Easing their access to capital markets, governments have been establishing a primary dealer system. Via bilateral self-enforcing agreements ('dealerships'), government debt management units (DMUs) have been appointing national and global banks (the 'dealers') to actively participate in...

Entry in a homogeneous Cournot-oligopoly is excessive if there is business stealing. This prediction assumes that production costs reduce profits and welfare equally. However, this need not be the case. If there is asymmetric information, suppliers or employees can utilize their superior...

We model the relationship between the number of tasks assigned to an employee and a firm's ability to motivate effort through informal performance-based bonuses. We show that assigning multiple tasks gives the firm a greater range of performance levels that can be rewarded. The firm takes...

This paper studies cost-reducing R&D incentives in a principal-agent model with product market competition. It argues that moral hazard does not necessarily decrease firms’ profits in this setting. In highly competitive industries, firms are driven by business-stealing incentives and exert...

This study develops a life-cycle model to predict an overlapping generations economy comprising heterogeneous agents. In the proposed model, ex-ante heterogeneity involves the work probability, survival rate, subjective discount rate, and intertemporal elasticity of substitution. We observe...

Promoting agency – people’s ability to form intentions and to act on them freely – must become a primary objective for behavioural public policy (BPP). Contemporary BPPs do not pursue this objective, which is problematic for many reasons. From an ethical perspective, goals like personal...

Asymmetric information about product quality can create incentives for a privately informed manufacturer to sell to uninformed consumers through a retailer and to maintain secrecy of upstream pricing. By delegating retail price setting to an intermediary the manufacturer can hide information...

We analyze the optimal delegation problem between a principal and an agent, assuming that the latter has state-independent preferences. Among all incentive- compatible direct mechanisms, veto mechanisms—in which the principal commits to mixing between the status quo option and another...

We consider a productive network formed by agents with heterogeneous privately-known productivity types. Under convex cost of link formation, bilateral links create endogenous externalities. We calculate the "rearrangement cost" imposed on the entire network by each subset of other agents an...

We examine optimal dynamic contracts when the firm's production generates harmful pollution undermining its productivity. The optimal contract rewards for financial performance and penalizes pollution. The combination of both contract sensitivities incentivizes the agent's effort and...

In an organization, the principal may care about both efficiency and fairness. In this paper, we study the optimal contracts between a principal and multiple agents when the principal favors a more even expost wage distribution. We characterize the principal’s fairness concern by a convex...

The aim of the research is to create a model of motivation of the top management of government agencies of regions, which will allow to make non-financial motivation of top managers dependent upon the achieved strategic potential of the region and their financial incentives. For this purpose,...

Performance related pay is a solution to an incentive problem. Theory suggests that performance related pay is optimal when inputs are unobservable and employees would otherwise lack incentives to provide effort. When labour inputs are observable, the optimal contract does not make pay...

Transparency is a promising means for enhancing democratic values, countering corruption, and reducing power abuse. Nonetheless, the potential of transparency in the domain of consumer contracts is untapped. This Article suggests utilizing the power of transparency to increase consumer access to...

Intangible capital can be used to create new goods and services (product intangibles) or to improve the efficiency of the firm (process intangibles). We reveal and study a new empirical fact: Executive and skilled labor pay is increasing in firm process intensity (the fraction of intangibles...

Purpose: As shareholder-elected monitors, independent non-executive directors (INEDs) should ensure that managers do not retain earnings to promote their own interests. The relationship between board independence and dividend distributions was hence investigated for selected companies listed on...

We examine whether reputable independent directors improve firm performance and governance quality in emerging markets, using data from China. Firms with such directors, measured as the number of directorships in other listed firms, have higher profitability, operating efficiency and...

This research examines the effectiveness of Family Constitution or Family Protocol agreements in mitigating each type of agency conflict in family firms. We performed a qualitative analysis, through a case study, and found that the succession process is the main driver for implementing this...

We study how the quality of investors' information across horizons influences investment. In our theory, managers care about how investment is impounded in current stock prices. Because prices imperfectly reflect investment’s value, they under-invest. However, they under-invest less when...

This paper presents a dual approach to the standard agency model. We formulate the dual of the principal-agent problem under the assumption that the incentive constraint can be replaced by a local constraint (the first-order approach), to examine whether the relaxed agency problem yields a...

Gil–Bazo and Ruiz–Verdú (2009) show that fund families strategically exploit the low performance sensitivity of investors, i.e., investors’ low elasticity of demand with respect to performance, to increase fund fees. Given that environmentally, socially and governance (ESG) focused...

With the wave of M&A, total amount of goodwill balances has been accumulated to a enormous number in Chinese capital market. Accounting Standards is controversial about high discretion in the goodwill subsequent measurements. This study examines whether goodwill book value is consistent with...

This paper incorporates model ambiguity into the traditional hedge fund models to explore how ambiguity influences the manager's investment strategy, risk attitude and compensation structure. We find the manager is ambiguity aversion. Model ambiguity enhances her level of endogenous risk...

The scientific credibility of the administrative state is under siege in the United States, risking distressful public health harms and even deaths. This Article addresses one component of this attack--executive interference in agency scientific decisionmaking. It offers a new conceptual...

We study the impact of ad agencies on the online advertising market. To increase the payoffs of their clients, in a process known as “bid rotation,” agencies act as bidding rings where they strategically hold out some ad candidates from publishers’ auctions to soften competition. We show...

We consider a principal-agent model in which the agent commits to a signal structure that generates messages based on his actions. There are also signals about the agent’s performance that he cannot control. The principal designs a payment scheme that depends on both types of signals. Both...

This paper examines the causes and consequences of hedge fund investments in exchange traded funds (ETFs) using U.S. data from 1998 to 2018. The data indicate that transient hedge funds and quasi-indexer hedge funds are substantially more likely to invest in ETFs. Unexpected hedge fund inflows...

This research focused on exploring capital structure that would have an impact on the Vietnamese company's profitability. Theoretically, we apply agency theory which mentions the separation of ownership and management, which leads to the problem when the managers act in their own interests...

We test whether differences in the background characteristics of firms' chairperson and CEO can reduce management agency costs. We find that when the chairperson is older, has a higher level of education, and has more overseas experience than the CEO, the management agency costs will be lower. A...

Faulty ratings of mortgage-related collateralized bond obligations played a prominent role in the financial crisis of 2008. Some critics charge that the rating agencies did not merely make honest mistakes, but were hopelessly conflicted by their practice of collecting revenue from the bond...

We investigate the optimal regulation of energy production reflecting the long-term goals of the Paris Climate Agreement. We analyze the optimal regulatory incentives to foster the development of non-emissive electricity generation when the demand for power is served either by a monopoly or by...