Two well-known mechanisms for enhancing managers' accountability are yardstick competition and internal monitoring. Yardstick competition puts managers in direct competition when firms make decisions for reappointment. Monitoring is used by firms to detect managers' rent-seeking activities. While common wisdom suggests that the joint use of the two means would reinforce each other in promoting managers good practices, we find that their interplay distorts managers' behavior who may end up acting in a less accountable way. Furthermore, differences in monitoring across firms bias that distortion, yielding even more counterintuitive results.

Managerial Accountability under Yardstick Competition / Giuranno, M. G.; Scrimitore, M.; Stamatopoulos, G.. - In: THE B.E. JOURNAL OF THEORETICAL ECONOMICS. - ISSN 1935-1704. - 20:2(2020), pp. 1-4. [10.1515/bejte-2019-0037]

Managerial Accountability under Yardstick Competition

Scrimitore M.;
2020-01-01

Abstract

Two well-known mechanisms for enhancing managers' accountability are yardstick competition and internal monitoring. Yardstick competition puts managers in direct competition when firms make decisions for reappointment. Monitoring is used by firms to detect managers' rent-seeking activities. While common wisdom suggests that the joint use of the two means would reinforce each other in promoting managers good practices, we find that their interplay distorts managers' behavior who may end up acting in a less accountable way. Furthermore, differences in monitoring across firms bias that distortion, yielding even more counterintuitive results.
2020
Tullock context success function; rent seeking; managerial discretion
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/20.500.12318/153727
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