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Thirdly, various contracts besides motivate managers to manage earnings, so(delete) under the promise motivations, two grammatical cases of contract will be discussed, the first type is management salary contract (Healy & Wehlen 1999, p.376). Management compensation contracts atomic number 18 ones that provide managers incentives to act in the interest of companys shareholders. It is similar to(the same mechanism as) managers bounty scheme when companys profit falls at bottom the range between the bogey and the cap as declared above,(.) which means(In other words), under the management compensation contract(under this kind of contracts), managers of companies(corporations) watch stronger motivations to use misreporting methods and real actions to manage(maintain) companys earnings up(a) for the sake of their earning-based bonus awards. In a word, management compensation contract is a(the) factor that motivates managers to manage(control) earnings. The second type of contract inside contracting motivation is add contract (Scott 2009, p.411).

In the(delete) impart contracts, there are always covenants over the managers imposed by shareholders in order to protect the shareholders personal interest against managers actions not act in the (which doesnt seek) interests of shareholders, such as the restriction on additional borrowing, maintain the minimum amount of workings capital in the firm. Given that lending contract colza will result in(induce) a great cost, and will also lead to a restriction on managers action in(on) operating the firm (Scott 2009, p.412),(.) Managers of the companies that(which are) close to violating the lending contracts get hold of motivations to manage(hold) earnings upward(uplift) or smooth the income to assure the(all) compliances within the contracts, with the target of reducing the possibility or delay of the violation of lending contract. Base on(On account of) the observation made by DeAngelo, DeAngelo and skinner (1994, p. 115), in the sample of... If you want to get a generous essay, order it on our website: Orderessay

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