Economics Problem Essay

1)False When the demand curve shifts left, it means there is less demand for diamonds. However, when consumer income increases, their purchasing power increases (assuming the relative price of diamonds stay constant). That being said, consumers are more likely to purchase more diamonds, especially because it is a luxury good, causing the curve of diamonds to shift right, increasing the demand. 2)False As the population increases, the demand of beef increases as well, causing the demand curve to shift right. In order to accommodate for the increased demand in beef, the price needs to be increased as well in order to reach the appropriate market price for the current supply. Correspondingly, at the new demand curve, consumers are willing to buy more for each price per unit. Thus, this statement is not an example of the Giffen good and does not illustrate an upward sloping demand, instead, the demand curve simply shifted right to account for the increase beef demand. 3)Uncertain Although energy from nuclear power and oil are considered substitutes, it is unclear whether or not the techniques for producing energy from nuclear power is cheaper or similar in price when compared to energy produced from oil. IF, energy produced from nuclear power is cheaper or similar in price, the demand for oil as an energy source will be more elastic. 4)False The demand curve is the relationship between price and quantity demanded, it measures how much consumers are willing to buy for each price per unit. Change in price of good alone does not affect the demand curve, but it does affect the quantity demanded. In other words, if the price of good changes, we would be moving along the demand curve, not affecting the demand curve to shift left or right. Factors that would affect the demand curve include price of related goods, income, tastes, etc†¦) 5)True Assuming the statement focuses on the domestic tomatoes, this is true because the change in price of the domestic tomatoes affects only the quantity demanded of the domestic tomatoes, not the demand curve. The decrease in price will move us down the demand curve, increasing the amount consumers are willing to buy per price per unit. 6)False If the price of something goes up, it is not necessarily irrational to buy more of it. It really depends on the good that the consumer is buying. For example, because rice is a staple in China, people will continue to buy it despite the price increase. To them, there is no â€Å"substitute† to rice, thus the income effect dominates, causing them to continue buying rice at a higher price. 7)False The price may or may not rise when supply and demand increase, it all depends on whether or not the supply and demand increase together proportionately. If supply and demand increase at the same rate, the quantity will increase but the price will stay constant. If supply increases more than demand, the price will decrease. If demand increases more than supply, the price will increase. 8)False In this case, I saw gas as a necessity; it is relatively inelastic because anyone who owns and uses a car will need to buy gas regardless of the price. The quantity demanded moves along the demand curve as the price of gas increases or decreases, and this is true for both professors and grad students. Even without a ceiling, students will continue to purchase gas. Moreover, the incomes of a professor and grad student are not clearly stated. Some grad students may have more income than a professor, giving the grad student just as much, if not more, purchasing power, thus a price ceiling does not necessarily hurt the professor more than the student.

My Posse Dont Do Homework1 essays

My Posse Dont Do Homework1 essays LouAnne Johnsons My Posse Dont Do Homework is an excellent book in the way that it describes the looked over and ignored kids of schools around the nation. My Posse Dont Do Homework shows us how important it is to nurture and care for students and tell each and everyone of those students how important they are and they, too, can make a difference. When Ms. Johnson had the class on the first day of school, the students were all prepared to work their way through yet another substitute or permanent teacher. According to the book My Posse Dont Do Homework, when Ms. Johnson had asked about Miss Shepard, the group of students former teacher, one girl replied that she had been psyched out (19). Miss Shepard had thrown down her book and rushed out of the classroom in tears the previous Friday. The kids werent surprised that she hadnt returned. They were obviously proud of their handiwork... (19). Moments later a dictionary was flung at her head and she then proceeded to leave the classroom . After the dictionary incident she spoke with a colleague, Hal Gray. After a brief discussion with him, she went back to the class where she was inspired by her former drill instructor, Petty Officer Hawks, presence and confronted the student who threw the dictionary at her. After getting in the boys face, he gave into her demand of sitting down. After introducing herself and telling them about her Marine and Navy background, she gained the advantage and some of their respect from fear that she could kill them with her bare hands. The book is not suggesting that every teacher that has a difficult group of students should let them think that he or she, meaning the teacher, is going to violent if they do not cooperate in class. However, with this group of kids Ms. Johnson thought that it would be most effective to intimidate her new student ...

