Journal ArticleDOI
Incentives for Innovation and Centralized versus Delegated Capital Budgeting
Sunil Dutta,Qintao Fan +1 more
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In this article, the authors study a setting where a divisional manager undertakes personally costly effort to improve the profitability of an investment project and find that delegation improves the manager's innovation incentives.Abstract:
We study a setting wherein a divisional manager undertakes personally costly effort to improve the profitability of an investment project. The manager’s choice of innovation effort is subject to a holdup problem because of the ex post opportunism on the part of headquarters. We analyze and contrast the performance of centralized and delegated forms of investment decision-making. We find that delegation improves the manager’s innovation incentives. We identify conditions for each of the two organizational forms to emerge as the optimal choice, and relate these conditions to characteristics of firms’ investment opportunity sets.read more
Citations
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Journal ArticleDOI
Finance and Corporate Innovation: A Survey
TL;DR: In this article, the authors provide a synthetic and evaluative monograph of academic papers that examine the drivers and financing sources of corporate innovation, and provide a survey of the top three finance journals that published a total of only five papers on corporate innovation from 2000 to 2008, the number of such papers published by these three journals skyrocketed to 56 from 2009 to the third quarter of 2017.
Journal ArticleDOI
Auditing Standards, Professional Judgment, and Audit Quality
Pingyang Gao,Gaoqing Zhang +1 more
TL;DR: In this paper, the authors propose a model to study how auditing standards affect audit quality, and they posit that both auditors' incentives and expertise are relevant for audit effectiveness.
Posted Content
Explicit and Implicit Incentives for Multiple Agents
TL;DR: In this article, the authors present existing and new research on three approaches to multiagent incentives: simpler mechanisms, robust mechanisms, and implicit contracts, and the goal of all three approaches is to find theories that better explain observed institutions than the standard approach has.
Book ChapterDOI
Capital Budgeting Research and Practice: The State of the Art
Donald K. Clancy,Denton Collins +1 more
TL;DR: There is much research to be done on capital budgeting, especially case studies of actual practice and experiments related to individual and group decision processes as mentioned in this paper, and this review is limited to the major journals in accounting, finance, and management; and the specialized journals in management accounting.
Journal ArticleDOI
Finance and Corporate Innovation: A Survey
TL;DR: In this article, the authors provide a synthetic and evaluative monograph of academic papers that examine the drivers and financing sources of corporate innovation, and provide a survey of the top three finance journals that published a total of only five papers on corporate innovation from 2000 to 2008, the number of such papers published by these three journals skyrocketed to 56 from 2009 to the third quarter of 2017.
References
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Journal ArticleDOI
An Exploration in the Theory of Optimum Income Taxation
TL;DR: In this paper, the authors make the following simplifying assumptions: (1) Intertemporal problems are ignored; (2) the tax system that would bring about that result would completely discourage unpleasant work; and (3) what such a tax schedule would look like; and what degree of inequality would remain once it was established.
Journal ArticleDOI
A Theory of Incentives in Procurement and Regulation.
TL;DR: A Theory of Incentives in Procurement and Regulation (TIIN) as mentioned in this paper is a popular textbook for regulatory economics, with a particular focus on the regulation of natural monopolies such as military contractors, utility companies and transportation authorities.
Journal ArticleDOI
Formal and Real Authority in Organizations
Philippe Aghion,Jean Tirole +1 more
TL;DR: In this article, the authors developed a theory of the allocation of formal authority and real authority within organizations, and illustrated how a formally integrated structure can accommodate various degrees of "real" integration.
Journal ArticleDOI
Using Cost Observation to Regulate Firms
Jean-Jacques Laffont,Jean Tirole +1 more
TL;DR: In this article, the authors emphasize the use of accounting data in regulatory or procurement contracts when the supplier has superior information about the cost of the project and invests in cost reduction, and the main result states that, under risk neutrality, the supplier announces an expected cost and is given an incentive contract linear in cost overruns.
Book
Advanced Management Accounting
TL;DR: In this paper, the authors present a cost system for short-term budgeting and control systems, which is based on a cost hierarchy (Unit, Batch, Product, and Customer-Sustaining).
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