Managerial Accountability Under Yardstick Competition
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Michele G. Giuranno
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 re-appointment. 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.
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Articles in the same Issue
- Research Articles
- The Effects of Entry when Monopolistic Competition and Oligopoly Coexist
- Managerial Delegation of Competing Vertical Chains with Vertical Externality
- Fiat Money as a Public Signal, Medium of Exchange, and Punishment
- Education Spending, Fertility Shocks and Generational Consumption Risk
- Should the Talk be Cheap in Contribution Games?
- College Assignment Problems Under Constrained Choice, Private Preferences, and Risk Aversion
- Competition with Nonexclusive Contracts: Tackling the Hold-Up Problem
- Endogenous Authority and Enforcement in Public Goods Games
- Disequilibrium Trade in a Large Market for an Indivisible Good
- Pretrial Beliefs and Verdict Accuracy: Costly Juror Effort and Free Riding
- Product R&D Coopetition and Firm Performance
- A Model of Inequality Aversion and Private Provision of Public Goods
- Managerial Accountability Under Yardstick Competition
- On the Equilibrium Uniqueness in Cournot Competition with Demand Uncertainty
