The Impact of Incentive Pay on Corporate Crime

The Impact of Incentive Pay on Corporate Crime

This paper presents a moral hazard model analyzing the agent's incentive to commit corporate crime. The principal can only observe profits which the agent can increase by committing crime or exerting effort. It is shown how different incentive contracts, i.e., thresholdlinear, capped bonus...

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Bibliografiske detaljer
Udgivet i:MAGKS - Joint Discussion Paper Series in Economics (Band 52-2017)
Hovedforfatter: Herold, Daniel
Format: Artikel
Sprog:engelsk
Udgivet: Philipps-Universität Marburg 2017
Fag:
cartels
Wirtschaft
corporate crime
moral hazard
incentive pay
Economics
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Beskrivelse
Summary:This paper presents a moral hazard model analyzing the agent's incentive to commit corporate crime. The principal can only observe profits which the agent can increase by committing crime or exerting effort. It is shown how different incentive contracts, i.e., thresholdlinear, capped bonus and linear contracts, can be adjusted in order to promote agent's law abiding behavior. Any adjustment implies a loss in internal efficiency which decreases in individual sanctions imposed on the agent.
Fysisk beskrivelse:34 Seiten
ISSN:1867-3678
DOI:10.17192/es2024.0549

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