Sequential Communication in Agencies

REVIEW OF ACCOUNTING STUDIES, Vol. 2, No. 2, 1997

Posted: 17 Sep 1997

See all articles by Peter O. Christensen

Peter O. Christensen

Copenhagen Business School - Department of Finance

Gerald A. Feltham

University of British Columbia

Abstract

This paper examines a principal-agent model in which the agent receives a sequence of two signals about the future outcome from his actions. Conditions are identified under which sequential communication (signals reported when received) is strictly preferred to simultaneous communication (signals only reported after all are received). If the second signal does not provide additional information about the outcome, then it can only be valuable if its report is verified. If the first signal is informative about the second and the second provides additional information about the outcome, then there exist settings in which sequential unverified reporting is strictly valuable.

JEL Classification: M41, M49, D82

Suggested Citation

Christensen, Peter Ove and Feltham, Gerald A., Sequential Communication in Agencies. REVIEW OF ACCOUNTING STUDIES, Vol. 2, No. 2, 1997, Available at SSRN: https://ssrn.com/abstract=10636

Peter Ove Christensen

Copenhagen Business School - Department of Finance ( email )

Solbjerg Plads 3
Frederiksberg, DK-2000
Denmark
+45 6140 3237 (Phone)

Gerald A. Feltham (Contact Author)

University of British Columbia ( email )

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada
604-822-8397 (Phone)
604-822-9470 (Fax)

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