Sensitivity, precision, and linear aggregation of signals for performance evaluation
Article Abstract:
The construction of managerial performance compensation evaluation measures in optimal compensation contracts are evaluated. The conditions under which the joint density functions of measures produce optimal linear aggregation are identified. Results indicate that managerial performance measures based on pure profit numbers will only be optimized if the precision times sensitivity of costs and revenue is equal. Results also indicate that if corporate overheads are correlated with division profits then it is optimal to include non-controllable corporate overhead expenses in the development of divisional performance evaluation measures.
Publication Name: Journal of Accounting Research
Subject: Business
ISSN: 0021-8456
Year: 1989
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External and internal pricing in multidivisional firms
Article Abstract:
The impact of vertical market scenario, on decision making of internal transfer pricing in multinational firms, is examined.
Publication Name: Journal of Accounting Research
Subject: Business
ISSN: 0021-8456
Year: 2006
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