Accounting Seminar（2014-16）

Topic:Information Policies, Manager Discretion, and Managerial Opportunism

Speaker:Huaxiang Yin (Nanyang Technological University)

Time:: Monday,22December, 10:00-11:30 am

Location:Room 217, Guanghua Building 2

Organizer:Department of Accounting,MPAcc GSM, PKU

Abstract：

Employees often have a subtle impact on the manager’s welfare, as they have some discretion over hours they would like to spend on the job, or have access to valuable resources that are beneficial to the manager. This study experimentally investigates whether or not organizations can make beneficial use of this power of the employee to control dysfunctional behavior of managers in firms. More specifically, results show that managers are less likely to engage in rent extraction under an open information policy, in which employees can observe manager behavior, than under a closed information policy, in which employees cannot observe manager behavior. The effect of the information policy on reducing rent extraction is larger when managers have discretion over rewarding their employees than when managers do not have discretion. The results have important practical implications. Organization can mitigate dysfunctional behavior of (even the more selfish) managers in their firms, if they redesign their information and reward policies such that managers are stimulated to carefully think about how employees would react to their behavior.

Your participation is warmly welcomed!