We study e¤ects of trust in implicit contracts. Trust changes whenever the principal honors or dishonors an implicit contract. Usually a higher discount rate lowers the value of trade in an agency. We show that a su¢ ciently high level of (ex ante) trust can o¤set this ef- fect. Strategies of...

In this paper we analyze a dynamic agency problem where contracting parties learn about the agent´s future productivity over time. We consider a two period model where both the agent and the principal observe the agent´s second period performance productivity at the end of the first period....

We consider a two period principal-agent problem in a LEN setting. Stock prices as well as accounting measures are available for incentive contracting. The principal needs to implement one out of two accounting systems. While the early accounting information system reports an accounting signal...

It's puzzling that most projects fail to complete within the predetermined timeframe given that timing considerations rank among the major goals in project management. We argue that when managers can extract private benefits from working on a project, project delay becomes optimal. We introduce...

Die Literatur über Corporate Governance und Top-Manager-Entlohnung (executive compensation) hat gezeigt, dass das klassische Prinzipal-Agenten-Modell die tatsächlich beobachteten Gehälter und Entlohnungsverträge für Top-Manager nur sehr eingeschränkt erklären kann. In jüngerer Zeit ist...

In this paper we analyze strategic transfer pricing with risk- and effort-averse divisional managers. In contrast to earlier literature, we find that the existence of a standard agency problem allows transfer pricing to serve as a commitment device even if the transfer prices are not mutually...

This paper offers an explanation for audit committee failures within a corporate governance context. We consider a setting in which the management of a firm sets up financial statements that are possibly biased. These statements are reviewed/audited by an external auditor and by an audit...

In this paper we analyze the value of delegation in a two-period agency. A central management hires an agent to perform a personal effort in each period. Due to time constraints or lack of ability this effort can not be performed by central management. Besides personal effort firm value is...

This paper offers an explanation for audit committee failures within a corporate governance context. The management of a firm sets up financial statements that are possibly biased. These statements are audited/reviewed by an external auditor and by an audit committee. Both agents report the...

In this paper we analyze a dynamic agency problem where contracting parties do not know the agent's future productivity at the beginning of the relationship. We consider a two-period model where both the agent and the principal observe the agent's second-period productivity at the end of the...