Question

If managers manage earnings to convey their inside information about firms' prospects, what are they engaging in?

A) Signaling
B) Opportunistic Behavior
C) Information Asymmetry
D) Stock Price Manipulation
E) Fraud

Answer 1

Managers who manage earnings to convey their inside information about firms' prospects are engaging in Signaling.

Step-by-step explanation:

Managers who manage earnings to convey their inside information about firms' prospects are engaging in Signaling. Signaling is a behavior where managers manipulate the company's financial results to send signals to the market about the company's future prospects. By managing earnings, the managers are trying to communicate positive information to attract investors.