Accounting analysis: the basics - Factors influencing accounting quality
4 important questions on Accounting analysis: the basics - Factors influencing accounting quality
There are three potential sources of noises and bias in accounting data:
random forecast errors
systematic reporting choices made by corporate managers to achieve specific objectives
Accounting rules introduce noise and bias because
Another source of noise in accounting arises from pure forecast errors because
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Managers have a variety of incentives to exercise their accounting discreation to achieve certain objectives:
management compensation
corporate control contests
tax considerations
capital market considerations
stakeholder considerations
competitive considerations
The question on the page originate from the summary of the following study material:
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