Many accounting textbooks state that the opportunity cost of idle fixed assets is zero. A few exceptions refer to repair, overhaul, employee vacation and congestion, giving rise to positive opportunity cost. We show that in important and frequently encountered situations, idled assets have...

Opportunity cost is a central concept in decision making. It is difficult to measure because it is the value associated with opportunities foregone. In this paper, we characterize three time-based dimensions of resources to help understand and estimate opportunity costs. These dimensions capture...

We examine the value of assigning costs of capacity resources to products for capacity planning. It is often argued that a product's full cost, which includes such assignments, is a measure of its long-run manufacturing cost. Hence, full cost is viewed as an appropriate basis for deciding...

Using theoretical analysis and simulation experiments, we examine the usefulness of full costs for product pricing. We show that full costs are economically sufficient for pricing when a decision-maker (DM) jointly solves the capacity planning and pricing problems, and has enough discretion in...

Recent literature on activity based product costing suggests that using product costs to make long-run product and capacity planning decisions is economically sound. This conclusion relies on the assumption that capacity resources impose quot;softquot; constraints (i.e., capacity can be...

We examine the principal's preference for a public predecision information system that produces a signal about a parameter of the firm's production function. We show that the discreteness of action space plays a crucial role in establishing the principal's preference for suppressing the release...

Both bond rating agencies and equity analysts evaluate public companies and report their findings and opinions to market participants. Regulation Fair Disclosure (FD) changed the dynamics of the market and placed restrictions on the information that companies could disclose to analysts. Debt...

In this paper, we investigate the market reward to firms that consistently meet or exceed analysts' consensus forecasts over the entire horizon over which a pattern of consistent meet/beat is exhibited. Our results support the existence of a positive market response over the entire horizon. We...