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I study the consequences of a random exposure to common risk for the purpose of relative performance evaluation (RPE) and find that it significantly affects the usefulness and the empirical measurement of RPE. According to my analysis, the magnitude of the exposure risk not only determines how...
Persistent link: https://www.econbiz.de/10013006074
This paper shows that in a model of managerial delegation in duopoly market structure, if the managers' salary varies … the proportion of the incentive scheme that the managers get as a part of their salary, i.e. in equilibrium owners will …
Persistent link: https://www.econbiz.de/10014030178
misrepresentation in order to achieve the same appearance of honesty. For managers under a precise system, this will shift the tradeoff …
Persistent link: https://www.econbiz.de/10014077638
improve organizational performance. We adopt the economic identity theory to mathematically model and test this model using … low-level sales managers as agents and department managers as principals in the mathematical analysis reveals that when … organizations do not set optimal compensation contracts, the expected utility of department managers is not high — even if they have …
Persistent link: https://www.econbiz.de/10012823761
The impact of accounting information on ethical behavior has been extensively documented. Additionally, agency theory … accounting education literature that ties ethical issues to an agency-theory context. The primary objective of this case is to … highlight control system ethical issues using an agency-theory context. Students explore their own reactions to a prohibited but …
Persistent link: https://www.econbiz.de/10012766584
Ortner et al. (Manage. Account. Res. 36(1):43–50, 2017) propose the State-Contingent Relative Benefit Cost Allocation Scheme as an incentive system for risky investment decisions. The note at hand reveals the information distribution implicitly assumed within the framework of this study. Based...
Persistent link: https://www.econbiz.de/10011849522
We derive sufficient conditions for ranking performance evaluation systems in multi-task agency models (using both optimal and linear contracts) in terms of a second-order stochastic dominance (SSD) condition on the likelihood ratios. The SSD condition can be replaced by a variance-covariance...
Persistent link: https://www.econbiz.de/10014045479
This study empirically investigates the incentive-action-performance chain on cross-sectional plant data in the context of a Just-in-time (JIT) plant manufacturing environment. Incentives in this study are of the soft goal-oriented variety rather than direct compensation. The empirical analysis...
Persistent link: https://www.econbiz.de/10014047606
Top management faces two key organizational design choices: (1) how much authority to delegate to lower-level managers …, and (2) how to design incentive compensation to ensure that these managers do not misuse their discretion. Although … evidence on the joint nature of the delegation and incentive compensation choices for lower-level managers. A simultaneous …
Persistent link: https://www.econbiz.de/10014034777
In this paper, the principal rewards an agent's farsighted effort both in the short- and long-term, with the short-term reward based on a noisy, forward-looking performance measure and the long-term reward based on a potentially less noisy, trailing performance measure. The main result is that...
Persistent link: https://www.econbiz.de/10014122378