search query: @author Baiman, S. / total: 15
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| Author: | Baiman, S. Rajan, M. |
| Title: | On the design of unconditional monitoring systems in agencies |
| Journal: | Accounting Review
1994 : JAN, VOL. 69:1, p. 217-229 |
| Index terms: | AGENCIES AGENCY THEORY ACCOUNTING |
| Language: | eng |
| Abstract: | In this article, the authors consider the implications of relaxing the assumption that output is costlessly observable and contractible, by analyzing the optimal design of a costly unconditional monitoring system. The authors characterize the monitoring system in the terms of the Type I error associated with the obedient action and the Type II errors associated with the disobedient actions. They find that it is always optimal to design the monitoring system such that the Type I error is smaller than the Type II error for any disobedient action. |
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