET AND SCHMEIDLER (2005) that ensures that the set of probabilities can be represented as a weighted sum of the frequencies of the observed cases. The weights of this sum are clearly determined. They reflect the similarities between the cases observed in the past and the case to be decided.

2. Vulture funds and the problem of creditor ranking among government debtors

Prof. Dr. Eva Terberger, University of Cologne

Mutual funds that specialize in buying up bad debts - as their name "Geierfonds" already signals - tend to have a negative public image, although empirical studies indicate that such funds play a positive role in the restructuring of companies in can play the financial crisis. Vulture funds buy up claims on sovereign debtors, particularly heavily indebted developing countries, and successfully sue their claims, and public outrage is particularly great. Here the question is examined whether the differences between companies and sovereign countries as debtors, in particular the lack of a framework in insolvency law and thus a determination of the creditor order,

Due to state sovereignty and immunity, creditors' ability to pursue claims of defaulting government debtors is limited in that it is possible to obtain a title, but enforcement of debtor assets is only possible under strictly limited conditions. This would tend to suggest that vulture funds could play a disciplining, debt-limiting moral hazard role. However, there is an informal debt restructuring system for sovereign debtors, in which the Paris Club, as an informal association of the main industrial creditor states, and the IMF, which supports reforms in the debtor country and whose claims are always served preferentially, play key roles. This informal system, vulture funds are disrupting the debt relief efforts of heavily indebted developing countries in recent years. However, it is not only vulture funds that benefit indirectly from the relief of the debtor countries by waiving the claims of the Paris club members, but also private creditors, especially bondholders, as well as other bilateral creditors, who do not participate in the debt waiver to a comparable extent as the club members. In this respect, vulture funds appear to be an indication, but not the only, that the informal system of debt restructuring among government debtors that has functioned over the past decades has been disrupted. However, it is not only vulture funds that benefit indirectly from the relief of the debtor countries by waiving the claims of the Paris club members, but also private creditors, especially bondholders, as well as other bilateral creditors, who do not participate in the debt waiver to a comparable extent as the club members. In this respect, vulture funds appear to be an indication, but not the only, that the informal system of debt restructuring among government debtors that has functioned over the past decades has been disrupted. However, it is not only vulture funds that benefit indirectly from the relief of the debtor countries by waiving the claims of the Paris club members, but also private creditors, especially bondholders, as well as other bilateral creditors, who do not participate in the debt waiver to a comparable extent as the club members. In this respect, vulture funds appear to be an indication, but not the only, that the informal system of debt restructuring among government debtors that has functioned over the past decades has been disrupted. who do not participate in the waiver of claims to a comparable extent as the club members. In this respect, vulture funds appear to be an indication, but not the only, that the informal system of debt restructuring among government debtors that has functioned over the past decades has been disrupted. who do not participate in the waiver of claims to a comparable extent as the club members. In this respect, vulture funds appear to be an indication, but not the only, that the informal system of debt restructuring among government debtors, which has been functioning for the past few decades, has been disrupted.

3. Integration and coordination of supply chains

Prof. Dr. Ulrich Thonemann, University of Cologne

Many established companies have started to use virtual stores as a direct distribution channel in addition to their existing indirect retail channels. These companies must now decide on how to integrate these channels. The alternatives are to operate dedicated distribution channels for the virtual store and the retail stores or to tightly integrate the virtual store into the existing distribution channels. In such an integrated supply chain, retail stores would continue to serve all in-store customers, but excess stock at retail stores could be used to fill some online orders. We analyze this problem from a supply chain perspective by developing and solving mathematical models for both dedicated and integrated supply chains. We characterize the optimal inventory policy and quantify the expected cost savings that can be achieved by using an integrated supply chain over a dedicated supply chain. We show that the cost savings can be significant and that both retailers and customers benefit from an integrated supply chain. We also analyze how the optimal solutions depend on the characteristics of the supply chain and identify conditions under which it would be optimal to operate the virtual store without dedicating any inventory to the virtual store.

4. Who will be an entrepreneur? The Hansdampf-in-alley, but not the specialist

Prof. Dr. Uschi Backes-Gellner, University of Zurich

This paper studies the willingness to become an entrepreneur depending on an individual's composition of human and social capital. Our theoretical analysis is an application and extension of Lazear's (2005) jack-of-all-trades theory. Our primary implication is that it is not individuals with a higher level of human or social capital but rather individuals with a more balanced portfolio of human and social capital that are more willing than others to become entrepreneurs. We use survey data from a sample of more than 2000 German students to test this hypothesis and find that the jacks-of-all-trades, ie the more balanced individuals are more likely to become entrepreneurs. On the other hand, the masters-in-one, ie the specialists, are better off being an employee and rightly prefer to be so.

The following presentations were held and discussed in Bendorf (Rhine) on May 4 and 5, 2007:

1. Inventory management in closed-loop supply chains

Prof. Dr. Karl Inderfurth, University of Magdeburg

In combination with regular production processes in a company, product recycling leads to so-called closed-loop supply chains, which place special demands on effective inventory management. This also applies to the recycling of process-induced as well as product-induced residues. In these cases, internal or external returns from recycling objects (defective products or old products) must be processed, the occurrence of which is characterized by a high degree of uncertainty.
It is shown what information can be provided by stochastic dynamic optimization for optimal coordination of production and recycling decisions in a corresponding problem context with random-dependent returns and requirements. As a practical approach, the use of a simply structured planning rule for stochastic inventory planning is proposed - separately for internal and external returns. The disposition parameters to be used are determined on the basis of a heuristic approach appropriate to the problem. As a special case in the context of external returns, the disposition problem of spare parts stock after the end of series production can be dealt with, including the reprocessing of parts from old products.
It can be seen that a promising planning rule is characterized not only by the stochastic nature of returns and requirements, but also very much by the ratio of the throughput times of production and recycling. As a result, it turns out that for an effective inventory management in case of uncertainty, the production and recycling decisions must be based on separate security stocks and on specific information about stocks and open orders. In the case of internal product returns, the safety stocks have to be continuously and dynamically adjusted, unlike external returns.

2. Real options and agency conflicts

Prof. Dr. Thomas Pfeiffer, University of Vienna

Recently, the focus of business interest has increasingly been on the theory of real options, which assigns flexibility (at least weakly) to positive decisions when making investment decisions. Agency conflicts are typically negated within the framework of the classic real options theory. The subject of this article is to take this into account and to analyze the influence of agency conflicts on the value of real options. As a result of the investigations, it can be seen that the value of a real option has, in addition to the positive flexibility value discussed in the classic real option theory, also a value originating from the agency problem, since the real option means that the incentive risk trade-off underlying the agency conflict changed. However, depending on the incentive and risk structure, this additional value can either be negative or positive. This article identifies situations in which the real option may have a negative value due to the agency conflict.

