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16 December, 05:59

An overstatement of earnings can inflate a company's stock price and may also be used to:

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  1. 16 December, 07:45
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    If a company overstates their earnings, it will also likely increase the upper management's bonus amounts at the end of the year. When the public realizes that the earnings are overstated, it's likely that the stock will drop significantly due to accounting fraud.
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