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. (7 marks) Situation Management's Motivation

The company wants to influence investors to pay more for the their shares.

Management wants to reduce the likelihood of paying additional taxes or regulatory charges.

The company takes a "big bath" in a bad year by recording more expenses than usual so that future years are more likely to show higher and rising profitability, resulting in higher future compensation or stock price.

Management wants to reduce riskiness of its cash flows and obtain funds from the bank at a lower interest rate.

The company is going through a merger, and management wants a stronger bargaining position in the negotiations.

Management wants to ensure that they receive the highest annual bonus possible.

The company is submitting their financial statements to the bank and wants to ensure that their current ratio debt covenant is met.