Executive Stock Option Programs (SOPs) have become the dominant compensation instrument for top-management in recent years. The incentive effects of an SOP both with respect to corporate investment and financing decisions critically depend on the design of the SOP. A specific problem in...

This experimental study investigates the use of audits as a control instrument in capital budgeting processes and factors that contribute to audit efficiency (or inefficiency) in a repeated relationship. We disentangle reputation aspects of superiors and subordinates from an increased social...

Participative budgeting processes are an important element of management control systems in many firms. The literature on participative budgeting has studied the role of information asymmetry. However, prior contributions do not differentiate between superior uncertainty about future...

In recent years, sustainability has increasingly attracted the attention of capital market participants. While event studies have established that stock prices react to news about environmental, social, and governance (ESG) performance, further empirical evidence raises the question of whether...

This study investigates whether and how environmental risk affects the efficiency (i.e., overall organizational profit) of negotiated transfer prices. We discuss three fairness-based sharing norms and the implications each would have for efficiency in our setting. We conduct an experiment in...

This study investigates how performance-to-target (exceeding vs. missing prior target) and task type (ability-driven vs. effort-driven) affect manager's target setting decisions in a setting in which a manager sets targets for multiple employees. We predict that target adjustments are greater...

Stock Option Programs (SOPs) have become the dominant compensation instrument for top-management in the nineties. Usually, they are not dividend protected, i.e. any dividend payout decreases the value of a manager's options. Empirical evidence shows that this results in a significant decrease in...