Transparency in Hierarchies

• 成果类型: Article
• 署名作者: Hofmann, Christian; Indjejikian, Raffi J.
• 署名单位: University of Munich; University of Michigan System; University of Michigan
• 刊物名称: JOURNAL OF ACCOUNTING RESEARCH
• ISSN/ISSBN: 0021-8456
• DOI: 10.1111/1475-679X.12516
• 发表日期: 2024
• 页码: 411-445
• 关键词: relative performance information; moral hazard; incentive contracts; COMPENSATION; decentralization; RENEGOTIATION; DESIGN; FIRMS; RISK

摘要

We use an agency model to address the benefits and costs of transparency in a hierarchical organization in which the principal employs a manager entrusted with contracting authority and several workers, all under conditions of moral hazard. We define the principal's transparency choices as a decision to allow workers to observe their coworkers' performances (observability) and as an investment in monitoring worker performance (precision). We find that whereas precision alleviates agency conflicts as expected, observability can exacerbate agency conflicts, especially if the manager's interests are misaligned sufficiently with those of the principal. Our results suggest several testable hypotheses including predictions that opaque performance measurement practices are well suited for small organizational units at lower hierarchical ranks, and in settings where the sensitivity-precision of the available measures is low, workers' performances are correlated positively, and managerial productivity is modest.