The ethics associated with earnings management decisions

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Ethics in Earning Management Name Institutional Affiliation Ethics in Earnings Management The term ‘earnings management’ describes a type of financial management which seeks to manipulate finances in a manner which positively impacts the company image. The act leads to a breach in the integrity of the accounting process. Distortion of company documents may occur in the managerial chain or through the accounting department. The aim is to give the company an increased advantage when statistics are available for investors and other stakeholders to view. Clearly, the whole process damages the credibility of the financial statement and may be punishable under the corporate law of any country in the world. The crime could be an international crisis if the impact transcends national boundaries CITATION Vla14 l 1033 (Vladu & Cuzdriorean, 2014). Conversely, the deed aids in accomplishing the goals set out in tax planning and minimize operational budget. Further discussion on the morality of the situation proves that earning management is unethical and creates legal problems in the end. Additionally, newly-hired accountants face a huge challenge struggling to obey the chain of command while respecting the rule of law. Senior accountants and other high ranking managers are familiar with earnings management. They push law-abiding accountants and other personnel to accept and practice unethical behavior; the whole alteration of documents improves the company imageCITATION Rah13 l 1033 (Rahman, Moniruzzman, & Sharif, 2013). Earnings management could be deleterious to the company in future because the management loses track of the real financial status. In fact,

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