Journal article
Private Predecision Information, Performance Measure Congruity, and the Value of Delegation
Contemporary accounting research, Vol.17(4), pp.562-587
12/2000
DOI: 10.1506/V1TU-AW8J-5FYA-GLPW
Abstract
We use a linear contracting framework to study how the relation between performance measures used in an agent's incentive contract and the agent's private predecision information affects the value of delegating decision rights to the agent. The analysis relies on the idea that available performance measures are often imperfect representations of the economic consequences of managerial actions and decisions, and this, along with gaming possibilities provided to the agent by access to private predecision information, may overwhelm any benefits associated with delegation. Our analytical framework allows us to derive intuitive conditions under which delegation does and does not have value, and to provide new insights into the linkage between imperfections in performance measurement and agency costs.
Details
- Title: Subtitle
- Private Predecision Information, Performance Measure Congruity, and the Value of Delegation
- Creators
- ROBERT M. Bushman - University of North Carolina at Chapel HillRAFFI J. Indjejikian - University of MichiganMARK C. Penno - Purdue University West Lafayette
- Resource Type
- Journal article
- Publication Details
- Contemporary accounting research, Vol.17(4), pp.562-587
- DOI
- 10.1506/V1TU-AW8J-5FYA-GLPW
- ISSN
- 0823-9150
- eISSN
- 1911-3846
- Publisher
- Blackwell Publishing Ltd
- Number of pages
- 26
- Language
- English
- Date published
- 12/2000
- Academic Unit
- Accounting
- Record Identifier
- 9984963120302771
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