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When corporate governance is effective, new managerial contracts should maximize shareholder wealth. The Omnibus Budget Reconciliation Act (OBRA) of 1993 provides a natural environment to examine the effectiveness of corporate governance. We find that firms affected by OBRAs $1 million cap on non-performance-based compensation experience abnormally high returns around the board meeting and proxy dates when contracts are voted on. These findings are consistent with effective corporate governance and efficient contracting and contrary to expropriation theory. Firms not affected by OBRA do not have a positive stock price reaction to new contracts and increase both cash and bonus compensation.

Extensively public concern on “Huge Executive Compensation” makes it urgent to investigate the reasonability of high executive compensation. The purpose of this paper is to explore the effectiveness of compensation contracting based on the specific responsibility of executives. More specifically, this paper is to examine whether high compensation is helpful to mitigate agency problems.

Considering that board secretaries of listed companies are responsible for information disclosure in China, this paper examines the effect of board secretaries’ excess compensation on firms’ disclosure quality using listed company data from 2007 to 2015. The first measure of disclosure quality is based on the disclosure violation behavior of firms, and the second is KV value that represents the extent to which the investors relay on the stock trading volume. To provide additional confidence that the findings are robust, this paper further conducts two indirect tests based on rumors and cost of equity capital.

The results show that board secretaries’ excess compensation is negatively associated with the probability of information disclosure violation and also negatively associated with firms’ KV value, suggesting firms that pay high compensation to their information providers are more likely to provide high-quality disclosures. Besides, this paper further finds that board secretaries’ excess compensation is negatively related to the incidence of rumors, the number of rumors incurred or the cost of equity capital.

Overall, the findings provide support to the efficient contracting of executive compensation, which implies that highly paid board secretaries would be better information providers than those poorly paid.

This paper provides empirical evidence that firms’ disclosure quality can be improved by modifying the compensation contract of information providers. This may indicate a new way to improve the quality of disclosures, so as to mitigate the agency problem.

In spite of the public criticism on executive excess compensation, the high compensation is not always a signal of manipulation, collusion and self-interest. It also can be a signal of individual talents and great efforts. Board secretaries are worth to be highly paid if they can improve firms’ disclosures, thereby reducing the incidence of rumors and reducing the cost of equity capital.

This paper is the first research to examine the effectiveness of compensation contracting based on information providers’ disclosure responsibility in the Chinese context. It documents a positive relation between board secretaries’ excess compensation and corporate disclosure quality.

The WTO dispute settlement process is an improvement to the original GATT dispute settlement mechanism. However, it fails to assure a timely implementation and enforcement of the dispute settlement body (DSB) recommendations. To this date, the issue of mandatory enforcement is still open to interpretation. The number of ‘matters’ that have been subject to WTO dispute settlement stands at 266 over the 1995–2006 period. The number of implementation disputes has increased since 1998 and stand at 34 as of January 1, 2007. This chapter reviews the process of dispute settlements and enforcements since 1995 and to argue for the interpretation of ‘WTO agreements’ as ‘binding contracts’ whose breach must be evaluated as either ‘efficient’ or ‘non-efficient’ when discussing enforcement. In this context the non-compliance issue may be viewed as an ‘efficient breach’ where the only efficient remedy is a ‘fine’ rather than the usual practice of ‘suspension of concessions or other obligations’ to the Respondent. What sets our approach apart from earlier discussion is that it does not view ‘suspension of concessions’ as a sufficiently burdensome and efficient sanction. A ‘fine’ on the other hand may serve as a ‘buy out’ of a Respondents WTO obligations, and can be transferred to the negatively affected domestic producers in the Complainant's market as compensation for losses.

This study aims to examine the effect of the auditor-client relationship (ACR) on related party transaction (RPT) types of disclosure, either RPT-efficient or RPT-conflict. This study also examines whether family controlling shareholders (FCS) negatively affect the ACR in RPT types of disclosure.

This study uses multivariate regression on 2,203 year-observations of companies listed in Malaysia during the period 2014–2017.

This study finds weak evidence that auditors can mitigate companies’ RPT type (RPT-efficient and RPT-conflict) disclosure while maintaining a close ACR. However, an interaction between FCS and ACR reduces the RPT-conflict disclosure. Additionally, the Big 4 auditors slightly increase the RPT-conflict disclosure, however, the relationships are inversed if the close ACR involves the FCS. The Big 4 auditors also increase RPT-efficient disclosure although in a close ACR with FCS. Meanwhile, an interaction between non-Big 4 auditors and FCS in close ACR reduces both types of RPT disclosures.

The findings suggest that a close relationship between auditors and clients in firms with significant family control could compromise auditor’s skepticism. The FCS can easily influence the auditors to agree with the ways they treat the RPT disclosure. Therefore, policymakers may have to revisit auditors’ rotation policies in Malaysia, especially those involving FCS.

