Moreover, management’s bonuses
might be earnings-based also in some private companies. As in public firms they
constituted a relevant incentives for managers to manipulate earnings, whereas
shareholders have a clear interest in obtaining non manipulated numbers. Finally,
in the settings where earnings reported in financial reports are the basis for
determining tax obligation, management/shareholder would like to pursue tax
saving objectives, whereas fiscal authorities have an interest to obtained high
quality accounting numbers.