Up to 20% of companies manipulate their earnings to misrepresenttheir economic performance, according to a studyby professors at Emory and Duke. Compliance Week reportsthat a majority of the 170 CFOs surveyed by the researchers believecompanies manage earnings to influence their stock price or toavoid consequences for senior executives under pressure to hitearnings targets. Two-fifths of CFOs said they believe more than15% of companies manage their earnings, and more than 99% of CFOssaid that at least some companies do.

The Securities and Exchange Commission cracked down on managedearnings in the 1990s. According to the study, the most commonindications of the practice are persistent deviations betweenearnings and cash flow, numbers that vary widely from what similarcompanies are reporting and large changes in accruals. To improvethe quality of reported earnings, the CFOs surveyed suggested thatthe Financial Accounting Standards Board impose fewer rules andmerge U.S. GAAP with international accounting standards.

For the full story.

Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.

  • Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM websites including PropertyCasualty360.com and Law.com.

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.