Numerous principal-agent situations of interest to accounting involve limited liability by the agent. We explore this issue when the outcome is mutually observable (MOC) and when it is not and the contract is based instead on the agent s report (NCC). We find that when outcome is not observable,...

In this study, we dispel several popular notions regarding the meeting or beating expectations/thresholds (MBE) phenomenon that permeates the research design of many empirical papers. First, MBE is not unequivocally associated with aggressive earnings management. Second, MBE does not necessarily...