| Course | ACCT 650 Corporate Governance and Fraudulent Financial Reporting (ACCT650) |
|---|---|
| Module/Week | 2 |
| Assignment | Discussion Board Forum 2 Thread |
| Paper type | Discussion thread |
| Length | about 529 words (thread and replies). Course guide: one forum thread in the 500-800 word band, drawing on three or more sources and at least one biblical principle, cited in current APA style |
| Format | APA 7 citations and reference list |
| Points | 75 |
| School | Liberty University Online |
| Program | MS in Accounting |
| Where it sits | Module/Week 2 in Liberty's published ACCT 650 course guide; current sections can differ |
| Updated | October 2026 |
Free sample paper for ACCT 650 Week 2
Discussion Board Forum 2 Thread: Incentives and Fraudulent Financial Reporting
ACCT 650 Corporate Governance and Fraudulent Financial Reporting, Discussion Board Forum 2 Thread
Thread by [Student Name]
The thread answers a composite prompt on incentives; the studies, SEC rule and Bible passage cited are real.
Fraudulent financial reporting follows money. The board can only guard against misstatement if it understands what pressures push executives toward it, and the research identifies two of them clearly: the need to raise capital and the structure of executive pay.
The first comes from companies that faced SEC enforcement for manipulating earnings. Dechow et al. (1996) found that an important motivation was to attract external financing at low cost, since higher reported earnings support a higher stock price and cheaper borrowing. The manipulators also tended to have weak governance, so pressure and opportunity arrived together. Their study showed the consequences, too: when the manipulation was revealed, the companies' stock prices fell sharply and their cost of capital rose, so the attempt to raise money cheaply ended by making it more expensive.
The second pressure is personal. Efendi et al. (2007) compared firms that restated their financial statements with matched firms and found that the likelihood of a misstatement increased greatly when the chief executive held a very large amount of in-the-money stock options. The mechanism is easy to see: a manager whose wealth rises sharply with each dollar of reported earnings has a strong reason to report more of them. They also found misstatements more likely when firms were constrained by debt covenants or were raising new debt or equity, which links back to the financing motive. The two pressures reinforce each other: an executive whose options are deep in the money and whose company needs new capital faces the strongest pull of all, because a higher reported number serves both the company's financing and the executive's wealth at once.
Regulators have responded by targeting the reward. In 2022 the SEC adopted a rule directing the stock exchanges to require listed companies to adopt and enforce policies recovering incentive compensation erroneously awarded to current and former executive officers during the three fiscal years before a required restatement, whether or not the executive was at fault (Securities and Exchange Commission [SEC], 2022). A clawback cannot stop a misstatement, but it can make sure no one keeps the money it produced. By removing the payoff, the rule weakens the incentive the research identified.
Scripture describes the danger plainly. In his first letter to Timothy, Paul describes the craving for wealth as a trap that drags people into ruin and calls the love of money the root of many kinds of evil (English Standard Version Bible, 2001/2016, 1 Timothy 6:9-10). The research describes the same pattern in economic terms. A biblical view does not condemn incentive pay, but it does warn that pay designed to make an executive rich from reported numbers creates exactly the temptation Paul described, and that contentment and accountability are the guardrails.
For compensation committees, the practical lesson is to weigh how much of an executive's wealth depends on short-term reported earnings, to lengthen vesting periods and to pair incentive pay with a well-enforced clawback. Pressure cannot be removed from business, but its pull on the financial statements can be reduced, and boards that understand where it comes from can watch the accounts most exposed to it, such as revenue and reserves, in the quarters before a financing.
References
Dechow, P. M., Sloan, R. G., & Sweeney, A. P. (1996). Causes and consequences of earnings manipulation: An analysis of firms subject to enforcement actions by the SEC. Contemporary Accounting Research, 13(1), 1-36. https://doi.org/10.1111/j.1911-3846.1996.tb00489.x
Efendi, J., Srivastava, A., & Swanson, E. P. (2007). Why do corporate managers misstate financial statements? The role of option compensation and other factors. Journal of Financial Economics, 85(3), 667-708. https://doi.org/10.1016/j.jfineco.2006.05.009
English Standard Version Bible. (2016). Crossway. (Original work published 2001)
Securities and Exchange Commission. (2022). Listing standards for recovery of erroneously awarded compensation (Release No. 33-11126).
