Earnings management and the quality of the financial reporting

• Authors: Ingrid Shuli
• Languages of publication: EN

Abstracts

EN

During the last time in the development of the financial reporting and frauds there have emerged several problems related to the quality of several indicators on the financial statements and especially the quality of the earnings indicator. According to the literature on the financial reporting it results that companies have the possibility to smooth earnings or manage earnings as a tool to avoid reporting a loss. While the economic entities are using the national and international accounting standards, the working practice of accountants/auditors shows episodes of the management of the earnings. One of the conclusions of this paper is that there is not enough information among accounting professionals regarding the practices of the earnings management. One of the recommendations is to include issues of fair and ethical reporting in the modules of the faculty of economics especially on the master level. Based on the many studies of this issue in other countries, this paper will show if this phenomenon is known in Albania and furthermore how important it is for the quality of the financial reporting in Albania. In order to achieve this objective it has been done a review of related studies. Because of the new legislation on the financial reporting being implemented in our country the recommendations of this paper may be valuable to the enforcement of the accounting standards mechanisms.

Keywords

EN

earnings quality; reporting quality; earnings management; earnings smoothing; accounting quality

Discipline

• ECONOMICS: ECONOMICS

• Publisher: Prague Development Center, Czech Republic
• Journal: Perspectives of Innovations, Economics and Business
• Year: 2011
• Volume: 8
• Issue: 2
• Pages: 45-48

Dates

published

2011-08-12

Contributors

author

Ingrid Shuli

• Faculty of Economics, Accounting Department, University of Tirana, Albania

• Prague Development Center, Czech Republic

References

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• Burgstahler, D., and Dichev, I., 1997. “Earnings management to avoid earnings decreases and losses,” Journal of accounting and economics, 24, pp.99-126
• Giacomino, D., Bellovary, J., Akers, M., 2006. “The ethics of managing short-term Earnings: Business managers and business students rate earnings management practices - implications for academia,” July, Vol.3, No.7, pp.57-70.
• Revsine, L., 1991. “The selective financial misrepresent-tation hypothesis,” Accounting Horizons, December, pp.16-27
• The Economist, 2001. “Taking the measure: Economic focus,” November 24, 2001, p.72.
• Warren Buffett's management secrets: Proven tools for personal and business success, 2009

Identifiers

DOI

http://dx.doi.org/10.15208/pieb.2011.28