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What are the two competing perspectives of earnings management?

A) Information asymmetry and agency conflicts

B) Opportunistic behavior and signalling

C) Perfect markets and efficient markets

D) Incentives and efficient contracting

E) none of the above

User Vnshetty
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1 Answer

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Final answer:

The competing perspectives of earnings management are Opportunistic behavior and Signaling, which involve management manipulating earnings for personal gain or to communicate positive future prospects to investors.

Step-by-step explanation:

The two competing perspectives of earnings management are Opportunistic behavior and signaling. Opportunistic behavior is when managers manipulate earnings to meet certain targets or to portray the company in a more favorable light, possibly to benefit themselves in terms of compensation or job security.

On the other hand, signaling involves the strategic use of earnings reports to send a positive message to the market about the company's future prospects, capitalizing on information asymmetry between those running the company and outside investors.

User Oylenshpeegul
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