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A Flexible Framework for the Examination of Production, Measurement, and Contracts in the Face of Moral Hazard.

Record Type:	Language materials, manuscript : Monograph/item
Title/Author:	A Flexible Framework for the Examination of Production, Measurement, and Contracts in the Face of Moral Hazard./
Author:	Bonham, Jonathan David.
Description:	1 online resource (85 pages)
Notes:	Source: Dissertation Abstracts International, Volume: 79-04(E), Section: A.
Contained By:	Dissertation Abstracts International79-04A(E).
Subject:	Accounting. -
Online resource:	click for full text (PQDT)
ISBN:	9780355370546

A Flexible Framework for the Examination of Production, Measurement, and Contracts in the Face of Moral Hazard.
Bonham, Jonathan David.

A Flexible Framework for the Examination of Production, Measurement, and Contracts in the Face of Moral Hazard. - 1 online resource (85 pages)

Source: Dissertation Abstracts International, Volume: 79-04(E), Section: A.

Thesis (Ph.D.)

Includes bibliographical references

I develop a framework to examine the effect of measurement on productive activity in the face of moral hazard. I allow an agent intricate control over the stochastic value of a firm's assets, and he is compensated based on a report produced by an accounting system that admits a large class of bias- and timing-oriented accounting measurement rules.

Electronic reproduction.
Ann Arbor, Mich. :
ProQuest,
2018

Mode of access: World Wide Web

ISBN: 9780355370546Subjects--Topical Terms:

561166
Accounting.
Index Terms--Genre/Form:

554714
Electronic books.

A Flexible Framework for the Examination of Production, Measurement, and Contracts in the Face of Moral Hazard.
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245 1 2 $a A Flexible Framework for the Examination of Production, Measurement, and Contracts in the Face of Moral Hazard.
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300 $a 1 online resource (85 pages)
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500 $a Source: Dissertation Abstracts International, Volume: 79-04(E), Section: A.
500 $a Adviser: Thomas Hemmer.
502 $a Thesis (Ph.D.) $c Rice University $d 2017.
504 $a Includes bibliographical references
520 $a I develop a framework to examine the effect of measurement on productive activity in the face of moral hazard. I allow an agent intricate control over the stochastic value of a firm's assets, and he is compensated based on a report produced by an accounting system that admits a large class of bias- and timing-oriented accounting measurement rules.
520 $a When measurement error is unavoidable but is treated to address the moral hazard problem, (i) the fundamental earnings distribution develops asymmetric tails and discontinuities at predictable thresholds, (ii) measurement rules develop all-or-nothing recognition properties and are rarely unconditionally biased, and (iii) the contract develops caps, floors, and hurdle bonuses at predictable thresholds.
520 $a In contrast, when measurement error can be reduced by delaying measurement until uncertainty has been resolved, historical cost accounting is unambiguously optimal in curtailing moral hazard. However, I show that an accounting regulator with alternative objectives can influence economic activity by mandating timely measurement. Specifically, I show that timely loss recognition induces firms that are more (less) averse to downside risk to contract for riskier (less risky) actions.
520 $a Finally, I show that first best actions are implementable in my setting via a two-wage penalty contract only if the measurement rule is extremely noisy and unconditionally conservative. Furthermore, the agent charges a negligible risk premium if he is sufficiently optimistic about the odds of avoiding a penalty-triggering earnings report. In other words, unconditionally conservative measurement can disable moral hazard when the agent is optimistic.
533 $a Electronic reproduction. $b Ann Arbor, Mich. : $c ProQuest, $d 2018
538 $a Mode of access: World Wide Web
650 4 $a Accounting. $3 561166
650 4 $a Economic theory. $3 809881
650 4 $a Economics. $3 555568
655 7 $a Electronic books. $2 local $3 554714
690 $a 0272
690 $a 0511
690 $a 0501
710 2 $a ProQuest Information and Learning Co. $3 1178819
710 2 $a Rice University. $b Business. $3 1181144
773 0 $t Dissertation Abstracts International $g 79-04A(E).
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