This paper incorporates a classical moral hazard problem with unobserved worker effort and bonus payments into a competitive search equilibrium environment with risk averse workers. The resulting framework permits an analysis of the effects of labour market competition and search frictions on...

The analysis compares two institutional settings in which individuals with complementary task abilities match to found new firms: corporate spin-offs of initially randomly matched production teams and the rational matching of such teams in an incubator organization. The alternative always...

In the ongoing discussions on audit regulation, the key issues of auditor independence and a high level of audit market concentration have become apparent. However, there is the concern that regulations intended to improve auditor independence (i.e., restrictions regarding the joint supply of...

Recently, the Commission of the European Communities has put up for discussion various reform proposals intended to enhance the reliability of audits and to re-establish trust in the financial market. In particular, the EU Commission seeks to strengthen auditor independence and to decrease the...

In its recently published Green Paper, the European Commission 2010 discusses various methods to enhance the reliability of audits and to re-establish trust in the financial market. The Commission primarily focuses on increasing auditor independence and on reducing the high level of audit market...

Accounting Oversight Board have suggested the implementation of the external audit firm rotation. The aims of this proposal are to increase auditor independence and to decrease the high level of supplier concentration in the audit market. However, proponents of this regulation raise the concern...

Although the role of auditing is to increase the reliability of financial statements, surprisingly little is known about addressees’ perceptions of the auditor-client relationship. Using a sample of more than 1,000 U.S. bank-years from 2008 to 2011, we analyze the economic consequences of the...

In many groups heterogeneous incentives induce people to make unequal contributions to a common pool. This paper studies whether people consider the random assignment of such unequal incentives as unequal opportunities and demand more egalitarian distributions of the pool. The aggregate...

The current study integrates the repeated game approach to implicit contracts and the analysis of explicit bonus rules based on subjective performance evaluation to determine the optimal structure of the compensation scheme for the average white- collar employee. In contrast to previous...