3. Self-commitment, first-mover and second-mover advantage

Prof. Dr. Michael Kopel, Vienna University of Technology

In this lecture we will investigate how different combinations of strategies for self-commitment affect the company's performance in competition. We consider a Stackelberg game and assume that both the Stackelberg leader and Stackelberg follower can use the following self-commitment strategies: (i) investment in process innovation to reduce costs (choice of technology) and / or (ii) delegation the production decision to a manager (choice of organizational form). It shows that in balance

  1. both companies want to reduce their costs through process innovation,
  2. the owners of the Stackelberg-Führer company make the production decision themselves, but the owners of the subsequent company delegate the production decision to a manager, and
  3. the follow-up company can thus compensate for the first mover advantage of the volume leader (ie higher profits).

A graphic and mathematical analysis shows that the two self-binding strategies - although seemingly very similar - differ considerably in their effects.

4. Entrepreneurial Elites: Industry Structure, Investment, and Welfare Effects of Incubating New Businesses

Prof. Dr. Oliver Fabel, University of Konstanz

We compare two institutional regimes in which individuals with complementary task abilities found entrepreneurial partnerships: corporate spin-offs of initially randomly matched production teams and the rational matching of such teams in an incubator organization. The alternative consists of seeking employment in industrial firms which pay a certain wage. This wage reflects the expected team quality assuming that all professionals who do not found firms themselves are randomly matched in production teams. Each institutional setting gives rise to a unique efficient competitive equilibrium such that both industrial and entrepreneurial firms coexist. The efficient incubator equilibrium induces a larger entrepreneurial sector in the industry. HOWEVER, simulations show that neither of the two regimes unambiguously yields higher industry-wide investments. Welfare comparisons assume that individuals do not yet know their specific ability profiles. Higher degrees of risk-aversion (interest-rates) render the efficient spin-off (incubator) equilibrium dominant.

The following presentations were held and discussed in Bendorf (Rhine) on May 5 and 6, 2006:

1. The limits of networking: The case of R&D cooperations

Prof. Dr. Peter-J. Jost, WHU Koblenz-Vallendar

R&D cooperations have emerged in the past two decades as a significant mode for the development of innovation. However, the potential benefits to technology alliances due to technology complemetary, a faster development of innovation or improved market access were not always realized leading to a stagnation or even a decline of the growth pattern of R&D cooperations towards the end of the 1980s. The conventional answers to why R&D cooperations do not neccessary lead to win-win situations points to managerial barriers due to organizational problems, opportunistic behavior of partners, or the limited success of technology alliances. The purpose of this paper is to determine the limits of networking in the absense of any managerial barriers to cooperations but in the presence of firms fully aware of the consequences of forming a network. To focus attention soley on this issue, we assume that the industry is composed of identical firms with regard to the type of innovation and their costs of R&D. Firms can strategically cooperate in either loose or tight networks. We analyze the innovative activities within these network industry in a contest model of product innovation with spillovers in the R&D process. Our analysis records that the strategic formation of networks is rather limited. we assume that the industry is composed of identical firms with regard to the type of innovation and their costs of R&D. Firms can strategically cooperate in either loose or tight networks. We analyze the innovative activities within these network industry in a contest model of product innovation with spillovers in the R&D process. Our analysis records that the strategic formation of networks is rather limited. we assume that the industry is composed of identical firms with regard to the type of innovation and their costs of R&D. Firms can strategically cooperate in either loose or tight networks. We analyze the innovative activities within these network industry in a contest model of product innovation with spillovers in the R&D process. Our analysis records that the strategic formation of networks is rather limited.

2. Market entry and competition in investment banking: the role of bundling lending and issuing business

Prof. Dr. Christian Laux, Goehte University Frankfurt am Main

Since the 1990s, there have been intensive efforts by commercial and universal banks to enter the supposedly lucrative investment banking business. The possibility of implicitly bundling the credit business with the advisory or issuing business is seen as a potential door opener. This strategy, for which there is a wide range of empirical evidence, is also critically examined. For example, the Economist writes: "Perhaps it was not such a bright idea to offer credit to investment-banking clients at less-than-market rates - even though this has been a chief calling card over the past few years for those commercial banks that wanted to get into the juicy business of investment banking. After all, it is precisely the riskiest borrowers, those who have trouble borrowing elsewhere,
Together with Uwe Walz, the article "Tying, Entry, and Competition in Investment Banking" examines the phenomenon of bundling credit and issuing business. Are there any economies of scale between the two businesses, for example information procurement, which are then expressed in more favorable terms, or is there more to it? Do commercial banks need related businesses to get into the investment banking business? Why are the advantages realized when bundling with risky loans?
We show that the bundling of lending and issuing business is necessary under certain conditions so that commercial banks can compete against specialized investment banks in the issuing business. The reason lies precisely in the ability of commercial banks to earn money after a "failed" issue with the lending that is then necessary. This reduces the incentives of the commercial bank in the emissions business. The granting of a risky loan can counteract this negative incentive if the loan is negatively affected by the failure of the issue. However, this additional incentive instrument also reduces a pension that may have to be earned in the emissions business for incentive reasons. The model allows a number of observable empirical implications to be derived: The bundling leads to (1) more aggressive price competition in the emissions business and (2) improved credit conditions; (3) Bundling can be observed particularly in the case of risky loans.

3. Supply chain collaboration with model-based negotiations

Prof. Dr. Hartmut Stadtler, University of Hamburg

Today, companies are usually integrated into networks. The quality of the cross-company collaboration contributes significantly to the competitiveness of the entire network (supply chain, SC for short).

The lecture looks at the coordination of SC partners on the master planning level. It is assumed that each company involved has a corresponding planning tool (e.g. an Advanced Planning System, abbreviated APS) and has committed to an SC partnership.

A negotiation scheme is presented, with which it is possible to coordinate the master plans of the partners in a few iterations so that the quality of the solution approaches that of a simultaneous planning. The following assumptions are made for the negotiation scheme:

  • The partners produce parts, assemblies and end products in workshop production.
  • The starting point is upstream planning.
  • No sensitive data (such as capacity utilization) are exchanged, only the procurement and delivery plans in the planning period.
  • The additional costs associated with a counter-proposal (e.g. a delivery schedule) are offset by compensation payments.