Word Choice Its vs. Its - Proofread My Papers Academic Blog

Word Choice Its vs. Its - Proofread My Papers Academic Blog Word Choice: Its vs. Its Apostrophes have a bad habit of turning up in unexpected places. Confusion between â€Å"its† and â€Å"its,† for example, is so common that, as proofreaders, we pretty much consider it our nemesis. Worry not, though! We’ve prepared this simple guide to using â€Å"its† and â€Å"it’s† correctly, so read on and you’ll soon be equipped to join our crusade against this common grammatical error. Why the Problem Occurs â€Å"Its† and â€Å"it’s† are so frequently confused because there are two situations in which we typically add an apostrophe to a word: To indicate possession (e.g., the windshield on a car is the â€Å"car’s windshield†) To indicate omitted letters in a contraction (e.g., â€Å"do not† becomes â€Å"don’t†) It would therefore make sense for something belonging to an â€Å"it† to be indicated by adding an apostrophe + â€Å"s† to the word, but in practice we only use an apostrophe for the contraction â€Å"it’s.† Why? And how do you remember this distinction? Let us explain. Its (Possessive Pronoun) The term â€Å"its† is used when referring to something owned or belonging to an â€Å"it† (typically an object or animal): With its smashed windows and chipped paintwork, the car was a wreck. Just dont ask us what we were doing when we wrecked it. [Photo: Thomas R Machnitzki]â€Å"Its† doesn’t require an apostrophe because it is a possessive pronoun, like â€Å"his,† â€Å"her† or â€Å"your† (none of which require an apostrophe to indicate possession). It’s (Contraction) â€Å"Its† is a contraction, a shortened version of two separate words with letters omitted. To be specific, â€Å"it’s† combines â€Å"it† with either â€Å"is† or â€Å"has† depending on the tense used: It is finally time! = It’s finally time! It has been a long wait! = It’s been a long wait! Like any other contraction, you must use an apostrophe to show that two words have been combined when writing â€Å"it’s.† Its or It’s? The distinction between these terms is vital for clarity, so it’s definitely worth taking a moment to remember how they should be used. Thankfully, the difference is a fairly simple one: Its = Possession Its = Contraction (either it is or it has) Thus, if you’re writing about something that belongs to an â€Å"it,† the correct term will always be â€Å"its.† Likewise, if you’re using â€Å"it’s† as a shortened version of â€Å"it is† or â€Å"it has,† you’ll always need an apostrophe. It’s also worth remembering that contractions are generally considered inappropriate in formal writing, so you should avoid terms like â€Å"its† in your college work and write â€Å"it is† in full instead.

Lobour Market Policy Essay Example | Topics and Well Written Essays - 1750 words

Lobour Market Policy - Essay Example The understanding of "labor market" or more appropriately, "labor markets" involves the study of the dynamics of the market vis--vis the demand and supply of various kinds of labor. A 'labor market' may be defined as the number of people employed plus the number of unemployed but seeking work. The supply of labor depends upon variables such as natural population growth, new entrants, immigrants, retirements, increased female participation, de-industrialization, skills shortage and surpluses, education and training, flexibility, and wage determination. The 'level of employment' is the proportion of such employed in the total labor market. The levels of supply and demand in the 'labor market', just as in 'markets' for any other goods depend on the availability of work, the availability of labor and their skill compatibility. However the main difference between the two is the function of supply and demand in setting the price and quantity. Whereas in the case of goods, increases in prices result in increased production for the demand to be satisfied, this does not happen in the case of labor for there are limitations of time available for labor and increased wages may result in less supply of labor as workers may tend to utilize increased earnings to indulge in leisure activities. Some economists believe that the laws of supply and demand apply more to certain segments of the markets only where workers change job types corresponding to changing wage rates.Segmenting labor markets The 'agency theory' of labor management purports that the principals (owners or managers) have to develop ways to monitor and control the activities of their agents (staff); that the principals may have problems in ensuring that work is carried out according to instructions and that therefore it is necessary to clear up ambiguities by setting objectives and monitoring performance. (Armstrong 2003, p. 281). However Armstrong suggests that the theory "looks at the employment relationship purely from management's point of view and regards employees as objects to be motivated by the carrot and stick." He calls it a "dismal theory, which suggests that people cannot be trusted." (Armstrong 1996, cited in 2003, p.281). The neoclassical theory of labor markets assumes that firms aim to maximize their profits with minimal costs; the number of buyers (firms) and sellers (workers) is