Study: One in Five Firms Misrepresent Earnings

Just a brief note, but worth passing on. From CNBC.com:

A study by four prominent business school professors on earnings quality shows that ‘managed’ earnings are not a figment of short-seller imaginations.

In this case, the fudging relies on tools available in the gray area of Generally Accepted Accounting Principles to make results look better than the underlying business really is...

More to the point, according to the study... About 20 percent of firms manage earnings to misrepresent their economic performance.

I'm actually surprised the number is that low...

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