Computer tests with over 500 test instances show that significant improvements compared to pure upstream planning can be achieved after just a few iterations. Further research includes expanding the negotiation scheme to multi-tier SCs, other types of arrangements, and transportation service providers.

4. Causal analysis studies in business administration - an inventory

Prof. Dr. Lutz Hildebrandt, Humboldt University Berlin

The structural equation methodology (causal analysis) has become the dominant analytical approach in empirical research in the past decade. Through the introduction of screen-based specification options (e.g. in LISREL and AMOS), even methodologically untrained researchers can carry out comprehensive analyzes of survey data, so that it is often easy to work according to application guidelines. The study deals with the effects of this practice. A meta-analysis examines 115 research papers that have been published in German-language business literature since 1990 and that use the structural equation methodology. Problems of content validity are examined, which are associated with the application of data cleansing procedures via Cronbach's alpha connected, the use of fit indices in the assessment of models is examined and the fulfillment of statistical requirements for the application of the methodology is discussed.

The following presentations were held and discussed in Bendorf (Rhine) on April 23 and 24, 2005:

1. Considerations for the production of services

Prof. Dr. Otto Rosenberg, University of Paderborn

According to the prevailing view, the production of services compared to the production of material goods has such peculiar features that it requires independent theoretical foundation. The relevant differences in production are seen a) in the immateriality of a service, from which its non-storage and transportability as well as the simultaneity of production and consumption are postulated, b) in the lack of quantifiability and c) in the indispensable presence of a so-called external factor. The lecture shows that it is seldom possible to clearly differentiate between material goods as material and services as intangible output, since a product vector that contains both material and immaterial elements is often generated in a production process. In these cases, it is only possible to assign them to one of the two categories. For many types of services, the simultaneity of creation and consumption is an observable phenomenon, the inevitability of which can be largely eliminated by using modern information and communication technologies. For example, a concert in a concert hall can be heard and broadcast simultaneously or at different times on the radio and thus heard in the broadcasting area and / or stored almost indefinitely after being recorded on a CD. Quantification problems also arise in the production of material goods. The methods used there for determining problem-adequate measures can often also be used for services. factors that belong to the service recipient's sphere of control are referred to as external factors and are regarded as a defining characteristic of every service production. Regarding the production process, however, it is irrelevant whether a good to be processed or transported comes from the area of ​​disposal of the service provider or the service recipient. If the service recipient is an element of the input himself, it must be ensured organizationally that he is physically present at the beginning of the production process. However, this is unlikely to have an impact on production. It can therefore be stated that the creation of services can be modeled, analyzed and explained in terms of production theory in the same way as the production of material goods.

2. Risk management in procurement auctions

Prof. Dr. Achim Wambach, University of Erlangen-Nuremberg

Purchasing auctions are used in the public and private sectors to procure goods and services. A relevant problem in particular when procuring services is that the contractor goes bankrupt when the order is created. For example, in the United States between 1990 and 1997, more than 80,000 projects went bankrupt, with a total liability of more than $ 21 billion "in which she found that" clients underestimate ... the risks of abnormally low tenders, especially the probability of bankruptcy and failure of enterprises ... ". The question now is how to deal with abnormally low bids. A first step is to identify these bids and then to find out how this low bid came about. Further procedural steps are reported from individual countries. For example, an award is said to have taken place in Switzerland, in which it was not the cheapest offer that was awarded, but the second cheapest. It is reported from Taiwan that the bid that is closest to the average of all bids is awarded the contract. This article analyzes the bidding behavior in purchasing auctions, taking into account the possibility of the bankruptcy of the provider. The efficiency of the methods described above is also examined. The results include: identify these commandments and then investigate how this low bid came about. Further procedural steps are reported from individual countries. For example, an award is said to have taken place in Switzerland, in which it was not the cheapest offer that was awarded, but the second cheapest. It is reported from Taiwan that the bid that is closest to the average of all bids is awarded the contract. This article analyzes the bidding behavior in purchasing auctions, taking into account the possibility of the bankruptcy of the provider. The efficiency of the methods described above is also examined. The results include: identify these commandments and then investigate how this low bid came about. Further procedural steps are reported from individual countries. For example, an award is said to have taken place in Switzerland, in which it was not the cheapest offer that was awarded, but the second cheapest. It is reported from Taiwan that the bid that is closest to the average of all bids is awarded the contract. This article analyzes the bidding behavior in purchasing auctions, taking into account the possibility of the bankruptcy of the provider. The efficiency of the methods described above is also examined. The results include: Further procedural steps are reported from individual countries. For example, an award is said to have taken place in Switzerland, in which it was not the cheapest offer that was awarded, but the second cheapest. It is reported from Taiwan that the bid that is closest to the average of all bids is awarded the contract. This article analyzes the bidding behavior in purchasing auctions, taking into account the possibility of the bankruptcy of the provider. The efficiency of the methods described above is also examined. The results include: Further procedural steps are reported from individual countries. For example, an award is said to have taken place in Switzerland, in which it was not the cheapest offer that was awarded, but the second cheapest. It is reported from Taiwan that the bid that is closest to the average of all bids is awarded the contract. This article analyzes the bidding behavior in purchasing auctions, taking into account the possibility of the bankruptcy of the provider. The efficiency of the methods described above is also examined. The results include: gets the contract. This article analyzes the bidding behavior in purchasing auctions, taking into account the possibility of the bankruptcy of the provider. The efficiency of the methods described above is also examined. The results include: gets the contract. This article analyzes the bidding behavior in purchasing auctions, taking into account the possibility of the bankruptcy of the provider. The efficiency of the methods described above is also examined. The results include: 

  • The possibility of bankruptcy makes bidders risk-loving, which is why a more aggressive bidding behavior can be expected. This result is known from the literature.
  • Different approaches to work around the problem of abnormally low bids sometimes have very negative consequences. For example, cutting the lowest bid (the Swiss example) causes bidders to try not to make the cheapest bid. This can lead to very high equilibrium prices.
  • Other ways to reduce the risk for the client include entrance fees, auctions with rationing procedures and multi-sourcing.