high; there is no collective bargaining that there is no monopsony of power (exploitation of labor because of large supply and low demand) and that the firm is a wage taker. In a perfect world, with no bargaining forums like trade unions, labor markets may be 'competitive'. This means that the workers and employers have information about each other and that there are no transaction costs. On the other hand, job search, training and the need to gain experience to switch jobs are variables that determine supply and demand in a normal labor market. However the glaring lacuna of this theory is that it assumes that labor is homogeneous which means that all workers turn out equal amount of work and that there are no differences in skills and experience of workers. This is demonstrated by the study of Hipple and Stewart (1996), w hich highlights the wide variations in the

Steriodogenesis has a common pathway but hormonal steriods are Essay

Steriodogenesis has a common pathway but hormonal steriods are secreted in a strongly cell specific manner. Discuss - Essay Example Steroidogenesis takes place in endocrine glands like the adrenal and gonads.P450side chain linked cleaving enzyme get involved in the interconversion of cholesterol to Carbon18, Carbon19, and Carbon21 and this is the committed step of Steroidogenesis (John 1994, p.33). HMG-CoA or the mevalonate pathway generates isopenteyl pyrophosphate and dimethylallyl pyrophosphate which serve as precursors for steroidal hormones biosynthesis. Isopenteyl pyrophosphate and dimethylallyl pyrophosphate become joined forming geranyl pyrophosphate that becomes lanosterol (Mary 2011, p.55). Lanosterol undergoes Steriodogenesis transformation to form other steroids. All steroid hormones in humans follow this pathway, but not all steroids are hormones (John 1994, p.77). Steroid hormones are crucial for proper functioning of the body. They get synthesized from cholesterol which is also a component of the cell membrane thus the hormone is able to enter the cell and bind to its receptor. Steroid hormones get classified as androgens, estrogens, progestins, mineral corticoids and glucocorticoids. Both estrogens and androgens get generated by the gonads and affect sexual development. Progestrins mediate the menstrual cycle and pregnancy. Excretion of water and salts by the kidney get regulated by mineral corticoids while lipid carbohydrate and protein metabolism become affected by glucocorticoids. Steroid hormones become synthesized when they are need. The brain releases a signal when the body wants a certain protein synthesized or needs a certain process done (John 1994, p.78). These signals get transmitted via the intermediary hormones in other words through trophic hormones. Once released, they act on the central nervous system and the peripheral target tissues (Richardb2010, p.67). One can regulate the amount of steroid hormone secretion by regulating the amount of cholesterol produced because cholesterol is the precursor for these hormones. The adrenal cortex has three main tissue re gions: the zona glomerulosa, zona fasciculate, and zona reticular is. These zones are histological and enzymatically distinct and the exact steroid hormone secreted depends on the enzymes present (Reginald 2010, p.34). Adenocorticotropin (ACTH) hormone regulates hormones produced at the zona reticularis and zona fasciculata (Donald 2010, p.56). The hypothalamus releases ACTH in to the blood stream then it become carried to the adrenal glands where it binds to ACTH receptors on the cell membrane activating adenylate cyclase with production of cAMP (second messenger).This leads to ultimate secretion of cortisol. When the body needs to accumulate more sodium, angiotensinogen get released from the liver and it become to angiotensin( i) and later angiotensin (ii) that bind to the cell membrane receptors which get coupled to the phospholipase c of the zona glomerulosa (John 1994, p.32).This leads to secretion of aldosterone; a mineral corticoid. Aldosterone leads to sodium retention by fa cilitating gene expression of messenger RNA for sodium-potassium ATPase which is responsible for reaccumulation of sodium and potassium. Gonadol steroid hormones become secreted by the testis and ovaries. The important hormones in this category are the estradiol and testosterone. Luteinizing hormone stimulates testosterone production in men by binding to Leydig cells. Androgen binding protein transports testosterone sertoli cells which convert it to

York and Sevilla Essay Example | Topics and Well Written Essays - 1500 words

