Joel S. Demski, Hans Frimor, Performance Measure Garbling Under Renegotiation in Multi-Period Agencies, Journal of Accounting Research, Vol. 37, Studies on Credible Financial Reporting (1999), pp. 187-214

Profit allocation, Ancillary Trade, Decentralization, Coordination

The purpose of this paper is to examine controllability: the notion a manager should be evaluated based on that which she or he controls. We embed the managerial evaluation problem in a principal-agent setting and ask whether the optimal agency solution bears any logical relation to a casual definition of controllability. It does not. More to the point, the agency framework compels us to look at information content. This information content perspective, upon reflection, agrees with our intuition, with our anecdotal Impressions of practice, and with the dictates of the principal-agent model. Moreover, there is a well-defined relation between information content and a notion of control. Thus, the Information content perspective may be thought of as offering a precise definition of controllability.

Private information, Moral Hazard, Contracting, Risk

Joel S. Demski, David M. Kreps, Models in Managerial Accounting, Journal of Accounting Research, Vol. 20, Supplement: Studies on Current Research Methodologies in Accounting: A Critical Evaluation (1982), pp. 117-148

William H. Beaver, Joel S. Demski, The Nature of Financial Accounting Objectives: A Summary and Synthesis, Journal of Accounting Research, Vol. 12, Studies on Financial Accounting Objectives: 1974 (1974), pp. 170-187

Sourcing, Make-or-Buy decisions, Product quality, Unverifiable information

Responsibility accounting, Principal-agent model, Performance, Hierarchical relationship

Expertise, Communication, Planning, Implementation

Line-item reporting, Principal-agent model, Disaggregation, Factor acquisition models