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AbstractManuscript TypeEmpiricalResearch Question/IssueThis study examines the relationship between bank CEO compensation and mortgage origination practices before the 2008 financial crisis. It extends the discussion about the degree of responsibility of executive compensation for the crisis, by testing whether bank CEO equity incentives contributed to the growth in high‐risk mortgages before the collapse of the mortgage market.Research Findings/InsightsUsing a unique dataset of comprehensive loan origination records and CEO compensation in an inclusive sample of publicly traded U.S. banks, this study finds strong evidence that CEO compensation vega is positively associated with the riskiness of mortgages before the collapse of the mortgage market and some evidence that compensation delta is negatively associated with the riskiness of mortgages.Theoretical/Academic ImplicationsThis study contributes to the understanding of the role of executive compensation in the 2008 financial crisis. Consistent with prior research, it provides further empirical support that compensation vega induces risk‐taking. Moreover, in the context of the financial industry, the findings illustrate the potential adverse effect of high‐vega compensation of bank CEOs, as such compensation may have contributed to the build‐up of high‐risk mortgages prior to the crisis.Practitioner/Policy ImplicationsFollowing the financial crisis, a series of policy changes towards regulating and reforming executive compensation in financial firms has been implemented. This study offers important insights for the reform and design of executive compensation in the financial sector. In particular, practitioners and policymakers should examine the incentive structures of bank executives (such as compensation delta and vega) in order to appropriately influence risk‐taking.

PurposeThis study investigates, from a resource dependence perspective, the effects of domestic private firms' political connections and economic power on their labor law compliance in China.Design/methodology/approachThis study used data from a large-scale nationwide survey on Chinese domestic private firms, the Chinese Private Enterprise Survey collected from 2004 to 2012, to examine factors of interest that affect firms' compliance to labor laws. Hypotheses were tested using OLS regression models with robust standard errors.FindingsThe results indicate that domestic private firms' institutional political connections specified by the presence of a union or a Chinese Communist Party committee is positively related to firms' labor law compliance, and firm owners' formal political connections indicated by their membership in the People's Congress or the Chinese People's Political Consultative Conference have a somewhat negative effect. The post-hoc analysis shows that firm owners' political representation at the county and city levels is negatively related with labor law compliance, while the political representation at the national level is positively related to labor law compliance. Moreover, the economic power of a domestic private firm is related positively to its labor law compliance. Finally, although the authors did not find evidence that the 2008 Labor Contract Law increased labor contract coverage, it did increase pension coverage after 2008.Research limitations/implicationsThe present study reveals a more refined relationship between domestic private firm owners' political connections and the degree of labor law compliance. It also demonstrates that the economic power of domestic private firms has a positive effect on their labor law compliance. This implies the importance of the contribution of domestic private firms to economic and social development in China, warranting continued support of the development of the private sector in China.Originality/valueThis study adds to the sparse literature on the determinants of domestic private firms' labor law compliance in China. It also sheds light on whether political connections and the rising economic power of Chinese domestic private firms influence their compliance with labor laws.

AbstractManuscript TypeEmpiricalResearch Question/IssueWhen the stock options granted to CEOs go underwater, boards of directors tend to award additional stock options to their CEOs. Drawing on agency theory and attribution theory, this study explores social psychological mechanisms that explain why boards of directors increase new option grants to CEOs in response to underwater options.Research Findings/InsightsUsing the compensation data of CEOs at 966 US firms, we found that contextual factors such as market conditions and industry performance affected boards of directors' decisions to grant new stock options. Consistent with our hypotheses, boards of directors granted a greater number of new options to CEOs in response to CEOs' underwater options during the recession period than the recovery period, and they granted fewer new options when the firm's industry performance was high rather than low.Theoretical/Academic ImplicationsThis study incorporates attribution theory in understanding boards of directors' causal attribution of firm performance and its impact on executive compensation. It complements earlier studies on causal attribution by exploring the role of contextual factors. It also contributes to the research by examining the attribution process of boards of directors rather than that of top management, as well as the consequences of the causal attribution in terms of ex‐post adjustment in executive option compensation.Practitioner/Policy ImplicationsThis study provides up‐to‐date and improved evidence on boards' decision making about executive stock options. Practitioners and policy makers can benefit from the study's findings that board members rely on contextual information about the market and the competition when they make causal attribution of firm performance changes, which tends to affect their decisions about executive compensation.

AbstractThe virtual water strategy (VWS) provides a theoretically feasible method to transport virtual water (VW) and balance regional differences in water resource endowments. However, the practical implementation of VWS faces selective resistance due to the lack of research in motivation analysis across potential executor regions. Game theory provides a new approach to study the decision‐making mechanism and behavioural motivation in the implementation of VWS. This study builds some semiquantitative game models to analyse the regions' potential acceptance of VWS in decision‐making, especially concerning economic development, water sustainability, and trade patterns. The result shows the factors like external incentives and stability of game can affect the payoffs and strategy selections on VWS in rational and semirational games. To achieve a mutual benefit equilibrium towards an effective VWS framework, improvement efforts could include mechanisms for rewards or punishments, promoting long‐term cooperation, and promulgation and education.

Background: Monoclonal antibody (mAb) drugs are increasingly important for the pharmaceutical industry across the globe. In China, mAb drug developments face many challenges. Multiple policies have been implemented recently to reinforce support in various areas. This study aims to investigate the latest landscape of mAb drugs in China from policy perspectives encompassing R&D, clinical trials, marketing approval, and talent pools. Methods: Information about mAb drugs approved in the United States, the European Union, Japan, and China by 2017 and mAb-related policies in China were retrieved from government websites and third-party statistical databases for descriptive, statistical, and comparative analysis. Results and discussion: In China, 21 mAb drugs (10 locally-developed and 11 imported) have so far been approved. For the 11 imported mAb drugs in China, the median drug lag in the marketing approval was estimated at 87.1 months, compared with the U.S. (0 months), the EU (8.9 months), and Japan (43.4 months). However, as far as the dramatically changing innovation supporting system in China is concerned, emergence of new biopharmaceutical companies, transformation of the current drug companies and their shift to antibody therapy, and the pooling of high-level talent contribute to mAb development in China. The number of clinical trials and marketing applications and approvals involving mAb drugs is also growing. Favorable policies will continue to play a role in the sustainable development of mAb drugs in China. Conclusion: The research showed that the reform of multiple policies and incentives for attracting/retaining high-level talent has evidently been effective in addressing the drug lag of mAb drugs in China. In future development, China should actively monitor the global R&D outcomes and industrial development trends of mAb drugs and make the policy environment more attractive to enable more mAb drugs to be marketed in China as soon as possible.