We study the implications of introducing ethics into the traditional principal-agent model. In our model, the principal specifies a standard for effort at the time of contracting and the agent suffers a utility loss if he chooses not to provide the standard after agreeing to the contract. The...

While managers commonly possess private information regarding future production cost when developing their cost budget, they also face outcome uncertainty regarding that future cost. This outcome uncertainty, however, has largely been ignored by experimental researchers examining various...

We examine the realism of the assumption of self-interested opportunism in agency theory. We place subjects into manager/producer pairs and set parameters so that the producer extracts the highest share of residual earnings from the manager by setting the budget at zero (100% slack) and...

We argue that the market for audit services closely resembles a common value procurement (seller's) auction, where auditors generate a private estimate of the actual cost of an audit engagement prior to quoting the client a price. Thus, we conduct a systematic examination of audit pricing and...

Researchers in accounting and economics have established that financial controls can diminish intrinsic motivation in the subordinate when they are intentionally imposed by the superior. We study the ability of a non-financial control to generate a similar crowding out effect on honest reporting...