Relevance versus reliability of accounting information with unlimited and limited commitment

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dc.identifier.uri http://dx.doi.org/10.15488/5199
dc.identifier.uri https://www.repo.uni-hannover.de/handle/123456789/5246
dc.contributor.author Schöndube-Pirchegger, Barbara
dc.contributor.author Schöndube, Jens Robert
dc.date.accessioned 2019-08-15T11:13:37Z
dc.date.available 2019-08-15T11:13:37Z
dc.date.issued 2017
dc.identifier.citation Schöndube-Pirchegger, Barbara; Schöndube, Jens Robert: Relevance versus reliability of accounting information with unlimited and limited commitment. In: Business Research 10 (2017), Nr. 2, S. 189-213. DOI: https://doi.org/10.1007/s40685-017-0050-2
dc.description.abstract We consider a two-period LEN-type agency problem. The principal needs to implement one out of two accounting systems. One emphasizes relevance, the other reliability. Both systems produce identical inter-temporally correlated signals. The relevant system reports an accounting signal in the period in which it is produced. The reliable system reports a more precise signal, but with a one period delay. Accounting information is contractible only if it is reported within the two-period horizon of the game. Accordingly, accounting information produced in the second period becomes uncontractible with the reliable system in place. Non-accounting information needs to be used for contracting to provide any second period incentives at all. We derive optimal compensation contracts in a full and in a limited commitment setting. With full commitment, the reliable system trades-off more precise first and less precise second-period contractible information, as compared to the relevant system. If the reduction of noise in the accounting signals is strong and the distortion in the non-accounting measure is weak, the reliable system is preferred. With limited commitment we identify a similar trade-off if intertemporal correlation of the signals is negative. If it is positive, this trade-off might reverse: The reliable system is possibly preferred if noise reduction is small and the non-accounting measure is heavily distorted. Noisiness in performance measures then serves as a commitment device. It reduces otherwise overly high powered incentives and thus benefits the principal. eng
dc.language.iso eng
dc.publisher Heidelberg : Springer
dc.relation.ispartofseries Business Research 10 (2017), Nr. 2
dc.rights CC BY 4.0 Unported
dc.rights.uri https://creativecommons.org/licenses/by/4.0/
dc.subject Distortion eng
dc.subject Throughput accounting eng
dc.subject Economics eng
dc.subject Accounting information system eng
dc.subject Contractible space eng
dc.subject Principal–agent problem eng
dc.subject Commitment device eng
dc.subject Incentive eng
dc.subject Welfare economics eng
dc.subject Information needs eng
dc.subject.ddc 330 | Wirtschaft ger
dc.title Relevance versus reliability of accounting information with unlimited and limited commitment
dc.type article
dc.type Text
dc.relation.issn 2198-3402
dc.relation.doi https://doi.org/10.1007/s40685-017-0050-2
dc.bibliographicCitation.issue 2
dc.bibliographicCitation.volume 10
dc.bibliographicCitation.firstPage 189
dc.bibliographicCitation.lastPage 213
dc.description.version publishedVersion
tib.accessRights frei zug�nglich


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