The use of equity-based compensation is an increasingly popular means by which to align the incentives of top management with those of the shareholders. However, recent theoretical and empirical research indicates that the use of equity-based compensation has the unintended consequence of...

We run experiments on English Auctions where the bidders already own a part (toehold) of the good for sale. The theory predicts a very strong effect of even small toeholds, however we find the effects are not so strong in the lab. We explain this by analyzing the flatness of the payoff...

This study considers the decision to impose a control system increasingly seen in practice, subcertification, and the resulting impact on the effort exerted by the controlled individual. I experimentally examine the interaction of subcertification with existing manager-subordinate relationship...

Auditors often receive summary information or conclusions from management about account balances or internal controls. They must then gather evidence to assess whether this information is fairly stated. In such situations, management can be considered the first mover and the auditor the second...

We run experiments on English Auctions where the bidders already own a part (toehold) of the good for sale. The theory predicts a very strong effect of even small toeholds, however we find the effects are not so strong in the lab. We explain this by analyzing the flatness of the payoff...

The trend toward continuous monitoring of automated business transactions by the internal audit function is growing as organizations seek to improve internal control. In this study, we demonstrate that continuous monitoring and the time horizon over which performance-contingent incentives are...

We examine the effect of non-mandatory corporate governance practices on a comprehensive set of audit judgments. We provide initial evidence on how auditors respond to corporate governance in an institutional environment where corporate governance is not mandated by law. Based on the agency and...

We report results of a series of nine market experiments with asymmetric information and a fundamental value process that is more "realistic" than those in previous experiments. Both a call market institution and a continuous double auction mechanism are employed. We find considerable pricing...

The Peter Principle states that, after a promotion, the observed output of promoted employees tends to fall. Lazear (2004) models this principle as resulting from a regression to the mean of the transitory component of ability. Our experiment reproduces this model in the laboratory by means of...

Using a controlled experiment, we examine the role of nurture in explaining the stylized fact that women shy away from competition. Our subjects (students just under 15 years of age) attend publicly-funded single-sex and coeducational schools. We find robust differences between the competitive...