EARNINGS MANAGEMENT Definition

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EARNINGS MANAGEMENT occurs when managers use judgment in financial reporting and in structuring transactions to alter financial reports to either mislead some stakeholders about the underlying economic performance of the company, or to influence contractual outcomes that depend on reported accounting numbers.

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REPORTED EARNINGS PER SHARE is the earnings per share after profit owed to preference shareholders or minority interests is subtracted, i.e. it is the profit that actually belongs to the ordinary shareholders.

INTEREST ONLY (IO),in securities, is the interest only portion of a stripped mortgage-backed security. For IO securities, all of the interest distribution is due to the registered holder based on the current face value of the underlying mort­gage-backed security.

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