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Operations Management
Reported accounting earnings provide valuable information to investors, lenders, and regulators. Reported income is also important for executive bonus. Yet, within the structure of GAAP, managers can use judgment in computing accounting earnings and in structuring transactions. In other words, managers can engage in earnings management. What safeguards can be used to reduce or preventing harmful earnings management intended to mislead investors and the market?

Reported accounting earnings provide valuable information to investors, lenders, and regulators. Reported income is also important for executive bonus. Yet, within the structure of GAAP, managers can use judgment in computing accounting earnings and in structuring transactions. In other words, managers can engage in earnings management. What safeguards can be used to reduce or preventing harmful earnings management intended to mislead investors and the market?

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Reported accounting earnings provide valuable information to investors, lenders, and regulators. Reported income is also important for executive bonus. Yet, within the structure of GAAP, managers can use judgment in computing accounting earnings and in structuring transactions. In other words, managers can engage in earnings management.

What safeguards can be used to reduce or preventing harmful earnings management intended to mislead investors and the market? 

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