Refine
Document Type
- Working Paper (2)
Language
- English (2)
Has Fulltext
- yes (2)
Is part of the Bibliography
- no (2)
Keywords
- Asymmetric Information (1)
- Coordination (1)
- Learning Effects (1)
- Managerial Accounting (1)
- Target Costing (1)
- auditor liability (1)
- liability insurance (1)
- risk allocation (1)
Institute
- Wirtschaftswissenschaften (2) (remove)
This paper examines auditor liability rules under imperfect information, costly litigation and risk averse auditors. A negligence rule fails in such a setting, because in equilibrium auditors will deviate with positive probability from any given standard. It is shown that strict liability outperforms negligence with respect to risk allocation, and the probability that a desired level of care is met by the audi tor if competitive liability insurance markets exist. Furthermore, our model explains the existence of insurance contracts containing obligations - a type of contract often observed in liability insurance markets.
During the last years issues of strategic management accounting have received widespread attention in the accounting literature. Yet the conceptual foundation of most proposals is not clear. This paper presents a theoretical analysis of one of the most prominent approaches of strategic management accounting, i.e., Target Costing. First, the relationship between Target Costing and Life-Cycle-Costing is shown. Secondly, a model based on a mechanism-design-approach is used to answer the question of whether the „Market-into-Company“-method of Target Costing can somehow be endogenized. The model captures problems of asymmetric information, price policy and cost structures (i.e. learning effects etc.). The analysis shows that the more „strategic“ is the firm´s cost function, the less valid is „strategic“ management accounting in terms of the usual way Target Costing is employed.