Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/214317 
Year of Publication: 
2004
Series/Report no.: 
CREMA Working Paper No. 2005-03
Publisher: 
Center for Research in Economics, Management and the Arts (CREMA), Basel
Abstract: 
Corporate scandals, reflected in excessive management compensation and fraudulent accounts, cause considerable damage. Agency theory's insistence on linking the compensation of managers and directors as closely as possible to firm performance is a major reason for these scandals. They cannot be overcome by improving variable pay for performance, as selfish extrinsic motivation is reinforced. Based on the common pool approach to the firm, institutions are proposed which serve to raise intrinsically motivated corporate virtue. More importance is to be attributed to fixed pay and strengthening the legitimacy of authorities by procedural fairness, relational contracts and organizational citizenship behavior.
Subjects: 
Agency theory
intrinsic motivation
crowding theory
management compensation pay for performance
organizational citizenship
JEL: 
D21
D23
J33
L20
Document Type: 
Working Paper

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