Truthfulness in Financial Reporting
LBS Management Review. 1999.4:1
30 Pages Posted: 12 Jul 2014
Date Written: 1999
This paper studies the ethical issues related to truthfulness that arise in connection with the preparation of financial reports by business organizations. After exploring in some detail the context in which financial reports are prepared, the paper puts forward six ethical norms relevant to the preparation of financial reports and in their light discusses specific issues such as year-end window dressing, earnings management, profit smoothing, provision of opaque financial statements, off-balance-sheet financing, choice of depreciatio periods, undervaluation of assets, the kitchen sink approach and accounting policies that consistently tend to overestimate or underestimate results.
Keywords: Financial reporting, Window dressing, Earnings management, Accounting ethics, Corporate governance
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