Welfare Effects of Timely Reporting

Posted: 27 Apr 1999  

Mitchell A. Farlee

University of British Columbia (UBC) - Sauder School of Business

Abstract

A principal-agent model is examined in which a manager acquires private cost information sequentially. All possible communication schemes are equivalent to one of two: (1) timely reporting, where the manager reports as soon as possible, and (2) delayed reporting, where the manager delays the report of the first of two signals. In the primary case identified, timely reporting is shown to be "owner valuable." However, the manager is better off under delayed reporting. Finally, total expected surplus is shown greater under delayed reporting. The owners' benefit from timely reporting is less than the manager's loss.

JEL Classification: M40, M46, D82

Suggested Citation

Farlee, Mitchell A., Welfare Effects of Timely Reporting. Review of Accounting Studies, Vol 3, 1998. Available at SSRN: https://ssrn.com/abstract=158988

Mitchell A. Farlee (Contact Author)

University of British Columbia (UBC) - Sauder School of Business ( email )

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada
604-822-8528 (Phone)
604-822-9470 (Fax)

Paper statistics

Abstract Views
398