Executive Stock Option Programs (SOPs) have become the dominant compensation instrument for top-management in recent years. The incentive effects of an SOP both with respect to corporate investment and financing decisions critically depend on the design of the SOP. A specific problem in...

Participative budgeting processes are an important element of management control systems in many firms. The literature on participative budgeting has studied the role of information asymmetry. However, prior contributions do not differentiate between superior uncertainty about future...

This study investigates whether and how environmental risk affects the efficiency (i.e., overall organizational profit) of negotiated transfer prices. We discuss three fairness-based sharing norms and the implications each would have for efficiency in our setting. We conduct an experiment in...

Executive Stock Option Programs (SOPs) have become the dominantcompensation instrument for top-management in recent years. Theincentive effects of an SOP both with respect to corporateinvestment and financing decisions critically depend on the design of the SOP. A specific problem in designing...

In an experiment, we model two stylized facts about capital budgeting practice, budgetary slack creation and delegation of decision-making authority. In our setting, under centralization, headquarters announces a budget, the division manager gives a cost report, and headquarters decides on the...