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Formerly Graduate
School of Industrial Administration (GSIA)
William Larimer Mellon, Founder
Schenley Park
Pittsburgh, Pennsylvania 15213-3890
United States of America |
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Pierre Jinghong Liang
Associate Professor of Accounting
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Intertemporal Aggration
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Anil Arya
Ohio State University
Jonathan Glover
Pierre Jinghong Liang
Carnegie Mellon University
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European Accounting Review
Vol. 13, no. 4 (December 2004) p. 643-657 |
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| Downloading the paper |
| 2003-Aug
Draft |
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| Abstract: |
| Accountants regularly aggregate, both across
activities and across time. We study a principal-agent model and show
that inter-temporal aggregation can be an optimal feature of the performance
evaluation system. We also study the value of additional information,
taking disaggregated or aggregated performance evaluation as given. We
observe that the value of additional information depends in a subtle
way on the aggregation of existing information. In particular, it is
possible that the principal will find an additional independent signal
to be valueless when existing information is aggregated but valuable
when existing information is disaggregated. That is, additional information
can be more helpful when other information sources abound than when they
are scarce. |
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