This paper describes conditions under which both conventional costing and linear activity-based costing can yield poor approximations to actual expenditures. We use a simulation approach based on data from a field experiment in a hospital to estimate how the introduction of a new anesthetic...

In participative budgeting settings, less informed superiors elicit information from privately informed subordinates. In these situations, subordinates' honesty preferences should substantially enhance the efficiency of the budgeting process. In fact, recent research on budgeting suggests that...

Over research years there has been an increase in global competition, particularly within manufacturing. Many firms faced with increased competition from foreign firms have sought to enhance their competitiveness by employing total quality management (TQM). An important concern in the...

This empirical study examines the relationship between managerial perceptions of elements of the performance measurement, evaluation and reward system (PMERS) and motivation. An extended version of the traditional expectancy-valence (E-V) model is developed to conceptualise the process of...

This is the first chapter of our book Principles of Cash Flow Valuation. It is an overview of what we present in the book. In this chapter, we present an informal introduction to the basic concepts and ideas in market-based cash flow valuation. The simplified exposition will provide sufficient...

This paper develops a multiperiod agency model to study the use of leading indicator variables in managerial performance measures. In addition to the familiar moral hazard problem, the principal faces the task of motivating a manager to undertake quot;softquot; investments. These investments are...

This paper considers an agency model in which a firm's manager receives private information about an investment project. The manager has unique skills that are essential for implementing the project, and he can pursue the project inside the firm or as an outside venture on his own. The firm's...

This paper examines a multiperiod principal-agent model in which a divisional manager has superior information regarding the profitability of an investment project available to his division. The manager also contributes to the periodic operating cash flows of his division through personally...

It is often claimed that (i) managers work too hard on operational issues and do not spend enough effort on strategic activities, and (ii) something can be done about this by introducing nonfinancial performance measures as for instance with a balanced scorecard. We give an explanation for both...

Multiple measures of managerial performance, including the increased use of non-financial measures exist widely in the business world. Using a principal-agent model with moral hazard, we study a special case of two performance measures - production and internal quality. We derive a condition...