Theory of Performance Measurement


Professor Madhav V. Rajan

(Stanford University)

Mannheim, July 9-11, 2009


This course is designed for PhD students and post-doctoral researchers who would like to extend and deepen their knowledge on current research issues in Managerial Accounting. The main focus of the course is to study the nature and characteristics of accounting performance measures, and to understand the efficient use of verifiable and non-verifiable metrics for incentive purposes.

The main topics include:

  • The efficient use of verifiable and non-verifiable measures of performance;
  • The optimal choice of monitoring, team size and compensation systems in multiple-agent settings;
  • Properties of common accounting metrics (ROI, E-P, and Market-to-Book ratios).

The primary objective of the course is to introduce scholars in accounting to current research paradigms on these topics and to identify promising avenues for future research.


Introductory article:

Rajan, M. V. and S. Reichelstein: Subjective Performance Indi-cators and Discretionary Bonus Pools, in: Journal of Accounting Research, Vol. 44 Issue 3, 2006, p. 585-618.