On interim performance evaluations and interdependent period outcomes

Abstract Performance feedback is an integral element of accounting system, and firms provide this at varying frequencies to their employees. This paper explicates the impact interim performance evaluation on principal’s surplus using a dynamic two-period agency model. Two settings are discussed: single-purpose use, wherein information used solely for control purposes, dual-purpose in which production control. Results demonstrate that optimality evaluations depends use interdependence period outcomes. Furthermore, neither setting entails strict dominance with regard carrying out or not. It implies can be optimal even if course action does not depend it. further suggests refraining from review required determine effort level.