Earnnings management Essay Example | Topics and Well Written Essays - 2000 words

Earnnings management - Essay Example earnings management plays a crucial role in determining the share prices of a listed company and also impact the direct allocation of resources buy the company in the capital markets. This paper is written with the aim of researching on the earnings management and reporting techniques, focusing on the big bath technique of earnings management. The main objective of the report is to understand the process of earnings management, especially the big bath technique of earnings management which is commonly used by companies and their managers to manipulate the reporting of the earning of the company. Earnings management is an important aspect of the financial management of any company. Earnings being crucial elements of the financial statements of a business, the evaluation and management of different types of earning are done by the management of any firm to ensure that the stock prices of the business remains high in the capital markets. There are many techniques that are traditionally a contemporarily applied for the management, manipulation and accounting of earnings in the financial statement publication of an enterprise. The study of the topic of earnings management and the much debated technique of earnings management and manipulation which is the big bath technique is critical in the contemporary corporate world. The management of earnings can have key influences on the political and regulatory structures of a country, the economic systems and prospects in the country and can also alter the functioning of industries as well as the investor groups of the business. Additionally, it may lead to crisis situations like financial downturns, extended low periods in the economic and business cycles and can also threaten the interests of the stakeholder groups of a business1. The use of manipulative techniques in earnings management can play a key role in misleading the investors and analysts in relation to the determination of the investment profile and investment