Joint research unit 7235

Principal vs. Principal: Reconciling regulatory compliance and shareholder value

Speaker :Bernard Sinclair-Desgagné (HEC Montréal)

This paper considers situations where an agent (say, a polluting firm’s CEO) must allocate his nonobservable effort across two distinct tasks (say, revenue/market share enhancement and regulatory compliance), and where two principals (say, the firm’s shareholders and a regulator) hold diverging viewpoints on what the best allocation should be. Both characteristics of this context – multi-tasking and conflicting principals – are normally seen as obstacles to strengthening the agent’s incentives. This paper proposes a simple arrangement, based on contingent monitoring and clawbacks, that can overcome these obstacles. Under this arrangement, the principals would end up coordinating their respective incentive schemes so that the agent considers revenue enhancement and environmental compliance as complementary utility-increasing activities. Potential applications to corporate governance, corporate social responsibility, and green innovation are briefly discussed.

AGENDA

Tuesday 5 December 2023

Recherche et Economie et Socioéconomie Politique, des Institutions et des Régulations (RESPIR)

Clément Fontan (UC Louvain)

The ECB and the inflation monsters: strategic framing and the responsibility imperative (1998-2023)

Tuesday 5 December 2023

The ECB and the inflation monsters: strategic framing and the responsibility imperative (1998-2023)

Clément Fontan (UC Louvain)

The ECB and the inflation monsters: strategic framing and the responsibility imperative (1998-2023)

Thursday 7 December 2023

Groupe de travail Economie Comportementale

Vincent Lenglin (Université Catholique de Lille)

How Do We Apply Self-Protection to Others?

Thursday 7 December 2023

How Do We Apply Self-Protection to Others?

Vincent Lenglin (Université Catholique de Lille)

How Do We Apply Self-Protection to Others?

Thursday 7 December 2023

Explaining economic performances in the French employment zone: spatial externalities and related variety

Emmanuelle Faure

Explaining economic performances in the French employment zone: spatial externalities and related variety

Thursday 7 December 2023

Doctorants

Emmanuelle Faure

Explaining economic performances in the French employment zone: spatial externalities and related variety

Monday 11 December 2023

Law, Institutions and Economics in Nanterre (LIEN)

Bastien Michel (LEMNA, Nantes)

Measuring the Impact of Incarceration on Recidivism in Denmark

Monday 11 December 2023

Measuring the Impact of Incarceration on Recidivism in Denmark

Bastien Michel (LEMNA, Nantes)

Measuring the Impact of Incarceration on Recidivism in Denmark

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