Why do managers sometimes manage earnings?
Answer to relevant QuestionsWhat are popular earnings management strategies? Explain.What is the relation between the reported value of assets and reported earnings? What is the relation between the reported values of liabilities, including provisions, and reported earnings?Describe alternative information sources beyond statutory financial reports that are available to investorsDescribe what income purports to represent under the historical cost and the fair value accounting models. How is income determined under either model?Managers are responsible for ensuring fair and accurate financial reporting. Managers also have inside information that can aid their estimates of future outcomes. Yet managers face incentives to strategically report ...
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