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Providing investment incentives: The role of revenue recognition in performance measurement

Moshe Bareket, 2002
Faculty Advisor: Nahum D. Melumad


This thesis investigates incentive provisions for a manager who makes investment decisions under capital constraints and for a manager who has private access to swap transactions. Exogenous financing constraints and access to swap transactions are found to have a direct impact on the way companies optimally account for revenues and income. The study demonstrate that the relative benefit depreciation method per se is not sufficient to achieve goal congruence in those situations and establishes that when the manager's time preferences are unknown to the owner, revenue recognition rules must be forward looking in order to achieve goal congruence. The study characterize the set of accounting rules that combined with residual income is unique in achieving goal congruence. The study also finds that a special relation between financial instruments (e.g., investments and swaps) has an impact on their accounting. This effect should be universal and not limited to cases where a derivative (swap) was adopted as suggested by generally accepted accounting standards (GAAP).

Doctoral Program News

Honigsberg featured in Ideas at Work

The August issue of Ideas at Work features research that doctoral candidate Colleen Honigsberg led in conjunction with Sharon Katz.

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Wazlawek featured in Ideas at Work

Abbie Wazlawek's joint research with Professor Daniel Ames is featured in the June 24th, 2014 edition of Ideas at Work

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Ethan Rouen featured in Ideas at Work

Ethan Rouen's joint research with Professor Dan Amiram is featured in the May 15th, 2014 edition of Ideas at Work

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Rivas Wins Fellowship

The PhD program is proud to congratulate Miguel Duro Rivas, who was awarded the Nasdaq Educational Foundation Doctoral Dissertation Fellowship.

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Wong wins Deloitte Fellowship

We are proud to announce that Yu Ting (Forester) Wong is one of the recipients of the 2014 Deloitte Foundation Doctoral Fellowship in Accounting.

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The PhD Program Congratulates John Yao

PhD student John Yao was a finalist in the 2013 M&SOM (Manufacturing & Service Operations Management) student paper competition.

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Honigsberg Named Postdoctoral Fellow

The PhD program is proud to congratulate Colleen Honigsberg, who was named the Postdoctoral Fellow in Corporate Governance at the Millstein Center at Columbia Law School in October 2013

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Master of Science in Marketing >

For Fall 2015 Entry:
Deadline: January 5th, 2015


Master of Science in Financial Economics

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Early Decision: Jan 6, 2015
Regular Decision: Feb 15, 2015


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