Benefits of independent agents' entrepreneurship: Evidence from the loan market

Journal of Management Accounting Research, Forthcoming

44 Pages Posted: 11 Dec 2019 Last revised: 13 Jan 2022

See all articles by Chung-Yu Hung

Chung-Yu Hung

University of Melbourne, Department of Accounting

Margaret A. Abernethy

University of Melbourne, Department of Accounting

Christian Hofmann

Ludwig Maximilian University of Munich (LMU) - Faculty of Business Administration (Munich School of Management)

Laurence van Lent

Frankfurt School of Finance and Management

Date Written: 1 12, 2022

Abstract

We examine whether different organizational forms influence agents’ pricing decisions. We study a secondhand car loan setting consisting of independent agents and in-house agents. We consider independent agents to be more entrepreneurial than in-house agents and argue that entrepreneurship motivates agents to scan the environment for the opportunity to maximize their payoffs. We predict that entrepreneurial agents are more likely to increase prices when presented with the opportunity to do so. We expect this to be the case for opaque loans as these loans are less subject to competition than transparent loans. We find that opaque loans have higher prices than transparent loans for both types of agents, and the price difference is more pronounced for independent agents. Our evidence suggests that entrepreneurship enables agents to perform better in an environment where agents can profit from exploring opportunities, i.e., a less competitive environment.

Keywords: organizational form; franchise; outsourcing; loans; soft information; decision-making; pricing decisions.

JEL Classification: D82; L22; M49

Suggested Citation

Hung, Chung-Yu and Abernethy, Margaret A. and Hofmann, Christian and van Lent, Laurence, Benefits of independent agents' entrepreneurship: Evidence from the loan market (1 12, 2022). Journal of Management Accounting Research, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3492407 or http://dx.doi.org/10.2139/ssrn.3492407

Chung-Yu Hung (Contact Author)

University of Melbourne, Department of Accounting ( email )

198 Berkeley Street
Melbourne, Victoria 3053
Australia

Margaret A. Abernethy

University of Melbourne, Department of Accounting ( email )

Victoria
Melbourne, Victoria 3010 3010
Australia
+61 3 8344 7655 (Phone)
+61 3 9349 2397 (Fax)

Christian Hofmann

Ludwig Maximilian University of Munich (LMU) - Faculty of Business Administration (Munich School of Management) ( email )

Kaulbachstr. 45
Munich, DE 80539
Germany

Laurence Van Lent

Frankfurt School of Finance and Management ( email )

Adickesallee 32-34
Frankfurt am Main, 60322
Germany

HOME PAGE: http://www.laurencevanlent.org

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