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Study Guide

BUS 320- Final Exam Guide - Comprehensive Notes for the exam ( 93 pages long!)


Department
Business Administration
Course Code
BUS 320
Professor
Dennis Chung
Study Guide
Final

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SFU
BUS 320
Final EXAM
STUDY GUIDE

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Lecture 1
Information Asymmetry: management not disclose all information based on costs and benefits
=> Efficient capital market hypothesis: market price reflect all infor of company
=> Not fully efficient capital market = affect access + minimize cost of capital
=> Human behaviour: management act on their own interest at the cost of other capital market
participants
Adverse selection: capital marketplace attract wrong company
Moral hazard: shirk responsibility if nobody is watching, act on own interest at the
expense of others
=> management bias: not disclose negative infor
=> aggressive accounting: downplay negative, focus on positive (overstate net income
+ asset, understate liability + expenses, emphasize on positive events) >< conservative
accounting => motivation: performance evaluation, compensation, access to capital
market and analyst expectations, meeting contractual obligations
=> serious = market collapse => reduce = accounting + internet
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Conceptual framework
Materiality
Influence decisions if omit or misstate
Entity-specific aspect of relevance based on nature or magnitude or both => no uniform
quantitative threshold
1.
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