'Tying the manager's hands': constraining opportunistic managerial intervention

We discuss and examine empirically a firm-level equivalent ofthe ancient problem of ‘tying the King's hands’,namely how to avoid managerial intervention that is undertakento reap private benefits but is harmful to overall value creation,that is, ‘managerial opportunism’. The link frommanagerial intervention to firm-level value-creation is moderatedby employee motivation. Thus, intervention in the form of managersoverruling employees or reneging on delegation may demotivateemployees, particularly when the intervention is perceived asbeing unfair, undertaken for personal gain, etc. We argue thata number of mechanisms, such as managers staking their personalreputation, employees controlling important assets, strong tradeunions, etc. may function as constraints on managerial proclivitiesto intervene, thus reducing the problem of managerial opportunism.We derive four hypotheses from these ideas, and test them, usingpath-analysis, on a rich dataset, based on 329 firms in theSpanish food and electric/electronic industries.     

International Labor Revitalization: Enlarging the Playing Field

This survey of international union strategies distinguishes between approaches that add microeconomic value, adjust institutional frameworks, and enlarge the "playing field" on which unions organize and represent worker interests. It considers unions' efforts across advanced capitalist economies to use the latter approach to solve public goods problems while organizing new members. This strategy is limited by difficulties of coordinating multiple social interests but holds revitalizing potential by adding social value in times of socioeconomic instability.     

Internet Technologies in China: Insights on the Morally Important Influence of Managers

Within Science and Technology Studies, much work has been accomplished to identify the moral importance of technology in order to clarify the influence of scientists, technologists, and managers. However, similar studies within business ethics have not kept pace with the nuanced and contextualized study of technology within Science and Technology Studies. In this article, I analyze current arguments within business ethics as limiting both the moral importance of technology and the influence of managers. As I argue, such assumptions serve to narrow the scope of business ethics in the examination of technology. To reinforce the practical implications of these assumptions and to further illustrated the current arguments, I leverage the recent dialog around U.S. Internet technologies in China. The goal of this article is to broaden that which is morally salient and relevant to business managers and business ethicists in the analysis of technology by highlighting key lessons from seminal STS scholars. This article should be viewed as part of a nascent yet burgeoning dialog between business ethics and Science and Technology Studies – a dialog that benefits both fields of study.     

On the completeness of complete markets

We reconsider the allocational invariance of equilibria to different formulations of market completeness. We identify the so-far neglected assumption of sophisticated behavior as being crucial. First, the Arrow–Debreu setting is considered, where markets do not reopen in the future. Second, sequentially complete markets are analyzed, where goods on the spot markets and all contingent one-period ahead commodities can be traded in every state. Finally, complete markets are analyzed, where all possible contingent commodities can be traded at every state. Preferences may be time-consistent or time-inconsistent. A distinction is made between naïve and sophisticated behavior.     

Internal auditors’ use of interpersonal likability,arguments, and accounting information in a corporate governance setting

Internal auditors play an important role in influencing managers’ judgments. Yet, the practitioner literature indicates that, because internal audit lacks the client services incentives of external audit, internal auditors often adopt a “policeman approach” that can lead to negative interpersonal relationships with managers. We investigate three variables fundamental to internal auditors’ ability to influence managers: (1) internal auditors’ interpersonal likability, (2) the information used to support their positions, and (3) whether they present that information in a thematically organized argument. We find that managers agree more with an internal auditor who is both likable and uses a thematically organized argument. We find further that this joint effect occurs regardless of whether the internal auditor’s information is relatively supportive or unsupportive of his position. Overall, our theory and findings suggest that an internal auditor can achieve agreement from managers on important corporate governance issues with this fairly straightforward presentation tactic, even when the underlying information is relatively unsupportive and managers otherwise tend not to agree with the internal auditor’s position. Our study contributes to accounting, psychology, and writing and discourse theories with new evidence of the effects of an argument structure (holding the underlying information constant) on users’ judgments, and how those effects depend on the likability of the source of information. Our findings have important implications for internal auditors, managers, external auditors, and others interested in corporate governance.