Transparency and Information Asymmetry: A Theoretical Model of Transparency in Government Procurement

Purpose This paper aims to examine the design of optimal incentives for a firm’s tax department in the presence of information asymmetry. Design/methodology/approach This paper provides a theoretical model to examine the design of optimal incentives. The focus is on a situation in which a risk-averse tax department has private information about its efficiency type or effort to be exerted before the firm sets the incentive schemes. Findings This paper shows that a tax department’s risk aversion leads to a decline in the fraction of the cost borne by the tax department. It also shows that the optimal contract schemes should be designed to filter out as much uncontrollable risk as possible by using third-party information relevant to a tax department’s realized cost. Social implications It contributes to a better understanding of the impact of corporate incentive plans on firms’ tax practices. This study, by designing a theoretical model, helps explain why there exist differences in tax planning across firms based on the finding that incentives for tax planning activities differ across firms. Originality/value This paper is the first study that considers the situation in which tax managers’ risk-averse and types, as well as relevant information collected by the firms, can be used to set up incentive schemes and investigates whether and how the incentive schemes will be affected when firms improve their prior information by acquiring relevant information before the tax department acts.

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Moral Hazard Assessment in State-subsidized: Renewable Energy Investments

Periodica Polytechnica Social and Management Sciences ◽

10.3311/ppso.12360 ◽

2019 ◽

Vol 27 (1) ◽

pp. 37-47

Author(s):

Olivér Hortay

Keyword(s):

Renewable Energy ◽

Theoretical Model ◽

Moral Hazard ◽

Information Asymmetry ◽

Hazard Assessment ◽

Incentive Structure ◽

Ceteris Paribus ◽

Market Prices ◽

The Impact ◽

Great Protection

This paper presents the impact of state subsidy programs on moral hazard in renewable energy investments. The purpose of the research is to build a theoretical model which is able to handle the borrower’s behavior under asymmetric information circumstances, thus creating a new aspect in the debate about the choice of the financially ideal incentive structure. The general conclusion of the article is that technology based subsidy mechanisms which provide great protection to the investing companies (ceteris paribus), increase information asymmetry and agency costs. While these systems improve predictability of revenues, they block effective lending or otherwise, the market dependent subsidies moderate the moral hazard, which reduce the risk of fluctuating market prices.

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MODELING OF INTERACTION BETWEEN AN INVESTOR AND A TRUST MANAGER WITH NONLINEAR FUNCTIONS

Vestnik Universiteta ◽

10.26425/1816-4277-2020-3-143-148 ◽

2020 ◽

pp. 143-148

Author(s):

S. V. Korzhnev

Keyword(s):

Theoretical Model ◽

Information Asymmetry ◽

Nonlinear Models ◽

Linear Functions ◽

Nonlinear Functions ◽

Linear And Nonlinear ◽

The Relationship

The article is devoted to studying interaction between investor and trust manager. There is an information asymmetry between the investor and the trust manager, which makes it necessary to create a model that would allow the investor to overcome this asymmetry at least partially and get information about the quality of the service. In previous researches, the author proposed a theoretical model, describing this interaction with linear functions. In this paper, a model with nonlinear functions has been created and the conclusions of the linear and the nonlinear models have been compared. As a result, the conclusions of models with linear and nonlinear functions regarding the nature of the relationship between the commission and the factors used in the model were the same.

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COMPETITION AND RATCHET HYPOTHESIS: HOW SAFE ARE MANUFACTURING COMPANIES IN SUB-SAHARAN AFRICA?

Malaysian Management Journal ◽

10.32890/mmj2021.25.3 ◽

2021 ◽

Vol 25 ◽

pp. 49-72

Author(s):

Olusola Enitan Olowofela ◽

Akanbi M. A Tonade ◽

Wasiu Abiodun Sanyaolu

Keyword(s):

Theoretical Model ◽

Information Asymmetry ◽

Sub Saharan Africa ◽

Manufacturing Companies ◽

Cross Sectional ◽

Piece Rate ◽

Panel Model ◽

Ex Post ◽

Sub Saharan ◽

Ratchet Effects

This study applied the conventional ratcheting notion that managers (agents) chose to restrict their performance because they anticipated that firms (principals) would respond to higher performance levels by raising targets or by cutting pay in a piece-rate labour environment. A cross-sectional panel model was developed to subject this baseline notion of ratcheting hypothesis to multi-period and ex-post competitive labour market environment, bearing in mind that there was information asymmetry to both parties. It was observed, as predicted by the theoretical model that there would be substantial ratchet effects in the absence of competition. However, when subjected to ex-post competition, the ratchet effects were reduced, regardless of whether market conditions favoured the firms or the managers and thereby making the manufacturing companies in Sub-Saharan Africa safer than when they were exposed to ratcheting in its conventional form.

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A theoretical model for understanding dentists' behavior in treating patients with AIDS

Journal of Dental Education ◽

10.1002/j.0022-0337.1991.55.11.tb02589.x ◽

1991 ◽

Vol 55 (11) ◽

pp. 708-716 ◽

Cited By ~ 1

Author(s):

MS Chen

Keyword(s):

Theoretical Model

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A Model for Analyzing Suicide Prevention

Crisis ◽

10.1027//0227-5910.21.2.80 ◽

2000 ◽

Vol 21 (2) ◽

pp. 80-89 ◽

Cited By ~ 3

Author(s):

Maila Upanne

Keyword(s):

Risk Factors ◽

Theoretical Model ◽

Protective Factors ◽

Suicide Prevention ◽

Suicide Risk ◽

Practical Work ◽

Individual Risk ◽

Self Assessment ◽

Prevention Project ◽

Individual Risk Factors

This study monitored the evolution of psychologists' (n = 31) conceptions of suicide prevention over the 9-year course of the National Suicide Prevention Project in Finland and assessed the feasibility of the theoretical model for analyzing suicide prevention developed in earlier studies [ Upanne, 1999a , b ]. The study was formulated as a retrospective self-assessment where participants compared their earlier descriptions of suicide prevention with their current views. The changes in conceptions were analyzed and interpreted using both the model and the explanations given by the subjects themselves. The analysis proved the model to be a useful framework for revealing the essential features of prevention. The results showed that the freely-formulated ideas on prevention were more comprehensive than those evolved in practical work. Compared to the earlier findings, the conceptions among the group had shifted toward emphasizing a curative approach and the significance of individual risk factors. In particular, greater priority was focused on the acute suicide risk phase as a preventive target. Nonetheless, the overall structure of prevention ideology remained comprehensive and multifactorial, stressing multistage influencing. Promotive aims (protective factors) also remained part of the prevention paradigm. Practical working experiences enhanced the psychologists' sense of the difficulties of suicide prevention as well as their criticism and feeling of powerlessness.

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