ENDING WASTEFUL YEAR-END SPENDING: ON OPTIMAL BUDGET RULES IN ORGANIZATIONS

• 成果类型: Article
• 署名作者: Siemroth, Christoph
• 署名单位: University of Essex; University of Essex
• 刊物名称: INTERNATIONAL ECONOMIC REVIEW
• ISSN/ISSBN: 0020-6598
• DOI: 10.1111/iere.12684
• 发表日期: 2024
• 页码: 1163-1188
• 关键词: Incentives

摘要

What can organizations do to minimize wasteful year-end spending? I introduce a two-period model to derive optimal budget roll-over and audit rules. A principal tasks an agent with using a budget to fulfill the organization's spending needs, which are private information of the agent. The agent can misuse funds for private benefit. The optimal rules allow the agent to roll-over a share of the unused funds, but not necessarily the full share, and in most cases to audit only sufficiently large spending. The optimal audit rule can change once fund roll-over is allowed. Strategically underfunding the agent can be optimal.