Reasons of manipulation of reported earnings by Managers:-

1) To create artificial goodwill of a business organization.

2) To have good incentive amount because the incentives payments of managers are directly linked with the company's profits, thus management shows higher profits of the company resulting in good incentive / bonus amounts to them.

3) To manage the price of share of company especially during short-run period.

4) To attract the investors so that they invest in the company because often investors take good profits of company as one of the base of their investments.

Has there been any on the issue of systematic over reporting of earnings? What are potential dangers to the economy that could arise from this issue?

5) To minimize tax liability of company.