This paper analyzes strategic transfer pricing with risk and effort averse divisional managers. In contrast to earlier literature, we find that the existence of a standard agency problem allows transfer pricing to serve as a commitment device even if the transfer prices are not mutually...

This paper analyzes the use of transfer pricing as a strategic device in divisionalized firms facing duopolistic price competition. When transfer prices are observable, both firms headquarters will charge a transfer price above the marginal cost of the intermediate product to induce their...

This paper shows that in a model of managerial delegation in duopoly market structure, if the managers' salary varies with the incentive schemes offered by the owners, then the well-known results of equilibrium incentive scheme (by Fershtman and Judd, 1987, A.E.R.) get modified. In case of...

This paper analyzes the use of transfer pricing as a strategic device in divisionalized firms facing duopolistic price competition. When transfer prices are observable, both firms' headquarters will exclude their marketing division from the external input market and charge a transfer price above...

This paper compares the performance of transfer pricing and tidy cost allocations in a multiproduct firm in presence of output market competition and production externalities. In absence of competition, tidy cost allocations are creating inefficient allocations within the firm while transfer...

This paper investigates the relationship between a firm's cost stability and the frequency with which it acquires data in planning its operations. We first consider a benchmark model of a profit maximizing monopolist whose marginal costs follow an AR(1) process over time. The firm uses forecasts...

Supply chain management has emerged as one of the more important topics in managerial accounting. The importance of information exchange between parties involved in supply chains has also been well documented. By addressing the value of audits in this setting, this theoretical paper serves to...

There has been increasing interest in firms in which workers strongly identify with their firm's success. It would seem apparent that such identification by workers should be considered as an integral element of the firm's control systems. However, much of the literature on the myriad forms of...

This study investigates the extent to which a retailer's willingness to share internal (sales and inventory) information with a manufacturer and the reliability of the information transmission between the retailer and the manufacturer affect the total supply-chain profits resulting from two...

We study the determinants of organizational slack in large decentralized firms and focus in particular on how management accounting systems (represented by business unit controllers) affect slack. We rely on an adverse selection model to derive several predictions and to motivate our tests....