Essay about Accounting Frauds And Its Impact On The Accounting History

715 Words Nov 11th, 2014 3 Pages
In recent years,some of the most maximal accounting frauds in history has occurred, leading to the well-known upheaval in the accounting history and be legal and supervised changes. These matters have left lawmaker, regulators, medicinal , and scholars searching for causes of these accounting frauds. Understanding the basement forces that gave ascending to these frauds is a necessary forerunner to effectively preventing future occurrences to happen. Many have suggested that the explanation lies in the award and chances for personal earnings faced by executives. One of the awards that managers might be replying to is the increase in the scale of their wealth that is tied to stock-based claimant and the lead to equity holdings for everyone. A excessive body of academic thing, beginning with Jensen and Meckling[1976], shows that these plans can be useful to encourage the benefit of managers with those of shareholders. Nevertheless, every sword has two edges, there are others that different view points. Some argue that options are an inefficient way to compensate managers (Jenter [2001], Meulbroek [2001], and Hall and Murphy [2002]), that managers use option grants for their own profit (Aboody and Kasznik [2000], Yermack [1997]), or that stock options do not exhibit empirical relations consistent with the economic motivations behind granting them (Yermack [1995]).

Accounting fraud is appear with the disclosure of financial misdeeds by believed…

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