We study a principal-agent framework in which principals can assign wage-irrelevant goals to agents. We find evidence that, when given the possibility to set wage-irrelevant goals, principals select incentive contracts for which pay is less responsive to agents' performance. We show that average...

Because heterogenous and unknown shareholder utility functions make it difficult to define a corporate objective common to all shareholders based on utility, the traditional theory of the firm concentrates on wealth maximization as the main measure of performance. Using the concept of ranked...

Control systems are a fundamental tool in the management process. Management control systems have been judged under the criterion of goal congruence, i.e., on whether the possible rewards given to people when they take specific actions benefit at the same time individuals and the organization as...

This essay is based on my keynote address at the 2016 annual meeting of the Eastern Finance Association. I propose that misunderstandings about the traditional model of corporate governance, with its emphasis on shareholder wealth maximization, contribute to negative societal attitudes about...

There is growing consensus that the conduct of monetary policy can have an impact on stability through the risk-taking incentives of banks. Falling interest rates might induce a 'search for yield' and generate incentives to invest into risky activities. This paper provides evidence on the link...

Based on the model and the concepts presented in Cugueró-Escofet and Rosanas (2013), that links justice in the MCS design and use to several states of goal congruence, we also incorporate the role of trust in managers as a crucial aspect of the informal organization. We are going to show that...