Information Asymmetries about Measurement Quality

• 成果类型: Article
• 署名作者: Glover, Jonathan; Levine, Carolyn B.
• 署名单位: Columbia University; University of Delaware
• 刊物名称: CONTEMPORARY ACCOUNTING RESEARCH
• ISSN/ISSBN: 0823-9150
• DOI: 10.1111/1911-3846.12434
• 发表日期: 2019
• 页码: 50-71
• 关键词: Moral hazard; earnings; SYSTEM

摘要

This article studies contracts between a principal and an agent that are robust to information asymmetries about measurement quality. Our main result is that an information asymmetry about measurement quality not only reduces the usefulness of a given performance measure for stewardship purposes, it also qualitatively changes the way the performance measure is used if the information asymmetry is sufficiently large. We also study the manipulability of performance measures, assuming that poor measurement quality creates room for manipulation via selective (cherry-picked) corrections by the agent. With known imperfect measurement quality, manipulability lowers the cost of providing incentives. Manipulability introduces overstatements only, while imperfect measurement introduces both overstatements and understatements. However, with an information asymmetry about measurement quality, manipulability can increase the cost of providing incentives, since there is now an induced information asymmetry about manipulability.