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Prior research hypothesizes managers use 'real actions' including the reduction of discretionary expenditures, to manage earnings to meet or beat key benchmarks. This paper examines this hypothesis by testing how different types of marketing expenditures are used to boost earnings for a durable commodity consumer product which can be easily stockpiled by end-consumers. Combining supermarket scanner data with firm-level financial data, they find evidence that differs from prior literature. Instead of reducing expenditures to boost earnings, soup manufacturers roughly double the frequency and change the mix of marketing promotions at the fiscal quarter-end when they have greater incentive to boost earnings.
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