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Putting Agency and Integrity to the Test

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  • Daniel G. Arce

Abstract

This article examines recent claims about the necessity of integrity in agency relationships by putting agents with preferences that reflect integrity in an evolutionary competition with opportunistic agents. Corporate culture is modeled through a process of assortative matching between principal and agent types (via industry or group effects). This leads to a characterization of corporate governance where integrity is linked with value creation.

Suggested Citation

  • Daniel G. Arce, 2011. "Putting Agency and Integrity to the Test," Southern Economic Journal, John Wiley & Sons, vol. 77(4), pages 843-855, April.
    • Handle: RePEc:wly:soecon:v:77:y:2011:i:4:p:843-855
    DOI: 10.4284/0038-4038-77.4.843
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    References listed on IDEAS

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    1. Daniel G. Arce, 2006. "Taking Corporate Culture Seriously: Group Effects in the Trust Game," Southern Economic Journal, John Wiley & Sons, vol. 73(1), pages 27-36, July.
    2. Timothy Besley & Maitreesh Ghatak, 2005. "Competition and Incentives with Motivated Agents," American Economic Review, American Economic Association, vol. 95(3), pages 616-636, June.
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    7. Theodore C. Bergstrom, 2003. "The Algebra of Assortative Encounters and the Evolution of Cooperation," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 5(03), pages 211-228.
    8. Margit Osterloh & Bruno S. Frey, "undated". "Corporate Governance for Crooks? The Case for Corporate Virtue," IEW - Working Papers 164, Institute for Empirical Research in Economics - University of Zurich.
    9. Noreen, Eric, 1988. "The economics of ethics: A new perspective on agency theory," Accounting, Organizations and Society, Elsevier, vol. 13(4), pages 359-369, June.
    10. Lex Donaldson, 2008. "Ethics Problems and Problems with Ethics: Toward a Pro-Management Theory," Journal of Business Ethics, Springer, vol. 78(3), pages 299-311, March.
    11. Rakesh Khurana, 2007. "Introduction to From Higher Aims to Hired Hands The Social Transformation of American Business Schools and the Unfulfilled Promise of Management as a Profession," Introductory Chapters, in: From Higher Aims to Hired Hands The Social Transformation of American Business Schools and the Unfulfilled Promise of Management as a Profession, Princeton University Press.
    12. Frey, Bruno S, 1993. "Does Monitoring Increase Work Effort? The Rivalry with Trust and Loyalty," Economic Inquiry, Western Economic Association International, vol. 31(4), pages 663-670, October.
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    Cited by:

    1. Dr.Muganda Munir Manini & Dr.Umulkher Ali Abdillahi, 2023. "Does the Internal Control Environment Drive the Performance of Cooperatives? A PLS-SEM Perspective," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(7), pages 721-745, July.

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