York and Sevilla - Essay Example New York City boasts of numerous Air Trains that have full-time operation within the city. There are three main airports people tourists and public travelers use to fly across the city including JFK International airport. The Newark Liberty International airport is a key transport terminal. LaGuardia Airport is another transport terminal in New York. Air transport facilitates tourism industry within the city because it is relatively cheaper to fly across the city at only $5 while children under five years take it free. In addition, tourists who may wish to fly using private flight have only twenty-five minutes to move between Teterboro Airport and Midtown Manhattan. However, air transport in York city, particularly the public sector, may at times limit tourism activities due to frequent commercial air traffic, consequently leading to unwanted delays. Sevilla offers a many advantage to tourists of all walks who visit the destination. The Sevilla International Airport is 25 minutes away from the city’s center. The Airport helps in facilitating quick tourist movements in and outside the city. In addition, La Parra International Airport, located only 10km away from Jerez de la Frontera, offers relatively cheap flights for tourists to Sevilla. Most of the flights have WI-Fi access that enables tourists to browse through and access information while on board. However, most of the flight-service-offering companies are relatively expensive to the tourists. The city of New York mainly utilizes two rail stations found in Midtown, Pen Station on the west side and the Grand Central Terminal on the east side of the city. The stations enjoy services from many bus and subway lines that facilitate an exchange of travelers out and into the stations (Boniface & Cooper 2009, p. 282). The railway transport is a good supplement to other means of transport available in New York because it does not experience traffic congestions. In addition, rail transport offers

Corporate Governance Essay Example for Free

Corporate Governance Essay ABSTRACT This paper examines whether the remuneration of the Chief Executive Officer position in Hong Kong public firms is affected by board composition, given the influence of family control on the boards of many Hong Kong companies. It is hypothesized that I) in family-controlled boards, Chief Executive Officers receiver higher compensation and II) Chief Executive Officers in family-controlled boards serve as Chief Executive Officer positions longer. In family-controlled boards, corporate governance is of very high importance as the independent non-executive directors can exert less influence over the board, compared to non-family-controlled boards (â€Å"dispersed boards†). Keywords: Board composition, Remuneration, Corporate Governance. 1.INTRODUCTION The economic turmoil in Asia in 1997 has led to a wider recognition of the importance of corporate governance. In line with global trends towards higher standards of corporate governance, the duties and liabilities of the directors of the listed companies have therefore become more stringent. It follows that many corporate governance mechanisms designed to monitor board members may be less effective for family-owned and family-controlled firms. However, to attract outside investors, family-owned and family-controlled firms tend to encourage greater independence and monitoring from the board. For the purposes of the study, family-owned and family-controlled are used interchangeably. The reason is that actual family ownership is difficult to ascertain due to various shareholdings and special purpose vehicles that are used, and cannot be deduced from annual reports. Thus, in this study we classify family-control and family-ownership when the board is made of a majority of related family members as a â€Å"family-controlled board†. When it is not, we classify it as a â€Å"dispersed board†. In practice, there are instances where the family owns the majority of a company but comprise of a minority of the board, and it is possible that the family is able to exert influence via other avenues, however, this study will not be examining such. Family-owned firms are common throughout Asia. Studies show that, family-owned firms hold more than 20 percent of the equity of listed companies in Asia, and more than 60 percent of the listed companies have connections with family-owned groups (Bebchuk Fried, 2006). Family-owned businesses represent the predominant form of listed companies in Hong Kong (Standard Poor’s, 2002). Such family ownership structure implies the strong influence of dominant shareholders and provides limited voice for minority shareholders. Compared to the Anglo-American environment, where ownership blocks are less concentrated but institutional investors are more prevalent, in Hong Kong, there is less of a culture for non-executive directors or minority shareholder activists to challenge. Variations in ownership structure may lead to differences in the nature of agency conflicts, the roles of directors may vary in accordance to the ownership structure. For family-owned firms, Shleifer and Vishny (1997) argue that the primary agency conflict is between a family owner and non-family owners. Meanwhile, for widely held firms, Berle and Means (1932), and, Jensen and Meckling (1976) argue that the primary agency conflict is between executives and shareholders. As a consequence, tying remuneration to performance of executives may prove the most efficient way to mitigate this agency conflict. To date, a vast of literatures published in recent years show the growing recognition of influences of family-owned firms and executive remuneration on corporate governance. Many studies have tended to focus on the use of remuneration contracts to align interests of executives with owners in family-owned firms. The rise in executive remuneration in recent years has been the subject of public criticism, which further intensified corporate governance scandals. Therefore, the question whether a correlation exists between remuneration and family-control in board composition at Hong Kong-listed companies. 