The Agent'ss Ethics in the Principal-Agent Model

This paper evaluates the current use of the Principal Agent Model (PAM) in accounting and finance, focusing on the agent'ss use of private information. The agent'ss behavioral norms in the the PAM deviate from commonly held ethical values in society, from models of man in conventional econ...

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Bibliographic Details
Published in:Journal of business ethics
Main Author: Bøhren, Øyvind (Author)
Format: Electronic Article
Language:English
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Published: Springer Science + Business Media B. V 1998
In: Journal of business ethics
Further subjects:B Human Resource
B Predictive Power
B Business Ethic
B Resource Management
B Economic Growth
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Description
Summary:This paper evaluates the current use of the Principal Agent Model (PAM) in accounting and finance, focusing on the agent'ss use of private information. The agent'ss behavioral norms in the the PAM deviate from commonly held ethical values in society, from models of man in conventional economic theory, and also from behavioral foundations of related business school fields like corporate strategy, business ethics, and human resource management. Still, it would be unwise to reject the PAM solely because of its distasteful ethical assumptions. The model does appear to have predictive power, but its descriptive or normative qualities remain unexplored. The popularity of the PAM, with its extreme model of man, raises fundamental questions about the impact of this model on business school stakeholders and society at large.
ISSN:1573-0697
Contains:Enthalten in: Journal of business ethics
Persistent identifiers:DOI: 10.1023/A:1005722800141