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Metering Problems and Resource Allocation

Ionela Andreicovici et al.

The Accounting Review2026https://doi.org/10.2308/tar-2024-0698article
FT50UTD24AJG 4*ABDC A*
Weight
0.50

Abstract

Why do seemingly similar firms show such different productivity? We argue that unresolved measurement problems, i.e., the persistent incongruity between economic transactions and their accounting representation, affect resource allocation. Our metric quantifies technical accounting terminology in firm disclosures to capture these unresolved measurement problems, UMPs, using over 90,000 10-Ks. A one standard deviation increase in UMP is associated with lower capital investment (6 percent), R&D (5 percent), and hiring growth (30 percent). We also find a reduction in total factor productivity (5 percent) and Tobin’s q (4 percent). Further, CEO compensation sensitivity to accounting performance decreases with UMP, whereas stock-based sensitivity remains unaffected. Our inferences continue to hold when we use a Bartik instrument, which exploits differential exposure to GAAP changes to isolate accounting-driven variation from the firm’s underlying economics. The results suggest unresolved measurement problems are a significant friction in resource allocation. Data Availability: The UMP dataset is available upon request. Please contact the first author. JEL Classifications: D22; D23; D24; G12; J23; M40.

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https://doi.org/https://doi.org/10.2308/tar-2024-0698

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@article{ionela2026,
  title        = {{Metering Problems and Resource Allocation}},
  author       = {Ionela Andreicovici et al.},
  journal      = {The Accounting Review},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.2308/tar-2024-0698},
}

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0.50

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F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
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R · text relevance †0.50 × 0.4 = 0.20

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