2.OBJECTIVES In 1994, Hong Kong Exchanges and Clearing Limited introduced rules that require listed firms to disclose the remuneration of directors. Before 2004, there was no requirement to disclose the names and remuneration of directors (Cheng Firth, 2005). The Disclosure of Financial Information rule under Hong Kong Exchanges and Clearing Limited’s Listing Rules was amended on 31 March 2004 to require full disclosure, on an individual and named basis, of directors’ fees and any other reimbursement or emolument payable to a director. In addition, Hong Kong Financial Reporting Standard 2 requires listed firms to disclose directors’ share-based remuneration. The Code on Corporate Governance Practices forms part of the Listing Rules and came into effect on 1 January 2005. According to the Code on Corporate Governance Practices, Hong Kong’s listed firms should be overseen by an effective board, which should assume responsibility for the leadership and control of the listed firm, and the members of which should be collectively responsible for promoting the success of the firm by directing and supervising its affairs. Directors should make decisions objectively in the best interests of the firm. In regards of remuneration policy for firms’ directors, the Code on Corporate Governance Practices requires the disclosure of information related to the firm’s directors’ remuneration policy and other remuneration-related matters. There should be a formal and transparent procedure for setting policy on executive directors’ remuneration. The Chief Executive Officer, a director in the board of company, will hence have his/her full remuneration disclosed. It is recommended that remuneration should be set at a level sufficient to attract and retain directors of the caliber required to run the company successfully, but companies should avoid paying more than is necessary. However, it is argued that many corporate governance mechanisms designed to monitor board members may be less effective for family-owned firms. However, to attract outside investors, family-owned firms tend to encourage greater independence and monitoring from the board. In Hong Kong, there are quite a number of listed companies have a high concentration of family ownership. It is common for the top executives of family-owned firms in Hong Kong to be family members. The rise of remuneration of family executives in family-owned firms has been the subject of public criticism. Recognizing this, the purpose of this research is to find out whether there is any relationship between family-board-control of firms and remuneration of Chief Executive Officers. To summarize, this study revolves around the following major objectives. †¢ To test whether there are significant differences in Chief Executive Officers’ remuneration for family-controlled and non-family-controlled firms (specifically firms with family-controlled boards and firms without family-controlled boards); †¢ To find out whether â€Å"Family Chief Executive Offices† (cases where the Chief Executive Officer are family members of the family-controlled boards) are awarded excessive compensation, compromising standards of corporate governance; †¢ To examine the tenure of Chief Executive Officers for family-controlled firms vs non-family-controlled firms, given that there may be differences in the board’s ongoing approval and demand of the results delivered by the Chief Executive Office; and †¢ To test whether there are significant differences in corporate governance structure of family-controlled and non-family-controlled firms. 3.LITERATURES REVIEW, HYPOTHESIS DEVELOPMENT 3.1 Agency theory It is commonly acknowledged that ownership structure, the basis of corporate governance, is important to the overall performance of firms. While there are a large number of literatures discussing ownership structure, agency theory is frequently cited as a foundation. In modern corporations, the separation of ownership and control leads to agency conflicts that can be alleviated through various corporate governance mechanisms (Fama and Jensen, 1983). As one such mechanism, compensation schemes are designed to provide incentives that align the behavior of agents to act on behalf of principles (Jensen and Meckling, 1976). This relationship between executive compensation and firm performance has received considerable attention from the general public and academics. One of the issues in the field of management is the impact of family influence (Mishra et. al., 2001; McConaughy et. al., 1998) and corporate governance on the value of a firm (Khatri et al., 2001; Kwak, 2003; Black et al., 2003). There are various studies in diverse areas like accounting, economics, finance, law and management have been conducted to study such impact (Mishra et al., 2001; Kwak, 2003; Blacket al., 2003; Andersen and Reeb, 2003). These studies have resulted