ABSTRACT How does demand uncertainty affect firms' investment decisions? We examine this question in the context of electricity‐producing firms' planned investments in new power plants. We measure uncertainty about future electricity demand using plausibly exogenous variation in temperature projections across scientific climate models. The results show that uncertainty increases investment in power plants with flexible production technologies, while reducing investment in less flexible technologies. Overall, the net effect of uncertainty on investment is positive when firms have access to flexible investment opportunities. These findings are consistent with models in which production flexibility shapes the investment response to demand uncertainty.

What makes independent directors perform their duty? One possible reason is that they are concerned about being punished if they do not fulfill their duties diligently. Using unique features of the Chinese capital market, we estimate the extent to which independent directors' subjective perceptions of penalty risk affect their voting on proposals. Our results suggest that they are more likely to vote against management after observing how another director in their board network received a regulatory penalty related to negligence. This effect is long lasting and stronger if the observing and penalized directors share personal characteristics and if the observing director is at a firm that is more likely to be penalized. These results provide novel evidence suggesting that the salience of penalty risk is an important factor motivating directors, which provides regulators with a powerful and cost-effective tool to improve firms' governance.

We examine how parity employee representation (PER) on corporate boards affects firms' capital investments. In Germany, PER is legally mandated for firms with more than 2,000 domestic employees, but not for those below this threshold. Exploiting this discontinuity, we show that PER has heterogeneous effects on firms operating in diverse environments. For firms experiencing positive growth, PER increases their responsiveness to investment opportunities, suggesting that employee participation increases firms' ability to exploit growth options. The effect through growth options is particularly salient in situations in which growth options are highly valuable. In contrast, for firms experiencing negative growth, PER reduces investment responsiveness, suggesting that employees resist the exercise of abandonment options. This effect is more pronounced in firms with high labor intensity, in which employees are likely to have a strong voice. Furthermore, operational risk moderates the effects of employee representation--the positive effect through growth options is attenuated in high-risk firms and the negative effect through abandonment options is exacerbated, thereby suggesting that employee board representatives are less interested in pursuing growth where businesses are relatively risky, and they protect their constituents more forcefully in high-risk environments. Moreover, the positive effect of PER on exploiting growth options is attenuated by collective bargaining agreements, while its effect through abandonment options is little affected. Evidence from stock price behavior further supports the viewpoint that employee representation affects capital investment. Our findings are relevant to policymakers as well as to firms' various stakeholders.

We study how involving employee board representatives in determining managerial compensation affects the within-firm pay ratio. The 2009 German Compensation Act shifted executive pay decisions to the entire supervisory board, amplifying employees' influence at firms with parity employee representation. This reform resulted in increased manager-to-worker pay ratios, driven by higher managerial compensation, without corresponding changes in firm performance or manager turnover. The result is robust in matched samples and absent in falsification tests. Improved employee job security and weak wage increases point to a possible alliance between employees and managers, indicating shared governance may not necessarily reduce pay inequality.

How does demand uncertainty affect firms’ investment decisions? We consider this issue from the perspective of electricity-producing firms and their planned investments in new power plants. Using plausibly exogenous variations in temperature predictions across scientific climate models to measure uncertainty about future electricity demand, we find that uncertainty increases investments in plants with flexible production technologies but depresses non-flexible investments. The net effect of uncertainty on investments is positive if firms have access to flexible investment opportunities. These results are consistent with models in which the impact of uncertainty on investments depends on the investments’ production flexibility.

This paper examines how female directors (FDs) affect firm value in the absence of mandatory gender quotas. Using a newly collected data set on director deaths around the globe, we find that stock prices decrease approximately 2% more when an FD passes away, compared with a male director. What explains this negative capital market reaction? We find evidence that finding successors for deceased FDs is challenging for firms: Succession delays are longer, and although firms try to replace FDs with women, two-thirds of their successors are male. Furthermore, their successors tend to be younger, less experienced, and more often externally hired. Stock prices decline less if more potential female successors exist in a country, the firm is larger, or FDs other than the deceased woman were on the board. Because observable characteristics such as age, tenure, education, and network centrality cannot explain the negative stock market reaction, unobserved differences across genders that lead to a lower fit of male successors to the existing board are the most likely explanation for the firm value loss after the death of an FD. This paper was accepted by David Simchi-Levi, finance. Supplemental Material: Data are available at https://doi.org/10.1287/mnsc.2022.4412 .

This paper uses legal board size requirements to test whether board size affects firm performance and value. Since 1976, the minimum size of German firms’ supervisory boards increases from 12 to 16 directors at 10,000 domestic employees, resulting in a sharp increase in board sizes. Regression discontinuity analyses show that ROA and Tobin’s Q decline by 2-3 percentage points and 0.20, respectively, at the threshold. A difference-in-differences analysis around the law’s introduction shows similar effects. Large boards’ underperformance is persistent, not just a transitory effect of adding directors, and large boards are associated with lower profit margins and M&A announcement returns.

