Staged-Financing Contracts with Accounting Fraud
This paper studies the use of incentive contracts to prevent accounting frauds. I show that when some agents in the population are technically con- strained from falsifying reports and stealing cash, the Bolton-Scharfstein con- tract remains to the optimal truth-telling contract. However, it may not be the optimal contract for a large range of parametric values. The optimal con- tract may induce stealing in equilibrium. Moreover, screening different types of agents is too costly for the principal ex ante, therefore, the optimal contract is always a pooling contract. The model provides insights to the optimality of pooling contracts versus separating contracts and the validity of applying the revelation principle in a multi-dimensional asymmetric information setting.
financial contracting principal-agent adverse selection moral hazard credibility
Hefei Wang
University of Illinois at Chicago 2601 S.Morgan St., M/C 168, Chicago, IL, 60611
国际会议
成都
英文
1-29
2007-07-09（万方平台首次上网日期，不代表论文的发表时间）