Forest Nelson and several academics from the University of Iowa were sitting down to lunch in March of 1988, just after the Michigan Democratic caucus. Michael Dukakis had been predicted to beat Jesse Jackson by a landslide. Instead, Jackson easily pulled off a startling upset. “One of the other two guys said, ‘Boy, if the futures markets in Chicago did as bad a job of predicting the November price of corn as those opinion polls did of predicting the very next day’s election, then those markets wouldn’t exist,’” recalled Nelson, an economics professor still at the university. ... Read More
Should We Buy Options on Presidential Candidates?
More like this: Business & Economics, The Idea Lobby Tags: Elections, Options, Politicians, Polls, Predictions, Stock Market
CEO Options Encourage Sautéing of the Books
You might think a corporate CEO's job is to maximize his or her firm's profits and create value for the shareholders, but in practice, say business researchers, it isn't always quite that simple. Depending on the types of compensation they receive, CEOs often act in ways that run counter to shareholders' interests, taking excessive risks, depressing profits and driving down stock prices. The woes — and horrendous PR — currently afflicting Wall Street may be a case in point. Even President Obama has joined in the chorus decrying executive compensation packages, calling the amounts given ... Read More
More like this: Business & Economics Tags: CEO, Compensation, Executive Pay, Financial Crisis, Options, Restatements
A Firm of One’s Own
The notion that employees might become owners of the companies where they work has centuries of history, but in the early 1970s, employee ownership in the U.S. was mostly confined to a handful of experimental companies. Over the last three decades, however, a stealth economic revolution has occurred. By 2006, the General Social Survey estimated that 35 percent — or more than 25 million — of the employees who work for U.S. corporations were participating in one or more stock ownership plan in their companies. A series of tax laws enacted between 1974 and 1997 (most notably employee ... Read More
More like this: Business & Economics, January-February 2009, Rational Argument Tags: 401(k), Corporations, Economy, ESOP, Options, Stocks
