NO.PZ2019120301000288
问题如下:
Question The effectiveness of a debt covenant in disciplining financial reporting quality is most often limited due to:选项:
A.ineffectiveness of financial triggers. B.reporting requirements that may not be legally binding. C.potential for managers to inflate earnings.解释:
SolutionC is correct. Avoidance of debt covenant violation is a potential motivation for managers to inflate earnings.
A is incorrect because financial triggers can be effective deterrents of debt covenant violations because the investors have the option to recover all or part of their investment.
B is incorrect because loan agreements often contain loan covenants, which create specifically tailored financial reporting requirements that are legally binding for the issuer.
没读懂,求翻译