Date of Award
Bachelor of Science (BS)
College of Business
The main objective of this paper is to provide a review on why companies use earnings management and the benefits and consequences as a result. There is a large grey area between aggressive accounting and outright fraud and this paper focuses on narrowing down that area so companies know when to stop. General Electric is an example of a company that used earnings management to its advantage because they used it cautiously. However, there is the other side where earnings management started off small and ended up spiraling out of control like with Enron. This paper will examine both how Enron crossed the line into fraud which resulted in the largest U.S. bankruptcy at the time, as well as General Electric’s rather favorable experience with earnings management (Magrath and Weld 2002).
Robertson, Brett, "Enron vs. General Electric: Is Earnings Management Worth the Risk?" (2010). Honors Theses. 139.