Majority of public companies pays extraordinary attention to earnings by engaging in the “earnings expectation game” (Rappaport, 2006). Focusing on earnings alone has detrimental implications. It is, therefore advisable for executives to shun the practice of managing earnings or providing guidelines regarding earnings. The author further asserts that it is vital for companies to emphasize only those strategies that maximize expected value above all the other considerations. In addition to this, the author addresses the significance of making acquisitions that maximize expected value. It is pertinent to appreciate the fact that the author maintains that it should not matter whether short term earnings fall as a result of maximizing expected value. As far as value maximization is concerned, the author point out that it is pivotal for companies to deal in assets that contribute towards maximizing value. The author does an exemplary job in explaining ways through which the principles can be implemented in public
Majority of public companies pays extraordinary attention to earnings by engaging in the “earnings expectation game” (Rappaport, 2006). Focusing on earnings alone has detrimental implications. It is, therefore advisable for executives to shun the practice of managing earnings or providing guidelines regarding earnings. The author further asserts that it is vital for companies to emphasize only those strategies that maximize expected value above all the other considerations. In addition to this, the author addresses the significance of making acquisitions that maximize expected value. It is pertinent to appreciate the fact that the author maintains that it should not matter whether short term earnings fall as a result of maximizing expected value. As far as value maximization is concerned, the author point out that it is pivotal for companies to deal in assets that contribute towards maximizing value. The author does an exemplary job in explaining ways through which the principles can be implemented in public