3. Transfer prices and specific investments - experimental design and first results

Prof. Dr. Dieter Pfaff, University of Zurich

Transfer prices play an important role in the internal coordination of decentralized areas. In particular, the empirical literature has so far paid little attention to specific area investments, through which the success that can be achieved through future transactions is improved from the perspective of the entire company. The problem of specific investments lies in a possible underinvestment, since the transfer price more or less arbitrarily divides the transaction advantage between the areas. As part of a course at the University of Zurich with Dr. Urs Fischbacher and Dr. Ulrike Stefani experiment, two questions were examined: (1) How do (sunken) specific investments affect the distribution of the transaction advantage created thereby? (2) How do certain transfer price regimes influence the investment decision and thus the overall success of the company? In contrast to related experiments, the present study is characterized above all by an efficiency comparison between different allocation rules (bilateral negotiation with low and high negotiation costs, halving the result achieved) and by the strongly complementary nature of the area investments. The results show, among other things, that the investment activity for a negotiated solution with low negotiation costs almost reaches the level of efficiency and is lowest with an ex-ante defined halve distribution of the advantage and thus significantly falls below the average investment level for a negotiation with high negotiation costs. However, the fixed allocation and the cost-intensive negotiation are about the same when considering the average profit level of all participants, because excessive demands of the first movers in the negotiation round are often rejected and thus lead to the destruction of the previously created value. While the results of the negotiation regimes are primarily driven by positive and negative reciprocal behavior, Appropriate behavior - at least after investment activity - is excluded with a fixed distribution. Overall, it can be seen that the underinvestment problem in the formally oriented transfer pricing literature is systematically overestimated, as the social preferences of the actors are neglected. In practice, it can be concluded that transfer pricing regimes should be designed in such a way that the advantages of social preferences in the negotiations are used as well as possible. Against this background, it seems disadvantageous to determine how a potential transaction advantage should be allocated according to investment activity. that the underinvestment problem in the formally oriented transfer pricing literature is systematically overestimated, because the social preferences of the actors are neglected. In practice, it can be concluded that transfer pricing regimes should be designed in such a way that the advantages of social preferences in the negotiations are used as well as possible. Against this background, it seems disadvantageous to determine how a potential transaction advantage should be allocated according to investment activity. that the underinvestment problem in the formally oriented transfer pricing literature is systematically overestimated, because the social preferences of the actors are neglected. In practice, it can be concluded that transfer pricing regimes should be designed in such a way that the advantages of social preferences in the negotiations are used as well as possible. Against this background, it seems disadvantageous to determine how a potential transaction advantage should be allocated according to investment activity.

4. Theoretical and empirical information on the branch structure of the corporate loan portfolios of credit institutions in Germany

Prof. Dr. Andreas Pfingsten, University of Münster

Should banks diversify their loan books or should they specialize in lending to homogeneous borrower groups for which they have above-average expertise? There are contradictory answers to this question in financing theory and in the theory of financial intermediation. On the one hand, the Markowitz portfolio theory - although not geared towards intermediaries at all - teaches that a portfolio of risky investment opportunities should be broadly diversified. On the other hand, there are also arguments for a specialization strategy. As Schmalenbach already argues: "The authorized representative who has to serve the wood industry becomes a wood specialist himself, he learns the needs of the wood trade, the sawmills, of furniture factories. He will also know how best to get the timber merchants. "Indeed, banks such as the Deutsche Apotheker- und Ärztebank, for example, have built up specific know-how in individual industries and specialized in lending. So there is obviously a conflict of objectives between Advantages of specializing in the lending business and advantages from risk diversification.

What is the current picture and what was the development in the past? In a first contribution, some statistical measures for measuring credit portfolio diversification were proposed and calculated for published aggregated data from banking groups in Germany. The use of distance measures, which make it possible to compare the structure of a credit portfolio with various benchmarks such as the composition of the German credit portfolio as a whole, should be mentioned as a methodological innovation. In a second contribution, these and other key figures were applied to anonymised bank-specific data from the Deutsche Bundesbank. A fairly stable observation in all approaches is that cooperative banks and savings banks in particular have increasingly brought the industry structures of their corporate credit portfolios closer to the market average. The lecture reports on these and other results of the two essays and also offers an outlook on the next research steps, which should shed more light on the connection between diversification and risk and return indicators.

The following presentations were held and discussed in Bendorf (Rhein) on April 23 and 24, 2004:

1. Management Board compensation and stock options

Prof. Dr. Michael Adams, University of Hamburg

Starting from the United States, astronomical increases in executive board remuneration have also occurred in Germany in recent years. The median total compensation (excluding fringe benefits and pensions) was $ 8.602 million for CEOs of American companies in 2004, £ 2.808 million for British CEOs and € 2.687 million for German CEOs. In 1992, compensation in the United States was $ 2 million. The pioneers of the increase in remuneration in Germany were the board members of Mannesmann AG, Deutsche Bank AG, DaimlerChrysler AG and Deutsche Telekom AG. What was previously only possible to acquire as a result of generations of successful entrepreneurship, was now brought together by salaried managers in a few short years with the help of complex stock option plans that were carefully kept secret from the owners in the first years. With stock option plans, a procedure was often chosen without any objective reason, which was associated with a maximum tax penalty for the shareholders. It is also noteworthy that the hundreds of millions of euros in compensation can be taken from the owners without any consideration in the form of an increase in company value. Based on many details of the stock option programs used in practice, the lecture showed that the remuneration systems are not structured that they actually convey the incentive improvements for the board members that are intended for them, but can essentially only be understood as looting procedures. Based on an economic and legal individual analysis, it was shown that stock option plans based on the model of DaimlerChrysler AG represent remuneration excesses that are based on the failure of the respective corporate control structures, as evidenced by the approximately three quarters lower remuneration in comparable companies such as BMW AG, which operates under efficient private control. The extreme incomes of the beneficiary board members are also not the result of an international competitive market for particularly talented managers who can be founded on the theory of superstars applicable to world-famous artists and media figures. Rather, it is about the self-service of direct private shareholders' control deprived of board members. The supervisory bodies of publicly owned companies are not sufficiently steadfast. The German special path of codetermination in the Supervisory Board has the effect of weakening control and has only led to option programs being extended to a broad range of employees.

