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Basic Question 5 of 5
Which statement is true?
B. High reporting quality increases company value.
C. It is hard to assess earnings quality if we have low reporting quality.
A. If the financial reporting quality is high, the company's earnings quality must also be high.
B. High reporting quality increases company value.
C. It is hard to assess earnings quality if we have low reporting quality.
User Contributed Comments 3
| User | Comment |
|---|---|
| babic | The existence of high-quality financial reporting itself cannot guarantee high quality earnings, but it allows the investor to make such an assessment. |
| ascruggs92 | B. If management is trying to hide something, high reporting quality could actually decrease the value of the company (i.e. Enron) |
| davidt87 | how, are you using Enron as an example of high reporting quality? one of the largest accounting firms in the world basically disappeared over night for signing off on Enrons financials... babic is right |
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Learning Outcome Statements
demonstrate the use of a conceptual framework for assessing the quality of a company's financial reports;
explain potential problems that affect the quality of financial reports;
CFA® 2025 Level II Curriculum, Volume 2, Module 14.