powerpoint 6

powerpoint 6 - 1 8. Economic Consequences of Accounting and...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 1 8. Economic Consequences of Accounting and Positive Accounting Theory Outline What is positive accounting? Why accounting matters contract theory Hypotheses from positive accounting theory Bonus plan Debt covenant 2 Debt covenant Political cost Exxon question 2 Positive Accounting Positive accounting theory involves describing and predicting: accounting policy choices reactions to proposed new accounting standards Positive = what is Not normative (what should be) 3 Understanding the present state of the world helps us predict the future. Why Accounting Matters If EMH is true, why do accounting choices matter matter? Capital markets see through the numbers. But they are not the only participants in the game. Other parties my be affected by accounting choices Customers Suppliers 4 Debt-holders Managers Employees Nexus of contracts view of the firm 3 Role of Accounting in Contracts Debt Covenant Speed Limit...
View Full Document

Page1 / 6

powerpoint 6 - 1 8. Economic Consequences of Accounting and...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online