Impact of Alternative Reporting Systems in Multi-Agent Contracting

48 Pages Posted: 31 Jul 2005

See all articles by Gerald A. Feltham

Gerald A. Feltham

University of British Columbia

Christian Hofmann

Ludwig Maximilian University of Munich (LMU) - Faculty of Business Administration (Munich School of Management)

Date Written: November 15, 2005

Abstract

The analysis in this paper extends the single-agent/multi-task LEN model in Feltham/Xie (1994) to a multi-agent/multi-task context. A key feature of the paper is that we consider the impact of alternative reporting systems on full- and limited-commitment contracts. With a centralized reporting system all performance measures are reported to the principal, while some measures are not reported to the principal with a decentralized reporting system. Under limited commitment, the principal may prefer to restrict the agents' access to certain measures. While additional reports are weakly preferred if there is full commitment, these reports may have a negative effect if there is limited commitment.

Suggested Citation

Feltham, Gerald A. and Hofmann, Christian, Impact of Alternative Reporting Systems in Multi-Agent Contracting (November 15, 2005). AAA Management Accounting Section 2006 Meeting Paper, Sauder School of Business Working Paper, Available at SSRN: https://ssrn.com/abstract=773584 or http://dx.doi.org/10.2139/ssrn.773584

Gerald A. Feltham (Contact Author)

University of British Columbia ( email )

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Christian Hofmann

Ludwig Maximilian University of Munich (LMU) - Faculty of Business Administration (Munich School of Management) ( email )

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Munich, DE 80539
Germany

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