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...

We consider a single-principal/multi-agent model to investigate the principal's preferences over delegated contracting. The analysis extends the single-agent/multi-task LEN model in Feltham and Xie (1994) to a multi-agent/multi-task context. We consider full-commitment contracts, i.e., the...

We analyze the impact of verifiability on how signals about agents are used to mitigate adverse selection. We show that if signals are verifiable the observed practice of collecting information about agents before contracting is inferior to writing contingent contracts. This holds regardless of...

This note contains complete proofs to the four theorems in Dikolli and Vaysman (2006) quot;Information technology, organizational design, and transfer pricing.quot; In a setting where a production department can only coarsely communicate private information to a marketing department, Theorem 1...

We study the feasibility and desirability of integrating ethics with traditional principal-agent theory. After discussing common objections and potential benefits, we present a principal-agent model that incorporates ethics in a manner that maintains the essential features of the traditional LEN...

The use of fixed capital budgets is an empirically well-documented phenomenon in business practice. Whensoever some profitable investment opportunities cannot be realized, managers have to make investment decisions between mutually exclusive investment opportunities. In a multiperiod agency...

The analysis in this paper extends the single-agent/multi-task LEN model in Feltham and Xie (1994) to a multi-agent/multi-task context. A key feature of the paper is that we consider centralized contracting with both full and limited commitment. The former refers to settings in which the...

This paper examines a multiperiod principal-agent model in which a divisional manager has superior information regarding the profitability of an investment project available to his division. The manager also contributes to the periodic operating cash flows of his division through personally...

We consider a setting where a firm delegates an investment decision and, subsequently, a sales decision to a privately informed manager. For both decisions corporate income taxes have real effects. We show that compensating the manager based on pre-tax residual income can ensure after-tax...

This article investigates the co-relationship of operating performance with implementation of ERP system in listed companies. The descriptive statistics reveals that the operating performance of ERP companies in 2003, that ROS, ROI, ROE and ROA regarded as companies' operating performance index...