IDEAS home Printed from https://ideas.repec.org/a/prg/jnlpol/v2018y2018i4id1208p491-507.html
   My bibliography  Save this article

Agent-zákazník problém v distribuci finančních produktů
[Agent-Principal Problem in Financial Distribution]

Author

Listed:
  • Jiří Šindelář
  • Petr Budinský

Abstract

The paper deals with the agent-principal problem (adverse selection) in the distribution of investment products. Utilising data from the Czech financial market, a linear model with mixed effects was constructed, evaluating the relationship between remuneration of individual agents and quality-costs of the products they recommend. The results were structured for different organisational setups. We have found that in some less important environments from the market perspective (small and medium multi-level marketing networks, small and big pools, medium and big flat firms), there is a negative association between quality-cost of the contracted product and the amount of commission paid out to the agent. This indicates potential consumer detriment. In the majority of organisations dominating the industry, however, the direction of this relationship is positive in nature or statistically insignificant. Hence, the systemic potential for instigating the adverse selection was not detected in a major part of the market, bringing up regulatory implications in the conflict of interest and inducements area.

Suggested Citation

  • Jiří Šindelář & Petr Budinský, 2018. "Agent-zákazník problém v distribuci finančních produktů [Agent-Principal Problem in Financial Distribution]," Politická ekonomie, Prague University of Economics and Business, vol. 2018(4), pages 491-507.
    • Handle: RePEc:prg:jnlpol:v:2018:y:2018:i:4:id:1208:p:491-507
    DOI: 10.18267/j.polek.1208
    as

