Incentives when Environment and Unobservable Managerial Effort Complement

Authors

Krishnamurthy FACULTY Author

Keywords:

Agency Theory, Quality, Incentives

Abstract

This paper presents a simple model showing the incentive payments to a manager when his efforts are unobservable and the efforts and the environment act in a complementary fashion. Using the example of manufacturing quality, we show that 1) incentive payments increase with increase in cost of quality and 2) managerial effort at quality increases with incentive payments.

Author Biography

Krishnamurthy , FACULTY

School of Accounting
Florida International University
Miami, FL 33199

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Published

2016-02-29

Issue

Vol. 4 No. 5 (2016): FEBURARY 2016

Section

Articles

License

Copyright (c) 2016 Academic Research Publishers

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

How to Cite

Incentives when Environment and Unobservable Managerial Effort Complement. (2016). International Academic Research Journal of Business and Management, 4(5), 15-19. https://www.acrpub.com/index.php/iarjbm/article/view/184

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