Project selection, income smoothing, and Bayesian learning

Arbeitspapier

Capital rationing is an empirically well-documented phenomenon. This constraint requires managers to make investment decisions between mutually exclusive investment opportunities. In a multiperiod agency setting, this paper analyses accounting rules that provide managerial incentives for efficient project selection. In order to motivate a shortsighted manager to expend unobservable effort and to make efficient investment decisions, the principal sets up an incentive scheme based on residual income (e.g. EVATM). The paper shows that income smoothing generates a trade-off between agency costs resulting from differences in discount rates and the costs associated with the congruity of residual earnings.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Working Paper Series: Finance & Accounting ; No. 116

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Accounting ; Capital Budgeting; Fixed Investment and Inventory Studies; Capacity ; Asymmetric and Private Information; Mechanism Design
• Thema: Investment Incentives ; Performance Measurement ; Residual Income ; Investitionsentscheidung ; Betriebliche Wertschöpfung ; Projektbewertung ; Prinzipal-Agent-Theorie ; Lernprozess ; Bayes-Statistik ; Theorie

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Gaber, Christian
• Ereignis: Veröffentlichung
• (wer): Johann Wolfgang Goethe-Universität Frankfurt am Main, Fachbereich Wirtschaftswissenschaften
• (wo): Frankfurt a. M.
• (wann): 2003

Weitere Informationen

• Handle: http://hdl.handle.net/10419/76964
• URN: urn:nbn:de:hebis:30-17882
• Letzte Aktualisierung: 10.03.2025, 11:45 MEZ