Impact of Highly Valued Equity on AEM & REM on Distressed and Non-Distressed Firms.

Abstract

High valued equity gives serious incentives for a manager to report earnings that do not let down the market. Soon after the characterization as highly valued and contrasted with firms with less outrageous valuations, highly valued firms have fundamentally higher participation in earning management and show a more articulated positive relationship between earning management and intermediaries for the probability of neglecting to meet earnings targets. The thesis will provide the stake holders a in depth picture of the impact that High valued equity would have on real earning management and accrual earning management done by the managers of the distressed and non-distressed firms. This will give a clear picture of how managers alter the financial statements of the firms by using different types of earning management techniques. The stakeholders would be well aware of their involvements in such firms in the coming times answering the question if they should have some stakes in the firm or not? The analysis is very un-biased and solely based on the financial statements of non-financial firms. All of these provide good financial services but the motive is to present the actual and true pictures of these firms to make the decisions easier for the users. The study concludes that managers of financial distress companies conduct more earning management mainly real and accrual earning management as compare to non-distressed firms.