INTERNATIONAL UNIVERSITY COLLEGE
Sofia
“Earnings management, in exchange listed companies, is not fraud but a case of caveat emptor for investors”
Coursework
in
BUSINESS FINANCIAL CRIME
Student registration No: 479866
Program: International Finance and Trade, Level 2
Lecturer: A. Paparizov
“Earnings management, in exchange listed companies, is not fraud but a case of caveat emptor for investors”
With the development of the stock markets and the huge grow in the volume of money traded in them, over the past 20 years a rising attention has been aimed at towards the importance of truthful and fair accounting. The real interest in how companies chase their financial reporting has developed in the wake of a multitude of large corporate scandals that has occurred worldwide. Two of the best known examples so far for significant manipulation of accounting data and the consequences thereof are the collapses of Enron and World Com.
But now, before I continue with these two cases and concentrate in the matter of the false or “not so true and fair accounting” will focus on what is the definition of earning management, and what drives the CEO’s of these corporations to pursue the earning management style of working.
The speed at which worldwide business and trade are growing has given new characteristic to the multi-functional roles managers are forced to play. Nowadays the majority of Managers of the “blue chips” companies are more than well paid, experienced speculators. Criticism all over the world has been raised suggesting that style of management executed by those CEO’s in which the performance of the company is measured not by the output of production, neither by the satisfaction of its customers, but by the boost of its financial accounting numbers, creates incentives for the managers to act in opportunistic manners at the cost of the corporation shareholders.
“Newly appointed CEOs manipulate earnings in order to boost... [continues]
Sofia
“Earnings management, in exchange listed companies, is not fraud but a case of caveat emptor for investors”
Coursework
in
BUSINESS FINANCIAL CRIME
Student registration No: 479866
Program: International Finance and Trade, Level 2
Lecturer: A. Paparizov
“Earnings management, in exchange listed companies, is not fraud but a case of caveat emptor for investors”
With the development of the stock markets and the huge grow in the volume of money traded in them, over the past 20 years a rising attention has been aimed at towards the importance of truthful and fair accounting. The real interest in how companies chase their financial reporting has developed in the wake of a multitude of large corporate scandals that has occurred worldwide. Two of the best known examples so far for significant manipulation of accounting data and the consequences thereof are the collapses of Enron and World Com.
But now, before I continue with these two cases and concentrate in the matter of the false or “not so true and fair accounting” will focus on what is the definition of earning management, and what drives the CEO’s of these corporations to pursue the earning management style of working.
The speed at which worldwide business and trade are growing has given new characteristic to the multi-functional roles managers are forced to play. Nowadays the majority of Managers of the “blue chips” companies are more than well paid, experienced speculators. Criticism all over the world has been raised suggesting that style of management executed by those CEO’s in which the performance of the company is measured not by the output of production, neither by the satisfaction of its customers, but by the boost of its financial accounting numbers, creates incentives for the managers to act in opportunistic manners at the cost of the corporation shareholders.
“Newly appointed CEOs manipulate earnings in order to boost... [continues]
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(2012, 04). Earnings Management, in Exchange Listed Companies, Is Not Fraud but a Case of Caveat Emptor for Investors. StudyMode.com. Retrieved 04, 2012, from http://www.studymode.com/essays/Earnings-Management-In-Exchange-Listed-Companies-959538.html
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"Earnings Management, in Exchange Listed Companies, Is Not Fraud but a Case of Caveat Emptor for Investors" StudyMode.com. 04 2012. 04 2012 <http://www.studymode.com/essays/Earnings-Management-In-Exchange-Listed-Companies-959538.html>.
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"Earnings Management, in Exchange Listed Companies, Is Not Fraud but a Case of Caveat Emptor for Investors." StudyMode.com. 04, 2012. Accessed 04, 2012. http://www.studymode.com/essays/Earnings-Management-In-Exchange-Listed-Companies-959538.html.
