German companies have a tradition of under-reporting their true earnings. In December 2021, more than 15% reported that they managed their earnings downwards (versus 5% making upwards adjustments). German Business Panel data shows: The challenging business environment in 2022 with its unprecedented cost pressure led to declining earnings and, for the first time, more German companies managing their earnings upwards than downwards. Prof. Dr. Jannis Bischof is discussing this trend and the risks for German managers in his guest essay for the Frankfurter Allgemeine Zeitung.
The dangers of distorted financial statements