Random
Name one of the students that presented today.
Angel, Albert, Ingrid, Shirley, and Lina.
Managers manipulate accounting variables or real actions to achieve some specific reported earnings objectives.
Earnings management
Managers can use control over accruals to influence the amount of reported net income.
Discretionary accruals (Chapter 5)
Name two authors for this week article (Last name).
Baker, Lopez, Reitenga, and Ruch.
Name the longest river in the world.
Nile River
What are the two types of opportunistic manager behavior?
1. Hide bad earnings management behind poor disclosure;
2. Do not accept securities market efficiency.
Name two contracts under agency theory.
Lending contract, employment contract (Chapter 9)
What act altered earnings management choices? (Full name)
Sarbanes-Oxley Act
Who sang the song “Rolling in the deep”?
Adele
Name the three good sides of earnings management.
1. Inform Investors
2. Reduce estimation risk
3. Favourably affect share price
The prices of securities traded on the market continue to fully reflect all information that is publicly known.
Efficient securities market (Chapter 4)
Name the theory the article used to explain individual power.
Power Circulation Theory
What is the state above Oregon?
California
Name any four motivations of using earnings management.
Bonus purpose, competing for manager talents, debt covenant, meeting investors’ expectations, low industry error rate.
Name four out of six behavioural characteristics of irrational investors.
Limited Attention, Representativeness, Self-Attribution Bias, Conservativeness, Overconfidence, Motivated Reasoning (Chapter 6)
In some circumstance, CEOs and CFOs have conflicting incentives regarding financial reporting. Who appear to suffer greater loss of reputation and wealth upon termination of employment?
CFOs
Name any five provinces or territories in Canada.
Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Ontario, Prince Edward Island, Quebec, Saskatchewan, and Yukon.
What are the two variables Jones used to estimate discretionary accruals?
1. The change of revenue of current years and the previous year;
2. The gross PPE in current year.
Name two types of information asymmetry that creates additional sources of estimation risk for the investor.
Adverse Selection, Moral Hazard (Chapter 4)
Which hypothesis states that a powerful CEO has a substantial incentive to limit REM in the pre-SOX period?
H2b