IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Monitoring, Moral Hazard and Turnover

  • Jacek Rothert

    ()

    (Department of Economics, University of Texas at Austin)

I study the effects of monitoring on turnover of executives, when the executives' early actions have permanent effects on future outcomes. I consider an infinite-horizon environment where the expectation about the potential successor's effort is endogenous. As a result, the incentive to replace the incumbent is endogenous. In a stationary Markov equilibrium the relationship between monitoring and turnover is hump-shaped. The model sheds light on dynamic agency problems when agent's initial effort has persistent effects, and on the role of reputation in models with endogenous turnover.

If 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.

File URL: https://sites.google.com/site/jacekrothert/research/rothert-monitoring.pdf
File Function: Revised version, 2012
Download Restriction: no

Paper provided by The University of Texas at Austin, Department of Economics in its series Department of Economics Working Papers with number 130124.

as
in new window

Length: 32 pages (w/o appendix)
Date of creation: Nov 2009
Date of revision: Sep 2012
Handle: RePEc:tex:wpaper:130124
Contact details of provider: Postal:
Austin, Texas 78712

Phone: +1 (512) 471-3211
Fax: +1 (512) 471-3510
Web page: http://www.utexas.edu/cola/depts/economics/
Email:


More information through EDIRC

References listed on IDEAS
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.:

as in new window
  1. Antonio Merlo & Andrea Mattozzi, 2005. "Political Careers or Career Politicians?," 2005 Meeting Papers 740, Society for Economic Dynamics.
  2. Andrew Atkeson & Christian Hellwig & Guillermo L. Ordonez, 2012. "Optimal regulation in the presence of reputation concerns," Staff Report 464, Federal Reserve Bank of Minneapolis.
  3. George-Marios Angeletos & Christian Hellwig & Alessandro Pavan, 2007. "Dynamic Global Games of Regime Change: Learning, Multiplicity, and the Timing of Attacks," Econometrica, Econometric Society, vol. 75(3), pages 711-756, 05.
  4. Toshihiko Mukoyama & Ayşegül Şahin, 2005. "Repeated moral hazard with persistence," Economic Theory, Springer, vol. 25(4), pages 831-854, 06.
  5. Campos, Nauro F & Karanasos, Menelaos, 2007. "Growth, Volatility and Political Instability: Non-Linear Time-Series Evidence for Argentina, 1896-2000," CEPR Discussion Papers 6524, C.E.P.R. Discussion Papers.
  6. Veronica Guerrieri & Peter Kondor, 2012. "Fund Managers, Career Concerns, and Asset Price Volatility," American Economic Review, American Economic Association, vol. 102(5), pages 1986-2017, August.
  7. Roubini, Nouriel & Swagel, Phillip & Ozler, Sule & Alesina, Alberto, 1996. "Political Instability and Economic Growth," Scholarly Articles 4553024, Harvard University Department of Economics.
  8. Jensen, Michael C & Murphy, Kevin J, 1990. "Performance Pay and Top-Management Incentives," Journal of Political Economy, University of Chicago Press, vol. 98(2), pages 225-64, April.
  9. Phelan, Christopher, 2006. "Public trust and government betrayal," Journal of Economic Theory, Elsevier, vol. 130(1), pages 27-43, September.
  10. Arantxa Jarque, 2008. "Repeated moral hazard with effort persistence," Working Paper 08-04, Federal Reserve Bank of Richmond.
  11. Stephen Spear & Cheng Wang, . "When to Fire a CEO: Optimal Termination in Dynamic Contracts," GSIA Working Papers 2002-E5, Carnegie Mellon University, Tepper School of Business.
  12. Alex Edmans & Xavier Gabaix & Tomasz Sadzik & Yuliy Sannikov, 2009. "Dynamic Incentive Accounts," NBER Working Papers 15324, National Bureau of Economic Research, Inc.
  13. Per Krusell & José-Víctor Ríos-Rull, 1996. "Vested Interests in a Positive Theory of Stagnation and Growth," Review of Economic Studies, Oxford University Press, vol. 63(2), pages 301-329.
  14. George-Marios Angeletos & Alessandro Pavan, 2007. "Dynamic Global Games of Regime Change: Learning, Multiplicity and Timing of Attacks," Discussion Papers 1497, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  15. Alesina, Alberto, et al, 1996. " Political Instability and Economic Growth," Journal of Economic Growth, Springer, vol. 1(2), pages 189-211, June.
  16. Fernandes, Ana & Phelan, Christopher, 2000. "A Recursive Formulation for Repeated Agency with History Dependence," Journal of Economic Theory, Elsevier, vol. 91(2), pages 223-247, April.
  17. Bengt Holmstrom, 1997. "Moral Hazard and Observability," Levine's Working Paper Archive 1205, David K. Levine.
  18. Hugo H. Hopenhayn & Arantxa Jarque, 2009. "Unobservable Persistant Productivity and Long Term Contracts," Economics Working Papers we092717, Universidad Carlos III, Departamento de Economía.
  19. Cheng Wang, 2005. "Termination of Dynamic Contracts in an Equilibrium Labor Market Model," 2005 Meeting Papers 743, Society for Economic Dynamics.
  20. Chris Edmond, 2007. "Information Manipulation, Coordination and Regime Change," Working Papers 07-25, New York University, Leonard N. Stern School of Business, Department of Economics.
  21. Edmans, Alex & Gabaix, Xavier, 2010. "Risk and the CEO Market: Why Do Some Large Firms Hire Highly-Paid, Low-Talent CEOs?," CEPR Discussion Papers 7836, C.E.P.R. Discussion Papers.
  22. Drew Fudenberg & David K. Levine, 1996. "The Theory of Learning in Games," Levine's Working Paper Archive 624, David K. Levine.
  23. Hugo A. Hopenhayn & Arantxa Jarque, 2007. "Moral hazard and persistence," Working Paper 07-07, Federal Reserve Bank of Richmond.
  24. Leonardo Martinez, 2008. "A theory of political cycles," Working Paper 05-04, Federal Reserve Bank of Richmond.
  25. Alessandro Riboni, 2013. "Ideology and endogenous constitutions," Economic Theory, Springer, vol. 52(3), pages 885-913, April.
  26. Caselli, Francesco & Morelli, Massimo, 2004. "Bad politicians," Journal of Public Economics, Elsevier, vol. 88(3-4), pages 759-782, March.
  27. Guillermo Ordoñez, 2013. "Reputation from nested activities," Economic Theory, Springer, vol. 52(3), pages 915-940, April.
  28. Timothy Besley, 2005. "Political Selection," Journal of Economic Perspectives, American Economic Association, vol. 19(3), pages 43-60, Summer.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:tex:wpaper:130124. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Caroline Thomas)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.