    Download full text from publisher

    File URL: http://polek.vse.cz/doi/10.18267/j.polek.1208.html
    Download Restriction: free of charge
    File URL: http://polek.vse.cz/doi/10.18267/j.polek.1208.pdf
    Download Restriction: free of charge
    File URL: https://libkey.io/10.18267/j.polek.1208?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. William T. Ross, Jr. & Erin Anderson & Barton Weitz, 1997. "Performance in Principal-Agent Dyads: The Causes and Consequences of Perceived Asymmetry of Commitment to the Relationship," Management Science, INFORMS, vol. 43(5), pages 680-704, May.
    2. Steven Shavell, 1979. "Risk Sharing and Incentives in the Principal and Agent Relationship," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 55-73, Spring.
    3. Roman Inderst & Marco Ottaviani, 2009. "Misselling through Agents," American Economic Review, American Economic Association, vol. 99(3), pages 883-908, June.
    4. Sobel, Joel, 1993. "Information Control in the Principal-Agent Problem," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 34(2), pages 259-269, May.
    5. Holmstrom, Bengt & Milgrom, Paul, 1991. "Multitask Principal-Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 7(0), pages 24-52, Special I.
    6. Ross, Stephen A, 1973. "The Economic Theory of Agency: The Principal's Problem," American Economic Review, American Economic Association, vol. 63(2), pages 134-139, May.
    7. N/A, 2001. "Law and Ethics," Medical Decision Making, , vol. 21(4), pages 335-336, August.
    8. repec:cgr:cgsser:03-13 is not listed on IDEAS
    9. Maskin, Eric & Tirole, Jean, 1990. "The Principal-Agent Relationship with an Informed Principal: The Case of Private Values," Econometrica, Econometric Society, vol. 58(2), pages 379-409, March.
    10. Danilov, Anastasia & Biemann, Torsten & Kring, Thorn & Sliwka, Dirk, 2013. "The dark side of team incentives: Experimental evidence on advice quality from financial service professionals," Journal of Economic Behavior & Organization, Elsevier, vol. 93(C), pages 266-272.
    11. Eckardt, Martina, 2002. "Agent and Broker Intermediaries in Insurance Markets -- An Empirical Analysis of Market Outcomes," Thuenen-Series of Applied Economic Theory 34, University of Rostock, Institute of Economics.
    12. Golec, Joseph H., 1992. "Empirical Tests of a Principal-Agent Model of the Investor-Investment Advisor Relationship," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 27(1), pages 81-95, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Inés Macho-Stadler & David Pérez-Castrillo, 2018. "Moral hazard: Base models and two extensions," Chapters, in: Luis C. Corchón & Marco A. Marini (ed.), Handbook of Game Theory and Industrial Organization, Volume I, chapter 16, pages 453-485, Edward Elgar Publishing.
    2. Vegas, E & Ganimian, A. J., 2013. "Theory and Evidence on Teacher Policies in Developed and Developing Countries," Working Paper 104291, Harvard University OpenScholar.
    3. Bengt Holmström, 2017. "Pay for Performance and Beyond," American Economic Review, American Economic Association, vol. 107(7), pages 1753-1777, July.
    4. Edward M. Iacobucci & Ralph A. Winter, 2005. "Asset Securitization and Asymmetric Information," The Journal of Legal Studies, University of Chicago Press, vol. 34(1), pages 161-206, January.
    5. Gao, Huasheng & Li, Kai, 2015. "A comparison of CEO pay–performance sensitivity in privately-held and public firms," Journal of Corporate Finance, Elsevier, vol. 35(C), pages 370-388.
    6. Paul Duetting & Michal Feldman & Inbal Talgam-Cohen, 2024. "Algorithmic Contract Theory: A Survey," Papers 2412.16384, arXiv.org.
    7. Edward P. Lazear, 1995. "Personnel Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121883, December.
    8. Sanjiva Prasad & Christopher J. Green & Victor Murinde, 2005. "Company Financial Structure: A Survey and Implications for Developing Economies," Chapters, in: Christopher J. Green & Colin Kirkpatrick & Victor Murinde (ed.), Finance and Development, chapter 12, Edward Elgar Publishing.
    9. Goldman, Eitan & Slezak, Steve L., 2006. "An equilibrium model of incentive contracts in the presence of information manipulation," Journal of Financial Economics, Elsevier, vol. 80(3), pages 603-626, June.
    10. Hadem, Michael, 2010. "Bedingungen und Konsequenzen des Wechsels von Finanzvorständen - Eine Analyse in großen börsennotierten Unternehmen," EconStor Theses, ZBW - Leibniz Information Centre for Economics, number 43681, March.
    11. Kishore Gawande & Alok K. Bohara, 2005. "Agency Problems in Law Enforcement: Theory and Application to the U.S. Coast Guard," Management Science, INFORMS, vol. 51(11), pages 1593-1609, November.
    12. Jed De Varo & Suraj Prasad, 2015. "The Relationship between Delegation and Incentives Across Occupations: Evidence and Theory," Journal of Industrial Economics, Wiley Blackwell, vol. 63(2), pages 279-312, June.
    13. Özalp Özer & Upender Subramanian & Yu Wang, 2018. "Information Sharing, Advice Provision, or Delegation: What Leads to Higher Trust and Trustworthiness?," Management Science, INFORMS, vol. 64(1), pages 474-493, January.
    14. Mirman, Leonard J. & Santugini, Marc, 2013. "Firms, shareholders, and financial markets," The Quarterly Review of Economics and Finance, Elsevier, vol. 53(2), pages 152-164.
    15. Thiele, Veikko, 2007. "Task-Specific Abilities in Multi-Task Agency Relations," MPRA Paper 2470, University Library of Munich, Germany.
    16. Luis Garicano & Luis Rayo, 2016. "Why Organizations Fail: Models and Cases," Journal of Economic Literature, American Economic Association, vol. 54(1), pages 137-192, March.
    17. Benjamin E. Hermalin & Michael L. Katz, 1994. "Corporate Diversification and Agency," Industrial Organization 9402001, University Library of Munich, Germany, revised 15 Nov 1996.
    18. William J. Marshall & Jess B. Yawitz & Edward Greenberg, 1984. "Incentives for Diversification and the Structure of the Conglomerate Firm," NBER Working Papers 1280, National Bureau of Economic Research, Inc.
    19. Robert Gibbons & John Roberts, 2012. "The Handbook of Organizational Economics," Economics Books, Princeton University Press, edition 1, volume 1, number 9889.
    20. Hilmer, Michael, 2013. "Fiscal treatment of managerial compensation - a welfare analysis," VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79703, Verein für Socialpolitik / German Economic Association.

    More about this item

    Keywords

    agent-principal problem; adverse selection; financial intermediation and advice; investment funds; unit-linked life insurance;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:prg:jnlpol:v:2018:y:2018:i:4:id:1208:p:491-507. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Stanislav Vojir (email available below). General contact details of provider: https://edirc.repec.org/data/uevsecz.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.