Managers of firms using accounting manipulations to inflate current earnings are likely to generate long-term benefits to the shareholders of the firm.

Question

Quizplus · Accepted Answer

Managers who manipulate accounting figures to inflate earnings may have short-term positive effects on stock prices, but in the long run, such practices can damage the reputation and financial stability of the firm, resulting in negative effects on shareholders. Moreover, if the manipulations are caught, the firm may face legal consequences and loss of investor trust, which can further harm the shareholders. Thus, accounting manipulations are not a sustainable or ethical approach to create shareholder value.

Managers of Firms Using Accounting Manipulations to Inflate Current Earnings