2. Relevance of heterogeneity and non-linearity in outlet-specific price-sales functions

Prof. Dr. Harald Hruschka, University of Regensburg

Studies that have dealt with the determination of outlet-specific price-sales functions can be divided into two groups. One group focuses on recording the heterogeneity of the outlets with regard to the coefficients of price-sales functions and assumes (log) linear functional forms. The second group of investigations in turn uses different methods, which guarantee a high degree of flexibility with regard to the functional form, but are limited to homogeneity (ie the same effect pattern across all outlets). Both approaches therefore ignore the other, possibly important aspect, which is why it seems obvious to add heterogeneity to a flexible, non-linear price-sales function. The study presented here is a multi-layer perceptron with a layer of hidden units, the latter in the form of logistical functions. In addition to this heterogeneous flexible price-sales function, linear and multiplicative functions, both in a homogeneous and in a heterogeneous variant, are also considered. All heterogeneous price-sales functions are based on the assumption that the outlet-specific coefficient vectors are multivariate-normal. This means that each outlet-specific coefficient depends on the data of all outlets and allows the estimation by a Markov Chain Monte Carlo (MCMC) method. The model estimates relate to sales and price data for 9 orange juice brands from 81 outlets. Between 61 and 88 weeks per outlet and brand results in at least 4,941 observations per brand. The expected value of the total sum of squares across all outlets serves as the statistical evaluation criterion for each model. After that, the heterogeneous linear price-sales function performs significantly better than the homogeneous multiplicative model and the homogeneous perceptron. This initially seems to support the view that non-linearity becomes unimportant when considering heterogeneity. However, the results for the heterogeneous multiplicative model and the heterogeneous perceptron show for the available data that, from a statistical point of view, models that allow both heterogeneity and non-linearity are clearly superior. The decision relevance of the estimated price-sales functions is discussed with regard to the problem of determining a uniform price for all outlets. Solving this problem requires knowledge of the price elasticity of total sales across all outlets. A statistically superior price-sales function is relevant to this decision problem if the elasticities implied by it differ from those of a simpler function. For the analyzed data, taking heterogeneity and flexible non-linearity into 8 out of 9 brands leads to different results in terms of price elasticity. Both aspects therefore prove to be relevant for setting uniform prices.

3. Auctions and corruption

Prof. Dr. Elmar Wolfstetter, Humboldt University Berlin

In many auctions, the auctioneer is an agent of the buyer or seller. This delegation often leads to corruption. Corruption means that the auctioneer manipulates the auction rules for the benefit of a single bidder and pays for this service. The lecture analyzed the highest price auction when bidders expect the auctioneer to be bribed. The nature of the corruption has been shown to depend on the distance between the two highest commandments. The auction game has two subgames. After the corruption subgame was solved, it was shown how the expectation of corruption changes the behavior of the bidders. The perfect balance of the game generally only has solutions in mixed strategies. These balances have probability masses on high bids.

4. Quality of accounting and auditing - are the current reform considerations appropriate?

Prof. Dr. Ralf Ewert, University of Frankfurt am Main

The accounting scandals of recent years have sparked considerable regulatory activity at national and international levels. The measures considered by the respective standard setters sometimes include drastic changes to the rules relevant for the statutory audit and accounting. The lecture dealt with the question to what extent such regulations can be justified by the results of economic research (theoretical and empirical). This question was examined on the basis of three aspects (prohibition of auditing and advice from the same client, external forced rotation of the auditor, restriction of options for external accounting). Regarding the ban on testing and advice, a variety of empirical studies initially show that the suspected negative impact on the independence of the auditor and thus on the quality of the accounting cannot be confirmed - many recent works even suggest the opposite. These results were explained and classified on the basis of a game theory model. Regarding the external forced rotation, recent empirical work shows that there is more of a positive relationship between the term of the mandate and the quality of the attestations or the accounting. Finally, the issue of restricting voting rights based on a capital market model with rational expectations of market participants was discussed. Numerous interdependencies and influencing factors were identified, which can counteract the originally intended improvements in the information content of external accounting. Overall, it turned out that the regulatory measures are far less convincing from an economic point of view than one would think at first glance.

The following presentations were held and discussed in Bendorf (Rhine) on April 25 and 26, 2003:

1. Redesign of production theory

Prof. Dr. Harald Dyckhoff, RWTH Aachen

The traditional production and cost theory, as the original core of German business theory, has some serious narrowing that make it impossible to keep up with the developments in modern production management and more recent corporate theory. Therefore, the broader view of a general theory of production is redesigned, which encompasses the traditional theory as well as the newer scientific contributions as special theories, without immediately falling into the claim of a general theory of the enterprise. A decision-oriented generalization of traditional production and cost theory forms a special theory. The fertility of this approach can be seen in that it integrates more complex preference structures and functional efficiency concepts in a natural way and allows the theoretical foundation of a Generalized Data Envelopment Analysis (GDEA). (Essential parts of the lecture were published in the ZfB in July 2003.)

2. Economic analysis of insurance fraud: insurance and third markets

Prof. Dr. Martin Nell, University of Hamburg

The economic literature on insurance fraud has so far considered almost exclusively the case that insurance fraud is committed solely by the policyholder. In reality, however, third parties such as workshops, experts or doctors are often involved in insurance fraud. So far, such constellations have hardly been analyzed, because little is known in the insurance economy about the interdependencies between insurance and downstream repair markets. In order to close this gap and, among other things, to stimulate more intensive research on insurance fraud with the involvement of third parties, these interdependencies are examined using model theory. A model with differentiated products and an endogenous number of suppliers is used for the repair market based on Salop (1979), while complete competition is assumed for the insurance market. It can be seen that the existence of insured customers increases both the price level and the number of providers in repair markets. The reason for this lies in the falling price elasticity of the consumers, which results in a higher market power of the suppliers. With free market access, this increases the number of providers. Nevertheless, the price level increases because the higher number of providers does not fully compensate for the higher market power due to the lower price elasticity. Conversely, repair markets have an impact on the optimal contract structure in insurance markets. In contrast to the standard results of insurance demand theory, the optimal insurance contract also includes a deductible even when the information is distributed symmetrically and transaction costs are neglected. Furthermore, it is shown that insurers offer contracts with insufficient deductibles in competitive markets compared to the optimal contract.

3. Measurement and evaluation problems in empirical research into success factors

Prof. Dr. Sönke Albers, Christian Albrechts University in Kiel

In the past 15 years, numerous empirical studies have appeared, particularly in sales and organizational research, in which statements about the success of various marketing strategies and organizational strategies are derived. These attempts to generate more knowledge about relationships in business management are to be assessed very positively. On the other hand, a large number of studies have used a methodological instrument that does not correspond to the latest knowledge. In the lecture 4 problem areas are identified and discussed, for which the latest methods should be used: 1. Since the explanatory strategies mostly only represent mental constructs, the problem of their operationalization arises. Here, mostly multi-item indicators are used, that are assumed to be reflective, but actually consist of formative indicators. This allows construct validations to be carried out that were not required at all and often led to the deletion of indicators that represent important aspects of a strategy. Reflective constructs are usually assumed because LISREL can be used to calculate structural equation models that supposedly can differentiate between the measurement and model levels. In the case of formative indicators, path regressions of the PLS type are more suitable. 2. Regression is almost exclusively calculated for the entire sample, even if cross-section examinations show a high degree of unobserved heterogeneity. Cluster analyzes don't help here either, since these only form similar groups according to the observed criteria, but only mixture models with which simultaneous group formation and regression is possible. 3. In the success factor research almost only linear models are calculated, which would mean that as a result you only get relationships of the type the more the better. In business management, however, we primarily know the optimal use of resources. Optimality therefore always means that a certain level is best. 4. Model relationships are often tested that contain "unspecific" hypotheses, the confirmation of which any manager would consider trivial anyway. Instead of just reporting significance here, the amount of which is strongly driven by the sample size anyway, the relative contribution to the explanatory or even better the forecast quality should always be reported. After all, one should rather concentrate on "exciting" hypotheses.

