Published PapersThe Covid-19 Pandemic and Management Controls (joint with Christian Hofmann & Nina Schwaiger)
Accounting and Business Research (2023), 53:5, 583-607. We examine how firms respond to the Covid-19 pandemic by adjusting their management controls and what the consequences are in terms of firms’ resilience to the crisis. We review literature that deals with the influence of the Covid-19 pandemic on business and investigate results from a survey conducted within a large international multi-divisional service firm and the German Business Panel. We find evidence consistent with the claim that the Covid-19 pandemic is associated with a shock to transparency and increased incentive problems. We document firms’ adjustments of their management controls in response to the Covid-19 crisis: Action controls are stronger, result controls are more flexible, and cultural controls are weaker. Regarding firms’ resilience, we provide supportive evidence that more resilient firms face a smaller shock to transparency, adjust their management controls to a smaller extent, and are associated with stronger cultural controls in terms of higher organizational trust. Microfinance loan officers before and during Covid-19: Evidence from India (joint with Kristina Czura, Florian Englmaier & Lisa Spantig)
World Development (2022), 152: 105812. The microfinance industry has been severely affected by Covid-19. We provide detailed insights into how loan officers, the key personnel linking the lender to its borrowers, are affected in their performance and adapt their work to the pandemic. We use administrative records of an Indian microfinance institution and detailed panel survey data on performance, performed tasks, and work organization to document how the work environment became more challenging during the pandemic. Loan officers operate in a setting where work from home is hard to implement due to the nature of the tasks and technological constraints. The usual performance indicators appear to be mainly driven by external factors such as the nation-wide debt moratorium. Loan officers worked similar hours, but engaged less in planning activities and completed fewer of the usual tasks. Work perceptions and mental health of loan officers reflect these changes, and perceived stress was particularly high during the period of the debt moratorium. Media coverage: fai blog post Working PapersLoss Aversion, Moral Hazard, and Stochastic Contracts
I examine whether stochastic contracts benefit the principal in the setting of moral hazard and loss aversion. Incorporating expectation-based loss aversion of the agent and allowing the principal to add noise to performance signals, I find that stochastic contracts reduce the principal’s implementation cost in comparison to deterministic contracts. The optimal stochastic contract pays a high wage whenever good signals are realized and also with a positive probability when bad signals are realized. Surprisingly, if performance signals are highly informative about the agent’s action, stochastic contracts strictly dominate the optimal deterministic contract for almost any degree of loss aversion. The findings have an important implication for designing contracts for loss-averse agents: the principal should insure the agent against wage uncertainty by employing stochastic contracts that increase the probability of a high wage. Employee Performance and Mental Well-Being: The Mitigating Effects of Transformational Leadership during Crisis (joint with Kristina Czura, Florian Englmaier & Lisa Spantig)
The positive role of transformational leadership on productivity and mental well-being has long been established. Transformational leadership behavior may be particularly suited to navigate times of crisis which are characterized by high levels of complexity and uncertainty. We exploit quasi-random assignment of employees to managers and study the role of frontline managers’ leadership styles on employees’ performance, work style, and mental well-being in times of crisis. Using longitudinal administrative data and panel survey data from before and during the Covid-19 pandemic, we find that frontline managers who were perceived as having a more transformational leadership style before the onset of the pandemic, led employees to better performance and mental well-being during the pandemic. Work in ProgressInformation Acquistion under Moral Hazard and Disappointment Aversion (joint with Christian Hofmann)
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