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The research question on problems that involves information asymmetry has been drawing more and more attention since the past decades, and in particular, two of the pioneers Bengt Holmström and Oliver Hart) in this field won the Nobel Prize of Economics in 2016. With the emergence of information economics, accounting researchers started focusing on the information asymmetry problems, with a particular interest and emphasis on moral hazard problems, within the firm. In this essay, we intend to fill the blank in this area by investigating some specific information asymmetry problems in managerial accounting under the presence of both moral hazard and adverse selection, or moral hazard and post-contract information asymmetry, respectively. The first study analyzes the expected value of information about an agent’s type in the presence of moral hazard and adverse selection. The value of the information decreases in the variability of output and the agent’s risk aversion, two factors that are typically associated with the severity of the moral hazard problem. However, the value of the information about agent type first increases but ultimately decreases in the severity of adverse selection. The second study draws attention to the tradeoffs associated with relying on pre-contracting ability measures in the design of executive compensation schemes. We show that the more sensitive of the ability signal to ability the more weight should be placed optimally, and the more precise of the ability signal the more weight should be placed optimally, in accordance with the informativeness principal. We further prove that under a broad class of distributions a linear aggregation of multiple pieces of pre-contracting information is sufficient for contracting purposes without loss of generality. The third study investigates three mechanisms of organizational control: outcome control (contracting on the outcome), effort control (contracting on the signal of action), and clan control (employing an agent whose preferences are partially aligned with the principal’s goal through a socialization process). In doing so, we expand the standard agency framework by introducing the concept of other-regarding preference and clan control to provide new insights into organizational control design. / Business Administration/Accounting

This dissertation investigates the structure of incentive contracts in which adverse selection problems are more severe. Specifically, I examine the moderating effect of R&D intensity on the relative weights placed on signals of ability and on performance measures in executive compensation. Furthermore, I also investigate the determinants on the compensation of university presidents. I find that that more weight is placed on signals of ability in R&D intensive firms and less weight is placed on performance measures. I find that R&D intensive firms pay more to executives with technical work experience and/or relevant educational degrees. Additionally, in the context of university presidents, the positive association between organizational complexity and executive compensation is driven by the role of managerial ability rather than by effort. This result also suggests that considering measures of organizational complexity (such as firm size and diversification) as control variables in empirical studies of executive compensation is the appropriate means by which to account for the impact of organizational complexity. / Business Administration/Accounting

The purpose of this thesis has been to analyse seven major factors that tend to influence the rate of early retirement in Sweden. The scope of data was gathered for every municipality in Sweden. Economic theories of labour supply, Moral Hazard, Adverse Selection and the Insurance Model were used to analyse the empirical results. In the analysis, earlier studies of the rate of sickness absence were important and used as a framework in choosing the explanatory variables for the econometric model. The analysed variables were; average income, average sickness days, educational level, foreign born, public sector employment, unemployment and the share of women in the population. As a consequence of the rift that occurred in 2003, when the average sickness days decreased and disbursed early retirements simultaneously increased, the relationship between these two variables was given special attention. The empirical findings confirmed our conjectures and were consistent with earlier research. Average income and the level of education were negatively related to the rate of early retirement. Moreover foreign born, average sickness days and unemployment showed a positive relation to early retirement. The relationship between average sickness days and early retirement had statistically changed and decreased between the years. A possibility is that other factors, such as changed social norms and increased stress in society (which are difficult to measure in a statistical and economical sense) might have become more relevant in explaining the rate of early retirement. / Syftet med denna uppsats har varit att analysera sju viktiga faktorer som tenderar att påverka graden av förtidspensionering i Sverige. Data omfånget insamlades för alla kommuner i Sverige. Ekonomiska teorier om arbetsutbud, Moral Hazard, Adverse Selection och Insurance Model användes för att analysera de empiriska resultaten. I analysen var tidigare studier utav graden av sjukfrånvaro viktig och användes som ramverk i valet av de förklarande variablerna till den ekonometriska modellen. De analyserade variablerna var; medelinkomst, genom-snittliga sjukdagar, utbildningsnivå, utlandsfödda, offentligt anställda, arbetslöshet och andelen kvinnor i befolkningen. Som en konsekvens utav den klyfta som uppstod 2003, när de genomsnittliga sjukdagarna minskade och utbetalda förtidspensioner samtidigt ökade, gavs sambandet mellan dessa två variabler speciell uppmärksamhet. De empiriska iakttagelserna bekräftade våra förväntningar och stämde överens med tidigare forskning. Medelinkomst och utbildningsnivå var negativt relaterade till graden av förtidspensionering. Dessutom var utlandsfödd, genomsnittliga sjukdagar och arbetslöshet positivt relaterade till förtidspensionering. Relationen mellan de genomsnittliga sjukdagarna och graden av förtidspensionering hade statistiskt sätt ändrats genom att ha minskat mellan åren. En tänkbar förklaring till detta skulle kunna vara att andra faktorer, såsom skiftande sociala normer och en ökande stress i samhället (vilka är svåra att mäta statistiskt och ekonomiskt) kan ha blivit mer relevanta i att förklara graden av förtidspensionering.

