Conny Overland

The Sheep Watching the Shepherd: The Monitoring Performance of Boards with Employee Representatives

The board of directors is key to monitoring management, but the asymmetric information between the board and management is an obstacle to effective monitoring. Using a sample of firms listed on the Stockholm Stock Exchange, this study investigates to what degree employee representatives contribute to the board’s monitoring of financial reporting. Controlling for alternative model specifications and potential sample selection bias, we find evidence for lower abnormal accruals in firms with employee representation. This suggests that firms with employee representation are less engaged in earnings management. Additional tests show that both income-increasing and income-decreasing earnings management occur less frequently in firms with employee representation.The board of directors is key to monitoring management, but the asymmetric information between the board and management is an obstacle to effective monitoring. Using a sample of firms listed on the Stockholm Stock Exchange, this study investigates to what degree employee representatives contribute to the board’s monitoring of financial reporting. Controlling for alternative model specifications and potential sample selection bias, we find evidence for lower abnormal accruals in firms with employee representation. This suggests that firms with employee representation are less engaged in earnings management. Additional tests show that both income-increasing and income-decreasing earnings management occur less frequently in firms with employee representation.

Bioenery Combines in District Heating Systems: Prospects for a Future Growth Industry?

District heating offers opportunities for integration of bioenergy production (e.g. of biofuel). The aim of this paper is to assess the environmental benefit and the economic value of such integration, in order to evaluate the prospect for bioenergy combines in district heating systems. Since the detailed characteristics of the district heating system are crucial for the feasibility for integration of bioenergy production, the assessment is based on four real district heating systems. The environmental evaluation shows that the decrease in green house gas emissions from a combine are in proportion to the increase in output of CO2 neutral energy products. However, the CO2 reduction per used quantity of biomass is higher in conventional combined heat and power production as long as marginal electricity is related to high CO2 emissions. Also the economic evaluation show ambiguous results: two cases had negative net present value even for low discount rates, while the two other cases showed to be more economically robust. In addition to this, a more detailed analysis of the industrial conditions for the integration shows a need for achieving a fit regarding several operational, strategic and economic circumstances for this type of business ventures. Two important conclusions that can be drawn from this is that: 1) not all district heating systems are suitable for bioenergy combines 2) there are many barriers for a wide spread adoption of bioenergy combines.