Corporate Governance for Crooks? The Case for Corporate Virtue
AbstractCorporate 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.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Institute for Empirical Research in Economics - University of Zurich in its series IEW - Working Papers with number 164.
Date of creation:
Date of revision:
Corporate Virtue; fraud; intrinsic motivation; crowding theory; pay for performance; employee participation;
Other versions of this item:
- Margit Osterloh & Bruno S. Frey, 2005. "Corporate Governance for Crooks? The Case for Corporate Virtue," CREMA Working Paper Series, Center for Research in Economics, Management and the Arts (CREMA) 2005-10, Center for Research in Economics, Management and the Arts (CREMA).
- G3 - Financial Economics - - Corporate Finance and Governance
- M2 - Business Administration and Business Economics; Marketing; Accounting - - Business Economics
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Akerlof, George A, 1982. "Labor Contracts as Partial Gift Exchange," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 97(4), pages 543-69, November.
- Ernst Fehr & John List, 2004.
"The hidden costs and returns of incentives - trust and trustworthiness among ceos,"
Artefactual Field Experiments, The Field Experiments Website
00044, The Field Experiments Website.
- Ernst Fehr & John A. List, 2004. "The Hidden Costs and Returns of Incentives-Trust and Trustworthiness Among CEOs," Journal of the European Economic Association, MIT Press, MIT Press, vol. 2(5), pages 743-771, 09.
- E. Fehr & John A. List, . "The Hidden Costs and Returns of Incentives - Trust and Trustworthiness among CEOs," IEW - Working Papers, Institute for Empirical Research in Economics - University of Zurich 134, Institute for Empirical Research in Economics - University of Zurich.
- Ernst Fehr & John A. List, 2004. "THE HIDDEN COSTS AND RETURNS OF INCENTIVES — TRUST AND TRUSTWORTHINESS AMONG CEOs," Labor and Demography, EconWPA 0409012, EconWPA.
- Becht, Marco & Bolton, Patrick & Roell, Ailsa, 2003.
"Corporate governance and control,"
Handbook of the Economics of Finance, Elsevier,
in: G.M. Constantinides & M. Harris & R. M. Stulz (ed.), Handbook of the Economics of Finance, edition 1, volume 1, chapter 1, pages 1-109
- Marco Becht & Patrick Bolton & Ailsa Röell, 2003. "Corporate governance and control," ULB Institutional Repository 2013/13330, ULB -- Universite Libre de Bruxelles.
- Patrick Bolton & Marco Becht & Alisa Röell, 2002. "Corporate Governance and Control," NBER Working Papers 9371, National Bureau of Economic Research, Inc.
- Bruno S. Frey & Reto Jegen, 2000. "Motivation Crowding Theory: A Survey of Empirical Evidence," CESifo Working Paper Series 245, CESifo Group Munich.
- Fischbacher, Urs & Gachter, Simon & Fehr, Ernst, 2001.
"Are people conditionally cooperative? Evidence from a public goods experiment,"
Economics Letters, Elsevier,
Elsevier, vol. 71(3), pages 397-404, June.
- Urs Fischbacher & Simon Gaechter & Ernst Fehr, . "Are People Conditionally Cooperative? Evidence from a Public Goods Experiment," IEW - Working Papers, Institute for Empirical Research in Economics - University of Zurich 016, Institute for Empirical Research in Economics - University of Zurich.
- Ernst Fehr & Bettina Rockenbach, 2003. "Detrimental effects of sanctions on human altruism," Microeconomics, EconWPA 0305007, EconWPA.
- Frey, Bruno S & Oberholzer-Gee, Felix & Eichenberger, Reiner, 1996. "The Old Lady Visits Your Backyard: A Tale of Morals and Markets," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 104(6), pages 1297-1313, December.
- Roland Benabou & Jean Tirole, 2003.
"Intrinsic and Extrinsic Motivation,"
Review of Economic Studies, Wiley Blackwell,
Wiley Blackwell, vol. 70(3), pages 489-520, 07.
- Linda Babcock & George Loewenstein, 1997. "Explaining Bargaining Impasse: The Role of Self-Serving Biases," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 11(1), pages 109-126, Winter.
- Elster, Jon, 1996. "Rationality and the Emotions," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 106(438), pages 1386-97, September.
- Iris Bohnet & Bruno S. Frey & Steffen Huck, . "More Order with Less Law: On Contract Enforcement, Trust, and Crowding," IEW - Working Papers, Institute for Empirical Research in Economics - University of Zurich 052, Institute for Empirical Research in Economics - University of Zurich.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Marita Kieser).
If references are entirely missing, you can add them using this form.