Abstract

http://ssrn.com/abstract=117859
 
 

Citations



 


 



The Effects of Promotion Incentives on Delegated Investment Decisions: A Note


Neil L. Fargher


Australian National University (ANU)

Frederick W. Rankin


Colorado State University, Fort Collins - College of Business

Todd L. Sayre


University of San Francisco - School of Business and Management


Journal of Management Accounting Research, 1998

Abstract:     
We report the results of an experiment designed to examine investment project selection under promotion incentives, modeled as tournament contracts. For a given expected return, the owner prefers investments with lower systematic risk. Therefore, to the extent managers select investments other than those yielding the highest risk-adjusted rates of return, they diverge from what the owner desires. In the presence of promotion incentives, we identify a situation in which the maximization of expected compensation by managers is incompatible with their selection of investment projects that maximize the risk-adjusted rate of return. The results indicated that subjects recognize the strategic implications of alternative promotion scenarios and respond to them in an opportunistic fashion.

JEL Classification: J33, G31

Accepted Paper Series





Not Available For Download

Date posted: August 24, 1998  

Suggested Citation

Fargher, Neil L. and Rankin, Frederick W. and Sayre, Todd L., The Effects of Promotion Incentives on Delegated Investment Decisions: A Note. Journal of Management Accounting Research, 1998. Available at SSRN: http://ssrn.com/abstract=117859

Contact Information

Neil L. Fargher (Contact Author)
Australian National University (ANU) ( email )
Canberra, Australian Capital Territory 2601
Australia
Frederick W. Rankin
Colorado State University, Fort Collins - College of Business ( email )
Fort Collins, CO 80523
United States
Todd L. Sayre
University of San Francisco - School of Business and Management ( email )
San Francisco, CA 94117
United States
Feedback to SSRN


Paper statistics
Abstract Views: 748

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo7 in 0.235 seconds