The escalation of commitment process involves a decision-maker continuing commitment to an investment after receiving negative information. This study develops a principal-agent model to explore how escalation decisions are linked with departures of CEOs from the position. With asymmetric...

This paper explores the links that the allocation of decision rights on the shop floor maintains with labor transaction attributes and several structural traits of the firm. The approach is based on the transaction cost apparatus and harnesses the theoretical and empirical background provided by...

Contrary to previous literature we hypothesize that interests of labor may well – like that of shareholders – aim at securing the long-run survival of the firm. Consequently, employee representatives on the supervisory board could well have an interest in increasing incentive-based...

Contrary to previous literature we hypothesize that labor's interest may well – like that of shareholders – aim at securing the long-run survival of the firm. Consequently, employee representatives on the supervisory board could well have an interest in increasing incentive-based...

We introduce uncertainty into Holmstrom and Milgrom (1987) to study optimal long-term contracting with learning. In a dynamic relationship, the agent's shirking not only reduces current performance but also increases the agent’s information rent due to the persistent belief manipulation...

This study examines the level and structure of CEO compensation of 2,448 CEO's from 1,622 firms spanning a range extending from 1997 through 2002. Based on agency and expectancy theories, this study tests the hypotheses that corporate diversification is associated with CEO compensation. The...

Agency theory is one of the most important foundational theories in management research, but it rests on tenuous cognitive assumptions. We combine classical agency theory with a realistic theory of the intrinsically imperfect human potential for interpersonal sensemaking. This allows us to...