Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/214324 
Year of Publication: 
2005
Series/Report no.: 
CREMA Working Paper No. 2005-10
Publisher: 
Center for Research in Economics, Management and the Arts (CREMA), Basel
Abstract: 
Corporate scandals are reflected in excessive top management compensation and fraudulent accounts. These scandals cause an enormous amount of damage, not only to the companies affected, but also to the market economy as a whole. As a solution, conventional wisdom suggests more monitoring and sanctioning of management. We argue that these efforts will create a governance structure for crooks. Instead of solving the problem, they make it worse. Selfish extrinsic motivation is reinforced. We suggest measures which clash with conventional wisdom: selecting employees with pro-social intrinsic preferences, de-emphasizing variable pay for performance and strengthening the participation and self-governance of employees. These measures help to increase intrinsically motivated corporate virtue and honesty.
Subjects: 
Corporate Virtue
fraud
intrinsic motivation
crowding theory
pay for performance
employee participation
Document Type: 
Working Paper

Files in This Item:
File
Size
174.57 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.