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Divisional Performance Measurement

1998; RELX Group (Netherlands); Linguagem: Inglês

10.2139/ssrn.94109

1556-5068

Michael C. Jensen, William H. Meckling,

Auditing, Earnings Management, Governance

Our purpose in this paper is to examine divisional performance measurement methods and related aspects of the rules of the game that govern the behavior of managers. Performance measurement is one of the critical factors that determine how individuals in an organization behave. It is one aspect of what we call the organizational rules of the game, which consist of (1) the performance measurement and evaluation system, (2) the reward and punishment system, and (3) the system for partitioning decision rights among individuals in an organization.