Discretionary accounting choices: a debt-covenants based signalling approach

Article Abstract:

A debt covenants-based explanation of discretionary accounting choices made by managers with access to private favourable or unfavourable information about their companies' future earnings is presented. A company with both equity and debt and a knowledgable manager is used as an example to show how managers can communicate information to investors through their accounting choices.

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Discretionary write-downs, write-offs, and other restructuring provisions: A signalling approach

Article Abstract:

Managerial compensation plans as economic incentives for reporting discretionary provisions have benn identified, using a model to explain discretionary write-downs, write-offs and other restructuring provisions reported by managers. It is shown that the manager may feasibly communicate his private information to investors via his provision policy, under certain conditions.

Accounting, auditing, & bookkeeping, Accounting & Auditing Services, Accounting, Tax Preparation, Bookkeeping, and Payroll Services, Models, Management

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