Managed earnings

Managed earnings occur when the managers of a business falsely manipulate reported profit levels. The manipulation is usually designed to increase profits, perhaps to improve the stock price of the business or to qualify it for a loan. Earnings may also be adjusted downward in order to reduce the tax burden of the business. Earnings can be managed in many ways, such as by accelerating or deferring revenue recognition, adjusting expense reserves, and capitalizing expenses.

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