Managers of firms that use alternative accounting techniques to inflate current earnings are likely to generate long-term benefits to the shareholders of the firm.

Question

Quizplus · Accepted Answer

Managers who use alternative accounting techniques to inflate current earnings may generate short-term benefits, such as increased stock prices and higher bonuses, but this comes at the expense of long-term shareholder value. By manipulating earnings, the company may be seen as less stable and less attractive to investors in the long term, leading to lower stock prices and decreased shareholder value. Additionally, such practices may lead to regulatory scrutiny and potential legal consequences, which can also harm long-term shareholder value.

Managers of Firms That Use Alternative Accounting Techniques to Inflate