The 'debt/equity hypothesis' of Positive Accounting Theory predicts that:
A) The higher the firm's debt/equity ratio, the more likely managers are to use accounting methods that lower income
B) The lower the firm's debt/equity ratio, the more likely managers are to use accounting methods that increase income
C) The higher the firm's debt/equity ratio, the more likely managers are to use accounting methods that increase income
D) None of the given options is correct
Correct Answer:
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