In examining the issue of whether the choice of accounting methods affects stock prices,studies have found that
A)the decision between LIFO and FIFO for inventory accounting can significantly affect stock prices.
B)a firm can affect its stock price if it either withholds information or provides incorrect information.
C)accounting changes that increase accounting earnings also increase stock prices.
D)switching depreciation methods can significantly affect stock prices.
E)the choice between the percentage-of-completion or the completed-contract method for construction projects affect stock prices.

Question

Quizplus · Accepted Answer

Studies have found that a firm can affect its stock price if it either withholds information or provides incorrect information. This indicates that accounting methods may not be the sole factor affecting stock prices, but rather the accuracy and transparency of financial reporting. Therefore, choice B is the best option.

In Examining the Issue of Whether the Choice of Accounting