in interesting and useful observations. According to Alchian and Demsetz (1972), the principal agent problem comes from hidden action due to asymmetric information. The essence of a firm is that, it permits people to work as a team. It is the cooperation of a team that leads to a firm’s output. Thus, the agency problem inevitably arises in corporate governance. According to Jensen and Meckling (1976), agent problem arises from the conflict of interests between shareholders as the principals and the executives as the agents. Consequently, residual control rights fall into the hands of management instead of the residual cash flow claimants. As a result, the sum of monitoring expenditures be incurred by the principal, bonding expenditures incurred by the agent, and the value of the lost residual borne by the principal are included as the cost of agency. In general, when ownership of a firm becomes more dispersed, the agency problem will be deteriorated due to the inability of the relatively small shareholders to monitor the behavior of management. The monitoring of managers by shareholders is also weakened by free-rider problem. To mitigate the problem of agency, Ang (2000) and Denis and Sarin (1999) suggested the shareholding of management to be increased in order to make the executive a significant claimant. An inverse correlation exists between the dispersed ownership and firm performance (Berle and Means, 1932), because executives’ interests do not coincide with the interest of shareholders so that corporate resources are not used for the maximization of shareholders’ wealth. This view has been supported by many scholars. Shleifer and Vishny (1986), McConnell and Servaes (1990), and Zingales (1995) found a strong positive relationship between ownership concentration and corporate performance. In transitional economies, Xu and Wang (1999) and Chen (2001) found a positive relationship between actual firm performance and ownership concentration for a sample of listed Chinese companies. 3.2Ownership Structure It is common in Hong Kong, that ownership structure is characterized by single dominant owners (Chau Leung, 2006). A report of the Corporate Governance Working Group of the Hong Kong Society of Accountants in 1995 indicated that a high concentration on family-controlled listed firms is highly entrepreneurial and opportunistic in their business strategies, however, the report also indicate that these firms with single dominant owners lack resources and corporate culture to maintain strong internal corporate control. The 2001 Review on Corporate Governance by the Hong Kong Standing Committee for Corporate Law Reform, as well as a report from Standard Poor’s, indicated that family ownership structures present particular challenges. Theoretically, there is a major puzzle regarding the role of family in large firms (Bertrand Schoar, 2006; Villalonga Amit, 2006). In family-controlled firms, threatening factors may negatively influence the firms’ value (Demstez, 1983; Demstez and Lehn, 1985). Table 1 as below lists positive and negative factors affecting the relationship between family control and firm value. It shows that there is still difference of opinion among researchers on this topic of importance. 3.3â€Å"Family† Chief Executive Officers In this study, whether a person belonging to the family acts as a Chief Executive Officer is taken into account. We classify family-control and family-ownership when the board is made of a majority of related family members (â€Å"family-controlled board†). When it is not, we classify it as a â€Å"dispersed board†. Family Chief Executive Officers have substantial stockholdings of 5 percent or more (Daily Dollinger, 1993), with such given bargaining power, can be expected to influence the size and structure of their remuneration packages to their own benefit. Thus, for the purposes of this study, Chief Executive Officers with stockholdings of less than 5 percent are not counted as â€Å"Family Chief Executive Officers†. There are differing opinions on whether such Family Chief Executive Officers have higher or lower remunerations at such family-controlled firms. Some believe that such Family Chief Executive Officers are receiving above-average compensation due to the family-controlled board, as well as their strong ability to influence remuneration committee. Oh the other hand, others take the opposite view and see that Family Chief Executive Officers should be receiving below-average compensation. There is several reasons for this expectation. First of all, both anecdotal (Applegate, 1994; Kets de Vries, 1993) and empirical (Allen Pamian, 1982; Gomez-Mejia et al., 2001; Schulze et al., 2001) evidence suggest that incumbents with family ties to owners enjoy high employment security. As argued by Beehr (1997), the Family Chief Executive Officer inherently plays two overlapping and interdependent roles: a work role as steward of the company, and a non-work role as fulfillment of family obligations. In reciprocity for this role duality, the Family Chief Executive Officer is rewarded with a relatively assured job (Allen Pamian, 1982; Kets de Vries, 1993; Gomez-Mejia et al., 2001). Moreover, some literatures