Globalisering har möjliggjort för svenska företag att expandera utomlands och etablera sig påinternationella marknader. Det största hindret för små- och medelstora företag (SMFs) i ainternationaliseringsprocess är avsaknad av finansiella medel och kunskap om den nyamarknaden. På grund av detta är användandet av en utlandsbaserad agent ett bra alternativ. Enagent har en god lokal marknadskunskap och representerar en etableringsform som är mindrekostsam i jämförelse med etableringen av ett dotterbolag. Med hänsyn till detta äranvändandet av en agent ett vanligt tillvägagångssätt bland internationaliserande SMFs.Samtidigt drivs företaget och dess agent av olika mål på grund av skillnader i egenintresse.Trots att en agent är anlitad i syfte att arbeta i enighet med företagets ambitioner, kan denneha ett egenintresse som kolliderar med företaget. Det är därför nödvändigt för företag attskydda det egna intresset genom implementering av olika kontrollsystem. I denna studie harvi använt oss av principal- agentteorin i syfte att förklara förhållandet mellan svenska SMFsoch dess agenter. Utöver detta undersöker vi även hur svenska SMFs kan kontrollera sinautlandsagenter. För att undersöka detta har vi formulerat följande forskningsfrågor: “Hur kanprincipal-agenteorin tillämpas i syfte att beskriva uppdragsrelationen mellan svenska SMFoch dess agent på den internationella marknaden?” samt ”Hur kan svenska SMFs styra attdess agent på den internationella marknaden arbetar enligt företagets önskemål?”. I syfte attbesvara dessa forskningsfrågor har det insamlats och bearbetats teoretiskt material, vilketutgjort underlag för den semistrukturerade intervjuguide som besvarats av studiensintervjupersoner. Detta har resulterat i en analys följt av slutsats där forskningsfrågornabesvaras. Studien avslutas med rekommendationer till framtida forskning. / Globalization has enabled firms to expand abroad and enter international markets. The mainobstacle for small and medium-sized firms in their internationalization-process is the lack offinancial resources and local market knowledge. Therefore, the use of an offshore agent is agood option. An agent holds good local market knowledge and represents an establishmentform that is less costly, compared to the start-up of a subsidiary. Hence, the use of an agent isa common approach amongst internationalized small and medium-sized firms (SME’s).Simultaneously, a firm and its agent are driven by different ambitions due to divergence intheir self-interests. Although an agent is hired to work in unity with the firm’s ambitions, itmay hold a self-interest that collides with the firm’s objectives. Therefore, it is vital for firmsto protect their own interests by implementing different mechanisms that can control theagent. In this study, the principal-agent theory has been applied in order to explain therelationship between Swedish SME’s and their agents. Additionally, it has been investigatedhow Swedish SME’s are able to control their offshore agents on the international market. Toexamine this, the following two research questions have been formulated: “How can theprincipal-agent theory be applied to describe the relation between Swedish SME’s and theiragent on the international market?” and “How can Swedish SME’s control that their agent onthe international market are working in unity with the firm’s requests?” In order to answerthese two questions, theoretical material has been collected and processed in order toformulate the basis of the semi-structured interview guide that has been answered by therespondents. This has resulted in an analysis followed by a conclusion where the researchquestions are answered.

