ACCT 455 Lecture Notes - Lecture 23: Avoidance Speech, Utility, Capital Structure
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Quiz 3: overall people did very well (average 71. 5, what is in the issues we talked about in class that relates to the question!! Investors make money on their investments (cid:894)(cid:272)a(cid:374)(cid:859)t (cid:271)e too ge(cid:374)e(cid:396)al(cid:895: need to apply theories not just memorize the theories! Apply to the specific context: need to adjust the answers to answer the question. Quiz 4: more emphasis on last 2 chapters (regulation!, cost to disclosing private information. Intervention will not get us to first-best solution: everything about accounting is regulated, capital markets will reward investors for sharing insider information, labour markets will encourage information disclosure. If manager compensation is based on accounting information, managers need to share this information in order to be better compensated. Auditing will emerge naturally (not just by regulation) 1st game 12 minutes (no regulators) disclosure happened naturally. Disclosure principle: first instalment of jsf game: if the market knows that the manager possesses information, this is enough to make him/her release it.