suggested that evaluators are more likely to make positive performance attributions to employees when there are emotional ties between monitoring and those being judged (Cardy Dobbins, 1993). It is expected that in family-controlled firms, board members in their role as monitors may be less inclined to attribute disappointing results to the Family Chief Executive Officer, giving the benefit of the doubt to the incumbent when interpreting ambiguous performance data. Agency theory suggests that there are inherent conflicts between shareholders and executives. Applying agency theory’s logic, the above scenario suggests that in family-controlled firms, risk adverse agents would trade higher job security for lower earnings if they are related to principals. Family Chief Executive Officers mitigate usual agency costs because of their aligned interests with the owners (Anderson Reeb, 2003). The information asymmetry problem in agency relationships may also be reduced given the close ties between Family Chief Executive Officers and the owners. Since they hold high ownership stakes, Family Chief Executive Officers have sufficient incentives to place family welfare ahead of personal interests, thus may perform better than firms with non-family Chief Executive Officers. Barney (2001) suggested that appointing family members as Chief Executive Officers may be beneficial. Tradition, loyalty, and bonding relationships determine how resources are deployed in family firms. Family Chief Executive Officers build common interests and identities (Habbershon Williams, 1999) and play a dual role by being both owners and executives (Chang, 2003; Yiu, Bruton, Lu, 2005). Through social relationships with managers and employees, Family Chief Executive Officers may help to obtain intangible resources such as goal congruence, trust, and social interactions, providing valuable, unique, and hard-to-imitate competitive advantage (Chu, 2011; Liu et al., 2011; Luo Chung, 2005). The Code on Corporate Governance Practices recommends remuneration committee to seek advice from the Chief Executive Officer on the matter of directors’ remuneration. Executives in firms controlled by a large shareholder receive more compensation for performance, than executives in firms lacking a controlling owner (Gomez-Mejia et al., 1987). Mehran (1995) examined the relationship between executive remuneration, ownership structure and firm performance. The results indicate that firms, which have more outside directors, have a higher percentage of executive remuneration in equity-based form. Moreover, the percentage of equity-based remuneration is inversely related to the outside directors’ equity ownership, i.e., the executive’s equity-based remuneration rose if the outside directors’ owned less of the company, and vice-versa. Next, Mehran (1995) turned to firm performance, and its relationship to executive remuneration and ownership structure. He used Tobin’s Q and return on assets as measures of firm performance. He found firm performance to be positively related to the percentage of executive remuneration that is equity-based. However, Mehran (1995) no relationship between firm performance and ownership structure. He concluded that the results support the notion that executive remuneration should be tied to firm performance. There is a vast amount of literature on turnover of the Chief Executive Officer position (Furtado and Karan, 1990; Kesner and Sebora, 1994; Finkelstein and Hambrick, 1996; Pitcher et al., 2000). However, according to Finkelstein and Hambrick (1996), the relationship between remuneration and turnover has not been subjected to rigorous empirical examination, even given the emphasis on retention as a justification for high remuneration of Chief Executive Officer. The following hypotheses are framed: Hypothesis 1: In family-controlled boards, Chief Executive Officers receive higher compensation. Hypothesis 2: Chief Executive Officers in family-controlled boards serve as Chief Executive Officer positions longer. 3.4Board Composition The role of the board is expected to represent shareholders, provide strategic guidance to and effective oversight of management, foster a culture of good governance, and promote a safe and healthy working environment within the company. In accordance to Hong Kong Stock Exchange Listing Rule 3.10, the board of directors is required to have at least three independent non-executive directors. The presence of â€Å"truly† independent non-executive directors in the corporate governance regime is seen as one way of mitigating agency problem associated with concentrated family ownership. In family-owned firms, given the influence of family control on the remuneration and performance relationships exists, where the majority of shares are in the hands of family members, under this circumstance, the executive and risk-bearer functions are merged and more of the wealth consequences of the executives’ decisions are internalized. In other words, there is less separation of ownership and control and thus lowering agency costs, which in turn leads to less cost for monitoring by outside directors. Therefore, firms closely controlled and managed by family members