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oai:www.ideals.illinois.edu:2142/19912 2023-07-10 col_2142_5131 col_2142_16440 com_2142_5130 com_2142_16439 com_2142_9216

Kwon, Young K. Chung, Moon-Chong 2011-05-07T12:22:39Z 2011-05-07T12:22:39Z 10000-01-01 1992 The choice problem between a profit and an investment center revolves around whether it is desirable to delegate investment decision responsibility to a divisional manager who is better informed about the investment opportunities of the division. We show that an accounting performance measure has a limited informational role for delegation in the sense that a cost involved in controlling the manager's incentives in relation to his private information for delegation is so high under certain conditions that an investment center cannot be supported as the optimal investment plan. Among profit center designs, one involving the possibility of underinvestment is chosen to avoid the information control cost. Alternatively, one involving the possibility of overinvestment is chosen since it improves the informativeness of the performance measure for the information control. By explicating the impact on the cost of delegation of the profitability of an ex post suboptimal investment choice which the principal wishes to prevent through delegation, we show that, ceteris paribus, a firm with a higher profitability of the suboptimal choice is more likely to find that an investment center is inferior to either design of a profit center. Made available in DSpace on 2011-05-07T12:22:39Z (GMT). No. of bitstreams: 2 license.txt: 4922 bytes, checksum: 910b249b4beec47e7ab768910c8f966f (MD5) 9305493.pdf: 3148200 bytes, checksum: 21bd693ae257c68ef82ff67adddaca4e (MD5) Previous issue date: 1992 Item marked as restricted to the 'UIUC Users [automated]' Group (id=2) by Howard Ding (hding2@illinois.edu) on 2011-05-07T14:40:17Z Item is restricted indefinitely. Restriction data tranferred 2014-07-01T11:17:12-05:00 Original Data Group with Access UIUC Users [automated] Release Date: none Reason: ETDs are only available to UIUC Users without author permission ETDs are only available to UIUC Users without author permission U of I Only AAI9305493 (UMI)AAI9305493 http://hdl.handle.net/2142/19912 eng Copyright 1992 Chung, Moon-Chong Business Administration, Accounting Economics, Commerce-Business Economics, Theory An investment center vs. a profit center: Capital investment under informational asymmetry text Accountancy Accountancy University of Illinois at Urbana-Champaign Dissertation Ph.D.