For the Situations Described Below, Explain Whether Managers Would Be

question 2

Essay

For the situations described below, explain whether managers would be motivated to manage earnings, assets, and equity upward and liabilities downward, or alternatively, managers may be motivated to manage earnings, assets, and equity downward and liabilities upward.
$$\begin{array} { l | l | } \hline \text { Situation } & \begin{array} { l } \text { Management motivation } \\\text { (Upward / Downward) }\end{array} \\\hline \text { To influence investors to pay more for the firm's } \\\text { shares. } & \\\hline \text { To reduce the likelihood of additional taxes or } & \\\text { regulations. } & \\\hline \begin{array} { l } \text { To take a "big bath" in a bad year by recording } \\\text { more expenses than usual so that future years } \\\text { are more likely to show higher and rising } \\\text { profitability, resulting in higher future } \\\text { compensation or stock price. }\end{array} & \\\hline \text { To reduce riskiness of its cash flows and obtain } & \\\text { funds from the bank at a lower interest rate. } & \\\hline \begin{array} { l } \text { To obtain a stronger bargaining position in } \\\text { merger negotiations. }\end{array} & \\\hline\end{array}$$

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Definitions:

Hidden Curriculum

Refers to the unwritten, informal, and often unintended lessons, values, and perspectives that students learn in school.

Copresence

Face-to-face interaction or being in the presence of others.

Saturated Self

A postmodern idea that the self is now developed by multiple influences chosen from a wide range of media sources.

Kenneth Gergen

A significant figure in the field of psychology, known for his contributions to social constructivism and the theory of the social construction of self.