Stakeholder Influence on Earnings Management: Ethical Considerations and Potential Avenues
Corporate Ownership and Control, Vol. 13 (2016)
31 Pages Posted: 21 May 2015 Last revised: 14 Mar 2016
Date Written: March 12, 2016
Financial reports are a major bonding agent in (prospective) firm-stakeholder relationships. Therefore, earnings management might induce stakeholders to accept terms of trade which they would have not, knowing the true situation. The issue becomes even more complicated and potentially conflict-laden if some stakeholders would possess the ability to influence firms' earnings management behavior and exploit this at the expense of others. Four generalizable avenues of potential stakeholder influence are presented.
Keywords: Stakeholder theory, Earnings management, Ethical implications
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