In debt-oriented countries companies tend to:
a. fear that the market will punish poor performance numbers
b. underreport earnings
c. make their numbers as positive as possible
d. both a and c
Answer and Explanation:
The answer to the above question is d. both a and c.
Explanation: In Debt oriented countries, companies tend to Fear that the market will punish the poor performance as they won?t be able to get more debt and due to poor performance, they withdraw their interest in company so, that is why they make their numbers positive as possible so that their investors are satisfied with the performance of the company and they will get the interest on their debt.
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from Financial Accounting: Help and ReviewChapter 8 / Lesson 7