Week 6 Review
These 3 deception techniques are the most common ones that firms use for "Greenwashing"
Confusion, Framing and Posturing
Lenders and shareholders demand these requirements from accounting information
Reliability and conditional conservatism
This was the primary accounting standards setter body of the 1970s
Financial Accounting Standards Board (FASB)
Positive accounting literature shows management act in this way
Opportunistically
Stakeholders will do this when performing engagement on a transactional basis
Stakeholders work closely with companies to improve their direct operational capacity with respect to a specific aspect of CSR.
Under efficient contracting theory, this is the best solution when handling contract rigidity
Provide flexibility for managers to choose accounting policies permitted by GAAP while requiring full disclosure on effect of changes
This term refers to the impact of accounting reports on the decision making behaviour of business, government, unions, investors and creditors
Economic Consequences
Positive accounting theory uses these three types of methodology
Economics
Science
Finance
These are the two major limitations of the research mentioned in the article authored by Nazari et al.
•Sample limited to companies listed on the S&P 500.
•North American companies lag behind their European counterparts in CSR disclosure.
This is the action that managers take to increase share prices before exercising their stock options and then selling before share prices drop
Pump and dump
In the 1970s there were three major reasons that influenced FASB’s decision to incorporate economic and social consequences into its standard setting process. What are those reasons?
American society held its institutions responsible for the social, environmental, and economic consequences of the actions
Companies made business decisions influenced by how the accounting earnings would be affected
Previous accounting policies recommended by FASB had an extremely high impact on volatility or level of earnings (ties into society holding institutions responsible for consequences of their actions
These three hypothesis exemplify the advancements made in positive accounting literature and show management act opportunistically
Bonus Plan
Debt/Equity
Political Cost