This paper examines a multi-period agency model in which a manager makes investment decisions in each period. Performance measures based only on realized cash flows are essentially uninformative about value creation at any intermediate point in time. If the principal has access to additional...

This paper examines the choice of asset valuation rules from a managerial control perspective. A manager creates value for a firm through his effort choices. To support its operating activities, the firm also engages in financing activities such as credit sales to its customers. Since such...

Two managers invest funds in either a division-specific or common project. Managers are privately informed of their own division-specific return ratio and issue forecasts to their partner. Experimental parameter values are chosen such that: (1) investment in the division-specific project...

The purpose of this field study is to gain better insights into the control strategies of firms with regard to strategic investments in manufacturing plant and equipment. More specifically, this research sets out to examine how management control systems (MCSs) are designed and used in an...

John Shank (in this special edition) summarises the argument for complementing a capital budgeting approach to investment decisions with a broader strategic cost management (SCM) accounting approach incorporating three additional tools __ value chain analysis, cost driver analysis and...

This paper considers incentive provisions for a manager who makes investment decisions. The manager's performance measure can be based on current accounting information, cash flow, depreciation, book value, and current investment. We argue that Residual Income is the unique (linear) performance...

This paper provides a formal analysis of how managerial investment incentives are affected by alternative allocation rules when managerial compensation is based on accounting measures of income that include allocations for investment expenditures. The main result is that there exists a unique...

This paper has an English version and can be downloaded from: "http://ssrn.com/abstract=1799605" http://ssrn.com/abstract=1799605En este trabajo se muestra cómo encontrar la estructura óptima de capital y el valor con un endeudamiento constante y variable período a período, cuando la tasa de...

This paper studies the capital budgeting process in a setting where a manager is privately informed about the profitability of an investment project and enjoys non-pecuniary benefits of control (empire benefits). I characterize the optimal required rate of return and show that a delegation...