• Earnings Management https://store.theartofservice.com/the-earnings-management-toolkit.html

Corporate governance Financial reporting and the independent auditor
1
The potential exercise of this choice to improve apparent performance (see creative accounting and earnings management) increases the information risk for users https://store.theartofservice.com/the-earnings-management-toolkit.html

Business ethics - Other issues
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Oxford: Blackwell ISBN 0-631-22123-9
Particular corporate ethical/legal abuses include: creative accounting, earnings management, misleading financial analysis, insider trading, securities fraud, bribery/kickbacks and facilitation payments https://store.theartofservice.com/the-earnings-management-toolkit.html

Creative accounting - Earnings management
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'A review of the earnings management literature and its implications for standard setting', Accounting Horizons, December
1999, pp https://store.theartofservice.com/the-earnings-management-toolkit.html

Accounting - Accounting scandals
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Lys: Trends in Earnings Management and
Informativeness of Earnings
Announcements in the Pre- and Post-
Sarbanes Oxley Periods (Kellogg School of Management, Evanston, Illinois,
February, 2005) p https://store.theartofservice.com/the-earnings-management-toolkit.html

Financial statement analysis
1
Another example is to adjust the reported numbers when the analyst suspects earnings management.
https://store.theartofservice.com/the-earnings-management-toolkit.html

Earnings management
1
“A Review of the Earnings Management
Literature and Its Implications for Standard
Setting.” Accounting Horizons 13 (4): 365–
383.
https://store.theartofservice.com/the-earnings-management-toolkit.html

Earnings management
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Earnings management has a negative effect on earnings quality, and may weaken the credibility of financial reporting. Furthermore, in a 1998 speech Securities and Exchange
Commission chairman Arthur Levitt called earnings management widespread. Despite its pervasiveness, the complexity of accounting rules can make earnings management difficult for individual investors to detect.
https://store.theartofservice.com/the-earnings-management-toolkit.html

Earnings management - Occurrence and response by regulators
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Ball|Ray Ball, while opining that accounting research was not reliably documenting earnings management, wrote: Of course earnings management goes on https://store.theartofservice.com/the-earnings-management-toolkit.html

Earnings management - Occurrence and response by regulators
1
The SEC has criticized earnings management as having adverse consequences for financial reporting, and for masking the true consequences of management's decisions. It has called on standard-setters to make changes to accounting standards to improve financial statement transparency, and has called for increased oversight over the financial reporting process. The
SEC has also pressed charges against the management of firms involved in fraud|fraudulent earnings management.
https://store.theartofservice.com/the-earnings-management-toolkit.html

Earnings management - Motivations and methods
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Other possible motivations for earnings management include the need to maintain the levels of certain financial ratio|accounting ratios due to debt covenants, and the pressure to maintain increasing earnings and to beat analyst targets.
https://store.theartofservice.com/the-earnings-management-toolkit.html

Earnings management - Motivations and methods
1
Earnings management may involve exploiting opportunities to make accounting decisions that change the earnings figure reported on the financial statements https://store.theartofservice.com/the-earnings-management-toolkit.html

Earnings management - Detecting earnings management
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For example, research has shown that firms with large accruals and weak governance structures are more likely to be engaging in earnings management https://store.theartofservice.com/the-earnings-management-toolkit.html

One share, one vote - Financial reporting and the independent auditor
1
The potential exercise of this choice to improve apparent performance (see creative accounting and earnings management) increases the information risk for users https://store.theartofservice.com/the-earnings-management-toolkit.html

Executive pay in the United States - Stock options
1
David Aboody and Ron Kasznik, `CEO Stock Option
Awards and the Timing of Corporate Voluntary
Disclosures,` Journal Accounting and Economics 29
(2000): 73 –100Steven Balsam, Huajing Chen, and
Srinivasan Sankaraguruswamy, Earnings
Management Prior to Stock Option Grants, working paper, Temple University Department of Accounting,
2003A study by David Yermack focusing on earnings announcements, found that managers are more likely to be awarded options in advance of the release of favorable earnings results that boost the stock price than in advance of unfavorable announcements and more powerful CEOs are able to obtain larger
`discounts` on their options https://store.theartofservice.com/the-earnings-management-toolkit.html

Mutual-fund scandal (2003) - Timeline
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*On November 30, 2004, the Securities and Exchange Commission announced
“the filing..of charges against American
International Group, Inc. (AIG) arising out of AIG’s offer and sale of an earnings management product.” The company
“agreed to pay a total of $126 million, consisting of a penalty of $80 million, and disgorgement and prejudgment interest of
$46 million.” https://store.theartofservice.com/the-earnings-management-toolkit.html

Mutual-fund scandal (2003) - Timeline
1
*On August 22, 2005, the Securities and
Exchange Commission “filed civil fraud charges against two former officers of
Bristol-Myers Squibb Company for orchestrating a fraudulent earnings management scheme that deceived investors about the true performance, profitability and growth trends of the company and its U.S. medicines business.” https://store.theartofservice.com/the-earnings-management-toolkit.html

Economic opportunism
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For example, managers can tilt the details of financial reporting in such a way that it favours their own position.Lan Sun and
Subhrendu Rath, Fundamental
Determinants, Opportunistic Behavior and
Signaling Mechanism: An Integration of
Earnings Management Perspectives https://store.theartofservice.com/the-earnings-management-toolkit.html

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