John H. Evans III, Optimal Contracts with Costly Conditional Auditing, Journal of Accounting Research, Vol. 18, Studies on Economic Consequences of Financial and Managerial Accounting: Effects on Corporate Incentives and Decisions (1980), pp. 108-128

Management control system, Agency model, Private information

John H. Evans III, James M. Patton, Signaling and Monitoring in Public-Sector Accounting, Journal of Accounting Research, Vol. 25, Studies on Stewardship Uses of Accounting Information (1987), pp. 130-158

Auditing, Contracting, Principle-agent model, Moral hazard

The purpose of this research is to explain municipalities' voluntary participation in the MFOA Certificate of Conformance Program (CCP) during 1976–1980 as a function of the economic incentives of municipal officials. Our operational model predicts that cities with more debt, CCP participation prior to 1976, professionally active municipal officials, and a manager form of government are more likely to participate. In addition, cities in states with GAAP (non-GAAP) reporting requirements were expected to be more (less) likely to participate. Taken as a whole, the empirical results are consistent with the proposed model of the CCP participation decision.

Financial reporting, Moral Hazard, Contracting, Accrual accounting

[A general prediction from the economic theory of tax reporting is that taxpayers will report more income as the tax rate increases, but the related empirical evidence has been mixed. We conducted an experiment to examine whether taxpayers' responses to a tax-rate change depend on both economic effects and perceptions of horizontal and exchange inequity. Our findings reconcile the previously inconsistent empirical results by identifying conditions under which perceptions of inequity drive taxpayers' reporting decisions. In summary, subjects reported less (more) income as tax rates increased (decreased) when they were inequitably treated relative to others, but not when they were equitably treated relative to others.]

Auditing, Collusion, Principle-agent model

Argues that the economic theory of tax reporting predicting taxpayers' responses depends on economic effects and perceptions of horizontal and exchange equity. Experiment resulting into conditions that influence the perceptions of inequity driving taxpayers' reporting decisions.