In a Duke University survey of 400 corporate financial executives, two out of five said they...

In a Duke University survey of 400 corporate financial executives, two out of five said they would use legal ways to book revenues early if that would help them meet earnings targets. More than one in five would adjust certain estimates or sell investments to book higher income. Comment on the ethics of both of these statements by the financial executives in the Duke survey. at least 300 words

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Expert Solution

The first option wherein the financial executives express their intertest to book revenues early is completely valid in case of certain businesses and industries. Moreover, they have expressed their interests well within the legal purview and they have said that they would keep their revenue bookings as per the legal procedure. Therefore, there is no question of ethical misdemeanor in this respect.

The second proposition about adjusting estimates or selling investments to book higher income would be misguiding the present investors or prospective investors. Selling of investments or adjusting the estimates is simply an accounting tool which does not reflect the business value created by the operations of a company. It also does not provide any direction with repsect to the future prospects of the company. Therefore, this proposition can be considered as an ethical crime created by the financial executives of a company.

keosha answered 5 months ago

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