We analyse information flows in a profit-centre organisation with internal trade between two risk-neutral divisions. Prior to production, the divisions make unverifiable investments in intrafirm synergies. After investments are made, the selling division announces a cost-based transfer price...

This paper investigates the suitability of different performance measures to evaluate the performance of investment center managers, when intrafirm coordination problems arise between headquarters and divisional management. The performance measures analyzed are based on available accounting...

This paper provides systematic research-based evidence on the usage of the BSC concept in German-speaking countries. We develop three primary types of BSC usage reflecting the successive phases in the evolution of the BSC concept and of its implementation in practice. This typology ranges from...

It has become increasingly popular in practice to implement incentive systems that create goal-congruent investment behaviour between central and divisional management. In the following paper, it is shown that only linear contracts enable goal-congruent investment decisions if central management...

In recent years, many firms have favoured residual income for value based management. One main argument for this measure is its identity with the net present value rule and that this compatibility with the net present value rule holds true for all possible depreciation schedules selected. In...

This paper provides systematic research-based evidence on the usage of the BSC concept in German-speaking countries. We develop three primary types of BSC usage reflecting the successive phases in the evolution of the BSC concept and of its implementation in practice. This typology ranges from...

Applying the Monti-Klein framework, we examine the optimal financing strategy of a fi rm that requires funding for individual projects at an imperfect credit market. In particular, we study under which circumstances the firm should raise debt for projects separately (decentralized funding) or...