Accounting Treatment of Inherent Versus Incentive Uncertainties and the Capital Structure of the Firm

@inproceedings{Liang2005AccountingTO,
  title={Accounting Treatment of Inherent Versus Incentive Uncertainties and the Capital Structure of the Firm},
  author={Pierre Jinghong Liang},
  year={2005}
}
This paper studies the accounting treatment of uncertainty and how it affects a firm’s capital structure. We distinguish two sources of uncertainty that raise reliability concerns: inherent uncertainty and incentive uncertainty. By inherent uncertainty, we refer to uncertainty about the quality of raw information regarding future cash flows. By incentive uncertainty, we refer to uncertainty of the quality of accounting numbers conveying the raw information. We explore features of accounting… CONTINUE READING

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