The size hypothesis predicts that the larger the firm,the more likely that managers will choose accounting methods that will move reported profits from future periods to current periods.

Question

Quizplus · Accepted Answer

The size hypothesis suggests that larger firms are more likely to have diversified operations and access to capital markets, reducing their need to manage earnings aggressively to meet external expectations. Therefore, they might not necessarily choose accounting methods to shift profits from future to current periods more than smaller firms.

The Size Hypothesis Predicts That the Larger the Firm,the More