What makes independent directors perform their monitoring duty? One possible reason is that they are worried about being sanctioned by regulators if they do not monitor sufficiently well. Using unique features of the Chinese financial market, we estimate the extent to which independent directors’ perceptions of the likelihood of receiving a regulatory penalty affect their monitoring. Our results suggest that they are more likely to vote against management after observing how another director in their board network received a regulatory penalty related to negligence. This effect is long-lasting and stronger if the observing and penalized directors share the same professional background or gender and if the observing director is at a firm that is more likely to be penalized. These results provide direct evidence suggesting that the possibility of receiving penalties is an important factor motivating directors. Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Product price risk is a potentially important factor for firms’ liquidity management. A natural place to evaluate the impact of this risk on liquidity management is the electricity industry, because producing firms face substantial price volatility in wholesale markets. Empirically, higher volatility of electricity prices leads to an increase in cash holdings, and this effect is robust to instrumenting for price risk using weather volatility. Cash increases more with price risk in firms using inflexible production technologies and those that cannot easily hedge electricity prices, indicating that operating flexibility and hedging are substitutes for liquidity management. This paper was accepted by Karl Diether, finance.

Purpose X‐ray microbeam radiation therapy is a preclinical concept for tumor treatment promising tissue sparing and enhanced tumor control. With its spatially separated, periodic micrometer‐sized pattern, this method requires a high dose rate and a collimated beam typically available at large synchrotron radiation facilities. To treat small animals with microbeams in a laboratory‐sized environment, we developed a dedicated irradiation system at the Munich Compact Light Source (MuCLS). Methods A specially made beam collimation optic allows to increase x‐ray fluence rate at the position of the target. Monte Carlo simulations and measurements were conducted for accurate microbeam dosimetry. The dose during irradiation is determined by a calibrated flux monitoring system. Moreover, a positioning system including mouse monitoring was built. Results We successfully commissioned the in vivo microbeam irradiation system for an exemplary xenograft tumor model in the mouse ear. By beam collimation, a dose rate of up to 5.3 Gy/min at 25 keV was achieved. Microbeam irradiations using a tungsten collimator with 50 μm slit size and 350 μm center‐to‐center spacing were performed at a mean dose rate of 0.6 Gy/min showing a high peak‐to‐valley dose ratio of about 200 in the mouse ear. The maximum circular field size of 3.5 mm in diameter can be enlarged using field patching. Conclusions This study shows that we can perform in vivo microbeam experiments at the MuCLS with a dedicated dosimetry and positioning system to advance this promising radiation therapy method at commercially available compact microbeam sources. Peak doses of up to 100 Gy per treatment seem feasible considering a recent upgrade for higher photon flux. The system can be adapted for tumor treatment in different animal models, for example, in the hind leg.

We propose a novel measure for workers’ financial incentives based on within-establishment wage differences among similar workers from the same occupation. This measure captures all forms of incentive pay that lead to worker-employer-specific pay premiums, including explicit (e.g., bonuses) and implicit forms (e.g., tournaments). We estimate the measure using a linked worker-establishment-firm dataset that covers 31 million workers in Germany. For validation, we exploit survey-based information on performance pay and variation in monitoring costs due to occupational characteristics, establishment size, and task complexity and show that the measure behaves as theoretically predicted. Applying the measure yields evidence that workers’ incentives positively correlate with firms’ performance and innovativeness, which supports a positive relationship between incentives and effort.

Total Joint Replacement (TJR) devices undergo standardized wear testing in mechanical simulators while submerged in a proteinaceous testing solution to mimic the environmental conditions of artificial joints in the human body. Typically, bovine calf serum is used to provide the required protein content. However, due to lot-to-lot variability, an undesirable variance in testing outcome is observed. Based on an earlier finding that yellowish-orange serum color saturation is associated with wear rate, we examined potential sources of this variability, by running a comparative wear test with bilirubin; hemin; and a fatty acid, oleic acid, in the lubricant. All these compounds readily bind to albumin, the most abundant protein in bovine serum. Ultrahigh molecular weight polyethylene (UHMWPE) pins were articulated against CoCrMo discs in a pin-on-disc tribometer, and the UHMWPE wear rates were compared between lubricants. We found that the addition of bilirubin increased wear by 121%, while hemin had a much weaker, insignificant effect. When added at the same molar ratio as bilirubin, the fatty acid tended to reduce wear. Additionally, there was a significant interaction with respect to bilirubin and hemin in that UHMWPE wear rate decreased with increasing fatty acid concentration. We believe the conformational change in albumin by binding bilirubin makes it more likely to form molecular bridges between UHMWPE and the metal counterface, thus increasing adhesive wear. However, fatty acids compete for binding sites on albumin, and can prevent this conformational change. Hence, the protein is stabilized, and the chance for albumin to form bridges is lowered. Ultimately, UHMWPE wear rate is driven by the competitive binding of bilirubin and fatty acid to albumin.

