Communication and Post-Decision Information

The article looks at the various sorts of information used to determine the compensation that is given to managers. The author provides instances in which a superior can use signals as a means of valuing a manager's worth and addresses the moral hazards that this method creates and that are related to private communication. Traditional measures of assessing managers' work performance relied on management forecasts, standards, and bottom-up capital budgeting. The article concludes that auditing a manager's accounts can be used as an alternative to communication.