12/9/2008

Executives of companies making a variety of products use marketing as a basic tool of earnings management, says Craig Chapman of the Kellogg School. Past studies suggest that firms cut marketing expenditures to boost their earnings report, but Chapman's research finds that soup makers double up on their marketing effort at the end of the fiscal year and after periods of poor financial performance, offering discounts that can help them meet targets but that also harm long-term profits.

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Kellogg Insight

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