The economic incentive for risk taking in professional partnerships

IF 7.8 3区管理学 Q1 MANAGEMENT

Review of Managerial Science Pub Date : 2024-03-02 DOI:10.1007/s11846-024-00737-1

L. Peter Jennergren

引用次数: 0

Abstract

Professional service firms are common in some areas, in particular auditing and law. They are organized as partnerships, private corporations, or public corporations. This paper discusses the first category of these three. When a partner leaves the partnership, her/his shares are redeemed. Two alternatives for redemption are at book value, the traditional alternative, or at fair market value. By means of a novel discounted dividends model that includes risk taking, it is shown that there may be an economic incentive for risk taking when the redemption value is equal to book value. There may also be an incentive for risk taking when the redemption value is equal to fair market value. However, the level of risk taking in the latter alternative is not higher than the level of risk taking in the former alternative. Switching from book value to fair market value as redemption value is hence suggested as one way to reduce client propensity for litigation. This paper’s incentive for risk taking in a professional partnership has apparently not been noted in the literature.

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专业伙伴关系中承担风险的经济动机

专业服务公司在某些领域很常见，尤其是审计和法律领域。它们的组织形式有合伙制、私营公司或公营公司。本文讨论的是这三类公司中的第一类。当合伙人离开合伙企业时，其股份将被赎回。赎回有两种选择，一种是按账面价值赎回，即传统的赎回方式；另一种是按公平市价赎回。通过一个包含风险承担的新型贴现红利模型，可以看出，当赎回价值等于账面价值时，可能存在承担风险的经济激励。当赎回价值等于公平市场价值时，也可能存在承担风险的动机。然而，后一种选择的风险承担水平并不比前一种选择的风险承担水平高。因此，本文建议将赎回价值从账面价值改为公平市价，作为降低客户诉讼倾向的一种方法。本文提出的专业合伙企业承担风险的激励机制在文献中显然未被提及。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Review of Managerial Science MANAGEMENT-

CiteScore

11.30

自引率

14.50%

发文量

期刊介绍： Review of Managerial Science (RMS) provides a forum for innovative research from all scientific areas of business administration. The journal publishes original research of high quality and is open to various methodological approaches (analytical modeling, empirical research, experimental work, methodological reasoning etc.). The scope of RMS encompasses – but is not limited to – accounting, auditing, banking, business strategy, corporate governance, entrepreneurship, financial structure and capital markets, health economics, human resources management, information systems, innovation management, insurance, marketing, organization, production and logistics, risk management and taxation. RMS also encourages the submission of papers combining ideas and/or approaches from different areas in an innovative way. Review papers presenting the state of the art of a research area and pointing out new directions for further research are also welcome. The scientific standards of RMS are guaranteed by a rigorous, double-blind peer review process with ad hoc referees and the journal´s internationally composed editorial board.