Problem
1) Rules-based accounting adds unnecessary complexity, encourages financial engineering and does not necessarily lead to a true and fair view. Discuss the statement with empirical evidence.
2) Discuss why we need accounting standards from agency issues perspective.
3) There has been much criticism of the effectiveness of non-executive directors following failures such as Enron. Some consider that their interests are too close to those of the executive directors and they have neither the time nor the professional support to all of them to be effective monitors of the executive directors. Researchers have specially focused on the effectiveness of corporate governance. Does corporate governance constrain (reduce) earnings management? Discuss the question with empirical evidence from Peasnell Pope and Young (2000).