Inb theb presentb context,b theb Wellsb Fargob companyb hasb beenb selected,b
whichb isb ab highlyb prestigiousb bankb inb theb Unitedb States.b Wellsb Fargob isb
currentlyb providingb ab wideb rangeb ofb financialb servicesb tob itsb potentialb
customersb inb theb US.b Inb Septemberb 2016,b theb reportb ofb theb Wellsb
Fargob scandalb wasb outb revealedb thatb theb employeesb hadb fakedb nearlyb
3.5b millionb customerb accountsb tob achieveb theb bank'sb salesb goalsb
(Welch,b 2022).b However,b theb companyb hasb admittedb itsb mistakeb ofb
falsifyingb theb informationb ofb theb customersb byb openingb unauthorizedb
customerb accounts.b Itb hasb beenb identifiedb thatb theb reputedb bank'sb
agentsb areb evenb involvedb inb forgingb theb customer'sb signatureb andb
manipulatingb andb transferringb assetsb betweenb theb accounts.b Theseb
activitiesb wereb conductedb withoutb theb knowledgeb andb consentb ofb theb
customersb (Cruz,b 2018).b Theb mainb reasonb behindb theb selectionb ofb thisb
Wellsb Fargob Scandalb isb thatb itb hasb beenb ab popularb exampleb ofb ethicalb
violation,b unethicalb salesb practicesb orb salesb integrityb violationb inb theb
US.b Asb theb questionb hasb aimedb tob analyzeb theb Wellsb Fargob caseb andb
applyb oneb ofb theb earningsb managementb techniques,b theb descriptionb isb
givenb below.
Theb earningsb managementb techniques
Theb earningsb managementb techniquesb andb strategiesb executedb byb
manyb bigb companiesb tob achieveb theirb financialb goal.b Thisb techniqueb
hasb theb potentialb tob paintb ab betterb pictureb forb stakeholdersb andb
intentionallyb influenceb financialb reporting.b Thisb earningb managementb
techniquesb haveb fiveb commonb factorsb thatb includeb theb Bigb Bath,b
Operatingb Activities,b Cookieb Jarb Reserves,b Revenueb Recognitionb andb
Materialityb methodsb (Strakova,b 2021).
Theb applicationb ofb earningsb managementb techniqueb inb theb caseb ofb
Wellsb Fargo
Theb bigb bathb isb oneb ofb theb earningsb managementb techniquesb thatb hasb
beenb appliedb tob theb Wellsb Fargob case.b Inb general,b whenb ab companyb isb
experiencingb ab badb periodb becauseb ofb externalb factors,b itb canb directlyb
affectb itsb organization'sb profit.b Atb thisb time,b theb companyb makesb itb
evenb worseb byb restructuringb costs,b writingb offb allb badb debts,b
overvaluationb ofb assetsb depreciation,b andb otherb expensesb tob evadeb
taxb andb showb moreb lossb (Swaminathan,b 2022).b Inb theb contextb ofb Wellsb
Fargo,b theb companyb wasb runningb inb ab badb situation,b butb itb committedb
ab mistakeb byb falsifyingb theb informationb ofb theb customersb andb openingb
unauthorizedb customerb accounts.b Duringb theb criticalb situation,b theb
companyb hasb decidedb tob reconstructb andb madeb allb investorsb andb
creditors,b customersb andb suppliers,b managementb andb employeesb
understandb theb expectedb effects.b Theb applicationb ofb theb bigb bathb
techniqueb inb theb businessb settingb hasb affectedb theirb brandb imageb andb
theb customers'b trustb level.
References
Cruz,b B.b (2018).b Wellsb Fargo:b Anb articleb basedb analysis.b
10.13140/RG.2.2.18452.65924.
Strakova,b L.b (2021).b Motivesb andb techniquesb ofb earningsb managementb
usedb inb ab globalb environment.b Inb SHSb Webb ofb Conferencesb (Vol.b 92,b p.b
02060).b EDPb Sciences.
Swaminathan,b A.b (2022,b Juneb 08).b Earningsb management.b Retrievedb
Octoberb 11,b 2022,b fromb https://www.wallstreetmojo.com/earnings-
management/
Welch,b J.b (2022).b Wellsb Fargo:b ab corporateb recoveryb modelb tob bankb
on.b Journalb ofb Businessb Strategy,b (ahead-of-print).