What the ACCT 650 Week 2 instructions ask
Module/Week 2 of ACCT 650 runs two forums at once: the reply that finishes Forum 1 and the thread that starts Forum 2, read beside chapter 6 of Girgenti et al. and a presentation. The new thread follows the course rule of 500 to 800 words, three or more sources and at least one biblical principle, in current APA style, and a classmate will answer it in Module/Week 3. Incentives make a natural second topic after board oversight, because a board can only guard against pressures it understands, and the research on why executives misstate is among the most consistent in the governance literature.
How this ACCT 650 Week 2 example is built
The thread is built around one claim, that misstatement follows money, and three pieces of evidence. It opens with research on firms subject to SEC enforcement, which found that the desire to raise external financing cheaply was a leading motive. A second paragraph adds research on stock options, showing that chief executives with large in-the-money options were more likely to lead firms that misstated. A third explains the SEC's clawback rule as a policy response that targets the reward rather than the act, and says when the rule took effect for listed companies. A biblical paragraph on the desire for riches addresses the human side the research describes. The thread closes with a practical suggestion for compensation committees and stays under the 800-word ceiling.
ACCT 650 Week 2 grading rubric: where the points go
Threads in ACCT 650 forums earn their points for a direct answer to the prompt, sound use of at least three sources, a biblical principle woven into the reasoning and disciplined length between 500 and 800 words. For an incentives prompt, instructors look for accurate statements of what the research found, an explanation of the mechanism linking pay or financing needs to misstatement, and some judgment about remedies. Citing a study without its finding, or listing fraud triangle elements without applying them, earns less. Clarity counts because a classmate must reply to the thread, and APA formatting of citations and references is part of every forum grade.
ACCT 650 Week 2 help: mistakes that cost points
State your answer to the prompt in the opening lines, then give each source a paragraph with its finding and why it matters. Distinguish motive from opportunity; this forum is about pressure and incentive, so keep controls for later. Report what studies found carefully, including whose behavior they measured, such as chief executives or firms. If you discuss a rule like the clawback requirement, say what it requires and when it took effect. Choose a biblical principle that fits the mechanism you describe, perhaps greed, contentment or stewardship. Keep the thread under 800 words, and plan to reply to a classmate's thread from Forum 1 the same week.
Related ACCT 650 sample papers
Other ACCT 650 weeks
- ACCT 650 Week 1: Forum 1 Thread
- ACCT 650 Week 3: Learning Project Proposal
- ACCT 650 Week 4: Forum 3 Reply
- ACCT 650 Week 5: Forum 4 Thread
- ACCT 650 Week 6: Forum 5 Thread
- ACCT 650 Week 7: Individual Learning Project
More MS in Accounting sample papers
- ACCT 616 Week 2: Case Study 1
- ACCT 618 Week 2: Discussion Board Forum 1
- ACCT 622 Week 2: Forum 1 Critique
- ACCT 635 Week 2: Discussion Board Forum 2
ACCT 650 Week 2 questions, answered
What is the ACCT 650 Forum 2 Thread?
The 75-point thread that opens Forum 2 in Module/Week 2, written in 500 to 800 words with three or more sources and at least one biblical principle.
Where can I find a free ACCT 650 Week 2 sample paper?
A full ACCT 650 Week 2 thread sample is on this page, on how executive incentives and financing pressure lead to fraudulent financial reporting and how clawbacks respond.
Do stock options encourage financial misstatement?
Research on misstating firms found that chief executives holding very large amounts of in-the-money stock options were more likely to preside over misstatements than those at matched firms.
What is the SEC clawback rule?
A 2022 SEC rule requiring listed companies to adopt policies to recover incentive compensation erroneously awarded to executives in the three years before an accounting restatement.
What else is due in ACCT 650 Module/Week 2?
Students also owe their Forum 1 reply that week, and they read chapter 6 of Girgenti et al. along with one presentation before posting.
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