External Agency Relationships and Agency Problems in Professional Service Firms: A Multilevel Study
57 Pages Posted: 22 Apr 2011
Date Written: April 19, 2011
We employ survey and archival data on a sample of 2083 lawyers working for 203 Dutch law firms to test a multilevel theory of the specific corporate governance challenges facing professional service firms (PSFs). We conceptualize the external agency relations characterizing PSFs, and test how agency problems emerge in these relationships under the influence of PSF-specific practices and the risk propensities of individual professionals. Taking complaints filed against lawyers with the bar association as a measure for agency problems, we find that organizational practices like training and strategic planning and individual characteristics like job roles and experience influence their prevalence.
Keywords: profession, professional service firm, misconduct, fraud, agency theory, agency problem, multilevel, HLM, Poisson regression, Poisson model, law firm, lawyer
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