Electronic Case - Earnings Management? Who, Me?

Earnings Management

It is an often debated contention that managers have the power, within GAAP, to manipulate earnings. The objective of earnings management is to provide investors with a smooth, regular, hopefully increasing pattern of reported earnings.

Questions:

1. Describe some of the methods managers might use to manage reported earnings.

2. Compare your answers with the methods described in a Fortune magazine article located here. According to the author of the article, how do the following companies manage their reported earnings:

a. Microsoft

b. General Electric

c. Coca-Cola (A Wall Street Journal article located here provides move information about Coca-Cola.)

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