How Employee-Funded Deferred Pay Can Promote Shared Interest, Control Corporate Misconduct and Faulty Business Decisions

Abstract

In this essay, I argue that employee-funded deferred pay can mitigate misconduct in organizations. Its objective is to internalize some of the fines and settlement costs if justified. Because employees might be required to cover some of the costs imposed on a firm, they may engage in information production and its escalation in the organization to alert others about potentially faulty business decisions. Thus, deferred pay could improve internal governance of the firm and potential cost of misconduct on firm stakeholders, including the public.