The Interactive Effect of Monitoring and Incentive Alignment on Agency Costs
研究了监督与激励相容两种机制如何交互影响股东代理成本，发现机构集中持股会加剧CEO为保全股权财富而进行的盈余管理，从而损害信息弱势投资者利益，且这种效应在CEO兼任董事长时更为显著。
The effectiveness of monitoring and incentive alignment as mechanisms for controlling agency costs have been explored separately and in combination, with monitoring substituting for weaknesses in incentive alignment and vice versa; this equates to positive substitution when describing how monitoring and incentive alignment interact to influence shareholder agency costs. We draw upon behavioral agency theory and findings from finance research to offer further theoretical insight into how these mechanisms interact to influence agency costs. Our results suggest that CEO earnings management aimed at preserving their equity wealth (an incentive alignment mechanism) is accentuated by higher levels of concentrated institutional ownership, thereby imposing agency costs on less informed investors. Thus, in addition to being substitutes in controlling agency costs, as previously suggested, monitoring may accentuate the perverse effects of incentive alignment, equating to negative reinforcement, rather than positive substitution. Yet this effect is negated in the absence of CEO power due to dual occupation of the board and CEO roles. We discuss implications of these findings for theory and practice.