Financial_Transparency_and_Earnign_Management - Financial...

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Financial Transparency and Earning Management Running Head: Financial Transparency and Earning Management Name: University: Course: Tutor: Date: 1
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Financial Transparency and Earning Management In every business setup, the aspect of reporting financial results in an adequate manner is one of the management aspects of a firm. In all cases such report should be based on standard financial requirements where accuracy and validity should highly be monitored. Business finance includes both costs and revenues. The health of the business is determined by the strength of these two components. However, there has been indifference in the understanding between the current period studies and the prior studies on the understanding of the relationship between transparency in reporting and management of earnings. Formerly, greater transparency has been viewed as a contributor to developing earnings management. However, in the current period greater transparency in cases of firms with big incomes will reduce their chances of earning management if the firm engages in such great transparencies. (Hunton, Libby, Mazza, 2006) Following the results got from their financial report in relation to their transparency, firms will regulate their financial strengths through varied ways. Where a firm has fewer earnings than expected, it will sell its securities to achieve such an income deficit and the opposite is true for firms with high income. For huge financial reporting however, transparency is geared towards the reductions in the decreasing or increasing income earning management to ensure that financial report forecasted is what is actually achieved. Method of investigation In the investigation regarding the relationship between transparency in reporting and earning management, this has been achieved through the authors study on how the users of these results behave towards the aspect of earnings management 2
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This note was uploaded on 03/02/2011 for the course BUS 500 taught by Professor Dr.spitz during the Spring '11 term at Deep Springs.

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Financial_Transparency_and_Earnign_Management - Financial...

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