IDEAS home Printed from https://ideas.repec.org/a/mhr/jinste/urnsici0932-4569(199903)1551_158pmima_2.0.tx_2-u.html
   My bibliography  Save this article

Performance Measurement in Multi-Period Agencies

Author

Listed:
  • Sunil Dutta
  • Stefan Reichelstein

Abstract

This paper analyzes a dynamic moral hazard problem in which the agent's unobservable effort in each period affects both current and future cash flows. For incentive contracting purposes, the principal can rely on realized and projected future cash flows. We find that a properly structured accrual accounting system identifies precisely the value added by the agent in each period, and this information is sufficient for providing optimal incentives. In contrast, the principal will lose intertemporal flexibility if the agent's compensation is based exclusively on realized cash flows. Such incentive schemes can be optimal only if the underlying agency problem is stationary.

Suggested Citation

  • Sunil Dutta & Stefan Reichelstein, 1999. "Performance Measurement in Multi-Period Agencies," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 155(1), pages 158-158, March.
  • Handle: RePEc:mhr:jinste:urn:sici:0932-4569(199903)155:1_158:pmima_2.0.tx_2-u
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Barbara Harreiter & Thomas Pfeiffer & Georg Schneider, 2007. "Are real options more valuable in the presence of agency conflicts?," Review of Managerial Science, Springer, vol. 1(3), pages 185-207, November.

    More about this item

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mhr:jinste:urn:sici:0932-4569(199903)155:1_158:pmima_2.0.tx_2-u. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Thomas Wolpert). General contact details of provider: https://www.mohr.de/jite .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.