2007•Systems Engineering - Theory & PracticeRequires access
Accounting Information and the Design of Managers' Incentive Contract
Yang De-ming
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Abstract
In practice,there are so popular to earnings management.But accounting information usually is used to performance evaluation.Our paper use a model of client-agent to analyse the relation between accounting information and the design of managers' incentive contracts.The model reveal incentive contracts should permit appropriate managers' earnings management.Our paper also show that the reliability of accounting information,efficiency of managers,managers' coefficient of risk aversion would affect the operation of accounting information in incentive contracts.