During the 1990s, GTR Corporation put together a long string of consecutive quarters in which the firm managed to meet or beat the earnings forecasts of Wall Street stock analysts. Some skeptics wondered if GTR managed earnings to meet Wall Streets expectations, meaning that GTR used accounting gimmicks to conceal the true volatility in its business. How do you think GTRs long run of meeting or beating earnings forecasts affected its cost of capital? If investors learn that GTRs performance was achieved largely through accounting gimmicks, how do you think they would respond?
During the 1990s, GTR Corporation put together a long string of consecutive quarters in which the...
During the 1990s, GTR Corporation put together a long string of consecutive quarters in which the firm managed to meet or beat the earnings forecasts of Wall Street stock analysts. Some skeptics wondered if GTR managed earnings to meet Wall Streets expectations, meaning that GTR used accounting gimmicks to conceal the true volatility in its business. How do you think GTRs long run of meeting or beating earnings forecasts affected its cost of capital? If investors learn that GTRs performance...
od OT P9-21 ETHICS PROBLEM During the 1990s, General Electric put together a long string of consecutive quarters in which the firm managed to meet or beat the earnings fore- casts of Wall Street stock analysts. Some skeptics wondered if GE "managed" earn- ings to meet Wall Street's expectations, meaning that GE used accounting gimmicks to conceal the true volatility in its business. How do you think GE's long run of meeting or beating earnings forecasts affected its cost of...
Motivation for Earnings Management Earnings Guidance During the 1990s and early 2000s, meeting or beating analysts’ earnings expectations emerged as an important earnings benchmark. Bartov et al. found that the stock market has been found to award firms that meet or beat analysts’ forecasts and punish firms that miss earnings targets. Meeting or beating earnings through earnings and expectations management has drawn concerns over the integrity of managers. For instance, an analysis of Nortel Networks Corporation by Fogarty et al....
CASE 20 Enron: Not Accounting for the Future* INTRODUCTION Once upon a time, there was a gleaming office tower in Houston, Texas. In front of that gleaming tower was a giant "E" slowly revolving, flashing in the hot Texas sun. But in 2001, the Enron Corporation, which once ranked among the top Fortune 500 companies, would collapse under a mountain of debt that had been concealed through a complex scheme of off-balance-sheet partnerships. Forced to declare bankruptcy, the energy firm...
Read about Cokes strategy in Africa in the article below and discuss the ethics of selling soft drinks to very poor people. Is this an issue that a company like Coke should consider? Africa: Coke's Last Frontier Sales are flat in developed countries. For Coke to keep growing, Africa is it By Duane Stanford Piles of trash are burning outside the Mamakamau Shop in Uthiru, a suburb of Nairobi, Kenya. Sewage trickles by in an open trench. Across the street,...
Case: Enron: Questionable Accounting Leads to CollapseIntroductionOnce upon a time, there was a gleaming office tower in Houston, Texas. In front of that gleaming tower was a giant “E,” slowly revolving, flashing in the hot Texas sun. But in 2001, the Enron Corporation, which once ranked among the top Fortune 500 companies, would collapse under a mountain of debt that had been concealed through a complex scheme of off-balance-sheet partnerships. Forced to declare bankruptcy, the energy firm laid off 4,000...