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Lastly, It Shall Study The Accounting Standards Adopted By The Uk And Us To ...

Lastly, it shall study the accounting standards adopted by the UK and US to compare which one is more prone to accounts manipulation.
Chapter 3 shall outline the various methods considered and chosen for the development of the current study.
Chapter 4 is an analysis of the data collected and evaluated from the researcher's point of view based on the expertise of the scholars discussed in the Literature Review.
Chapter 5 shall conclude the findings, and offers some recommendations to resolve the issues outlined in the objectives.

Chapter 2 Literature review
Overview
An efficient capital market is one that allows prices to shift rapidly in response to the latest information because public information is conveyed efficiently, interpreted and analyzed to make effective decisions. Disclosure therefore is an obligation imposed by law to facilitate market performance. Companies are obligated to provide information so that investors and the public can interpret information to participate in the market decisions. Professional ethics is relegated through understanding among accountants, auditors, management and executives on the premise that the market is entitled to receive full accounts and reports of companies' performance as per regulatory authority. The form and content of the individual or consolidated accounts is regulated by the company law and by accounting standards issued to the accounting professionals and auditors. However, sometimes publicly traded company financial position becomes tradeoffs due to limited liability, losses and performance pressure. Any compromise in their performance results in negative market reaction, as they are bound by standards and targets set by the public. This kind of market behaviour force companies to resort to unethical practices (Ferran 1999).
Alternatively, when regulations change in response to the demand of the market, companies have to reshuffle their internal systems to comply with them. The preparation of accounts in accordance to applicable accounting standards often conflict with the company's standards and values. New accounting information requirements and standards are often viewed with apprehension as they put pressure on the statutory requirements. For example the Listing Rules of the London Stock Exchange require annual reports and accounts of companies to contain additional information. The changing environment therefore creates a problem for companies to align current with past performances (Ferran 1999).
To gauge a company's financial standing, analysts use ratios to estimate and evaluate its performance by comparing it with the current status or against the industry's standards. Financial managers of companies are aware of the use of this tool to evaluate company's performance. Within the framework of legal accounting standards they employ planning and capital structure decisions to measure the performance of firms.

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