are expected to use lower proportion of outside directors compared with firms with disperse ownership. In widely held firms, with ownership dispersed among many investors, investors are often small and poorly informed to exercise even the control rights they actually have. Moreover, the free-rider problem faced by individual investors makes them uninterested in expending effort to learn about the firms they have financed, or even to participate in the governance (Shleifer and Vishny, 1997). As a result, the larger degree of separation of ownership and control in widely held firms leads to greater conflicts. The use of outside directors by widely held firms is expected to be more. 3.5Remuneration Committee In 1999, remuneration committees were uncommon in Hong Kong, with only few firms reporting their existence (Cheng Firth, 2005). Since 2006, Hong Kong Stock Exchange proposes a rule to require issuers to set up a remuneration committee, with the committee chairman and a majority of the members being Independent Non-executive Directors. In family-owned firms, the positions of the Chief Executive Officer are usually held by family members, who can influence the level of remuneration paid to directors. The Code on Corporate Governance Practices recommends remuneration committee to seek advice from the Chief Executive Officer on the matter of directors’ remuneration. The Code on Corporate Governance Practices recommends that the majority of remuneration committee members be Independent Non-executive Directors. The presence of Independent Non-executive Directors on the remuneration committee is supposed to be used as monitoring mechanism that prevents excessive remuneration for executive directors (Basu et al., 2007), including that of the Chief Executive Officer. The role of independent non-executive directors and large institutional shareholders becomes crucial to curtailing the possible self-serving behavior of top managers (HKSA, 2001). Studies of firms in other countries show conflicting results on the relationship between remuneration and remuneration committee. Some findings show that remuneration committees tend to reduce remuneration, whereas others report the opposite (Conyon Peck, 1998; Ezzamel Watson, 1998). However, in practice it is highly likely that the Chief Executive Officer has some influence over the compensation decision (Murphy, 1999). An important question relating to the composition of remuneration committee concerns the ideal combination of outsiders and insiders. Insiders may face distorted incentives due to their lack of independence from the Family Chief Executive Officer (Bushman et al., 2004). 3.6 Components of Remuneration The basic components of remuneration of Chief Executive Officer are similar, however, the relative level and weights on the components differ (Abowd and Kaplan, 1999, and Bryan et al., 2006). Generally, remuneration of Chief Executive Officer can be divided into four basic parts: a base salary, an annual bonus which is tied to some accounting measure of company performance, stock options, and long-term incentive plans, such as restricted stock plans and multi-year accounting-based performance plans. †¢ Base salary: is the fixed part of remuneration of Chief Executive Officer, causing risk-averse executives to prefer an increase in base salary rather than an increase in bonuses. Most components of remuneration are specified relative to base salary. †¢ Bonus: in addition to the base salary, most companies offer their executives an annual bonus plan based on a single year’s performance. The purpose of such bonuses, as well as options, is to align the incentives of the Chief Executive Officer with that of the shareholders. †¢ Stock options: are contracts, which give the owner the right to buy shares at a pre-specified exercise price. Stock options reward stock price appreciation, not total shareholder return, which includes dividends. In this study, stock options are excluded, as full details of such information would not be retrievable from annual reports. †¢ Other forms of compensation: restricted stock to be received by executives, it is restricted in the sense that shares are forfeited under certain conditions, which usually have to do with the longevity of employment. Many companies also have long-term incentive plans in addition to the bonus plans, which are based on annual performance. Top executives routinely participate in supplemental executive retirement plans in addition to the company-wide retirement plans. Most executives have some sort of severance arrangement. Finally, executives often receive benefits in the form of free use of company cars, housing, etc. Based on the various conceptual and empirical evidences presented above, this study aims to understand whether the remuneration of a Family Chief Executive Officer is influenced by the board composition, i.e. whether it is family-controlled or not. This ties into the original Hypothesis 1, thus, the further hypotheses is framed as follows: Hypothesis 3: The higher the proportion of independent non-executive members on the board of directors at family-board-controlled firms, the lower the Chief Executive Officer remuneration.