Sensitivity, precision, and linear aggregation of signals for performance evaluation

Article Abstract:

The construction of managerial performance compensation evaluation measures in optimal compensation contracts are evaluated. The conditions under which the joint density functions of measures produce optimal linear aggregation are identified. Results indicate that managerial performance measures based on pure profit numbers will only be optimized if the precision times sensitivity of costs and revenue is equal. Results also indicate that if corporate overheads are correlated with division profits then it is optimal to include non-controllable corporate overhead expenses in the development of divisional performance evaluation measures.

Research, Accounting, Employee performance appraisals, Performance appraisals

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External and internal pricing in multidivisional firms

Article Abstract:

The impact of vertical market scenario, on decision making of internal transfer pricing in multinational firms, is examined.

United States, Financial management, Management dynamics, Multinational Corporations, Decision-making, Decision making, Analysis, Management, Finance, International business enterprises, Company business management, Transfer pricing, Vertical markets, Company financing

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