The relationship between the informational environment and the cost of equity capital has received considerable interest in finance and accounting research as well as in financial reporting regulation. Recent papers have demonstrated that increased public disclosure may decrease firms' cost of...

This paper analyzes the impact of signal-to-noise-ratios and the autocorrelation of a performance measure on the principal's welfare in dynamic agencies with renegotiation. We consider the impact of changes in the persistent, transitory, and reversible components of accounting earnings on its...

Revisits the finding of a ratchet effect causing losses through lack of commitment by managers through their contracts by Indjejikian and Narda (1999). Demonstrates that equilibrium can be achieved by assuming the principal can commit in advance to offer a fair second-period contract and the...

The present study began with Jerry Feltham’s invitation to present at the Stanford Summer Camp in August 2003. As we were variously involved in related work on performance measurement and dynamic incentives, Peter, Jerry, Christian, and Florin teamed up and the result was Christensen, Feltham,...