This study investigates determinants of budgetary slack using the framework of agency theory and the methods of experimental economics. A computerized, five-period experiment is designed to test the robustness of prior experimental results documenting budgeting behavior inconsistent with...

A challenge faced by many firms is how to encourage managers to undertake risk levels that are compatible with overall firm performance goals. Incentive compensation that is tied to financial returns is a common control mechanism that is meant to induce managers to strive for higher returns...

This study reports the results of three experiments that examine how preferences for wealth and honesty affect managerial reporting. We find that subjects often sacrifice wealth to make honest or partially honest reports, and they generally do not lie more as the payoff to lying increases. We...

Using an experiment in which participants design rebus puzzles, we extend recent research on creativity-weighted productivity (i.e., quantity weighted by creativity ratings) by allowing participants to choose between a contract that rewards creativity-weighted productivity or one that rewards...

A case study of the implementation of the balanced scorecard in a large local government authority is reported. Based on interview data, the factors that were perceived by senior managers to be important to the success or failure of the implementation are analysed. It is determined that...

We examine the performance of 84 firms that adopt value-based management (VBM) systems during the period 1984-1997. The typical firm significantly improves matched-firm-adjusted residual income after adopting VBM. This improvement persists for the five post-adoption years studied. After...

We show that project evaluation should be based on free cash flows at nominal prices. We present a case where the results from the constant price method are biased upwards and there is a risk to accept bad projects. It is a widespread practice to evaluate projects at constant prices. With an...

Using data from FTSE 350 firms, we examine factors influencing explicit relative performance evaluation (RPE) conditions in performance-vested equity grants. We provide exploratory evidence on whether the use or characteristics of RPE are associated with efforts to improve incentives by removing...

Alex Pearson, manager of Charley's Family Steak House number two, is preparing for his upcoming meeting with Charley Turner, owner of the steak house. The purpose of the meeting is to discuss the restaurant's 2004 results, how they compared to budget, and how Pearson performed during his second...