If you are an aggressive manager you should use aggressive estimates and ttempt to report the highest Net Income possible since: 1 2 Management may receive higher bonuses based on favorable financial results. If reported Net Income is above analyst's expectation of net income, then share price may increase and management's stock options and stock holdings will increase in value. However, if reported earnings are below expectations investors are disappointed and stock prices may fall (Brown and Caylor, 2005). Management may have minimum ratios to maintain according to debt covenants in their borrowing agreements. This gives them an incentive to manage income in order to avoid debt-covenant violations