earnings management techniques

Jun 18th, 2015
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o Increasing income – managers adjust accruals to increase reported income o Big Bath – managers record huge write-offs in one period to relieve other periods of expenses or income minimisation o Income smoothing – managers decrease or increase reported income to reduce its volatility

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Unit 1Dimensions of international financeWhich make international finance different from domestic finance.Foreign exchange and political risko Foreign exchange riskForeign exchange rate is not fixedVolatility on foreign exchange affect international financialmanagementIt also affects on export and import management.o Political riskIt ranges from change in unexpected tax rule to outrightexpropriation of assets held my foreigner.Market imperfectiono Perfect market is characterized byPerfect mobility of resourcesPerfect information with zero costNo transportation costo In the real world we foundLegal restrictionDiscriminatory taxationTransportation costCost of informationo Market imperfection represented various impediments preventing marketsfrom functioning perfectly, play an important role in motivatingMultinational Companies to locate production overseas.Expanded opportunity seto Due to globalization firms venture into global market, they can benefitfrom expanded opportunity setIntegration of global resourcesCan locate production plant anywhere of the worldiRise funds from any capital marketHire employees from cheaper marketAdvantage of economic scaleGoal for international financial managementProfit maximizationo A traditional conceptPromotion of firms stakeholderso European countries like Germany and Franceo It

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