 

4. Innovation and intellectual property - approaches to analyzing the patent system

Prof. Dr. Dietmar Harhoff, Ludwig Maximilians University Munich

Dietmar Harhoff's lecture gave an overview of the current state of economic analysis of patent rights. The focus of the lecture was on the empirical analysis of legal disputes in which the validity of patents is challenged. The role of patents and other intellectual property rights and their place in developed economies changed fundamentally and probably permanently in the 1990s. The change challenges traditional economic knowledge about the importance of patents for the innovative behavior of companies and for the organization of markets. The change manifests itself in a phenomenon that has entered the economic literature as a "patent paradox": A massive increase in the number of patent applications has been observed at the macroeconomic level since the beginning of the 1990s. This increase is not accompanied by a corresponding increase in research and development expenses (R&D), which are to be regarded as the most important input for the invention process. In some cases, R&D expenditure is even declining. At the same time, surveys show that many companies attest that patents are becoming less and less effective as a means of appropriating innovation income compared to other protective instruments. This also applies to companies that increasingly register patents. By contrast, patents have acquired a strategic importance that goes beyond the actual function of appropriating direct income from innovations. This strategic meaning is often no longer borne by individual patent rights, but by interconnected individual patents, which are referred to as patent thickets. Against this background, a number of theoretically and economically relevant questions are currently being raised in the economic science discussion. For example, should all technical fields be provided with the same patent protection ("one size fits all") or should options be created for applicants? Should a new EU community patent be established in addition to the existing institutions in Europe? Should European Courts be set up for patent litigation (centralized litigation)? Patents give their holder the right exclude other actors from using an invention. Only in rare cases does this include a monopoly. The equation of monopoly and patent found in some textbooks is an abstraction for the purpose of simplifying the model, but this rarely corresponds to reality. The theoretical reason for granting temporary exclusion rights is based on the incentive effect of patents. The non-rivalry and non-exclusion of technical knowledge (as described in the works of Arrow, Nordhaus and Romer) lead to market failure and suboptimal incentives for inventive step. In the 1990s, the classic model approaches were supplemented by works that highlight the breadth of patents, the level of invention, and other aspects. Special attention has also been paid to the phenomenon of sequential or cumulative innovation, which raises the question of the optimal strength of patent protection for early and late (based on other inventions) patents. Patent systems offer a number of advantages over other policy instruments, such as the fact that costs are borne by users, that no private information is required for the implementation, and that the disclosure of the patents (meanwhile also in the USA) enables the diffusion of knowledge. This is offset by the disadvantage that temporary market power is created, that there are incentives for the duplication of R&D activities and that distortions arise with regard to the orientation of R&D activities. because patent protection is not available to the same extent in all technical areas. An important research question concerns the distribution of the value of patents. In the lecture, various study results were presented that demonstrate the strong heterogeneity of the value of patent rights. The value of patents can be approximated with a log normal distribution. Approximately 10 percent of patent rights represent approximately 90 percent of the total in a patent portfolio. In the recent literature, legal disputes about patent rights have been examined particularly intensively. Since particularly valuable patents are often the focus of these disputes, their analysis is of great importance. The legal institutions in Europe and the USA differ considerably. The EPO (European Patent Office) can appeal against the granting of a patent within 9 months of the announcement of the grant; an appeal against the decision of the Board of Appeal is possible. This option has been used in around 8 percent of all patent grants since 1978, around a third of the contested patents have been revoked, and another third has been restricted in scope. Approximately a third of the decisions are reviewed in the second instance (complaint). Econometric analyzes of these disputes have already produced a number of interesting results. The likelihood of an opposition increases with the value of patent law and the degree of uncertainty in a technical area. Just new, Science-based patents are created in an environment in which the scope of protection cannot be clearly defined. This encourages the creation of divergent expectations and asymmetrical information, which in turn make disputes more likely. Disputes in court, which can arise after opposition and appeal in any of the nation states for which the European Patent Office can grant patent rights, are far less well investigated. In Germany the frequency of disputes is around one dispute per 100 patents. Interestingly, the frequency of litigation in court is significantly lower than in the United States. This difference is probably due to the intensive pre-selection by the opposition procedure. In the lecture, results from econometric studies were presented, who support this assessment. Finally, research questions were presented that have so far remained largely unanswered. In particular, this includes the need to replace the unrealistic equation of patent and product in theoretical modeling with model variants in which the protective effect is based on a bundle of interlocking patent rights. In addition, it appears necessary to examine the increasing strategic importance of patents in the sense of patent thickets. Here, however, there is still a lack of theoretical approaches that can be used in empirical work. To replace the unrealistic equation of patent and product in theoretical modeling with model variants in which the protective effect is based on a bundle of interlocking patent rights. In addition, it appears necessary to examine the increasing strategic importance of patents in the sense of patent thickets. Here, however, there is still a lack of theoretical approaches that can be used in empirical work. To replace the unrealistic equation of patent and product in theoretical modeling with model variants in which the protective effect is based on a bundle of interlocking patent rights. In addition, it appears necessary to examine the increasing strategic importance of patents in the sense of patent thickets. Here, however, there is still a lack of theoretical approaches that can be used in empirical work.

