In this paper, we study a setting where a firm (principal) is privately informed of the firm's potential and contracts with an agent to supply unobservable effort. We show it can be optimal for the firm to have loose monitoring in the sense that the monitoring system is less perfect than what is...

The discussion on value-based performance measures is centered around the concept of residual income. The main property of residual income is its connection to capital budgeting and the net-present-value-rule. This property is, however, not sufficient to guarantee strong goal congruence between...

Corporate governance research has focused mainly on the analysis of the information that firms ought to disclose and the effects of disclosure, basically without considering the media involved. This paper examines the relevance of technology, and particularly the internet, for the improvement of...

In the midst of a time plagued by corporate scandals, Tyco has captured headlines and undoubtedly shocked and appalled many inside and outside the business world. While there is little doubt of Tyco's absence of morality and ethics, blame cannot be simply placed on the organization itself....

We examine a primary outcome of corporate governance, the ability to identify and terminate poorly performing CEOs, to test the effectiveness of U.S. investor protections in improving the corporate governance of cross-listed firms. We find that firms from weak investor protection regimes that...

Notwithstanding one decade of corporate law reform during which the German legislature augmented the traditional explicit system of corporate control with market-based corporate governance devices, the German corporate governance reform law agenda is still packed. The paper provides an overview...

The event of a rising share price for a firm following the announcement of its intentions to acquire another firm is generally recognised as a sign of market support for the deal. If the price continues to rise over the offer period, as the market fully digests various items of information...

Merger and acquisition transactions are often explained and justified by reference to their potential capacity to generate value - for example through the achievement of operational synergies, critical scale or optimal scope. In contrast, a significant and growing literature questions the worth...

Enterprise resource planning systems have great potential for changing how companies are administered. In accepting that premise, this paper has two purposes: (1) to demonstrate the capacity of ERP systems to improve capital budgeting by specifying explicitly the intended impacts on revenues,...

This study investigates whether increasing a superior's span of control reduces the effectiveness of capital budgeting in eliciting truthful reports. We conduct an experiment based on a modification of the capital budgeting setting described by Antle and Eppen (1985). This modification...