Question: Long response questions: from Dunmore (2008) and Forager (2013) online at:
https://foragerfunds.com/bristlemouth/bristlemouthdick-smith-takes-bath-comes-out-nice-and-clean/
Required: 1. Outline why management may be motivated to manage the earnings of their company.
2. Outline the evidence provided by Dunmore to support his argument regarding earnings management, particularly around the division between accounting losses and accounting profits.
3. Identify the options that firms use to manage earnings.
4. Discuss whether earnings management is an ethical practice.
5. Forager (2013) notes that Dick Smith "takes a bath". Explain why and how this was done. Discuss the role that this instance of earnings management had in the collapse of Dick Smith Group.