Essays on the shortcomings of mechanisms intended to mitigate the agency conflict between manager and shareholders

Grathwohl, Julia

Document Type: Doctoral dissertation
Year of publication: 2012
Place of publication: Mannheim
University: Universität Mannheim
Evaluator: Simons, Dirk
Date of oral examination: 2 May 2012
Publication language: English
Institution: Business School > ABWL u. Rechnungswesen (Simons 2004-)
Subject: 330 Economics
Keywords (English): Agenda conflict , Manager compensation , Accounting choices , Auditing
Abstract: This dissertation addresses different aspects of the agency conflict between managers and shareholders. The conflict is aimed to be solved by incentive contracts. Typically, incentive contracts are not agreed upon by the shareholders themselves, but by the board of directors which is legally representing the shareholders. This dissertation empirically addresses the effect of opportunistic behavior by directors on manager compensation. A second problem inherent in compensation contracts is that manager pay typically is tied - directly or indirectly - to accounting data. However, the preparation of financial statements necessarily involves accounting choices to be made by the preparer, i.e., the manager. Given that compensation contracts typically are tied to financial statement data, incentives to use discretion opportunistically for the manager are high. In this dissertation the accounting choice between full and partial goodwill method is presented and the potential for manipulation of goodwill accounting is addressed. Lastly, this dissertation deals with shortcomings of monitoring mechanisms. The focus hereby is on the monitoring mechanism most closely related to the problem of financial statement manipulation, i.e., auditing. This dissertation addresses the interaction of three players, namely the manager, the internal auditor and the external auditor and its effect on the audit as a means of verification of financial statements.

Dieser Eintrag ist Teil der Universitätsbibliographie.

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