Business executives and academics frequently criticize budget-based compensation plans as providing incentives for subordinates to build slack into proposed budgets. In this paper, we examine whether either of two practices - using budgets to allocate scarce resources, or providing information...

A fundamental accounting question is whether investors perceive low risk when earnings are smooth relative to the volatility of operating cash flows. We conduct two experiments to examine this question. Absent additional information concerning the likelihood of earnings management, our first...

In this paper, we examine the role experimental research plays in developing accounting knowledge. We use as a framework for this examination an information economic perspective, positing that the general goal of accounting research is legitimate, consequential belief revision. We then evaluate...