The sovereign debt crisis has emphasized the seriousness of the results of poor financial management and financial reporting. Financial reporting failure in the private sector earlier this century led to dramatic action. Although there have been widespread reporting failures in the public sector...

A principal hires an agent to work on a long-term project that culminates in a breakthrough or a breakdown. At each time, the agent privately chooses to work or shirk. Working increases the arrival rate of breakthroughs and decreases the arrival rate of breakdowns. To motivate the agent to work,...