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Knowledge@Wharton is an online business publication presenting business news, analysis
and research to corporate executives, entrepreneurs, policy makers and academics.
Beginning with this issue, the Wharton Alumni Magazine will run selected excerpts from
Knowledge@Wharton. For complete versions of these and other articles, visit this free site at
http://knowledge.wharton.upenn.edu
CEOs and Their
Companies Profit
from Executive Stock
Ownership
Should a Chief Executive Officer be
required to own stock in his or her
firm? The age-old question of whether
or not to force CEOs to buy into their
company continues to generate significant
debate, with much of the discussion
centering on whether standard
equity ownership by senior management
and external board members is
too low to motivate appropriate financing
and investment decisions that increase
shareholder value. In response to
this and other criticisms by shareholders
and corporate governance activists,
a number of companies have adopted
target ownership plans.
Will the Glaxo-SmithKline Merger
Be Good Therapy?
The proposed acquisition of SmithKline
Beecham by Glaxo Wellcome –
in a stock swap valued at $75.7 billion
– may be creating the world’s largest
pharmaceuticals company, but the
question remains: Is it worth the
effort? Wall Street in general was clearly
not enthusiastic about the deal. On
Tuesday, January 18, the first business
day after the announcement of the
merger on Monday, both company
stocks took a beating in London and
the U.S.
The Patient Died: A Post-
mortem on America's
Largest Nonprofit
Healthcare Failure
When the Allegheny Health, Education,
and Research Foundation
(AHERF) declared bankruptcy on July
21, 1998, it left behind $1.3 billion
in debt, 65,000 creditors and enough
bile to blanket the East coast.
The bankruptcy meant the dismantling of
the largest statewide integrated delivery
system in Pennsylvania.
It led to
thousands of layoffs in Philadelphia’s
healthcare community and the sale
of six local hospitals to an out-of-state,
investor-owned corporation. And it
called into question a strategy – popular
among academic medical centers
in the mid-1990s – of acquiring, at almost
any cost, physicians, researchers
and medical facilities in order to corner
a market that has turned out to be
remarkably elusive.
Information Technology:
How It Affects Work
Practices and Wages
We have only to pick up the daily
newspaper to read about the creation
of yet another fabulous fortune based
on technology. But even as high-tech
millionaires proliferate, there has
been considerable debate about
the impact that technology
has had on wages of those
who use technology in
their daily work practices.
Some argue that
technology has eliminated
jobs and had a
negative impact on
wages, while others
counter that it has improved productivity
and boosted wages.
Wharton’s Chip Hunter and John
Lafkas recently completed a study in
which they examined information
technology, work practices, and wages
for the job of customer service representatives
(CSRs) in bank branches.
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