Manager's ability to manage earnings is important to their ability to provide information about future cash flows and should be impaired

Subject  > Businesss Research Papers  > Accounting

The management of earnings is a topic that has raised many eyebrows in the accounting industry. With the amount of scandals in the last decade, the methods of managing earnings have become very important to investors. Although it is not fraudulent activity it is the manipulation of numbers. From this it is obvious that a “grey” area ca develop. It is this grey area that questions whether these manipulations are performed out of self-interest or for investor benefit. Although there are arguments that indicate this practice is beneficial it is by belief that manager’s ability to manage earnings is important to their ability to provide information about future cash flows and should be impaired. This ...

... a lack of disclosure. With insider information investors are not seeing the whole picture and therefore not fully informed. Providing investors with quality information is essential to making informed decisions. Therefore, a focus should be focused on quality and quantity. Different opinions of ethical conduct could lead companies into the “grey area” of earnings management. Consequently, earnings management can be seen as a gateway to fraudulent manipulation. Therefore, this paper clearly states that a manager’s ability to manage earnings is important to their ability to provide information about future cash flows and should be impaired. BibliographyBruns, W.J. Jr., and Merchant, K.A. (1990, August). The dangerous morality of managing

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