Financial Times: How to spot companies at risk of earnings manipulation

Dr Jenny Chu, University Lecturer in Accounting at Cambridge Judge Business School, comments on her new study on corporate earnings manipulation. The study says the power of a company’s CEO plays a role in the likelihood of earnings manipulation linked to consistently beating analyst forecasts. “You either come clean and say those expectations are too high, and suffer the price loss and reputation damage, or you use measures that are within GAAP (generally accepted accounting principles) and move into grey area,” Jenny says. (subscription).

Read the full article [ft.com]