Research indicates that earnings management techniques are always used to make companies more profitable, and never to make them look less profitable.

Question

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Research has found that companies may use earnings management techniques to make themselves appear less profitable in certain circumstances, such as when they want to reduce tax liabilities or signal to investors that they have room for improvement. However, the primary use of earnings management techniques is to boost reported profits and meet or exceed analysts' earnings expectations.

Research Indicates That Earnings Management Techniques Are Always Used to Make