We draw on theory from moral licensing and image motivation to test the prediction that, when auditors provide assurance over a pro-social activity that is roughly analogous to reported corporate social responsibility (CSR), reporters become more aggressive in subsequent reporter-auditor...

This study investigates the effect of a principal's choice on the availability of discretionary controls, where discretionary controls are defined as those not supported by enforceable explicit contracts. In contrast to prior findings on explicit controls, we find that agent reciprocity is not...

Budgets serve an important role in motivating employee performance. We examine how the difficulty of meeting a budget target (“budget difficulty”) and the stability of the budget environment affect performance. We use a controlled experiment where employee-participants perform a task under...

We examine the effect of endogenous contract selection on budgetary slack using two slack-inducing contracts found in the literature: a trust contract where the superior must accept the subordinate’s budget and a discretion contract where the superior can accept or reject the budget. Because...

Given traditional agency theory assumptions and unobservable effort in a single-period setting, a moral hazard arises in which the agent is expected to shirk and provide the miminal possible effort after contracting with the principal. Traditional solutions to this agency problem include paying...