Product Market Competition and Agency Costs

Jennifer Baggs and Jean-Etienne de Bettignies

Analytical Studies Branch Research Paper Series from Statistics Canada, Analytical Studies Branch

Abstract:

We model the effects of product market competition on agency costs, and develop two main empirical predictions. First, competition, by reducing agency costs, unambiguously increases the importance firms place on quality improvements. This leads to higher powered incentives, and in turn to increased effort and quality. Second, these effects are increasing in the severity of agency problems, and should be stronger in large, hierarchical corporations (where agency problems are more severe) than in entrepreneurial firms. We test the predictions of our model using a unique dataset with both firm and employee characteristics.

Keywords: Employment and unemployment; Hours of work and work arrangements; Labour; Wages; salaries and other earnings (search for similar items in EconPapers)
Date: 2006-12-04
New Economics Papers: this item is included in nep-bec and nep-com
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
https://www150.statcan.gc.ca/n1/en/catalogue/11F0019M2006287 (application/pdf)

Related works:
Journal Article: PRODUCT MARKET COMPETITION AND AGENCY COSTS* (2007)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:stc:stcp3e:2006287e

Access Statistics for this paper

More papers in Analytical Studies Branch Research Paper Series from Statistics Canada, Analytical Studies Branch Contact information at EDIRC.
Bibliographic data for series maintained by Mark Brown ().