06_Overheads - Objectives for today Brief review Steps...

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ACC 333 (Farrell), Fall 2011, Class 06 1 ACC 333 (Farrell) Fall 2011, Class 06 1 Objectives for today Brief review Steps involved in making a decisio n Classification into decision management and decision control Delegation of steps to different people Types of decision control systems How use of different types varies across different ownership structures In-class activity A closer look at decision control in open corporations: The board of directors ACC 333 (Farrell) Fall 2011, Class 06 2 Brief review Alienable rights and decision rights Bundled in markets Separated in firms Agency relationships Goal incongruence, information asymmetry Agency problems Adverse selection, moral hazard Rules of the game / three-legged stool 1) Allocate decision rights to agents 2) Create a performance measurement and control system and tie it to rewards and punishments
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