This thesis consists of two separate but related studies of divisional control practices in divisionalized multi-business firms.; The first study investigates the factors driving the choice of measures used to evaluate division managers in divisionalized firms. Accounting and information economic theories suggest that the usefulness of a measure of agent performance is a function of the measure's informativeness of the agent's actions and/or efforts. I examine whether patterns in the types of measures used to monitor and control division managers in divisionalized firms are related to the characteristics of the firm which affect the relative informativeness of alternative measure types. I test hypotheses with survey data obtained from 110 medium-size US public companies. Results reveal broad support for the association between key firm characteristics and performance measure use.; While these results are statistically significant, there nevertheless remains considerable variation in the types of measures used to evaluate division managers which is not explained by the above theories. One possible reason for this is that ex post performance evaluation is not as critical to effective divisional control as is implied by these theories. The second study of this thesis explores the role of ex post evaluation in the overall divisional control process, and its importance relative to other mechanisms used to control divisional activity. In-depth field studies of eight firms, drawn from the larger sample of 110 firms, are used to obtain data. These data reveal that in many firms ex post evaluation, while important, is not as important as other control devices. In particular, in many firms, planning and budgeting systems ex ante manager screening systems are as or more important than ex post evaluation and reward systems. Additionally, it appears that firms' policies concerning the exploitation of divisional synergies or interdependencies--whether to exploit them and how to exploit them--is related to the relative importance of these three control devices. Firms electing not to exploit divisional synergies use ex post monitoring systems as their principal control device; firms encouraging the exploitation of divisional synergies, but whose corporate offices play no role in facilitating that exploitation, use ex ante screening; and firms whose corporate offices both encourage and facilitate the exploitation of divisional synergies use planning and budgeting systems as their principal divisional control device.
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