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Monitoring

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Full-Text Articles in Behavioral Economics

Agency And Compensation: Evidence From The Hotel Industry, Matthew Freedman, Renata Kosova Feb 2014

Agency And Compensation: Evidence From The Hotel Industry, Matthew Freedman, Renata Kosova

Matthew Freedman

We examine how agency problems in the workplace interact with compensation policies by taking advantage of the structure of the hotel industry, in which many chains have both company managed and franchised properties. As residual claimants on their properties’ profits, franchisees have stronger incentives to monitor employees than managers in company managed hotels. Exploiting this variation and using rich, longitudinal data on the hotel industry, we estimate differences in wages and human resource practices across company managed and franchised hotels within chains as well as within individual hotels as they change organizational form. Our results suggest that the timing of …

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The Role Of Family Ties In Mitigating Moral Hazard: Firm-Level Evidence From Tamil Nadu, India, Goldie Chow Nov 2013

The Role Of Family Ties In Mitigating Moral Hazard: Firm-Level Evidence From Tamil Nadu, India, Goldie Chow

Goldie Chow

Drawing on firm-level data from the district of Coimbatore in Tamil Nadu, India, this study explores the role of family ties as a means to counteract potential moral hazard concerns. It is shown that firms will be more likely to employ family relations when faced with a higher hidden context for moral hazard. Specifically, the analysis finds that the presence of family members within the firm is higher when the firm provides general training and that firms that are more likely to do external business with family relations when it is believed that the legal system is not effective. Additionally, …

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