With regard to research on the stock price reaction to mandated accounting changes,such as FASB 52,
A)the results suggest that market participants seem to think that changes in reported earnings do not change the actual cash flows in multinational firms.
B)the results suggest that market agents react to "cosmetic" earning changes.
C)the results suggest that market agents do not react to cosmetic earning changes that do not affect value.
D)none of the options

Question

Quizplus · Accepted Answer

Research on the stock price reaction to mandated accounting changes, such as FASB 52, generally finds that market agents do not react to cosmetic earning changes that do not affect the underlying value of the firm. This suggests that market participants are more concerned with changes that have real cash flow implications rather than just changes in accounting methods or reporting practices.

With Regard to Research on the Stock Price Reaction to Mandated