The Earnings Game: Everyone Plays, Nobody Wins
SHC 4153 Accounting Theory and Practice
Case Study
The Earnings Game: Everyone Plays, Nobody Wins.
Group member: Chong Li Yun | AH090043 | Ho Shuang Tien | AH090095 | Chua Huey Shieng | AH090053 | Lau Foong Seong | AH090126 | Aminah binti Nasaruddin | BH100002 |
Lecturer:
Dr. Aniza binti Othman
INTRODUCTION
It is all about the shares price. The shares market is so active and everybody wants to win in this game. In reality, nobody would want to become a loser. They try to think the best way to gain the advantage and win in this game. Unfortunately, the players in the game used questionable tactics in order to win the game. All players are connected with each other and the winner will only goes to the player who able to control the game. Finally, who will be the loser? It could be the players itself or the outsiders e.g. the citizen who does not play the game. The dynamic share market could make the economy become gloomy and undesirable consequences will be occurs.
Most of the companies involved in the earnings game where the companies have desire or have took actions to meet the analysts’ earnings per share predictions. The common players of this game include the companies themselves, analysts, investors, and accounting firms. There are many issues had been arise in the earnings game.
ISSUES AND ANALYSIS
1.0 MANAGEMENT
In order to meet the analysts’ expectation on the earnings per share, companies will use some tactics to distort their current earnings even those tactics may against the law or regulations. The tactics included:
a) Channel Stuffing
Channel Stuffing is a tactic where the companies borrow from future sales to increase current results by selling goods to customers who aren’t ready to buy yet. In order to attract buyers, the companies are willing to take the cost of storing the goods. Sunbeam, consumer appliance maker is a company who use channel stuffing to boost its earnings in winter by selling millions of
Case Study
The Earnings Game: Everyone Plays, Nobody Wins.
Group member: Chong Li Yun | AH090043 | Ho Shuang Tien | AH090095 | Chua Huey Shieng | AH090053 | Lau Foong Seong | AH090126 | Aminah binti Nasaruddin | BH100002 |
Lecturer:
Dr. Aniza binti Othman
INTRODUCTION
It is all about the shares price. The shares market is so active and everybody wants to win in this game. In reality, nobody would want to become a loser. They try to think the best way to gain the advantage and win in this game. Unfortunately, the players in the game used questionable tactics in order to win the game. All players are connected with each other and the winner will only goes to the player who able to control the game. Finally, who will be the loser? It could be the players itself or the outsiders e.g. the citizen who does not play the game. The dynamic share market could make the economy become gloomy and undesirable consequences will be occurs.
Most of the companies involved in the earnings game where the companies have desire or have took actions to meet the analysts’ earnings per share predictions. The common players of this game include the companies themselves, analysts, investors, and accounting firms. There are many issues had been arise in the earnings game.
ISSUES AND ANALYSIS
1.0 MANAGEMENT
In order to meet the analysts’ expectation on the earnings per share, companies will use some tactics to distort their current earnings even those tactics may against the law or regulations. The tactics included:
a) Channel Stuffing
Channel Stuffing is a tactic where the companies borrow from future sales to increase current results by selling goods to customers who aren’t ready to buy yet. In order to attract buyers, the companies are willing to take the cost of storing the goods. Sunbeam, consumer appliance maker is a company who use channel stuffing to boost its earnings in winter by selling millions of