Reply to: Dynamic incentives and responsibility accounting: A comment

Raffi Indjejikian, Dhananjay Nanda

Research output: Contribution to journalComment/debate

4 Scopus citations

Abstract

Christensen et al. (Dynamic incentives and responsibility accounting: a comment, J. Account. Econ. 35 (2003) 423) examine Indjejikian and Nanda (J. Account. Econ. 27 (1999) 177) and suggest that our characterization of the inefficiency arising from limited commitment as a "ratchet effect" phenomenon is misplaced. In this reply, we describe the ratchet effect as commonly understood in the literature, clarify the role of contractual commitments in our analysis, and then illustrate why both the substance and interpretation of our original results continue to be appropriate.

Original languageEnglish (US)
Pages (from-to)437-441
Number of pages5
JournalJournal of Accounting and Economics
Volume35
Issue number3
DOIs
StatePublished - Aug 2003
Externally publishedYes

Keywords

  • Contracting
  • Performance measurement
  • Ratchet effect

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

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