It is common practice for firms in a variety of industries to specify bonus pools that are available for distribution among a group of managers. While the actual size of the bonus pool may vary with the realization of certain financial metrics, for example, earnings growth or...

Knowledge is central to managing an organization, but its presence in employees is difficult to measure directly. We hypothesize that external communication patterns reveal the location of knowledge within the management team. Using a large database of firm conference call transcripts, we find...

This study endogenously generates the asymmetric verification concept of conservatism, using evolutionary biology as a foundation. A producer produces (or hunts) a consumable with a stochastic production technology, and possibly faces a stealer thereafter, who seeks to expropriate the...

In certain circumstances, insider trades such as private transactions between executives and their firms could be disclosed after the end of the firm's fiscal year, on a Form-5 filing. We find that insider sales disclosed in such a delayed manner for large firms are predictive of negative future...

<heading id="h1" level="1" implicit="yes" format="display">ABSTRACT</heading>This paper shows that major components of modern manufacturing processes, such as inventory management and cross-training, play a significant control role. In our model, workers possess information that is critical to efficient ongoing operations. An organizational design that motivates...

Using detailed data on defect rates and quality costs from twelve plants of a Fortune 500 company, we provide the first direct tests of predictions arising from two sets of dynamic quality-based learning models. We find greater support for quality-based learning models that assume learning is a...

Arguing that GAAP is ill suited for estimating the future profitability of intangibles, the accounting literature (e.g., Kaplan and Norton 1996, Lev 2001) has recently proposed alternative measurement models. These models view intangibles as composed of a set of fundamental business activities...

Using a database of branch managers in retail banks, this study finds some empirical support for the two main predictions of Jensen and Meckling's (1992) theory on organizational design choices: a) the allocation of decision rights to branch managers is associated with control systems that...

Return on Investment (ROI) is widely regarded as a key measure of firm profitability. The accounting literature has long recognized that ROI will generally not reflect economic profitability, as determined by the internal rate of return (IRR) of a firm's investment projects. In particular, it...