One of the most important corollaries of the efficient markets hypothesis for corporate management is the futility of using accounting manipulations to increase stock prices. Academic research in finance and accounting has produced a large body of evidence attesting to the ability of the stock market to penetrate accounting fictions. When bonds are first issues the agencies in effect certify the issue providing investors with an implicit guarantee that the bonds have credit quality. In corporate financial reporting the game plan is to show steadily rising earnings per share. This pronounced change in viewpoint since the 60s is the result of an impressive accumulation in a growing number of accounting and finance journals of empirical evidence on the relationship between accounting numbers and stock prices. Some of the traditional studies it is true would begin with perfunctory attempts to justify their proposed improvements of accounting procedures.
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