Question
Gowthorpe and Amat (2005) argue earnings management is morally reprehensible. If earnings management is regarded as morally reprehensible, explain why very strict accounting standards are not applied and enforced by the regulators. If you are a manager of a superannuation fund investing in shares in the retail and property sectors, discuss the issues you may face when using financial reports subject to earnings management. Given earnings management is regarded as morally reprehensible explain why managers are still motivated to manage earnings?