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Refer to Theory in Practice 11.2, Concerning General Electric Co. (GE). In Particular, consider the strong negative market reaction to lower reported earnings in
Refer to Theory in Practice 11.2, Concerning General Electric Co. (GE). In Particular, consider the strong negative market reaction to lower reported earnings in April 2008. Required: 1. Why did GE's share price fall? 2. Suppose that GE had adopted Mr. Welch's urging to report increased earnings this quarter. Would this have been consistent with its reputation for good earnings management? Explain why or why not?
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