Earnings Management:

Question

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Earnings management refers to the manipulation of a company's financial statements to meet predetermined targets or expectations. It's not always illegal, but certain methods used to manipulate earnings can be illegal or unethical. The timing difference between cash and accrual accounting is often exploited by managers to manage earnings. While earnings management is not always bad for shareholders, it can be when it is used to misrepresent a company's financial performance or hide underlying problems.