The value of transparency in multidivisional firms
| Autor: | Emanuele Tarantino, Salvatore Piccolo, Giovanni Ursino |
|---|---|
| Jazyk: | angličtina |
| Rok vydání: | 2015 |
| Předmět: |
Economics and Econometrics
Transparency (market) Moral hazard Strategy and Management Economics Econometrics and Finance (miscellaneous) Strategy and Management Tourism Leisure and Hospitality Management Aerospace Engineering Commit Transparency Industrial and Manufacturing Engineering Microeconomics Incentive Multidivisional firms Spillover effect Economics Industrial Relations Settore SECS-P/01 - Economia Politica Industrial organization |
| Popis: | We study internal incentives, transparency and firm performance in multidivisional organizations. Two independent divisions of the same firm design internal incentives, and decide whether to publicly disclose their performances. In each division a risk-neutral principal deals with a risk-averse (exclusive) agent under moral hazard. Each agent exerts an unverifiable effort that creates a spillover on the effort cost of the other agent. We first study the determinants of the optimal principal-agent contract with and without performance transparency. Then, we show how effort spillovers affect the equilibrium communication behavior of each division. Both principals commit to disclose the performance of their agents in equilibrium when efforts are complements, while no communication is the only equilibrium outcome when efforts are substitutes. |
| Databáze: | OpenAIRE |
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