Earnings management: Origins

This chapter seeks to describe the field of inquiry by defining the concepts of earnings quality, earnings management, fraud, and earnings manipulation. It presents the earnings management phenomenon, specifically, from whence it comes. It reviews the mainstream studies, and focuses on two types of earnings management: accruals earnings management and real activities earnings management. In addition, studies related to fraudulent financial reporting (or non-generally accepted accounting principles, i.e. non-GAAP earnings management) will be presented and discussed as well. Furthermore, this chapter presents studies on managerial incentives for earnings management. The most important incentives (or causes) for managing earnings are discussed and the contradictory results provided by some of them highlighted. Finally, a few offsetting causes that may interfere with these main incentives for managing earnings are presented

Law and economics of the European multilingualism

The economics of language applied to multilingualism in the European Union (EU) has only recently come to the fore. Languages economics and Law and Economics disciplines both emerged in the 1960s. However, no study has, hitherto, linked these disciplines. This paper intends to fill that void. Language barriers are the last major remaining barriers for the EU’s ‘single’ market. The lack of coordination of multilingualism in the EU stems from a taboo crystallized by a dilemma between economic efficiency and linguistic diversity—i.e., the maximization of wealth versus the maximization of utility. The EU Member States (MSs) do not hasten to coordinate their language policies at the EU level inasmuch as they overestimate the benefits of the current EU multilingualism while drastically underestimating its costs. Coordination shall occur when MSs evaluate the costs and benefits of the current EU multilingualism. This will uncover the aforementioned dilemma, that will only be resolved when both Law and Economics are applied. In pursuing this objective a “Linguistic Coase Theorem” adapted from the work of Parisi and the Nobel Prize winner, Ronald Coase is elaborated. Having outlined the basic notions deriving from the EU Law of Languages and the Economics of Languages (Introduction), the paper scrutinizes the costs and benefits incurred by the current non-coordinated EU multilingualism (Part I). Subsequently, a ‘Linguistic Coase Theorem’ is elaborated in order to reach a Pareto-optimal outcome, thereby solving the dilemma—both economic efficiency and the linguistic diversity being enhanced (Part II)