For the Situations Described Below, Explain Whether Managers Would Be

Essay

For the situations described below, explain whether managers would be motivated to manage earnings, assets, and equity upward and liabilities downward, or alternatively, managers may be motivated to manage earnings, assets, and equity downward and liabilities upward.
$$\begin{array} { | l | l | } \hline \text { Situation } & \begin{array} { l } \text { Management motivation } \\\text { Upward / Downward) }\end{array} \\\hline \text { To obtain higher bonuses. } & \\\hline \text { To increase the likelihood of receiving } \\\text { government subsidies and trade protection. } & \\\hline \begin{array} { l } \text { To improve bargaining position relative to } \\\text { employee unions. }\end{array} & \\\hline \text { To meet covenants based on net income. } & \\\hline \text { To meet regulatory requirements. } & \\\hline\end{array}$$