How does global warming affect firms’ activities? We consider this issue from the perspective of the electricity producing industry. Warmer temperatures increase the demand for air conditioning, the use of which fluctuates substantially over time, making investments in “flexible” power plants that can be turned on quickly and at low cost more valuable. Using an international sample of planned power plants, we estimate that hotter weather in a region leads utilities to increase their investments in flexible power plants. This effect appears to be driven by long-term changes in climate rather than abnormally high temperatures that occur over a short period. While these results are specific to the electricity industry, it is likely that climate change will require similar adjustments of firms’ assets in other industries as well. JEL classification: G30, G31

Osteoarthritis (OA) is a degenerative joint disease and a leading cause of disability globally. In OA, the articulating surface of cartilage is compromised by fissures and cracks, and sometimes even worn away completely. Due to its avascular nature, articular cartilage has a poor self-healing ability, and therefore, understanding the mechanisms underlying degradation is key for OA prevention and for optimal design of replacements. In this work, the articulating surface of bovine cartilage was investigated in an environment with enhanced calcium concentration -as often found in cartilage in relation to OA- by combining atomic force microscopy, spectroscopy and an extended surface forces apparatus for the first time. The experimental results reveal that increased calcium concentration irreversibly weakens the cartilage's surface layer, and promotes stiction and high friction. The synergistic effect of calcium on altering the cartilage surface's structural, mechanical and frictional properties is proposed to compromise cartilage integrity at the onset of OA. Furthermore, two mechanisms at the molecular level based on the influence of calcium on lubricin and on the aggregation of the cartilage's matrix, respectively, are identified. The results of this work might not only help prevent OA but also help design better cartilage replacements.

We examine how direct representation of employees on corporate boards affects the manager-to-worker pay ratio within firms. German law mandates that in firms with more than 2,000 domestic employees half of the supervisory board seats belong to employee representatives. For the identification of the effect of employee board representation on the pay ratio, we exploit this discontinuity, a law change granting employees more influence over managerial compensation, and a combination of both. In all three specifications, the strengthened employee voice increases the pay ratio, driven by higher managerial compensation. As employees are also better off in terms of job security, higher pay ratios in codetermined firms are consistent with the existence of a manager-worker alliance that benefits both parties.

Using a matched employee-establishment-firm data set covering German workers, we find that wage inequality increases monotonously with firm size: the largest firm decile pays 70% higher wages than the bottom decile, and their within-firm wage variance is 30% larger. Decomposing wage inequality into workforce composition and non-composition effects reveals that composition is responsible for three-quarters of the size-inequality relation within firms and half between firms. Higher wage variance in larger firms is largely explainable by more heterogeneous job characteristics and higher employee monitoring complexity. Higher wages in larger firms are not related to differences in profitability, monitoring complexity, or unionization levels, but different job characteristics and local labor markets play some role. Analyzing establishment size within firms reveals that larger establishments show more variation in workforce quality, but do not pay an economically significant wage premium. We thank Christoph Kaserer, Dalia Marin, Christian Merkl, Stefan Seth, Sebastian Siegloch, Uta Schönberg, Elena Simintzi, and Stefanie Wolter for comments and suggestions. Please send correspondence to Daniel Bias, E-Mail: daniel.bias@tum.de

Extraordinary normal tissue response to highly spatially fractionated X-ray beams has been explored for over 25 years. More recently, alternative radiation sources have been developed and utilized with the aim to evoke comparable effects. These include protons, which lend themselves well for this endeavour due to their physical depth dose characteristics as well as corresponding variable biological effectiveness. This paper addresses the motivation for using protons to generate spatially fractionated beams and reviews the technological implementations and experimental results to date. This includes simulation and feasibility studies, collimation and beam characteristics, dosimetry and biological considerations as well as the results of in vivo and in vitro studies. Experimental results are emerging indicating an extraordinary normal tissue sparing effect analogous to what has been observed for synchrotron generated X-ray microbeams. The potential for translational research and feasibility of spatially modulated proton beams in clinical settings is discussed.

Extraordinary normal tissue response to highly spatially fractionated X-ray beams has been explored for over 25 years. More recently, alternative radiation sources have been developed and utilized with the aim to evoke comparable effects. These include protons, which lend themselves well for this endeavour due to their physical depth dose characteristics as well as corresponding variable biological effectiveness. This paper addresses the motivation for using protons to generate spatially fractionated beams and reviews the technological implementations and experimental results to date. This includes simulation and feasibility studies, collimation and beam characteristics, dosimetry and biological considerations as well as the results of in vivo and in vitro studies. Experimental results are emerging indicating an extraordinary normal tissue sparing effect analogous to what has been observed for synchrotron generated X-ray microbeams. The potential for translational research and feasibility of spatially modulated proton beams in clinical settings is discussed.

This paper examines how direct involvement of employees in corporate governance affects executive compensation. German law mandates that half of the supervisory board seats belong to employee representatives in firms with over 2,000 domestic employees. For identification, we exploit this discontinuity, a law change which grants employees more influence over compensation, and a combination of both. In all three settings, we find that executive compensation rises by about one-third if employee voice is strengthened. Employees are also better off, as evidenced by increased employment protection. These results support that employee control facilitates the alliance between managers and employees.