<p>The purpose of this thesis has been to analyse seven major factors that tend to influence the rate of early retirement in Sweden. The scope of data was gathered for every municipality in Sweden. Economic theories of labour supply, Moral Hazard, Adverse Selection and the Insurance Model were used to analyse the empirical results. In the analysis, earlier studies of the rate of sickness absence were important and used as a framework in choosing the explanatory variables for the econometric model. The analysed variables were; average income, average sickness days, educational level, foreign born, public sector employment, unemployment and the share of women in the population. As a consequence of the rift that occurred in 2003, when the average sickness days decreased and disbursed early retirements simultaneously increased, the relationship between these two variables was given special attention. The empirical findings confirmed our conjectures and were consistent with earlier research. Average income and the level of education were negatively related to the rate of early retirement. Moreover foreign born, average sickness days and unemployment showed a positive relation to early retirement. The relationship between average sickness days and early retirement had statistically changed and decreased between the years. A possibility is that other factors, such as changed social norms and increased stress in society (which are difficult to measure in a statistical and economical sense) might have become more relevant in explaining the rate of early retirement.</p> / <p>Syftet med denna uppsats har varit att analysera sju viktiga faktorer som tenderar att påverka graden av förtidspensionering i Sverige. Data omfånget insamlades för alla kommuner i Sverige. Ekonomiska teorier om arbetsutbud, Moral Hazard, Adverse Selection och Insurance Model användes för att analysera de empiriska resultaten. I analysen var tidigare studier utav graden av sjukfrånvaro viktig och användes som ramverk i valet av de förklarande variablerna till den ekonometriska modellen. De analyserade variablerna var; medelinkomst, genom-snittliga sjukdagar, utbildningsnivå, utlandsfödda, offentligt anställda, arbetslöshet och andelen kvinnor i befolkningen. Som en konsekvens utav den klyfta som uppstod 2003, när de genomsnittliga sjukdagarna minskade och utbetalda förtidspensioner samtidigt ökade, gavs sambandet mellan dessa två variabler speciell uppmärksamhet. De empiriska iakttagelserna bekräftade våra förväntningar och stämde överens med tidigare forskning. Medelinkomst och utbildningsnivå var negativt relaterade till graden av förtidspensionering. Dessutom var utlandsfödd, genomsnittliga sjukdagar och arbetslöshet positivt relaterade till förtidspensionering. Relationen mellan de genomsnittliga sjukdagarna och graden av förtidspensionering hade statistiskt sätt ändrats genom att ha minskat mellan åren. En tänkbar förklaring till detta skulle kunna vara att andra faktorer, såsom skiftande sociala normer och en ökande stress i samhället (vilka är svåra att mäta statistiskt och ekonomiskt) kan ha blivit mer relevanta i att förklara graden av förtidspensionering.</p>

För försäkringsbolag är beslutsfattande en viktig process där privatpersoners situationer ska bedömas. Vilka bedömningsfaktorer som försäkringsbolag tar hänsyn till vid premiesättning har därför diskuterats. Likaså vilka svårigheter försäkringsbolag upplever inför och under beslutsfattandeprocessen av en försäkringspremie. Tidigare studier visar att beslutsfattandeprocessen innehåller element från ett bolags riskhantering till en försäkringstagares beteende och livssituation. I vår studie har vi valt att fokusera på motorförsäkring, sjuk- och olycksfallsförsäkring samt livförsäkring där premien kan variera utifrån försäkringstagarens beteende. Tidigare studier belyser också principal-agentteorin utifrån moral hazard och adverse selection som försäkringsbolags främsta dilemman. Vidare har vi i vår studie valt att undersöka genom intervju hur de nämnda dilemman påverkar försäkringsbolags beslutsfattande. Intervjuerna genomfördes med en kvalitativ metod. I vår slutsats konstateras att osäkerhet präglar försäkringsbolags beslutsfattande vilket påverkas av både moral hazard och adverse selection. Försäkringsbolag vill minska denna osäkerhet och använder sig därför av en tydlig riskhanteringspolicy. Likaledes läggs förhoppningar på att digitaliseringen ska underlätta visst beslutsfattande. / For insurance companies decision making is an important process where the situation for private persons are assessed. Which assessment criterias that are used for premium setting by insurance companies have therefore been discussed. Also what difficulties insurance companies experience before and during the decision making process of an insurance premium. Previous research shows that the decision making process contains elements from a company's risk management to a policyholder's behaviour and life situation. In our research we have chosen to focus on motor insurance, health insurance and life insurance where the premium can vary due to a policyholder’s behaviour. Previous research also estimate that principal-agent problem whit moral hazard and adverse selection constitutes insurance companies’ main dilemma. Furthermore, in our research we have chosen to look into, with interview, how the mentioned difficulties affect the decision making in insurance companies. The interviews were conducted with a qualitative method. In our conclusion is it noted that insecurity is characterized by insurance companies’ decision making which is affected by both moral hazard and adverse selection. Insurance companies want to decrease this insecurity and therefore uses a clear enterprise risk management. Likewise, hopes are being made that the digitization will facilitate certain decision making.

