Efficient Manipulation in a Repeated Setting

Joel S. Demski, Hans Frimor and David Sappington

Journal of Accounting Research, 2004, vol. 42, issue 1, 31-49

Abstract: We analyze the optimal behavior of an organization when its employees can manipulate the organization's accounting system to their private advantage. We find that the organization may benefit by helping its employees manipulate the system. This help can reduce the employees' private returns from devoting effort to further manipulation of the accounting system, which reduces the cost of motivating the employees to devote their effort to improving the real (rather than the measured) performance of the organization.

Date: 2004
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https://doi.org/10.1111/j.1475-679X.2004.00128.x

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Persistent link: https://EconPapers.repec.org/RePEc:bla:joares:v:42:y:2004:i:1:p:31-49

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Journal of Accounting Research is currently edited by Philip G. Berger, Luzi Hail, Christian Leuz, Haresh Sapra, Douglas J. Skinner, Rodrigo Verdi and Regina Wittenberg Moerman

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