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Managerial Accountability Under Yardstick Competition

Author

Listed:
  • Giuranno Michele G.

    (University of Salento, Dipartimento di Scienze dell’Economia “A. De Viti De Marco”, Lecce, 73100Italy)

  • Scrimitore Marcella

    (University of Salento, Dipartimento di Scienze dell’Economia “A. De Viti De Marco”, Lecce, 73100Italy)

  • Stamatopoulos Giorgos

    (Department of Economics, University of Crete, 74100Rethymno, Crete, Greece)

Abstract

Two well-known mechanisms for enhancing managers’ accountability are yardstick competition and internal monitoring. Yardstick competition puts managers in direct competition when firms make decisions for re-appointment. Monitoring is used by firms to detect managers’ rent-seeking activities. While common wisdom suggests that the joint use of the two means would reinforce each other in promoting managers good practices, we find that their interplay distorts managers’ behavior who may end up acting in a less accountable way. Furthermore, differences in monitoring across firms bias that distortion, yielding even more counterintuitive results.

Suggested Citation

  • Giuranno Michele G. & Scrimitore Marcella & Stamatopoulos Giorgos, 2020. "Managerial Accountability Under Yardstick Competition," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 20(2), pages 1-4, June.
    • Handle: RePEc:bpj:bejtec:v:20:y:2020:i:2:p:4:n:9
    DOI: 10.1515/bejte-2019-0037
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    References listed on IDEAS

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    More about this item

    Keywords

    Tullock context success function; rent seeking; managerial discretion;
    All these keywords.

    JEL classification:

    • D - Microeconomics
    • D2 - Microeconomics - - Production and Organizations
    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • M2 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics

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