:observability of agent’s action, risk preference 2.adverse selection and moral hazard
ex ante information asymmetry ex ante opportunistic behavior ex post information asymmetry ex post opportunistic behavior
---monitor:social, law, market( market for corporate control,managerial labor
market, competitive product and service market,creditors monitor,large shareholders etc.)
accounting and management accounting
corporate governance and accounting
The role and value of information Business state of nature initial judgment revised judgment
---incentive: pecuniary incentive(salary,bonus, restricted stock,stock option, stock appreciation right , phantom stock , long-term performance plan etc.); non-pecuniary incentive(control,reputation,self-satisfaction etc.)
4.external corporate governance: market-based; internal corporate governance: surrounding board of directors and management
5. the role of accounting: production and presentation of information (mainly in terms of money) : 6. reporting to external and internal interested parties: financial
corporate governance and accounting
The Ownership of the Firm: residual control rights claim to firm’s residue
Agency problem: 1.principal (information disadvantage) and agent (information advantage)
corporate governance and accounting
3.agency cost----monitoring costs, bonding costs, residue losses
* Corporate Governance and Accounting
1. the concrete arrangement of the ownership of the firm 2. a set of institutional arrangement with the intent to alleviate agency problem in the firm( focus on shareholders &management) naturally,creditors also face agency problems 3.the core of corporate governance: information asymmetry
ex ante i.e. pre-contract, ex post i.e. post-contract *ex ante opportunistic behavior i.e. adverse selection :screening, signalling,
how to induce candidates tell the truth,cost of signal is so high that others can not to reproduce *ex post opportunistic behavior i.e. moral hazard :
工编
corporate governance and accounting
Accounting and Economics share some common basic assumptions :
First level: scarcity of resources, complexity and uncertainty of environment, economic men with bounded rationality Second level: information incompleteness and asymmetry, opportunistic behavior tendency (different utility functions, externality of behavior), positive transaction cost Result: incomplete contracts The Nature of the Firm: Jensen & Meckling(1976) the nexus of a set of contracts between owners of production factors, a legal fiction