Can financial crisis affect earning management practices?

 Can financial crisis affect earning management practices?

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 financial crisis has long been seen as a way for governments to cut taxes and increase the debt of their citizens, which forces industries to lay off employees. However, this is not always the case, as those in power also resort to cutting back on government support such as healthcare, education and even unemployment benefits.

The biggest problems with this kind of financial crisis is that while it does cause job losses and other adverse effects, sometimes they are so severe that governments resort to nationalization of sectors as a way to keep up. This can lead to large companies becoming bankrupt while many others continue to operate through different means. There has been a lot of discussion about whether or not these types of countries should have done away with nationalized industries due to the costs caused by them and how they could be better managed. In addition, there have been arguments about whether these economies should become more open so that jobs are created on both ends of the spectrum.

But what happens when this type of monetary policy comes to an end? For example, when interest rates shoot up, it doesn’t mean that banks are no longer lending money to people, instead they become worried that they are going to run out of cash if this continues. If you ask me, I would much rather see a country where everyone is employed than one where the economy is flooded and only the most fortunate individuals are getting the best job possible. The main reason for this would be that the government would eventually have enough money to give all its citizens jobs, as they would be able to pay their own workers enough due diligence and hard work. Unfortunately, during times of economic downturns, the government loses control of many businesses. These types of industries don’t get paid because the government makes them pay. It then becomes pretty difficult for any business owner to make enough money to meet their demands. As a result, businesses tend to close down or take a step away from being around to avoid failure. But where do they go to borrow money to help buy whatever else they need.

So what happened after the big crash? Well, we now know who some of the top executives are (and how they made their fortune) but have we ever actually had a chance to look at some of the top earners in corporate America? And have we ever had a good idea of how salaries compare?

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f you Google employee reviews for Fortune 500 CEOs, you will find almost 1,200,000 ratings in less than two years! While some of this information may be outdated, this is still very surprising. People who earn their living off stock options can command hundreds of thousands of dollars per year per annum. Companies like Warren Buffett and Peter Lynch have earned billions of dollars in returns over the past few decades. This is often known as “gainsharing” as well as other ways to make money by buying and selling shares in company, which in turn takes a huge amount of money from the shareholders. By keeping your wealth hidden and avoiding your taxes, it allows you to save money on your company's debts, especially when stocks go down and you have fewer funds to invest in growth opportunities.

This is great, but one question arises…how can these billionaires afford their huge salary? Why can't most Americans make six figures a year? Why is it that Warren Buffett is not making more money? What has gotten him so rich? How did Buffett build his massive success? What strategies are he using? Is it just luck? Or is it something more? If you read the book, Hard Knock Living, by Gary Taubes, you would think that Buffett did not have a choice when he decided to write the books. He was born into a poor neighborhood in Flint Michigan. His parents, Joseph R. Buffett and Jeanette L. Simon, grew up without access to high-end education like the vast majority of American families. So while he spent many years studying in school, he never got a chance to develop an interest in finance. When he was 18, he dropped out of college and went to work. At first, he quickly fell victim to the depression that led to the breakdown in his marriage because of his unhappiness. During this time, he worked as a bartender and took a lower paying job. After a while he realized he needed to get some serious money to pay for his wife, kids and rent. That's when he realized the problem with writing the books; writing these books would allow him to set prices for the books himself. By doing so, he would raise money for his family, but he also wouldn’t have to depend on the federal income tax bracket. Buffett wanted to change the lives of the average person in America, and to do that, the first thing he asked himself was “how do I help people?” That’s exactly why he started investing. Since then, these self-made men and women have made approximately $100 billion annually in return, but the real meaning of the word “earnings” is really different than you might imagine. Earnings do not relate solely to profits; earnings also involve how much more than one earns. The highest paid executive can now rake in upwards of $400 million per year.

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hese top level executives are paid in equity, which means they receive compensation from the owners of their corporation. Equity can be likened to stocks, except that when dividends are paid, the income received goes directly into the corporations, so there would be nothing left in the corporation. With this being said, it’s important to note that while equity will be part of your total compensation package, dividends can either be ignored entirely on your account or deducted based on your income. As mentioned earlier, Buffett is a billionaire, and it's common knowledge that he enjoys dividends. As a result, Forbes reports that after 2016, Berkshire Hathaway Inc. issued $4.6 billion in quarterly dividends, giving Buffett an estimated annual return of 4.6 percent. It’s clear that Buffett likes dividends, and that he is indeed a smart businessman and knows how to maximize his dividends. Because of Buffett’s immense salary, he owns quite a bit of stock in Berkshire Hathaway and other publicly traded companies. Not only that, but Buffett owns roughly 70% worth of his private foundation, called the Buffett Partnership Fund. According to Forbes, he is currently worth as little as $1.7 billion and the net worth of Berkshire Hathaway is approximately $13 billion. Even though he is a billionaire, Buffett is not exempt from taxes, having recently bought a house for $6.3 million in Florida, according to CNBC.

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s far as we know, Buffett made $2.25 billion during his last quarter and paid $1.05 on capital gains. One thing I learned from reading the Berkshire Hathaways Annual Report, is that Buffett owns 60% of Berkshire Hathaway, so the remaining value is held by his sister and her husband, Jeffery Buffett, and he only holds 5%. This is something Buffett didn’t expect to happen when he purchased his property. You see, Buffett originally bought his home. He thought he would grow things to sell, sell them, and gain income instead, thus reducing his value because of his low profit margin. Luckily enough, for Buffett, his business has helped put up the rest of his income in recent quarters, which has enabled him to purchase another place to live. Now Buffett is worth an estimated $50 billion, but the numbers aren’t looking so impressive. Most of the money that Berkshire Hathaway pays out is based on the value of assets that Berkshire Hathaway provides. This value is calculated by subtracting income from expenses, dividing income by sales while adjusting for depreciation or amortization, and adding interest expense to revenue. Then, dividends are added where Berkshire Hathaway sells the land, buildings and franchises, and the net results are reported. All of these numbers add up over the course of hundreds of millions annually, including Berkshire Hathaways share of assets, such as the S&P 500 Index, that it manages. Some of the best estimates of Berkshire Hathways fiscal year 2017 income comes from Bloomberg Business Week's calculations, which showed that Berkshire Hathaways fiscal year income came in at nearly $16.3 billion. Last month the firm reported that it had completed 2019 with income of $14.9 billion, up 12.7% over the previous year, making it by far the largest public company on Wall Street.