Course Readings marked with a (*) on the following list will be covered in some detail in the course of this seminar. Course Requirements: Provide a detailed written analysis of at least four of the nine Practice Problems chosen for this course. Participants are free in their selection among these problems except that inclusion of either Problem 8 or Problem 9 (or both) is required.
Day One: Accrual Accounting for Managerial Performance Measures
- *Rogerson “Intertemporal Cost Allocation and Managerial Investment Incentive: A Theory Explaining the Use of Economic Value Added as a Performance Measure” Journal of Political Economy, 1997.
- Reichelstein “Investment Decisions and Managerial Performance Evaluation,” Review of Accounting Studies, 1997.
- *Dutta and Reichelstein, " Controlling Investment Decisions: Depreciation- and Capital Charges", Review of Accounting Studies, 2002
- Christensen, Feltham and Wu, " Cost of Capital in Residual Income for Performance Evaluation", The Accounting Review, 2002.
- Baldenius, " Delegated Investment Decisions and Private Benefits of Control", The Accounting Review, 2003.
- *Dutta and Reichelstein, " Accrual Accounting for Performance Evaluation ", mimeo, 2004.
Day Two: Commitment and Renegotiation
- *Fudenberg , Holmstrom and Milgrom," Short-Term Contracts and Long-Term Agency Relationships, Journal of Economic Theory, 1990.
- Hermalin and Katz, " Moral Hazard and Verifiability : The Effects of Renegotiation in Agency", Econometrica, 59, 1991.
- Indjejikian and Nanda, “Dynamic Incentives and Responsibility Accounting, Journal of Accounting and Economics, 1999.
- *Christensen, Feltham and Sabac, “Dynamic Incentives and Responsibility Accounting: A Comment”, Journal of Accounting and Economics, 2003.
- Sliwka, “ On the Use of Non-Financial Performance Measures in Managerial Compensation”, Journal of Economics and Management Strategy, 2002.
- *Dutta and Reichelstein, " Leading Indicator Variables, Performance Measurement and Long-Term versus Short-Term Contracts", Journal of Accounting Research, 2003.
Day Three: Stock Price versus Accounting Information
- *Bushman and Indjejikian, “Accounting Income, Stock Price and Managerial Compensation,” Journal of Accounting and Economics, 1992.
- Paul, " On the Efficiency of Stock Based Compensation", Review of Financial Studies, 1992.
- Feltham and Wu, “Public Reports, Information Acquisition by Investors and Management Incentives”, Review of Accounting Studies, 2000.
- *Dutta and Reichelstein, “ Stock Price, Earnings and Book Value in Managerial Performance Measures”, mimeo, 2004.