Trust, familiarity and future fee dependency are significant threats to auditor independence in a close ACR. This study contributes to the literature by examining the effect of a close ACR on RPT types of disclosure from a network theory perspective.

We survey several of the theoretical models that have been applied to the analysis of the GATT/WTO dispute settlement process. These include repeated game models, which emphasize the punishment aspect of dispute settlement, and incomplete contracting models, which emphasize the “gap-filling” aspect. Our analysis emphasizes the implications of these models for the strengthening of the dispute settlement process under the WTO and for its application to the TRIPS agreement. We also discuss how models of settlement bargaining can be applied to obtain empirical predictions about which cases will actually proceed to an actual finding by the dispute panel.

The purpose of this paper is to provide insights into the extent of, rationales for and outcomes of contracting out in the local road and park sectors in Norway. For understanding the use of contracting out in local governments, it highlights the relevance of the capability perspective in organisational literature as an alternative to the standard efficiency perspective.

The paper draws on four expert interviews and survey data gathered from park and road managers in Norwegian municipalities in 2015.

The study suggests that Norwegian municipalities primarily contract out park and road maintenance services when they do not have the capability to perform these services themselves. Cost concerns are also highlighted but of less importance. Moreover, lack of competition renders the use of contracting out as a potentially costly and less satisfying arrangement for organising service delivery.

While the scope is limited to one country, Norway, future research may benefit from the theoretical perspectives, which have been used.

Policy guidelines should support a flexible use of various arrangements for service provision.

The dominating view among proponents of marketisation in the public sector suggests that contracting out to private contractors is undertaken to enhance economic efficiency compared to keeping service production in-house. This study suggests that this is not always the case – even in “most likely” sectors such as park and road maintenance.

The purpose of this paper is to propose using agency theory for assessing the likelihood of quality fade in buyer‐supplier relationships and prescribing contractual mechanisms for reducing quality fade. In this paper, quality fade, an element of supply chain vulnerability, is defined as the unforeseen deterioration of agreed to or expected quality levels with respect to product and/or service requirements. The use of outcome‐based, behavior‐based, or mix contracts can be used to reduce the likelihood of quality fade and illustrate preferred scenarios for buyer and suppliers.

This paper proposes a conceptual model for using agency theory to explain and address a type of supply chain vulnerability called quality fade. A 2×2 matrix is proposed that contrasts outcome measurability with outcome uncertainty to illustrate buyer and supplier vulnerability and to suggest contractual mechanisms that can be used to mitigate vulnerability for both parties.

A typology of governance mechanisms is presented and described with the use of a manufacturer third‐party logistics provider example to illustrate the theoretical framework. Four different scenarios are discussed and described. Contractual mechanisms are provided to mitigate vulnerabilities and reduce quality fade.

Quality fade is a term that has not been described extensively in academic literature but is a term that is relevant in the broader discussion of supply chain vulnerability. Given that quality fade is a behavioral, as opposed to process oriented, approach, it requires a theoretical framework rooted in behavioral considerations. Agency theory is an appropriate framework for studying governance options.

The purpose of this paper is to study if the performance history impacts supplier selection in the French public sector context. While French public procurement legislation forbids consideration of the past contract wins in supplier selection, public contractors may still rely on contract win history for highly complex transactions.

Using French Official Journals (BOAMP), the authors collected all public procurement transactions of 976 suppliers that had at least one transaction per year, over a period of six years (between 2006 and 2011). The authors conducted a two-level hierarchical linear auto-regression analysis and a feature evaluation analysis for all transactions.

The paper finds significant variation between the transactions of different markets, as well as in the overall positive impact of past wins and in the detailed impact patterns and thresholds of each market. The findings may allow refinement of existing contract awarding strategies and of current legislation.

The paper aims at empirically testing whether a supplier’s degree of success in any given year, measured by the number of public contracts won, may have an impact on the likelihood that the same supplier is awarded a public contract the following year. The authors conclude that suppliers retained for public contracts could benefit from building public buyers’ loyalty using a key account selling approach rather than systematically seeking to acquire new contracts.

Refers to previous research to suggest that US commercial bank managers use discretion to “manage” regulatory capital and that accounting discretion can influence a bank’s investment opportunity set (IOS) and therefore its share price. Challenges the assumption that using accounting discretion to manipulate contracting variables will only result in a redistribution of wealth. Develops a mathematical model based on Feltham and Ohlson (1995) and uses it to explore the bank manager’s optimal investment in risky assets, the constraint on investment choice produced by minimum regulatory capital requirements and how accounting discretion can reduce this. Shows that regulatory requirements do constrain a bank’s IOS but that discretion (e.g. over loan loss provisions) can only mitigate this if dividend and financing policies depend on the discretionary components.