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Welfare Effects of Timely Reporting

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  • Mitchell A. Farlee

    (University of British Columbia)

Abstract

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 report of the first of two signals. In the primary case identified, timely reporting is shown to be “owner valuable.” However, the manager is better off under delayed reporting. Finally, total expected surplus is shown greater under delayed reporting. The owner's benefit from timely reporting is less than the manager's loss.

Suggested Citation

  • Mitchell A. Farlee, 1998. "Welfare Effects of Timely Reporting," Review of Accounting Studies, Springer, vol. 3(3), pages 289-320, September.
    • Handle: RePEc:spr:reaccs:v:3:y:1998:i:3:d:10.1023_a:1009679523731
    DOI: 10.1023/A:1009679523731
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    References listed on IDEAS

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    Cited by:

    1. Peter O. Christensen & Gerald A. Feltham, 2000. "Market Performance Measures and Disclosure of Private Management Information in Capital Markets," Review of Accounting Studies, Springer, vol. 5(4), pages 301-329, December.

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