Financial accounting produces series of detailed financial and economic information of a company. Reports created by financial accounting are used by investors to judge the profitability of a company and thus effect a company’s financing abilities, such as stock price and loans. Or they can be used by managers for strategic decision makings purposes. Olympus Corporation, an optics company of Japan, tried, for decades, to use accounting loop holes and creating special accounts to hide its losses that would otherwise be reflected on financial statements, which would have affected the company’s stock prices and financing powers. Olympus Corp. admitted in early November 2011 that it has been using methods to cover up its investment losses, meaning to keep them off their balance sheets so investors cannot see. This has caused Olympus’s share price to fall and other legal issues. Companies has to be more transparent in their actions for “sunlight is said to be the best of disinfectants; electric light the most efficient policeman” (Brandeis 1933, 62). The public (sunlight) and the media (electric light) and the best watch dogs to ensure companies do not walk away with financial schemes.
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