Kuntien lakisääteiset velvoitteet ja niiden laiminlyönnit tilintarkastuskertomusten perusteella

his article studies misconducts and neglects detected by auditors in Finnish municipalities in years 2017-2019. This article uses auditor’s reports to evaluate how common these misconducts and neglects are in Finland. The study is conducted by collecting all auditor’s reports in municipalities in mainland Finland from years 2017–2019 and analysing whether the auditor’s reports are unmodified or modified and if they were modified, why they were modified. This study concludes that 20 % of Finnish municipalities neglect their public economy or administration duties every year. These neglects are most common when requirements are related to the principal-agent problem in cases where the municipality should monitor their employees or electeds. These neglects and misconducts are, however, not quite severe. Severe cases were extremely rare in the reports.

Will the EU Taxonomy Regulation Foster Sustainable Corporate Governance?

EU securities regulation has established a taxonomy of environmentally sustainable activities. This article discusses, from a law and economics standpoint, the potential of this taxonomy to support sustainable corporate governance. Corporate governance can be an efficient way to channel investor preferences towards sustainability because the concentration of institutional shareholding has lowered the transaction costs of shareholder action. However, there is a principal-agent problem between institutional investors and their beneficiaries, which depends on greenwashing and undermines sustainable corporate governance. This article argues that introducing environmental sustainability into EU mandatory disclosure aligns the institutional investors’ incentives with the interest of their beneficiaries and may foster the efficient inclusion of sustainability in corporate governance. The argument is threefold. Firstly, the EU taxonomy may curb greenwashing by standardizing the disclosure of environmental sustainability. Secondly, this information may become salient for the beneficiaries as the same standards define the sustainability preferences to be considered in recommending and marketing financial products. Thirdly, sustainability disclosure prompts institutional investors to compete for sustainability-minded beneficiaries. Being unable to avoid unsustainable companies altogether, institutional investors are expected to cater to beneficiaries’ preferences for environmental sustainability using voice instead of an exit.

Analytical approach to the influence of motivation on the dynamics of heterogeneous employees and expected average costs of efficient work

Motivating employees with different characteristics has a significant effect on company performance. This paper models the relationship between employer and heterogeneous employees working in pairs as a principal-agent problem. Every worker can encounter moral hazard with regard to the stimulation of the employer and the efficient work of co-workers. Employee behavior describes a reaction function based on which the equilibrium of appropriate pairs of employees and their overall effective performance is described. The employer determines the optimal stimulation that minimizes the expected average cost of effective work for each individual group of employees. The total expected average cost of efficient work of the entire company in the short run depends on the distribution of employees with different characteristics. How the attitude of employees towards work in the long run changes is described by replicative dynamics and shows that the stability of the employee population is achieved in two cases where the long-run total expected average cost of efficient work is differentiated by approximately eight percent. This paper describes a new conceptual framework for quantitative analysis of the effects of motivation on the short and long run financial results of an enterprise.

Promoting the Emergence of Behavior Norms in a Principal–Agent Problem—An Agent-Based Modeling Approach Using Reinforcement Learning

One of the complexities of social systems is the emergence of behavior norms that are costly for individuals. Study of such complexities is of interest in diverse fields ranging from marketing to sustainability. In this study we built a conceptual Agent-Based Model to simulate interactions between a group of agents and a governing agent, where the governing agent encourages other agents to perform, in exchange for recognition, an action that is beneficial for the governing agent but costly for the individual agents. We equipped the governing agent with six Temporal Difference Reinforcement Learning algorithms to find sequences of decisions that successfully encourage the group of agents to perform the desired action. Our results show that if the individual agents’ perceived cost of the action is low, then the desired action can become a trend in the society without the use of learning algorithms by the governing agent. If the perceived cost to individual agents is high, then the desired output may become rare in the space of all possible outcomes but can be found by appropriate algorithms. We found that Double Learning algorithms perform better than other algorithms we used. Through comparison with a baseline, we showed that our algorithms made a substantial difference in the rewards that can be obtained in the simulations.

Principal Trading Arrangements: When Are Common Contracts Optimal?

Many financial arrangements reference market prices that are yet to be realized at the time of contracting and consequently susceptible to manipulation. Two of the most common such arrangements are as follows: (i) guaranteed volume-weighted average price (VWAP) contracts, which reference the VWAP prevailing over an execution window, and (ii) market-on-close contracts, which reference the price prevailing at the window’s end. To study such situations, we introduce a stylized model of financial contracting between a client, who wishes to trade a large position, and the client’s dealer. We provide conditions under which guaranteed VWAP contracts are optimal in this principal-agent problem. In contrast, market-on-close contracts generally cannot be optimal. These results explain the use of guaranteed VWAP contracts in practice, question the use of market-on-close contracts, and suggest considerations for the design of financial benchmarks. This paper was accepted by Haoxiang Zhu, finance.

Simulating the Principal-Agent Relationship between Enterprise Owners and Professional Managers Using Evolutionary Game Theory and System Dynamics

The separation of ownership and management is a common operation mode in modern enterprises, which establishes the principal-agent relationship between modern enterprise owners and professional managers. Due to the information asymmetry and interest conflicts between the principal and agent, the principal-agent problem will occur and affect the efficiency of enterprise operations. Therefore, it is necessary to propose measures to improve the principal-agent relationship. This paper analyzed the principal-agent problem between enterprise owners and professional managers based on system dynamics, evolutionary game, and principal-agent theory and built a principal-agent evolutionary game model to analyze the rule of strategic choices and predict the equilibrium outcomes of different scenarios. In addition, the influence of different factors on strategic choices was simulated by the system dynamics model. The results depicted that the basic benefits and costs of cooperation are the key factors of the strategic choices, and the gap between the expected payoffs of different strategies also affects the probability of choosing those cooperative strategies. Proper supervision, standardization of the managerial labor market, and establishment of long-term incentives are crucial to cooperation between enterprise owners and professional managers.

Introduction

In recent decades in general and since the turn of the millennium in particular, accountability has emerged as the democratic state’s most important legitimation mechanism for national security and intelligence practices and institutions. The functional imperative of accountability is to scrutinize intelligence agencies, practices, and systems to ensure their compliance with regulations, mandates, laws, and the Constitution—largely to provide reassurance that organisations that must operate in secret are not abusing their special powers and authorities. In addition to compliance, however, many other benefits that flow from crucial subsidiary functions that intelligence accountability performs. This chapter tracks the value and importance of intelligence to detect, disrupt, and deter a growing number of threat actors and vectors to security, prosperity, and democracy, and concomitant shift in intelligence posture from foreign spies to an array of domestic counterterrorism, counterespionage, counter sabotage, counter propaganda, counter information and counter cyber operations. In an era of social and political disruption that is marked by technological change, changing threat vectors, changing public expectations and scandals, democratic governments have established, evolved, and expanded accountability systems to review and oversee the intelligence community. The chapter introduces readers to ways of theorizing and reconciling the relationship between the intelligence community and civilian institutions of the democratic state, notably as a principal–agent problem: a relationship in which one side (the civilians) attempts to have an epistemic community (the ‘spies’) carry out its will. Politicians and the civil service leverage the intelligence community’s expert knowledge to keep the democratic state, its institutions, and its citizens safe and secure and deter and contain existential threats. In fulfilling this mandate, the democratic public expects the intelligence community to comply with relevant legal and constitutional frameworks.