Profit sharing and monitoring in partnerships

• 成果类型: Article
• 署名作者: Huddart, S; Liang, PJH
• 署名单位: Pennsylvania Commonwealth System of Higher Education (PCSHE); Pennsylvania State University; Pennsylvania State University - University Park; Carnegie Mellon University
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2005.04.008
• 发表日期: 2005
• 关键词: Moral hazard; TECHNOLOGY; firm

摘要

We consider partnerships among risk-averse professionals endowed with (i) a risky and personally-cosIly production technology and (ii) a personally-costly monitoring technology providing contractible noisy signals about partners' productive efforts. Partners shirk both production and monitoring tasks because efforts are unobservable. We characterize optimal partnership size, profit shares and incentive payments when every partner performs the same tasks, and show that medium-sized partnerships are dominated by either smaller or larger partnerships. Prohibiting some partners from monitoring increases the incentives for others to monitor. We illustrate how task assignments and incentives interact, leading to improvements in partner welfare. (c) 2005 Elsevier B.V. All rights reserved.