For each of the following factors, determine if the given change or level of that factor would lead an analyst to believe that managers of a firm are more or less likely to engage in earnings manipulation:
Definitions:
Optimum Arousal Theory
The theory that individuals perform best and are most productive at a moderate level of arousal, rather than at lower or higher levels.
Moderate Arousal
An optimal level of alertness or activation that enhances performance on tasks or activities, according to Yerkes-Dodson Law.
Biological Deprivation
A lack of essential biological needs, such as food, water, and sleep, that can lead to severe physical and psychological consequences.
Sign Stimulus
An external sensory cue that triggers a specific innate behavior in animals and humans.
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