From the course: Accounting Foundations: Internal Controls
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Is earnings management ethical?
From the course: Accounting Foundations: Internal Controls
Is earnings management ethical?
- Should company executives manage earnings? The perfect world response is that a company should never manage earnings under any circumstances. In today's financial reporting environment, this response is both naive and not necessarily correct. Let's try to understand the difference between legitimate efforts at burnishing the company's financial image and aggressive manipulation with the intent to deceive. In the websites of most publicly-traded companies, the financial statements can be found under the heading Investor Relations. In essence, financial reporting is just a sub-category of public relations, and the financial statements are one of a large number of vehicles used by the managers of a company to communicate information about the company to the public. And as with other forms of corporate communication, a company must balance its desire to frame information in the best light possible with the desire to maintain…
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