
Ultimate access to all questions.
Private contracts, such as bank loan agreements, are most likely to provide an effective disciplinary mechanism to ensure high financial reporting quality because:
A
lenders monitor managers and pay close attention to the firm's financial reports.
B
loan covenants require the firm to meet specific financial ratios in order to renew the loan.
C
loan covenants may allow the lender to recover all or part of their investment if certain financial conditions are triggered.