Avoid reporting losses or meet analysts forecasts (share price reaction, reputation, legal); excessive writeoffs; smooth or growth; inside info; income smoothing, big bath. Don"t accept securities market efficiency; too much reduces usefulness. Earnings management: the choice by a manager of accounting policies or real actions affecting earnings so as to achieve some specific reported earnings objective. Accounting policy choices (e. g. , straight line sv declining balance, revenue recognition) and real actions. Discretionary accruals: credit losses, warranty costs, inventory values, and timing and amounts of low persistence special items like writeoffs, provisions for restructuring. Corporate governance, securities managerial labour markets, standard setter, securities commissions and courts. Ch9 single period; look at multiple periods here. Wolfsons (1985) oil and gas limited partnerships section 10. 2 reputation effects reduce but dont eliminate moral hazard problems. Multi period increases earnings management it also operates to constrain practice. Real variables: advertising, r&d, maintenance, timing of purchases and disposals of capital assets, stuffing channels, overproduction.