It is frequently argued that the high costs of clinical trials prior to the admission of new pharmaceuticals are stifling innovation. At the same time, regulation of the access to markets is often justified on the basis of consumers` inability to detect the true quality of a product. We examine these arguments from an information economic perspective by setting a framework where the incentives to invest in R&D are influenced by the information structure prevailing when the product is launched in the market at a later stage. In this setting, by changing the information structure, regulation (or the lack of) can thus indirectly affect R&D efforts. More formally, we construct a moral hazard - cum - adverse selection model in which a pharmaceutical firm exerts an unobservable effort towards developing an innovative (high quality) drug (moral hazard) and then announces the (unobservable) quality outcome to an uninformed regulator and/or consumers (adverse selection). We compare the outcomes in regard to innovation effort and expected welfare under two regimes: (i) regulation, where products undergo a clinical trial designed to ascertain product quality at the point of market access; and (ii) laissez-faire with free entry, where the revelation of quality is left to the market process. Results show that whether or not innovation is greater in the presence of entry regulation crucially depends on the efficacy of the trial in identifying (poor) quality, on the probability that unknown qualities are revealed in the market process, and on the preference and cost structure. The welfare ranking of the two regimes depends on the differential effort incentive and on the net welfare gain from implementing full information instantaneously. For example, in settings of vertical monopoly, vertical differentiation and horizontal differentiation with no variable cost of quality, entry regulation tends to be the preferred regime if the effort incentive under pooling is relatively low and profits do not count too much towards welfare. A complementary numerical Analysis shows how the outcomes vary with the market and cost structure. (authors' abstract) / Series: Department of Economics Working Paper Series

Having the author been involved in banking and finance for almost 25 years, this thesis intends to reflect on the role of banks with emphasis on cross border lending and credit rating, their effectiveness and the impacts of cultural differences. Perhaps this would not differ substantially from a researcher or a scholar, yet the exploratory approach taken in this research will be somewhat different as it deliberately seeks to answer a number of questions relevant to practitioners in today’s banking. In trying to achieve this goal, this thesis hopefully may find its way to international bankers wondering about the perspectives of their business in general and their profession in specific. It even may perhaps improve the understanding of their clients. The Basel committee which published the new Basel II framework on bank regulation and supervision was the result of long and careful discussions, wide consultations and comprehensive impact studies. Whereas Basel II covers the entire risk profile and supervision of financial institutions, this research is limited to the cross border lending by banks to companies and provides the views from both practicing international bankers and their customers on their 3 expectations regarding Basel II, credit rating and the relevance of context and culture differences. Bankers all over the world are being trained on how to read balance sheets, yet less attention is being paid as to by whom they are being created and how precisely these balance sheets came into existence, other than the accountancy standards applied. Bankers furthermore seem to agree on the fact that credit risks in large part are related to the management competencies, effective corporate governance and integrity of management and organization. The argument could be made that the assessment of management capabilities, governance and integrity may be hindered in those cases where the culture is little understood. In a three days conferences titled; “The Future of Relationship Banking”, 80 senior executives from international banks and large companies were gathered in Punta del Este, Uruguay and were asked to speak about these aspects. A transcript of the conference is provided as annex to this thesis (Annex 1) and serves to triangulate the findings of the research. Main findings of three management papers were presented by the researcher during the conference. A survey was performed during the conference and in addition, through an online survey, in total over 100 practitioners in the field participated in the survey. Results show a variation of conclusions, but very especially seem to confirm the view, contrary to the approach taken in Basel II, that cultural differences and context are felt to be highly relevant in cross border lending.

The thesis examines factors that influence sustainability and success of microfinance institutions in Ghana. The topic is important, particularly in poverty stricken Africa, where microfinance institutions play a significant role in supporting governments' initiatives to reduce/alleviate poverty. The developed model is tested using data collected from 14 face-to-face interviews and 114 questionnaires. The data is analysed using different techniques- descriptive statistics, cross-tabulations and regression analysis. The research design and scale of the study are appropriate to both the problem addressed and doctoral level research. A number of factors in the model developed were found to be influencing the sustainability and success of microfinance institutions. A model was proposed that seeks to offer an explanation of sustainability and success of Microfinance Institutions in Ghana. The proposed model identified five categories being: institutional characteristics, agency costs, business strategy, environment/governance and success. Single factor analysis established positive relationships between sustainability and all the five factors but placed more emphasis on three out of the five factors namely; success, business strategy and environment/ governance. Multiple factor analysis established no significant differences in the sustainability with respect to the type of MFI, ownership and source of funding. Multiple Regression which allows for the testing of theories or models established a significant relationship between the Operational Self Sufficiency (OSS) and the predictors, especially the drop-out rate of clients and average loans. The Subsidy Dependence Index (SDI) was calculated for the various types of MFIs and the result was a high dependency ratio especially among the FNGOs. Though the dependency is on the decline, it is very slow indicating that most MFIs will depend on subsidies for a very long time to come. Finally it was observed that the relatively high interest rates charged by most of the MFIs tended to defeat the purpose for which the microfinance movement came about. Not only did the study confirm the research model, but it also revealed that most owners did not exhibit a deep sense of involvement and used general knowledge to practice in Ghana. The study concluded that success factors, business strategy, and environment/governance were the most critical of the sustainability factors in Ghana. It is therefore important that managers develop institutional capacities especially in managing the agency problem effectively if they have to be sustainable and successful.