THE ROLE OF FINA

NCIAL INFORMATI
ON IN CONTRACTI
A I R A N H A I R E C . M E C AT E , C PA
LEARNING OBJECTIVES

• What conflicts of interest arise between managers and shareholders, lenders, or regulators.
• How and why accounting numbers are used in debt agreements, in compensation contracts,
and for regulatory purposes.
• How managerial incentives are influenced by accounting-based contracts and regulations.
• What role contracts and regulations play in shaping managers’ accounting choices.
• What accounting “gimmicks” are sometimes used to hide a company’s true performance, and
how to spot them.