This paper shows a strict demand for a suitably chosen inaccurate overhead cost allocations in an agency model in which a profit center manager is in charge for production cost containment and pricing decisions. Given exogenous restrictions on the compensation scheme, the use of distorted...

This paper develops the tests a standard-based control system model which consists of three interrelated controls-participative standard setting, standard-based incentives, and standard tightness-as well as selected antecedents (task variety, task analyzability, information asymmetry) and...

Truthful subordinate communication of private information is important to effective resource allocation. Analytical research has proposed mechanisms to attain this objective, yet few instances of their adoption have been reported. Instead, real world control mechanisms tend to be much simpler...

In this paper, we study a principal-agent problem in which (1) the manager has private information about, and control over, the mean and variance of his outputs; (2) the manager?s outputs consist of a sample of independently distributed cash flows, all having mean and variance determined by the...

A principal-agent model is examined in which a manager acquires private cost information sequentially. All possible communication schemes are equivalent to one of two: (1) timely reporting, where the manager reports as soon as possible, and (2) delayed reporting, where the manager delays the...

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...

This article investigates the co-relationship of operating performance with implementation of ERP system in listed companies. The descriptive statistics reveals that the operating performance of ERP companies in 2003, that ROS, ROI, ROE and ROA regarded as companies' operating performance index...

A perplexing yet persistent empirical finding is that individuals assess probabilities in words and in numbers nearly equivalently, and theorists have called for future research to search for factors that cause differences. This study uses an accounting context in which individuals are commonly...

Markets have a remarkable capacity for producing efficient resource allocations when information about relative values is dispersed across economic agents. We explore the use of market mechanisms inside the firm to address a resource allocation problem, and compare the outcome with the first-...

Vertical integration is often proposed as a way to resolve hold-up problems, ignoring the empirical fact that division managers tend to maximize divisional (not firmwide) profit when investing. This paper develops a model with asymmetric information at the bargaining stage and investment returns...