Given traditional agency theory assumptions and unobservable effort in a single-period setting, a moral hazard arises in which the agent is expected to shirk and provide the miminal possible effort after contracting with the principal. Traditional solutions to this agency problem include paying...

We draw on theory from moral licensing and image motivation to test the prediction that, when auditors provide assurance over a pro-social activity that is roughly analogous to reported corporate social responsibility (CSR), reporters become more aggressive in subsequent reporter-auditor...

This study investigates the effect of a principal's choice on the availability of discretionary controls, where discretionary controls are defined as those not supported by enforceable explicit contracts. In contrast to prior findings on explicit controls, we find that agent reciprocity is not...

Budgets serve an important role in motivating employee performance. We examine how the difficulty of meeting a budget target (“budget difficulty”) and the stability of the budget environment affect performance. We use a controlled experiment where employee-participants perform a task under...

We examine the effect of endogenous contract selection on budgetary slack using two slack-inducing contracts found in the literature: a trust contract where the superior must accept the subordinate’s budget and a discretion contract where the superior can accept or reject the budget. Because...

While managers commonly possess private information regarding future production cost when developing their cost budget, they also face outcome uncertainty regarding that future cost. This outcome uncertainty, however, has largely been ignored by experimental researchers examining various...

This study examines the effects of profit-sharing on honesty in managerial reporting. While profit-sharing plans are widely used, there remains a need for understanding how profit-sharing plans affect honesty in managerial reporting. We investigate two commonly observed profit-sharing plans...

We examine theoretically and experimentally how combining between-team and within-team incentives affects behavior in team tournaments. Theory predicts that free-riding is likely to occur when there are only between-team incentives, and offering within-team incentives may solve this problem....

This study investigates the effect of internal reporting environment openness and organizational identification on managers’ budgetary misreporting. Using an experiment, we find that organizational identification moderates the effect of internal reporting environments on misreporting. That is,...

This study examines the benefits of employee involvement in feedback system design for cooperation. Understanding how to enhance cooperation is important given the increasing use of team settings in practice. Control systems often provide feedback on cooperative actions of coworkers, which can...