Earnings Management: the Continuum from Legitimacy to Fraud

Earnings Management: the Continuum from Legitimacy to Fraud  Research Paper example
Ph.D.
Research Paper
Finance & Accounting
Pages 3 (753 words)
Download 0
Are you going to conduct your fraudulent actions and operations in your business? Maybe it is better for you to make fraudulent actions and to cheat you CEOs? Of course, the answer to these questions should be negative…

Introduction

Earnings Management: the Continuum from Legitimacy to Fraud

To focus on the basic concepts and to clearly be aware of the essence of the concepts is the first and foremost step in research development. Schram and Shank (2006) underline that it is very important to identify one concept and separate it clearly from another one. Patton (2002) makes an emphasis on a potential interpretation of key concepts, i.e. we should first identify "fraud" and then pay our attention to "legitimacy". Therefore, we should follow the ideas of bright minds and wise heads of the researchers and believe into their claims that concepts identification is very important in the process of our further research. What is the real meaning of the concept of "fraud"? On the one hand, it is not very easy to identify this concept and very often it is used beyond the context of economy. It is possible to identify the concept of "fraud" in the following way: the way an accountant or a financial manager or any other party involved in the earnings management is involved in the process of cheating, then it is possible to talk about a possible occurrence of fraud. It is very easy to understand and discuss the concept of fraud in relation to earnings management and refer to it as to cheating the process of gains management of a certain financial entity.
Enron case study is a perfect example of the necessity to avoid fraud in earnings management. The accountants were driven into temptation of hiding real figures in the financial statements of the company and Enron lost its money. ...
Download paper
Not exactly what you need?

Related papers

Earnings Management: The Continuum From Legitimacy To Fraud
Examples of the affected corporate firms are Enron and WorldCom, which illustrate how opportunistic earnings resulted in the greatest bankruptcies in the history of the US. However, there are claims that earnings management has some beneficial uses too (McKee, 2005). Evidence empirically shows that earnings managing firms have an inverse relationship with agency costs, but when combined,…
Earnings Management: The Continuum from Legitimacy to Fraud.
A scope of qualitative issues Various managerial activities can be hazardous for earnings allocation and distribution and earnings management can be a challenging issue. Different earnings management activities are focused on legitimate choices focused on account provision for transactions and for other events (e.g. when accounting estimates and judgments are in compliance with generally accepted…
Earnings Management: The Continuum from Legitimacy to Fraud.
Further on this research paper is focused on critical reflections in the field of accounting, illustrating them with famous cases and referring to relevant studies in this field (Shank, 2006). Fraud is defined as any attempt to deceive another to gain profits (Shelton, Whittington, and Landsittel, 2001). Definition of “earnings management” can be as follows: both legal and illicit actions of…
Preliminary Data Analysis and Reporting Plan-Qualitative Research Method-submit a preliminary qualitative data analysis and repo
Introduction According to agency theory, managers may have personal goals that compete with the goal of the institution or company they are running. Due to the imperfect labor and capital markets top managers seek to maximize their utility at the expense of the company. The need to expand rapidly and gain recognition among the top managers can lead to the manipulations (Bowie and Freeman, 1992) of…
The Construct surrounding Earnings Management.
While such actions are not per se specifically violations of the Generally Accepted Accounting Principles (GAAP), they may impact adversely on the accuracy of the information that may be drawn from financial statements. Two important elements that are identified by the definition are inextricably linked to the concept of earnings management – specifically, consequences and intent (Farag & Elias,…
Earnings Management: The Continuum from Legitimacy to Fraud
In understanding this phenomenon of earnings management, it’s important to have a wide overview of the legitimate managerial activities carried out in an entity and the fraudulent reporting that is spearheaded by accountants and the entire management of an organization. The management of earnings leans on the credibility of financial information which is adversely affected by legal or illegal…
Critique of Quantitative and Qualitative Research: Female Auditors and Accruals Quality
Speci?cally, we aim to assess whether and how female auditors affect the quality of ?nancial reporting. Behavioral differences between men and women form the basis of this study. Taking into consideration the presumption that there is the existence of gender-based differences in the process of cognitively processing information, diligence, conservatism, overcon?dence, and risk tolerance, Ittonen…