This paper examines transfer pricing in multinational firms when individual divisions face different income tax rates. Assuming that a firm decouples its internal transfer price from the arm's length price used for tax purposes, we analyze the effectiveness of alternative pricing rules under...

This paper studies how to assign monitors to productive agents in order to generate signals about the agents? performance that are most useful from a contracting perspective. We show that if signals generated by the same monitor are negatively (positively) correlated, then the optimal monitoring...

This paper provides a new explanation for CEO turnover. In an environment in which all potential CEOs are endowed with the same ability and the firm is not looking for a strategy change, I demonstrate that CEO turnover may still occur in equilibrium. Specifically, a performance-contingent CEO...

To restore investors' confidence in the reliability of corporate financial disclosures, the Sarbanes-Oxley Act of 2002 mandated stricter regulations and arguably increased auditors' liability. In this paper, we analyze the effects of increased auditor liability on the audit failure rate, the...

In this paper, we build on a rational expectation model to study the economic consequences of a firm's choice of disclosure audience in a market with heterogenous traders in terms of information processing abilities. Through costly expertise acquisition, some traders become sophisticated and can...

We argue that, in response to increased scrutiny and greater attention to accruals versus sales, firms become more likely to engage in accrual conversion (AC) cash management aimed at aligning cash and accruals with earnings and sales (e.g., by factoring of receivables). In doing so, they reduce...

We study a model of imperfect competition and limited production capacity, in which a choice of low product quality enables firms to increase total production. We find that in the presence of limited capacity, such reduced quality often results in increased social welfare.We also explore the...

In recent years, outsourcing has become a common practice for firms operating domestically as well as globally. The academic and professional literature discusses numerous factors that influence outsourcing decisions, including the commonly used argument that activities that are not within the...

We study the economic consequences of alternative hedge accounting rules in terms of managerial hedging decisions and wealth effects for shareholders. The rules we consider include the quot;fair-valuequot; and quot;cash-flowquot; hedge accounting methods prescribed by the recent SFAS No. 133. We...

Source: Dissertation Abstracts International, Volume: 68-09, Section: A, page: 3933.