Chief financial officers on average believe a little more than 18 per cent of public companies misrepresent their economic performance, according to a recent survey by Emory and Duke University researchers (h/t WSJ’s Francesco Guerrera).
The survey ‘s 169 CFOs also said outside observers find it hard to unravel earnings management, especially when such earnings are managed using real actions.
They also said 10 per cent of firms misrepresent their earnings statements.
Here are the motivations they found companies would do so:
And here are the ways they said you can spot junk earnings reports: