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| Tekijä: | Indjejikian, R. Nanda, D. |
| Otsikko: | Dynamic incentives and responsibility accounting |
| Lehti: | Journal of Accounting & Economics
1999 : APR, VOL. 27:2, p. 177-201 |
| Asiasana: | Organizations Theories Management Measurement Decentralisation |
| Kieli: | eng |
| Tiivistelmä: | In dynamic principal-agent relationships, unless a principal can commit to a multi-period contract, incentives are affected by a problem known as the ratchet effect. This paper presents a two period agency model to show that the use of more aggregate performance measures and greater consolidation of responsibility helps mitigate the ratchet effect. For example, an aggregate measure may be preferred to a set of disaggregate measures to avoid aggravating the ratchet effect. Similarly, it might be preferable to consolidate responsibility for two activities into the hands of one agent inspite of the potential loss of performance evaluation information implied by consolidation. |
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