Corporate Design for Regulability: A Principal-Agent-Supervisor Model

Engel, Christoph

doi:10.1628/093245606776166651

Cited by 8 publications

(2 citation statements)

References 15 publications

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“…In this framework, asymmetric information allows for informational rents and distortion of optimal levels of an unobserved efficiency parameter. There is an extensive literature on the value and desirability of auditing (Khalil & Lawarree, 1995), supervision (Engel, 2006) and monitoring (Lewis & Sappington, 1991;Liu, 1982;Zhao, 2008) in reducing such distortions. This literature emphasizes threats of collusion between the supervisor and either party -principal or agent (Strausz, 1997;Vafaï, 2005).…”

Section: Theoretical Modelmentioning

confidence: 99%

The Inner Workings of the Patient Centered Medical Home Model

David¹,

Saynisch²,

Smith‐McLallen³

2016

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for data support and helpful suggestions. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. At least one co-author has disclosed a financial relationship of potential relevance for this research. Further information is available online at http://www.nber.org/papers/w22429.ack NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

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Section: Theoretical Modelmentioning

confidence: 99%

The Inner Workings of the Patient Centered Medical Home Model

David¹,

Saynisch²,

Smith‐McLallen³

2016

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“…Engel's paper (ENGEL [2006]) discusses an important aspect of modern business: regulability. In regulated markets firms have an incentive to mitigate the effects of regulation that might create extra costs, foreclose business options, and thus reduce profits.…”

Section: Introductory Remarksmentioning

confidence: 99%

Corporate Design for Regulability: Comment

Kirchner¹

2006

JITE

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Comment by CHRISTIAN KIRCHNER Introductory RemarksEngel's paper (ENGEL [2006]) discusses an important aspect of modern business: regulability. In regulated markets firms have an incentive to mitigate the effects of regulation that might create extra costs, foreclose business options, and thus reduce profits. On the other hand, regulatory authorities face the problem of ineffective regulation due to asymmetric information between regulator and regulated firms. Thus the problem of regulability is a reciprocal one.In traditional theory of regulation the regulator supposedly is pursuing the bonum commune (public interest); thus he should get full powers to be able to effectively execute his regulatory task. But this argument breaks down if those actors who are working in regulatory agencies are assumed to maximise rationally their individual utility.In modern positive theory of regulation a typical problem of regulation is regulatory capture. Regulated firms tend to influence regulation and collude with regulators to the detriment of third parties. Market foreclosure by means of regulation is a well-known example for this sort of win-win game between regulatory authorities and regulated industries. In order to achieve these goals, regulated firms and regulatory authorities have to communicate and to invest in their reciprocal relationship. One of the possible devices to be introduced by regulated firms (or by regulators) is an interface actor, who acts as an intermediary between the firm and the regulator.The paper presented by Christoph Engel introduces a modified principal-agentsupervisor model in order to better understand the role of the interface actor. Thus a specific aspect of regulation -i.e., a mode of communication between regulated firms and regulators -is analysed within a corporate governance framework. Regulated firms employing interface actors adapt their corporate design to the specific needs of their regulatory environment. This is a new aspect of corporate governance. Corporate governance structures are not supposed to be designed in order to improve the firm's position on capital markets, but to improve its relations with regulators, thus strengthening its competitive standing vis-à-vis its competitors.

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