Current reforms in the public sector are characterized by the introduction of businesslike incentive structures, in particular the introduction of “pay for performance” schemes in public institutions. However, the public sector has some specific characteristics, which might restrict the...

Corporate scandals, reflected in excessive management compensation and fraudulent accounts, cause considerable damage. Agency theory’s insistence on linking the compensation of managers and directors as closely as possible to firm performance is a major reason for these scandals. They cannot...