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Strategy

A Survey of Investor Relations and Earnings Guidance

A survey of financial statement preparers revealed that as a company gets larger, the scope of its investor relations and earnings guidance increases.  However, the perceived frequency of accrual earnings management decreases.  The tone at the top can influence the quality of financial reporting.  At companies where an earnings miss is considered a big deal, there is a perception that earnings management is more likely. This report explores whether pressures imposed on executives to meet guided estimates encourage either of two types of earnings management, the so-called real earnings management and accrual earnings management.