Accounting, Relationships, and Contracts



Jonathan Glover

(Columbia University)


Munich, July 9-11, 2018


This course is designed for PhD students and other researchers interested in accounting theory.

The course will largely view accounting theory as a subfield of information economics and will focus on the contracting role of accounting, where contracting includes both explicit contracts that can be enforced by the courts and implicit/relational contracts that must be self-enforcing (typically through repeated encounters). The first part of the course will cover basic models. The second part will take up particular applied topics, reviewing existing results and with an eye toward developing new directions.

Basic Models:
• Adverse selection and moral hazard
• Relational contracts (single- and multi-agent)
• Decentralization
• Corporate culture

Applied Topics:
• Information system design as a substi-tute for commitment
• Earnings management
• Reporting frequency
• Accounting conservatism
• Corporate governance (including the role of the board of directors)
• Non-verifiable performance measures
• Accountability viewed as a relational con-tract
• Accounting and corporate culture (within and across firms)
• Financial reporting regulation and standard setting

The primary objective of the course is to identify avenues for future research.