Description
- Evaluate the environmental factors that contribute to corporate management’s need to manage corporate earnings to align with market expectations, indicating the potential long- term risks to financial performance and sustainability.
- Assess the ethical complexities related to managing corporate earnings, determining whether or not investors and stakeholders are accepting of this behavior. Assuming that you are in a position to make corporate financial decisions, how likely are you to engage in earnings management and why?
- Please provide one citation/reference for your initial posting that is not your textbook. Please do not use Investopedia or Wikipedia.
Explanation & Answer
Attached.
Factors Contributing to the Corporate Earning’s Management
It has been assumed in management theories that the usual goal of any corporation is to
maximize its profitability which is subject to various constraints. Though the most important
factor that offers financial resources to the corporations’ operations are the shareholders there are
other variations that affect its profit maximization. According to the study, there are now
companies that integrate environmental as well as social issues which theoretically assumed that
it will not be sustainable compared to companies that are not civic-minded (Eccles, et.al., 2014).
However, based on the evidences gathered in the study it revealed that groups with High
Sustainability outperform the group of Low Sustainability suggesting that corporations can
integrate environmental as well as social pol...
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