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Abstract

In recent years the traditional collegial model of university management has been challenged by the rapid growth of higher education, a renewed emphasis on competition, and an increase in external demands for accountability, especially with regard to funding, quality control and research assessment. This transformation has been applauded by some because it is widely believed that the movement to hierarchical control and the rise of the academic manager would contribute to a reduction in agency costs and the costs of moral hazard occuring in the form of opportunism by those who simulate commitment to the moral values of the university community and to the patronage of intellectual elites associated with the collegial model (Valsan and Sproule 2010). However, if the source of the agency problem in university management is not the collegial model but the poorly defined nature of the residual value produced by the university, the replacement of collegial management models with hierarchical models will not reduce agency costs and eliminate moral hazard.

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