The comprehensive survey reported here allowed analysis of how senior U.S.
financial executives make decisions related to performance measurement and
voluntary disclosure. Chief financial officers were asked what earnings
benchmarks they cared about and which factors motivated executives to exercise
discretion—even sacrifice economic value—to deliver earnings. These
issues are crucially linked to stock market performance. The results show that
the destruction of shareholder value through legal means is pervasive, perhaps
even a routine way of doing business. Indeed, the amount of value destroyed by
companies striving to hit earnings targets exceeds the value lost in recent
high-profile fraud cases.