1) Would managers who have negotiated debt contracts with accounting based covenants based around "Rolling GAAP" be relatively more likely to lobby an accounting standard -setter about a proposed accounting standard than would a manager from a firm who has negotiated accounting based debt covenants that use 'frozen GAAP'? WHY?
Read accounting headline 7.7 and adopting a positive accounting theory perspective consider the following issues
a) If a new accounting standard impact on profits, should this impact on the value of the firm, and if so, why?
b) Will the imposition of a particular accounting method have implication for the efficiency of the organization?
2) READ accounting headline 3.9 and using a particular theory of regulation (choose the most appropriate one) explain what factors might be motivating the then president Jacque chirac to lobby against the accounting standards in question
Assignment Instructions
prepare answers to these two casestudies from the set text:
3.30
7.17
Required:
Critically analyse and evaluate the arguments for, and against, for each of the case studies.
Which arguments do you consider to be more compelling?