What question did this study set out to answer?

The research aims to explore how delegating monitoring system choices impacts efficiency in firms.

Decentralized Choice of Monitoring Systems.

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An agency model reveals efficient monitoring system choices by delegating selection to agents, suggesting rational behavior in accounting methods.

The research aims to explore how delegating monitoring system choices impacts efficiency in firms.
Developed an agency model to analyze monitoring system selection.
Investigated the effects of private information on production technology.
Examined the implications of expanding the contracting space.
Found that delegation of monitoring systems can lead to more efficient agent effort management.
Identified that the choice of accounting methods by managers reflects rational equilibrium behavior.

Demski et al. (1984) studied this question.

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An agency model reveals efficient monitoring system choices by delegating selection to agents, suggesting rational behavior in accounting methods.