Decisions, decisions: what motivates managers to choose certain policies and methods?

Article Abstract:

Managers enjoy the freedom of choosing the appropriate accounting policies and methods for their firms. To provide illumination on how managers choose the right accounting approaches, researchers examine earnings management to find out if managers use accruals to accomplish their interests. For this purpose, they need to determine the discretionary component of accruals because these represent managerial interventions into the financial reporting process. Based on previous studies, managers use earnings management to reduce political costs, cut financing costs or optimize their personal wealth and well-being.

Research, Executives, Financial management

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Never say never

Article Abstract:

Using 'nonrecurring charges' in financial reports can help manipulate corporate earnings. Although a decrease in corporate earnings has often been attributed to nonrecurring charges, the growing regularity of the use of these charges is believed to seriously impair the quality of earnings. Five accounting 'gimmicks' that are supposedly being used to manage earnings are presented. In Canada's accounting standards, firms are not required to report nonrecurring items.

Reporting & Disclosure, Standards, Analysis, Canada, Accounting and auditing, Corporation reports, Company reports

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