Siemroth, Christoph (2024) Ending Wasteful Year-End Spending: On Optimal Budget Rules in Organizations. International Economic Review, 65 (3). pp. 1163-1188. DOI https://doi.org/10.1111/iere.12684
Siemroth, Christoph (2024) Ending Wasteful Year-End Spending: On Optimal Budget Rules in Organizations. International Economic Review, 65 (3). pp. 1163-1188. DOI https://doi.org/10.1111/iere.12684
Siemroth, Christoph (2024) Ending Wasteful Year-End Spending: On Optimal Budget Rules in Organizations. International Economic Review, 65 (3). pp. 1163-1188. DOI https://doi.org/10.1111/iere.12684
Abstract
What can organizations do to minimize wasteful year-end spending? I introduce a two-period model to derive optimal budget roll-over and audit rules. A principal tasks an agent with using a budget to fulfill the organization's spending needs, which are private information of the agent. The agent can misuse funds for private benefit. The optimal rules allow the agent to roll-over a share of the unused funds, but not necessarily the full share, and in most cases to audit only sufficiently large spending. The optimal audit rule can change once fund roll-over is allowed. Strategically underfunding the agent can be optimal.
Item Type: | Article |
---|---|
Additional Information: | Source info: International Economic Review, forthcoming |
Uncontrolled Keywords: | Auditing; Budget Carry-Forward; Budget Roll-Over; Fund Misuse; Moral Hazard; Year-End Spending |
Divisions: | Faculty of Social Sciences Faculty of Social Sciences > Economics, Department of |
SWORD Depositor: | Unnamed user with email elements@essex.ac.uk |
Depositing User: | Unnamed user with email elements@essex.ac.uk |
Date Deposited: | 20 Jan 2024 11:36 |
Last Modified: | 14 Mar 2025 10:40 |
URI: | http://repository.essex.ac.uk/id/eprint/36967 |
Available files
Filename: Int Economic Review - 2023 - Siemroth - ENDING WASTEFUL YEAR‐END SPENDING ON OPTIMAL BUDGET RULES IN ORGANIZATIONS.pdf
Licence: Creative Commons: Attribution 4.0