Nichols and Whalen (2004) replicate and confirm the results of a study by Bernard and Thomas (1989) that seems to indicate that the capital market response to quarterly earnings announcements disregards systematic components of earnings that should not be disregarded if the market is efficient. Meanwhile, Nelson et al. (2003) and other groups of researchers have demonstrated that corporate managers manipulate accounting data while acting in their own self-interest. Assume that at least part of the markets failure to respond fully to earnings is due to managers manipulation of accounting information. What steps can regulators take to address this situation? Include in your discussion the overarching goal of financial reporting presented in SFAC8, chapter 1 as well as your perceived benefits and drawbacks to having more or less rigidly uniform financial reporting rules (see Wolk et al, 2013, Ch. 9).