盈利质量和盈余管理(1).docx

盈利质量和盈余管理(1).docxEarnings Management and Earnings Quality
What is Earnings Management? (Bryan Hall's Webpage)
Earnings management is def it distorts the information in a way that it less useful for predicting future cash flows. Within the Conceptual Framework, useful information is both relevant and reliable. However, earnings management reduces the reliability of income, because the income measure is biased (up or down) and/or the reported income that is not representationally faithful to that which it is supposed to report (., volatile earnings are made to look more smooth).
The term quality of earnings refers to the credibility of the earnings number reported. Companies that use liberal accounting policies report higher income numbers in the short-run. In such cases, we say that the quality of earnings is low. Similarly if a nonrecurring gain increases income, but the gain is obviously not sustainable, then the quality of earnings is considered low.
For the markets to work efficiently, it is vital that investors be able to trust the earnings numbers of the companies in which they have chosen to invest their capital. Recent studies have shown that the investing public believes that the occurrence of earnings management is both widespread and pervasive in the financial statements of corporations worldwide. However, it is interesting to note that the investing public does not necessarily view minor earnings management as unethical, but in fact as a common and necessary practice in the everyday business world. It is only when the impact of earnings management is great enough to affect the investors
9 portfolio that they feel fraud has been committed.
The Impact of Earnings Management
Public perception about the widespread occurrence of earnings management is affecting the public's confidence in external financial reporting. The practice of earnings management damages the perceived quality of reported earnings over the entire market, resulting in the belief that reported ear