Solution-Demonstrate the efficient contract view

Demonstrate the efficient contract view

Reference no: EM132620173

Question 1: Briefly explain if the following examples demonstrate the efficient contract view.

Accounting numbers are used to design bonus plan contracts rather than share prices
As part of the debt contracts, the leverage ratio (i.e., debt to total tangible assets) excludes intangible assets from the denominator;
A manufacturing company recognises sales revenue at the time of production, even though the company receives no guaranteed sales contract.

Reference no: EM132620173

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Demonstrate the efficient contract view

Reference no: EM132620173

Reference no: EM132620173

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