Evaluate the environmental factors that contribute to corporate management’s need to manage corporate earnings to align with market expectations, indicating the potential long- term risks to financial performance and sustainability.

“managing corporate earnings” please respond to the following:

Due to external factors, corporate management often tries to achieve market-based earnings. This can be influenced by macroeconomic conditions or investor sentiment. These factors can also impact financial performance. Companies may adjust earnings to achieve targets, or to stay competitive in a changing market environment due to changes in investor sentiment and market trends. Companies may manipulate the figures they report to look more appealing due to macroeconomic uncertainties such as recessions, trade wars, or other economic uncertainty.

The regulators might also have an influence on how corporate management reports its financials in order to protect themselves from retribution. This practice of “creative accounting” has the potential for long-term risks if not managed properly as it could lead to inaccurate projections leading investors astray while also creating an environment that encourages manipulation instead of transparency which is essential for ensuring capital markets continue functioning efficiently.

It is crucial for corporate managers to understand the environmental factors that could impact the management of corporate earnings. This will allow them to better manage any issues and prevent them from becoming bigger problems later.

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