Agency theory predicts that tighter monitoring can motivate managers to exert higher effort. However, psychology theory suggests that managers may perceive increased monitoring as an indication of distrust, thereby reducing their effort level--known as a crowding-out effect. Prior research on...

Agency theory predicts that tighter monitoring can motivate managers to exert higher effort. However, psychology theory suggests that managers may perceive increased monitoring as an indication of distrust, thereby reducing their effort level -- known as a crowding-out effect. Prior research on...

This study investigates the association between cost rigidity and managerial ability. Cost rigidity refers to the percentage variation in costs relative to the percentage variation in sales, which can be captured by the relative proportion of fixed and variable costs. Traditional management...

We examine the information role of accounting disclosures on warranties, utilizing a database that became available due to the requirements of FIN 45. First, because firms use warranty policies as a business strategy to promote their products, a warranty reserve can serve two roles: an...

Recent research shows that matching between contemporaneous revenues and expenses has declined over the past 40 years. We argue that this decline in matching reduces the contracting usefulness of earnings and affects managerial effort allocation and performance measure choice. Based on a...