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In practice, both pre- and after-tax performance measures are used to incentivize managers. In this paper, we analyze the optimality of these performance measures in an agency setting, assuming that both the principal and the agent face tax base risks. Switching from a pre-tax to an after-tax...
Persistent link: https://www.econbiz.de/10015152724
We study interfirm competition on a product market where effort decisions are delegated to the firms' workers. Intrafirm organization is captured by a principal-multiagent framework where firm owners implement alternative compensation schemes for the workers. We show that the value of delegation...
Persistent link: https://www.econbiz.de/10010233989
We show that prices and incentives recommended by the salesforce literature when targeting a profitable segment can attract unprofitable customers, particularly when salespeople have high productivity and low risk (i.e., risk aversion times uncertainty). Therefore, when customers are...
Persistent link: https://www.econbiz.de/10009767159
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We examine the implementation of efficient decisions about accepting a special order with asymmetric information by means of a dual transfer pricing mechanism based on Ronen and McKinney (1970). The model is designed in a simple fashion, two vertically related divisions within a firm...
Persistent link: https://www.econbiz.de/10010494194
Finance theory does not provide a comprehensive framework for explaining risk management within the imperfect financial …
Persistent link: https://www.econbiz.de/10011441429
than in the stable environment. This finding is in line with standard agency theory and contrasts a distinct element of … expectancy theory; noisier performance measures do not lower work motivation. …
Persistent link: https://www.econbiz.de/10011376648
noise in the performance measure. In contrast, expectancy theory as developed by psychologists predicts lower effort levels …
Persistent link: https://www.econbiz.de/10011343251
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