The following presentations were held and discussed in Bendorf (Rhine) on April 26 and 27, 2002:

1. The emergence of a 'new economy' - an O-ring approach

Prof. Dr. Oliver Fabel, University of Konstanz

In the most recent literature, approaches are increasingly found that refer to the characteristic properties of production technology and the incentive system of companies in the "new economy". In contrast to the "old economy", the human capital of company members is the critical resource. In addition, the members of the production teams are directly involved in the company's success. This article attempts to work out an organizational-economic theory of business start-up that processes these two stylized facts of companies in the new economy. Given an "O-ring" - analogous to the failure of a sealing ring as the alleged cause of the Challenger accident -Production, the team output is determined by the contribution of the weakest team member. On the one hand, a longer task chain increases the team's product per capita, on the other hand, the inclusion of an additional team member increases the likelihood that the planned income cannot be realized. Teams whose members have a higher ability in terms of a lower probability of error are therefore willing and able to offer a new member a better offer than teams with a poorer skill profile. There is an advantage of matching skills in teams. However, this can only be realized in companies that are organized as equal partnerships between team members. In the typical profit-maximizing company of the "old economy", which hires managers to organize the production, the individual skills during the hiring process cannot be verified. At the same time, however, assuming the risk aversion of the team members means that partnerships also fail to offer the first best solution, as there is an individual financing risk. The capital resources and the capital intensity of production in the risk-averse partnerships are inefficiently low. They also realize an inefficiently small size. The existence of at least one separating equilibrium can then be shown. Groups of individuals with an identical, relatively high level of ability form partnerships, while individuals with relatively poorer skills than workers in profit-maximizing companies seek employment who randomly recruit their workforces from the remaining workforce "pool" of the economy. If skills are evenly distributed across the population, even small improvements in the attractiveness of employment in the "old economy" mean that a relatively large number of partnerships in the "new economy" cease production. In addition, there will generally be multiple equilibria with different numbers of partnerships, only one of which is efficient. Finally, knowledge of the existence of a balance means that the profit-maximizing companies of the "old economy" can profitably integrate partnerships.

2. Optimism and pessimism in financial investment decisions

Prof. Dr. Jürgen Eichberger, Heidelberg University

Optimism and pessimism are important features of the decision-making process in the face of uncertainty. However, the economic theory of decision in the event of uncertainty is still based on the paradigm of subjective maximization of expectation benefits, as developed by RAMSEY (1926), DE FINETTI (1937) and SAVAGE (1954). Based on this approach, economic theory finds it difficult to see such weighty decisions as financial investment decisions influenced by "irrational" attitudes. Over the past two decades, experimental studies have shown that decision-makers are influenced by whether events are considered impossible or safe. Based on robust experimental observations, WAKKER (2001) presents a definition of optimism and pessimism that can be used to analyze economic decision-making behavior. Optimistic behavior is characterized by the fact that the best possible result of an unsafe action is overweighted, while pessimism emphasizes the worst possible result. It is possible to show that this conception of optimism and pessimism can be integrated into the Choquet expectation benefit approach. By restricting the independence postulate to actions in which the extreme results occur on the same events, the preferences can be represented by a balanced mean of expected benefits and the extreme utility values. If one examines the financial investment decisions of investors with this representation, it shows that high risk premiums for stocks, as stated by the "Equity Premium Puzzle", are perfectly compatible with risk-taking behavior when investing with high but risky returns. The contradiction between a risk-averse search for insurance options and a risk-taking willingness to take part in games of chance can be resolved by empirically observing a mixture of optimistic and pessimistic weighting of the results of campaigns. but tolerable risky returns. The contradiction between a risk-averse search for insurance options and a risk-taking willingness to take part in games of chance can be resolved by empirically observing a mixture of optimistic and pessimistic weighting of the results of campaigns. but tolerable risky returns. The contradiction between a risk-averse search for insurance options and a risk-taking willingness to take part in games of chance can be resolved by empirically observing a mixture of optimistic and pessimistic weighting of the results of campaigns.

3. The coordination of demand and capacity through adaptive decisions - An application of the case based decision theory

Prof. Dr. Hermann Jahnke, Bielefeld University

The decision of a monopolistic company about the price and the production capacity in the case of incompletely known demand is considered. For this purpose, a delivery service-sensitive market is represented by a kinked demand function. With the help of a queue model, it is shown for the one-product company that in this scenario the sum of proportional, fixed capacity costs and variable costs is a sensible basis for pricing. If the distribution of demand is unknown, the optimal capacity cannot be determined. In the context of an adaptive decision process modeled with the help of the Case Based Decision Theory (CBDT), the additional information resulting from the demand process is used to gradually change the installed capacity.

4. Price influence, profit and liquidity risk in Xetra stock trading

Prof. Dr. Siegfried Trautmann, Johannes-Gutenberg University Mainz

The lecture presented the empirical results of a completed DFG research project on the profitability of trade-based price manipulation on financial markets (results and recommendations for action are summarized in three as yet unpublished working papers). Financial market manipulations can be classified according to ALLEN / GALE (1992) as follows. Action-based manipulation: manipulation is based on activities that influence the actual or perceived share value based on fundamental data. Information-based manipulation: Influencing prices that arise due to inside information or the spreading of false rumors. Trade-based manipulation: manipulation means the price influence that results from larger buy or sell orders in a financial security. Model-theoretical analyzes of the profitability of trade-based manipulation now provide the following answers: in models in which a non-price taker has a higher level of information, the latter is better off than an (uninformed) price taker (e.g. KYLE (1985), ALLEN / GALE (1992), HOLDEN / SUBRAHMANYAM (1992), KUMAR / SEPPI (1992)). In models in which a non-price taker does not have a higher level of information, the results are not uniform: in the models of GRINBLATT / ROSS (1985) and KAMPOVSKY / TRAUTMANN (1999) a non-price taker has no advantages due to his market power, while in the BASAK model (1996, 1997) a non-price taker is at least as well off as a price taker. There are hardly any empirical studies or no clear answers. Classic example: The trade-based manipulation of the silver market by the Hunt brothers in 1979/1980. The presented empirical study on "Price Impact and Profit of Xetra-Traders: Does Profitability increase with Trade Size?" now supports the model-theoretical results of GRINBLATT / ROSS (1985) and KAMPOVSKY / TRAUTMANN (1999). On the basis of a unique data sample (transaction data from the electronic trading platform Xetra with coded trader identification in 11 DAX shares and in 6 MDAX shares over the period from August 1998 to August 1999), it is shown, among other things, that proprietary profitability does not increase with the average order size , Trading-based price manipulation is therefore not profitable, at least in the Xetra world, and therefore, in our opinion, is not an issue for financial market supervision. Further results of the empirical study can be summarized as follows:

  • The relationship between price influence and trade size is almost linear.
  • Even with liquid DAX shares, the liquidity risk increases on turbulent trading days: The price influence of large orders increases substantially.
  • Day trading is profitable but contributes little to the profit of the dealer.
  • Proprietary traders who also trade on the customer's account do not benefit from this business (especially with DAX shares and when brokerage fees from commission transactions are neglected).
  • Proprietary profits fall with the proportion of initiated transactions, especially for DAX shares.
  • Retailer profits increase with the number of transactions in a share, especially for DAX shares.

