When the Revelation Principle (RP) holds, managing earnings confers no advantage over revelation. We construct an explanation for earnings management that is based on limitations on owners? ability to make commitments (a violation of the RP?s assumptions). Traditionally, earnings management is...

This paper explores "revenue accounting" in contrast to traditional "cost accounting." Revenue accounting is to serve information needs of managers and investors in planning and controlling a firm's sales activities and their financial consequences. Weaknesses of traditional accounting have...

In this paper, we study information asymmetries about verifiability between a principal and an agent. Our main result is that an information asymmetry about verifiability not only reduces the usefulness of a given performance measure for stewardship purposes, it can completely destroy that...