search query: @indexterm Chief executive officers / total: 802
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| Author: | Hofmann, C. |
| Title: | Using Different Budgeting Procedures tî Coordinate Principal/Agent-Relationships |
| Journal: | Schmalenbach Business Review
2003 : JAN, VOL. 55:1, p. 22-45 |
| Index terms: | BUDGETING AGENCY THEORY CHIEF EXECUTIVE OFFICERS |
| Language: | eng |
| Abstract: | Budgeting mechanisms help the CEO of a firm to restrict managerial discretion and therefore to mitigate the firm's agency problems. By using flexible budgets, the CEO allows the managers to efficiently adapt their actions to changing economic conditions. Alternatively, rigid budgets result in a more extensive restriction of the managers' actions. In this paper, the authors analyze a moral hazard problem resulting from a combined hidden action and hidden information situation. The authors formulate the agency problem under the assumptions of the LEN-model. The authors do not consider communication, i.e., the authors analyze authoritative budgeting procedures. |
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