The following presentations were held and discussed in Bendorf (Rhine) on May 4 and 5, 2001:

1. Marketing and institutional economics - elements of a theoretical concept and starting points for empirical testing

Prof. Dr. Rolf Weiber, University of Trier

The aim of the lecture was to derive an integrated theoretical framework for marketing on the basis of information-economic considerations, which can map and explain the behaviors of suppliers and consumers. So far, in the information-economics-oriented marketing literature, the customers with their information and uncertainty problems have been placed one-sidedly at the center of the theoretical considerations. In addition, the considerations mainly focused on decision-making objects that affect the efficiency of actions. An expanded theoretical framework should therefore consider not only the customer, but also the information and uncertainty problems of the providers. In addition to efficiency, the effectiveness of actions must also be taken into account from which the uncertainty about the efficiency and effectiveness of decisions arises as a common basis for orientation. These expansions must be seen against the background of an individual with limited rationality who bases his decision-making behavior on subjective levels of demands. The decision-making process of the provider and the customer can be broken down into the perception of the initial situation, the information decision with a corresponding reduction in uncertainty and the decision to act, in accordance with the tripartite division of information economics. The comparison of this decision-making process with the effectiveness and efficiency aspects results in a consistent analysis framework for the behavior of suppliers and customers. On the side of the customer, the performance identification can be identified as an embodiment of the effectiveness aspect and the performance evaluation as an embodiment of the efficiency aspect. On the provider side, a distinction must be made in this connection between service marketing with the service concept and service transfer (effectiveness aspect) and service provision (efficiency aspect). On the basis of this theory framework, existing information deficits can be systematized and explained on the supply and demand side, information strategies can be derived and decision models can be designed. On the provider side, a distinction must be made in this connection between service marketing with the service concept and service transfer (effectiveness aspect) and service provision (efficiency aspect). Based on this theoretical framework, existing information deficits can be systematized and explained on the supply and demand side, information strategies can be derived and decision models can be designed. On the provider side, a distinction must be made in this connection between service marketing with the service concept and service transfer (effectiveness aspect) and service provision (efficiency aspect). Based on this theoretical framework, existing information deficits can be systematized and explained on the supply and demand side, information strategies can be derived and decision models can be designed.

2. Industrial economic aspects of the wage and employment policy of companies

Prof. Dr. Hans-Jürgen Ramser, University of Konstanz

The traditional delimitation of the research subject of industrial economics with its focus on the analysis of the allocation of isolated partial markets with different structures necessarily leads to a certain limitation of their normative and positive meaningfulness. In extreme cases, the allocation to a goods market is more or less largely determined by what is happening on the relevant labor and capital markets. In the present article, interdependencies between the allocations on both markets are discussed using the example of various empirically interesting labor market / goods market constellations. An important aspect is that the wage and employment policy of a company is not only directly relevant to the balance on the labor market, Rather, it can also indirectly be an important instrument in competition on the goods market. Wage and employment decisions by companies, like financing decisions, can in principle be self-binding and thus hinder the entry of new competitors on the goods market. The interdependencies between the market structures that become visible in this way are of interest from a business perspective as well as from the perspective of competition policy. In detail, various aspects are discussed that are important for the empirical relevance of the considerations, for example the observation that an efficient innovation policy is often only the flip side of a corresponding personnel policy, that creates the necessary incentives for attracting creative employees at the expense of competitors. In this context, the often neglected question of the desirable and at the same time enforceable wage structure is addressed.

3. Delegation and strategic incentives for managers

Prof. Dr. Matthias Kräkel, Rheinische Friedrich-Wilhelms-Universität Bonn

As known from agency theory, the separation of property and management can result in significant welfare losses. Fershtman / Judd (1987) and Sklivas (1987) have shown, however, that delegating management to a manager from an owner's point of view can be beneficial for the purpose of self-loyalty: Without delegation to a manager, an owner would run the business himself and as a profit maximizer appear on the market. However, through the delegation in conjunction with an explicit incentive contract, the owner can commit to not maximizing profit, which can be rational for strategic reasons. In particular, for the Cournot competition, a delegation associated with an incentive contract that places positive emphasis on sales, is beneficial for owners. The lecture builds directly on the work of Fershtman / Judd (1987) and Sklivas (1987). Instead of the usual Cournot or Bertrand competition, an alternative form of oligopolistic competition is considered - a kind of tournament competition. The following results on strategic delegation and incentives differ significantly from the previous results: (1) There are asymmetrical partial game-perfect equilibria, although the game structure itself is completely symmetrical. (2) With these asymmetrical balances, one owner chooses a positive weight for sales in the optimal incentive contract, while the other owner chooses a negative weight. (3) In deterministic production technology, one owner even induces a maximization of sales for his manager, while the manager of the other owner is completely discouraged as a result and leaves the competition. (4) Depending on the form of the tournament competition, both owners choose either for or against a delegation of management to a manager.

4. Information efficiency of capital markets

Prof. Dr. Klaus Spremann, University of St. Gallen

The concept of information efficiency is linked to the thesis that price formation would anticipate everything quickly, completely and correctly. The "market efficiency hypothesis" MEH had the character of a fundamental perspective, particularly in financial markets. It allowed various arguments to be made to logically complete the "teaching building". There were also many reasons that MEH should also do justice to reality. Now, the information efficiency of financial markets, namely the price formation for shares in larger companies, has recently been seriously questioned from an empirical perspective. However, the question associated with information efficiency does not only have the answer: "For theoretical reasons, Results like Baber and Odean's "Trading is Hazardous to Your Wealth". 6. (Larger) divergences between the real economy and the financial world. It means price bubbles; Keywords: wealth effect, Blanchard and Watson 1982, and the question of whether bubbles can be "managed". 7. Survival and evolution: selection effects in a changing market. The overview underlines that it is not a question of whether a particular market is now information-efficient or not, but that more than two paradigms on the topic (meanwhile quite extensive) have been expanded.

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Ausschussvorsitzende

Die Leitung des Ausschusses –
Alle Vorsitzenden seit dem Gründungsjahr.

Prof. Dr. Dr. hc Helmut Koch 

 

Prof. Dr. Dr. hc mult. Waldemar Wittmann

 

Prof. Dr. Eva Bössmann

 

Prof. Dr. Dr. hc Herbert Jacob

 

Prof. Dr. Wolfgang Kilger

 

Prof. Dr. Dr. hc Herbert Hax

 

Prof. Dr. Werner Dinkelbach

 

Prof. Dr. Horst Seelbach

 

Prof. Dr. Dr. hc Helmut Laux

 

Prof. Dr. Hugo Kossbiel

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Prof. Dr. Harald Dyckhoff

 

Prof. Dr. Siegfried Trautmann

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Prof. Dr. Martin Nell

Prof. Dr. Jürgen Eichberger

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